4 Key Things You Should Learn About SBS Transit Ltd’s Dividend

SBS Transit Ltd (SGX: S61) is a recognisable company for many in Singapore.

For one, it’s hard to miss the company’s fleet of public buses that ply the roads of our Garden City daily. As a brief background, SBS Transit also operates the North East Line and Downtown Line MRT (mass rapid transit) rail services here along with the Sengkang and Punggol LRT (light rail transit) systems.

SBS Transit is also a regular payer of dividends. The land transport operator’s latest annual report had four key things related to its dividend that investors might want to know:

1) Revenue is rising…

2016-06-30 SBS Transit Revenue
Source: SBS Transit’s annual report

Revenue is the starting point of a viable business. SBS Transit ticks the boxes here with its rising sales over the past five years. In 2015, the company served over 1 billion bus passengers and almost 260 million MRT passengers. It’s safe to say that its services are a daily necessity for people who live in Singapore.

2) …But earnings are lagging  

2016-06-30 SBS Transit EPS
Source: SBS Transit’s annual report

As we’ve seen above, SBS Transit’s revenue has grown in the past few years. But, its earnings have lagged. The chart above shows how the land transport outfit’s earnings per share (EPS) had dipped to a low of 3.6 cents in 2013 before rising back up to 5.4 cents last year. Unfortunately, the 2015 EPS is still less than half that seen in 2011.

3) The dividend policy

SBS Transit declared its dividend policy in its annual report:

“The Company’s dividend policy is to pay out at least 50% of profit after taxation attributable to Shareholders of the Company. The dividend policy takes into account the long-term objective of maximising shareholder value, availability of cash and retained earnings, projected capital expenditure and growth opportunities.

The Company declares dividend semi-annually and informs its Shareholders of the dividend payments via announcements in the SGXNet.”

The lower EPS has had an impact on its dividend, as the following chart illustrates.

4) Historical dividend per share

2016-06-30 SBS Transit Dividend
Source: SBS Transit’s annual report

The fortunes of SBS Transit’s dividends seem to mirror its EPS. In fact, the company’s dividend payout has been exactly half of its EPS since 2012. This falls in line with its dividend policy.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.