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Singapore Exchange Limited's (SGX:S68) investors are due to receive a payment of SGD0.09 per share on 15th of November. This payment means that the dividend yield will be 3.2%, which is around the industry average.
View our latest analysis for Singapore Exchange
Singapore Exchange's Future Dividend Projections Appear Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Singapore Exchange was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to expand by 5.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 60% by next year, which is in a pretty sustainable range.
Singapore Exchange Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was SGD0.28, compared to the most recent full-year payment of SGD0.36. This means that it has been growing its distributions at 2.5% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. Singapore Exchange has seen EPS rising for the last five years, at 8.8% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Singapore Exchange Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we track are forecasting for Singapore Exchange for free with public analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.