Everyone loves receiving dividends.
This flow of cash into our bank accounts represents a tangible return from the companies we invest in.
By building a portfolio of dividend stocks, you can create a healthy source of passive income for yourself.
The target is to beat inflation and to also prepare yourself better for retirement.
The important attributes to look for in dividend stocks are businesses that display a consistent track record of dividend payments as well as a strong franchise.
It also helps if the business can generate healthy levels of free cash flow as this will further support the dividend payouts.
Here are four dividend-paying stocks that you may want to add to your investment watchlist.
Q&M Dental (SGX: QC7)
Q&M Dental owns the largest network of 90 private dental outlets in Singapore.
The group employs a team of around 270 dentists that attend to around 40,000 patients a month.
In addition, the firm also operates five medical clinics and a dental supplies and equipment distribution company.
Q&M reported an impressive set of numbers for its fiscal 2021 third quarter (3Q2021).
Revenue jumped by 48% year on year to S$57.7 million due to a more than 10-fold year on year surge in the revenue of its medical laboratory, dental equipment and supplies division.
Net profit rose 175% from S$5.1 million a year ago to S$13.9 million in the reporting quarter.
The group is rewarding shareholders with a third interim dividend of S$0.01. Coupled with the first and second interim dividends of S$0.01 each, the total dividend for the first nine months of 2021 (9M2021) came up to S$0.03.
At the recent share price of S$0.585, the shares provide a trailing dividend yield of around 6%.
Q&M intends to open nine new clinics in Singapore and two in Malaysia by the end of this year, as well as expand its team of dentists.
The group targets to open at least 30 clinics per year from 2021 onwards and is also eyeing China as a new pillar of growth.
UMS Holdings (SGX: 558)
UMS provides equipment manufacturing and engineering services to original equipment manufacturers in the semiconductor industry.
The group reported an encouraging set of results for 3Q2021 and also a record revenue and net profit for 9M2021.
For 3Q2021, revenue soared by 50% year on year to S$67.6 million while net profit improved by 17% year on year to S$15.1 million.
9M2021 saw revenue jump by 53% year on year to S$184 million while net profit surged by 35% year on year to S$47.4 million.
The interim dividend was doubled year on year to S$0.01 for 3Q2021.
Year to date, UMS has already paid out a total of S$0.03 in dividends and has also given out one bonus share for every four shares held by shareholders.
Old Chang Kee (SGX: 5ML)
Old Chang Kee, or OCK, sells a variety of snack foods such as spring rolls, curry puffs and carrot cakes.
The group had a network of 89 outlets in Singapore as of 30 September 2021.
For its fiscal year 2022 first half (1H2022), OCK reported a slight year on year improvement in revenue to S$38.5 million due to higher delivery and retail sales.
However, there was an associated increase in selling and distribution expenses due to higher staff costs to support the growth in revenue.
As a result, net profit fell by 45% year on year to S$3.4 million.
Despite the weaker results, free cash flow generation remained strong at S$8.1 million.
The group doubled its interim dividend from S$0.005 last year to S$0.01.
Trailing 12-month dividend stood at S$0.02, and its shares provide a trailing yield of 2.9%.
Fraser & Neave Limited (SGX: F99)
Fraser & Neave Limited, or F&N, is a consumer conglomerate that mainly deals with food and beverage with a smaller division in printing and publishing.
The group is present in 11 countries in Asia-Pacific, Europe and the US and employs more than 6,900 people worldwide.
For the fiscal year ended 30 September 2021 (FY2021), revenue inched up 2.5% year on year to S$1.88 billion while operating profit increased by 6.6% year on year to S$151 million.
After accounting for fair value adjustments and exceptional items, net profit declined by 5.9% year on year to S$140.4 million.
Operating cash flow jumped by nearly six-fold from S$42.7 million in FY2020 to S$247.4 million in FY2021.
Free cash flow for FY2021 was healthy at S$148 million.
The group declared a final dividend of S$0.035, adding up to a total dividend of S$0.05 for FY2021, representing a 50% payout ratio.
F&N’s shares offer a trailing dividend yield of 3.5% at the last traded share price of S$1.44.
The group had recently acquired a 55.5% stake in the Sri Nona group of companies for S$19.3 million to diversify its product offerings to customers.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
