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

Singapore Post Limited (SGX: S08) is a regular dividend payer.

Singapore Post has come a long way from its earliest days of delivering snail mail to letterboxes around the Lion City. Today, it has three business segments: postal, logistics, and eCommerce. The firm’s annual report for the fiscal year ended 31 March 2017 (FY2016/17) had four key things, related to its dividend, that investors might want to know.

Revenue has been rising

Source: Singapore Post’s Annual Report

Revenue is the starting point of a viable business. By this measure, Singapore Post delivers the goods, more than doubling its sales over the last five years. Between FY2012/13 and FY2016/17, revenue increased at an rate of almost 20% per year.

But the healthy increases in sales did not quite translate to similar increases in profits.   

… but underlying profits have lagged  

Source: Singapore Post’s Annual Report

Singapore Post’s FY2016/17 underlying profits is lower compared to where it was in FY2012/13. Underlying profits moved higher between FY2012/13 and FY2014/15, but declined in both FY2015/16 and FY2016/17. Let’s take a look at its dividend policy next.

The dividend policy

Singapore Post has decided to make changes to its dividend policy. In its latest annual report, the firm gave context to its decision:

“The Board conducted a review of the dividend policy during the year.

SingPost’s dividends were previously supported largely by the domestic mail business which continues to see declining volumes. To provide future sources of earnings, we have made significant transformational investments in eCommerce and eCommerce logistics, as well as in the redevelopment of the SingPost Centre retail mall.

These investments will impact earnings in the short term, and the review of the dividend policy should be understood in this context.”

With that, the policy has been updated to:   

“To ensure that the dividends are sustainable, the dividend policy has been changed from an absolute amount to one based on a payout ratio ranging from 60 per cent to 80 per cent of underlying net profit for each financial year.”

Historical dividend per share

Source: Singapore Post’s Annual Report

Prior to the update, Singapore Post had increased its dividends from 6.25 cents per share in FY2012/13 to seven cents per share in FY2015/16. However, the dividends were cut to 3.5 cents per share in FY2016/17 to reflect its new dividend policy. The four points above serve as a starting point for studying Singapore Post’s dividend. Other areas worth looking into include its balance sheet and free cash flow generation capability.

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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.