Jardine Strategic Holdings Limited (SGX: J37) is a sprawling conglomerate with interests in many Singapore-listed companies such as automobile distributor Jardine Cycle & Carriage Ltd (SGX: C07), bricks-and-mortar retailer Dairy Farm International Holdings Ltd (SGX: D01), property investor and developer Hongkong Land Limited (SGX: H78), and more.
At Jardine Strategic’s current stock price of US$38.50, it has a really low dividend yield of just 0.8% based on its 2017 dividend of US$0.32 per share. But, in this article, I want to highlight two positive aspects about Jardine Strategic’s dividend.
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A 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 Jardine Strategic, the company has a track record of producing stable business results over the past few years.
Source: Jardine Strategic 2016 annual report
As the table above shows, from 2012 to 2016, Jardine Strategic’s underlying earnings per share (EPS) had come in within a tight range of US$2.37 to US$2.64. The same goes for its revenue, although there was a slight decline of 11% for the timeframe above.
In its latest earnings update released last month, Jardine Strategic reported that its underlying EPS in 2017 was up 13% to US$2.76.
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.
Jardine Strategic has done well on the dividend-front. The company has grown its annual dividend from US$0.24 per share in 2012 to US$0.32 per share in 2017. What’s more, Jardine Strategic’s 2017 dividend of US$0.32 per share was just 12% of its underlying EPS of US$2.76 for the year, which indicates sustainability in the payout.
A final word
Dividend investors may want to take a close look at Jardine Strategic given its stable historical business performance and growing 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. The Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation on Dairy Farm International Holdings.