Dividend stocks are said to be an income investor’s best friend.
These businesses churn out healthy levels of free cash flow, enabling them to carry on paying healthy dividends to their shareholders.
Investors should look out for stocks that can sustainably raise their dividends and continue doing so.
These businesses may possess catalysts or characteristics that allow them to keep paying out more to shareholders.
We highlight four Singapore stocks that recently increased their dividends that you could consider for your buy watchlist.
UMS Holdings (SGX: 558)
UMS provides equipment manufacturing and engineering services to original equipment manufacturers of semiconductors and related equipment.
The group operates production facilities in Singapore, Malaysia, and the US.
For UMS’ third quarter 2023 (3Q 2023) earnings, revenue fell by 29% year on year to S$71.3 million, led by a 30% year-on-year fall in the semiconductor segment in line with slower global semiconductor demand.
This decline was partially offset by a 35% year-on-year jump in revenue from Aerospace as the recovery in the travel industry stayed buoyant.
Net profit plunged 64% year on year to S$15.3 million.
Free cash flow also fell into negative territory for 3Q 2023 at minus S$6.1 million, although free cash flow for the first nine months of 2023 (9M 2023) remained positive at S$26.5 million.
Despite the weaker results, UMS declared an interim dividend of S$0.012, 20% higher than the S$0.01 paid out last year.
CEO Andy Luong is optimistic about the company’s future as there are signs of a semiconductor rebound.
The group’s growth will hinge on its twin engines semiconductors and aerospace with the former set to benefit from new technology innovations along with the boom in artificial intelligence (AI).
Fraser and Neave Ltd (SGX: F99)
Fraser and Neave, or F&N, is an established food and beverage group with brands such as 100 Plus, Ice Mountain, and Magnolia.
The group also runs a printing and publishing business.
F&N released a respectable set of earnings for its fiscal 2023 (FY2023) ending 30 September 2023.
Revenue inched up 4.8% year on year to S$2.1 billion with gross profit improving by 8.6% year on year to S$623 million.
Net profit before fair value adjustments and exceptional items edged up 3% year on year to S$133.3 million.
The business also generated a positive free cash flow of S$113.8 million for FY2023.
To mark the group’s 140th anniversary, F&N declared a final dividend of S$0.04, higher than the S$0.035 paid out last year, bringing FY2023’s dividend to S$0.055.
F&N recently broke ground on its new integrated dairy farm in Negeri Sembilan, Malaysia.
Costing RM 1 billion and spanning 2,726 hectares, the farm can accommodate 20,000 milking cows and produce 200 million litres of fresh milk.
The group also unveiled new packaging for popular beverages such as its fresh milk, soya milk, and range of carbonated soft drinks.
Valuetronics Holdings Limited (SGX: BN2)
Valuetronics is an electronic manufacturing service (EMS) provider focusing on the design and development of clients’ products.
The group has manufacturing facilities in both China and Vietnam.
Valuetronics released its first half of fiscal 2024 (1H FY2024) earnings for the period ending 30 September 2023.
Revenue for 1H FY2024 fell by 15% year on year to HK$891.3 million, with both Consumer Electronics and Industrial & Commercial Electronics divisions suffering year-on-year revenue falls.
Operating profit, however, surged by close to 40% year on year to HK$91.4 million as the group enjoyed higher interest income from rising interest rates.
Net profit soared 42% year on year to HK$82.1 million.
Valuetronics has zero debt on its balance sheet along with HK$1.1 billion of cash.
The EMS provider generated a positive free cash flow of HK$179 million, 58.8% higher than the prior year’s HK$112.7 million.
Management declared an interim dividend of HK$0.04 along with a special dividend of HK$0.04, bringing the total dividend to HK$0.08.
This level of dividends was double what the group paid out last year.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunication company and offers mobile, broadband, and pay-TV services.
The group saw operating revenue slip 3.2% year on year to S$7 billion.
Operating profit, however, edged up 2.2% year on year to S$1.8 billion while underlying net profit increased by 11.6% year on year to S$1.1 billion.
The better performance was powered by its growth engines NCS and Digital InfraCo, while regional associates’ pre-tax contributions were also up 3% year on year to S$1.2 billion.
Singtel declared an interim dividend of S$0.052, 13% higher than the S$0.046 paid out in 1H FY2023.
The telco also raised its dividend payout ratio to 70% to 90% of underlying net profit, up from the previous range of between 60% to 80%.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.