It’s the time of the year again as earnings season rolls around.
Being right smack in the middle of the season allows us to get a view of companies or REITs that have already reported to see if a recovery is indeed underway.
Armed with this knowledge, it’s also possible to make educated guesses on how other companies may fare.
For dividend-focused investors, a rise in earnings and cash flow bodes well for increased payouts.
We have compiled a cross-section of companies that have announced dividend increases, or may potentially announce a rise in dividends.
Some companies that have managed to maintain their dividends will also be featured as a beacon of resilience amidst the downturn.
Without further ado, here’s a laundry list of our top dividend stocks to watch for this month.
REIT recovery underway
In the REITs sector, several REITs have posted healthy increases in distribution per unit (DPU) as the industry sees a nascent recovery.
Frasers Centrepoint Trust (SGX: J69U), a retail REIT with a portfolio of 10 suburban malls, posted a strong 28.4% year on year rise in DPU to S$0.05996 for its fiscal 2021 first half (1H2021).
Although Singapore is now back under Phase II Heightened Alert, tenant sales have recovered strongly for the REIT and unitholders can expect heartland malls to remain resilient.
Industrial REIT Mapletree Industrial Trust (SGX: ME8U) posted a 16.7% year on year increase in DPU for its latest quarter, driven by acquisitions of data centres in the US and lower rental reliefs for tenants.
And Parkway Life REIT (SGX: C2PU) remains a bastion of stability, churning out a 0.7% year on year rise in DPU to S$0.0338 for its fiscal 2021 second quarter.
These three REITs provide a good indication of better economic conditions as more countries raise their vaccination rates.
The numbers also provide unitholders with the assurance that these distributions can continue.
Dependable businesses with healthy cash flows
Another segment of companies is those with sturdy balance sheets and cash flows despite the tough economic conditions.
Hongkong Land Limited (SGX: H78), an owner of commercial real estate in both Singapore and Hong Kong, posted a 12% year on year rise in underlying net profit despite fair value losses incurred on its properties.
The property giant maintained its interim dividend of US$0.06 per share.
In that same vein, Haw Par Corporation Ltd (SGX: H02), which is due to announce its 1H2021 earnings on 13 August, should also display the same traits of being able to maintain its interim dividend.
The conglomerate, which distributes the world-renowned Tiger Balm brand of ointments, is well-known for its strong balance sheet, healthy free cash flows and stakes in both United Overseas Bank Ltd (SGX: U11) and UOL Group Limited (SGX: U14)
A bump up in dividends
There’s also a crop of companies that have bumped up their dividends as their business has remained relatively insulated from the pandemic.
One of these is iFAST Corporation Limited (SGX: AIY), a financial technology company that operates a platform for the buying and selling of unit trusts, bonds and shares.
The group reported a healthy 55% year on year surge in its net profit and hiked its dividend by 46% year on year from S$0.0075 to S$0.011.
Another company that significantly raised its annual dividend is The Hour Glass (SGX: AGS), a retailer of luxury watches.
The speciality watch retailer tripled its fiscal 2021 dividends to S$0.06 from S$0.02 a year ago, as healthy consumer spending in the luxury sector lifted the group’s earnings by 8% year on year.
Looking at this recovery, we can reasonably expect that both VICOM Ltd (SGX: WJP) and SBS Transit Ltd (SGX: S61) may restore their interim dividends this year.
Both transportation-related companies had withheld paying out an interim dividend last year due to the tough conditions imposed by the Circuit Breaker.
VICOM is set to release its earnings on 11 August while SBS Transit is slated to report a day after.
Get Smart: The best is yet to come
For companies that have adapted well to the changes in the business environment, the best is yet to be.
Their resilience and tenacity will enable them to triumph over their competitors to post continued growth in both earnings and dividends.
Investors should monitor for the above stocks in the coming months to see if the growth momentum continues.
If so, they can expect dividends to be maintained or even increased further.
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Disclaimer: Royston Yang owns shares of VICOM, iFAST Corporation Limited and Singapore Exchange Limited.