Singapore’s Best Shares over the Past Decade

Since the start of 2004, the Straits Times Index (SGX: ^STI) has gained 87% to 3,296 points, translating into an annualised return of some 6.1%. If dividends of 2% to 3% per year are slapped on, investors are actually looking at average annual returns of some 8% to 9% a year.

In fact, this corroborates very well with data from the SPDR Straits Times Index ETF (SGX: ES3), an exchange-traded fund that tracks the Straits Times Index. For the 10 years ended 30 April 2014, the ETF has generated annualised total returns (where gains from reinvested dividends are included) of some 9.17%.

That sort of return from just the Straits Times Index alone has certainly not been too shabby. But, the index is made up of just 30 shares. There has to be shares outside the index that has done much better than it. To find out what those shares are, I decided to run a screen on S&P Capital IQ, the source of my stock market data.

According to Capital IQ, there are currently 751 shares listed on Singapore’s Mainboard and Catalist stock exchanges. Out of those, only 366 had existed since 1 January 2004. From that smaller group, I then sought to find out the 10 shares with the highest total return. Here’s what I found:

Rank Share Total return*
1. Ezion Holdings (SGX: 5ME) 4,734%
2. United Overseas Australia (SGX: EH5) 2,931%
3. Aspial Corporation (SGX: A30) 2,445%
4. Baker Technology 2,095%
5. Low Keng Huat (Singapore) 2,067%
6. Sim Lian Group 1,566%
7. CWT 1,413%
8. Raffles Medical Group 1,274%
9. Vicom 1,257%
10. MTQ Corporation 1,190%
*Total returns take into account all dividends, rights issues, spin-offs and splits. The dates involved are from 1 Jan 2004 till 1 June 2014.

Source: S&P Capital IQ

Based on a quick glance at their financials, two interesting things pop out at me regarding the anatomy of a long-term stock market winner.

1. Corporate growth drives long-term market returns

It isn’t exactly true for each case, but the 10 shares with the best total returns have generally seen their earnings 10 years ago grow into multiples of what they were, as seen in the table below:

Share EPS: 1 Jan 2004* EPS: 1 June 2014* % Change
Ezion Holdings -1.27 20.00 1671%
United Overseas Australia 2.16 10.08 366%
Aspial Corporation 0.58 5.00 759%
Baker Technology 1.75 2.42 38%
Low Keng Huat (Singapore) 0.69 6.51 849%
Sim Lian Group 1.83 15.89 771%
CWT 0.33 18.99 5620%
Raffles Medical Group 1.89 15.57 722%
Vicom 9.99 32.76 228%
MTQ Corporation 2.05 19.19 838%
*EPS = Earnings per share; figures are denominated in Singapore cents

Source: S&P Capital IQ

As billionaire investor Warren Buffett was once apparently quoted: “If the business does well, the stock eventually follows.”

2. The power of dividends

Over the long-term, reinvested dividends have proven to be an extremely powerful source of stock market returns. For instance, United Overseas Australia’s returns from capital appreciation alone (i.e. gains from reinvested dividends are not included) have been ‘just’ 1,188%, or less than half of what it could be if dividends had been reinvested.

Elsewhere, capital appreciation for other shares like Raffles Medical Group and Vicom would have also fallen to 909% and 504% respectively.

In Singapore’s context, reinvesting dividends might not be too feasible a concept due to the lot-size restrictions we have with trading here. But, the difference in returns between a situation where dividends are reinvested, and where dividends are not reinvested, makes it imperative that we put to work in any way we can, those dividends that we receive.

Foolish Bottom Line

All told, a focus on a share’s long-term corporate growth and the reinvestment of dividends can go a long way in helping us grow our portfolio.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Raffles Medical Group.