It’s a great feeling to own stocks that pay out dividends.
This stream of passive income not only enriches your wallet but also acts as a great buffer in case of a recession.
It’s even better if these businesses can raise their dividends over time, such that your flow of income also rises in tandem.
There are two main methods that companies rely on for growth.
One is through organic means – building a new factory or producing an additional product line or brand extension.
The other is through acquisitions of companies or assets.
We look at four Singapore stocks that recently conducted acquisitions to grow their dividends for this year.
Ascendas REIT (SGX: A17U)
Ascendas REIT, or A-REIT, is one of the oldest industrial REITs in Singapore.
It has a total asset value of S$16.4 billion as of 31 March 2022 that is split across four regions – Singapore, Australia, the US and the UK.
Last month, A-REIT announced the acquisition of seven logistics properties in Chicago, USA, for S$133.2 million.
In general, Chicago has a low vacancy rate at 3.1% and is expected to fall to around 2%.
Also, the asking rent has increased by around 3.7% per year over the last five years.
The acquired properties have a total of 12 tenants with a weighted average lease expiry (WALE) of five years as of 31 March 2022.
No single tenant contributes more than 20% of total rental income and all leases come with rental escalation clauses of 2% to 3% per annum.
Distribution per unit is expected to rise by 0.01% from this transaction.
The Hour Glass Limited (SGX: AGS)
The Hour Glass, or THG, is a luxury watch retailer that owns a network of 50 boutiques around the Asia-Pacific region.
The group sells a variety of Swiss watch brands such as Rolex, Patek Philippe, Omega, Panerai, and Hublot.
THG had acquired a two-storey retail and office building in Brisbane, Australia, for around S$81.4 million.
The property has a total net lettable area of 2,030 square metres and is located in the heart of Brisbane’s central business district (CBD).
This acquisition is in line with THG’s strategy of owning properties in prime locations to set up new boutiques.
The luxury retailer recently announced a strong set of earnings for its fiscal 2022 (FY2022) that saw revenue rise 39% year on year and net profit surge 88% year on year.
Total dividends for FY2022 came up to S$0.08, higher than the S$0.06 paid out the year before.
If this acquisition results in better revenue and profits, investors could see the group raising its dividend once more.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, is a global real estate investment manager with S$124 billion of real estate assets under management (AUM) as of 31 March 2022.
The group also held around S$86 billion worth of funds under management via six listed REITs and business trusts.
Just last week, CLI acquired a 22-storey freehold office building in Melbourne, Australia, marking the group’s fifth investment in the country in the last six months.
The property has a net lettable area of 32,000 square metres and is located within the CBD.
Management believes the acquisition is well-positioned to do well given the strong WALE, its good location, and potential for asset enhancement initiatives.
As CLI builds up its asset base and UM, there’s also an increased chance that the property giant can pay out a higher dividend for FY2022.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT, or UHREIT, owns a diversified portfolio of grocery-anchored and necessity-based retail properties in the US.
Its portfolio comprises 20 predominantly freehold grocery properties and four self-storage properties with an AUM of around US$688.5 million.
UHREIT announced the acquisition of a US$85.7 million grocery-anchored property called Upland Square Shopping Centre in Pennsylvania, USA.
This is the REIT’s second acquisition in Pennsylvania this property has a net lettable area of 400,674 square feet with 100% occupancy and a long WALE of 6.3 years.
Upland Square has a diverse pool of 35 tenants including anchor tenant Giant by Ahold Delhaize (AMS: AD) and ULTA Beauty (NASDAQ: ULTA).
The purchase is expected to increase DPU by 2.13% post-acquisition from US$0.061 currently to US$0.0623.
UHREIT’s portfolio value will also rise 6% to US$730.1 million.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
