For income-seeking investors, 2020 is probably a year best forgotten.
Many companies, under pressure from the COVID-19 pandemic, had resorted to cutting their dividends or eliminating them.
Fortunately, economic conditions have improved in the first four months of this year with the rapid dissemination of the various vaccines.
Despite the tough conditions, some businesses have managed to do well.
These companies have a proven business model and a strong brand that enabled them to remain resilient.
Investors may be surprised to learn that these businesses have declared higher year on year dividends despite the general downturn.
Here are three stocks that recently raised their dividends and may continue to do so.
The Hour Glass (SGX: AGS)
The Hour Glass, or THG, is a leading luxury watch specialist that owns a total of 47 boutiques across 12 cities in the Asia-Pacific region.
The company’s network of multi-brand and standalone brand boutiques sell a wide variety of timepieces from brands such as Rolex, Patek Philippe, Hublot and Audemars Piguet.
Despite the pandemic, the group managed to weather the crisis by posting a solid set of financials for its fiscal year ended 31 March 2021 (FY2021).
Total revenue, which includes other income, remained flat year on year for FY2021 at S$751.8 million while total costs and expenses declined by 4% year on year to S$641.3 million.
THG also booked a S$10 million fair value loss on its investment properties. Despite the charge, the luxury watch company still managed to report an 8% year on year rise in net profit attributable to shareholders.
This result was possible due to both cost savings and a higher share of earnings from its associates.
The group had a sturdy balance sheet with S$247.8 million in cash and S$105.1 million in total debt.
Operating cash flow improved year on year from S$110.2 million a year ago to S$174.4 million, leading to THG chalking up free cash flow of S$162 million for FY2021.
The improved performance led to a doubling of the group’s final dividend from S$0.02 to S$0.04.
Back in November last year, THG had also declared its first-ever interim dividend of S$0.02.
Summing up both the interim and final dividends means that THG had tripled its FY2021 dividend to S$0.06 compared with S$0.02 in the prior year.
Michael Tay, group managing director of THG, attributed the strong performance to the building of healthy sales momentum in the second half of the fiscal year.
The group has sufficient resources to tide over any further challenges as the group believes that consumer sentiment may remain volatile in the near term.
LHN Limited (SGX: 41O)
LHN is a real estate management services group that is a specialist in space optimisation, helping to add value for both its landlords and tenants.
The group has three main business divisions: space optimisation, facilities management and logistics services.
For its fiscal 2021 half-year ended 31 March 2021 (1H2021), LHN reported a 25% year on year increase in revenue to S$64.5 million.
The jump was mainly contributed by the facilities management division which saw its revenue more than tripling year on year to S$31.6 million due to short-term contracts for dormitories.
Net profit after tax surged more than four-fold from S$3.5 million to S$15.3 million due to lower fair value losses on investment properties and higher other income.
LHN’s cash flow generation remains healthy, with around S$19.2 million in free cash flow generated in 1H2021.
Because of the good results, the group tripled its interim dividend from S$0.0025 to S$0.0075.
LHN continues to build up its space optimisation business by entering into options to purchase properties in Amber Road, Beach Road and Geylang Road to boost its offerings to tenants.
Kimly Limited (SGX: 1D0)
Kimly is one of the largest traditional coffee shop operators in Singapore.
The group operates and manages 83 food outlets and 137 food stalls along with a central kitchen that supplies sauces, marinades and semi-finished food products.
For 1H2021, Kimly’s revenue increased by 14.2% year on year to S$122.6 million, driven by higher revenue contribution from existing food stalls and an increase in food delivery sales.
Net profit attributable to shareholders doubled year on year from S$10.5 million to S$21.7 million.
Kimly doubled its interim dividend from S$0.0028 to S$0.0056 to reward shareholders as the group also has a healthy net cash position.
The group is powering on with its growth plans by recently acquiring a 75% stake in the Tenderfresh Business for S$54 million.
This acquisition helps to diversify Kimly’s revenue streams and adds a new food division to the group’s business.
Can’t decide between growth or income? Now, you can enjoy the best of both worlds with our newest FREE report, 8 Singapore Stocks for Your Retirement Portfolio. You’ll discover 8 SGX stocks we believe can offer you strong capital growth and juicy dividend payouts. Click here to download the report.
Disclaimer: Royston Yang does not own shares in any of the companies mentioned.