There are several ways a company can grow its dividends.
The first, and more obvious way, is to enjoy a rise in demand for its goods and services.
This higher demand then translates to better profits and cash flow so that the business can afford a larger dividend.
Another method is for the company to conduct acquisitions to immediately grow its presence and increase its profits and cash flows.
Acquisitions, if done right, can be attractive as they allow an organisation to quickly grow its market share and boost its profits.
Income-driven investors can turn their attention to these four Singapore names that have recently announced acquisitions.
These acquisitions, in turn, increase the chance that these companies will declare a higher dividend.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, is a real estate investment manager with around S$124 billion of real estate assets under management (AUM) and S$86 billion worth of real estate funds under management.
CLI’s lodging business unit, The Ascott Limited, announced that it is acquiring Oakwood Worldwide, a global service apartment provider, for an undisclosed amount.
Oakwood will boost Ascott’s portfolio by 81 properties totalling around 15,000 units.
This transaction will immediately benefit Ascott’s recurring fee income streams when the purchase is concluded in the current quarter.
Ascott will see its global presence enhanced with this acquisition to more than 150,000 units in 900 properties, with a presence in over 200 cities in 39 countries.
Some of the new markets that will be added include Cheongju in South Korea, Qingdao in China, and Washington D.C. in the US.
CLI had announced during its fiscal 2022’s first quarter (1Q2022) business update that it already had 135,000 units and was on track to hit its target of 160,000 units by 2023.
This acquisition helps to accelerate the growth of Ascott and puts CLI one step closer to achieving its objective.
As a recap, CLI paid out a total dividend per share of S$0.15 in 2021 comprising an ordinary dividend of S$0.12 and a special dividend of S$0.03.
ComfortDelGro Corporation Limited (SGX: C52)
ComfortDelGro Corporation Limited, or CDG, is a blue-chip land transport conglomerate with a total fleet size of around 35,000 buses, taxis and rental vehicles.
Earlier this month, CDG announced that it was acquiring Irish coach operator GoBus for €12 million, propelling the group to become the country’s third-largest inter-city coach operator.
GoBus’ fleet consists of 31 buses and three intercity coaches plying three routes.
ComfortDelGro Irish Citylink has been operating in the country since 1991 and operates a current fleet of 33 buses, carrying around 28,000 a week across all routes.
CDG’s group CEO believes that this acquisition will provide more options for both Citylink and GoBus customers and encourage more people to commute using public transportation.
CDG paid out a total dividend of S$0.042 in FY2021.
Ascendas India Trust (SGX: CY6U)
Ascendas India Trust, or AIT, owns a portfolio of real estate in India with an AUM of S$2.4 billion as of 31 December 2021.
Its portfolio comprises eight IT business parks, one logistics park, one industrial facility, and a data centre development.
AIT announced a forward purchase agreement to acquire two industrial assets, known as Casa Grande, in Mahindra World City, Chennai.
The REIT will also provide funding for the development of the Phase Two Project, and this transaction comes more than a year after an earlier forward purchase agreement within the same market.
The construction of Casa Grande Phase Two should be completed by the second half of 2023.
AIT paid out a distribution per unit (DPU) of S$0.078 in 2021, and this development could see DPU heading higher after the completion of the project.
Cromwell European REIT (SGX: CWBU)
Cromwell European REIT, or CEREIT, owns more than 100 predominantly freehold properties in countries such as Norway, Italy, Germany, Finland, France, and Poland, to name a few.
The portfolio’s AUM stands at around €2.5 billion as of 31 March 2022.
The REIT announced the acquisition of its third logistics asset in the UK called The Cube in Preston Brook for £18.9 million.
The freehold asset is fully occupied, has a 10-year lease, and is acquired at a net operating income yield of 5.2%.
The property comprises several warehouses and incorporates a two-storey office as well as loading bays and a canopy area.
The tenancy agreement includes a retail price index-linked rent review at year five that will provide positive rental income uplift for CEREIT.
The REIT paid out a DPU of €0.16961 in 2021 but this acquisition could see DPU heading higher for this year.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.