Dividends are a great source of passive income that can help you pay for your expenses when you retire.
When it comes to searching for suitable dividend-paying stocks, income investors should look for businesses with strong competitive moats that generate healthy free cash flows.
It is also a good idea to scour the investment landscape for companies that possess catalysts or are riding on sustainable trends.
Here are four interesting dividend-paying stocks that I am considering adding to my portfolio if I had S$10,000 to spare.
Sheng Siong (SGX: OV8)
Sheng Siong is a supermarket operator with 73 outlets across Singapore serving a wide assortment of live and fresh produce, general merchandise, and essential household products.
The group continued to report strong results for the first half of 2024 (1H 2024).
Revenue increased by 3.4% year on year to S$714.2 million with gross profit improving by 4.8% year on year to S$215 million.
Sheng Siong’s gross margin continued its upward climb, touching 30.1% from 29.7% a year ago.
The retailer managed to increase its gross margin every year without fail since 2020.
Net profit jumped 6.8% year on year to S$70 million.
The supermarket operator increased its interim dividend from S$0.0305 to S$0.032.
Sheng Siong aims to open at least three new stores per year and has already opened two new stores in 1H 2024.
Another two stores were opened in July 2024 and management expects seven stores to be put up for tender by HDB in the second half of 2024.
Over in China, Sheng Siong opened its sixth store in Kunming back in June and its Chinese subsidiary continues to be profitable.
SATS Ltd (SGX: S58)
SATS provides air cargo network solutions and cargo and ground handling for airlines.
The group is also a leading Asian aviation food solutions provider with customers in 215 locations in 27 countries.
SATS pulled off a commendable performance for its fiscal 2024 (FY2024) ending 31 March 2024.
Revenue more than doubled year on year to a new high of S$5.1 billion, boosted by the consolidation of Worldwide Flight Services.
The group generated an operating profit of S$244 million for FY2024, reversing the operating loss of S$48 million last year.
Core net profit came in at S$78.5 million, a more than fourfold year-on-year increase.
Free cash flow turned positive for FY2024, coming in at S$326.5 million versus a negative free cash flow of S$39.8 million in FY2023.
SATS proposed a final dividend of S$0.015, representing its first dividend payment since the start of the pandemic.
The ground handler has set its financial goals for FY2025 which will involve the “3Rs” of repay, reinvest, and resume.
Its priority is to repay around S$200 million of loans, reinvest S$300 million of cash in capital expenditure, and resume paying dividends to shareholders.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine retail malls and an office building, all located in Singapore.
Its assets under management (AUM) stood at S$7.1 billion as of 31 March 2024.
For the first half of fiscal 2024 (1H FY2024) ending 31 March 2024, the retail REIT saw its gross revenue decline by 7.2% year on year and net property income (NPI) fall by 8.4% year on year to S$172.2 million and S$124.6 million, respectively.
The declines were due to lower contributions from Changi City Point, which was divested in October 2023, along with an asset enhancement initiative (AEI) at the Tampines 1 Mall.
Stripping these out, revenue and NPI would have increased by 2.9% and 2.1% year on year, respectively.
FCT paid out a distribution per unit of S$0.06022 for 1H FY2024, down just 1.8% year on year.
The REIT recently released an encouraging business update for its fiscal 2024 third quarter (3Q FY2024).
Retail occupancy stood high at 99.7% while shopper traffic and tenant sales registered a 4.1% and 0.7% year-on-year increase, respectively.
The Tampines 1 AEI is slated for completion by September 2024 with 100% of the mall committed.
FCT will introduce 68 new-to-mall concepts along with 46 concepts that are new to FCT.
The return on investment for this AEI should exceed 8%.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, is an industrial REIT with a portfolio of 28 properties.
25 of these properties are in Singapore with the remaining three in Australia.
For the REIT’s recent business update for the first quarter of fiscal 2025 (1Q FY2025) ending 30 June 2024, gross revenue rose 9.7% year on year to S$47.3 million.
NPI increased by 6.6% year on year to S$34.4 million.
Although distributable income increased by 7.3% year on year to S$18.4 million, DPU dipped by 1.7% year on year to S$0.0227 on an enlarged unit base.
Despite this slight decline, AAREIT saw its portfolio occupancy stay high at 97.3%.
Rental reversion is also positive at +12.8% for the quarter, with tenant retention rate staying high at 91.3%.
The REIT manager has identified and is conducting two AEIs in Singapore, at 7 Clementi Loop and 15 Tai Seng Drive.
Around S$32 million will be used for these two AEIs and AAREIT expects the projected NPI yield to exceed 7% after they are completed.
Ready to discover the next $100 billion stock? Our newest FREE report dives deep into five popular SGX companies that many say are the next big thing. Read our team’s findings to guide your investment strategy. Click the link here to download now.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang does not own shares in any of the companies mentioned.
