4 Promising Singapore Stocks That Could Increase Their Dividends
Income investors focus their attention on stocks that pay out dividends.
These dividends act as a stream of steady passive income that can supplement your earned income.
Eventually, these dividends will increase to a point where they can comfortably cover your expenses, allowing you to enjoy financial independence.
To do so, you need to turn your attention to companies that raise their dividends over time.
Here are four promising candidates that could be poised to up their dividend payouts.
Centurion Corporation (SGX: OU8)
Centurion Corporation owns, develops and manages specialised accommodation assets for workers and students in Singapore, Malaysia, Australia, the US, the UK, and China.
The group’s portfolio comprises 32 accommodation assets totalling 66,495 beds as of 30 June 2024.
The group reported a strong set of earnings for the first half of 2024 (1H 2024).
Revenue jumped 27% year on year to S$124.4 million while gross profit climbed 34% year on year to S$94.1 million.
Net profit leapt more than three-fold year on year to S$118.2 million, aided by fair value gains on investment properties.
Excluding these one-off gains, core net profit for Centurion surged 48% year on year to S$53.4 million.
The group declared an interim dividend of S$0.015, a sharp 50% year-on-year increase from the S$0.01 paid out a year ago.
There could be more growth ahead for the business.
Management intends to enhance project returns through asset enhancement initiatives (AEIs) for its assets and grow its accommodation business through strategic acquisitions.
Singapore should add around 5,400 beds by 2026 from the redevelopment of two properties while Malaysia’s AEIs will add 920 this year and another 2,690 beds in 2025.
In early September, Centurion formed two joint ventures in China to retrofit, renovate, and manage build-to-rent residential accommodation in Xiamen, contributing to the group’s asset-light strategy.
Centurion paid out just 24% of its earnings as a dividend for 1H 2024, demonstrating significant room to increase its dividend should its earnings rise in tandem.
Digital Core REIT (SGX: DCRU)
Digital Core REIT, or DCR, is a data centre REIT with a portfolio of 10 data centres across Europe, the US, and Canada.
The REIT’s assets under management stood at US$1.4 billion as of 30 June 2024.
DCR reported a downbeat set of earnings for 1H 2024 with revenue tumbling 9.6% year on year to US$48.3 million because the REIT sold off two properties in January this year.
Net property income fell 13.4% year on year to US$30.4 million.
Distribution per unit (DPU) slid 6.3% year on year to US$0.018.
DCR could see finance costs start to ease as interest rates have begun to decline with the US Federal Reserve initiate its first rate cut of 0.5 percentage points since 2020.
Meanwhile, the REIT also announced the acquisition of an additional interest in a Frankfurt data centre.
The manager expects to purchase an additional 10% interest in the asset to add to its existing 49.9% stake.
Based on this stake, DCR estimates that DPU will rise by approximately 1.7%.
iFAST Corporation Limited (SGX: AIY)
iFAST Corporation is a financial technology company that operates a platform for the buying and selling of equities, unit trusts, and bonds.
iFAST released a sparkling set of earnings for its second quarter of 2024 (2Q 2024).
Net revenue surged by 93% year on year to S$61.4 million while operating profit shot up nearly fourfold year on year to S$20.2 million.
The fintech’s net profit for 2Q 2024 leapt 346.1% year on year to S$16 million.
iFAST increased its second interim dividend from S$0.01 to S$0.015 as its assets under administration hit a new record of S$22.37 billion as of 30 June 2024.
For its 1Q 2024, the fintech also upped its interim dividend by 30% year on year to S$0.013.
Management believes its Hong Kong ePension contract will be an important growth driver for this year and the next.
With the two dividend increases under its belt, the group looks well-positioned to increase its third interim dividend above what it paid the previous year if it can continue to post year-on-year improvements in its net profit.
Elsewhere, iFAST’s digital bank is also set to become an important growth driver for the group in 2025 and beyond.
Grand Banks Yachts (SGX: G50)
Grand Banks Yachts, or GBY, is a manufacturer of luxury recreational motor yachts under the Grand Banks, Eastbay, and Palm Beach brands.
The group owns a manufacturing yard at Pasir Gudang, Johor, and owns service yards in the US and Australia.
GBY reported a strong set of results for its fiscal 2024 (FY2024) ending 30 June 2024.
Revenue rose 17.1% year on year to S$133.7 million with gross profit climbing nearly 38% year on year to S$50.7 million.
Net profit more than doubled year on year to S$21.4 million and represented a new record for the yacht builder.
The group declared a final dividend of S$0.01, unchanged from a year ago.
However, FY2024’s total dividend came up to S$0.015, which was 50% higher than what was paid out in FY2023.
GBY recently completed its new single-storey facility at its Pasir Gudang yard which will increase the usable floor space by 25%.
New machinery brought in will help the group to enhance capacity, build larger and more energy-efficient yacht models, and reduce deliver time.
Management is optimistic about the outlook for the luxury yacht market as the group’s strong orders provides a buffer against short-term headwinds such as supply chain disruptions and the outbreak of war.
Should GBY continue this financial performance, we could see the yacht manufacturer pay out more in dividends for FY2025.
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Disclosure: Royston Yang owns shares of Digital Core REIT and iFAST Corporation.
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