Singapore Exchange (SGX:S68) Is Increasing Its Dividend To SGD0.105

Singapore Exchange Limited (SGX:S68) will increase its dividend from last year's comparable payment on the 27th of October to SGD0.105. Even though the dividend went up, the yield is still quite low at only 2.4%.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Singapore Exchange's Future Dividend Projections Appear Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. The last dividend was quite easily covered by Singapore Exchange's 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 20.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 52%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Singapore Exchange

Singapore Exchange Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was SGD0.28, compared to the most recent full-year payment of SGD0.42. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See Singapore Exchange's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Singapore Exchange has grown earnings per share at 6.5% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Singapore Exchange's Dividend

Overall, a dividend increase is always good, and we think that Singapore Exchange is a strong income stock thanks to its track record and growing earnings. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 15 Singapore Exchange analysts we track are forecasting continued growth with our free report on 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.