Best Dividend Buy: AEM vs. Venture Corp

November 23, 2022

What is Dividend

Singapore investors have had a rough time of it in 2022 as stock markets worldwide have tanked.

That’s less true of the Singapore stock market, which has held up relatively well. Yet that has been down to big Singapore banks.

One area of the Singapore Exchange (SGX), which doesn’t get much coverage from investors, is the technology sector.

Structurally, technology is a good sector to be in for investors, even if the short-term headwinds aren’t ideal.

Two of the most well-known technology stocks listed in Singapore are semiconductor and electronics testing company AEM Holdings Limited (SGX: AWX) and technology solutions and products provider Venture Corporation Ltd (SGX: V03).

Many investors might not know this but both companies also pay a dividend.

While Venture shares (down 5% so far in 2022) have outperformed AEM’s (down 33% year-to-date), which stock is actually the best dividend buy right now for investors? Let’s take a look.

Revenue and profit growth

At the end of the day, growing revenue and profits over the long term both drive a company’s share price, as well as its dividend payout.

If we take a look at the past 10 years, in the first half of 2012, AEM posted revenue of S$47.7 million and net profit of S$1.1 million.

Fast forward to the first half of 2021 and AEM posted revenue of S$540.5 million and net profit of S$83 million.

That equates to a 10-year compound annual growth rate (CAGR) for its revenue and net profit of 27.5% and 54.1%, respectively.

As for Venture, in the first half of 2012 it posted revenue of S$1.18 billion and net profit of S$69.1 million.

In the first half of 2022, the company saw revenue of S$1.8 billion and net profit of S$174 million. That amounts to a 10-year CAGR for its revenue and net profit of 4.3% and 10%, respectively.

Winner: AEM Holdings

Dividend growth and dividend yield

It’s a nice surprise for investors that both AEM and Venture actually pay a dividend. But how have they grown and do the stocks offer investors a decent yield?

In 2016, AEM paid a dividend per share (DPS) of 1.5 Singapore cents. For the full year of 2021, AEM aid a DPS of 7.6 Singapore cents.

That means its dividend’s CAGR over the past five years has been 38.3%. AEM shares currently yield 3.3%.

Meanwhile, Venture in 2016 paid a DPS of S$0.50 for the whole of 2016 while in 2021 the company paid a DPS of S$0.75.

That equates to a dividend CAGR of 8.5% over the past five years. Venture shares are yielding more, though, at 4.3%.

However, given the impressive growth rate of AEM’s dividend, it edges this round.

Winner: AEM Holdings

Dividend payout ratio

A company’s dividend payout ratio allows investors to see whether the company’s dividend is sustainable. So, the lower the number, the better.

In the first half of 2022, AEM had a dividend payout ratio of 25%. On the Venture side, the company had a dividend payout ratio of 42% in the first half of 2022.

Winner: AEM Holdings

Technology across the dividend spectrum

Based on the above, it looks like AEM is the best dividend buy right now. However, its immediate/short-term outlook is less bright given a recession could adversely impact its business.

Meanwhile, while a recession would also impact Venture’s business, a lot of its customers are in the healthcare and life sciences segments, which are generally considered more defensive – which might explain its better share price performance so far in 2022.

Overall, though, for investors looking at long-term income growth, AEM shares look to be the better buy for Singapore dividend investors.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Venture Corporation Ltd.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

Share this

Subscribe to our weekly
newsletter and stay updated!