3 Key Things Investors Should Know About StarHub Ltd’s Dividend

StarHub Ltd (SGX: CC3) is likely to be a recognisable company for many in Singapore.

It is the second largest telecommunications firm in Singapore, sitting in front of M1 Ltd (SGX: B2F) and behind Singapore Telecommunications Limited (SGX: Z74).

StarHub organises its business into five different segments, namely, Mobile, Pay TV, Broadband, Enterprise Fixed, and Handset Sales. The first four are collectively known as Services revenue.

The telco has also been consistently paying an annual dividend over the last 10 years. Its latest annual report had three key things related to its dividend that investors might want to know:

1) Flat revenue and earnings per share (EPS)

2016-07-04 Revenue EPS Starhub
Source: StarHub’s Annual Report

For a business to be viable, it needs revenue first of all. StarHub’s top-line has not grown much in the past five years as you can see from the chart above. The same goes for its EPS over that period, which has increased by only 14% from 18.8 cents to 21.4 cents.

2) The dividend policy

StarHub did not list an official dividend policy in its annual report. But Dennis Sim, StarHub’s chief financial officer, did have this to say about the company’s dividends:

“The Board takes a forward three-year view of the Company’s earnings, free cash flow, growth plans and balance sheet efficiency to determine the appropriate level of dividend payment. The preference is to make sustainable dividend payments, as the Board believes in providing greater assurance and clarity to our shareholders.”

3) Historical dividend per share

StarHub has been paying out a quarterly dividend of $0.05 per share since the third-quarter of 2009. As such, its annual dividend has been unchanged since 2010 (the annual dividend has been maintained at S$0.20 per share). A summary of StarHub’s dividend track record can be found here.

The three points above serve as a starting point for studying StarHub’s dividend. Other areas worth looking into include its balance sheet and the amount of free cash flow it generates.

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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 company mentioned.