The earnings season has come to a close as companies report their latest financial results and business updates.
Some of these businesses have raised their dividends in line with better profits and cash flows.
For income-seeking investors, such events are music to their ears as it means they can enjoy an increased flow of passive income into their bank accounts.
The good news is that companies that reported strong numbers may end up raising their dividends further.
We sifted out four companies that appear well-positioned to increase their dividends next year.
OCBC Ltd (SGX: O39)
OCBC is Singapore’s second-largest bank by market capitalisation and offers a comprehensive range of banking, investment, and insurance services.
The blue-chip lender had reported a stellar set of earnings for its fiscal 2023’s first half (1H 2023).
Surging interest rates benefitted the banks’ net interest income which flowed down to improve its bottom line, with net profit climbing 38% year on year to S$3.6 billion.
In line with the strong results, OCBC hiked its interim dividend by close to 43% year on year to S$0.40.
There could be more good news to come for investors.
The bank launched a major rebranding exercise in July with a refreshed logo and tagline, aiming to deliver an incremental S$3 billion in revenue over the next three years.
This growth trajectory will be driven by four key pillars – Asian wealth, trade and investment flows, new economy, and sustainability.
The US Federal Reserve is also intent on keeping interest rates high to combat inflation and bring it down to the 2% level.
With rates staying high till at least 2024, OCBC should continue to enjoy higher net interest income.
Should the bank carry on reporting robust financial results for 2023, it could up its final dividend early next year.
Credit Bureau Asia (SGX: TCU)
Credit Bureau Asia, or CBA, provides credit and risk information solutions to clients such as banks, financial institutions, multinational corporations, and government bodies.
The group reported a respectable set of earnings for 1H 2023 with revenue rising 12.3% year on year to S$26.4 million.
Net profit jumped 15.6% year on year to S$10.7 million.
The business also generated a positive free cash flow of S$11.8 million.
CBA maintained its interim dividend at S$0.017.
Should the credit rating firm continue to post healthy growth momentum, investors could see the business increase its final dividend.
The maturing digital bank sector in Singapore offers opportunities for CBA to offer more services.
Also, the group is expanding its business offerings in Cambodia while in Myanmar, CBA signed up 27 banking financial institutions as members.
Another 40 non-bank financial institutions and foreign banks in Myanmar are awaiting approval from the regulator to join CBA’s Myanmar division.
StarHub Limited (SGX: CC3)
StarHub is a telecommunication company offering mobile, broadband, and cable TV services, among others.
The group reported an encouraging set of earnings for 1H 2023 as revenue across all its divisions saw year-on-year increases.
Net profit for the period climbed 25.8% year on year to S$76.7 million.
The telco kept its interim dividend constant at S$0.025.
There are indications that StarHub can continue to report healthy numbers moving forward.
Its mobile service churn rate remained stable year on year with smartphone data usage increasing by nearly 25% year on year to 16.2 GB.
The average revenue per user (ARPU) also grew year-on-year for most segments despite intense competition.
Elsewhere, the telco’s DARE+ transformation is on track to allow the group to achieve S$500 million breakeven EBITDA (earnings before interest, taxes, depreciation and amortisation) by 2024.
If the telco reports stronger full-year 2023 numbers, investors could see it declare a higher year-on-year final dividend.
Haw Par Corporation Limited (SGX: H02)
Haw Par is a conglomerate with four core divisions – healthcare, leisure, investments, and property.
The group also owns the Tiger Balm brand and manufactures and distributes analgesics ointments and creams.
Revenue for 1H 2023 rose 16.3% year on year to S$111.1 million with net profit jumping 34.9% year on year to S$104.1 million.
Haw Par’s free cash flow improved by 15.8% year on year to S$14.6 million for 1H 2023.
The conglomerate raised its interim dividend from S$0.15 to S$0.20 in line with the better results.
With economies reopening and sports activities resuming, Haw Par’s Tiger Balm should see increased sales.
The division looks poised to benefit from improved consumer sentiment too.
If Haw Par can continue to report higher year-on-year profits and better cash flow, it could raise its final dividend above the S$0.15 that was paid out last year.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
