The CPF Ordinary Account (OA) is a useful place to park your money.
Not only does it offer a steady 2.5% interest rate, but it is also guaranteed by the Singapore government, making it a near risk-free return.
But with inflation rearing its ugly head, this level of return will not suffice for the long term.
You have the option of investing your CPF money by opening a CPF Investment Account (IA).
By searching for companies that pay out healthy dividends, you have the opportunity to enjoy a yield that’s higher than what the CPF OA offers.
Here are three companies that sport dividend yields higher than 2.5%.
Boustead Singapore Limited (SGX: F9D)
Boustead Singapore Limited, or BSL, is an engineering conglomerate with four main divisions — energy-related engineering, real estate solutions, geospatial technology, and healthcare.
The group recently reported a somewhat downbeat set of earnings for its fiscal 2022 first half (1H2022).
Although revenue rose by 17% year on year to S$340.3 million, adjusted net profit fell by 24% year on year to S$19 million.
The weakness in the oil and gas sector and the disruptions brought about by pandemic-related restrictions were cited as reasons for the lacklustre performance.
However, BSL announced that its interim dividend will rise 50% year on year to S$0.015 as free cash generation remained healthy.
The engineering specialist boasts a track record of paying out consistent dividends over the last decade.
For its previous fiscal year FY2021, the group declared a S$0.03 final dividend along with a S$0.04 special dividend as its real estate subsidiary Boustead Projects Limited (SGX: AVM) had unlocked value by selling 14 properties to a private investment fund that was set up.
The trailing 12-month dividend yield for BSL stands at 4.4% based on the last traded share price of S$1.02.
CSE Global Ltd (SGX: 544)
CSE Global is an engineering firm that builds customised, integrated systems for customers in the energy, infrastructure, and mining and minerals industries.
The group has a presence in 16 countries and employs more than 4,200 staff.
CSE Global encountered a difficult quarter for its fiscal 2021 third quarter (3Q2021) business update.
The group faces delays in project orders and equipment delivery, causing revenue to dip by 1.9% year on year for the quarter.
Operating cash flow also halved from S$12 million a year ago to S$6 million.
On the bright side, CSE Global clinched 32% more new orders during the quarter compared to a year ago, bringing its order book to S$216.8 million as of 30 September 2021.
The group has been a steady payer of dividends, paying out an annual S$0.0275 per share in the last five fiscal years.
For its fiscal 2021 first half, the group kept its interim dividend constant at S$0.0125 despite a 33.3% plunge in net profit.
As the economy recovers, the engineering group should see its prospects improve in tandem.
Trailing 12-month dividend stands at S$0.0275, and its shares offer a trailing dividend yield of 5.4%.
Civmec Ltd (SGX: P9D)
Civmec is a multi-disciplinary construction and engineering services provider with clients in the oil and gas, infrastructure, and marine and defence sectors.
The group is also listed on the Australian Stock Exchange (ASX).
Civmec reported a strong performance for its fiscal year 2022’s first quarter (1Q2022) ended 30 September 2021.
Revenue jumped by 31.8% year on year to A$197.4 million while gross profit increased by almost 34% year on year.
Net profit surged by 61.7% year on year to A$10.8 million.
Civmec also enjoyed a higher order book of A$1.1 billion compared to A$946.000 a year ago.
Notably, dividends have been increasing since FY2019.
FY2019’s annual dividend was A$0.007 and FY2020 saw an increase to A$0.01.
The total dividend then doubled year on year in FY2021 to A$0.02, translating to a trailing dividend yield of 2.9%.
The group has established itself on both the East and West coasts of Australia and has secured several maintenance contracts from new clients there.
The group’s major project pipeline remains strong.
Meanwhile, the management also sees new opportunities in the fields of hydrogen and lithium.
CSIRO, an Australian government agency, has reported sixty hydrogen projects in various stages of development in both Australia and New Zealand.
If Civmec gets a foothold in this new sector, it could bring in higher levels of revenue and profit for the group and investors could also enjoy increasing dividends over time.
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Disclaimer: Royston Yang owns shares of Boustead Singapore Limited.
