How To Supplement Your Income With 4 Companies That Pay Quarterly Dividends: DBS; iFAST; SGX; ST Engineering

Singapore’s key core inflation measure, which excludes private transport and accommodation, rose 4.8% in July from a year ago, marking the highest level in almost 14 years.

Amid the highly inflationary environment and jittery economic conditions, people might be looking around for ways to make additional money to cover up for the increased household expenses.

In this week’s edition of 4 Stocks This Week, we will look at a handful of Singapore-listed companies that are dishing out dividends each quarter (or around every three months or so). Investors may want to use the companies presented here to research further for their own portfolios and decide if it makes sense to own them for the long term.

DBS Group Holdings Ltd (SGX: D05)

Singapore’s largest bank, DBS Group (SGX: D05), is the only bank that pays quarterly dividends. In 2019, DBS restarted paying dividends every three months after a 10-year break.

In its first-quarter earnings report in 2019, the bank said that it would give out dividends every quarter to provide “shareholders with more regular income streams”, instead of biannually, as was the case from 2011 to 2018.

Over the past many decades, total dividends from DBS have grown from 26 cents per share in 2001 to 120 cents per share in 2021. That translates to a compound annual growth rate (CAGR) of close to 8%.

DBS is currently paying a quarterly dividend of 36 cents per share, which annualises to 144 cents per share.

Source: DBS earnings presentation

In July 2020, DBS and the other local banks had to curb their dividend payout after the Monetary Authority of Singapore (MAS) called on the financial institutions to cap their total dividends per share for 2020 at 60% of 2019’s dividends.

If not for the cap, DBS could have paid out a total dividend of 132 cents per share for 2020 (or 33 cents each quarter).

The MAS dividend cap was lifted in July 2021, and DBS resumed its dividend payout of 33 cents per share for its 2021 second and third quarters, before increasing the payout to 36 cents in the 2021 fourth-quarter, as seen in the chart above.

DBS has a dividend policy of paying sustainable dividends that rise progressively with its earnings, so shareholders may expect its dividend to grow further as long as the bank grows its bottom line.

For its latest financial quarter ended 30 June 2022, net profit rose 7% year-on-year S$1.82 billion, the second highest in history, with net interest income increasing by 17%. DBS said that business momentum was broadly sustained in the first six months of the year while net interest margin rose after three years of decline.

At DBS’ share price of S$33.39, it has a price-to-book ratio of 1.5x and a dividend yield of 4.2%.

iFAST Corporation (SGX: AIY)

iFAST (SGXL AIY) is an Internet-based investment products distribution platform that provides a comprehensive range of investment products and services to both corporate clients and retail investors.

In the second quarter of 2022, the company saw its net revenue grow 13.3% year-on-year to S$29.9 million. However, it went into a net loss of S$2.7 million on the back of a one-time impairment loss for its India business.

Excluding the one-off impairment allowance, iFAST would have posted a profit of S$2.5 million, down 64% year-on-year from S$7.0 million last year.

iFAST declared an interim dividend of 1.10 cents per share for the latest quarter, unchanged from the previous year.

Over the past five years, iFAST has increased its total dividend from 3.01 cents in 2017 to 4.80 cents per share in 2021, which represents an annual dividend growth of 12%.

Looking ahead, iFAST said that between 2023 and 2025, it expects to see a strong increase in its profitability as its new e-pension division in Hong Kong becomes a strong contributor. The Hong Kong e-pension project will start contributing to the company’s business from the third quarter of 2023 onwards.

In January 2021, iFAST announced that PCCW was awarded the contract to design, build and operate Hong Kong’s eMPF platform. The MPF (Mandatory Provident Fund) is the city’s pension system and iFAST is the prime subcontractor for PCCW.

At a share price of S$4.43, iFAST has a price-to-earnings (P/E) ratio of 72x and a dividend yield of 1.1%.

Singapore Exchange Limited (SGX: S68)

Singapore’s only stock market operator, Singapore Exchange (SGX), declared a total dividend of 32.0 Singapore cents per share for its latest financial year that ended on 30 June 2022 (FY2022).

The company said previously that it aims “to pay a sustainable and growing dividend over time, consistent with the company’s long-term growth prospects”.

It added that the policy provides SGX with the flexibility to balance its dividend payments with the need to retain cash to support business growth.

Currently, SGX pays a quarterly dividend of 8.0 cents per share.

The following chart shows how SGX’s dividends have grown over the past many years:

Source: SGX investor relations website

SGX said that FY2022 was a challenging year for financial assets. However, its multi-asset strategy paid off and it managed to deliver its highest revenue of S$1.1 billion since its listing. The good performance was supported by broad-based growth in derivatives volume across equities, currencies and commodities asset classes.

At SGX’s share price of S$9.55, it has a P/E ratio of 23x and a dividend yield of 3.4%.

Singapore Technologies Engineering Ltd (SGX: S63)

ST Engineering (SGX: S63) is an integrated defence and engineering group that many Singaporean males will be familiar with. During our National Service stint, we would have come across or handled at least one piece of equipment or weapon made by ST Engineering. Rifles such as the SAR 21 (Singapore Assault Rifle – 21st Century) are the brainchild of the engineering conglomerate.

ST Engineering has been consistently paying a dividend of 15.0 Singapore cents per share for the past many years, with the dividend paid out on a half-yearly basis.

But that has changed since the start of this year. ST Engineering is now declaring dividends every quarter instead of twice a year.

In its 2021 annual report, it said:

“For FY2022, the plan is for dividends to be paid four times a year, at 4.0 cents per share each time, resulting in total dividends of 16.0 cents per share payable for FY2022 (compared to the 15.0 cents per share paid or payable for FY2021).”

ST Engineering added that the change from declaring dividends semi-annually to quarterly will provide shareholders with more frequent income streams.

The dividends for FY2022 are expected to be paid in June 2022, September 2022, December 2022, and May 2023.

For FY2021, ST Engineering’s revenue rose 7.5% year-on-year to S$7.7 billion with growth from all its business segments – commercial aerospace (CA); urban solutions and satcom (USS); and defence and public security, and others (DPS).

Meanwhile, ST Engineering’s net profit grew 9% to S$571 million. The group’s order book stood at S$19.3 billion at the end of 2021, and S$6.6 billion of the order book amount is expected to be delivered in this year.

Source: ST Engineering earnings presentation

At a share price of S$3.70, ST Engineering has a P/E ratio of 21x and a dividend yield of 4.9%.

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