Evaluating Yield, Growth, and Stability in Three Market Leaders
Date: January 2026
Analysis Period: 9M2025 to FY2025
EXECUTIVE SUMMARY
This case study examines three Singapore-listed dividend stocks that demonstrate the optimal balance between income generation, business stability, and long-term growth potential. The analysis focuses on Sheng Siong Group (SGX: OV8), Raffles Medical Group (SGX: BSL), and Singapore Exchange Limited (SGX: S68), evaluating their financial performance, competitive positioning, and investment impact for income-focused portfolios in 2026.
INVESTMENT THESIS
The central thesis underlying this analysis is that optimal dividend investing requires more than simply chasing the highest yield. Instead, sustainable income generation depends on three critical pillars:
1. Defensive Business Models: Companies operating in sectors with consistent demand regardless of economic cycles.
2. Strong Financial Foundations: Robust balance sheets with minimal debt and substantial cash reserves to support dividend continuity.
3. Growth Catalysts: Identifiable pathways for business expansion that can drive both capital appreciation and dividend growth.
COMPANY PROFILES
1. Sheng Siong Group Limited (SGX: OV8)
Business Overview
Sheng Siong operates as Singapore’s leading neighborhood supermarket chain, focusing on fresh produce and household essentials. The company targets heartland communities with strategically located stores designed to serve as convenient shopping destinations for daily necessities. This positioning creates natural defensive moats through location-based customer loyalty and high switching costs.
Financial Performance (9M2025)
| Metric | Performance |
| Revenue | S$1.2 billion (+9.5% YoY) |
| Gross Margin | 31.1% (improved) |
| Net Profit | S$116.1 million (+6.5% YoY) |
| Free Cash Flow | S$162.4 million (+14.9% YoY) |
| Cash Position | S$393.7 million |
| Total Debt | Zero |
| Dividend (9M2025) | S$0.064 per share |
Growth Drivers
Store Network Expansion: The company reached 90 stores by late 2025, with nine new outlets opened during the first nine months. This aggressive expansion targets underserved heartland areas and positions Sheng Siong for market share gains.
Same-Store Sales Growth: Comparable stores delivered 1.5% growth, demonstrating that existing locations continue to attract increased customer spending despite mature operations.
Margin Enhancement: Improved product mix and operational efficiency drove gross margins to 31.1%, creating additional room for profit growth even in competitive markets.
2. Raffles Medical Group Limited (SGX: BSL)
Business Overview
Raffles Medical Group operates integrated healthcare services across Southeast Asia, including hospitals, clinics, insurance, and specialized medical services. The company benefits from multiple structural tailwinds, including aging demographics, rising healthcare spending, and growing medical tourism in the region.
Financial Performance (1H2025)
| Metric | Performance |
| Revenue | S$378.4 million (+3.5% YoY) |
| Hospital Services Revenue | +3.8% YoY |
| Hospital Segment Profit | +24.3% YoY |
| Free Cash Flow | S$52.0 million (+139.4% YoY) |
| Cash Position | S$334.2 million |
| Dividend (FY2024) | S$0.025 per share |
Strategic Focus
Operational Efficiency: The company’s 2025 strategy emphasized quality over quantity, with hospital segment profits surging 24.3% despite only modest revenue growth of 3.8%. This demonstrates successful focus on high-margin specialized services.
Cash Generation: Free cash flow jumped 139.4%, driven by reduced capital expenditure and improved operating cash generation. This provides substantial capacity for dividend increases and strategic investments.
Insurance Turnaround: Operating losses in the Insurance segment narrowed by over 50%, indicating progress toward profitability in this complementary business line.
3. Singapore Exchange Limited (SGX: S68)
Business Overview
Singapore Exchange operates as the sole stock market operator in Singapore, holding a regulatory monopoly over securities trading in the city-state. Beyond equity markets, SGX has evolved into a diversified multi-asset exchange offering derivatives, fixed income, currencies, and commodities trading, with particular strength in Asian financial derivatives.
Financial Performance (FY2025)
| Metric | Performance |
| Net Revenue | S$1.298 billion (+11.7% YoY) |
| Cash Equities | +26.5% YoY |
| Currency Derivative Volumes | +54.1% YoY |
| Net Profit | S$648 million (+8.4% YoY) |
| Dividend (FY2025) | S$0.375 per share (vs S$0.345 in FY2024) |
Competitive Advantages
Regulatory Monopoly: As Singapore’s only stock exchange operator, SGX enjoys structural protection from domestic competition, creating predictable revenue streams.
Global Derivatives Hub: The FICC segment’s exceptional performance, particularly the 54.1% surge in currency derivative volumes, positions SGX as a critical global foreign exchange trading venue.
Dividend Visibility: Management’s commitment to S$0.0025 quarterly dividend increases from FY2026 through FY2028 provides investors with rare forward visibility and a built-in 40% growth trajectory over three years.
COMPARATIVE ANALYSIS
Financial Strength Comparison
| Metric | Sheng Siong | Raffles Medical | SGX |
| Cash Position | S$393.7M | S$334.2M | Not disclosed |
| Debt Level | Zero | Minimal | Not disclosed |
| FCF Growth | +14.9% | +139.4% | Not disclosed |
| Revenue Growth | +9.5% | +3.5% | +11.7% |
Business Model Assessment
Sheng Siong operates with the most defensive business model among the three. Grocery retail is recession-resistant, as consumers require food and household essentials regardless of economic conditions. The company’s debt-free balance sheet and substantial cash reserves provide exceptional financial flexibility for continued expansion and dividend sustainability.
Raffles Medical benefits from powerful structural tailwinds in healthcare. The aging population across Southeast Asia ensures growing demand for medical services, while rising disposable incomes drive increased healthcare spending. The company’s strategic shift toward high-margin specialized services demonstrates management’s focus on profitability over pure revenue growth.
Singapore Exchange possesses the strongest competitive moat through its regulatory monopoly. The exchange generates transaction-based revenue that scales with market activity, while its transformation into a global multi-asset platform reduces dependence on local equity market volumes. The committed dividend growth provides investors with unusual forward visibility.
INVESTMENT IMPACT ANALYSIS
Portfolio Diversification Benefits
Combining these three stocks creates a well-diversified income portfolio with exposure to different economic sectors and revenue drivers. This diversification reduces concentration risk while maintaining consistent dividend income.
Sector Diversification: The portfolio spans consumer staples (Sheng Siong), healthcare (Raffles Medical), and financial infrastructure (SGX), ensuring that economic headwinds affecting one sector do not compromise the entire portfolio.
Revenue Cyclicality: Sheng Siong provides counter-cyclical stability, Raffles Medical offers secular growth independent of economic cycles, and SGX delivers pro-cyclical exposure to financial market activity.
Dividend Timing: Different fiscal year-ends and dividend payment schedules across the three companies can provide more frequent income distributions throughout the calendar year.
Risk-Adjusted Return Profile
All three companies demonstrate strong risk-adjusted return potential through their combination of stable cash flows, conservative balance sheets, and identified growth catalysts.
Financial Stability: Sheng Siong’s zero debt and Raffles Medical’s minimal leverage eliminate financial distress risk, even in severe economic downturns. This stability supports dividend continuity during market stress.
Cash Generation: Strong free cash flow generation across all three companies ensures dividends are funded by actual cash earnings rather than accounting profits, reducing the risk of dividend cuts.
Growth Optionality: Each company possesses clear pathways for business expansion, providing potential for both dividend growth and capital appreciation beyond current yield.
Income Sustainability Assessment
The sustainability of dividend payments depends on durable competitive advantages, consistent cash generation, and management commitment to shareholder returns.
Sheng Siong: Free cash flow of S$162.4 million significantly exceeds nine-month dividends, providing substantial payout coverage. The expanding store network creates additional cash flow streams as new outlets mature.
Raffles Medical: The 139.4% surge in free cash flow demonstrates improving cash generation capacity. While the company doesn’t pay interim dividends, the year-end distribution appears well-supported by strengthening cash flows.
SGX: Management’s public commitment to quarterly dividend increases through FY2028 provides the highest level of income visibility. The exchange’s monopoly position and diversified revenue base support this guidance.
RISK FACTORS AND MITIGATION
Company-Specific Risks
Sheng Siong:
Competition Risk: Entry by international grocery chains or e-commerce platforms could pressure market share and margins. However, Sheng Siong’s neighborhood focus and cost structure create defensibility against premium competitors.
Expansion Risk: Aggressive store openings require successful site selection and rapid maturation. Poorly performing new stores could dilute returns. The company’s track record and gradual expansion pace mitigate this concern.
Raffles Medical:
Regulatory Risk: Government healthcare policies significantly impact pricing and reimbursement rates. Changes to insurance coverage or foreign worker medical requirements could affect volumes.
Medical Tourism Volatility: Travel restrictions or regional healthcare competition could impact patient volumes. The company’s diversified service offerings across multiple countries provide some buffer.
Singapore Exchange:
Market Volume Risk: Trading volumes fluctuate with market conditions and investor sentiment. Extended bear markets or low volatility periods reduce transaction revenue.
Competition from Alternative Venues: Global exchanges and alternative trading platforms compete for derivatives trading. SGX’s continued investment in technology and product innovation addresses this challenge.
Macroeconomic Risks
Inflation: Rising costs could pressure margins if companies cannot pass increases to customers. Sheng Siong appears best positioned given grocery retail’s pricing power during inflation.
Interest Rates: Higher rates increase the relative attractiveness of bonds versus dividend stocks. However, all three companies’ debt-free or low-debt profiles mean they don’t face refinancing pressure.
Economic Recession: Sheng Siong’s consumer staples focus provides natural recession protection. Raffles Medical may see reduced elective procedures, while SGX could experience lower trading volumes. Portfolio diversification helps balance these exposures.
CONCLUSIONS AND RECOMMENDATIONS
Investment Thesis Validation
The analysis confirms that Sheng Siong, Raffles Medical Group, and Singapore Exchange collectively represent an optimal dividend investment strategy for 2026. Each company demonstrates the critical balance of immediate income generation, business stability, and long-term growth potential.
All three stocks exhibit rock-solid balance sheets with minimal leverage, providing exceptional financial flexibility and dividend security. Their free cash flow generation substantially exceeds dividend requirements, indicating sustainable payout ratios with room for future growth.
The companies operate in sectors with durable competitive advantages, whether through location-based customer loyalty, structural healthcare demand, or regulatory monopoly. These moats provide confidence in long-term earnings stability.
Portfolio Construction Recommendations
For investors seeking to implement this dividend strategy, consider the following portfolio allocation approach based on risk tolerance and investment objectives:
Conservative Allocation: 50% Sheng Siong, 25% Raffles Medical, 25% SGX. This weighting emphasizes the most defensive business model while maintaining diversification.
Balanced Allocation: Equal-weight at 33.3% each. This approach provides maximum sector diversification and balanced exposure to different economic cycles.
Growth-Oriented Allocation: 25% Sheng Siong, 40% Raffles Medical, 35% SGX. This weighting favors companies with stronger growth catalysts while maintaining defensive characteristics.
Key Monitoring Metrics
Investors should track the following metrics quarterly to ensure investment thesis integrity:
1. Free cash flow trends and payout ratios to assess dividend sustainability
2. Same-store sales growth for Sheng Siong as an indicator of competitive positioning
3. Raffles Medical’s hospital segment margins to monitor operational efficiency improvements
4. SGX’s derivatives trading volumes, particularly in FICC products, to gauge global competitiveness
5. Balance sheet strength metrics including cash positions and debt levels
Final Assessment
This case study demonstrates that effective dividend investing extends far beyond simply selecting the highest-yielding stocks. The “sweet spot” emerges when companies combine immediate income generation with business quality and growth potential.
Sheng Siong provides the defensive foundation through recession-resistant consumer staples, Raffles Medical delivers structural healthcare growth, and Singapore Exchange offers monopoly-protected financial infrastructure exposure. Together, these three stocks create a diversified income stream backed by exceptional balance sheets and clear competitive advantages.
For income investors in 2026, this trio represents a compelling opportunity to generate sustainable dividends while maintaining strong potential for capital appreciation. The combination of business quality, financial strength, and growth catalysts positions this portfolio for long-term success through varying market conditions.
DISCLAIMER
This case study is provided for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or an offer to buy or sell securities. Past performance does not guarantee future results. All investments carry risk, including potential loss of principal.
Investors should conduct their own research and consult with qualified financial advisors before making investment decisions. The analysis presented reflects information available as of January 2026 and may not reflect subsequent developments.