Since adopting a multi-asset exchange strategy a couple of years ago, the Singapore Exchange’s (SGX) performance has improved steadily. Its margins have widened and return on equity has increased. Its cash pile, too, has grown a lot bigger. To reward shareholders, SGX has given out higher dividends each year.

But now, the bourse operator is putting in place a scrip dividend scheme from FY2022 ending June 30 onwards, which will offer shareholders the option to reinvest their cash dividends in SGX shares. This comes in the wake of several acquisitions made by the company to grow its fixed income, currencies and commodities (FICC) business. SGX had also recently announced a weaker set of results for FY2021 ended June 30.

SGX says the scrip dividend will allow shareholders to participate in the company’s medium term growth journey. Yet a scrip dividend may indicate that the company is conserving capital. Should shareholders take up the scrip dividend?

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