For investors seeking exposure to palm oil, a critical Southeast Asian commodity, two names stand out.
Wilmar International Limited (SGX: F34) is a sprawling, diversified agribusiness, while First Resources Limited (SGX: EB5) is a more focused plantation play.
Both pay dividends, both are exposed to palm oil, and both just posted double-digit dividend increases.
For an income investor, the question isn’t which pays more today. It’s which can sustain and grow that payout through the commodity cycles that define this industry.
Understanding the Two Businesses
Wilmar’s business spans plantations, edible oils, oilseed crushing, sugar, and branded food manufacturing across Asia.
The logic is simple: the diversification ensures its earnings aren’t held hostage to palm oil prices alone, and different segments can offset each other across the cycle.
But there are also trade-offs.
A business this sprawling is harder to value cleanly, and not every segment grows at the same rate, so investors need to look at what’s actually driving results.
First Resources is a purer plantation play.
Its oil palm cultivation, fresh fruit bunch (FFB) production, milling, refining and downstream processing activities are concentrated in Indonesia.
The thesis is also simpler.
First Resources represents more direct leverage to palm oil prices and plantation economics, for better or worse.
It feels the effects of palm oil prices, weather, yield swings and cost inflation far more directly.
The Dividend Showdown
Both companies just raised their dividends sharply.
Wilmar hiked its interim dividend for 2026 by 25% to S$0.05 per share from S$0.04.
But against its 2025 total dividend of S$0.14 per share, the five-year trend is actually a mild decline before this rebound.
At the current price of S$3.70, Wilmar’s trailing yield sits at 4.1%.
First Resources’ interim dividend surged 78% to S$0.08 per share (from S$0.045).
Its total dividend in 2025 was S$0.147 per share, continuing a streak of annual increases since 2023.
The company’s trailing yield is also 4.1%.
First Resources’ dividend has grown faster and more consistently, while Wilmar’s is a little spottier.
But this does not make First Resources automatically “better”; the real question is which dividend is more sustainable.
Is the Dividend Actually Sustainable?
Wilmar’s 1H2026 net profit rose a modest 2% to US$609 million, with earnings per share (EPS) also up 2% to US$0.097.
This means that Wilmar’s dividend grew faster than earnings.
Over the past five years, Wilmar’s payout ratio has swung between 38% and 63%, suggesting volatile earnings, not a steady dividend policy, are driving the changes in the payout ratio.
At today’s payout ratio of 51.5%, Wilmar’s dividend is sustainable only if earnings hold up.
Coming to First Resources, 1H2026 net profit surged 57% to US$234.9 million, with EPS up a similar amount to US$0.15.
Its dividend hike also outpaced EPS growth, but this was deliberate. Management had raised First Resources’ payout policy from 50% to up to 60% of underlying profit, and the current 45% payout ratio sits comfortably within the new range.
Both companies’ payout ratios have moved meaningfully, but for different reasons: Wilmar’s from volatile earnings, and First Resources from a deliberate policy choice.
The second is the more sustainable pattern, provided the growth behind it holds up.
Free Cash Flow Tells a Different Story
For plantation businesses, actual cash produced matters more than accounting profit, given the heavy capex of replanting and maintaining ageing estates.
Wilmar’s 1H2026 operating cash flow (OCF) came to US$521.9 million.
After US$680.3 million in capital expenditure, free cash flow (FCF) was a negative US$158.4 million, which does not cover its dividend.
This looks concerning.
But Wilmar’s business exhibits significant working-capital swings that can distort cash flow for a period.
First Resources produced OCF of US$210.7 million for 1H2026, comfortably covering its capital expenditure of US$110.1 million, leaving FCF of US$100.6 million.
This barely covers the interim dividend of S$0.08 per share, which works out to around US$100 million.
Balance Sheet: Which Company Has More Financial Flexibility?
Wilmar has a gearing ratio of 0.93, with US$8.1 billion of cash against gross borrowings of US$32.2 billion.
These are large numbers that reflect its scale and trading-heavy model. Wilmar’s EBITDA against interest expense was 3.7x.
First Resources runs a lighter balance sheet.
Its net gearing ratio is 0.40, and it has US$229.2 million of cash against US$877.4 million in gross debt.
The interest coverage is also stronger at 11.2.
In a commodity downturn, the company with more headroom can keep operating without touching its dividend; on that measure, First Resources clears.
Wilmar vs First Resources: Which Is More Defensive?
Wilmar’s diversification means it has less reliance on a single commodity, but this comes at the cost of a more complex, harder-to-value business.
First Resources is simpler to understand but bears heavy concentration risk.
This isn’t really “which is better”; it’s which risk an investor would rather own.
Valuation: Which Stock Offers Better Value?
First Resources trades at a modest P/E of 12.6, alongside a P/B of 3.6x – reasonable given its recent earnings surge.
Wilmar’s P/E of 13.2 and P/B of 0.8x similarly don’t scream expensive.
But its more volatile earnings make historical comparisons not as ‘clean’.
Neither looks priced for aggressive future growth.
The real question is whether each company’s earnings, inflated by strong 2026 conditions, are the right level to value them on.
Which Stock Is Better for Different Income Investors?
For higher current income, dividend growth, and balance-sheet support, First Resources is your pick.
For lower concentration risk, Wilmar’s diversification is the natural choice.
And for direct palm oil exposure, First Resources is the purer company by design.
What Should Investors Watch Next?
For Wilmar: plantation performance, food product margins, the sugar business, net profit trends, free cash flow, net gearing, and the dividend payout trajectory.
For First Resources: Crude palm oil (CPO) prices, FFB yields, production volumes, plantation costs, replanting schedules, FCF, and the dividend payout ratio as it moves towards the new 60% ceiling.
For both: CPO prices, weather, government policy, export demand and sustainability requirements.
These are the shared forces deciding who’s still paying a dividend comfortably moving forward.
Get Smart: The Better Dividend Stock Depends on What You Want to Own
Wilmar and First Resources both offer palm oil exposure, but their dividend propositions genuinely differ.
Wilmar spreads earnings across multiple businesses at the cost of a flatter, more variable payout, while First Resources offers a more focused, currently faster-growing dividend backed by a lighter balance sheet, at the cost of greater commodity sensitivity.
Neither wins outright – the decision should turn on dividend sustainability, free cash flow, balance-sheet strength, growth potential and valuation, not on which stock’s yield looks biggest today.
The better dividend stock is whichever one keeps paying, and growing that payout, through the next downturn in the cycle – not just the current upswing.
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Disclosure: Wilson H. does not own shares of any companies mentioned.
