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4 Key Things to Know About SATS Ltd’s Dividend

SATS Ltd  (SGX: S58) has been paying dividends regularly for many years.

The company categorises its business into two major segments, namely, Food Solutions and Gateway Services. The first division covers airline catering, food distribution, industrial catering, and other services. Meanwhile, Gateway Solutions provides ground handling services of passengers, flights, and cargo.

SATS’s latest annual report, released less than three months ago, had four key pieces of information related to its dividend that investors might want to know.

1. Revenue has been sliding but profits are up

2016-09-23-sats-revenue-profit
Source: SATS’s annual report

Revenue is the starting point of a viable business. As the chart above shows, SATS’s top-line has been sliding downwards over its past five fiscal years.

SATS has been shifting out its less profitable businesses. In April last year, SATS divested its food distribution business to a joint venture entity with BRF, a Brazilian meat producer. The move added scale to the operations while improving margins at SATS.

This is one reason why the company’s profits are up (from S$170.9 million to S$220.6 million) despite falling revenue.

2. …So earnings per share (EPS) is up  

Subsequently, SATS’s earnings per share (EPS) has been on the rise for most years between FY2011-12 and FY2015-16.

2016-09-23-sats-eps
Source: SATS’s annual report

3. SAT’s dividend policy

SATS also included a brief statement on its dividend policy in its annual report:

“The Company has an internal dividend policy which targets to provide sustainable and progressive dividend payouts.”

That doesn’t tell us too much about how the company’s dividends will look like every year, but the historical dividend payouts might give us some hints.

4. Historical dividend per share

The following chart shows SATS’s historical dividend per share. The company has increased its dividend over the past five fiscal years if we exclude special dividends (orange bars represent ordinary dividends while grey bars represent special dividends).

2016-09-23-sats-dividends
Source: SATS’s annual report

There are many other things for investors to look at when studying a company’s dividend, but the four points above can serve as useful starting points for SATS. Other areas worth looking into include its balance sheet.

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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.