The earnings season has almost ended this round as May draws to a close.
Many companies have reported weaker financial numbers as they grapple with the twin challenges of high inflation and surging interest rates.
As profits dipped, some have also reduced their dividends in tandem.
During tough times, it’s good to lean on reliable blue-chip stocks that have weathered many a storm.
This round, several blue-chip stocks also managed to defy the odds and post an increase in their dividend payments.
We highlight three of these companies and assess if they can continue to raise their dividend payments moving forward.
Singtel (SGX: Z74)
Singtel is no stranger to most, being Singapore’s largest telecommunication company (telco).
The group recently reported a commendable set of earnings for its fiscal 2023 (FY2023) ending 31 March 2023.
Underlying revenue inched up 1.9% year on year while underlying net profit (excluding exceptional items) rose 6.8% year on year to S$2.1 billion.
The telco declared a final dividend of S$0.053 for FY2023, higher than the prior year’s S$0.048.
Looking ahead, Singtel should continue to benefit from the reopening of economies and resumption of air travel.
The group’s roaming revenue will receive a boost from the higher number of travellers but management did warn that the strong Singapore dollar may act as a headwind for FY2024.
Singtel will also carry on its capital recycling efforts to unlock more value for shareholders, just as FY2023 saw an additional S$0.05 in dividends being paid out from the group’s capital recycling initiatives.
Should these initiatives bear fruit in the future, investors could be looking at more special payouts.
Singtel also intends to improve margins for its core business and scale up growth areas such as NCS and its regional data centre business.
There is a good chance that FY2024 could see better financial numbers as the business shakes off its pandemic blues and welcomes a surge in volume from customers who are eager to explore the world again.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, owns a portfolio of 185 properties spread across eight countries.
The REIT’s total assets under management stood at S$12.8 billion as of 31 March 2023.
For FY2023, MLT reported a 7.7% year on year increase in revenue to S$730.6 million while net property income rose 7.2% year on year to S$634.8 million.
MLT’s distribution per unit (DPU) inched up 2.5% year on year to S$0.09011.
The logistics REIT has a history of relying on acquisitions to boost its DPU.
Just last month, the REIT manager announced a series of acquisitions totalling S$904.4 million to purchase eight properties in Japan, Australia, and South Korea.
As part of this transaction, MLT has another potential acquisition of two assets in China.
Historically, MLT has undertaken yield-accretive acquisitions and this one is no different.
Additionally, the REIT is also working on an ongoing asset enhancement initiative at 51 Benoi Road in Singapore.
Once completed in the first quarter of 2025, it will raise the total gross floor area of the property by around 2.3 times to 887,000 square feet.
Investors can feel confident that the REIT can continue to up its DPU barring unforeseen circumstances.
DBS Group (SGX: D05)
DBS is Singapore’s largest bank by market capitalisation.
The lender recently reported a sparkling set of earnings for its fiscal 2023’s first quarter (1Q 2023).
Net profit jumped 43% year on year to S$2.57 billion and the group’s quarterly dividend was raised from S$0.36 in 1Q 2022 to S$0.42 this quarter.
DBS has benefitted from the sharp rise in interest rates and the US Federal Reserve looks set to keep rates higher for longer to combat the inflation scourge.
Hence, the bank looks well-positioned to enjoy elevated levels of net interest income even as CEO Piyush Gupta projects 3% to 5% year on year loan growth for 2023.
What’s more, fee income is also expected to post a high-single-digit year on year growth as wealth management and investments recover and credit card fees are buoyed by an increase in overseas travel.
During DBS’s recent Investor Day, the bank disclosed that it has the capital headroom to support higher dividends in the future.
The lender believes that a sustainable baseline dividend increase is S$0.24 per year, implying that 2024’s dividend may be raised to S$1.92 from the current S$1.68.
If you’re looking to invest in 2023, our latest FREE report can guide you. It shows you how to find dividend stocks in SGX, and a nearly fool-proof way of building your portfolio. Many people love dividend investing, but few truly know how to profit from it consistently. Click the link here to download our new report and discover the secrets!
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of DBS Group.
