As we look forward to a brand new year, it’s time to size up various industries and businesses to see which will continue to do well.
2020 has seen a wide swath of businesses suffering from falling profits as the COVID-19 pandemic wreaked economic havoc on the world.
The second half of the year has seen a gradual recovery of sorts as businesses adjust to the new normal imposed by this crisis.
As several promising vaccines are being readied for distribution around the world, businesses can look forward to a sustained recovery in 2021.
Investors have witnessed a plunge in the dividends declared by numerous companies in the wake of the pandemic.
As the world slowly picks itself back up again, companies may once again find the bandwidth to increase their dividend payments to investors.
Here are five companies that could see their dividends being raised in 2021.
AEM Holdings Ltd (SGX: AWX)
AEM offers intelligent system test and handling solutions to semiconductor and electronic companies.
The group has been riding on a wave of technological innovation that has seen its order book burgeon and its revenue and net profit hit new highs.
In its third-quarter business review, AEM reported that revenue jumped 93% year on year to S$161.8 million.
Net profit soared 77.4% year on year to S$24.3 million.
The group has more than doubled its interim dividend from S$0.02 to S$0.05 when it released its first-half 2020 earnings.
AEM has raised its revenue guidance for the full fiscal year 2020 to between S$500 million and S$520 million.
For context, its total revenue for the fiscal year 2019 stood at S$323 million.
Investors can expect an uplift in the group’s upcoming final dividend if it continues to report strong numbers.
iFAST Corporation Ltd (SGX: AIY)
iFAST is a financial technology company that owns a platform for the buying and selling of securities such as equities, bonds and unit trusts.
For its third quarter 2020 earnings, iFAST reported that net revenue improved by 35.7% year on year to S$22.9 million, driven by fund inflows from clients.
Net profit attributable to shareholders soared by 150% year on year to S$6.2 million.
The group’s quarterly dividend inched up slightly from S$0.0075 to S$0.008.
Group assets under administration also hit a new all-time high of S$12.59 billion as of 30 September 2020.
Last week, the group announced that it had failed to clinch a digital wholesale bank licence in its bid to become Singapore’s first batch of digital banks.
However, its core business remains strong and without the need to stump capital for the digital bank, there is a high chance that the group will raise its dividends next year.
DBS Group Holdings Ltd (SGX: D05)
DBS Group is Singapore’s largest local bank by market capitalisation.
The lender released a downbeat set of earnings for its third quarter but provided a sanguine outlook.
CEO Piyush Gupta expects a strong economic rebound once Asia recovers from the effects of the COVID-19 pandemic.
The group paid out a quarterly dividend of S$0.18 per share as part of the Monetary Authority of Singapore’s (MAS) call for banks to limit their dividend payments.
Should the recovery take place in the second half of 2021, there is a good chance that DBS can restore its quarterly dividend to the original S$0.33 per share.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
For its fiscal full-year 2020 ended 30 June 2020 (FY 2020), the group reported a record-high revenue of S$1.1 billion, up 16% year on year.
Net profit jumped by 21% year on year to S$472 million.
The bourse operator hiked its quarterly dividend by S$0.005 from S$0.075 to S$0.08, bringing FY 2020’s dividend to S$0.305.
Moving forward, SGX will pay out a total of S$0.32 per fiscal year.
FXfutures traded on the SGX showed healthy volumes. As of 16 Nov, the year to date volumes are up 8.6% year on year, reaching US$1.18 trillion.
A new record was also achieved for the SGX USD/CNH futures open interest of US$9.7 billion on 27 October.
If these derivative volumes continue to do well, and SGX enjoys higher net profits, the group could see itself raising dividends further in the fiscal year 2021.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong runs one of the largest supermarket chains in Singapore, with 64 outlets as of 30 September 2020.
The group released an upbeat set of earnings for its third-quarter business update.
Revenue for the quarter increased by 29% year on year to S$327.3 million, while net profit jumped by 54.4% year on year to S$31.8 million.
Sheng Siong continued to enjoy healthy footfall and sales as many continued to telecommute.
Recall that the group had doubled its interim dividend from S$0.0175 to S$0.035 back in late July when it released its first-half 2020 results.
When construction resumes after the stoppage of work due to COVID-19, Sheng Siong expects a slew of new shops to be released for tender.
Lim Hock Chee, the group’s CEO, affirms the group’s strategy of continuously looking for retail space to expand its presence within the heartlands.
Sheng Siong will continue to bid for space in areas where it does not have a presence, as it seeks to grow its total number of stores in Singapore.
Looking at the group’s sparkling set of earnings, there is a high chance that its final dividend will see a year on year increase from fiscal 2019’s S$0.018.
Disclaimer: Royston Yang owns shares in iFAST Corporation Limited, DBS Group Holdings Ltd and Singapore Exchange Limited.