A lot has been written on companies to be purchased for retirement, especially the need for them to be stable, predictable stalwarts that are unlikely to go bust. I thought it would be useful to look into companies a young working adult could consider investing in, as many such adults likely won’t yet have built up a large cash stash for investing, and they may also not have enough time to research companies because of work commitments and on-the-job training.
Companies need to have the following characteristics to qualify as investment possibilities for young adults: They should be stable, solid, and dependable names the investor does not have to dig into too deeply. They should preferably have some element of growth as young investors on the cusp of their investment journeys have many more years of compounding ahead of them. It also helps if the companies pay dividends so as to supplement earned income for these young working adults, as they may have many financial commitments.
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Here are three solid companies a young, salaried adult may want to consider as investments.
1. DBS Group Holdings
DBS Group Holdings Ltd (SGX: D05), or DBS, is one of Singapore’s three big banks and offers a comprehensive suite of services for individuals and corporations. The bank has many branches and automatic teller machines all over Singapore.
DBS offers a good proxy to Singapore’s economic growth as its loan growth would mirror the country’s economic prosperity. As it is Singapore’s premier bank, investors need not worry about the bank failing; it is well capitalised and prudent in its lending. DBS has been growing its loan book and fee income over the years and should be able to continue to do so for the foreseeable future. In addition, the bank pays close to a 5% dividend yield, and dividends are paid quarterly.
2. Singapore Technologies Engineering
Singapore Technologies Engineering Ltd (SGX: S63), or STE, is an engineering conglomerate that’s majority-owned by state-backed Temasek Holdings. The group has four main divisions: aerospace, electronics, land systems, and marine.
STE is a giant conglomerate with a diversified business, and it would form a solid base for a new investor seeking stability and predictability. STE is growing, slowly but surely, but will not provide the kind of returns that smaller, higher-risk companies provide. As the young investor may not have time to monitor the business and announcements that come with it, owning STE is a good way to sleep soundly and yet enjoy consistent growth. STE also pays a dividend yield of around 3.7%.
3. Frasers Centrepoint Trust
Frasers Centrepoint Trust (SGX: J69U), or FCT, is a REIT that invests in suburban properties in Singapore. It currently owns six malls in various parts of Singapore and is in the process of acquiring a 33.3% stake in another (Waterway Point). FCT’s malls are located in heartland areas and have a large and diversified tenant base.
FCT will enable investors to own a slice of Singapore’s heartland malls and will give them exposure to real estate assets. FCT also has a strong sponsor in Frasers Property Limited (SGX: TQ5), which lends additional stability to the investment. The REIT has a strong track record of raising its distribution per unit since IPO, and I am confident it will continue to grow its distribution for the foreseeable future. The REIT offers a trailing dividend yield of 4.7%.
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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 the shares of DBS Group Holdings Ltd and Frasers Centrepoint Trust. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.