Last Updated on 3 months by Antony C.
Disclaimer: I may or may not have invest in any of them, what’s listed here is only for entertainment purpose only and it should never be used as any form of investment advice. This is my diary on my stock analysis, while I’ve been investing for +15 years, I am still learning. I wish to share what I learn during my investment journey so you may learn from both my success and mistakes. Enjoy!
Right now Singapore Post Limited (S08)share priceis at SGD$0.450
At this price, SingPost is valued at a P/B ratio of 0.736 and a trailing distribution yield of 2.77%
With the current valuation, would I invest in it?
Let’s go through it using my 7 steps guide and see how I pick the Best Singapore Dividend Stocks.
As a quick recap, here are the 7 steps I use to pick the best Singapore Dividend Stocks.
- Debt to Equity Ratio
- Dividend Yield
- Dividend payout ratio
- EPS Growth Rate
- Return of Equity (ROE)
- Price-to-Book Ratio
- MOAT
Business Background
Singapore Post Limitedis the dominant provider of domestic and international postal services in Singapore. Founded in 1819 and incorporated in 1992, the company was an exclusive provider of basic mail service in Singapore until 2007, and a non-exclusive provider until 2017.
Business:
- Post & Parcel (Mail business to both local and international)
- Logistics (eCommerce)
- Property (Retail service)
- Others
Support Facilities:
- Warehousing
- Fulfillment and distribution
SingPost is currently focusing on seeking new eCommerce growth opportunities
in Singapore, Australia, and the Asia-Pacific region by improving their Business-to-Business-to-Consumer (‘B2B2C’) logistics capabilities.
DEBT TO EQUITY RATIO
Check for:Less than 0.5 D/E Ratio
Looking at the financial data online.
SingPost have a D/E ratio of 0.485.
This is lower than the 0.5 D/E Ratio.
With a D/E ratio of less than 0.5, this means, the company’s operation is generally driven by equity. A low level of debt will also mean a healthy balance sheet, an important attribute of a good dividend stock.
The company is having a low risk of defaulting.
My Opinion:Pass
Dividend Yield
Check for:More than a 2.5% dividend yield
For the Year 2023, SingPost pay a dividend of 0.0058 which translates to a dividend yield of just 1.28%.
This is much lower than my target of 2.5%.
| Year | Dividend in SGD |
|---|---|
| 2023 | 0.0058 |
| 2022 | 0.013 |
| 2021 | 0.011 |
| 2020 | 0.022 |
| 2019 | 0.035 |
| 2018 | 0.035 |
| 2017 | 0.035 |
| 2016 | 0.065 |
| 2015 | 0.075 |
| 2014 | 0.063 |
| 2013 | 0.063 |
The amount of dividends distributed year-on-year from 2017 to date is much lower than in 2016. SingPost was the exclusive distributor of postal services before the year 2017.
I believe that the loss of the exclusive rights has a major impact on the distribution of the dividend.
For the past 10 years, the dividend distributed is decreasing year-on-year.
As the dividend yield is below 2.5%, which is the risk-free rate (CPF OA Account). I will give it a verdict of fail.
My Opinion:Fail
Dividend Payout Ratio
Check for:Less than 80% dividend payout ratio
At the time of writing, a quick check using some of theonline toolsshows that the dividend payout ratio for SingPost is 36.94% which is below my threshold of 80%.
A payout ratio of less than 50% is a good sign that the company is not at risk of default due to paying out too much of its operating cash to its shareholders.
I think SingPost can have a higher payout ratio of around 50%, but if they are retaining cash flow to expand its logistic business then paying its shareholders less cash make sense.
Personally, I think they really need an upgrade for their system to prepare for eCommerce and improve their logistic capabilities.
My Opinion:Pass
EPS Growth Rate
Check for:More than 10% EPS Growth
Earning Per Share (EPS) is probably what I will be drilling into for dividend stocks.Since this company has been around for such a long time, I will probably have high expectations of its EPS.
A quick check on its financials online.
The EPS 5 year growth rate is a shocking -34.935%.
Yup, the EPS growth for SingPost is below my criteria of 10%!
This is very bad!
Seems like their management is doing everything wrong drop the EPS to less than 0%.
My Opinion:Fail
High Return Of Equity (ROE)
Check for:More than 10% ROE
ROE is one of the most important ratios used by Warren Buffett and his disciples.
Return of Equity gives us an idea of how well is the money being used by the management of the company. The higher the value the better it will be for the investors.
At the time of writing, the ROE of SingPost have an ROE of 2.44%!
Although an ROE of around almost 5% isn’t bad, it is way lower than my threshold of 10%.
The company’s management seems to be just average.
My Opinion:Fail
PRICE-TO-BOOK RATIO
Check for:a P/B Ratio of less than 1.8
SingPost is a multi-million dollar blue chip company with a long rich history of providing postal service locally and internationally.
Therefore, the price of the stock will most likely be traded above its valuation (book value).
At the time of writing, the current P/B ratio of SingPost is 0.736.
Meaning, it is trading at 24% below its book value, which I think is very reasonable.
My Opinion:Pass
MOAT
Check for:Not just having a MOAT, but a great MOAT
SingPost is the dominant player in Singapore for postal and mailing services.
Although they are the dominant player, people usually have a few criteria when selecting their courier providers.
Criteria When Selective Courier Providers:
- Speed of delivery
- Cost of each delivery
- Reliability of the courier provider
Honestly, in my opinion, SingPost is not too bad at meeting these criteria. But there are many other courier providers available which are pretty good as well.
Some of SingPost’s competitors are:
- Ninja Van
- Qxpress
- TaQbin
- Uparcel
- GrabExpress
- Lalamove
- GetVan
- GogoX
With so many competitors on their tail, I don’t think SingPost has a very good MOAT.
According toPhil’s bookRule#1 investing, SingPost may have 2 MOATs;
- A very weak “Switching MOAT” as it is the only provider that has a physical location of their postal service in Singapore.
- A “Brand MOAT”, as it is a well-known service provider to most Singaporeans.
With the popularity of door-to-door service, the factor of having the physical location of their service may not be as important as it was previously. Thus, the “Switching MOAT” is very weak.
My Opinion:Partially Pass
Overall
SingPost has a final score of 5/10.
With a dividend of <2.5% and a weak MOAT, I think this is not a dividend stock that I will like to invest in.
Therefore, I will keep SingPost on my watchlist.
Below is how I’ve scored SingPost.
| Metrics | Weightage | Score |
|---|---|---|
| Debt to Equity Ratio | High (2) | 2 |
| Dividend Yield | Low (1) | 0 |
| Dividend payout ratio | Low (1) | 1 |
| EPS Growth Rate | Low (1) | 0 |
| High Return of Equity (ROE) | Low (1) | 0 |
| AcceptablePrice-to-Book Ratio | Low (1) | 1 |
| MOAT | Very High (3) | 1 |
| Total | NA | 5 |
If you want to learn more, here are the 3 metrics I’ve found to be more important:
- Price-to-Book Ratio
- MOAT
- Debt-To-Equity Ratio
Question…
Would you invest in SINGPOST now?
- Average Brokerage Fee in Singapore: 20+ Broker Fees Compared
- 73 Singapore SGX-Listed ETFs Dividend Distribution Frequency (Monthly to Annually)
- Dividend Investing Singapore: Complete Beginners Investor Guide
- 41 Singapore REITs (S-REITs) Dividend Distribution Frequency
- Best Undervalued Stocks in Singapore That Pays High Dividend in 2024 (Updated)
Join 900+ BUDDIES who are growing their wealth with our weekly Income Newsletter
Antony C.
Founder & Financial Writer at Income Buddies | Website | Posts by Author
Antony C. is a dividend investor with over 15+ years of investing experience. He’s also the book author of “Start Small, Dream Big“, certified PMP® holder and founder of IncomeBuddies.com (IB). At IB, he share his personal journey and expertise on growing passive income through dividend investing and building online business. Antony has been featured in global news outlet including Yahoo Finance, Nasdaq and Non Fiction Author Association (NFAA).
