Many investors park their money in promising growth companies to enjoy capital gains.
As these businesses grow their profits and cash flows, the share price should naturally follow, providing the investor with a healthy profit.
Other investors may focus on generating a passive flow of income instead.
In such cases, their attention will be drawn to dividend-paying companies.
But, why not search for the best of both worlds – companies that both offer growth and pay out a dividend?
Here is a list of four Singapore electronics and semiconductor stocks that offer this sweet combination that you can add to your buy watchlist.
UMS Holdings Limited (SGX: 558)
UMS provides equipment manufacturing and engineering services to original equipment manufacturers of semiconductors and related products.
The group reported a healthy set of financial numbers for its fiscal 2022’s first half (1H2022) earnings.
Revenue jumped 47% year on year to S$171.3 million while net profit rose 23% year on year to S$39.5 million.
Free cash flow was also healthy at S$29.1 million for 1H2022, 14.8% higher than 1H2021’s S$25.4 million.
UMS declared an interim dividend of S$0.01 for its second quarter (2Q2022), and coupled with the S$0.01 paid out in the first quarter, 1H2022 saw a total of S$0.02 in dividends announced by the group.
Annualised dividend stands at S$0.04, giving UMS shares a prospective dividend yield of 3.1%.
All the group’s geographical markets, apart from the US, saw double-digit year on year sales growth in 2Q2022.
UMS is sanguine on its prospects as its key customer expects increased sales despite the supply chain problems faced this year.
AEM Holdings Limited (SGX: AWX)
AEM provides comprehensive semiconductor and electronics test solutions for its clients and has manufacturing plants in Singapore, Malaysia, Indonesia, Vietnam, China, Finland, South Korea and the US.
For 1H2022, AEM reported a sharp 181.1% year on year jump in revenue to S$540.5 million due to volume ramp-up for its new generation of system level and burn-in test handlers.
Net profit nearly tripled year on year from S$29.7 million to S$83.1 million.
The group also generated a free cash flow of S$13.9 million for 1H2022, a reversal from the free cash outflow of S$17.6 million in the prior year.
AEM declared an interim dividend of S$0.067.
Coupled with last year’s final dividend of S$0.05, the trailing 12-month dividend stands at S$0.117 and shares offer a 2.8% trailing dividend yield.
AEM recently acquired a 53.3% stake in South Korean manufacturer Nestek which will allow it to extend its offerings in the consumables business.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings), or MMH, designs and manufactures high-precision tools and parts used in the wafer fabrication and assembly processes of the semiconductor industry.
For MMH’s fiscal 2022 (FY2022) ending 30 June 2022, revenue increased 11.8% year on year to S$82.5 million.
Net profit rose 9.7% year on year to S$19.8 million.
The group also generated S$20.3 million of free cash flow, up 7.4% year on year from FY2021’s S$18.9 million.
A final dividend of S$0.06 and a special dividend of S$0.02 were proposed, bringing FY2022’s dividend to S$0.14.
The trailing dividend yield of MMH’s shares stood at 4.4%.
The group could see more growth in the year ahead with the World Semiconductor Trade Statistics (WSTS) forecasting that the global semiconductor market will grow a further 5.1% year on year in 2023 to US$680 billion.
Venture Corporation Limited (SGX: V03)
Venture is a blue-chip electronic service provider that manages a portfolio of 5,000 products and solutions and employs more than 12,000 people worldwide.
The group reported a respectable set of results for 1H2022, with revenue rising 25.4% year on year to S$1.8 billion and net profit climbing 24.1% year on year to S$174.3 million.
Venture generated S$40 million of free cash flow during the period.
The group declared an interim dividend of S$0.25 in line with the good performance.
The trailing 12-month dividend stood at S$0.75, giving Venture’s shares a trailing 12-month dividend yield of 4.4%.
Venture expects demand to remain strong for the remainder of 2022.
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Disclaimer: Royston Yang owns shares of Micro-Mechanics (Holdings) Ltd.