Blue-chip stocks are generally perceived as investments that give slow and steady returns to investors. In other words, they are “boring” yet relatively safer investments.
Yet, investing in solid blue chips over the long term can generate significant wealth for investors. And this brings us to my main point here – I’d like to share one reliable blue chip that has more than doubled its dividend in the last decade.
The company I’ll look at here is Jardine Matheson Holdings Limited (SGX: J36). As a quick introduction, Jardine Matheson is a conglomerate with interest in the web of Jardines companies which include Jardine Strategic Holdings Limited (SGX: J37), Jardine Cycle & Carriage Ltd (SGX: C07), Hongkong Land Holdings Limited (SGX: H78), Dairy Farm International Holdings Ltd (SGX: D01), Mandarin Oriental Limited (SGX: M04), Jardine Lloyd Thompson and Jardine Pacific.
For those who want to better understand the various businesses within Jardine Matheson, please read the article here.
Now let’s look at Jardine Matheson’s dividend per share (DPS) over the last decade.
Source: Jardine Matheson’s Annual Reports
From the above, we can see that Jardine Matheson has grown its DPS from US$0.75 in 2008 to US$1.70 in 2018. In other words, its DPS has more than doubled (up 127%) in the last decade. Moreover, DPS has grown every year during that period (with the exception of 2015 when the DPS remained unchanged as compared to 2014).
Personally, I think that’s a solid track record! Such performance can only come from sustainable growth in Jardine Matheson’s underlying profitability. Let’s look at its financial numbers below.
In the last decade, Jardine Matheson grew its revenue from US$22.4 billion in 2008 to US$42.5 billion in 2018. Similarly, its underlying net profit grew from US$0.8 billion to US$1.7 billion during that period. The former was up by 90% while the latter grew 113%!
Such strong growth in underlying performance was the main reason that Jardine Matheson was able to consistently grow its DPS over the years.
Jardine Matheson has demonstrated solid growth in the last decade. Going forward, the group is well-positioned to continue on its trajectory, given its exposure to various regions (mainly Asia) that have much more room for growth.
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 Hongkong Land Holdings Limited and Dairy Farm International Holdings.