Singtel (Z74); StarHub (CC3); NetLink (CJLU): Local Telcos Dividend Yield And Share Price Performance
This article is republished with permission from Dollars And Sense .
11-Jan
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Telecommunications companies, often referred to as telcos, have long been regarded by investors as defensive stocks. This perception is rooted in several fundamental aspects of the industry that contribute to these telcos’ financial stability and resilience, even in challenging economic conditions.
One of the primary reasons telcos are considered defensive stocks is their ability to generate stable cash flow and consistent profits. This stability stems from substantial investments in infrastructure such as cell towers, fibre-optic networks, and data centres. These assets form a robust foundation that supports reliable service delivery to a broad customer base. Moreover, telcos typically operate on a recurring revenue model, where customers subscribe to services like mobile phone plans, internet access, and cable television. This model ensures a steady income stream as subscribers make regular monthly payments for essential communication services.
In Singapore, there are currently three companies on the Singapore Exchange (SGX) that we can invest in if we want to gain exposure to the telco sectors. The companies are Singtel (Z74), StarHub (CC3) and NetLink (CJLU).
For this edition of 4 Stocks This Week, we examine the stock performance and dividend yields of these telco companies.
Singtel (Z74)
Singapore Telecommunications Limited (SGX: Z74), or Singtel for short, is the largest telco in Singapore with 4.1 million mobile customers in Singapore.
Besides Singapore, Singtel also invests in regional markets such as AIS in Thailand, Airtel in India, Globe in the Philippines, and Telkomsel in Indonesia. AIS, Globe and Telkomsel are the top telcos in market position in their respective countries while Airtel is number two in the South Asian country. Singtel also fully owns Optus, the second-biggest telco in Australia, behind the leader Telstra.
Singtel’s dividend policy aims to pay core dividends between 70% and 90% of underlying net profit.
From 2018 to 2021, its dividend payout declined from 20.5 cents per share in 2018 (inclusive of a one-off special dividend of 3.0 cents) to 7.5 cents as of 2021.
In 2022, the dividend payout increased to 9.3 cents. In 2023, it also increased to 14.9 cents (including a 5.0 cent special dividend). For 2024, dividends increased once again to 15.0 cents (inclusive of a 3.8 cent value realisation dividend). Singtel says this is the third dividend increase since the strategic reset three years ago. For 2025, Singtel has paid a dividend of 7.0 cents thus far, including a valuation realisation dividend of 1.4 cents.
In its FY2023 results announcement, StarHub (Z74) reported that its net profit had increased 140% to $150 million as compared to FY2022 when it was affected by impairments (net profit would have been $114.2 million in FY2022 if not for the impairments). StarHub also reported FY2023 Service Revenue of $1.99 billion, a 5.5% growth compared to FY2022. According to StarHub, the company registered real growth across all metrics and business segments.
For its 3Q2024 results announcement, the company reported a net profit of $40.4 million, an 11.1% increase compared to the same period last year.
StarHub pays dividends semi-annually, and FY2023 dividends are at 6.7 cents per share. Based on its current share price of $1.22 as of 10 January 2025, this gives it a dividend yield of about 5.4%. StarHub's current market capitalisation is about $2.11 billion.
NetLink NBN Trust (CJLU)
NetLink (CJLU) isn't a telco. Rather, it builds, owns and operates the passive fibre network infrastructure for homes and non-residential premises and non-building address points (NBAP) in Singapore. This is the same fibre network that the other telco providers (i.e. Singtel, StarHub, M1,) use to provide broadband access to you. It has approximately 1.3 million residential end-user connections and more than 45,000 non-residential end-user connections.
In its latest 1H2025 results announcement, Netlink saw a decline in revenue of $0.5 million compared to the same period last year. Net profit after tax was at $48.5 million, down about 8.3% compared to the same period last year.
NetLink's distribution policy is to distribute 100% of its cash for distribution semi-annually. The dividend payout for 1H2025 is at 2.68 cents, up 0.03 cents compared to previous period.
