Singtel’s Rising Dividends Boost Investor Confidence Amid Strong 1H FY2025 Results

Singapore Telecommunications Limited (Singtel) has captured investor optimism as HSBC, UOB Kay Hian (UOBKH), Maybank, RHB, CGS-CIMB, and Citi reaffirm their “buy” recommendations following Singtel’s robust first half FY2025 financial results.

The telecommunications giant announced an interim dividend of 5.6 cents per share for the first half of FY2025, along with a value realisation dividend (VRD) of 1.4 cents per share. This brings the total dividend for the period to 7 cents—a substantial 35% increase year-on-year.

Singtel has also unveiled plans for a significant capital recycling initiative, with management targeting around $6 billion in capital over the medium term. UOBKH analysts Lucas Chong and Llelleythan Tan anticipate that this capital will be unlocked through divestments in regional associates and non-core assets, potentially leading to higher dividend payouts in the future. They suggest that Singtel’s current excess cash reserves, which range between $2 to $3 billion, could push dividends toward the upper end of its 70%-90% underlying profit payout policy.

Chong and Tan further speculate that the VRD could be increased, potentially hitting the upper range of Singtel’s 3-6 cents per share guidance for FY2025, pending any additional divestments or stake sales in the second half of FY2025. Introduced earlier this year, the VRD reflects Singtel’s strategy to return excess cash generated from its capital recycling program to shareholders. According to the analysts, each $1 billion raised through capital recycling could translate into a VRD of approximately 5-6 cents per share, adding an estimated 1.5% to dividend yield.

HSBC’s Piyush Choudhary shares the positive outlook, forecasting a 6.7% year-on-year increase in dividends per share (DPS) for FY2025, rising to 16 cents, with a further 6.3% increase to 17 cents projected for FY2026. Choudhary attributes these gains to growth in Singtel’s core business and earnings from regional associates, supported by rising ARPU across markets. He expects Singtel’s underlying net profit to grow at a compound annual growth rate (CAGR) of 15% over the next three years.

In total, Singtel’s planned interim dividend includes a 5.6 cent core ordinary dividend and a 1.4 cent VRD, reflecting its commitment to return value to shareholders. Additionally, shareholders are set to receive a second tranche of 1.9 cents from the VRD announced with Singtel’s FY2024 results in May.

As Singtel forges ahead with its capital recycling strategy, the market is responding positively, with analysts across major banks confident in the company’s ability to sustain higher dividends and growth in the years ahead.

Thank you