SGX's Sustainable Earnings Growth and Dividend Strategy in 2025: A Blueprint for Long-Term Shareholder Value

The Singapore Exchange (SGX) has long been a cornerstone of Asia's capital markets, but its FY2025 results reveal a company that is evolving into a masterclass in sustainable earnings growth and disciplined capital allocation. With net revenue surging 11.7% to S$1.298 billion and a net profit of S$610 million, SGX has demonstrated how multi-asset diversification and a shareholder-centric dividend strategy can create enduring value. For income-focused and growth-oriented investors alike, the case for SGX is compelling—and its 2025 performance provides a roadmap for why.

Multi-Asset Diversification: The Engine of Resilient Earnings

SGX's ability to generate consistent revenue across its core segments—cash equities, derivatives, and fixed income, currencies, and commodities (FICC)—is a testament to its strategic foresight. In FY2025, the Cash Equities segment alone contributed 30.3% of total net revenue, with a 18.7% year-on-year increase driven by a 26.5% rise in securities daily average traded value (SDAV) to S$1.34 billion. Meanwhile, the FICC segment, particularly over-the-counter (OTC) foreign exchange (FX), surged 25.3% in net revenue to S$113 million, fueled by a 28.5% jump in average daily volume (ADV) to US$143 billion.

This diversification is not accidental. By expanding into high-growth areas like OTC FX and structured products (e.g., ETFs and depository receipts), SGX has insulated itself from sector-specific volatility. For instance, while treasury and other revenue declined 20.4% due to macroeconomic headwinds, gains in trading and clearing revenue more than offset this, showcasing the power of a balanced portfolio.

Cost Discipline: The Unsung Hero of Profitability

Even as revenue grew, SGX maintained a tight grip on expenses. Total expenses remained stable at S$555.3 million, with adjusted expenses rising just 1.6% to S$542.8 million. This was achieved through lower depreciation and amortisation costs, offsetting modest increases in variable staff expenses. The company's commitment to efficiency is further underscored by its FY2026 capital expenditure plans: S$90–S$95 million will be reinvested in technology and infrastructure, ensuring scalability without sacrificing margins.

This disciplined approach is critical for sustaining long-term value. By keeping expenses below its historical average of 7% of revenue, SGX has preserved profitability even amid margin pressures—a trait that will serve it well in uncertain markets.

Dividend Strategy: Rewarding Shareholders Without Compromising Growth

SGX's dividend policy in 2025 is a masterstroke of balance. The proposed final quarterly dividend of 10.5 cents per share—a 16.7% increase year-on-year—brings the total FY2025 payout to 37.5 cents per share, up 8.7% from FY2024. More impressively, the company has outlined a clear path for future growth: a 0.25-cent-per-quarter increase from FY2026 to FY2028, subject to earnings performance.

This gradual, earnings-linked approach ensures that dividends remain sustainable while providing income investors with a reliable yield. At a trailing 12-month dividend yield of ~3.5% (as of August 2025), SGX is already a compelling option for income seekers. For growth investors, the reinvestment of retained earnings into high-growth areas like OTC FX and digital platforms (e.g., BidFX and MaxxTrader) amplifies the compounding potential of capital gains.

Why SGX is a High-Conviction Buy

For investors seeking both income and growth, SGX's 2025 results present a rare convergence of strengths:
1. Diversified Revenue Streams: Exposure to equities, derivatives, and FICC ensures resilience across market cycles.
2. Cost Efficiency: A lean expense structure and strategic reinvestment in technology position SGX for long-term margin stability.
3. Rising Dividends: A disciplined, earnings-linked payout strategy rewards shareholders while retaining capital for growth.

Moreover, SGX's leadership in OTC FX—now among the top three exchange-backed platforms globally—positions it to capitalize on the $6.6 trillion FX market. With digital innovation accelerating (e.g., AI-driven trading tools and blockchain-based clearing), the company is well-placed to attract global liquidity and expand its fee-based revenue.

Risks and Mitigants

While SGX's strategy is robust, risks such as macroeconomic volatility and regulatory shifts in FX markets could temper growth. However, the company's diversified revenue base and strong balance sheet (with a debt-to-equity ratio of 0.3x) provide a buffer. Additionally, its focus on technology-driven efficiency ensures it can adapt to changing conditions without sacrificing profitability.

Conclusion: A Model for Sustainable Value Creation

SGX's FY2025 results are more than a financial victory—they are a blueprint for how a capital market operator can create enduring value. By leveraging multi-asset diversification, maintaining cost discipline, and prioritizing shareholder returns, SGX has positioned itself as a high-conviction buy for both income-focused and growth-oriented investors. As it executes its 2026–2028 reinvestment plans and dividend roadmap, the company's ability to balance reinvestment with returns will likely drive double-digit total returns over the next five years.

For those seeking a stock that combines stability, growth, and income, SGX's 2025 performance is a compelling case study—and a strong reason to consider adding it to a long-term portfolio.