The second quarter was indeed a dividends bonanza, and I’m pleased to report that my portfolio achieved yet another record quarter for dividends received!
While the 11% increase wasn’t as dramatic as last year’s 45% jump, getting a “pay” rise of that magnitude is certainly nothing to complain about.
Undoubtedly, the special dividends from the three banks, returning capital to shareholders, played a significant role in this surge. However, as the image above illustrates, another contributing factor was that most of my holdings declared higher dividends per share compared to the previous year.
Considering I only reinvested in UMS Integration (SGX: 558) since last September, and excluding my recent divestment of the three Mapletree REITs, this performance from my portfolio’s contributors is truly superb.
The final factor is that I was a net buyer of SG stocks for the past five months. The majority of the transactions occured in February and May, when opportunities arose from availability of CPF for investments.
Looking ahead, will the companies be able to sustain its dividends?
While I remain hopeful based on companies’ latest quarterly earnings,, I’m also mentally prepared for potential cuts, as some companies might turn cautious and opt to retain more cash during these uncertain periods.
A recent example is The Hour Glass (SGX: AGS), which just announced a reduction in its final dividend from S$0.06 to S$0.04.
Although the company reported resilient performance for FY2025, with earnings per share decreasing by 12% year-on-year to S$0.2094 (FY2024: S$0.2387), this decline in profit is unlikely the primary reason for the cut.
Even if the final dividend had been maintained, the payout ratio (including the interim dividend of S$0.02) would have been a modest 38%.
More likely, this decision is linked to its recent A$90 million acquisition of an Australian watch retail entity (SPV). According to an earlier announcement, the pro-forma effects on the consolidated EPS of the Group for FY2024 would have been S$0.2521 if the acquisition had been completed earlier.
I’ll be awaiting the Annual General Meeting in July to gain further insights into this decision.
The second quarter’s dividend bonanza has set a strong tone, yet I remain vigilant. While I anticipate that this year’s overall dividend income will mirror the previous year’s figures, the example of The Hour Glass serves as a reminder that individual company decisions can shift.
I will continue to monitor market developments and company-specific announcements, and make the necessary adjustments, if required.
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