The Singapore stock market is popular among income investors as it contains many dividend-paying stocks, including the three big local banks.
Amid the macroeconomic headwinds, investors might be looking to invest in companies that can sustain their businesses, at the very least. It’s a bonus if those stocks can increase their dividends as well.
In this latest edition of 4 Stocks This Week, we explore 4 Singapore dividend companies that investors can research further into to buy for their stock portfolio.
HRnetGroup Ltd (SGX: CHZ)
If you have ever worked in temporary jobs during your schooling days, you would have probably come across HRnetGroup Ltd (SGX: CHZ). The company is one of the largest recruitment firms in Asia-Pacific and is the owner of Recruit Express, a well-known recruitment company in Singapore.
It also owns many other brands such as RecruitLegal, PeopleSearch, and HRnetOne. Currently, HRnetGroup has a total of 12 brands operating in 14 Asian cities.
HRnetGroup operates two main business segments, namely, professional recruitment (PR) and flexible staffing (FS).
The professional recruitment business is involved in sourcing and selecting talent to be employed by its clients. Meanwhile, the flexible staffing business is about supplying manpower based on clients’ demand.
In 2021, around 83% of HRnetGroup’s total revenue of S$590.5 million came from its flexible staffing business. For the first half of 2022, HRnetGroup’s revenue grew 14.2% year-on-year to S$314.2 million while its underlying net profit rose 36.2% to S$42.6 million. The strong growth was due to contributions from both its business segments.
HRnetGroup also enjoys a healthy balance sheet. As of 30 June 2022, it had S$312.7 million in total cash balance with zero bank borrowings.
With its operating cash flow increasing over 750% year-on-year and after deducting for minimal capital expenditure, HRnetGroup’s free cash flow for the 2022 first-half stood at S$33.1 million.
This allowed HRnetGroup to declare an interim dividend for the first time of 2.13 Singapore cents per share.
Source: HRnetGroup earnings presentation
The company also has a share buyback program to repurchase shares from the market when its stock price is undervalued. It has been consistently buying back shares from the open market ever since.
As for its outlook, HRnetGroup’s chief corporate officer and executive director, Adeline Sim, said:
“Whilst the macro environment for 2H may be uncertain with inflationary-led fears of a recession, we are inclined to believe that the global “battle for talent” is a longer-term trend that will transcend fluctuations of the market. Typically we deliver growth above GDP growth rates as we have the benefit of quickly maneuvering to work on pockets of growth opportunities within our sector specializations.”
At HRnetGroup’s share price of S$0.805, it’s trading at a price-to-earnings (P/E) ratio of 12.6x and a dividend yield of 7.6%.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings) Ltd (SGX: 5DD) is involved in the designing, manufacturing, and marketing of consumables and precision tools that are used in the semiconductor industry.
The company has been consistently paying dividends over the years. Since its listing in 2003, Micro-Mechanics has dished out a total dividend of S$1.139 per share to its shareholders.
Source: Micro-Mechanics (Holdings) Ltd FY2022 earnings presentation
Over a shorter time frame, since FY2017 (financial year ended 30 June 2017), it has increased its dividend per share by almost 12% annually, from 8.0 cents to 14.0 cents in FY2022.
The dividend growth was fuelled by strong revenue increase over the last six financial years, with FY2022 posting record revenue for the group, as shown by the chart below:
Source: Micro-Mechanics (Holdings) Ltd FY2022 earnings presentation
That said, for the first quarter of FY2023, Micro-Mechanics’ revenue fell by 1.3% year-on-year to S$20.2 million while its net profit tumbled 14.6% to S$4.2 million. This reflects the moderation in the growth of the global semiconductor market since the middle of 2022.
However, over the longer term, global chip sales could double to nearly US$1 trillion by 2030 from about US$450 billion in 2020, according to VLSI Research.
In FY2021, Micro-Mechanics predicted the total addressable market for parts and tools used in critical chip-assembly and wafer-fabrication processes to be over US$500 million. With revenue of just around US$83 million in FY2022, the company has plenty of opportunities to grow its business.
Micro-Mechanics is well-positioned to take advantage of the increasing use of chips in our everyday lives, from smartphones to driverless cars of the future.
At Micro-Mechanics’ share price of S$2.58, it has a P/E ratio of 18.8x and a dividend yield of 5.4%.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange (SGX) (SGX: S68)doesn’t need much introduction since it’s the only stock market operator in our country.
Apart from allowing investors to buy and sell shares, SGX also operates fixed-income, currency and commodity markets.
SGX has three main business divisions, and they are:
- Fixed Income, Currencies and Commodities (FICC)
- Equities
- Data, Connectivity and Indices (DCI)
Pictorially, the following is how SGX’s FY2022 (financial year ended 30 June 2022) revenue can be broken down:
Source: Singapore Exchange FY2022 annual report
If you have been a long-term shareholder of SGX, you would be seeing steady increases in dividends over the years.
Over the past many years, SGX has rewarded its shareholders with increasing dividends. In FY2009, it dished out 26 cents per share in dividends, and this has grown consistently to 32 cents per share in FY2022.
From the fourth quarter of FY2020, SGX said it will pay a quarterly dividend of 8.0 cents per share. It added:
“We aim to pay a sustainable and growing dividend over time, consistent with the company’s long-term growth prospects. The new policy will provide flexibility for SGX to balance its dividend payments with the need to retain earnings to support growth. Dividends will be paid on a quarterly basis and will be decided by the board.”
At SGX’s share price of S$9.26, it sports a P/E ratio of around 23x and a dividend yield of 3.5%.
Singapore Paincare Holdings Ltd (SGX: FRQ)
Listed in July 2020, Singapore Paincare (SGX: FRQ) is a medical services group with a focus on treating and managing chronic and acute pain. The healthcare provider currently has 10 general practitioner clinics, three specialists clinics, two physiotherapy centres, one traditional Chinese medicine (TCM) clinic, and two health screening facilities.
Since Singapore Paincare is a provider of essential medical services, it was less impacted during the COVID-19 pandemic as compared to those in the service and retail sectors.
In FY2022 (financial year ended 30 June 2022), it posted a record revenue of S$18.8 million, up 70.9% year-on-year while its net profit grew 77.3% to S$3.9 million, also an all-time high.
The company said that, during the year, there was an increase in revenue contribution from its GP clinics as it participated in Singapore’s nationwide COVID-19 vaccination programme. Also, revenue contribution from specialists grew due to an increase in medical consultations after the full opening of Singapore’s borders in April last year.
New revenue contributions from the acquisition of Centre for Screening & Surgery Pte Ltd (CSS) in February 2022 and the establishment of a new TCM arm also led to growth. On the back of strong financial performance in FY2022, the company declared a final dividend of 1.20 Singapore cents per share, up 60% from 0.75 Singapore cents per share a year ago.
Singapore Paincare also remained in a strong financial position with a total cash balance of S$15.2 million, as of 30 June 2022.
At a share price of S$0.21, Singapore Paincare has a P/E ratio of 9.7x and a dividend yield of 5.7%.
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The post 4 SGX Dividend-Paying Stocks For Your Portfolio: HRnetGroup; Micro-Mechanics; SGX; Singapore Paincare appeared first on DollarsAndSense.sg.
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