Many salaried workers desire to eventually retire. They also want to be able to enjoy a steady stream of passive income when they do. Those who have managed to save up a tidy sum over the years may also be considering early retirement in order to spend more time with family or pursue their own personal interests and hobbies. Investing offers a route to independence in terms of building both a solid asset base and a passive income.
However, some companies and industries may not be suitable for retirement, as they are unstable, cyclical or may not pay a sufficiently high dividend. So, stability in investments is paramount for retirees. This article shall introduce two companies while in a future article I will feature two industries.
Company 1: Dairy Farm International
Dairy Farm International Holdings Ltd (SGX: D01), or DFI for short, is a pan-Asian retailer with a broad range of retail formats spanning hypermarkets, supermarkets, convenience stores, and health and beauty stores. The group operates in Singapore, Malaysia, Indonesia, Hong Kong, and China as its main markets.
DFI has a very experienced and competent management team with many years of experience running retail formats in Asia. Though the group has faced headwinds in the last few years due to changing retail formats and the advent of e-commerce, DFI’s recent full-year earnings commentary had identified broad areas for improvement, and the group is actively embracing a five-year transformation plan. This should enable the group to adapt and evolve with the times. Owning a piece of DFI will likely give investors peace of mind that their money is in safe hands.
DFI offers a dividend yield of 2.6% at the last traded share price of US$7.82.
Company 2: Raffles Medical Group
Raffles Medical Group Ltd (SGX: BSL), or RMG for short, is a healthcare company that runs hospitals in Singapore and China, as well as a chain of clinics across Singapore. The group has recently completed the construction of a specialist centre in Singapore and also offers health insurance to customers via its online platform.
A compelling reason for investing in RMG is its prudence in managing the business, as well as the CEO Dr Loo Choon Yong’s long-term perspective. As Singapore is facing headwinds in medical tourism and patient numbers are expected to remain weak in the near-term, the group has ventured into China to build two hospitals; one in Chongqing (which started operations in January 2019) and another in Shanghai (expected to commence operations in early 2020).
Dr Loo is willing to take losses in the short term in order to build and grow the group for the long term, just as he did with Raffles Hospital back in the early 2000s. The Raffles brand is renowned and is well-respected in China. He is confident that RMG can grow slowly but steadily there.
Healthcare is also a resilient industry which is not subject to normal economic forces, thus, investors in RMG can rest well knowing that their capital is being well-deployed. RMG pays a dividend yield of 2.5% at the current share price of S$1.03.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Dairy Farm International Holdings Limited and Raffles Medical Group Ltd. Motley Fool Singapore contributor Royston Yang owns shares in Raffles Medical Group Ltd.