Amid the macro-economic headwinds, income investors might be looking for shares that can withstand the test of time. Here, let’s explore three such companies that have strong balance sheets and dividend yields of over 4%.
The first company income investors should consider is Singapore O&G Ltd (SGX: 1D8). It provides women and children private health-care services. It has four business segments, and they are O&G (Obstetrics & Gynaecology), Cancer-Related, Dermatology, and Paediatrics. Singapore O&G was listed in June 2015.
The healthcare provider has a rock-solid balance sheet. As of 31 March 2019, it had a cash balance of S$25.1 million, up from S$21.5 million at the end of 2018. It had no debts in both the years. Singapore O&G has increased its dividend from 1.55 Singapore cents in 2016 to 1.70 cents in 2018, translating to a growth rate of around 10% in all.
At Singapore O&G’s share price of S$0.395, it has a price-to-earnings (PE) ratio of 21 and a dividend yield of 4.3%.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD) designs, manufactures, and markets consumables and precision tools used in the semiconductor industry. I admire Micro-Mechanics’ fortress-like balance sheet. As of 31 March 2019, the company had S$19.0 million in cash hoard with no debt. Even though the cash balance had fallen slightly from the end of December 2018’s cash balance of S$20.4 million, there’s nothing alarming.
In the last five fiscal years, Micro-Mechanics’ total dividend has climbed from 3.0 Singapore cents per share in 2014 to 10.0 Singapore cents per share in 2018 (including a 1.0 Singapore cent special dividend). That’s an over 200% increase during the time frame.
At Micro-Mechanics’ share price of S$1.57, it sports a PE ratio of 15 and a dividend yield of 5.7%, excluding the 2018 special dividend. Including the special dividend, the yield increases to 6.4%.
VICOM Limited (SGX: V01) is a provider of technical testing and inspection services mainly in Singapore. Just like Singapore O&G and Micro-Mechanics, VICOM’s balance sheet is extremely healthy. Its cash position was S$112.8 million with no bank loans. This is a vast improvement from 31 December 2018, where it had S$104.1 million in cash and zero debt.
Shareholders would be delighted to note that VICOM’s total dividend from 2014 to 2018 had grown by 68% in all.
Source: VICOM 2018 annual report
At VICOM’s share price of S$6.99, it sports a PE ratio of 18 and a dividend yield of 5.2%, without any special dividend. Including the 2018 special dividend, the yield shoots up to 6.5%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore O&G Ltd, Micro-Mechanics and VICOM. Motley Fool Singapore contributor Sudhan P owns shares in Micro-Mechanics and VICOM.
Motley Fool Singapore 2019