Early in December, several banks announced major cuts to interest rates on savings accounts.
This comes on the back of interest rate reductions that occurred earlier this year, as the economic impact brought by the COVID-19 pandemic put pressure on banks’ balance sheets.
With government bonds also offering less-than-attractive yields, more investors have turned their sights to the equities markets to achieve a better risk-reward return on their money.
Newer, risk-averse investors may be looking to park their extra cash in reliable companies that pay a steady stream of dividends, but still offer a decent return.
Here are four companies that investors who are looking for stable dividends can consider for their investment portfolio.
DBS Group Holdings Ltd (SGX: D05)
A ubiquitous name to Singaporeans, DBS was named Asia’s Best Bank in 2020 by Euromoney, as well as Best Bank of The Year by Global Finance.
In its latest earnings report, the bank reported a profit before allowances of S$6.75 billion for the first nine months of 2020, a 5% improvement from the corresponding period a year before.
DBS CEO Piyush Gupta also outlined his expectations for a strong economic rebound in Asia in 2021.
Strong growth in fee income is expected to partly offset the impact of lower net interest margins, while S$2.5 billion has already been set aside as allowances for bad loans.
Moreover, DBS has been investing in its digital transformation since 2014, a strategy that paid off during the COVID-19 pandemic.
The bank also announced plans to further scale up its digitalisation efforts to improve efficiency at its physical branches, which bodes well for the future of the bank’s operations.
At the current price of S$25.02, DBS shares currently offer an annualised forward dividend yield of around 2.9%.
Venture Corporation Ltd (SGX: V03)
Venture Corporation Ltd is a provider of technology products and services for a wide range of international clients.
The group comprises over 30 companies that employ more than 12,000 employees worldwide.
In its third-quarter earnings report, Venture reported a quarter-on-quarter revenue growth of 18.2%, with net profit growing at 14.2% over the same period.
This improved performance accompanied the group’s interim dividend increase to S$0.25 from S$0.20 a year before.
If the group maintains its final dividend at the previous year’s $0.50, it would give Venture’s shares a dividend yield of 4.0% at the share price of S$18.93.
The group’s decent showing amidst the COVID-19 pandemic demonstrates the resilience of its underlying business and proves its mettle as a reliable dividend-paying stock.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange, or SGX, is the only stock exchange in Singapore, offering a multi-asset platform for equity, fixed income and derivatives markets.
SGX broke records in 2020, raking in S$1 billion in revenue, the highest in any financial year since its listing in 2000.
Net profit also grew 20.7% year on year in the fiscal year 2020, from S$391 million to S$472 million, while operating margins widened slightly to 54%.
The better showing was down to expanded product range and platform capabilities, as well as increased participation from retail investors that increased global demand for its services.
The company will continue seeking out new partnerships and collaborations in order to meet the diverse services demanded by investors.
SGX paid dividends of S$0.305 a share in FY2020, an increase of S$0.005 from FY2019 and the highest since 2009.
The bourse operator also mentioned that it expects to pay a dividend of S$0.32 going forward, and its shares offer a 3.5% dividend yield at the share price of S$9.04.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is a global technology, defence and engineering group that delivers innovative solutions for both governmental and commercial clients in over 100 countries.
STE’s impressive track record and wide-ranging expertise have fortified it as a towering bulwark of a business.
The group secured more than S$1.7 billion worth of new orders in the third quarter of 2020, bringing its total order book to S$15.8 billion.
Revenues for the year are expected to remain somewhat resilient, with STE projecting a 10% year-on-year drop despite the pandemic.
Back in November, STE also announced a major rejigging of its organizational structure, with a new leadership structure that should help STE better focus its attention on its key business clusters.
STE has paid a constant dividend of S$0.15 every year since 2015, which represents a dividend yield of 3.9% at the current share price of S$3.86.
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Disclosure: Herman Ng does not own shares in any of the companies mentioned.
