OCBC dividends: Everything you should know

Oversea-Chinese Banking Corp Limited is another popular dividend stock among Singapore investors.

Right now, let’s look into the Singapore bank’s dividend yield, dividend history, and more importantly…

… its dividend sustainability to understand if OCBC can continue dishing out increasing dividends.

OCBC dividend yield

The OCBC share price closed at $11.61 apiece on Sept 1.

At that stock price, the bank’s trailing dividend yield was 3.5 per cent.

To put things into perspective, the SPDR STI ETF had a lower distribution yield of around 2.7 per cent on the same day.

The SPDR STI ETF is an exchange-traded fund (ETF) that replicates the performance of Singapore’s Straits Times Index (STI).

OCBC is part of the STI and is its second-largest component at around 14 per cent.

OCBC dividend amount and payout periods

For its financial year ended Dec 31, 2020, OCBC dished out a total dividend of 31.8 Singapore cents per share.

The bank’s annual dividend is usually split into two parts – one part (interim dividend) is given out for the second quarter and the other for the fourth quarter (final dividend).

Last year, OCBC paid out a dividend of 15.9 Singapore cents per share each for the second and fourth quarters.

In the 2021 second-quarter, OCBC paid out 25.0 Singapore cents per share after the Monetary Authority of Singapore (MAS) lifted the dividend cap for local banks and finance companies.

In July 2020, OCBC and the other banks had to curb their dividend payout after Singapore’s central bank called on the financial institutions to limit their total dividends per share for 2020 at 60 per cent of 2019’s dividends as a pre-emptive measure.

OCBC scrip dividend scheme

The OCBC scrip dividend scheme provides shareholders with the option of receiving their dividends in shares instead of cash.

OCBC last offered a scrip dividend in the fourth quarter of 2020.

Here’s a look at all the periods that OCBC has offered scrip dividends:

OCBC dividend history

Now, let’s explore OCBC’s dividend payouts from 2008 to 2020:

OCBC Dividend for Year	Dividend Period	Dividend Per Share (Singapore Cents)	Total Dividend Per Share (Singapore Cents)	5-Year Compound Annual Growth Rate (CAGR)
2008	Interim dividend	14.0	28.0	4.2 per cent
	Final dividend	14.0
2009	Interim dividend	14.0	28.0
	Final dividend	14.0
2010	Interim dividend	15.0	30.0
	Final dividend	15.0
2011	Interim dividend	15.0	30.0
	Final dividend	15.0
2012	Interim dividend	16.0	33.0
	Final dividend	17.0
2013	Interim dividend	17.0	34.0	2.14 per cent
	Final dividend	17.0
2014	Interim dividend	18.0	36.0
	Final dividend	18.0
2015	Interim dividend	18.0	36.0
	Final dividend	18.0
2016	Interim dividend	18.0	36.0
	Final dividend	18.0
2017	Interim dividend	18.0	37.0
	Final dividend	19.0
2018	Interim dividend	20.0	43.0	N/A
	Final dividend	23.0
2019	Interim dividend	25.0	53.0
	Final dividend	28.0
2020	Interim dividend	15.9	31.8
	Final dividend	15.9

Over the years, OCBC has paid consistently growing dividends.

In 2008, the bank paid out 28.0 Singapore cents per share in total dividends.

That grew to 53.0 Singapore cents per share in 2019, giving a CAGR of around 6 per cent.

In 2020, OCBC dished out a total dividend per share of 31.8 Singapore cents, which is 60 per cent of the previous year’s dividend (in line with the MAS cap).

OCBC dividend policy

The following shows OCBC’s dividend policy, as stated in its annual report:

“Our dividend policy aims to provide shareholders with a sustainable and progressive dividend that is consistent with our long term growth.”

OCBC’s dividends are indeed sustainable, as we will see next.

ALSO READ: OCBC Bank dividends & share price guide: Is it worth buying?

OCBC dividend sustainability

Given OCBC’s conservative dividend payout ratio , its dividends are well-protected.

Companies that pay below 100 per cent of their earnings would leave some room for dividend increases in the future, even if their earnings were to fall.

Here, let’s look at OCBC’s dividend payout ratios from 2016 to 2020:

2016	2017	2018	2019	2020
Earnings Per Share ($)	0.82	0.95	1.06	1.12	0.80
Total Dividend Per Share ($)	0.36	0.37	0.43	0.53	0.318
Dividend Payout Ratio	43.9 per cent	38.9 per cent	40.6 per cent	47.3 per cent	39.8 per cent

OCBC’s dividends are well-covered as it has paid out below 50 per cent of its earnings as dividends over the last five years.

As long as OCBC continues to grow its earnings, it should increase its dividends over time, in line with its dividend policy. This is evident from its historical dividend trend as well.

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