Finding companies that pay consistent dividends over the years isn’t easy.
A multitude of factors such as the economic climate, competition and bad management can lead to businesses eliminating their dividends to conserve cash.
Last week, we featured one company, Singapore Exchange Limited (SGX: S68), that has paid dividends without a pause for two whole decades.
Engineering conglomerate Boustead Singapore Limited (SGX: F9D), or BSL, is another company with a long track record of consistent dividend payments.
The 193-year old company is one of the oldest in Singapore and was started by Englishman Edward Boustead.
I have owned BSL for 15 years and always look forward to the twice-yearly dividend payments that come into my bank account.
That said, investing is about the future and not the past.
Does BSL still qualify as an attractive investment?
A 17-year dividend streak
BSL has chalked up an enviable record of 17 consecutive years of dividend payments.
When factoring in dividends from spinoffs issued over the years, the total dividend per share comes up to a massive S$0.809.
For its latest the fiscal year 2021 ended 31 March 2021 (FY2021), the group paid out a total of S$0.08 per share in dividends, its highest on record.
Part of this payout comprised a special dividend of S$0.04. BSL declared this large payout because its subsidiary Boustead Projects Limited’s (SGX: AVM), or BPL, had successfully established a private investment fund called Boustead Industrial Fund (BIF) during FY2021.
Excluding this, the historical yield remains relatively attractive at 3.9% based on BSL’s closing price of S$1.02.
Geospatial strength
The group owns four core divisions — energy-related engineering, real estate solutions (under BPL), geospatial technology, and healthcare.
The first two divisions have been under considerable pressure due to the pandemic.
The recent oil price crash has led to lower spending by oil majors, while movement restrictions and reduced supply of foreign labour has caused problems for BPL’s projects.
The crown jewel in Boustead Singapore’s stable of businesses, however, is its geospatial technology division.
The conglomerate has an exclusive contract to distribute the Esri ArcGIS Technology, a geographic information system, in Asia and Australia.
ArcGIS is used for smart mapping and location analytics that has been embraced by governments and businesses alike during the pandemic.
Both revenue and profit before tax for this division has been steadily climbing.
Revenue has more than doubled from S$74.8 million in FY2010 to S$170.4 million in FY2021.
Profit before tax has surged from S$18.7 million to S$40.7 million over the same period.
Real estate ambition
Although BPL is facing delays in project execution, management has pulled off an impressive coup by establishing BIF in FY2021.
BIF’s initial portfolio comprises 14 properties with a total valuation of S$559 million as of FY2021.
Portfolio occupancy stands at 99% and the weighted average lease expiry for the portfolio (by net lettable area) is greater than seven years.
The idea of setting up BIF is to unlock the market value of the properties within BPL’s stable of properties and to earn recurring income through management fees.
Just last week, BIF purchased its fifteenth property, 351 on Braddell, from BPL for S$121 million.
BPL is also actively building up its property portfolio to be able to inject future properties into the fund.
Back in August, it acquired the mezzanine debt of a property group that may lead to the potential ownership of an 18-storey mixed development consisting of hospitality, healthcare and commercial components.
Get Smart: Dividends likely to continue
Boustead Singapore has demonstrated its ability to generate consistent free cash flow every year despite the economic ups and downs.
Its stellar dividend-paying track record speaks for itself, and the catalysts identified above should ensure the group continues its streak of consecutive payouts.
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Disclaimer: Royston Yang owns shares of Boustead Singapore Limited and Boustead Projects Limited.
