Every investor loves receiving a dividend that goes straight into their bank account.
Dividends represent not just a stream of passive income but also act as a tangible return on your investment.
Fortunately, many stocks pay out a dividend, including blue-chip companies and smaller, sturdy businesses.
An income-driven investor will be drawn to these stocks as dividends are not taxed in Singapore, unlike rental income from owning an investment property.
That said, it’s always more attractive to invest in a company that pays rising dividends.
If a company reports growth in its net profit and free cash flows, there is a good chance that it can raise its payout.
Here are five stocks that could potentially increase their dividends this year.
Sheng Siong Group (SGX: OV8)
Sheng Siong is a supermarket operator with 68 stores located around Singapore.
The group sells a wide variety of goods including fresh and dry foods, household items, and necessities.
For its fiscal 2023’s first quarter (1Q 2023), the retailer saw its revenue dip slightly by 0.4% year on year to S$356.5 million.
The good news was that gross profit inched up 0.1% year on year as an improved sales mix helped to increase its gross margin.
Net profit declined by 5.2% year on year to S$33.4 million.
Despite the dip, investors should feel confident that Sheng Siong can do well for the remainder of 2023.
For one, the decline was due to a high base effect in 1Q 2022.
The group is also seeking to expand its network of stores in Singapore and is slated to open its fifth store in Kunming, China.
It also plans to increase the sales mix for its higher-margin products and continue to derive efficiency gains from its supply chain.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank, or UOB, is Singapore’s third-largest bank by market capitalisation.
The lender had reported a sparkling set of results for 1Q 2023, being a beneficiary of higher interest rates that lifted its net interest income by 43% year on year.
Net profit surged by 74% year on year to a record high of S$1.6 billion.
The US Federal Reserve had recently hiked interest rates for the 10th consecutive time in a bid to tame inflation.
With interest rates likely hovering higher for longer, UOB looks poised to enjoy higher net interest income for the remainder of 2023.
And as net profit increases, there is also a good chance the bank will pay out more dividends.
Genting Singapore Ltd (SGX: G13)
Genting Singapore owns and operates the integrated resort (IR) at Resorts World Sentosa (RWS).
The IR comprises six hotels with around 1,600 hotel rooms, a casino, a universal studios theme park, and a host of dining, retail, and entertainment options.
For 1Q 2023, revenue jumped 54% year on year to S$484.5 million while net profit more than tripled year on year from S$40.4 million to S$129.2 million.
The better performance was because of higher tourist numbers to the IR as many countries reopened their borders.
With China’s reopening, the IR operator is poised to benefit from increased tourist numbers in the months to come.
There is a high chance that Genting Singapore can up its dividend for 2023 if its financial numbers stay strong.
StarHub Ltd (SGX: CC3)
StarHub is a telecommunications group that offers mobile, broadband and cable TV services and also provides cybersecurity and data analytics services to corporations.
The telco pulled off a commendable performance for 1Q 2023, with total revenue rising 8.7% year on year to S$557.4 million.
Net profit climbed 26% year on year to S$37.5 million.
Revenue increases were broad-based across all four of StarHub’s divisions.
The group exceeded its expectations in terms of service revenue growth and capital expenditure commitment as a proportion of total revenue.
Free cash flow, however, remained negative at S$19 million for the quarter.
Still, StarHub can pay out a higher dividend should its strong performance continue for the rest of this year.
Civmec Ltd (SGX: P9D)
Civmec is an integrated construction and engineering specialist that provides services to the Energy, Resources, Infrastructure, and Marine & Defence sectors.
The group released its fiscal 2023’s third quarter (3Q FY2023) earnings for the period ending 31 March 2023.
For 3Q FY2023, revenue dipped by 2.7% year on year to A$187.8 million but net profit jumped 20.2% year on year to A$14.6 million.
What’s more, cash generated from operations for the first nine months of FY2023 soared more than four-fold year on year from A$13.9 million to A$67.7 million.
Civmec’s order book also edged up 0.9% year on year to A$1.19 billion as of 31 March 2023.
The jump in operating cash flow could result in the engineering company paying out a higher final dividend for FY2023.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
