Singapore Exchange's (SGX:S68) Dividend Will Be SGD0.09

The board of Singapore Exchange Limited (SGX:S68) has announced that it will pay a dividend on the 15th of November, with investors receiving SGD0.09 per share. This means the dividend yield will be fairly typical at 3.2%.

Check out our latest analysis for Singapore Exchange

Singapore Exchange's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Singapore Exchange's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 5.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 60%, which is in the range that makes us comfortable with the sustainability of the dividend.

Singapore Exchange Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was SGD0.28 in 2014, and the most recent fiscal year payment was SGD0.36. This works out to be a compound annual growth rate (CAGR) of approximately 2.5% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Singapore Exchange has been growing its earnings per share at 8.8% a 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, we like to see the dividend staying consistent, and we think Singapore Exchange might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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.