Some investors rely on dividends to grow their wealth. If you’re one of those dividend experts, you might be intrigued to learn that Singapore Exchange Limited (SGX:S68) is about to lose its dividend in just three days. The ex-dividend date is one business day before the record date and is the deadline for shareholders to be on the company’s books and eligible for dividend payments. It is important to be aware of the ex-dividend date, as stock trades must be settled on or before the record date. This means that investors who purchased Singapore Exchange shares after October 17th will not receive the dividend, which will be paid on October 25th.
The company’s next dividend will be S$0.09 per share. Last year, the company distributed a total of S$0.36 to shareholders. Based on last year’s total dividends, Singapore Exchange has a yield of 3.1% on the current stock price of S$11.68. If you buy this business for its dividend, you need to understand whether Singapore Exchange’s dividend is reliable and sustainable. As a result, readers should always check whether Singapore Exchange has been able to grow its dividends, or if the dividend could be cut.
Check out our latest analysis for Singapore Exchange.
Dividends are usually paid out of a company’s profits. If a company pays more in dividends than it earned in profit, then the dividend might become unsustainable. Singapore Exchange pays out 62% of its profits, which is a common payout level for most companies.
If a company pays out less in dividends than it earned in profit, this generally suggests the dividend is affordable. The lower the percentage of profits that a company pays out, the greater the margin of safety for the dividend if the business goes into a downturn.
Click here to see the company’s payout ratio and analyst estimates of its future dividends.
historic dividend
Are profits and dividends growing?
Stocks in companies that generate sustainable earnings growth often offer the best dividend prospects, since it’s easier to lift dividends when earnings are rising. If profits decline significantly, the company may be forced to cut its dividend. That’s why we were relieved to see Singapore Exchange’s earnings per share have grown 8.8% per year over the past five years.
Many investors assess a company’s dividend performance by evaluating how much the dividend has changed over time. Over the past decade, Singapore Exchange has increased its dividend by an average of about 2.5% per year. We’re glad to see dividends growing alongside profits over the years, and this could be a sign that the company intends to share its growth with shareholders.
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conclusion
Should investors buy Singapore Exchange for its upcoming dividend?Earnings per share are growing at a reasonable rate, and the company is paying out just over half of its profits as dividends. It doesn’t seem like a clear opportunity at this point, so at most I’d put it on the watch list to see if the situation improves.
Want to know what other investors think about Singapore Exchange? Visualize past and future estimated earnings and cash flows to see what analysts are predicting.
A common investing mistake is buying the first interesting stock you see. You can find a complete list of high dividend stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
