The Motley Fool

3 Singapore Blue Chips to Enjoy a Secure Retirement

When it comes to retirement stocks, it’s beneficial to look out for companies that provide services that won’t become obsolete, have robust financials, and growing (or at least stable) dividends. In Singapore, there are some companies that fit the bill, and three of them belong to the Straits Times Index (SGX: ^STI). So without further ado, here are three blue chips investors can consider so they can have peace of mind in retirement.

Company #1

Singapore’s largest bank, DBS Group Holdings Ltd (SGX: D05), is the first company on my list. On top of our city-state, the bank has operations in Hong Kong, China, Taiwan, India, and Indonesia.

Being the biggest bank in Singapore, DBS attracts many savers with its huge network of bank branches and cash machines. DBS’s depositors also tend to be “sticky”. Once someone opens a bank account with DBS and engages in its services, the person is unlikely to jump ship, unless there is a convincing reason to do so. Having a predictable pool of capital from depositors contributes to the stability of the bank. DBS is also confident of taking on new competition from the virtual banks that are poised to start operations here.

The competitive advantage DBS has is in its financial performance and dividend payout over the years. From 2014 to 2018, DBS’s total income grew 37%, net profit rose 38%, and its dividend surged 107%. At DBS’s share price of S$25.29, it has a price-to-book ratio of 1.4 and a dividend yield of 4.7%.

Company #2

The next company on the list is SATS Ltd (SGX: S58). The company is a provider of food solutions and gateway services solutions, mainly to the aviation industry. It is the main ground-handling and in-flight catering service provider at Singapore Changi Airport. Besides its operations in Singapore, SATS has also established a network in Asia through its various joint ventures.

The following chart shows how its revenue and net profit have increased from FY2014-15 to FY2018-19 (the company has a 31 March year-end):Source: SATS FY2018-19 annual report

Retirees would be delighted to note that SATS has dished out growing dividends over the years – dividend per share grew 36% from S$0.14 in FY2014-15 to S$0.19 Singapore cents FY2018-19. At SATS’s share price of S$4.74, it has a PE ratio of 22 and a dividend yield of 4%.

Company #3

Last but not the least is Singapore Exchange Limited (SGX: S68), or SGX for short. SGX is the only stock market operator in Singapore, and it provides listing, trading, clearing, settlement, depository and data services. Whenever someone wants to buy shares in Singapore, they have to go through the SGX. The company’s derivatives business is also gaining traction well.

The company’s revenue has grown 17% from S$779 million to S$910 million over the last five fiscal years (SGX has a fiscal year ending 30 June) while net profit increased 12% from S$349 million to S$391 million during the same period. FY2019’s revenue was the highest since its listing and net profit hit an 11-year peak. SGX also set all-time records in its derivatives volumes and open interest in FY2019.

From FY2015 to FY2019, SGX’s dividend per share has increased 7% from S$0.28 to S$0.30. At its share price of S$7.89, it has a PE ratio of 22 and a dividend yield of 3.8%.

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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 DBS Group Holdings Ltd, Singapore Exchange Limited and SATS Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited and SATS Ltd.