There is a foolhardy assumption that
dividends paid by companies listed in the index are rock solid. This is not the case
as I looked at a company that has experienced some sell-off in recent times;
the biggest of them all, Singapore Telecoms (SingTel).
Data were taken from annual reports, from https://www.singtel.com/about-Us/investor-relations/annual-reports#
Somewhere in the early 2000s, dividend
income from subsidiaries were moved from “Cashflow from Investing Activities”
to “Cashflow from Operating Activities.” As such, data can be inaccurate. However,
I suppose things cannot be too far off…
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
2013
|
5817.5
|
2058.6
|
3758.9
|
2517.7
|
66.98%
|
2012
|
5710.4
|
2248.7
|
3461.7
|
4111.4
|
118.77%
|
2011
|
6043
|
2004.6
|
4038.4
|
2356.6
|
58.35%
|
2010
|
5328.8
|
1923
|
3405.8
|
2084
|
61.19%
|
2009
|
5163
|
1918.3
|
3244.7
|
1989.4
|
61.31%
|
2008
|
5453.7
|
1879
|
3574.7
|
3435.4
|
96.10%
|
2007
|
4584.7
|
1789.8
|
2794.9
|
1920.9
|
68.73%
|
2006
|
4485
|
1713.5
|
2771.5
|
1733.8
|
62.56%
|
2005
|
4489.6
|
1428.1
|
3061.5
|
915.2
|
29.89%
|
2004
|
4594.7
|
1300.2
|
3294.5
|
764.8
|
23.21%
|
2003
|
3771.1
|
1667.9
|
2103.2
|
764.7
|
36.36%
|
2002
|
3088.1
|
2999.7
|
88.4
|
697.4
|
788.91%
|
2001
|
3533.5
|
1762
|
1771.5
|
1493.8
|
84.32%
|
There were a couple of years which should
be disregarded. Year ending on 2002 should be disregarded due to the purchase
of Optus. 2012 should be disregarded as there was a huge one-time special dividend
payout.
Let’s remove them.
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
2013
|
5817.5
|
2058.6
|
3758.9
|
2517.7
|
66.98%
|
2011
|
6043
|
2004.6
|
4038.4
|
2356.6
|
58.35%
|
2010
|
5328.8
|
1923
|
3405.8
|
2084
|
61.19%
|
2009
|
5163
|
1918.3
|
3244.7
|
1989.4
|
61.31%
|
2008
|
5453.7
|
1879
|
3574.7
|
3435.4
|
96.10%
|
2007
|
4584.7
|
1789.8
|
2794.9
|
1920.9
|
68.73%
|
2006
|
4485
|
1713.5
|
2771.5
|
1733.8
|
62.56%
|
2005
|
4489.6
|
1428.1
|
3061.5
|
915.2
|
29.89%
|
2004
|
4594.7
|
1300.2
|
3294.5
|
764.8
|
23.21%
|
2003
|
3771.1
|
1667.9
|
2103.2
|
764.7
|
36.36%
|
2001
|
3533.5
|
1762
|
1771.5
|
1493.8
|
84.32%
|
42719.2
|
28120.8
|
65.83%
|
One could see that based on 15 years of
data, the average dividend payout is 65.83%.
SingTel was able to pay dividends
effortlessly from 2001-2005. A check at the yield then was about 1-2%, which is
low. Payout from FCF increases dramatically from 2006, as its yield increases.
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
2013
|
5817.5
|
2058.6
|
3758.9
|
2517.7
|
66.98%
|
2011
|
6043
|
2004.6
|
4038.4
|
2356.6
|
58.35%
|
2010
|
5328.8
|
1923
|
3405.8
|
2084
|
61.19%
|
2009
|
5163
|
1918.3
|
3244.7
|
1989.4
|
61.31%
|
2008
|
5453.7
|
1879
|
3574.7
|
3435.4
|
96.10%
|
2007
|
4584.7
|
1789.8
|
2794.9
|
1920.9
|
68.73%
|
2006
|
4485
|
1713.5
|
2771.5
|
1733.8
|
62.56%
|
Total
|
32488.5
|
24182.3
|
74.43%
|
The last 3 years has been tough for
SingTel.
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
Total
|
8899.6
|
8144.5
|
91.52%
|
From the prospective of a dividend hunter,
I wouldn’t say this business is one in which you buy and sleep on it, since
share prices are not that depressed (EV/EBIDTA is still way higher than the
other telecommunication companies). I can say with some confidence that current
year’s (2017) dividend is UNLIKELY to be cut based purely from this year’s FCF
and CAPEX, but the short future seems very rough.
2017
|
OCF
|
CAPEX
|
FREE CASHFLOW
|
DIVIDEND PAID
|
REMARKS
|
Q1
|
1736.8
|
504.5
|
1232.3
|
-
|
|
Q2
|
1121
|
479.7
|
641.3
|
1705.5
|
Already paid earlier this year
|
Q3
|
1263.3
|
623.6
|
639.7
|
-
|
|
Last Year's Q4
|
1208.3
|
527
|
681.3
|
1083.7 (Figure to match last year's total
dividend payout)
|
|
Total
|
5329.4
|
2134.8
|
3194.6
|
2789.2
|
87.31%
|
Total dividend paid last year was 2789.2
Dividends paid so far (SingTel pays twice a year): 1705.5
Assuming dividends this year will equal last year's, next dividend should be 2789.2 - 1705.5= 1083.7
This will probably mean using up to 87.31% of the
estimated free cash flow, provided this coming
quarter’s performance matches last year’s. As a large company with multiple
sources of revenue, I don’t expect any earnings surprises.
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2017
|
5329.4
|
2134.8
|
3194.6
|
2789.2
|
87.31%
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
Total
|
12094.2
|
10933.7
|
90.40%
|
Hence, if the management were to cut
dividends or offer a dividend guidance, it will mean that the short future does
look bleak.
The key takeaway is that dividend payout percentage from the Income Statement does not adequately express the difficulty of paying dividends.
Update
SingTel announced its 4th quarter and Full Year result recently. These are the updated figures.
Update
SingTel announced its 4th quarter and Full Year result recently. These are the updated figures.
2017
|
OCF
|
CAPEX
|
FREE CASHFLOW
|
DIVIDEND PAID
|
REMARKS
|
Q1
|
1736.8
|
504.5
|
1232.3
|
-
| |
Q2
|
1121
|
479.7
|
641.3
|
1705.5
|
Already paid earlier this year
|
Q3
|
1263.3
|
623.6
|
639.7
|
-
| |
Q4
|
1416.3
|
652.8
|
763.5
|
1110
| Announced 18-May |
Total
|
5537.4
|
2260.6
|
3276.8
|
2815.5
|
85.92%
|
Year Ending
|
OCF
|
Capex
|
FCF
|
Dividends declared and paid
|
Percentage
|
2017
|
5537.4
|
2260.6
|
3276.8
|
2815.5
|
85.92%
|
2016
|
4647.7
|
1930
|
2717.7
|
2789.2
|
102.63%
|
2015
|
5170.7
|
2237.6
|
2933.1
|
2677.5
|
91.29%
|
2014
|
5350.3
|
2101.5
|
3248.8
|
2677.8
|
82.42%
|
Total
|
12176.4
|
10960
|
90.01%
|
