In a time where tech stocks globally are underperforming due to slowing growth and a higher interest rate environment, there are a number of Singapore tech stocks that are paying out robust dividends.
Tech stocks are sought by investors mainly for growth. In times where growth slow down, tech stocks who are able to pay dividends reward investors for holding these stocks.
Tech stocks that are able to pay out some dividends usually reflect a mixture of reasons such as profitability, strong balance sheet and confidence in its prospects.
Here we look at:
5 SG Tech stocks with dividend yields of 3.5% or more
| Company | Ticker (SGX) | Market capitalisation (S$’m) | P/E ratio | Dividend yield(%) |
| AEM Holdings | AWX | 898 | 7.2 | 3.5 |
| Aztech Global | 8AZ | 646 | 9.7 | 3.7 |
| Venture Corporation | V03 | 5,010 | 13.5 | 4.4 |
| UMS Holdings | 558 | 724 | 11.9 | 4.6 |
| Micro-Mechanics Holdings | 5DD | 317 | 19.3 | 5.3 |
1) AEM Holdings (SGX: AWX)
AEM Holdings provides semiconductor and electronics test solutions. FY22 was an exceptionally strong year for AEM as revenue increased 54% YoY to S$871 million while net profit grew 38% YoY to S$124 million despite interest rate hikes and recessionary fears in the latter half of 2022.
This was spurred by a strong ramp up in demand by its key customer, Intel for both equipment and consumables. This demand was driven in part by a pull-in from 2023.
FY22’s earnings per share stood at 40.7 cents, representing a 29% YoY increase from 31.6 cents in FY21.
However, 3Q22 recorded revenues of $206 million and 4Q22 recorded revenues of $124 million. Both were significant sequential declines from the three prior quarters which ranged between $227 million to $279 million. This was attributed due to the weaker demand of the industry as a result of high inventory levels and recessionary fears.
Due to the global slow down, AEM has provided a FY23 revenue forecast of $500 million, even lower than FY21’s revenue of $565 million. It is also well known that Intel is struggling and has cut jobs, spending as well as dividends.
The total dividend payout for FY2022 will be 10.3 cents a share, comprising a 3.6 cents final dividend and 6.7 cents interim dividend, higher than FY21’s 7.6 cents total, supported by AEM’s healthy balance sheet as the company ended FY22 with a net cash position.
2) Aztech Global (SGX: 8AZ)
Aztech makes IoT devices, data communication products, LED lighting and other electrical products. The company recorded a 31% growth in revenue to a record $820.2 million for FY22. Net profit, however, declined by nearly 10% to $67.2 million due to foreign exchange loss.
Earnings per share declined from 10.0 cents in FY2021 to 8.68 cents in FY22.
The total dividend payout for FY22 will be 4.5 cents a share, comprising a 1.5 cents final dividend and 3 cents interim dividend. This was lower than FY21’s total dividend of 5.0 cents per share.
Aztech disclosed that if they excluded the impact of foreign exchange loss, Aztech’s net profit would record year-on-year improvement of 66% to $123.8 million respectively. EPS would have been 16 cents in FY22.
Revenue was driven by higher sales volume of IoT devices and Data-communication products as revenue for this segment increased by 34%, offset by decline of 32% in LED lighting and other electrical products.
Aztech’s balance sheet remained healthy with a net cash of $210.9 million, amounting to $0.27 per share or nearly a third of market capitalisation.
3) Venture Corporation (SGX: V03)
Venture is a company that manufactures new tech products that add value to businesses in various industries. It provides integrated products and solutions with capabilities spanning marketing research, design and development, product and process engineering, design for manufacturability, supply chain management, as well as product refurbishment and technical support.
Venture’s 4Q22 revenue increased 15% to 1.045 billion and 4Q22’s earnings per share increased 3% to 33.6 cents per share. The lower increase to earnings per share reflected cost pressures.
On an overall basis, FY22 revenue increased 24% to 3.864 billion while earnings per share increased 19% to 126.8 cents per share. Earnings per share for FY22 was higher than the previous 3 years and was in line with FY18, marking a post covid recovery.
The total dividend payout for FY22 will be 75 cents a share, comprising a 50 cents final dividend and 25 cents interim dividend. This was in line with FY21’s and FY20’s dividend.
Venture’s life sciences, medical devices and healthcare domain saw revenues increasing by 32% to $1.7 billion while its tech domain increased 19% to $2.2 billion.
Venture’s balance sheet remained healthy with net cash of $812.6 million, amounting to $2.79 per share or nearly 15% of market capitalisation.
4) UMS Holdings (SGX: 558)
UMS makes equipment and provides engineering services to semiconductor companies with front-end semi-conductor equipment contract manufacturing and complex electromechanical assembly and final testing devices. UMS also carries out modular and integration system for original semiconductor equipment manufacturing.
UMS recorded its highest ever annual net profit of $98 million on record revenue of S$372 million.
All three of its segments did better with its core semiconductor segment increasing 33% YoY to $322 million while the aerospace segment increased 50% YoY to $15 million. Its last segment which manufactures water disinfection systems and trades non ferrous metal alloys increase 85% YoY to $35 million.
In its core semiconductor segment, UMS’s Semiconductor Integrated System subsegment leapt 47% from $153 million in FY22, and its component sales climbed 23% to S$170 million in FY22.
Looking at UMS’s performance by geography, the company also saw significant sales growth in all its key markets. Malaysia and rest of world delivered the strongest growth of 73% and 87% respectively. Revenue in Singapore jumped 36% as compared to FY2021 while sales in Taiwan and US increased 40% and 12% respectively.
Earnings per share for FY2022 nearly doubled to 14.71 cents from 7.96 cents in FY2021.
UMS’s balance sheet remained healthy with net cash of $32 million, allowing the company to propose a final dividend of 2 cents per share, when combined with interim dividends for the last three quarters totalling 3 cents per share adds up to a total dividends of 5.0 cents a share in FY22. The dividend for FY22 was in line with FY21.
Given the uncertain 2023 macroenvironment, UMS has cautiously guided its outlook, expecting to be profitable in 2023 as its order book remain healthy. UMS will continue to expand capacity and its construction of its Penang factory is scheduled for completion in mid 2023.
5) Micro-Mechanics Holdings (SGX: 5DD)
MMH is a manufacturer of high precision tools and parts used in process critical applications for the semiconductor industry. The parts and precision tools are used to assemble and test semiconductors.
In its recent 1HFY23 results for the period ending 31 Dec 22, MMH recorded revenues that was 10% lower at $36.9 million and profits that were 36% lower at $6.1 million. Earnings per share stood at 4.42 cents as compared to 6.85 cents in 1HFY22.
The decline was due to the global chip market slowdown and difficult operating conditions in its major market of China where a flare-up in COVID-19 infections triggered new curbs and targeted lockdowns to control the outbreaks.
Although profits were lower, MMH was able to maintain its interim dividend at 6 cents per share. This could be attributed to its resilient balance sheet with an $18 million net cash position.
Conclusion
After marking strong growth in the first half of 2022, worldwide chips and other hardware sales began to taper during the second half of the year. Despite the macroeconomic weakness, these 5 tech companies are still dishing out decent dividend yields.
Although there are short term weaknesses, long term prospects are still bright due to secular tailwinds as chips are key to the big emerging technologies, such as artificial intelligence (AI), IoT and 6G.
All 5 tech stocks mentioned here have seen weak recent share price performances, recording either YTD or negative 1 year share price changes. This means that for investors who were looking to enter into these stocks earlier, the share price is comparably cheaper.
The outlook provided by these companies are tepid at best, hence being able to enter these stocks at the right price and being rewarded for time in the market via dividends will lead to strong overall returns.
