A Close Look At Keppel Corporation Limited’s Dividend, Growth, And Valuation

Keppel Corporation Limited (SGX: BN4) is a well-known conglomerate in Singapore’s stock market.

It has a major business in the construction/repair/upgrade of oil rigs and various types of vessels; it is actually one of the largest oil rig builders in the world. The company is also heavily involved with property investment and development.

Here’s a look at aspects of Keppel Corporation’s business fundamentals that may be of interest to investors, namely, its dividend, growth, as well as valuation.


Let’s start with its dividend. At Keppel Corp’s current share price of S$5.62, it has a yield of 6.05% thanks to its 2015 dividend of S$0.34 per share.

This is significantly higher than the dividend yield of 3.4% that the SDPR STI ETF (SGX: ES3). The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Let’s now turn to Keppel Corp’s debt-to-equity ratio and pay-out ratio, which measures a company’s dividend as a percentage of its earnings. These two ratios can give us clues as to the sustainability of a company’s dividend. In general, the lower the ratios, the better could be. But it must be noted that they are not the only ratios to look at when studying a company’s dividend.

Keppel Corp has a debt-to-equity ratio of 69.8% right now. In 2015, the company’s dividend was 40.5% of its earnings.


The following table illustrates the changes in Keppel Corp’s revenue and operating income from 2011 to 2015:

Keppel Corp revenue and operating income growth
Source: S&P Global Market Intelligence

We can see that Keppel Corp’s results have been somewhat volatile. There’s also a distinct lack of growth over the five year period.


Even the fastest growing business can be a lousy investment if bought at too high a price. That’s why it’s important to focus on valuations.

At Keppel Corp’s current share price, it has a price-to-earnings ratio and price-to-book ratio of 7.4 and 1, respectively. For perspective, the self-same figures for the SPDR STI ETF are 12 and 1.2. Given the nature of the SPDR STI ETF, we can thus say that Keppel Corp has lower valuations than the market at the moment.

If you'd like more investing insights as well as the latest news about Singapore's stock market, you can get both from The Motley Fool's free weekly investing newsletter, Take Stock Singapore. Written by David Kuo, Take Stock Singapore can help you grow your wealth in the years ahead. So, come sign up here.

The Motley Fool's purpose is to help the world invest, better. Like us on Facebook to follow our latest news and articles.

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