Best Dividend Stocks to Look at in Singapore for 2019
Singapore is one of the prime locations for long term investors who look out for equities with a favourable dividend payout. Notably, long term investors focus on stocks that have a higher return on equity (ROE). However, it is also true that the growth rate of the dividend is a huge factor that influences investment patterns.
Before we delve deep into the most favourable dividend stocks for 2019, one should appreciate the following things. First, dividend stocks are most appealing to long term investors. Second, investors in the dividend stocks mainly focus on the ROE of the stocks. Lastly, the rate of growth of the dividend payout greatly determines whether one will invest in the stock or not.
Further, investors understand that good stock is one that can sustain its dividend payout for a long time. It is not uncommon to find today’s hottest dividend stock to be tomorrow’s worst performer. Notably, a good stock pays out less than 100% in the dividend payout ratio. As such, the firm can maintain the payout at least for five years and above. In light of this, this article will highlight the best dividend stocks for 2019 based on the factors.
ComfortDelGro Corporation Limited
ComfortDelGro is one of the most important dividend stocks listed on Singapore Exchange Limited (SGX). The company is a land transport conglomerate that ferries people around Singapore in buses. Further, the firm provides services related to the evaluation of motor vehicles, insurance, broking, and even vehicle inspection.
When it comes to dividend payout, the firm stands out among the best performing not only in Singapore but globally. Notably, the dividend yield for ComfortDelGro has grown consistently since 2014. At the time, the firm gave out SGD 0.083 which represented a yield equal to 3.33%. In 2018, the dividend payout amounted to $ 0.104, during the August payout, and which represents an 80.59% dividend ratio.
Interestingly, ComfortDelGro ranked as the second-best dividend stock in Singapore in 2017 according to the world ranking of global dividend stocks. According to Singapore’s Ministry of Trade and Industry (MTI), the transportation sector grew 1.3% year-on-year in Q2 2018. Although this was a contraction from last quarter’s 2.7%, the overall outlook is positive.
Therefore, it is possible that the sector could expand further this year, especially with the introduction of an electric vehicle. In that spirit, investors should expect the firm to continue growing regarding dividend payouts.
Jardine Matheson Holdings Limited
Founded in 1832, Jardine Matheson is one of the oldest companies listed on the SGX. Also, the company has a wide-ranging network of subsidiaries that transcend almost all sectors of the Singaporean economy. Jardine Matheson has operations in the motor vehicle industry, home furnishings, property investment construction and so many more. Virtually, the firm’s business strategy ensures that it cushions its investors from the shocks from a single sector of the economy.
More breathtaking is the fact that the firm has consistently grown its dividend payouts for the last five years. In 2017, the firm paid stockholders 160 cents USD per share and which represented a 7% growth from FY2016. For that year, the dividend yield amounted to 2.6%. Being a ubiquitous player in the economy, it is safe to say that the firm has sufficient cushion to provide a positive dividend yield in the years ahead.
As per MTI, the Singapore economy witnessed positive growth in the domestic-oriented services for the year 2018. Notably, consumer sentiments picked up, and sectors like food services and retail experienced a positive impact. Further, the Ministry revealed that the labour market improved during the year. In light of this, the sectors are likely to experience further growth during this year as they remain resilient to the ongoing global trade tensions. As such, investors should expect the dividend payout to continue being generous.
Hutchison Port Holdings Trust
Hutchison is one of the highest dividend payers in Singapore. Interestingly, the average dividend yield for the last eight years is over 15%. Notably, the firm had the lowest dividend yield in 2011 just after incorporation. The following year, Hutchison stockholders went on to receive the highest dividend yield of 32.57%.
Hutchison manages deep-water container ports and has grown its clout since 2011. However, 2018 was a challenging year where the firm posted disappointing numbers in revenue. Due to the weak revenue, the dividend yield has dropped for two consecutive years. Notably, the drop could be attributable to the slowing Chinese economy and the increasing turbulence in global trade.
Nevertheless, the firm comes on top concerning distribution yield. Notably, the distribution yield by the end of 2018 was 9.6%. Interestingly, this is after Hutchison cut the distribution per unit in the year to 24.4%. In 2017, the company revised downward the distribution yield by 20%. As such, this is a reason for investors to treat the stock with a lot of caution.
Ascendas Real Estate Investment Trust
Ascendas is among the few Real Estate Investment Trusts (REITs) whose fortunes are ascendant within the East Asian and Australian regions. Notably, the firm manages prime properties in the region and where most of them are industrial.
As per the Ministry of Trade and Industry, the manufacturing sector in Singapore was robust for last year. Notably, Q2FY2018 saw the sector grow 10.2% year-on-year compared to 10.8% in Q1FY2018. Interestingly, there is a likelihood of the industry grow even further for this year as manufacturers ditch mainland China. Subsequently, this influx will increase the demand for industrial real estate, an area Ascendas has expertise. As such, one would expect the company to announce positive figures in revenue later this year.
What this means is that Ascendas is in an excellent position to raise its dividend yield as well as the dividend distribution per unit (DPU). Interestingly, the firm has the second highest DPU in the market at 6.2%, and it has been on the rise lately. During the FY2017/2018, the DPU grew by 1.55% which compares dismally to 2.5% for FY2016/2017. Nonetheless, the firm is in a good position to beat those figures.