Singapore companies are well-known for their dividend-paying culture. The fact that investors in Singapore, unlike investors in some other countries, are not taxed on their dividends makes receiving dividends an even more appealing prospect here.
With that in mind, I have found two shares that income investors in Singapore might love.
Banking on its 5% Dividend Yield
First, and perhaps, one of my favourite dividend stocks is DBS Group Holdings Ltd (SGX: D05). The bank recently changed its dividend policy from paying half-yearly to quarterly. From the first quarter of 2019, it will pay out 30 cents per share each quarter.
At its current price of S$25.40, that translates to an annualised yield of around 4.7%. DBS also has a track record of not only paying a dividend each year but also increasing it. DBS increased its dividend from 30 Singapore cents in 2002 to 120 Singapore cents in 2019.
More importantly, its current dividend looks sustainable as it’s backed by robust core earnings. In the first three months of 2019, the 30 cents per share it paid out as dividend represented just under half of its earnings per share.
DBS is also very well-positioned financially. The common equity tier 1 capital adequacy ratio, a commonly used metric to assess a bank’s ability to withstand financial stress, stood at 14.1%. This is well above the 6.5% regulatory requirement. Its leverage ratio was also 7.3%, above the regulatory requirement of 3%.
All of the above point to a sustainable dividend that will only likely grow from here.
Manufacturing a juicy 6% yield
Design and manufacturing firm, Valuetronics Holdings Limited (SGX: BN2) dished out 25 Hong Kong cents worth of dividend in its last financial year. Based on current exchange rates and its current price of S$0.68, that translates to a tasty 6.3% yield.
Valuetronics also has a track record of growing both its revenue and net profit. In the past five years, revenue and profits have grown annually by 3.1% and 6.0% respectively.
Moreover, its dividend is well-covered by earnings and free cash flows. In its last financial year, its dividend payout ratio was just 54%, indicating that the company still has room to increase its payout in the future. The company generated HK$357 million in free cash flow, while only paying out HK$107.9 million in dividends.
Most impressively, Valuetronics has HK$930.4 million in cash with no debt. Its clean balance sheet should allow it to continue dishing out dividends even in difficult economic conditions.
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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. Motley Fool Singapore contributor Jeremy Chia owns shares of DBS Group Holdings Ltd.