If you are a dividend-hungry investor, you should pay attention to the following blue-chip banks. The banks have been great dividend masters. They also have the potential to increase their dividends in years to come given their stable businesses.
Bank #1: DBS Group Holdings Ltd (SGX: D05)
DBS is the largest bank in Singapore and is one of Asia’s leading banks with over nine million customers in 18 markets.
From 2013 to 2017, DBS has increased its dividend by 25% per year from S$0.58 per share to S$1.43 per share (includes 2017’s special dividend of S$0.50 per share). On a longer time frame, its dividend had climbed 11.2% yearly from S$0.26 per share in 2001 up till 2017.
From 2018 onwards, DBS has committed to an annual dividend payment of S$1.20 per share. The higher dividend policy was the result of the finalisation of Basel capital reforms, which provided clarity on the requirements going forward. In its 2017 annual report, DBS explained:
“The recent finalisation of the Basel III capital reforms has provided clarity on future regulatory requirements. They have a benign impact on DBS, enabling our capital requirements to be rationalised. In view of this, the Board suspended the scrip dividend with immediate effect. It also determined that the ordinary dividend can be sustained at higher levels and affirmed the policy of increasing it over time in line with earnings growth.”
In the 2018 second-quarter, DBS increased its interim dividend by 82% to S$0.60 per share from S$0.33 per share a year ago.
From 2013 to 2017, the bank’s dividend yield (without special dividends) ranged from 3.1% to 4.5%, with an average of 3.7%. At DBS’ current share price of S$24.98, it has a trailing dividend yield of 4.8%, excluding any special dividend. Including 2017’s special dividend, the yield would be higher at 6.8%.
Bank #2: United Overseas Bank Ltd (SGX: U11)
United Overseas Bank is a leading bank in Asia with a global network of more than 500 branches and offices in 19 countries and territories in Asia Pacific, Europe and North America.
In 2009, the bank paid out S$0.60 per share in total ordinary dividend. The dividend has since grown to S$0.80 per share in 2017.
Between 2013 and 2017, its dividend rose 3.4% annually, from S$0.70 per share in 2013 to 2017’s S$0.80 per share. The figures exclude all special dividends given out. Including special dividends, the growth comes up to 7.5% per annum during the same period.
In the 2018 second-quarter, UOB upped its interim dividend by 43% to S$0.50 per share from S$0.35 per share a year ago.
From 2013 to 2017, UOB’s dividend yield (including special dividends) ranged from 3.4% to 4.3%, with an average yield of 3.8%. At UOB’s current share price of S$26.43, it has a trailing dividend yield of 4.4%, inclusive of its 2017 special dividend. Excluding the special dividend, the yield would be lower at 3.6%.
Bank #3: Oversea-Chinese Banking Corp Limited (SGX: O39)
OCBC is the longest established local bank, formed in 1932 with the merger of three Singapore banks. Currently, OCBC is the second largest financial services group in Southeast Asia.
OCBC’s dividends have climbed 2.1% annually from S$0.34 per share in 2013 to S$0.37 per share in 2017. Over a longer period, the bank’s dividend had climbed 3.2% yearly from S$0.28 per share in 2008 to 2017’s S$0.37 per share.
In its second quarter of 2018, OCBC increased its interim dividend by 11% to S$0.20 per share from S$0.18 per share a year ago.
Between 2013 and 2017, OCBC’s dividend yield ranged from 3.4% to 4.2%, giving an average of 3.7%. At OCBC’s current share price of S$11.68, it has a trailing dividend yield of 3.3%.
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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 DBS Group Holdings Ltd, Oversea-Chinese Banking Corporation Limited and United Overseas Bank Ltd. Motley Fool Singapore contributor Sudhan P doesn't own shares in any companies mentioned.