We are a lucky bunch here in Singapore when it comes to investments.
Investors are exempted from paying income tax on both capital gains and dividends.
In contrast, rental income from owning an investment property needs to be declared for income tax, and properties themselves attract property taxes.
This attractive feature is why many investors choose to own a portfolio of dividend-paying stocks.
Dividends represent a stream of passive cash flow that you can rely on to enjoy a comfortable retirement.
Meanwhile, a group of resilient companies have continued paying out dividends in the last 18 months.
Here are five that look poised to increase their dividend payouts next year.
iFAST Corporation Limited (SGX: AIY)
iFAST is a financial technology company that runs a platform for the buying and selling of unit trusts, equities, and bonds.
The group has benefitted from the surge in digital traffic as more people head online for investments.
iFAST reported a more than year on year doubling of net profit for its fiscal 2020 (FY2020).
The company’s fiscal 2021 third quarter (3Q2021) has seen this trend continue, with net revenue rising by 32.6% year on year to S$30.3 million.
Net profit for 3Q2021 jumped by 23.3% year on year to S$7.6 million.
In tandem with the good results, iFAST hiked its interim dividend by 62.5% year on year to S$0.013.
Meanwhile, the group unveiled its five-year growth plan to strengthen its platform and pursue more licences.
Should its growth momentum continue, investors should see the fintech group raise its dividends once again.
DBS Group (SGX: D05)
DBS needs no introduction, being Singapore’s largest local bank.
The lender has surprised investors with a stellar set of results experiencing lower net interest margins.
Another piece of good news came when Singapore’s central bank eased dividend restrictions for the local banks due to the improved global outlook.
This relaxation allowed DBS to declare a 3Q2021 dividend of S$0.033, in line with what it paid out in the first quarter of 2020.
There are clear catalysts for the bank in 2022.
Interest rate rises, coupled with continued buoyant conditions and the establishment of a digital exchange should bring about higher earnings for DBS.
As earnings rise, the potential for a dividend increase also rises in tandem.
The Hour Glass (SGX: AGS)
The Hour Glass, or THG, is a luxury watch retailer that owns 50 boutiques in 12 cities in Asia.
The group has reported a sparkling set of earnings for its fiscal 2022 first half ended 30 September 2021 (1H2022).
Revenue climbed by 63% year on year to S$472.4 million while net profit more than doubled year on year to S$62.6 million.
The group’s free cash flow also surged by nearly 54% year on year from S$51.1 million to S$78.6 million.
THG kept its interim dividend constant at S$0.02 per share for the 1H2022 but improving fundamentals suggest that the group is in a good position to pay out more.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong is one of Singapore’s largest supermarket chains and operates 63 outlets across the island.
For its 3Q2021 earnings, the group reported a 6.4% year on year rise in revenue to S$348.1 million while gross profit climbed by 14.2% year on year due to a higher gross margin.
Net profit improved by 8.3% year on year to S$34.4 million.
The group had paid out a slightly lower interim dividend of S$0.031 for its first half.
However, things are looking up for the supermarket group.
Sheng Siong is poised to bid for HDB spaces next year to set up new shops while seeking organic growth for its existing stores.
The supermarket operator’s two China subsidiaries in Kunming are also profitable, and the group had just opened two more stores in the second half of this year.
Boustead Singapore Limited (SGX: F9D)
Boustead Singapore, or BSL, is an engineering conglomerate with four core divisions in oil and gas, real estate, geo-spatial technology, and healthcare.
For 1H2022, BSL reported a 17% year on year increase in revenue to S$340.3 million but saw its adjusted net profit tumble by 24% year on year due to continued restrictions imposed on its real estate division.
Despite the lower net profit, the group declared an interim dividend of S$0.015, 50% higher than the S$0.01 declared a year ago.
The group maintains an order backlog of S$342 million as of 30 September 2021 and is cautiously optimistic that business conditions will improve as borders slowly reopen.
Get Smart: A gift that keeps giving
Dividends are the core of our investment philosophy at The Smart Dividend Portfolio.
We have carefully curated a portfolio of 23 names that have paid out consistent dividends even though the pandemic.
With the Singapore economy in recovery, we are glad to see that our accumulated dividends have tripled compared to a year ago.
What’s more, we believe that some of our stocks may be ready to pay out even more next year.
If you are interested to know more about how to generate your stream of passive income, you can find out more about how we build our portfolio and present our case studies.
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Disclaimer: Royston Yang owns shares of iFAST Corporation Limited, DBS Group and Boustead Singapore Limited.