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4 Quick Things to Know About Keppel Corporation Limited’s Dividend

Keppel Corporation (SGX: BN4) is a regular dividend payer.

Keppel Corporation is involved in a number of different businesses. The firm organizes itself in four divisions: O&M; Infrastructure; Property; and Investments. To learn more, we can take a look at the conglomerate’s 2016 annual report. There were four key things, related to its dividend, that investors might want to know.

1. Revenue has fallen hard for two years in a row

Source: Keppel Corporation’s Annual Report

Revenue is the starting point of a viable business. The highest revenue recorded over the past five years was in 2012 where Keppel Corporation recorded $13.97 billion in sales. In 2016, the conglomerate’s revenue had been sliced to $6.77 billion. The decline has been acute over the past two years, where Keppel Corporation struggled amid persistently low oil prices.

2. Profit has been slammed  

Source: Keppel Corporation’s Annual Report

Keppel Corporation’s profit has been slammed alongside its steep decline in sales. The conglomerate posted $2.24 billion in net profit in 2012 but that figure had plunged to $784 million in 2016. Like its revenue, the net profit decline has been more pronounced in 2015 and 2016.

3. The dividend policy

Keppel Corporation does not have an explicit dividend policy. In the report, the firm’s chief executive Loh Chin Hua acknowledged the desire of some shareholders for a minimum dividend payout.

But he maintained that a minimum dividend will have to be substantial and could set a burden that might be too onerous to keep up. Loh said:

“We believe in rewarding shareholders fairly and sustainably. While we do  not have an explicit dividend policy, investors who have been following Keppel Corporation know that we have had a consistent track record in distributing 40-50% of our annual net profit as dividends.”

4. Historical dividend per share

Source: Keppel Corporation’s Annual Report

As Keppel Corporation’s net profit fell over the past five years, its dividend has also taken a hit. The conglomerate paid out as much as 48 cents per share in 2014, but its dividend has been cut to 20 cents per share in 2016. For the first half of 2017, Keppel Corporation maintained its dividend at eight cents per share, unchanged from a year ago.

The four points above serve as a starting point for studying Keppel Corporation’s dividend. Investors might want to look up the firm’s free cash flow track record alongside the strength of 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 writer Chin Hui Leong doesn't own shares in any company mentioned.