I don’t know about you, but my eyes always light up when I receive a dividend.
This source of passive income provides me with an additional layer of income and is also fuss-free as the money is credited directly into my bank account.
The great thing about Singapore’s stock market is that it has a wide range of REITs and dividend-paying companies that offer you a breadth of choices for your investment portfolio.
In an era of high inflation, it’s important to look not just for stocks that pay out dividends, but also those that can increase their dividends over time.
Companies that can do so usually have strong franchises and are also growing their profits and cash flows at a steady clip.
Here are three companies that demonstrate room to increase their dividends when they next report their earnings.
The Hour Glass Limited (SGX: AGS)
The Hour Glass, or THG, is a luxury watch retailer that operates 50 boutiques in the Asia-Pacific region.
The group markets famous Swiss watch brands such as Rolex, Patek Phillipe, Omega, and Hublot.
THG reported an encouraging set of results for its fiscal 2023’s first half (1H FY2023) ending 30 September 2022.
Revenue climbed 18% year on year to S$562.7 million while net profit jumped 35% year on year to S$84.6 million.
The luxury retailer paid out an interim dividend of S$0.02, similar to a year ago.
Coupled with its final dividend of S$0.06 for FY2022, the total trailing 12-month dividend came up to S$0.08.
THG’s payout ratio based on its trailing 12-month earnings per share (EPS) of S$0.2597 stands at just 31%, giving the retailer room for further dividend increases.
Swiss watch exports began the year on an encouraging note.
For January 2023, total exports came in at 1.1 million units, up 3.1% year on year.
The value of these watch exports jumped 8.6% year on year to CHF 1.86 billion.
These numbers bode well for THG as it indicates that the group can continue to capture higher business volumes for FY2023 and beyond.
AEM Holdings Ltd (SGX: AWX)
AEM provides comprehensive semiconductor and electronic test solutions.
The group has manufacturing plants in countries such as Singapore, Malaysia, Finland, and the US along with a global network of sales offices and distributors.
AEM reported a record-high revenue and profit before tax for the first nine months of 2022 (9M2022).
Revenue surged by 120.6% year on year to S$746.6 million while net profit soared by 117.6% year on year to S$115.3 million.
The test specialist paid out an interim dividend of S$0.067 for 1H 2022 and a final dividend of S$0.05 for 2021, bringing the trailing 12-month dividend to S$0.117.
The group’s trailing 12-month EPS clocked in at S$0.4948. implying that it was paying out just under 24% of its net profit as dividends.
With AEM poised to report strong results for 2022, we are confident that the group can raise its final dividend above the S$0.05 that was paid out in 2021.
Raffles Medical Group (SGX: BSL)
Raffles Medical Group, or RMG, is an integrated healthcare player that offers a comprehensive range of healthcare services from primary to tertiary care.
RMG’s network comprises three tertiary hospitals and more than 100 multi-disciplinary clinics and the group employs more than 2,700 staff.
The integrated healthcare specialist reported a strong set of results for 9M 2022, with revenue rising 9.6% year on year to S$581.8 million and net profit surging by 57.3% year on year to S$98.2 million.
The better performance came about as Singapore opens up its borders and welcomes more foreign patients seeking treatment at RMG’s hospitals.
The group paid out a total dividend of S$0.028 in 2021.
RMG’s trailing 12-month EPS came in at S$0.0645, indicating that the group is paying out just 43.4% of its earnings as dividends.
With more foreign tourists flowing into Singapore, along with RMG working closely with the Singapore government on PCR tests and vaccinations, the integrated healthcare player will likely report a strong set of earnings for 2022.
As the payout ratio is less than 50%, there is room for the total dividend to increase when RMG reports its results on the morning of 27 February.
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Disclosure: Royston Yang owns shares of Raffles Medical Group.