I remember the joy of receiving my first bonus. I am sure you do too.
After a year of hard work coupled with navigating the COVID-19 pandemic, the bonus represents the much-needed validation for your efforts.
If you are just starting out in your career, this bonus will be the first big bonanza you receive.
With a large inflow of money, it’s also an opportunity to put aside a good sum to invest for your future.
For young investors who are starting out, there are a few factors to consider when it comes to the selection of investment ideas.
Firstly, you don’t want to risk your hard-earned bonus on speculative stocks or those without a long track record.
Sticking with established blue-chip companies is therefore of paramount importance.
Secondly, you might also want to aim for some growth and dividends.
Being young, you have many years ahead to compound your money, while the dividends provide some additional passive cash flow to add to your earned income.
With that in mind, here are three blue-chip companies that you can consider for your starter stock portfolio.
OCBC Ltd (SGX: O39)
OCBC Ltd probably doesn’t need much introduction, being one of the three large local banks.
The lender has a long operating track record and has been through multiple crises over the decades.
For the previous fiscal year 2020 (FY2020), the group reported a 7% year on year decline in total income amid challenging economic conditions.
Operating profit before allowances also fell by 7% year on year to S$6.3 billion.
Allowances more than doubled to S$2 billion as OCBC set aside a bigger sum due to the economic stress caused by pandemic.
Net profit after tax fell 26% year on year as a result.
Despite the decline, OCBC still paid out a total dividend of S$0.318 for the year.
The total dividend was around 60% of the S$0.53 paid out in 2019.
OCBC kept dividends at that level as the Monetary Authority of Singapore had called on local banks to moderate their dividend payments in light of the crisis.
The bank sounded an optimistic tone as it is seeing emerging signs of a segmental recovery, though it warned of the need to remain watchful as uncertainty persists.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The bourse operator runs a platform for the buying and selling of securities such as equities, bonds and derivatives.
SGX has a long track record of paying dividends and has remained resilient despite the current pandemic.
For its fiscal 2021 half-year results ended 31 December 2020, revenue climbed by 9% year on year to S$521 million.
Net profit attributable to shareholders increased by 12% year on year to S$240 million.
An interim quarterly dividend of S$0.08 was declared, bringing trailing 12-month dividends to S$0.32.
At the closing price of S$9.91, SGX’s trailing dividend yield stood at 3.2%.
The group reported that its freight derivatives set a new record open interest last month, with freight forwarding agreement traded volume up 80% year on year.
Market turnover for exchange-traded funds (ETFs) also rose 40% year on year during the month to S$499 as more investors warmed up to this security.
Mapletree Commercial Trust (SGX: N2IU)
Mapletree Commercial Trust, or MCT, is a REIT that invests in a portfolio of both retail and commercial properties in Singapore.
Its portfolio consists of five assets: VivoCity, Mapletree Business City, mTower, Mapletree Anson and Merril-Lynch Harbourfront (MLHF).
The REIT has a strong record of rising distribution per unit (DPU) since its listing in 2011.
DPU has increased over eight consecutive years till the fiscal year ended 31 March 2019 (FY2019).
For FY2020, DPU dipped from S$0.0914 to S$0.0800 due to S$43.7 million being retained due to the COVID-19 pandemic for tenant relief measures.
Investors should note that rental rebates have continued to be extended to tenants during the REIT’s fiscal 2021 first half, with DPU declining by 10% year on year to S$0.0417.
The annualised dividend yield for the REIT is around 4% based on the share price of S$2.10.
The REIT’s well-located, quality assets should ensure that the REIT can continue to deliver.
Committed occupancy remains high at 98.1% as of 31 December 2020 despite the tough conditions.
VivoCity has revitalised its food and beverage cluster at level 1 that has been well-received by shoppers.
The mall has also refreshed its tenant mix with the introduction of new brands such as Hey Tea, Pizzakaya and The Original Boat Noodle.
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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited.