3 Solid Dividend Stocks For Your Retirement Portfolio

By James Yeo //
March 26, 2021
While not as sexy as growth stocks, dividend stocks have their own appeal as stable and 'income-producing' investments. This is especially so when good dividend companies often offer the potential of capital gains when the stock prices increase too. With that said, here are 3 solid dividend paying stocks you can possibly include in your retirement portfolio.

#1 Singapore Exchange Limited

Singapore Exchange Limited (SGX) is the only exchange in Singapore. It is headquarted in Singapore and provides a platform for equities, bonds, commodities, etc. About 40% of its listed companies and 80% of listed bonds are originated outside Singapore. As of FY2020, SGX’s revenue increased by 16% to $1.05 billion. Its net profit increased by an outstanding 21% to $472 million. Free cash flow came in at an outstanding $317.6 million. As a result, cash balance of the company increased to $686.4 million. SGX’s dividends have been increasing steadily over the past 8 years. We can also see that SGX is very prudent to only pay dividends (green bar) from its earnings (blue bar) and its dividend payout ratio has even come down due to faster growth in earnings. Another assuring factor is SGX solid balance sheet - it has roughly $310 million more cash than debt which can be used for higher dividends or M&A opportunities when the time arises. SGX last closed at $9.88, which values it at a P/E ratio of 22.5x and a dividend yield of 3.1%.

#2 Ascendas Real Estate Investment Trust

Ascendas Reit is Singapore’s first and largest listed business space and industrial real estate investment trust. Ascendas Reit owns and manages a well-diversified portfolio, valued at S$12.8 billion, comprising 200 properties in Singapore, Australia, the United Kingdom and the United States. As of its latest half-yearly report, Ascendas’s revenue increased by 14.6% to $521.2 million. Its net property income increased by 11.2% to $388 million. Free cash flow still came in at a good level of $249.7 million. As a result, cash balance of the company grew to a much healthier level of $361.3 million. Distributions per unit from Ascendas REIT increased from $0.0278 in 2002 to $0.1149 per unit in 2019. It is evident that the management team has done a good job managing the properties. Moreover, aggregate leverage of Ascendas is standing at 34.9% versus the current stipulated 50% during COVID-19. Interest coverage ratio is also at a comfortable level of 4.3X. This gives the REIT plenty of leeway to acquire more assets or simply do more AEI. Ascendas REIT last closed at $3.01 which values it at a P/B ratio of 1.36x and a dividend yield of 4.9%.

#3 DBS Group Limited

DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS has a growing presence in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. As of its quarterly report, DBS’s revenue increased by 2% to $11.3 billion. Its net profit decreased by 24% to $3.7 billion. The drop in net profit is due to the provisions for potential credits and other losses. An important ratio to take note is that non-performing ratio remains low at 1.6 and cost/income ratio dropped to 40.4. DBS’s dividends have grown from $0.56 per share in 2010 to $1.23 per share in 2019. Dividends in 2020 have been capped due to MAS’s requirement so that DBS have enough liquidity to tide through any potential credit losses. It can be assumed that DBS’s dividends will be reinstated to the $1.2 levels once the situation improves. Moreover, it is also backed by Temasek Holdings - a hallmark of investment calibre for the firm. DBS last closed at $28.5, which values it at a P/B ratio of 1.4x and dividend yield of 3.1%.
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