Last night release of HRnetGroup Limited’s (SGX:CHZ) 1H 2024 results marked (almost) the end of this quarter’s earning season of income portfolio.
While there is still Micro-Mechanics Holdings (SGX:5DD) that will report at the end of the month, that is still a good two weeks ago, hence I decided not to wait for it to include it in this summary.
Nonetheless, I am expecting a similar performance and dividend declare by the company.
Overall, I am pleased with the dividend received from my income counters. With the exception of Mapletree Pan Asia Commercial Trust (SGX: N2IU) and Mapletree Logistics Trust (SGX: M44U), the rest have maintained or increased their dividends.
If I had equally weighted the counters, the overall dividend yield would be up 7.8% year-on-year (YOY). While my actual portfolio isn’t equally weighted, this indicates that the portfolio can generate consistent dividend.
While I did not intend it initially, my portfolio interesting has naturally segmented into three categories: Singapore banks, Singapore REITs, and Singapore cash-generating companies.
Singapore Banks
The banks continue to benefit from the tailwind of high-interest rates. Combined with improved non-interest income, all three Singapore Banks reported good earnings and rewarded shareholders with increased dividends.
With an imminent rate cut, there is concern about a potential reversal of this trend. While I’m no economist or banker, I believe the banks can manage a gradual interest rate decline.
Hence, I remain confident in their ability to maintain performance and dividends at least until the next financial year.
Singapore REITs
On the other hand, Singapore REITs have faced challenges managing increased borrowing costs due to higher interest rates over the past two years.
Despite this, my five REIT holdings have performed well.
Given the expiration of older, cheaper loans, I anticipate headwinds to persist for another year.
However, with their resilient operations, I believe they can weather this storm and emerge stronger.
Singapore Cash Generating Companies
Interestingly, all three companies in this segment, HRnetGroup, The Hour Glass Limited (SGX:AGS), and Venture Corporation (SGX:V03), reported lower net profit but maintained their dividends.
Unlike REITs, which are required to distribute 90% of their income, these companies have more flexibility in dividend payouts.
With lower dividend payout ratios, they can maintain dividends even during periods of lower profit.
Additionally, they have built substantial cash reserves over the years to cushion the impact of slower economic conditions.
Among the three, Venture is likely to recover sooner as they’ve guided for a stronger second half.
I expect HRnetGroup and The Hour Glass to face tougher times at least until the next financial year. Nevertheless, I remain confident in their long-term prospects.
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