3 impressive dividend growth stocks you should take note of

June 2021

The low yield environment across the world has driven investors to scour for any good interest rate opportunity. Traditional tools such as fixed deposits and bonds have lost their shine due to the low-interest rate environment. The highest fixed deposit rate as of June is a paltry 0.75% per annum, which barely beats inflation.

An innovative way is to invest in companies that pay decent dividends. What is even better is investing in companies that grow their dividends over time. We have identified 3 such stocks that have both of these impressive features that you should take note of.

#1 Micro-Mechanics Holdings Ltd

Micro-Mechanics designs, manufactures and markets high precision parts and tools used in process-critical applications for the wafer-fabrication and assembly processes of the semiconductor industry.

As of its latest quarterly results, Micro’s revenue increased by 14.1% to $ 55.6 million. Its net profit increased by an amazing 24% to $ 13.3 million.

The group’s free cash flow came in at $ 4 million which brings its cash level to $16.4 million.

Mirco has grown its dividends per share by an astounding 400% in the past 10 years. It has grown its dividends per share from $0.03 in 2010 to $0.12 in 2020. The company is en route to reward its shareholders in the same amount for 2021 with the half-yearly dividends at $0.06 per share.

Micro last closed at $3.12, which valued the company at a P/E ratio of 25.03x and dividend yield of 3.55%.

#2 Singapore Exchange

Singapore Exchange is Asia’s leading and trusted securities and derivatives market infrastructure, operating equity, fixed income, currency and commodity markets to the highest regulatory standards.

SGX provides listing, trading, clearing, settlement, depository and data services, with about 40% of listed companies and over 80% of listed bonds originating outside of Singapore.

As of its latest half-yearly report, SGX’s revenue increased by 9% to $ 521 million. Its net profit increased by 12% to $240 million.

Free cash flow came in at $32 million. The cash balance of the company, as a result, increased to a healthy level of $281.7 million.

SGX has grown its dividends per share by an admirable 12% in the past 10 years. It has grown its dividends per share from $0.27 in 2010 to $0.305 in 2020. The company is en route to reward its shareholders at a higher dividend of $0.320 for 2021.

SGX last closed at $10.52, which valued the company at a P/E ratio of 23x and dividend yield of 2.99%.

#3 Powermatic Data Systems Ltd

Powermatic Data Systems Ltd is an investment holding company. It has six fully owned subsidiaries, Compex Systems Pte. Ltd., Compex Technologies Pte. Ltd., Compex Technologies Sdn. Bhd., Compex Inc, Compex (Suzhou) Co. Ltd., and Compex Wireless (Suzhou) Co. Ltd.

The Group operates under two main segments:
1. Manufacturing and sale of Wireless Connectivity products and related services.
2. Lease and maintenance of Harrison Industrial Building, a freehold investment property owned by the
Company.

As of its latest annual report, Powermatic’s revenue increased by 5% to $15.0 million. Its net profit dropped by 17% to $4.9 million. This is likely an effect due to COVID; which has driven supply chain costs up.

Free cash flow came at $2.9 million and helped to boost to cash balance to $36.8 million.

Powermatic has grown its dividends per share by an incredible 700% in the past 10 years. It has grown its dividends per share from $0.01 in 2010 to $0.08 in 2020. The company is en route to reward its shareholders at a higher dividend for 2021.

Powermatic last closed at $2.68, which valued the company at a P/E ratio of 15.85x and dividend yield of 2.98%.

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