If you own a car in Singapore, chances are you’ve visited a VICOM inspection centre.
What you might not know is that this familiar name trades on the SGX – and it has the makings of a solid retirement income stock.
VICOM (SGX: WJP) is Singapore’s leading vehicle inspection and technical testing provider.
The company has been operating since 1981, a testament to the business’s staying power.
But longevity alone doesn’t make a stock suitable for retirees.
Let’s examine whether VICOM can deliver the steady income that retirement portfolios demand.
A Regulated Duopoly
Here’s the part you don’t want to miss: VICOM operates in a duopoly with STA Inspection.
With six inspection centres around the island compared to STA’s two, VICOM is the clear market leader.
In 2024, the company inspected 525,108 vehicles, commanding a 72.9% market share.
The beauty of this business lies in its regulatory moat.
Vehicle inspection isn’t optional – it’s mandated by law.
Every car owner must get their vehicle inspected, creating a captive and recurring customer base.
This is precisely the kind of predictable demand that retirees can count on.
Beyond vehicles, VICOM’s 2003 acquisition of SETSCO expanded its reach into non-vehicle testing services, including building construction, aerospace, marine and offshore, oil and petrochemicals, and electronics manufacturing.
Dividend Sustainability: The Numbers That Matter
For dividend investors, free cash flow is the lifeblood of payouts.
VICOM’s dominant vehicle inspection business generates stable cash flows, which is essential for maintaining its dividend.
The company’s revenue has recovered strongly from its pandemic lows, rising around 54% from S$86.5 million in 2020 to S$133 million for its trailing 12 months prior to 30 June 2025.
However, net income has yet to surpass its prior high of S$34.7 million achieved in 2018.
Net margin contracted from 34.3% in 2018 to 23.1% for its TTM period, owing to higher operating costs and increased competition in the non-vehicle testing segment.
This margin pressure prompted management to take a disciplined approach to dividends.
The payout ratio is maintained at around 70% today.
At 2024’s payout of S$0.058 per share, the dividend looks sustainable.
Notably, the company also maintains a net cash balance of S$21.7 million, adding a further layer of security.
Growth on the Horizon
Management is optimistic about the future.
Key initiatives include a new integrated testing centre at Jalan Papan, set to open in the first half of 2026, which will capture growing demand in the west of Singapore.
The company is also diversifying its testing capabilities into emerging areas such as wastewater disease detection, runway suitability testing, and electric vehicle charging system inspection.
Meanwhile, Singapore’s construction boom and technological rollouts in smartphones, PCs, and AI devices could boost demand for SETSCO’s testing services.
Risks to Consider
Retirees should keep three risks on their radar.
First, inflationary pressures on raw materials, rental, and labour costs may continue to squeeze margins.
Second, the increasing adoption of electric vehicles could require further investment in VICOM’s testing capabilities to stay competitive.
Finally, intense competition in non-vehicle testing services has been dragging on group margins – a trend that may persist.
Get Smart: A Quiet Compounder for Retirement
VICOM won’t make headlines.
It’s not a growth darling or a market darling.
But for retirees seeking steady income rather than explosive returns, this stock offers a compelling combination: a regulated duopoly with a 72.9% market share, a sustainable 70% payout ratio, and a net cash balance sheet that provides breathing room.
The dividend has remained in a tight range of S$0.055 to S$0.0664 per share since 2020.
That consistency, backed by the predictable cash flows of a mandated service, is exactly what retirement income portfolios need.
Sometimes, the best retirement stocks are the ones you drive past every few years without giving a second thought.
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Disclosure: Calvina Lee does not own any shares mentioned. Chin Hui Leong contributed to the article and owns shares of VICOM.
