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3 Things You Should Know About Singapore Exchange Limited’s Dividends Right Now

Singapore Exchange Limited (SGX: S68) is the only stock market operator in Singapore, and it provides listing, trading, clearing, settlement, depository and data services.

At the current stock price of S$7.46, it has a dividend yield of 4%. Here are three other things you should know about the company’s dividends right now.

Fourth quarter dividend

Singapore Exchange is going ex-dividend (or XD) tomorrow. This means that those who wish to receive the fourth quarter dividend of 15 Singapore cents per share have to buy the company’s shares by the close of market today.

For the full year ended 30 June 2018 (FY2018), revenue rose 5.5% to S$844.7 million. All business segments – Equities and Fixed Income, Derivatives, and Market Data and Connectivity – saw growth in their businesses.

Net profit, meanwhile, increased by 6.9% to S$363.2 million. Consequently, Singapore Exchange’s diluted earnings per share rose to 33.8 Singapore cents from 31.6 Singapore cents a year ago.

The company’s balance sheet improved for the year as the bank balance grew to S$831.6 million, compared to S$796.4 million last year. It had no debt in both the years.

Free cash flow climbed from S$317.6 million in FY2017 to S$348.3 million in FY2018, up almost 10%. Free cash flow is cash that the company can use to pay out dividends to shareholders, buy back shares, or make acquisitions, among other things.

Dividend growth rate

Singapore Exchange’s dividend per share had increased from 28 cents in FY2014 to 30 cents in FY2018, translating to an annualised growth rate of 1.7%. The dividend for FY2018 is the highest annual dividend in 10 years.

The following chart shows the dividend growth over the past five years:Source: Singapore Exchange FY2018 earnings presentation

In FY2018, the company had a dividend payout ratio of 88.4%, which shows how much in dividend it pays out out of its net profit.

Dividend policy

Singapore Exchange has revised its dividend policy.

From FY2019, the dividend policy will be based on an absolute amount, instead of being based on a percentage of net profit. The previous dividend policy stated no less than 80% of the annual net profit after tax or 20 cents per share, whichever is higher, would be paid out as dividend.

In its FY2018 annual report, the company explained the rationale for the dividend policy change:

“The new policy aims to pay a sustainable and growing dividend over time, consistent with the company’s long-term growth prospects. This will provide flexibility for SGX to balance its dividend payments with the need to retain earnings to support growth.”

In addition, Singapore Exchange will pay a higher dividend of 7.5 cents per share quarterly, starting from the first quarter of FY2019. The exchange said that this “is an increase of 2.5 cents per share and shareholders will receive their dividends earlier in the financial year, compared to previous years.”

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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 has recommended shares of Singapore Exchange Limited. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited.