UOB is a well-known name among local investors given that it’s one of the oldest listed companies in Singapore. Moreover, I think the local bank can be a safe investment for the foreseeable future and, thus, should be a suitable candidate to consider for your retirement. Here are two reasons why I’m such a strong believer in it.
Stable financial track record
To start with, I like UOB for its stable and sustainable financial track record. Here, I want to stress the importance of investing in a business with a strong track record. A stable business allows the company to sustain or, even better grow, its profitability over time. This will, in turn, sustain or boost both its share price and dividend payments. With that, let’s look at some numbers.
From 2008 to 2018, UOB grew total income from S$5.3 billion in 2008 to S$9.1 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.9 billion in 2008 to S$4.0 billion in 2018. The former was up by 72% while the latter was up by 111% during that period.
From the above, we can see that not only did UOB grow its revenue over time but it also grew its bottom line even more. Going forward, I think that UOB can at least maintain, if not grow its financials over time, especially given that it’s providing a daily necessary service to its customers.
Dividend track record
One of the key criteria that retirees should consider before investing in a company is its dividend track record. This is important since retirees will need that dividend income to pay their bills. In general, a company with a stable dividend track record will provide assurance that it will continue to pay dividends in the future. And now, time for some facts about UOB’s dividends.
In the last decade, UOB has grown its dividend per share from S$0.60 in 2008 to S$1.20 in 2018 (including a S$0.20 per share special dividend). In other words, its dividend was up by 100%, or 67% excluding the special dividend, during the period. Though its past record is no guarantee of future performance, it’s likely that UOB will continue to pay out a stable dividend so long as it can sustain its profitability.
In sum, I think UOB is a high-quality company worthy of further research for your retirement portfolio, based on its solid financial and dividend track record.
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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. The Motley Fool Singapore has recommended the shares of DBS Group Holdings Ltd, Oversea-Chinese Banking Corporation Limited and United Overseas Bank Ltd.