During times of economic stress, blue-chip stocks offer the haven that many investors are looking for.
With their billion-dollar market capitalisations, these companies have built up a strong reputation over the years.
Many have also weathered tough times and emerged none the worse for wear.
Investors have been faced with a plethora of worries this year.
High inflation is threatening to further erode the value of our hard-earned money and crimp consumer demand, resulting in lower revenue and profits for a wide range of businesses.
Surging interest rates have also raised borrowing costs for businesses and dampened the desire for capital spending.
As tough times approach, it’s useful to turn to steady, reliable blue-chip stocks.
It’s a bigger bonus if these stocks also pay out increasing dividends over the years.
Here are three such stocks that you can consider adding to your buy watchlist.
Sembcorp Industries Limited (SGX: U96)
Sembcorp Industries Limited, or SCI, is an energy and urban solutions provider with a balanced energy portfolio of more than 15 gigawatts (GW) along with a project portfolio spanning 13,000 hectares.
The blue-chip utility giant paid a total dividend of S$0.04 for fiscal 2020 (FY2020) and increased it to S$0.05 last year.
For the first half of 2022 (1H2022), the group reported a strong set of financial numbers and doubled its interim dividend from S$0.02 to S$0.04.
If last year’s final dividend of S$0.03 per share is maintained, then SCI would have increased its FY2022 dividend to S$0.07 per share, giving the group’s shares a trailing dividend yield of 2.5%.
Signs are pointing to promising business developments that may support an increase in dividends moving forward.
Just last month, SCI agreed to divest its Indian energy division for S$2.1 billion to strengthen its balance sheet.
Last week, an agreement was signed with Pertamina Power Indonesia and IGNIS Energy Holdings to explore the possibility of commercial-scale clean hydrogen production in Indonesia.
SCI’s solar portfolio in Singapore also hit a new milestone of 535 megawatt-peak of gross installed capacity with its latest SolarNova 7 Project win.
These moves are in line with SCI’s commitment to go big on renewables and turn its portfolio from brown to green.
Wilmar International Limited (SGX: F34)
Wilmar is an integrated agribusiness with a business model that covers the entire value chain of the agricultural commodities business.
The group has more than 500 manufacturing plants and an extensive distribution network spanning more than 50 countries.
Wilmar has raised its dividend over the last five years without a pause, beginning with S$0.10 per share in FY2017 and ending with S$0.155 in FY2021.
The group even paid out a special dividend of S$0.065 to shareholders as a bonus.
The trend of rising dividends looks set to continue.
Wilmar reported a strong set of earnings for 1H2022 as revenue climbed 22.3% year on year to US$36.1 billion.
The commodity giant’s core net profit surged 57.8% year on year to US$1.1 billion, and an interim dividend of S$0.06 was declared and paid, the highest for the group since listing.
The group remains optimistic about its performance as lower commodity prices should restore demand and also improve margins for its downstream business.
Yangzijiang Shipbuilding Holdings Limited (SGX: BS6)
Yangzijiang Shipbuilding Holdings Limited, or YZJ, is one of the largest shipbuilders in China with five shipyards in Jiangsu province.
The group manufactures a range of commercial vessels including containerships, bulk carriers, and LNG carriers.
The shipbuilder raised its dividend from S$0.045 in FY2020 to S$0.05 last year and looks poised to do so again this year.
The group reported a 70% year on year jump in revenue to RMB 9.7 billion for 1H2022.
Net profit increased by 32% year on year to S$1.2 billion.
YZJ boasted an order book of US$8.1 billion as of 30 June 2022 for 134 vessels to be delivered from this year through 2025.
The group had clinched contracts worth US$1.1 billion to date, achieving more than half of its full-year target of US$2 billion.
Over at its shipping division, the group has also steadily built up its fleet.
YZJ had 18 vessels at the end of FY2018 and has since grown this to 29 vessels as of 1H2022.
With Europe’s consistent coal restocking demand and China’s surge in coal demand to support its economic recovery, the prospects for shipping look bright in the near term.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
