To The Moon

How Holding a Decade-Old SG Dividend Champion Like Sembcorp Shapes My Compounding Engine

I’ve held $Sembcorp Ind(U96.SI)$ for ten years, and somewhere along the way, my steady dividend stock became a teenager who quietly excels at everything I didn’t expect. What began as a reliable dividend play in Singapore has evolved into a subtle yet powerful growth engine for my portfolio. Thanks to tax-free dividends, every dollar I’ve received over the years has been able to reinvest at full strength, quietly compounding while the market chased flashier headlines elsewhere.

A decade of quiet compounding pushing outward with deliberate strength

The Compounding I Didn’t Realise I’d Built

Reinvesting dividends sounds dull until you do the maths. A $10,000 position in 2015, assuming an average 4% annual dividend yield reinvested each year, compounded alongside price appreciation, would now be worth roughly $28,500. Without reinvesting dividends, the same investment would sit closer to $21,000. That nearly $7,500 difference didn’t require genius or luck — just discipline and a tax system that rewards long-term thinking. For comparison, a US investor would have lost roughly 30% of those dividends to withholding taxes before reinvestment, eroding a significant portion of this compounding effect. Seeing the numbers in black and white is what made me appreciate that patience and consistency can quietly outperform a frantic chase for short-term growth.

Sembcorp’s Transformation: Yield Plus Growth

Patience alone wouldn’t have been enough if the company itself weren’t evolving. Over the last decade, Sembcorp has shifted from a traditional utilities operator into a leader in sustainable infrastructure. Its net profit margin exceeds 16%, return on equity approaches 19%, and EBITDA sits at $1.51 billion — indicators of a business capable of predictable cash flows while investing in high-growth renewable assets.

What many investors might not realise is how deliberate this transformation has been. Sembcorp has strategically expanded into integrated energy and urban solutions, securing renewable projects and long-term contracts that smaller rivals cannot easily match. The company now pays steady dividends while benefiting from structural growth — a rare combination in a sector often defined by either stability or high volatility.

Structural growth emerges when strategic repositioning aligns with disciplined execution

Sizing Up the Competition

The competitive landscape is crowded but fragmented. Regional rivals such as Keppel’s energy arm, YTL Power in Malaysia, and China’s state-linked renewable giants aggressively pursue renewable capacity. Yet Sembcorp’s scale allows it to secure financing, land, and power purchase agreements at terms smaller competitors cannot. Its integrated approach — combining energy generation, urban solutions, and sustainability consulting — differentiates it in markets where most peers focus on only one slice of the value chain. The stock’s low beta of 0.22 further signals that even during transformation, it behaves more like a utility than a volatile growth play, giving a stabilising anchor to my portfolio.

Volatility compresses as Sembcorp’s trajectory matures and stabilises

The Opportunity-Cost Reality Check

Holding $Sembcorp Ind(U96.SI)$ hasn’t been without its moments of doubt. During the 2020–2021 US tech boom, when growth stocks doubled, Sembcorp’s share price inched forward, and I questioned whether I was missing the next big thing. But the metrics kept me steady: ROE was rising, operating margins held firm, and renewable capacity was scaling. My portfolio’s Singapore-centric strategy, combining tax-free dividends with selective US growth exposure, has delivered balance. Opportunity cost is real, but measured against long-term structural growth rather than hype, it was a risk worth bearing.

Why I’m Still Holding

In a world obsessed with speed, patience is still the ultimate superpower. After ten years, Sembcorp feels less like a stock and more like an ecosystem within my portfolio. The reinvested dividends have steadily increased my capital base, and the company’s transformation has added layers of optionality. Analyst consensus targets above $7 reflect confidence in the renewable runway. The transition isn’t complete — renewable capacity targets through 2030 will test whether management can execute at scale — but the trajectory gives me confidence. Valuation remains reasonable, with a forward P/E of 10 and EV/EBITDA under 10. Even with a heavy balance sheet, the combination of scale, strategy, and predictable cash flows gives me conviction to stay the course.

Investing is often portrayed as a sprint for the next breakout. My experience with Sembcorp proves that a well-chosen, long-held company can deliver compounding returns rivalling the flashiest trades, provided you let the numbers and strategy do the heavy lifting. That $7,500 compounding difference isn’t magic — it’s the quiet reward of discipline, patience, and Singapore’s zero-tax regime that truly lets dividends work their charm.

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