More to dividends than meets the eye

A FEW years ago, I was casually looking through the financial statements of SIA Engineering.

What impressed me then, from that quick glance, was how the Straits Times Index (STI) component stock had negligible debt - just S$2.3 million - and a cash hoard of almost S$400 million.

Its profits were steadily growing. On top of that, the company had paid out a bumper dividend the year before of 30 cents a share. Excluding the 10-cent special dividend, it paid out 20 cents a share.

This worked out to a dividend yield of around 5.3 per…