4 Quick Things to Know About Singapore Telecommunications Limited’s Dividend

Singapore Telecommunications Limited (SGX: B2F) is a regular dividend payer.

Better known as Singtel, the telco is the largest player among the trio of telecommunications services providers in Singapore. 

The firm has three major business segments: group consumer, group enterprise, and group digital life. 

Singtel’s latest annual report had four key things, related to its dividend, that investors might want to know.

Revenue has been declining

Source: Singtel’s Annual Report

Revenue is the starting point of a viable business. Over the last five fiscal years, Singtel’s topline has gone down. To be sure, its Singapore revenue has steadily grown during this period. But, it was held back by its Optus revenue, which has declined in Singapore dollar terms.

Free cash flow has been choppy

Source: Singtel’s Annual Report (please refer to the first diagram for the fiscal year)

Singtel’s free cash flow (FCF) has had its ups and downs between the fiscal year ending 31 March 2013 (FY2013) and FY2017. Free cash flow from its Optus arm has declined significantly over the past five fiscal years. However, dividends from associate have risen from $900 million in FY2013 to $1.5 billion in FY2017 as compensation.

The dividend policy

Singtel also included this statement on its dividend as part of its annual report:  

“The Group monitors capital based on gross and net gearing ratios, and the dividend payout ratio ranges from 60% to 75% of underlying net profit. Underlying net profit is defined as net profit before exceptional and other one-off items.”

Investors can expect to see an increase in dividend if Singtel is able to grow its underlying profit.

Historical dividend per share

Source: Singtel’s Annual Report

Singtel has increased its dividend per share from 16.8 cents in FY2013 to 17.5 cents in FY2017. 

The four points above serve as a starting point for studying Singtel’s dividend. Another area worth looking into includes 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 company mentioned.