Income investors would ideally like to invest in companies that have sustainable dividends.
Unfortunately, no one can accurately predict the future, which makes estimating the future dividends of a company potentially tricky. One way to help clear up some of the fog would be to look at a company’s history of paying dividends.
Over the past 10 years, the global economy has been through some really rough times, with the great financial crisis being the most jarring episode. It would thus mean that a company that can grow its dividends in the past decade has a business that has some stability and sustainability in the past – and that could be a great starting point for further research.
Here, we will look at three of these companies that have grown their dividends for dividend investors by more than 50% in the last 10 years.
We will start with Dairy Farm International Holdings Ltd (SGX: D01).
As a quick introduction, Dairy Farm is a conglomerate with four main business segments: Food, Health and Beauty, Home Furnishings, and Restaurants. In Singapore, Dairy Farm is the owner of stores such as Guardian, Cold Storage, Giant Hypermarket, and 7-Eleven.
In the last decade, Dairy Farm has grown its dividend per share from US 14 cents in 2008 to US 21 cents in 2017, up by 50% during the period. At a current price of S$ 9.05 (as of writing), the company is trading at a dividend yield of 2.3%.
The next company on our list is ComfortDelgro Corporation Ltd (SGX: C52).
As a quick introduction, Comfortdelgro is a transport company with operations mainly in Singapore, Australia, the United Kingdom and China. Comfortdelgro did well in growing its dividend in the last decade.
Here are some numbers: dividend per share more than doubled from 5.0 cents in 2008 to 10.4 cents in 2017. In term of percentage, this is up by 108% during the period!
At a current share price of S$ 2.15 (as of writing), the company is trading at a dividend yield of 4.8%.
The next company is DBS Group Holdings Ltd (SGX: D05) or DBS in short, which is one of the three major banks based out of Singapore.
In the last 10 years, DBS Group grew its dividend per share from 65 cents in 2008 to 143 cents in 2017, up by 120% during the period. One thing that investor should note is that the company paid out a special dividend of 50 cents per share paid in 2017. Nevertheless, DBS Group still grew its dividend by 43% even after excluding the special dividend.
At a current share price of S$ 23.70 (as of writing), the company is trading at a dividend yield of 6.0% (including special dividend).
Income investors might want to take a look at these companies above due to their track record of growing dividends for dividend investors in the last decade.
And if you enjoyed this article, stay tuned for the next two companies to be revealed in another article. [Editor’s note: The second article in this two-part series has been published and it can be found here.]
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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. Motley Fool has a recommendation for DBS Group Holdings Ltd and Dairy Farm International Holdings Ltd.