There has been a swift rebound in the Singapore stock market since the lows achieved in March last year.
Post circuit breaker, business sentiment has also improved markedly.
Although the pandemic may still be raging, the share prices of many companies and REITs have surged from their lows last year.
Partial restoration of dividends has accompanied the rapid rise in share prices across the board.
But amid the rising share prices, income-seeking investors may feel that they have missed the boat.
The question is — are dividend stocks still worth buying today?
Or is it too late to invest?
The recovery is still on track
Despite the proliferation of the new COVID-19 delta variant, many countries are proceeding successfully with their vaccination programs.
Recovery is therefore still on track, benefitting numerous businesses that had suffered from widespread lockdowns and movement restrictions.
Dividend-paying companies such as VICOM (SGX: WJP) have seen some respite.
Although business activity isnot yet close to the pre-pandemic levels, the group is seeing some improvement for its non-vehicle testing business in its fiscal 2021 first quarter (1Q2021).
Retail REITs such as CapitaLand Integrated Commercial Trust (SGX: C38U) and Frasers Centrepoint Trust (SGX: J69U), or FCT, have reported encouraging recovery in tenant sales.
In particular, FCT’s portfolio’s tenant sales have seen an 11.7% year on year rise for February 2021.
This encouraging statistic, along with the acquisition of five malls from AsiaRetail Funds, has enabled the REIT to report a 28.4% year on year jump in its distribution per unit (DPU) to S$0.05996 for its fiscal 2021 first half.
Resilience during adversity
Investors should not forget that there are a handful of businesses that have displayed resilience during tough times.
Not only have these businesses held their own, but some have also thrived and gone on to report higher revenue and profits.
Consequently, dividends have also increased in tandem with the improved business performance.
Take Singapore Exchange Limited (SGX: S68), or SGX, for instance.
The bourse operator announced a 9% year on year rise in revenue for its fiscal half-year ended 31 December 2020.
Its net profit rose by 12% year on year to S$240 million, and the group raised its quarterly dividend by S$0.005 to S$0.08 per share.
Another example of a company that has thrived during this downturn is iFAST Corporation Limited (SGX: AIY).
The financial technology company saw its net revenue increasing by 51.4% year on year for 1Q2021.
Net profit surged by 142.5% year on year to a record S$8.8 million, and iFAST raised its interim dividend by 33% from S$0.0075 to S$0.01.
Taking advantage of opportunities
Investors should also take advantage of short-term negative sentiment to accumulate shares in dependable dividend-paying companies.
Each market sell-down should be seen as an opportunity to snap up shares of great businesses.
Assuming dividends remain constant, you will be enjoying a higher dividend yield as the share price falls.
And if dividends are raised in future due to business recovery or growth, it will be a double bonus for the savvy investor.
There are also opportunities to purchase the stock of companies that have raised their dividends significantly.
Such a move may signal better times ahead and a willingness to continue paying out a raised level of dividends.
One example of this is The Hour Glass (SGX: AGS), a retailer of high-end luxury watches and timepieces that owns over 45 boutiques in 12 cities in Asia.
For its fiscal year ended 31 March 2021, the group reported flat year on year total revenue has seen an 8% year on year increase in net profit to S$82.5 million.
Total dividends for the fiscal year, however, tripled from S$0.02 last year to S$0.06.
Get Smart: It’s never too late for dividends
Investors need to realise that it’s never too late to buy into great dividend stocks.
The recovery theme suggests that companies that had temporarily dropped dividends can eventually restore them.
Meanwhile, growth companies such as SGX and iFAST are even raising their dividends as their business benefits from tailwinds generated by the pandemic.
Being open to opportunities to accumulate rock-solid dividend stocks on the cheap allows you to build up a strong portfolio that can provide you with passive income for your retirement.
Battle of Stocks – Your 3 Winning Stocks! After almost two weeks of battling it out, 3 Singapore stocks have emerged as your favourites! Join The Smart Investor’s Co-Founders David Kuo, Joanna Sng, and Chin Hui Leong in a webinar as they discuss these 3 winning stocks
Is it going to be Keppel DC REIT (SGX: AJBU), DBS (SGX: D05), or Frasers Logistics & Commercial Trust (SGX: BUOU)? These 3 stocks have emerged as our audience’s favourites in our epic Battle of the Stocks! Join The Smart Investor’s Co-Founders David Kuo, Joanna Sng, and Chin Hui Leong in a webinar as they discuss these 3 winning stocks and reveal their favourite one! Click HERE to sign up for free!
Disclaimer: Royston Yang owns shares of VICOM, Singapore Exchange Limited and iFAST Corporation Limited.