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The board of Singapore Exchange Limited (SGX:S68) has announced that it will pay a dividend of SGD0.09 per share on the 25th of October. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.
See our latest analysis for Singapore Exchange
Singapore Exchange's Future Dividend Projections Appear Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, Singapore Exchange's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 3.7% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 61% 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 dividend has gone from SGD0.28 total annually to 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.
Singapore Exchange Could Grow Its Dividend
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 like to see the dividend staying consistent, and we think Singapore Exchange might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. 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. Is Singapore Exchange not quite the opportunity you were looking for? Why not check out our selection of top 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.