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2 Reasons To Like SATS Ltd From The Perspective Of A Dividend Investor

There are many type of investors and one of which is the dividend investor. This group of investors invest in a company for the long term and expect their investment returns to come mainly from the dividend payments in the foreseeable future.

Therefore, it is important for dividend investors to invest in companies that have a sustainable and growing business, which in turn, should provide sustainable and growing dividend in the long run.

Recently, I came across a company that might be of interest to the dividend investors and it is SATS Ltd (SGX: S58).

Here, we will look at two simple reasons why they might love SATS.

Five Years’ Financial Performance

Source: FY16/17 Full Year Result Presentation

From the above, we can see that profit after tax and minority interest (PATMI) had grown from $184.8 million to $257.9 million during the period, up by a total of 40%.

The majority of growth of PATMI was due to expansion of margin, which expanded from 10.2% to 14.9%.

In short, we see that SATS has demonstrated sustainable profitability in the last five years.

Dividend Yield

One other factor that dividend investors care about before investing in a company is its dividend yield.

Here, investors will likely want to invest in a company with a dividend yield that is comparable, if not higher, than the market average.

At the current price of $5.01, SATS is trading at a dividend yield of 3.4%. Comparatively, the STI ETF (SGX: ES3), a proxy for the Straits Times Index  (SGX: ^STI), has a yield of 2.9%.

In other words, SATS is trading at a yield that is 17% higher than the market average.

Foolish Conclusion

The above are two reasons why dividend investors might like SATS as an investment. However, investors are reminded that the above are merely two simple metrics from the company which, on their own, would not be able to justify any investment decisions. Further research should be conducted before an investment decision can be made.

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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 has a buy recommendation for SATs. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.