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Top 5 Singapore Shares for Dividend Investors

Many Singaporean investors love investing in dividend shares since those stocks usually offer a steady stream of income. To help such investors, I used a stock screener to find some of the best dividend shares in Singapore right now.

These stocks were found using stringent criteria to include only shares that have:

  1. Dividend yield of between 3% and 7%.
  2. Dividend payout ratio of below 80%.
  3. Debt-to-cash flow of below 50%.
  4. Dividend growth rate of more than 3% per year for the past three years.
  5. Profit growth rate of more than 3% for the last three years.

The first criterion was chosen because I wanted stocks with a reasonable yield at the minimum. The second criterion gives me companies with well-covered dividends, while the third criterion is used to select stocks with strong balance sheets. The dividend and profit growth rates of 3% — the fourth and fifth criteria — were included as the average long-term inflation rate in Singapore is 2.6%. Dividend and profit growth rates above the average inflation rate are excellent, since that means the dividends and profits are keeping up with inflation, at the very least.

Without further ado, here are Singapore’s best five dividend shares.

Taking the top spot is Micro-Mechanics (Holdings) Ltd (SGX: 5DD). The company designs, manufactures, and markets consumables and precision tools used in the semiconductor industry. The following shows how Micro-Mechanics’ dividend has grown over the years:

Source: Micro-Mechanics 1H2019 earnings presentation

At Micro-Mechanics’ share price of S$1.71, it has a dividend yield of 5.3%, excluding special dividends. With special dividends included, the dividend yield goes up to 5.8%.

Valuetronics Holdings Limited (SGX: BN2) slots into the second spot. The company is an integrated electronics manufacturing services provider with its headquarters in Hong Kong. At Valuetronics’ share price of S$0.68, it gives a dividend yield of 5.1% without any special dividend. With special dividend included, the yield shoots up to 6.3%.

China Sunsine Chemical Holdings Ltd (SGX: CH8), a leading speciality rubber chemicals producer, takes the third place. China Sunsine has the lowest dividend payout ratio among the five companies at 21% of earnings. At such a low payout ratio, it has the biggest potential for further dividend hikes. Currently, China Sunsine sports a dividend yield of 4.5% at its share price of S$1.21.

Coming in fourth is a company that is part of the Straits Times Index (SGX: ^STI), SATS Ltd (SGX: S58). SATS provides food solutions and gateway services solutions, mainly to the aviation industry. It has a dividend yield of 3.4% at its current share price of S$5.24.

Taking the last spot is Powermatic Data Systems Ltd (SGX: BCY). The company is an investment holding firm that mainly deals with the design and manufacturing of wireless connectivity devices. At Powermatic’s share price of S$1.58, it has a dividend yield of 3.2% without any special dividend, and 4.4%, including special dividends.

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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 Micro-Mechanics (Holdings) Ltd and SATS Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Micro-Mechanics (Holdings) Ltd and SATS Ltd.