In a significant move for investors, Singapore Land Group Limited (SGX:U06) has announced an increase in its dividend payment, set to rise to SGD0.045 on May 28, 2025. This marks a 13% increase from last year's payment of SGD0.04, although the dividend yield remains relatively low at just 2.4%. Despite this modest yield, the company’s projected earnings suggest that its future distributions are likely to be covered adequately, providing some reassurance to shareholders.
Historically, Singapore Land Group has maintained a solid track record of dividend payments, with its annual distribution having grown from SGD0.03 in 2015 to the current SGD0.045, reflecting a compound annual growth rate of 4.1%. However, analysts caution that the company’s earnings per share (EPS) are projected to decline by 14% over the next year if current trends persist. This decline raises concerns about the sustainability of dividend payments in the long run.
"Even a low dividend yield can be attractive if it is sustained for years on end," noted a financial analyst. The payout ratio, which estimates how much of the earnings are being returned to shareholders, is expected to be around 27%. This ratio is considered acceptable, given the current earnings projections, but it underscores the need for vigilance as earnings decline.
In contrast, Hock Lian Seng Holdings Limited (SGX:J2T) has also announced a dividend increase, set to rise to SGD0.018 on May 16, 2025, a 20% increase from last year's SGD0.015. This adjustment brings the annual payment to 4.8% of the current stock price, aligning closely with industry averages. Unlike Singapore Land Group, Hock Lian Seng’s earnings cover the dividend comfortably, suggesting a more stable outlook for its shareholders.
Looking ahead, Hock Lian Seng’s EPS is projected to rise by 20.5% over the next year if recent trends continue. The payout ratio for the upcoming dividend is estimated at 21%, indicating a healthy balance between rewarding shareholders and reinvesting in the business. However, the company has experienced some volatility in its dividend history, including at least one cut in the last decade. Since 2015, its annual payment has decreased from SGD0.04 to SGD0.018, reflecting a decline of approximately 7.7% annually.
"It's great to see that the company can raise the dividend and keep it in a sustainable range," commented another industry expert. This growth in EPS, coupled with a low payout ratio, provides Hock Lian Seng with the flexibility needed to potentially increase dividends in the future.
Meanwhile, the market remains attentive to developments involving DBS Bank, which reported a significant security breach after being informed by Toppan Next Tech, a vendor responsible for printing customer statements. The ransomware attack compromised the information of about 8,200 DBS customers and 3,000 Bank of China customers in Singapore. The compromised data included names, addresses, and details regarding equities held under DBS Vickers and Cashline loans.
Following the announcement of the breach, DBS shares plummeted by 9.3%, closing at S$39.28 on April 7, 2025. The incident has raised alarms about data security in the banking sector, prompting the bank to reach out to affected customers.
On the broader market front, the Straits Times Index (STI) has experienced significant volatility, closing down 3% on April 4 and declining further by 7.5% on April 7, marking its worst performance since 2008. Shares of Singapore Exchange (SGX) fell accordingly, closing at S$11.79, down 9.5% from the previous close of S$13.02.
In another development, Dasin Retail Trust's trustee-manager declared an extraordinary general meeting (EGM) called by dissenting unitholders as "invalid and ineffective," stating that any resolutions passed during the meeting would be void. The EGM, scheduled for April 17, 2025, aimed to approve the termination of FTI Consulting (Singapore) as the trust's adviser and appoint a new adviser to assist with restructuring its financial obligations.
Units of Dasin Retail Trust last closed at S$0.020 on April 2, 2025, before a trading halt was called on April 4. The trust has requested to lift the trading halt as it navigates these challenges.
As these companies adjust their dividends and navigate the market's ups and downs, investors are reminded to consider a range of factors beyond just dividend payments when evaluating their investment strategies. While dividends can be a reliable source of income, the underlying financial health and stability of the companies are equally crucial.
Overall, the announcements from Singapore Land Group and Hock Lian Seng Holdings indicate a mix of cautious optimism and underlying challenges in the market. Investors will be watching closely as these companies continue to adapt to changing economic conditions and strive for sustainable growth.
