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Willie Keng, CFA

Willie Keng, CFA

Chief Editor

Is Venture Corp a Good Dividend Grower?

Venture Corp was founded in 1984. You could say it's an OEM giant, making electronic devices for many Fortune 500 Companies.
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Venture Corp (SGX:V03) is a major, Singapore-based electronics maker. 

Founded in 1984, this company hit its first billion dollar revenue in 2000 — riding the trend of the tech wave in the late 1990s. 

Not many people know Venture Corp. But I’ll tell you, Venture Corp makes a wide range of stuff. It produced the hottest technology equipment in the late 1990s — printing and imaging products, routers, barcode scanners, networking and communication products. The stuff that many Fortune 500 companies, including big telecom, semiconductor and consumer electronics products sell.

It counts big brands — like Hewlett Packard as its customers.

You can say Venture Corp is an Original Equipment Manufacturer (OEM). 

An OEM is a company who makes equipment and devices that are used in another company’s end products. For instance, Venture Corp makes Hewlett Packard’s printers.

At one point, it almost clinched a huge project with Philip Morris (seller of Marlboro cigarettes) to manufacture e-cigarettes.

 

Venture Corp is an electronics “powerhouse”

The fact is, Venture Corp doesn’t only sell in Singapore, but across all over the world in Asia. 

Its close to 40 years of reputation earned Venture Corp an electronics maker “powerhouse”. 

Having studied years of its annual reports, I’d say Venture Corp adapts well in today’s fast moving world. 

Right now, it positions itself in life science genome, artificial intelligence, “Internet of Things” etc. The latest trends people are talking about. The company is transforming itself. It’s even moving into the electric vehicle battery industry. 

That’s why Venture Corp’s sales grew steadily from S$2.4 billion in 2011 and hit around S$3 billion last year 2020. At one point, it was making S$4 billion in revenues in 2017. And over the same period its net income almost doubled from S$156 million to S$297 million.

In its latest financial year results ending Dec 2020, it produced S$3 million in revenues, down 17%. While net profits fell 18% to S$297 million. This was because its production was affected by the shutdown during the COVID pandemic. 

But it all bounced back up in the second half of 2020. 

That’s why, the company on average, produced S$213 million free cash flow over the past 10 years. And all that cash flow generated allow Venture Corp to sit on a huge pile of cash — all S$928 million.

If I were a retiree, I would be sleeping soundly at night with this kind of balance sheet. That’s because it can safely pay all of its liabilities, and has more than enough to continue growing its business. 

 

As the world gets into the 5G revolution, Venture Corp is winning big

And its growth potential is huge. 

For example, global “Internet of Things” is expected to grow at a rate of close to 14% per annum till 2023. And with quicker transmission of data, larger network capacity, plus a more secure 5G will push more devices to be connected using the Internet of Things. 

According to International Data Corporation (IDC), a global market intelligence firm, global Internet of Things spending will reach US$1.1 billion by 2023, up from US$749 million in 2020. And that’s only one segment of Venture Corp’s business. 

What’s more important is its alignment with shareholders. 

Management does not have a fixed dividend policy. But the company has paid dividends in abundance since its listing in 1992. And they are able to maintain this perfect track record. All from its cash flow generative business. It paid an average 50 cents dividends per share. 

In fact, during last year, it decided to reward shareholders with a 75 cents per share dividends. 

As a whole, Venture Corp has paid out over S$2.3 billion since 1992 till date. 

This is a steady dividend payer.

Venture has enough firepower to continue its rich research & development capabilities across various technical domains. This allows it to quickly adapt and transform its business to the latest technology developments.

I think Venture Corp is a great company to get into if you’re interested in riding the huge technology wave. It’s a different type of company, unlike the smaller OEM companies or the largely unprofitable technology stocks. 

Even though Venture Corp’s growth may not be as strong, but it provides a certain level of stability and safety to its dividends. A perfect fit for a dividend portfolio. 

Sometimes, investing can be simple.

Always here for you, 
Willie Keng, CFA
Founder, Dividend Titan

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Willie Keng, CFA

Willie Keng, CFA is the founder of Dividend Titan, a financial publication for self-managed investors. A former research analyst for top private banks, Willie today runs his own consulting firm. Some of his clients include asset managers and family offices. Willie has a deep passion for helping everyday investors take control of their financial future. And has spent over 10,000 hours researching, analyzing and recommending investment ideas.

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