Information technology (IT) can be considered a sunrise industry as it offers great future prospects for enhancing our quality of life. The sector itself is large and varied, ranging from companies that manufacture components for the electronics industry to software companies that write programs for clients.
SGX has recently highlighted the IT sector as the best-performing sector over first the seven months of 2019, generating a total return of 29.8%. With the ongoing trade dispute between the US and China, electronic manufacturers may witness higher costs seeping into their supply chains, while demand may also remain muted moving forward.
However, I believe all these headwinds will eventually pass, and they are currently creating mouth-watering opportunities for long-term investors to pick up juicy bargains, as the top five technology companies (featured below) within the IT sector provided an average dividend yield of 6%.
No. 1: CSE Global Ltd
CSE Global Ltd (SGX: 544) is a global technology company with a network of 39 offices across the world. The group employs more than 1,000 employees worldwide and generates more than 95% of its revenue from outside Singapore.
CSE Global had an indicative dividend yield of 6.5%, and it reported strong earnings for Q2 2019, with revenue and net profit up 8.4% and 3.9% year-on-year, respectively. New orders received also rose 19.3% year-on-year to S$106.3 million.
No. 2: Sunningdale Tech Ltd
Sunningdale Tech Ltd (SGX: BHQ) is a manufacturer of precision plastic components for four key business segments: automotive, consumer/environment, healthcare, and tooling. The group has manufacturing facilities in countries around the world with a factory space of more than three million square feet.
Sunningdale has an indicative dividend yield of 6.2%, but investors should note that the business is facing challenges in its automotive sector thanks to the ongoing US-China trade war. The group reported a 10.3% year-on-year fall in revenue for Q2 2019 and also incurred a loss of S$1.1 million.
No. 3: Venture Corporation Ltd
Venture Corporation Limited (SGX: V03) is a global provider of technology solutions, products, and services. The group has more than 30 companies under its belt and employs over 12,000 people worldwide.
Venture’s indicative dividend yield was 6.1%, and the group reported flat revenue and net profit for H1 2019. With its electronics supply chain being affected by the trade wars, the group may continue to face stress on its order book, which will continue to weigh on its results.
No. 4: GP Industries Ltd
GP Industries Ltd (SGX: G20) is a manufacturing and marketing company involved in the development, manufacturing, and marketing of electronic and acoustic products. The group had an indicative dividend yield of around 6.1%.
GP Industries reported a weak Q1 2020 set of earnings, with revenue falling 4.6% year-on-year. Net profit attributable to shareholders tumbled 27.5% year-on-year to S$5.2 million.
No. 5: UMS Holdings Limited
UMS Holdings Limited (SGX: 558) provides equipment manufacturing and engineering services to Original Equipment Manufacturers (OEM) of semiconductor and related products. The group has production facilities in Singapore, Malaysia, and California (US).
UMS’s indicative dividend yield was 5.8%, but the business has been under pressure for the last few quarters. For H1 2019, revenue was down 19% year-on-year, while net profit plunged 42% year-on-year. UMS also slashed its quarterly dividend from S$0.01 to S$0.005 as a result of weaker prospects.