VICOM Limited (SGX: V01) provides technical testing and inspection services mainly in Singapore. As of 26 February 2019, ComfortDelGro Corporation Limited (SGX: C52), one of the largest land transport companies in the world, had a 67.06% stake in VICOM.
For those who are interested in VICOM’s dividend, including aspects such as its dividend yield, dividend history, and dividend payout ratio, look no further.
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VICOM shares closed at S$6.59 apiece on 8 April, making for a tasty dividend yield of 5.6%, excluding any special dividends. The yield shoots up to 6.9% if the special dividend for 2018 is included. (Note: VICOM’s financial year ends on 31 December each year.)
For perspective, the SPDR STI ETF (SGX: ES3) had a distribution yield of 3.5% on the same day. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI).
Dividend amount and payout periods
VICOM dished out a total dividend of 45.25 Singapore cents per share in 2018. Of that, there was a 13.46 Singapore cent interim dividend, a 23.17 Singapore cent final dividend, and a 8.62 Singapore cent special dividend.
The company’s annual dividend is usually split into two parts: one part (the interim dividend) is given out in the second quarter, and the other in the fourth quarter (final and special dividends).
The following chart shows VICOM’s dividend history (including special dividends) from 2014 to 2018:Source: VICOM 2018 annual report
The total dividend from VICOM has grown from 27 Singapore cents per share in 2014 to 45.25 Singapore cents last year, meaning an annual growth rate of 13.8%.
VICOM has a dividend policy of declaring 90% of its yearly net profit as dividends. The policy came into effect starting in the second quarter of 2017; the previous dividend payout ratio stood at 50%.
Dividend insights from the 2018 annual report
VICOM’s 2018 total dividend of 45.25 Singapore cents per share gives the company a dividend payout ratio of 116%. In its 2018 annual report, VICOM Chairman Lim Jit Poh said:
“Though the present dividend policy is to distribute 90% of our profits, the Board of Directors decided to maintain its 2017’s practice of paying out 120% of its profits for 2018.”
With a payout ratio of more than 100%, it’s clear that VICOM had paid out more in dividends than its earnings in 2018. Lim explained the rationale for the high payout ratio:
“This dividend payout reflects my earlier remarks in the past AGMs that so long as we do not need the extra cash, we shall return it to the Shareholders.”
I agree that it’s better for management to return any extra cash to shareholders, who can use it for other purposes as they deem fit instead of leaving it on the company’s balance sheet without being put to good use.
Dividend yield history
The following chart shows VICOM’s dividend yield (excluding special dividends) for the past 10 years, from April 2009 to April 2019:
Source: S&P Global Market Intelligence
VICOM’s average dividend yield for the past 10 years has been 4.7%. With the latest dividend yield of 5.6%, VICOM’s shares look cheaper than its historical average.
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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 recommends VICOM Limited. Motley Fool Singapore contributor Sudhan P owns shares in VICOM Limited.