For investors, there are few things more satisfying than the sound of dividends dropping into your bank account.
After all, who wouldn’t enjoy sitting back while cash flows in?
Income-seeking investors liken a dividend flow to a tap that never turns off.
Some companies will, over time, even gradually raise their dividend pay-outs as their businesses grow.
Remember that dividends are like a gift that keeps giving.
You can choose to use the cash however you like. Spend it, save it, or even compound it to grow your wealth further.
The key is to invest in companies with a long growth runway, are well-managed and have a propensity to increase dividends.
Here are four dividend-paying stocks that I own and plan to hold for the rest of my life.
DBS Group Holdings Ltd (SGX: D05)
DBS is one of the three big banks in Singapore and offers a comprehensive range of banking services to both individuals and corporations.
For the first quarter of 2020, DBS reported a new high in trading income, hitting S$4.03 billion and up 13% year on year.
The COVID-19 pandemic, however, resulted in the bank taking on general allowances of S$0.7 billion as a pre-emptive measure.
Net profit, therefore, tumbled by 29% year on year to S$1.2 billion from S$1.65 billion a year ago.
However, DBS has kept its S$0.33 per share quarterly dividend constant from the fourth quarter of 2019.
If we annualised the dividend, we get a full-year dividend of S$1.32, translating to a dividend yield of around 6.4% at its last traded price of S$20.50.
In my view, the group is poised to ride the recovery in Asia once the pandemic has passed, and its digitalisation efforts are starting to bear fruit as it captures a larger slice of the market.
CEO Piyush Gupta has remarked that the bank should maintain its S$0.33 dividend for the second quarter, barring a significant deterioration in the economic outlook.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a pure-play data centre REIT with a portfolio consisting of 18 data centres as of 30 June 2020.
The portfolio spans 11 cities in a total of eight countries with a high occupancy rate of 96.1%.
With the pandemic forcing more people to shop online and work from home, internet traffic has jumped significantly in the last three months.
Many businesses have also been compelled to digitalise their operations to continue functioning amidst the lockdowns and movement restriction orders.
These shifts are expected to increase global mobile data traffic significantly. An estimate by Ericsson in June 2020 predicts a 31% annual increase from 2019 through to 2025.
For the first half of 2020, Keppel DC REIT reported a nearly 30% year on year rise in gross revenue, while net property income jumped by 32% year on year.
Distribution per unit (DPU) rose 13.6% year on year to S$0.04375, translating to a dividend yield of around 3%.
With more acquisitions in the pipeline, the REIT plans to continue growing its portfolio of assets and in turn, its DPU in the years ahead.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange.
Over the years, SGX has evolved into a multi-asset exchange that offers a wide range of securities, derivatives and options for investors to manage their portfolios.
To complement its business, the bourse operator has made a few opportunistic acquisitions.
For instance, Scientific Beta, a smart beta index firm, was acquired in January this year for EUR 186 million.
Last month, SGX acquired the remaining 80% stake in BidFX for US$128 million, expanding its reach into the global over-the-counter foreign exchange market.
As the group grows, it has been sharing its success in the form of dividends.
SGX pays out a quarterly dividend of S$0.075 for a full-year dividend of S$0.30. Its dividend yield stood at around 3.6%.
With these acquisitions boosting its growth, I believe SGX can maintain this dividend and possibly grow it further in future.
Raffles Medical Group Ltd (SGX: BSL)
Raffles Medical Group, or RMG, is an integrated healthcare provider that offers a comprehensive range of medical services ranging from primary to tertiary care.
The group recently reported a weak first half 2020 earnings, with revenue declining by 5.4% year on year and profit after tax plunging 41.6% year on year.
COVID-19 has led to the deferment in elective surgeries and reduced the number of medical tourists, resulting in the drop in revenue.
Meanwhile, RMG’s newly-opened Chongqing hospital had to operate with a smaller patient load due to the curtailment of movement in China during the period
Together with higher depreciation and interest charges (from a higher debt load for the construction of Raffles Hospital Shanghai), net profit took a significant hit.
Despite the setbacks, the group declared an interim dividend of S$0.005, unchanged from the year before.
Trailing 12-month dividend yield stands at around 2.7%.
Prospects look good for a recovery in the business as lockdowns ease, while Raffles Hospital Shanghai is slated to open soon.
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Disclaimer: Royston Yang owns shares in Keppel DC REIT, DBS Group Holdings Ltd, Singapore Exchange Limited and Raffles Medical Group.
