2 Reasons For You To Like Straco Corporation Ltd’s Dividend
Straco Corporation Ltd (SGX: S85) is a tourism asset operator with operations in China and Singapore.
In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and the Lintong Lixing Cable Car attractions under its umbrella. As for Singapore, Straco has a majority stake in the Singapore Flyer, one of the largest observation wheels in the world. .
At Straco’s current share price of S$0.825, the company has a dividend yield of 3.0%, which is pretty average. But, in this article, I want to highlight two reasons for liking Straco’s dividend.
Strong track record of business growth
One important criteria that dividend investors should focus on in assessing a stock is how well its underlying business has performed.
A good track record of growth will provide assurance that the company has a high likelihood of being able to sustain its business growth, and by extension, its dividend payments.
As for Straco, the company has a pretty strong track record in my view. From 2006 to 2016, its revenue has grown from S$18.5 million to S$125.2 million which equates to an outstanding 21% compound annual growth rate (CAGR). The company’s profit to shareholders has done even better, climbing from S$3.38 million to S$46.5 million over the same period; that is an annual growth rate of 30%.
Strong track record of dividend growth
A company’s strong business track record will mean little to dividend investors, unless it also pays its profits as dividends to its shareholders.
Straco has done just that over the years. From 2006 to 2016, the tourism asset owner’s dividend has jumped from 0.25 cents per share to 2.5 cents per share. To put the growth into perspective, Straoc’s dividend per share has a CAGR of 26%. Moreover, the company has managed to either grow or maintain its dividend in each year for the period above.
A final word
Dividend investors may want to take a close look at Straco given its excellent historical business and dividend track records.