The Motley Fool

The Better Dividend Share: Nagacorp Ltd vs. Genting Singapore Ltd

Nagacorp Ltd (SEHK: 3918) and Genting Singapore Ltd (SGX: G13) are two casino stocks listed on separate stock exchanges. Nagacorp is listed in Hong Kong but has operations mainly in Cambodia. Meanwhile, Genting Singapore is listed in Singapore with its business largely, well you’ve guessed it, in Singapore.

Both companies are known to be high-yielding shares. If you could invest in only one, though, which would you pick? That might be a tough question, but I’ll attempt to make your life easier by comparing four main dividend aspects of both companies here.

Dividend yield

Nagacorp’s shares are currently trading at HK$11.88 each. At that share price, it has a trailing dividend yield of 4.1%. On the flipside, Genting Singapore has a share price of S$0.90 and that gives a trailing dividend yield of 3.9%.

Winner: Nagacorp

Dividend growth rate

The dividend yield tells us what a company has paid over the last 12 months. But we should also analyse how the company’s dividends have changed over time, at least over the previous five fiscal years.

Nagacorp has grown its dividend per share (DPS) from US$0.0418 in 2014 to US$0.054 in 2018, translating to an annualised growth of 6.6%. Meanwhile, Genting Singapore’s DPS has surged 36.8% annually, from S$0.01 in 2014 to S$0.035 in 2018.

Winner: Genting Singapore

Dividend payout ratio

Beyond the trailing dividend yield, we should also assess whether a company can maintain or grow its dividend in the future. To do that, we can compare the company’s dividend payout ratio (dividend as a percentage of earnings). Companies that pay out lower than 100% of earnings as dividends have a margin of safety.

In 2018, Nagacorp paid out 60% of its earnings as dividends. On the other hand, Genting Singapore’s 2018 dividend payout ratio stood at 56%. Both the dividend payout ratios are conservative and are close to each other. Therefore, there’s no clear winner here.

Winner: It’s a tie

Balance sheet strength

If a company has a significant amount of debt on its balance sheet, it will need to channel its resources to pay off the loans, which could mean less cash available to be paid out to shareholders in terms of dividends. Therefore, I like to see companies with more cash than debt on their balance sheets to allow them to pay sustainable dividends.

As of 30 June 2019, Nagacorp had more cash than borrowings on its balance sheet. It had a cash hoard (including certificates of deposit, fixed deposits and other liquid funds) of US$323 million and total debt of US$292.9 million, giving it a net cash position of around US$30 million.

Genting Singapore, on the flip side, had cash and cash equivalents of S$3.6 billion and total borrowings of S$269.1 million, as of the end of June 2019. This translates to S$3.4 billion in net cash. Both companies have strong balance sheets.

Winner: It’s a tie

The Foolish takeaway

On the whole, there’s no clear winner on which company is the better dividend stock. However, if I were to pick one, I would choose Genting Singapore since its historical dividend growth rate is better than its counterpart, and its current dividend yield is not too far off either.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Sudhan P doesn’t own shares in any companies mentioned.