All for you: Sheng Siong shares and dividend guide

One of our local supermarkets, Sheng Siong has been growing from strength to strength on the back of Covid-19. If you’re looking to add this grocer to your portfolio, here’s what you need to know about their dividends before hitting ‘Buy’.

A supermarket located in the heartlands, Sheng Siong is a listed stock that needs little introduction. 

When the news broke on May 14 that Singapore will be heading into phase 2 (heightened alert), Sheng Siong’s stock price jumped 10 per cent within the day.

Sheng Siong has more than 60 stores islandwide, mostly located in the neighbourhoods rather than shopping malls. They pride themselves in offering quality products that are value-for-money. 

Groceries and household products aside, frequent Sheng Siong shoppers will be familiar with Sheng Siong’s lucky draws and contests that give shoppers the chance to win attractive prizes.

Sheng Siong also made the news last year with their silent acts of kindness, giving money to funerals for 30 years to foster greater ‘kampung spirit’. 

Before you decide to include Sheng Siong in your portfolio, here are some important details you need to know.

Sheng Siong’s growth in 2020 and beyond

Sheng Siong has been a beneficiary of the Covid-19 situation, posting stellar numbers since the arrival of the pandemic. 

For Q1 2021, Sheng Siong’s net profit grew 6.5 per cent year-on-year (YOY) to $30.9 million. This was despite having to compare to a relatively high base due to Covid-19 inducing demand in Q1 last year.

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If we look at FY2020 as a whole, Sheng Siong’s net profit grew an impressive 83.7 per cent YOY to $139.1 million.

Most people will remember the 16 months’ bonus some of Sheng Siong’s staff received and the many Sheng Siong memes that followed — a clear indication of their solid revenue performance. 

Sheng Siong’s CEO also mentioned that the Group is committed to expanding their footprint in Singapore, particularly in locations where there aren’t Sheng Siong stores present.

They also aim to improve profitability by enhancing gross margin — done through better cost efficiency in the supply chain and changing the sales mix to include more fresh produce.

Sheng Siong’s share price has been on a gradual uptrend over the past few years, trading at about $1.6 in May 2021 compared to less than $1 in 2018. Many investors choose to add Sheng Siong to their portfolios for its dividends rather than capital gains.

How much will you receive if you own Sheng Siong shares?

Sheng Siong usually gives dividends twice a year. This 2021, Sheng Siong will be giving out S$0.03 per share in dividends this May. The ex-dividend date (the last date that investors can buy Sheng Siong shares in order to receive dividends) was May 7. 

This means that if you own 10,000 Sheng Siong shares, you’ll receive $300 worth of dividends on May 20 (the dividend pay date).  

Over the past five years, Sheng Siong dividends have generally been on the rise, 2020 being a great year for investors with the highest dividend per share yet. 

Sheng Siong dividend payout date: Based on historical data, Sheng Siong typically gives out dividends biannually, specifically in May and August. 

While a two per cent to three per cent yield isn’t the most impressive (Singapore bank stocks and real estate investment trusts can offer higher yields), it is still worth considering as it helps your wealth beat inflation with little volatility. It could also serve as a good way to diversify your portfolio.

Why invest in Sheng Siong shares?

The queues at the Sheng Siong cashiers are telling. In such uncertain Covid-19 times, supermarkets like Sheng Siong continue to thrive. People still need to visit the supermarket in order to get groceries and household items required for prolonged periods at home. 

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Sheng Siong reaches out to heartlanders, offering quality products at affordable prices. Groceries aside, there are other compelling reasons for locals to purchase groceries from Sheng Siong rather than other supermarkets. 

This includes the frequent lucky draws and up to 12 per cent cashback you receive when you spend using a credit card such as the BOC Sheng Siong card. Senior citizens aged 60 and above also enjoy a three per cent discount every Wednesday for the entire 2021. 

Most importantly, dividends have been constantly paid out and increasing on the back of Covid-19. If you’re an investor looking to add a stock that contributes towards a steady passive income stream, Sheng Siong could be one to consider. 

What are the risks of investing in Sheng Siong?

Sheng Siong isn’t the only grocery store in Singapore. The likes of NTUC FairPrice, Cold Storage, Giant and even HAO Mart give Sheng Siong a run for its money.

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However, it’s also worth noting that different grocery stores have their own unique appeal and in some cases, special products sold on the shelves.

Redmart, pandamart and Grab Mart are up-and-coming online supermarkets that also offer customers doorstep delivery — a big draw for consumers with no time to head out, or simply looking to avoid the crowds.

Also, while stocks such as Sheng Siong have been seeing good days since the beginning of Covid-19, it is possible that foot traffic and purchases at supermarkets could fall when the tide finally turns with travel and dining out completely resuming. 

How to invest in Sheng Siong shares?

To purchase Sheng Siong shares, you’ll need a brokerage account. If you have plans to hold the stock for a long time, you can also consider opening a Central Depository (CDP) account and have your Sheng Siong shares stored there. 

As Sheng Siong is listed on the SGX, be sure to choose a brokerage account that offers access to Singapore stocks. 

This article was first published in SingSaver.com.sg. All content is displayed for general information purposes only and does not constitute professional financial advice.