Dividends are an income investor’s best friend.
Not only do they provide a steady stream of passive income, but they also constitute a tangible return on your investment.
Fortunately, many stocks listed on the local bourse pay out a dividend, including REITs and blue-chip companies.
However, you may be more interested in companies that not only dish out a dividend but can also increase this dividend over time.
These higher dividends will not only help to buffer against inflation but can also set you up nicely for a comfortable retirement in the future.
Here are four Singapore stocks that could be in line to raise their dividends in due course.
Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)
Yangzijiang Shipbuilding, or YZJ, is one of China’s largest private shipbuilding companies.
The group has four shipyards in Jiangsu province and manufactures a broad range of commercial vessels including large containerships, bulk carriers, and LNG carriers.
YZJ reported a stellar set of earnings for 2022, with revenue jumping 37% year on year to RMB 20.7 billion.
Net profit climbed 31% year on year to RMB 2.6 billion, and the business paid out a total dividend of S$0.05 for the year.
Back then, the shipbuilder reported an order book of US$11 billion as of 23 February.
Late last month, YZJ announced that it had successfully snagged new orders for 37 vessels in April and June, to be delivered between 2025 and 2027.
For the year-to-date, the group has secured total new orders for 69 vessels worth around US$5.6 billion, taking its order book to a new record high of US$14.6 billion.
With YZJ only paying out 36% of its net profit as dividends last year, there is room for the group to further increase its dividend payment should net profit hit a new high for 2023.
iFAST Corporation Limited (SGX: AIY)
iFAST is a financial technology (fintech) group that operates a platform for the buying and selling of unit trusts, equities, and bonds.
The group reported a downbeat set of earnings for its fiscal 2023’s first quarter (1Q 2023), with net profit plunging 48.1% year on year to S$3 million.
iFAST did, however, maintain its interim dividend of S$0.01 for the quarter despite the weaker earnings.
Going forward, the fintech group expects to enjoy a period of high growth in revenue and profitability between this year and 2025 as it ramps up the progress of its Hong Kong ePension division.
If the project proceeds smoothly, iFAST may see its Hong Kong division’s profits multiply, allowing the business to increase its dividend payments.
Elsewhere, the group has also launched ORSO Pension Services, a one-stop digital pension solution for Hong Kong’s Occupational Retirement Schemes Ordinance (ORSO) Pension schemes.
iFAST expects this launch to make a material positive contribution to its revenue and profits from 1Q 2025.
Nordic Group (SGX: MR7)
Nordic Group provides a wide range of services such as maintenance, repair and overhaul, vessel maintenance, and systems engineering for the marine, offshore oil and gas, petrochemical, pharmaceutical, and semiconductor industries.
The group released its 1Q 2023 business update that saw revenue and net profit continue their climb.
Revenue increased by 15% year on year to S$46.2 million while net profit improved by 11% year on year to S$5.8 million.
Nordic Group’s order book stood at S$205.2 million as of 31 March 2023.
Last year saw the group pay out a total of S$0.02068 in dividends, up nearly 20% year on year and the highest in 13 years.
Should net profit continue to climb, there is a good chance Nordic Group can pay out an even better dividend than in 2022.
Food Empire Holdings Ltd (SGX: F03)
Food Empire is a food and beverage manufacturer and distributor with a portfolio of instant beverages and snack foods.
The group operates eight manufacturing facilities in five countries and has 23 offices worldwide. Some of its proprietary brands include MacCoffee, CafePHO, Hillway, and Cracks.
For its 1Q 2023 business update, Food Empire reported a 24.2% year on year improvement in revenue to US$102.6 million.
Gross profit jumped by 43.2% year on year as gross profit margin expanded 4.7 percentage points from 30.9% to 35.6%.
Net profit surged by 50.9% year on year to US$13.8 million.
This set of earnings was a good start to 2023 and if the food and beverage manufacturer can keep up the momentum, it could see a significantly higher net profit for this year.
The group paid out a first and final dividend of S$0.044 for 2022, doubled the S$0.022 that it paid in 2021.
Should net profit improve once again, Food Empire could dish out a higher dividend in line with the improvement in its earnings.
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Disclosure: Royston Yang owns shares of iFAST Corporation Limited.
