It is finally phase 2!! We are one step nearer to full recovery hopefully. But this week, due to uncertainties regarding a second wave of coronavirus hitting the world, the markets saw a slight pull back. I took the opportunity to purchase a stock that I have placed in my watchlist for quite some time: Chip Eng Seng (SGX:C29) at 55 cents per share.
Chip Eng Seng Corporation Ltd (CES) is a construction and property group. Notably, CES was the main contractor for HDB's Pinnacle @ Duxton, the only public housing in the CBD area. Another notable one is perhaps Bishan Loft. In March 2020, they secured a $98.7m contract with HDB for building works at Tampines, lasting around 30 months. As Singapore start to ease the restrictions again, the construction industry will also be allowed to resume operations. Following so, housing needs and property development will start to gain traction as well.
CES has been paying a solid 4 cents per share in dividends for the past 10 years. That translates to a dividend yield of 7.27% for me! From the annual report, CES takes pride in their ability to maintain the dividend payout. Financials wise, I do not foresee any significant cut in their dividends policy. The company's EPS is consistently more than 5 cents.
My main motive of purchasing this stock is to enjoy the dividends payout. I particularly like the fact that they are paying a fairly modest payout ratio. Maintaining at 4 cents per share every year allows them to draw on previous years' retained earnings should they not perform well in the year.
This stock has been on my watchlist for sometime and I am glad that I will be able to ride the recovery wave (hopefully) up with it. CES closed today at 56.5 cents.
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Have you considered the rights issue that CES had alongside the 1H 2020 profit guidance?
ReplyDeleteThere is very much chance that there won't be 4 cents of pay out this year as the EPS might not be more than 5 cents.....
Hi thanks for your comment and view! :) I did take note of the guidance, but I believe that has very much been priced in along with the rights issue. I feel that the past prudence approach to dividend payout will greatly help them in this year’s laggard earnings as well.
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