Jardine Matheson Holdings Limited (SGX: J36) is a conglomerate with interest in the web of Jardines companies.
Retail investors have generally stayed away from Jardine Matheson due to the complexity of its businesses as well as its web of ownerships in various entities across the group. Nevertheless, there are good reasons Jardine Matheson could be a solid long-term investment despite its complexities. Here, we will look at two of those reasons.
Jardine Matheson is a conglomerate with complex business links across its various subsidiaries and associates. On one hand, such business relationships are a downside since they make it hard for investors to truly understand its various businesses. Yet, one enormous advantage of having such a business structure is the diversification it offers.
How diversified is the company’s income? Let’s consider the table below:
Source: Jardine Matheson 2018 Annual Report
Jardine Matheson is widely diversified across five main industries. Such diversification confers huge advantages. For one, it allows the company to weather some short-term, industry-specific challenges. Moreover, it allows plenty of opportunities to redeploy excess capital from one industry to the other, thus positioning the company well to maximize long-term shareholders’ wealth.
Another thing to mention about Jardine Matheson (which many have missed) is its solid dividend track record in the last decade. Here are the numbers.
In the last 10 years, dividend per share (DPS) grew from US$0.75 in 2008 to US$1.70 in 2018. To put this into perspective, Jardine Matheson grew its dividend by a compound annual growth rate (CAGR) of 8.5% during that period.
The consistent dividend track record indicates that Jardine Matheson is likely to continue paying dividends for the foreseeable future, so long as it can sustain its underlying profitability.
Jardine Matheson looks like a good candidate for investors to research further given its diversified income and solid 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.