My 5-star dividend machines Venture and HRnetGroup

Besides Banks and REITs which give consistent dividends, there are also some companies that have consistently share their earning with shareholders.

Venture Corporation and HRnetGroup are two such companies. Despite the tough business environment for FY2023, both have maintained their dividend. They can only do that because they kept to a sustainable payout ratio under normal circumstances, have a strong balance sheet, and a desire to reward the shareholders.


Both revenue and net profit remains weak for the quarter but there are some bright spots. There is an improvement over previous quarter, and net profit margin continues to stay above 9%.

The group has guided a stronger 2H2024, which means it is likely to report a weaker number for FY2024Q1 as compared to FY2023. I am hopeful though that they might report a better number as soon as FY2024Q2.

A look at their segmental report shows a significant drop (around 20%) in both their Portfolios A and B for this financial year. Historically, the data suggests that Portfolio A’s revenue is more volatile, while revenue for Portfolio B is more resilient. It might be impacted by the cyclical nature of semiconductor related products this time round.

Portfolio A comprised Life Science, Genomics, Molecular Diagnostics and Related Materials Technology, Medical Devices and Equipment, Healthcare & Wellness Technology, Lifestyle Consumer Tech, Health Improvement Products and Others.

Portfolio B comprised Instrumentation, Test & Measurement Technology, Networking & Communications, Security & Safety, Building Automation, Industrial IOT, Fintech & Advanced Payment Systems, Computing & Productivity Systems, Advanced Industrial Technology, Semiconductor Related Products, Printing & Imaging, Related Components Technology and Others.

There’s no information before FY2017 as they re-organised how they report their segmental information in FY2017. Incidentally, FY2017 was also the year that they made a jump in their NPM from historically 6% to the current 9%. Annual Report for 2017 is probably worth a read.

I believe that the demand of tech will continue to increase for quite some time. Hence, there is room for optimism that Venture will benefit from the return in demand in the coming years.


HRentGroup reported a set of results that is better than my expectation. Both top line and bottom line dropped less than 6% in this tough environment. In fact, net profit for the second half improved by 7.1% compared to previous year.

Looking through the financial statement, this is achieved through a smaller than expected drop in revenue, increase in interest income and a significant decrease in employee benefit expenses.

Since listing in June 2017, HRnetGroup has shown that they are adaptive and that has allowed them to not only maintain their margin, but also grow both their revenue and net profit over the past 6 years.

From 2018 to 2023, revenue and net profit have compounded at around 6.2% and 5.7%. That might not seem impressive, especially when you think of tech companies. However, that would not be a fair comparison. Despite the perception that recruitment a sunset industry, HRnetGroup has shown that there is room for growth.

I do not have the data of how their competitors did over the years, but the above shows how HRnetGroup has out manoeuvred their competitors this year. And the ability to do well in a tough year means they should do even better when the good time is back.

I also decided to take a look at their segment data.

As the data suggests, they have grown their Flexible Staffing (FS) segment very nicely over the past 5 years. And for the first time since their listing, its gross profit is more than their Professional Recruitment (PR) segment. PR segment seems to be affected more by business/economic cycle.

Assuming the FS segment remains resilient and PR segment does follow business/economic cycle, it means we can expect a basic level of annual return due to FS, and PR would bump up the return in good years.

With the cash pile, can they pay out more dividend?

Both Venture and HRnetGroup can definitely afford to do so and I would definitely love to get more dividend too. However, I can also understand why they need to have certain amount of cash buffer. It is a safety net for bad times and more importantly, it allows them to take on any opportunities that come knocking on their doors.

The idea is in fact is very similar to having emergency fund in personal finance and opportunity fund in investment. But how much cash to keep? That is for the management to decide since they would know their business and industries a lot more.

And looking at track record, I do not think that they will undermine minority shareholders. They did increase the amount of dividend on various occasions. So there is no reason to think that their behaviour will change.

At least not for the moment.


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