Income investors focus on the dividends that a stock can pay out.
This stream of passive income is useful for supplementing your active income and provides a cushion that you can rely on for retirement.
Luckily, there is no shortage of dividend-paying stocks on the local bourse.
The trick, though, is to sift through the pile for stocks that could increase their dividends.
We profile seven stocks that may announce a dividend increase in 2024.
DBS Group (SGX: D05)
DBS needs no introduction, being Singapore’s largest bank by market capitalisation.
The lender benefitted from the surge in interest rates last year as it posted a sharp increase in its net interest income (NII).
For the first nine months of 2023 (9M 2023), NII leapt 46% year on year to S$10.6 billion while net profit jumped 33% year on year to S$7.8 billion.
The blue-chip bank also upped its quarterly dividend from S$0.36 to S$0.48 in line with the strong results.
Looking ahead, CEO Piyush Gupta expects higher for longer interest rates to support the bank’s net interest margin (NIM) and for net profit to be maintained around 2023 levels.
DBS could initiate a further dividend increase as the bank has communicated its intention to increase its annual dividend by S$0.24 per share during its Investor Day, barring unforeseen circumstances.
Sheng Siong Group (SGX: OV8)
Sheng Siong is a supermarket operator with a total of 69 outlets across the island selling a variety of fresh and chilled produce and essential household products.
The retailer posted a mixed set of results for 9M 2023.
Revenue inched up 2.6% year on year to S$1 billion but net profit dipped by 0.1% year on year to S$100.3 million.
Sheng Siong seeks to grow through the expansion of its store network in Singapore.
The group has been awarded one HDB shop with three pending results and expects five more HDB shops to be put up for tender in the next six months.
Assuming Sheng Siong manages to snag several bids and opens new outlets in 2024, it could result in a rise in revenue and net profit.
The retailer may then pay out a higher dividend to reward shareholders.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank Ltd, or UOB, is the smallest of the three local banks.
The lender also reported a stellar set of earnings with 9M 2023’s net profit rising 26% year on year to S$4.3 billion.
Like DBS, UOB expects its NIMs to remain at current levels and recently completed and integrated Citigroup’s (NYSE: C) consumer banking business in Indonesia.
With steady NIMs and the boost from its S$5 billion acquisition of Citigroup’s consumer banking business, the bank looks poised to increase its 2023 final dividend next year.
SIA Engineering Co Ltd (SGX: S59)
SIA Engineering, or SIAEC, is a maintenance, repair and overhaul (MRO) specialist for the airline industry.
The group posted a strong set of earnings for the first half of fiscal 2024 (1H FY2024) ending 30 September 2023.
Revenue surged 41.9% year on year to S$514 million and the MRO specialist eked out a tiny operating profit of S$0.1 million.
Net profit soared 82.5% year on year to S$59.3 million and SIAEC declared an interim dividend of S$0.02.
SIAEC is seeing an increase in MRO demand as flight activities recover to pre-pandemic levels.
If this momentum continues, the group could see higher profits for FY2024 and declare a better final dividend.
OCBC Ltd (SGX: O39)
OCBC is Singapore’s second-largest bank by market capitalisation.
The group, like its peers DBS and UOB, posted a stellar set of earnings with 9M 2023 net profit climbing 32% year on year to S$5.4 billion.
CEO Helen Wong believes that OCBC is on track for a resilient 2023 performance with NIM settling at 2.25% (9M 2023: 2.28%).
Loan growth is expected to grow around single-digit year on year.
The bank went through a rebranding exercise in July this year and plans to double its assets under management for its premier banking and premier private client segments by 2025.
Should interest rates remain high, the growth of OCBC’s net profit should allow the bank to increase its final dividend for 2023.
iFAST Corporation Limited (SGX: AIY)
iFAST is a financial technology company operating a platform for the buying and selling of unit trusts, equities, and bonds.
The group more than quadrupled its 3Q 2023 net profit for its latest set of earnings.
iFAST recognised one month of revenue from its Hong Kong ePension contract while its assets under administration hit a record high of S$19.12 billion as of 30 September 2023.
The fintech could be poised for much higher revenue and profits with management reiterating that 2023’s profitability should be “substantially better” than 2022.
In light of this, there is a high chance that iFAST may raise its final dividend next year, paying out a higher annual dividend than the S$0.048 that was paid in 2022.
Straco Corporation Limited (SGX: S85)
Straco Corporation operates tourism assets and owns two aquariums in China (Shanghai and Xiamen) as well as the Singapore Flyer, a giant observation wheel.
The group paid out a first and final dividend of S$0.01 in 2022 despite incurring a net loss of S$10.8 million as the pandemic led to the temporary closure of its attractions in China and Singapore.
For its 3Q 2023 business update, Straco reported that revenue for 9M 2023 more than tripled year on year to S$67.5 million as tourists came flocking back to its attractions.
Net profit clocked in at S$22.7 million for the period.
Should this momentum continue, Straco looks well-positioned to pay out a higher final dividend for 2023.
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Disclosure: Royston Yang owns shares of DBS Group and iFAST Corporation Limited.