Sunday, 7 February 2021

5 Potential SGX High Yield Dividend Stocks with High Liquidity And Profitability

Recently, I have started looking around for other potential high dividend yielding stocks with good liquidity and profitability for inclusion into my future equities portfolio. The strategy is to sell off some of the stocks/REITs position that I maybe overly concentrated (such as Lendlease REIT) once their prices increases over the next 1-2 years (it is only a matter of time the covid vaccination succeed in lifting the devastating full/partial economic lockdown in different countries)  so as to embark onto further diversification- the ideal situation is not to have more than S$50K in any stocks going forward as I figured out that is the maximum permanent capital loss I can afford to replace or top up annually in the unfortunate event of a business failure. 

The top 5 potential high yield dividend stocks with good liquidity attributes on their balance sheet and are profitable are as follow:

1. FSL Trust
FSL Trust appearing on my screening list of top 5 stocks was a great surprise as it has been mired in financial trouble since 2011. FSL Trust has dropped off my radar for quite some time as the last I recalled it was close to bankruptcy many years back. Apparently, the new management team managed to turn around FSL Trust in 2019 and produced a net profit of USD10.9Mil as well as announced the resumption of distribution since 2012.  
FSL Trust has been able to sell off some of its older ships at a very good price and giving generous high dividends. It gave out US0.045 (S$0.0594) of dividends which translates to approximately 67% dividend yield on last traded price of S$0.082 per unit. Saying that, this is a very cyclical business in shipping and many previous investors have got themselves burnt badly. One will also need to be well versed in FSL Trust to know the history and the current strategic plan to decipher the sustainability of the dividends instead of blindly rushing in to buy at whatever prices. 

2. Axington
Axington, together with its subsidiaries, provides integrated professional services mainly in Malaysia to government-linked entities, private and public listed companies, and multinational corporations. Its four key business segments are tax advisory, business consultancy, enterprise management system application and business support.

Axington share price has performed strongly in 2020, gaining an impressive 400% over and is definitely one of the top 10 performer on SGX. 

3. Powermatic Data Systems
Powermatic specialize in the design and manufacturing of wireless connectivity devices. Their services include the provision of OEM, ODM, and JDM for wireless solutions.
The product range of Powermatic Data includes high performance wireless radio modules, embedded boards, indoor and outdoor access points and wireless antennas. Our products are used in various industries such as Factory automation, Healthcare, Hospitality, Security surveillance and many others.

Most importantly, Powermatic is in a strong partnership with Qualcomm Atheros (QCA). Their subsidiary Compex Systems Pte Ltd is officially appointed as Qualcomm Authorized Design Centre in South East Asia. As a Qualcomm design center, Powermatic provides wireless knowhow in both hardware and software services to many multinational corporations.

For Powermatic Data, its topline and bottom line have been performing impressively. Only issue I have is that it is a company with a small market capitalization. Saying that, Powermatic Data is currently on the top of my potential investment watchlist. 

4. Lung Kee Bermuda
Lung Kee (Bermuda) Holdings Limited manufactures metal products. The Company, through its subsidiaries, manufactures and markets mold bases. Lung Kee (Bermuda) Holdings also trades metals and parts. Lung Kee has a primary listing on the Hong Kong Stock Exchange since 5 March 1993 and has a dual secondary listing on SGX on 23 July 2002. 

Lung Kee has been giving out high dividends which seems to be more than profits at times but if looking at free cashflow perspective, appears alright. Unfortunately, trading liquidity is extremely low for this counter. Will also need to do more deep dive with regard to its operational profits trending to know more about its businesses. 

5. PNE Industries
PNE Industries is principally engaged in the design, development, manufacture, marketing and distribution of transformers, electronic controllers, emergency lighting equipment and electronic ballasts. Its emergency lighting equipment and electronic ballasts are sold under the "PNE" brand name, whereas the transformers and electronic controllers are non-branded products.

The key operations risk is that Malaysia is a key location for the Group's manufacturing facilities and that the recent COVID-19 outbreaks may lead to labour shortages or mandated shutdown.

FY20 dividends was at S$0.08 (dividend yield of 8.6% based on last traded price of S$0.920) while EPS is at S$0.074. According to the management of PNE Industries, despite the generous payout, they are confident of the having sufficient funds on hand for any investment opportunities. 

Some of the electronic businesses such as manufacturing wireless connectivity devices are essential for the new digital economies. As such, I think they will still be relevant. High risk high return does apply to many of the above mentioned businesses. 

1 comment:

  1. is this the same Axington?