Dividend Idea: SATS - Singapore Airport Terminal Services Skip to Content

Dividend Idea: SATS – Singapore Airport Terminal Services

Airline Ground Services and Inflight solutions provider have really taken a beating together with SIA Engineering and ST Engineering.

What is common between the 3 of them? A high possibility that sentiments are against them due to the slowing of US economy and demand for air travel and maintenance.

However, i think as a long term investor we have a good play here.

  1. SATS served 40 airports in inflight catering and ground handling.
  2. SATS dividend payout have been increasing steadily the past few years
  3. SATS have a good free cashflow position. This is due to the need for low capital expenditure and consistent operating cashflow.
  4. From a business point of view, their association with SIA and SIA being a well-respected brand will filter down to SATS as well and together with their experience in inflight services and ground handling, should be a good dividend stock to own.

At current price of SGD1.83 the yield 7.6% on 14 cents of div. However, I am a bit cautious since the past average payout ranges from 10 cts to 7 cts. Based on that the yield is around 5.4%, which is hardly the best prospect when it comes to dividend counters.

However, if you believe SATS will improve their payout yearly, it may balance out SATS not having a 8-9% yield. You have to wait until it falls to SGD1.10 for it to have that kind of yield.

Phillip Fisher on Profit Margins
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