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Here Are 3 Blue Chip Stocks With High Yields And A Long History of Paying Dividends

Income investors generally seek to invest in companies with stable businesses that have a high probability of sustaining their dividends for long periods of time.

Moreover, they seek to acquire shares of these companies at attractive dividend yields.

But here’s the rub: Can investors actually find companies with steady dividends that also offer high dividend yields? Yes. In fact, there are a few such stocks amongst Singapore’s blue chips, the 30 stocks that are part of the local stock market benchmark, the Straits Times Index (SGX: ^STI).

Let’s take a look at three blue chips that have both traits: (1) A track record of paying an annual dividend for at least 10 years, and (2) a dividend yield of over 3%, which is the current yield of the market. The trio are, in no order of merit, Singapore Telecommunications Limited (SGX: Z74), Singapore Technologies Engineering Ltd (SGX: S63), and ComfortDelGro Corporation Ltd (SGX: C52).

Singtel is currently one of the three main telcos in Singapore, with the other two being StarHub Ltd (SGX: CC3) and M1 Ltd (SGX: B2F).

When compared to its peers, Singtel has a way more diversified income base since it derives over 70% of its net profit from outside of Singapore; in contrast, StarHub and M1 only conducts business in the Garden City. Some of the countries that Singtel has a presence in include Australia, Indonesia, and Thailand.

Singtel has a policy of paying out 65% to 70% of its underlying net profit each year as a dividend to its shareholders. From its fiscal year ended 31 March 2005 (FY2005) to FY2016, Singtel’s dividend has climbed from S$0.13 per share to S$0.175 per share.

At its current stock price of S$3.92, Singtel has a trailing dividend yield of 4.5%.

Next up we have ST Engineering, an engineering conglomerate. It has four different business divisions, namely, Aerospace, Electronics, Land Systems, and Marine.

ST Engineering was listed in late 1997 and paid a dividend of S$0.018 per share for that year. The company currently does not have a stated dividend policy in its annual report, but it has not missed an annual dividend since 1997. From 1998 to 2016, the company’s dividend has climbed from S$0.068 per share to S$0.15 per share.

The engineering conglomerate’s long track record of paying a dividend indicates that there’s a high possibility that it can continue to pay a dividend in the years ahead.

The company has a trailing dividend yield of 4.0% at its current stock price of S$3.73

Last but not least, there’s ComfortDelGro, a land transport services provider. The company has businesses in seven countries, namely (in order of revenue), Singapore, United Kingdom, Australia, China, Ireland, Vietnam, and Malaysia.

It is also the majority owner of two Singapore-listed companies, the vehicle testing and inspection outfit Vicom Limited (SGX: V01), and bus and rail services operator SBS Transit Ltd (SGX: S61).

ComfortDelGro has paid an annual dividend since at least 2004 and its dividend has inched up from S$0.0961 per share back then to S$0.103 per share in 2016. It has a policy of paying out at least 50% of its profits as a dividend.

Based on its latest share price of S$2.59, the land transport services provider has a trailing dividend yield of 4.0%.

A Foolish conclusion

Singtel, ST Engineering, and ComfortDelGro have good long-term track records in terms of paying dividends. They also have market-beating yields.

But, it is important that investors do not take their past performances as a guarantee of the future. After all, businesses and the market environment they are in do change. For instance, ComfortDelGro is the largest taxi operator in Singapore and the taxi market here is competing with ride-hailing apps such as Uber and Grab that sprung up only in recent years.

It is important that investors evaluate the future prospects of the three companies mentioned here before any investment decision can be made. A company can only sustain its dividends in the long run if its business remains healthy.

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