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2 Reasons For You To Like Singapore Exchange Limited’s Dividend

Singapore Exchange Limited (SGX: S68) is the only stock exchange operator in Singapore. But it does more than just run the local bourse – the company has three business lines, namely, Equities & Fixed Income, Derivatives, and Market Data & Connectivity.

At Singapore Exchange’s current stock price of S$7.59, it has a trailing dividend yield of 3.7%, which is higher than the market. In this article, I want to highlight two important reasons why investors should like the company’s dividend.

Track record of stable business performance

One important criteria that dividend investors should focus on in assessing a stock is how well its underlying business has performed.

A good track record of growth will provide assurance that the company has a high likelihood of being able to sustain its business growth, and by extension, its dividend payments.

As for Singapore Exchange, the company has a track record of producing stable business results over the past few years.


Source: Singapore Exchange annual report

As the table above shows, from FY2013 (fiscal year ended 30 June 2013) to FY2017, Singapore Exchange’s revenue had grown by 12% from S$714 million to S$801 million, while its profit attributable to shareholders had climbed slightly from S$336 million to S$340 million. Fluctuations in the company’s top-line and bottom-line have also been minimal.

Track record of stable dividends

A company’s business track record will mean little to dividend investors, unless it also pays its profits as dividends to its shareholders.

Singapore Exchange has done well on the dividend-front. The company has maintained its annual dividend at 28 cents per share from FY2013 to FY2017. What’s more, the dividend has been maintained at less than 93% of its earnings in that period, which indicates sustainability in the payouts.

A final word

Dividend investors may want to take a close look at Singapore Exchange given its track records of stable historical business performance and dividend payouts.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Singapore Exchange Limited.