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3 Charts Investors Should See About Singapore Press Holdings Limited’s Dividend

Singapore Press Holdings Limited  (SGX: S58) has been consistently paying an annual dividend for many years.

The company may be best known as a publisher of most of the major newspapers here in Singapore. But there’s more to SPH: It also engages in property development and other activities such as events management. As part of its property-related business, SPH is the majority owner and manager of SPH REIT  (SGX: SK6U), a real estate investment trust that owns retail malls.

The media giant’s latest annual report contained three key things related to its dividend that investors might want to know.

Return on Shareholder’s Funds  

SPH shared its historical return on shareholder’s funds (or return on equity) for its past five fiscal years. This is a measure of how much profit SPH has been able to generate for each shareholder dollar it has.

Source: SPH’s annual report

As you can see, SPH’s return on shareholder’s funds has been heading downwards.

This is an indication that the media giant has not been able to generate the same amount of profits for each shareholder dollar it holds when compared to the past. For the financial year ended 31 August 2016 (FY2016), SPH recorded a return on shareholder funds of just 7.5%.

Recurring earnings

SPH also shared a graph that shows the level of earnings it has that it deems to be recurring for the same five year period as above. The company also included its dividend payout ratio in the same graph.

Source: SPH’s annual report

The pay-out ratio refers to the percentage of a company’s profit that is paid out as a dividend. In general, the lower the pay-out ratio is, the better it could be; a low dividend payout ratio would mean that a company has headroom to navigate any changes in its business fortunes.

In the case of SPH, it has had a dividend payout ratio of over 100% in its past three fiscal years.

Historical dividends

As it turns out, SPH’s dividends (ordinary plus special) has been on a downtrend for the past five years.

Source: SPH’s annual report

In FY2012 (fiscal year ended 31 August 2012), SPH paid out a total of 24 cents per share in dividend. This figure has since declined to 18 cents per share in FY2016.

Conditions have been tough on SPH over the past few years. In FY2016, SPH recorded another year of decline in its all-important media segment revenue. The company is also reorganizing its core media business to cope with the competitive changing landscape.

As investors, we will have to observe whether SPH’s actions will bear fruit a few years down the line.

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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.