Year in Review: 5 Companies That Raised Their Dividends in 2020

As the year draws to a close, the global investing climate remains as uncertain as ever.

There is skepticism revolving around the efficacy and side effects of the various COVID-19 vaccines, delaying the return to normalcy.

Additionally, there is also the highly anticipated Georgia Senate runoff election in January 2021 which will determine the party in control of the United States Senate.

Despite this economic rollercoaster ride, receiving passive income from dividends does provide some respite.

In the spirit of Christmas, we have identified a few companies which have been giving out extra this year.

While higher dividend pay-outs are attractive, it is important for investors to determine their sustainability.

Here are five companies that have increased their dividends in 2020.

UMS Holdings Limited (SGX: 558)

UMS Holdings is a precision engineering group which specialises in the manufacturing of semiconductor components, assembly of electromechanical parts and final testing services.

Its customers are geographically diversified and hail from countries such as Singapore, United States and Taiwan.

For the nine months ended 30 September 2020, UMS reported a 32% year on year increase in revenue to S$120 million from S$91.5 million.

In the same period, profit after tax leapt 45% to S$35.2 million from S$24.3 million.

The group declared a dividend of S$0.05 for the trailing 12-month (TTM) period ended 30 September 2020, an increase from the S$0.035 in the previous trailing 12-month period.

At UMS Holdings’ last traded price of S$1.03, this represents a trailing dividend yield of 4.9%.

AEM Holdings Ltd (SGX: AWX)

AEM Holdings is a testing and handling solutions provider for semiconductor and electronics companies.

These customers are involved in the advanced computing, 5G and artificial intelligence (AI) markets.

For the nine months ended 30 September 2020, AEM recorded an 85.7% increase in revenue to S$436 million from S$234 million a year back.

Net profit during the same period saw a 121% increase to S$80 million from S$36 million in 2019.

Total TTM dividends declared amounted to S$0.081, more than double the previous year’s dividend of S$0.039.

At a share price of S$3.38, AEM Holdings offers a TTM dividend yield of 2.4% for 2020.

The strong performance from the two semiconductor companies is expected to continue into the new year.

According to the Semiconductor Industry Association, which collects data from 95% of U.S. semiconductor companies and roughly 67% of non-U.S. semiconductor companies, semiconductor sales are expected to rise by 6.2% in 2021.

Similarly, industry-recognised SEMI forecasts a 10.8% increase in chip manufacturing equipment spending for 2021.

Sheng Siong Group Ltd (SGX: OV8)

Sheng Siong Group is a household supermarket chain in Singapore.

As of 30 September 2020, there were 64 outlets throughout the peninsula.

Revenue for the first nine months ended 30 September 2020 came in at S$1.1 billion, a 44.6% increase compared to S$743 million for the same period in 2019.

Net profit growth was even more impressive, increasing by 83.3% to S$107 million from S$58.4 million the previous year.

On the back of this stellar performance, Sheng Siong paid out a TTM dividend of S$0.053, up from S$0.035 year on year.

This gives Sheng Siong a dividend yield (TTM) of 3.5% for 2020.

Riverstone Holdings Limited (SGX: AP4)

Riverstone Holdings is a Malaysia-based glove-making company.

Aside from its cleanroom and nitrile healthcare gloves, the company also produces fingercots and packing bags.

For the nine months ended 30 September 2020, Riverstone reported a 51.6% year on year increase in revenue to RM1.1 billion.

Net profits more than tripled in the same period, to RM316 million from RM98.3 in the previous year.

TTM dividends totalled to RM0.0985, up from RM0.07 year on year.

At its last traded share price of S$1.19, Riverstone sports a dividend yield (TTM) of 2.7%.

Top Glove Corporation Berhad (SGX: BVA)

Top Glove is another Malaysian glove-making company.

It is the world’s largest manufacturer of gloves, capturing 26% of the global market share for rubber gloves.

The company also has a non-glove segment that includes products such as condoms, face masks, exercise bands and other household products.

For Top Glove’s 2020 11 months ended 30th November 2020, revenue nearly quadrupled year on year to RM4.76 billion.

Net profits skyrocketed to RM2.40 billion, a value 21.6 times greater than the previous year.

Investors of Top Glove were rewarded with much higher dividends at RM0.2833 in the last 12 months. This includes the first quarterly dividend declared by the company of RM0.165.

This brings the company’s TTM dividend yield to 4.2% for 2020.

The Malaysian glove-making scene has benefitted from the onset of the pandemic as hygiene and sanitation are now in sharp focus

For this year, these two glove-making companies have rewarded their shareholders with higher dividend pay-outs.

It will be interesting to watch how the management decides to deploy the supernormal profits from the pandemic in the years to come.

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Disclosure: Zachary Lim does not own shares in any of the companies mentioned.

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