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Subscribe to RSS feed A Simple Trend Analysis of Dividends - Part 2

By evankoh posted on 19 Jan 2016  -  3,018 views


Previously, I wrote an article about some simple analysis I did of companies listed in SGX that pays dividends. The main conclusion of that article was as follows:

1) If a company is giving out dividends this year, the chance that it would give out same or more dividends (absolute amount per share) next year was 60%.

2) If a company is giving out dividends this year, the chance that it would give out at least 50% or more dividends (absolute amount per share) next year was 80%.

In this article, I wanted to see if certain attributes of a company will significantly influence these percentages. In particular, I wanted to look at Market Capitalization and Sector.

Based on the dividend information between 2006 and 2015, this was what I found:

1) As you may have suspected, companies with higher market capitalization are more consistent with dividend payouts. Especially during bad years, companies with higher market capitalization significantly outperform others. They are still able to give at least 50% of last year dividends >80% of the time.


Table 1. From 2006-2015, percentage of companies with dividends higher than the previous year

Market Cap Overall Lowest*
>SGD 1B 70% 38%
>SGD 100M 64% 39%
<SGD 100M 55% 26%
*All Lowest results occurred in 2009


Table 2. From 2006-2015, percentage of companies with dividends at least 50% of the previous year

Market Cap Overall Lowest**
>SGD 1B 92% 82%
>SGD 100M 86% 66%
<SGD 100M 79% 60%
**All Lowest results occurred in 2009 except for Mid Cap which was in 2008, but 2009 was only 1% better


2) As for the Sector attribute, I could not really see any conclusive difference between sectors. Conversely, the lack of conclusive difference could actually indicate that Sector is not an influential factor in dividends payout.


Sector Dividends Higher Than Previous Year Dividends At Least 50% of Previous Year
AGRICULTURE 50% 90%
COMMERCE 62% 84%
CONSTRUCTION 66% 85%
ELECT/GAS/WATER 57% 95%
FINANCE 65% 91%
HOTELS/RST 70% 85%
MFG 59% 82%
MINING/QUARRYING 64% 82%
MULTI-IND 70% 86%
PROPERTIES 67% 91%
SERVICES 61% 83%
TPT/STOR/COM 64% 84%
Note: I chose not to show the Lowest results for Sector because the sample sizes are quite low for some sectors per year hence the results might be misleading to look at.


Conclusion: While the results of this analysis might not come as a surprise to most people, it further reinforces the suggestion that companies with larger market capitalization tends to be more dependable in their dividend payouts even during bad years (i.e. 2008 and 2009).

In future articles, I will continue to look at and find attributes of a company that are able to significantly influence its dividend payouts. I might also create a tool for anyone to easily perform such analysis in future.


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