With many stocks suffering beat-downs recently, you might find yourself holdings stocks which are in the red. Rest assured that this is pretty normal as stocks tend to be more volatile compared to other investments.
You might be wondering when your stocks can return to their original value or maybe appreciate even more. In truth, this might take months or even years, as it depends on market sentiment and business fundamentals.
However, there are a group of stocks which have strong business fundamentals and can afford to pay out sizable dividends to their investors. Such companies can be excellent assets as the earnings generated from their businesses can be a form of passive income for investors.
This passive income would add up to considerable gains over time for shareholders as well, boosting the total return from their investments.
Here are 4 solid dividend paying stocks which investors might want to consider for passive income.
APAC Realty (SGX:CLN)
APAC Realty is the holding company for the ERA Realty franchise in Singapore and the Asia Pacific region. As a property brokerage company, their main source of income comes from facilitating property transactions in both new and resale properties.
The company is also involved in marketing activities for new and upcoming home launches, earning a commission fee for every unit sold by their agents. They have secured marketing agent mandates for 25 upcoming residential projects in Singapore.
APAC Realty is currently focused on building their market share in Singapore, and growing their presence in foreign markets as well. The agency managed to increase their local market share from 38% to 41% recently. They have one of the largest brand footprints in Asia with 18,400 agents operating across 10 countries through its franchise model.
Their share price currently trades at a PE ratio of 10x, with a dividend yield of about 10%. This amount comes from a payout ratio of 73%, and includes a special dividend of 3.0 Singapore cents per share.
To know more about their business model, check out our blog post on the listed property agencies in Singapore.
HRnetGroup is an HR services firm with business operations in Singapore and throughout North Asia, which includes countries such as Taiwan, Hong Kong, and China. With the hiring landscape expected to rotate to growth as the pandemic eases, HRnetGroup is well-positioned to capitalize on the returning demand for it’s services.
The firm enjoys the advantage of having an asset-light business model, with good free cash flow, while also being relatively easy to scale. Recently the company reported a promising set of half-annual results, with revenue increasing by 30%, and net profit increasing by 71%.
The company has been following it’s dividend policy of paying out at least 50% of it’s profits as dividends for the past 4 years. With the recent surge in profits, investors can likely expect a dividend yield of 4-5% for 2021 based on it’s share price of S$0.76.
The firm offers services in permanent and flexible staffing to cater to it’s clients. To understand more about the company’s business model, do check out our blog post.
Suntec REIT (SGX:T28U)
When talking about dividends, we can’t forget about REITs. REITs are great passive income assets due to Singapore’s tax exemption regulations which require them to pay out 90% of their income as dividends to shareholders.
Suntec REIT is one such REIT which invests in retail and office properties predominantly in Singapore and also in Australia and the UK. They own major stakes in Suntec City, One Raffles Quay, and the Marina Bay Financial Center as well.
Recently they have been actively divesting some lower yielding Singapore assets while acquiring UK properties which provide better yields at a longer WALE period as well. This would likely help position their portfolio to provide higher payouts for shareholders.
The REIT currently trades at a PB ratio of about 0.7x, with a trailing dividend yield of 5.7%. This makes it a solid passive income instrument which can provide dividend payouts as well as potential capital gains in the future.
Sheng Siong (SGX:OV8)
Sheng Siong Group is one of Singapore’s largest supermarket chains, with 63 stores located all across the island. The group also has operations in Kunming, China and has been building it’s online presence through it’s online storefront as well.
Sheng Siong supermarkets are generally well-received by consumers as their stores are known for offering a variety of fresh produce and daily necessities at cheap prices. So much so that they have become an established household name among Singaporeans nowadays.
The group generated a stellar set of results for 2020 due to the panic-buying induced during the circuit-breaker and pandemic, in addition to an admirable set of financial results for the past few years. Commonly scrutinized metrics such as revenue, gross profit margins, and EPS have all been on an uptrend.
Sheng Siong currently trades at a dividend yield of 4%, with a PE ratio of 17x. This comes from a payout ratio of 70% of the company’s net profits, and is in line with the group’s dividend policy of paying out up to 70% of their profits as dividends.
A Steady Stream Of Income
Dividend investing is a popular investment strategy which is especially attractive to Singaporeans, as there are a variety of listed companies which pay out handsome dividends to shareholders listed on our local stock exchange.
Although a counter’s share price will fluctuate based on news articles and market sentiment, as long as the business model is solid and profitable, you would likely continue to receive dividends for holding the stock.
Over time this payouts can really add up to a substantial amount, providing a source of passive income while you hold the stock, and also boosting your overall return.
To end off, do consider investing in some of these counters if you are interested in collecting passive income for yourself.