Singapore Telecommunications Limited, or Singtel, is the biggest and oldest Telco in Singapore. They’ve been on the trade since the late 1800s and even monopolized the local telco scene until 1997. By then, Singtel had already publicly listed the company. Three years later, they started issuing dividends.
Fast forward to 2021, It is also the fourth main player of Singapore’s stock market benchmark. However, times are rapidly changing. The intense competition, as well as the COVID-19 pandemic, are the two most pressing issues that the company has to face. Despite this, Singtel continues to provide dividend payouts even in 2020 and 2021.
So is Singtel a good dividends stock in 2021? Whether you’re thinking of diversifying your dividend portfolio or you already have shares in the firm, here’s what you need to know about its payouts.
How Much Will I Receive?
2021 continues to be a hard year for everyone, including big companies. With the current market condition plus the circuit breaks and the economic slowdown, both consumers and businesses are suffering from losses.
Singtel also suffered setbacks. In fact, The telco posted revenue of $7.4 billion during the latest period. They are down 10% from earning $8.3 billion in 2020. One of the factors that contributed to the loss is the lower equipment sales, roaming, and prepaid mobiles.
Thankfully, they experienced growth in their Infocomm technology business.
Singtel’s Revenue and Performance Report
|Revenue from Singtel’s Major Product and Services||Half Year Ended 30 Sep 2020 (S$’ mil)||Half Year Ended 30 Sep 2019 (S$’ mil)|
• Mobile service
• Sale of equipment
• Handset operating lease income
|Data and Internet||1,716.1||1,803.0|
What Is The Dividend Payout Schedule?
Financial Year Profit Report
Singtel’s underlying net profit plunged 36% to $837 million. However, after adding the significant regulatory losses in the latest period, the telco’s net profit for 1HFY21 amounted to $466 million. This is still a major improvement from last year’s net loss of $127 million.
How Much Interim Dividend Will Investors Receive?
Singtel announced an interim dividend of 5.1 cents per share for the half-year ended 30 September 2020. This amounts to $833 million or approximately 100% of the telco’s underlying net profit for the first year.
This was paid on January 15, 2021. The dividend payout is down 25% from 2020’s 6.8 cents per share. Before the pandemic, dividends amount to more than 15 cents per share.
|Cash (Interim Ordinary Dividend 2021)||Shares (Singtel Scrip Dividend Scheme)|
|$0.051/share||Receive shares at $2.422 each|
Despite the setbacks, the STI constituent distributed close to 100% of its underlying net profit from April to September 2020 to shareholders. This was a risky move since the telco needs cash to prepare for their 5G mobile network as well.
On top of that, the telco also launched its own scrip dividend scheme in 2021. This gives investors the opportunity to receive the payouts in the form of shares instead of cash.
Why are they offering a scrip dividend scheme?
This is a way to encourage shareholders to continue investing in their company. Additionally, it also encourages long-term investing. This means shareholders will continue to believe in the company instead of pulling out their investments as soon as they receive cash. More importantly, the scrip dividend scheme helps Singtel conserve cash by issuing new shares instead.
Lastly, the firm also stated that it will review its dividend policy at the end of the financial year. By then, they will be able to evaluate the pandemic’s impact on their business.
Dividend Payout Schedule
|Interim Dividend Payment (annual)||Final Dividend Payment (annual)||Other Dividend Payments (ad-hoc)|
|Mid-January||Mid-August||Late-August (Special Dividend 2011)
Mid-January (Special Dividend 2018)
As stated above, shareholders will receive an interim dividend share price of 5.1 cents. For the scrip dividend scheme, shareholders will receive a share at $2.422 each.
Now, it’s time to take note of Singtel’s dividend payout schedule. Shareholders can expect to receive two payments from Singtel every year:
First in January after it consolidates its performance for the first half of the financial year. The next one is in August after closing its AGM.
What Are The Risks?
Singtel is known for its relatively stable dividends and finances. However, its shares still take a hit – especially during these trying economic times. That said, it’s no different from other investments.
Additionally, in recent years, competition among telecommunication companies has been very stiff. Singtel needs to compete with its traditional rivals, plus the growing number of MVNOs.
That said, the share prices have dropped since 2015. In fact, the share prices hit a record low in October last year.
Despite this, stock analysts are giving a “buy” rating for they see further improvements, especially with recovery now underway. That said, analysts see deep value in the stock. Additionally, UOB’s equity research team named Singtel as one of the “Stock Alpha Picks” for January 2021.
So whether you’re a new or veteran investor, Singtel is a company worth investing in. The telco has been operating for over a century. Plus, their dividend yield has never dropped lower than 4.4% – even during COVID-19.
Singtel aims to get back on its feet and experience remarkable growth again. That’s why they recently announced an organizational restructure. They are capitalizing on its commanding 5G presence in Singapore. In doing so, they’ll be able to find new growth opportunities.
What does this mean for shareholders? Once Singtel starts stabilizing, shareholders can expect a more handsome dividend payout. And if their planned organizational restructuring leads to long-term growth, shareholders will have a stable investment as well.
Currently, Singtel is facing challenging times- both locally and regionally. But they have demonstrated that they are capable of providing consistent dividend payouts to their shareholders.
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