Singapore Exchange (SGX:S68) Has Affirmed Its Dividend Of SGD0.08

Singapore Exchange Limited (SGX:S68) will pay a dividend of SGD0.08 on the 21st of October. Based on this payment, the dividend yield will be 3.3%, which is fairly typical for the industry.

View our latest analysis for Singapore Exchange

Singapore Exchange's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Before this announcement, Singapore Exchange was paying out 76% of earnings, but a comparatively small 63% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 16.2%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 67% which brings it into quite a comfortable range.

Singapore Exchange Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was SGD0.27 in 2012, and the most recent fiscal year payment was SGD0.32. This works out to be a compound annual growth rate (CAGR) of approximately 1.7% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

We Could See Singapore Exchange's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Singapore Exchange has been growing its earnings per share at 5.9% a year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 15 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.