Oversea-Chinese Banking Corp Limited (SGX: O39), or OCBC, is one of the three main local banks listed in Singapore, along with United Overseas Bank Ltd (SGX: U11) and DBS Group Holdings Ltd (SGX: D05). All three pay out dividends to shareholders.
In this article, though, I’ll take a look at two reasons why I think OCBC can be an excellent dividend stock for any investor looking for regular income.
Impressive dividend track record
One of the very first things that dividend investors will assess before investing in any company is the company’s dividend track record. Here, investors will be looking for stable, or even better, rising dividend payments over the years.
The good news is that OCBC has done just that in the last decade. From 2008 to 2018, not only has it paid a dividend every year, but it has also grown its dividend per share (DPS) from S$0.28 in 2008 to S$0.43 in 2018. In other words, its dividend was up by 54% during the period.
Clearly, OCBC has a great track record of paying dividends to investors. But can it continue to do so in the future? Here’s what I’ll explore next.
Supported by stellar financial performance
For OCBC to continue paying sustainable dividends, it must have a strong underlying business that can deliver sustainable profitability over the long term.
Here, investors can get some assurances if the bank has delivered stable (or better, growing) revenue and net profit in the previous 5-10 years. A strong track record will provide peace of mind to dividend investors that the company will likely sustain its business performance, and subsequently, its dividend payments for the foreseeable future.
As for OCBC, it has a pretty solid track record over the past decade. From 2008 to 2018, OCBC’s total income grew from S$4.4 billion in 2008 to S$9.7 billion in 2018. Similarly, net profit attributable to shareholders grew from S$1.7 billion in 2008 to S$4.5 billion in 2018. The former was up by 120% while the latter was up by 164% during that period.
Personally, I believe such performance is nothing short of impressive, especially considering that OCBC was already a large size company back then.
In sum, dividend investors might want to take a closer look at OCBC given its strong financial and dividend track records.
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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 shares of Oversea-Chinese Banking Corp Limited, DBS Group Holdings Ltd and United Overseas Bank Ltd.