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

Vicom Limited (SGX: V01) has been a solid long-term winner in Singapore’s stock market. Over the past five years, its shares have climbed by 73% in price alone; this compares with the 1.4% decline that the Straits Times Index (SGX: ^STI) has experienced.

Here are three important aspects about Vicom’s business fundamentals that may interest investors, namely, its dividend, growth, and valuation.


At Vicom’s current share price of S$5.75, it has a yield of 4.8% thanks to its trailing dividend of S$0.2775 per share. For perspective, the SPDR STI ETF (SGX: ES3) has a yield of just 3.25%.

To assess the sustainability of a company’s dividend, there are many things we can look at. But in here, let’s focus on just two financial ratios, the debt-to-shareholders’ equity ratio and the pay-out ratio. The former is a gauge of the level of financial risk a company is taking on and the latter expresses a company’s dividend as a percentage of its profit.

As a rule of thumb, the lower the ratios are, the better it could be. But do bear in mind the fact that there are many other important areas to study when analysing a company’s dividend, as I already mentioned.

Based on its latest financials (as of 30 June 2016), Vicom has zero debt, which gives rise to a debt-to-shareholders’ equity ratio of 0%. Meanwhile, the company has trailing earnings of S$0.331 per share, which gives rise to a pay-out ratio of 84%.


Here is a table showing how Vicom’s revenue and earnings have changed from 2011 to 2015:

Vicom financial table - Lawrence
Source: S&P Global Market Intelligence

Vicom’s top-line and bottom-line have both grown in each year for the period under study. But, growth has been slow. In all, the company’s revenue and earnings per share have increased by a total of just 18% and 24%, respectively, from 2011 to 2015.


We’ve seen Vicom’s trailing earnings per share and current share price above. These two figures give the company a trailing price-to-earnings (PE) ratio of 17.4.

There are two things to know about Vicom’s PE ratio. First, it is near the higher end of where it has been in the past five years, as you can see in the chart below:

Vicoms PE ratio since 2 September 2011
Source: S&P Global Market Intelligence

Second, the SPDR STI ETF (SGX: ES3) has a PE ratio of 12 at the moment, which is lower than Vicom’s current valuation.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.