Dividends from Singapore blue chips to rise 17.8% in current reporting season: Research house

SINGAPORE - Dividends from companies on the Straits Times Index are expected to climb 17.8 per cent for the 2024 interim reporting season, according to a report put out by S&P Global Market Intelligence.

The expected growth will be a step down from 2023’s 36.4 per cent, which was boosted by record-high dividends declared by Singapore banks for 2023. 

The 30 STI companies are expected to announce dividends worth US$7.8 billion (S$10.5 billion) from July to October 2024.

The three Singapore banks, which account for 46 per cent of the benchmark index, paid dividends averaging yields of 6.2 per cent for the last financial year.

S&P Global Market Intelligence projects that dividends from Singapore’s banks will continue to grow, despite declining net interest income.

The banks’ established position in non-interest businesses, which has seen a notable uptick recently, is expected to support the growth of profits and payouts in 2024.

Large caps have generally led in terms of dividend payout. Keppel, Singtel, Singapore Airlines and ST Engineering have paid generous dividends averaging over 4 per cent.

But the financial research house also expects Singapore real estate investment trusts, or S-Reits, to be at the forefront of dividend payouts in 2024.

“Despite the persistently high finance and operating costs faced by Singapore Reits, S&P Global Market Intelligence forecasts that Reits will continue to offer attractive dividend yields compared to major interest rate benchmarks, given the resilience of the distributions,” said the July 29 report.

The Singapore market is arguably generous in terms of dividend yields, averaging at 4 per cent to 5 per cent, according to various analyst reports. Dividend yield is a financial ratio showing how much a company pays out in dividends each year relative to its stock price.

Going forward, S&P Global Market Intelligence reckons certain sectors could be more generous than others.

“The growth momentum for Singapore’s travel and leisure players, including airlines and resort developers, is expected to continue this year,” it said. “This can be attributed to industry tailwinds, such as the 30-day visa agreement established between mainland China and Singapore as well as the hosting of world-class concerts earlier this year.”

SIA’s dividend yield, for example, came in at well over 6 per cent over the past year as the company raked in record profits, thanks to a surge in demand for air travel.

Sats, which used to be known for its dividend payments, resumed payouts after its recent full-year results, following a pause of some three years.

While banks and blue chips have generally led the way in terms of payouts, in recent years, even second-liners have been jumping on the dividend bandwagon to attract investor interest.

With the first-half earnings season just begun, investors will be watching to see whether this uptrend continues.

“Over 90 per cent of the total amount is expected to have the ex-dates in August, assuming the persistent historical pattern for STI companies to continue this year,” the report noted.