A noble aim of an income investor is to seek passive income that exceeds inflation.
With inflation running at between 2% to 3%, investors would want dividend yields that exceed this threshold to make their money work harder for them.
At the same time, it’s important to ensure, though, that these dividends are sustainable.
A high yield alone cannot be used as the basis for purchasing any stock but should be taken as just one of the many factors you should consider when evaluating suitable investment opportunities.
Here are five companies that offer dividend yields above 5%.
Valuetronics is an electronic manufacturing service provider that designs and develops products for the electronics industry.
The group has two main reporting segments: consumer electronics and industrial & commercial electronic products.
For the fiscal half-year ended 30 September 2020, Valuetronics reported that revenue fell nearly 20% year on year to HK$1.1 billion.
Profit attributable to shareholders declined by 12.1% year on year to HK$91.5 million.
The group was impacted by a slowdown in demand from certain customers who were affected by the pandemic.
Despite the weak performance, the group still declared an interim dividend of HK$0.05, down from HK$0.06 a year ago.
Its trailing 12-month dividend stood at HK$0.19, and its shares offered a dividend yield of around 5.5%.
Sasseur REIT is a retail outlet mall REIT that invests in the fast-growing outlet mall sector in China.
The REIT’s portfolio consists of four assets located in the cities of Chongqing, Kunming and Hefei.
For its third-quarter earnings, Sasseur reported a 2.1% year on year decline in rental income to RMB 152.6 million.
Distribution per unit (DPU) increased by 7.6% year on year to S$0.01764.
Sasseur REIT’s trailing 12-month DPU stands at S$0.06239. At the REIT’s share price of S$0.80, the shares are offering a trailing dividend yield of 7.8%.
Sales have recovered strongly to nearly pre-COVID levels as China has successfully contained the pandemic, with all four of the REIT’s outlet malls generating 33% higher total sales on a quarter on quarter basis.
Frasers Logistics and Commercial Trust, or FLCT, owns a portfolio of 100 industrial and commercial properties worth around S$6.2 billion.
These properties are spread out across five major markets: Australia, Germany, Singapore, the UK and the Netherlands.
For the REIT’s full fiscal year 2020’s earnings, it reported that revenue jumped 53% year on year to S$332 million, largely due to the REIT’s merger with Frasers Commercial Trust during the year.
DPU inched up by 1.7% year on year to S$0.0712. At FLCT’s last traded price of S$1.39, this represents a trailing dividend yield of 5.1%.
There has been no material impact on FLCT’s portfolio to-date, and its logistics portfolio has continued operating during the pandemic.
NetLink NBN Trust designs, builds, owns and operates Singapore’s next-generation nationwide broadband network (NBN), which delivers high-speed internet services across the island.
For its fiscal 2021 half-year ended 30 September 2020, the trust reported a slight 2.5% year on year decline in revenue to S$181.5 million.
Profit after tax, however, rose slightly by 1.5% year on year to S$44.8 million.
DPU inched up slightly by 0.4% year on year to S$0.0253 and annualised DPU based on the first half results is S$0.0506.
At NetLink NBN Trust’s last traded price of S$0.97, this represents a dividend yield of around 5.2%.
The trust continues to expand its network into new housing estates and had also taken part in a 5G trial with TPG Telecom a while back.
HRNetGroup is a human resources firm that provides recruitment and staffing services for clients.
The group employs over 900 consultants across 13 Asian cities and owns 12 brands, including PeopleFirst, Recruit Express and SearchAsia.
HRNetGroup only declares dividends once a year and for the fiscal year 2019, it declared and paid out a dividend of S$0.028.
The shares offer a trailing 12-month dividend yield of around 5.5%.
For the half-year ended 30 June 2020, the group reported a slight 1% year on year fall in revenue, but gross profit fell by 15% year on year due to higher sub-contractor costs.
Despite lower selling expenses, profit after tax plunged by 31.9% year on year to S$21 million.
Many Asian countries, including Singapore, recorded negative GDP growth rates due to the economic damage wreaked by the pandemic.
The group has warned that the impact on its business will be more evident in the third and fourth quarters as government assistance has propped up its net profit so far.
If net profit does plunge significantly for the full year, there is a high chance that HRNetGroup may drastically reduce its dividend from the level it paid out last year.
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Disclaimer: Royston Yang owns shares in Frasers Logistics and Commercial Trust and NetLink NBN Trust.