3 dividend stocks with at least 150% growth for the past 4 years

For dividend investors, not only are they interested in the companies that could pay a steady stream of dividend, they are also keeping a look out on whether the company can boost their dividend payout in the long term.

A company with the ability to increase their dividend means that investors could potentially receive a higher amount of dividend income from their investment in the long run. 

In this article, we will be looking at 3 companies with significant growth in their dividend payout for the past 4 years: JB Foods Limited, Q&M Dental Group Limited and SBS Transit Limited. 

1. JB Foods Limited

Established since the 2000s, JB Foods Limited (“JB Foods”) is a major cocoa ingredients producer with operations in Malaysia and Indonesia with a cocoa bean processing capacity of 180,000 tonnes per year. 

JB Foods is principally engaged in the production and sale of cocoa ingredient products, namely cocoa butter, cocoa powder, cocoa liquor and cocoa cake, which are used to produce chocolate, chocolate confectionary, as well as cocoa-related food and beverages.

The Group’s products are sold primarily under the “JBCOCOA” brand name and they export their products worldwide to customers ranging from international trade houses to end users. 

Revenue & net profit

JB Food’s revenue has been growing since FY2016 except for a slight dip of 9.1 per cent in FY2017 due to a decrease in average selling price for their cocoa products as a result of lower cocoa bean prices. 

In terms of their profit after tax, it has shown a strong growth rate of almost 250 per cent in FY2017 due to the improvement in gross profit margin. This can be attributed to the increasing sales volume and improvement in operating efficiency.  

Despite the growth in profit after tax for FY2016 – FY2018, it saw a dip of 3.7 per cent in FY2019 due to the increase of headcount and finance costs arising from higher inventory due to expanded production capacity. 

Dividend

With the strong financial performance achieved in FY2017, JB Food’s total dividend per share saw an increase from 0.5 cents in FY2016 to 2.0 cents in FY2017. That is a growth rate of 300 per cent.  

In FY2018, the dividend per share further increase by 50 per cent to 3.0 cents per share on the back of better financial performance achieved in the same period. Due to the slight dip in profit after tax for FY2019, their dividend per share saw a drop of 6.7 per cent to 2.8 cents per share. 

JB Food’s dividend payout ratio has been hovering around 20 – 24 per cent for the past 4 financial years as the Group tends to keep majority of its profit for working capital and further expansion in production capacity. 

Overall, JB Food has achieved a growth of 460 per cent in dividend payout for the past 4 financial years. 

2. Q&M Dental Group Limited

Q & M Dental Group Limited (“Q&M”) is a leading private dental healthcare group in Asia. The Group owns the largest network of private dental outlets in Singapore and aims to expand its operations geographically and vertically through the value chain in Malaysia, the People’s Republic of China (“PRC”) and within ASEAN. 

Established in 1996, Q&M has built a brand that is synonymous with accessible and quality dental healthcare. The Group operates 114 dental outlets, 5 medical clinics and 3 dental supplies and equipment distribution companies across Singapore, Malaysia and the PRC.

Underpinned by more than 230 experienced dentists and close to 400 supporting staff, the Group has an outreach of more than 600,000 patients in Singapore. 

Revenue & net profit

Q&M’s revenue has suffered a steep drop in FY2017 due to deconsolidation of Aoxin Q&M Dental Group Limited (“AQMD”) from the accounts, as it changed from being a subsidiary to an associate in April 2017.  

As a result of the deconsolidation, Q&M’s profit after tax for FY2017 has dipped by 29.0 per cent year-on-year to $23.6 million 

In FY2019, its revenue has increased by 6.7 per cent year-on-year to $127 million. This can be seen from the higher contributions from existing and new dental outlets in Singapore and Malaysia, as well as the dental equipment and supplies distribution arm. 

Due to the higher contribution from its business operation, Q&M’s profit after tax for FY2019 has increased by 26 per cent year-on-year to $18.1 million.  

Dividend

Despite the fall in revenue and profit for FY2017, Q&M’s management announced the same amount of gross dividend as compared to the previous year. They also paid out a special dividend of 0.5 cents per share to reward their shareholders due to the spin-off of its subsidiary, AQMD.  

There was a spike in FY2019’s dividend by more than 243 per cent year-on-year as the management intended to reward shareholders in view of the profit generated from the partial disposal of interest in Aidite. This resulted in the payout ratio hitting above 100 per cent.  

Excluding FY2019, Q&M’s past dividend payout ratio has been fluctuating between 31 – 54 per cent as the management aims to balance out between retaining its profit for expansion and rewarding shareholders.

Overall, Q&M has achieved a growth of 152 per cent in dividend payout for the past 4 financial years. 

3. SBS Transit Limited

A subsidiary of ComfortDelGro Corporation Limited, SBS Transit Limited (“SBS Transit”) is a leading bus and rail operator in Singapore. SBS Transit operates more than 200 bus services with a fleet of some 3,000 buses. 

On top of the extensive bus routes, it also runs the North East MRT Line, which is the world's first fully automated, underground heavy rail system that connects Punggol to HarbourFront, as well as the Light Rail System in the Punggol and Sengkang new towns. 

Lastly, SBS Transit operates the newest MRT line - the Downtown Line. This 42km Line with 34 stations is the longest underground Line in Singapore. The first and second stage of Downtown Line commenced service on Dec 22, 2013 and Dec 27, 2015, whilst the third stage opened on Oct 21, 2017. 

Revenue & net profit

From the table above, we can see that SBS Transit has achieved an average revenue growth of 9.67 per cent since FY2016 till FY2019. The growth can be attributed from the higher ridership and higher fares across its public transport services.  

Furthermore, revenue from its commercial services also contributed to the group’s revenue growth as it recorded higher advertising revenue.  

For FY2018, despite only a 16 per cent growth in SBS Transit’s revenue, the group has recorded a 70.0 per cent growth in its profit after tax. The rise can be seen from a slower growth in SBS Transit’s cost of revenue and a reduction in depreciation expenses and finance costs. 

Dividend

With the increase in revenue and net profit, SBS Transit’s management has declared a growing amount of dividend payout for the past 4 financial years.  

In FY2016, SBS Transit’s dividend per share stands at 5.05 cents and has increased substantially by 158 per cent to 13.05 cents per share in FY2019. The increase in dividend can be seen from the growth in its business operations and underlying profits.  

SBS Transit’s dividend payout ratio has been fluctuating around the 50 per cent level, which is line with the group’s dividend policy of distributing at least 50 per cent of its profit as dividend. 

Conclusion 

Dividend investor should always keep a lookout for companies that are able to maintain their dividend payout, but also achieve growth in their payout in the long run.  

However, investors should also take note of the overall financial performance of the various companies. This is to ensure that they can continue to distribute out dividend without jeopardizing the financial health of the underlying business operation.

This article was first published in Investor-One. All content is displayed for general information purposes only and does not constitute professional financial advice.