The CapitaLand dividend has not been consistent for the past few years. The effects of the COVID-19 pandemic affected the company’s earnings and, as a result, the share price. However, despite this decline in FY2020, the company still paid out a dividend to its shareholders.
The company is now investing in a more globally diversified business model to mitigate the negative impact on its real estate business. The Group also has adopted a strategic approach with the entry into new economy assets in 2019, contributing to their portfolio growth.
Profile
CapitaLand Limited is an investment holding company that engages in real estate development, investment advisory, real estate financial products and assets investment, and management of serviced residences. With its headquarters in Singapore, the company was founded in 1989 and was initially known as Pidemco Land Limited.
Today, CapitaLand Limited operates in Singapore, China, Europe, Australia, and other Asian countries. The real estate portfolio comprises offices, homes, shopping malls, and mixed-use developments.
The company operates through CapitaLand Singapore, CapitaMalls Asia, CapitaLand China, Australand, Ascott, and other segments. Internationally, the company also owns and operates serviced residences under the Somerset, Ascott, and Citadines brands. As of 31 December 2020, the company owned and managed a global portfolio worth about S$132.5 billion.
Performance
| Year | Yield | Total | Amount | Ex-Date | Pay Date | Particulars |
| 2021 | 2.24% | SGD 0.09 | SGD 0.09 | 2021-05-04 | 2021-05-18 | Rate: SGD 0.09 Per Security |
| 2020 | 2.99% | SGD 0.12 | SGD 0.12 | 2020-07-07 | 2020-08-20 | SGD 0.12 per security/unit |
| 2019 | 2.99% | SGD 0.12 | SGD 0.12 | 2019-04-23 | 2019-05-07 | Rate: SGD 0.12 Per Security |
| 2018 | 2.99% | SGD 0.12 | SGD 0.12 | 2018-05-08 | 2018-05-18 | SGD 0.12 ONE-TIER TAX |
| 2017 | 2.49% | SGD 0.1 | SGD 0.1 | 2017-05-02 | 2017-05-12 | SGD 0.1 ONE-TIER TAX |
Based on this performance for the past five years, the dividend growth has not been impressive. Therefore, this may not be an appropriate investment if you need a growing dividend as an investor.
The company has had a decline in earnings and was unprofitable last year. The trend also indicates that the earnings have been declining over the previous five years, which raises questions about the sustainability of their dividend.
CapitaLand covered the dividend payout using 14% of its free cash flow in the past year. This is not a sustainable proposition for investors looking to invest in a profitable brand.
Share Price, DPU, and Dividend Yield
The CapitaLand share was also affected by the COVID-19 pandemic. Due to its heavy involvement in hospitality, retail and F&B industries, the share price dropped to a low of S$2.51 in November 2020. However, the share prices have made a comeback and gone up 20% when compared to the past five years. This surge in share price indicates that the market has confidence in CapitaLand’s split of its property development business into a private enterprise.
As one of Singapore’s top blue-chip stocks, the company has not had consistent dividend payouts and yields. For the past five years, the gross dividends have been between 9 to 12 cents per share. In addition, the average dividend yield for the same period is 2.49%. These results have affected the financial situation.
Strategies for Growth
CapitaLand has three strategic growth pillars in development, fund management, and lodging. The Group is deploying capital to other economic sectors. They have made approximately S$3.4 billion of new investments in logistics and business parks assets, which forms about 93% of total investments made for the future growth of the portfolio.
The lodging business achieved an average occupancy of 50% and had positive cash flow in 2020. Despite the pandemic, CapitaLand lodging segment secured 14,200 units in FY2020. This adds to the Group’s future income stream when the new lodging units become operational.
As the company is restructuring, the focus is more on asset-light fund management and lodging business, bringing more value for shareholders.
Dividend Payout Schedule
For the past five years, CapitaLand has paid out dividends once every year. The payout usually takes place in May after the company has consolidated the financial results for the end of the year in March. If you have invested or plan to buy these shares, you should expect your payday in mid-May.
What are the Risks?
CapitaLand paid out a dividend using its cash flow despite making a loss. This financial situation could be concerning for investors in the future, especially since it’s unsustainable. However, some analysts are expecting the share price to go up as the company refocuses more on asset-light fund management and the lodging business.
The company is also making bets on the increased demand for data and global connectivity by moving into new economy assets such as data centers. This positive outlook for its shares is anchored on these growth strategies.
The pandemic has also increased the demand for digital connectivity. If this continues, CapitaLand shareholders might benefit from the upsides.
Our Verdict
The COVID-19 pandemic has affected the hospitality, retail, and office sectors. Companies such as CapitaLand Limited financial situation suffered these effects, which affected their gross earnings and dividend.
Despite being unprofitable in the past year, the company still paid out a dividend to its shareholders. These financial results might not be attractive to investors in the long run, especially if you look at the numbers from the past five years.
However, the company is diversifying into other investments to grow its portfolio. Their new investment management strategies are not capital-intensive real estate development and are now focused on new markets such as data centers. As these investments bring in returns, this should keep CapitaLand on the blue-chip list for many years to come.
Read also Best Singapore Dividend Stocks Singapore (2022)
Key Takeaways
- The investment into new economy asset classes will boost the company’s future growth to the portfolio.
- CapitaLand’s proposed restructuring into the lodging business segments and fund management will be more valuable for shareholders.
- Despite the negative impact of the COVID-19 pandemic, the company has overcome the real estate challenges.
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