As dividend investors, one thing we look forward to is receiving a larger paycheck than the year before.
To do so, we need to be able to identify good dividend stocks that can increase their dividends consistently over time.
This will help to increase your passive income stream over time without having to invest more capital.
A higher dividend yield does not make a stock a more attractive investment in the long run if the company is unable to sustain its dividend payments.
Instead of focusing solely on dividend yield, investors should also pay attention to a company’s revenue, net profit and free cash flow.
After all, it is the company’s financial performance that determines whether it can continue to raise its dividends consistently in the long run.
A resilient company with strong fundamentals also gives investors the confidence to remain invested during bleak economic periods.
Here are five companies that have increased their dividends in 2022.
AEM Holdings Ltd (SGX: AWX)
AEM Holdings is a testing and handling solutions provider for semiconductor and electronics companies.
Its customers are involved in the advanced computing, 5G and artificial intelligence (AI) markets.
In the nine months ended 30 September 2022 (9M2022), AEM reported a record high revenue of S$746.6 million, representing a 121% increase from S$338.5 million a year back.
Profit before tax (PBT) during the same period saw a 123% increase to S$141.4 million from S$63.3 million in 9M2021.
Total trailing 12-month (TTM) dividends declared amounted to S$0.117, a 77.3% increase from the previous year’s dividend of S$0.066.
At a share price of S$3.61, AEM Holdings offers a TTM dividend yield of 3.2% for 2022.
Amidst strong demand for AEM’s technology and equipment, management has also maintained its fiscal year 2022 (FY2022) revenue guidance of between S$820 million and S$850 million.
This translates into a year-on-year increase of between 45% and 50.4% for fiscal year 2022 (FY2022).
AEM has managed to grow its revenues by an average of 51% per year from 2016 to 2022.
Moving forward, AEM is expected to continue its strong performance in the years ahead.
According to IC Insights, the semiconductor market is projected to grow to US$1 trillion by the early 2030s.
The demand for end-user devices is driven by the rapid adoption of 5G, artificial intelligence, Internet of Things (IoT), cloud and automotive.
Coupled with increasing device test times, this will contribute to the secular growth in test spend, a market where AEM is the global leader.
DBS Group (SGX: D05)
DBS is the largest local bank in Singapore.
DBS has three core business segments, namely Institutional Banking, Consumer Banking / Wealth Management and Treasury Markets.
In the third quarter of 2022 (3Q2022), total income climbed 27.5% year on year to a new record high of $4.5 billion.
Net interest margin (NIM) surged by 0.47 percentage points year on year to hit 1.9% for 3Q2022, buoyed by the higher interest rate environment.
Investors of DBS were rewarded with much higher dividends at S$1.08 in 9M2022.
Comparatively, DBS gave a dividend of S$0.84 in the same period last year.
At a share price of $34.30, this brings the company’s TTM dividend yield to 4.2%.
Against the backdrop of rising interest rates, the bank expects its net interest margin (NIM) to reach around 2.25% by mid-2023.
Management has also guided for a double-digit growth in fee income in 2023.
OCBC Ltd (SGX: O39)
Following closely behind is the second largest bank OCBC.
When it came to its financial performance, OCBC did not disappoint as well.
In 3Q2022, total income surged by 23% year on year to S$3.15 billion while net profit rose by 31% year on year to S$1.6 billion.
Income growth was largely driven by a higher NIM of 2.06% during the quarter.
As for 9M2022, total income and net profit increased by 8% and 14% respectively.
In line with the stronger performance, OCBC declared an interim dividend of S$0.28, 12% higher than S$0.25 paid out the year before.
At a share price of $12.20, this brings OCBC’s TTM dividend to 4.6%.
HRNetGroup Ltd (SGX: CHZ)
HRNetGroup is a leading recruitment and staffing company with on-site recruiters across 14 cities.
The group owns a total of 12 brands such as HRNetOne, Recruit Express and PeopleSearch.
For the first half of fiscal year 2022 (1H2022), HRNetGroup saw placements fall 1.2% year on year to 3,691.
On a positive note, the number of contractor employees rose 11.7% year on year to 17,954 as more companies switched to short-term contracts.
Taken together, revenue for HRNetGroup increased by 14.2% to reach S$314.2 million.
Meanwhile, gross profit increased 12.3% year on year to S$91.9 million, from S$81.8 million in the prior year.
With the job vacancy to unemployed person ratio increasing in recent years in Singapore, businesses’ demand for talent will likely remain strong.
HRNetGroup’s dividend more than doubled from S$0.025 in 2021 to S$0.0613 in 2022.
With a share price of S$0.77, shareholders of the company have been rewarded with a dividend yield of 8%.
Riverstone Holdings Limited (SGX: AP4)
Riverstone Holdings is a Malaysia-based glove-making company.
Aside from its cleanroom and nitrile healthcare gloves, the company also produces finger cots, packaging materials and face masks.
For 3Q2022, Riverstone reported a 58.6% year on year decrease in revenue to RM 270 million amid the normalisation of healthcare glove demand as more economies start to reopen.
Despite this, CEO Mr Wong Teek Son has emphasised that the cleanroom segment has shown resilience over the years, given the company’s market leadership in this industry.
Consequently, net profit decreased by 76.2% year on year to RM 63.5 million in 3Q2022.
Still, Riverstone’s 9M2022 dividend increased from RM 0.1 in 2021 to RM 0.16 in 2022.
This is thanks to the company declaring a second interim dividend of RM 0.06 for 3Q2022.
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Disclosure: Ryan Yap does not own any of the shares mentioned.
