5 Companies with Dividend CAGR above 20% for the Past 3 Years

The Dividend Compound Annual Growth Rate (CAGR) measures the rate of growth in each company's dividends per share. It indicates the growth in dividend payout across a specific period. The formula to derive the Dividend CAGR is as follow:

(Current year's value / Value X years ago) ^ (1/X) - 1

The growth in dividend payout is an important aspect because it highlights the company's ability to not only pay out a consistent level of dividend but also a growing amount across a period.

A dividend CAGR of 20% and above and a dividend payout ratio below 1x demonstrates the capability of the company to grow its profits and cash balance steadily.

With that said, here are 5 such companies that have managed this incredible feat, especially during this pandemic:

• Union Gas Holdings Limited (SGX: 1F2)

• Sheng Siong Group Limited (SGX: OV8)

• Riverstone Holdings Limited (SGX: AP4)

• Food Empire Holdings Limited (SGX: F03)

• Innotek Limited (SGX: M14)

Note: CAGR calculations are based on the Full Year financial results announcements over the past few years.

1) Union Gas Holdings Limited (SGX: 1F2)

Union Gas Holdings Limited (Union Gas) is an established provider of fuel products in Singapore with over 40 years of operating track record.

Its three key businesses comprise Retail Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), and Diesel.

For the past 3 financial years, Union Gas’ Dividend CAGR stands at 44.70%. The growth in dividend was supported by the strong financial performance across the years and a slightly higher dividend payout ratio in FY2019 and FY2020.

Union Gas’s share price is last traded at S$0.815, with a market capitalization of S$186.57 million.

2) Sheng Siong Group Limited (SGX: OV8)

Sheng Siong Group Limited (Sheng Siong) is one of the largest supermarket chains in Singapore. Currently, the group has 61 outlets across the island and are primarily located in retail locations in the heartlands of Singapore.

For the past 3 financial years, Sheng Siong’s Dividend CAGR stands at 25.35%. As a beneficiary from the COVID-19 pandemic, Sheng Siong’s financial performance got an uplift in FY2020 and therefore we have seen a corresponding 83% jump in its total dividend per share in the financial year.

Sheng Siong’s share price is last traded at S$1.55, with a market capitalization of S$2.33 billion.

3) Riverstone Holdings Limited (SGX: AP4)

Malaysia-based Riverstone Holdings Limited (Riverstone) is listed on the Mainboard of Singapore Exchange since 2006 and is a global market leader in the manufacturing of nitrile and natural rubber cleanroom gloves used in highly controlled and critical environments as well as premium nitrile gloves used in the healthcare industry.

For the past 3 financial years, Riverstone’s Dividend CAGR came in at an impressive 42.07%.

This is largely due to the pandemic-led boom that resulted in a surge in sales revenue and net profits. Hence, there was a jump in gross dividends and the declaration of a special dividend in the last FY2020.

Riverstone’s share price is last traded at S$1.34, with a market capitalization of S$1.98 billion.

4) Food Empire Holdings Limited (SGX: F03)

Food Empire Holdings Limited (Food Empire) is a global branding and manufacturing company in the food and beverage sector. Its products include instant beverage products, frozen convenience food and snack food.

Food Empire’s products are exported to over 50 countries, in markets such as Russia, Vietnam, Ukraine, Kazakhstan, Central Asia, the Middle East, China, Mongolia and North America. The Group has 23 offices worldwide and operates 7 manufacturing facilities in Malaysia, India, Vietnam, Russia and Ukraine.

For the past 3 financial years, Food Empire’s Dividend CAGR stands at a hefty 39.99%. This can be seen from the steady increase in its earnings across the years.

Furthermore, the rise in dividend payout ratio from 22.6% in FY2017 to 33.2% in FY2020 also contributed to the growth in Food Empire’s total dividend per share.

For FY2020, its total dividend per share stood at 2.2 Singapore cents per share.

Food Empire’s share price is last traded at S$0.94, with a market capitalization of S$505.32 million.

5) Innotek Limited (SGX: M14)

InnoTek Limited (InnoTek) is a precision metal components manufacturer serving the consumer electronics, office automation and automotive industries. InnoTek has five manufacturing facilities in the PRC and one facility in Rayong, Thailand.

The Group’s wholly-owned subsidiary, Mansfield Manufacturing Company Limited, provides precision metal stamping, commercial tool and die fabrications and precision machining works to a strong and diversified base of international end-customers.

For the past 3 financial years, InnoTek’s Dividend CAGR stands at 25.99%. Despite declining earnings since FY2018, its total dividend per share has risen steadily during the same period.

This in turns caused its dividend payout ratio to swell from 16.7% in FY2018 to 32.6% in FY2020.

Innotek’s share price is last traded at S$0.85, with a market capitalisation of S$194.05 million.

Conclusion

To conclude, the dividend CAGR is one of the important metrics to take note because investors could enjoy a steadily increasing dividend income to combat inflation over time.

Lastly, it is important for investors to also keep a lookout for the company’s dividend payout ratio to determine if the dividend payout will be sustainable for the respective company.

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