The Smart Investor
    Facebook Instagram
    Monday, January 30
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Dividend Stocks»3 Reasons VICOM Limited Could be the Perfect Retirement Stock
    Dividend Stocks

    3 Reasons VICOM Limited Could be the Perfect Retirement Stock

    The testing and inspection specialist may seem boring, but here’s why you should not overlook this gem.
    Royston YangBy Royston YangJune 24, 20214 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Man Inspecting Car Engine
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    Our golden years should be a time to recover from the stress of a hectic working life. 

    However, to do so, we need to ensure that we have sufficient passive income to pay for our daily needs. 

    Building a portfolio of stocks that pay out regular dividends is a great way to achieve this.

    With that said, here are three solid reasons why I believe VICOM Limited (SGX: WJP) could be a candidate as a perfect retirement stock.

    A recession-proof business

    VICOM’s business is effectively recession-proof. 

    The company operates seven of the nine vehicle inspection centres in Singapore. 

    As all cars older than three years require mandatory inspections, VICOM’s car inspection business is backed by regulatory requirements that are unlikely to change any time soon.

    It also is by far the biggest player in the vehicle inspection space. 

    Last year, it inspected 75.2% of the vehicles that were due for inspection that year, amounting to close to 500,000 vehicles.

    In addition, all private mobility devices (PMDs) also need to undergo inspection starting from September last year.

    Yet another new source of revenue for VICOM is the requirement for all licensed street and ride-hail service providers with a fleet of more than 800 vehicles to undergo mandatory inspection.

    This initiative commenced in April this year.

    VICOM’s track record of consistent earnings in the past is a testament to its resilient business model.

    Willingness to dish out higher dividends

    Retirees can also rest easy that the company is willing to pay out most of its earnings as dividends. 

    The group has steadily increased its dividend payout ratio in the last 10 years as it seeks to reward shareholders with higher dividends.

    In addition, VICOM has a large stockpile of cash. 

    As of 31 March 2021, VICOM had S$94.8 million sitting in the coffers. 

    Despite the pandemic, it also generated S$2.2 million in free cash flow in the first quarter of 2021.

    With its asset-light model and healthy cash balance, the group is likely to continue returning part of this cash to shareholders in the future.

    Decent yield

    Crucially, VICOM also sports a fairly decent dividend yield. 

    With the company looking to pay out close to 100% of its earnings back to shareholders, investors can look forward to a fairly decent dividend yield.

    Last year was an exceptional one for VICOM as it had to contend with tough economic conditions brought about by the pandemic.

    Still, the inspection giant managed to pay out a full-year dividend of S$0.0622. At the closing price of S$2.06, this translates to a fair respectable yield of 3%.

    On top of that, there is also a chance that the company will pay out a special dividend like it did back in 2018, once the downturn has passed.

    Get Smart: A slow grower with dependable dividends

    VICOM does have its limitations though. 

    For one, Singapore is moving to a car-lite society, with the government targeting zero private car growth. 

    This regulation will limit VICOM’s long-term growth prospects.

    However, even with limited growth in sight, retirees may still want to consider VICOM as a potential investment. 

    Besides its decent yield, VICOM is recession-resistant and is largely immune to currency risks as it operates mainly in Singapore. 

    It also has a robust balance sheet. 

    All these attributes make it a great choice for yield-hungry retirees looking for reliable and consistent dividends.

    SPECIAL FREE REPORT! 10 Growth Stocks To Supercharge Your Portfolio! We cover 3 unstoppable growth trends and the 10 stocks that will ride them in 2021 and beyond! CLICK HERE to download for FREE now!

    Don’t forget to follow us on Facebook and Telegram for some of our latest free content!

    Disclaimer: Royston Yang owns shares of VICOM Limited.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Data Centre (Sunlight)

    5 Key Takeaways from Mapletree Industrial Trust’s Latest Business Update

    January 30, 2023
    Screen Showing Share Prices

    Get Smart: Why You Shouldn’t Focus on Share Prices Alone

    January 29, 2023

    Top Stock Market Highlights of the Week: Frasers Property Limited, Frasers Centrepoint Trust and China’s Reopening

    January 28, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.