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Singapore Exchange Ltd's Dividend Analysis

Understanding the Dividend Prospects of Singapore Exchange Ltd

Singapore Exchange Ltd (SPXCF) recently announced a dividend of $0.09 per share, payable on 2024-02-20, with the ex-dividend date set for 2024-02-09. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Singapore Exchange Ltd's dividend performance and assess its sustainability.

What Does Singapore Exchange Ltd Do?

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Singapore Exchange is a vertically integrated securities exchange business, offering listing, data, trading, clearing, and settlement services across equities, debt, and derivatives. Singapore Exchange, like Singapore itself, is remarkably outward-facing and offers some of the most liquid and widely traded equity derivative products for various regional markets, including the FTSE China A50 Index Futures and the Indian Nifty 50 Index Futures.

Singapore Exchange Ltd's Dividend Analysis
Singapore Exchange Ltd's Dividend Analysis

A Glimpse at Singapore Exchange Ltd's Dividend History

Singapore Exchange Ltd has maintained a consistent dividend payment record since 2008, with dividends currently distributed on a quarterly basis. To track historical trends, below is a chart showing the annual Dividends Per Share for Singapore Exchange Ltd.

Breaking Down Singapore Exchange Ltd's Dividend Yield and Growth

As of today, Singapore Exchange Ltd currently has a 12-month trailing dividend yield of 3.51% and a 12-month forward dividend yield of 3.65%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Singapore Exchange Ltd's annual dividend growth rate was 2.20%. When extended to a five-year horizon, this rate decreased to 0.70% per year. Moreover, over the past decade, the annual dividends per share growth rate stands at 1.80%.

Based on Singapore Exchange Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Singapore Exchange Ltd stock as of today is approximately 3.63%.

Singapore Exchange Ltd's Dividend Analysis
Singapore Exchange Ltd's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2023-12-31, Singapore Exchange Ltd's dividend payout ratio is 0.70, which may suggest concerns about the sustainability of the company's dividend.

Singapore Exchange Ltd's profitability rank of 8 out of 10, as of 2023-12-31, suggests good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Singapore Exchange Ltd's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. However, Singapore Exchange Ltd's revenue has increased by approximately 3.30% per year on average, a rate that underperforms approximately 59.26% of global competitors. Similarly, its 3-year EPS growth rate of 1.70% per year on average also underperforms approximately 64.02% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 5.60% underperforms approximately 65.76% of global competitors.

Next Steps

In conclusion, while Singapore Exchange Ltd's dividend payments and yield are attractive, the modest growth rates and payout ratio raise questions about the long-term sustainability of its dividends. Investors should consider these factors alongside the company's strong profitability and competitive position in the market. As the financial landscape evolves, will Singapore Exchange Ltd be able to maintain its dividend attractiveness, or will it need to adjust its strategy to sustain its payouts? Value investors may wish to keep a close eye on the company's performance and future announcements.

GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.