Who doesn’t love dividends.?
Dividend investing is even more appealing in Singapore where investors are not taxed on dividends earned.
With that, here are two high-yield dividend stocks that look like great investment opportunities now.
Buying the dip
It is no surprise to see that stocks affected by the trade war have been hammered recently. Valuetronics Holdings Limited (SGX: BN2), a manufacturing firm with all its factories in China, is one of the stocks that got hit.
With around 45% of the Hong Kong-headquartered firm’s revenue coming from US customers and around half of that subject to 25% tariffs, Valuetronics is a company that has been hit hard by the trade tariffs. Its stock has, likewise, fallen more than 20% since the start of the trade war last year.
However, this could be the perfect opportunity for bargain hunters to pick up shares on the cheap.
Valuetronics’ shares now trade at around S$0.63 each, which translates to just 7.7 times its trailing earnings and 1.3 times its book value. Its net cash balance, which has swelled to more than HK$900 million, now accounts for more than 60% of Valuetronics entire market cap.
Moreover, based on 2019’s dividend of 25 HK cents per share, Valuetronics has a meaty dividend yield of 7%, despite paying out just 54% of its earnings.
The management of Valuetronics has a good track record of growing the business, doubling the group’s earnings per share from 23.2 HK cents in FY2008 to 46.2 HK cents in FY2019. Management has also responded sharply to the ongoing threat of the China-US trade war by setting up a production facility in Vietnam, which began mass production in June this year.
With Valuetronics’ shares trading at bargain prices, this could be a great time for income investors to pick up its shares.
Riding the surge in luxury watch demand in China
While Valuetronics has seen its share price decline, luxury watch retailer Cortina Holdings Limited‘s (SGX: C41) stock has climbed more than 50% in the last year. But don’t let that turn you off.
Despite the surge in its share price, Cortina Holdings could still make a smart investment for income investors.
Based on its current share price of S$1.39, Cortina has a price-to-earnings ratio of just 7 and trades just 10% above its book value.
In the quarter ended 30 June 2019, Cortina saw revenue jump 20%, with earnings per share climbing 69%. The group ended the quarter with S$85 million in cash and S$25 million in debt, giving it a net cash position of S$60 million. Despite the rise in its share price, Cortina’s market cap is still just S$230 million. As such, its net cash balance alone makes up more than 20% of its entire market cap.
And based on 5.5 Singapore cents in total dividends paid out for the year ended 31 March 2019, the retailer has a yield of around 4%. With the steep increase in profits and cash on its books, investors can expect Cortina to continue dishing out those sweet dividends over the foreseeable future.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Jeremy Chia doesn’t own shares in any companies mentioned.
Motley Fool Singapore 2019