A New Year has arrived once again, and it promises to be one filled with hope and optimism.
And as 2022 rolls in, it’s also time to think about building your own passive income portfolio using great, well-run companies.
You can choose to use either your cash or your CPF balance to make such investments.
As a reminder, CPF balances enjoy that once-in-a-year interest crediting, with the Ordinary Account (OA) enjoying a 2.5% rate and the Special Account (SA) boasting a 4% interest rate.
The CPF OA provides a near risk-free return.
However, you may find it tough to beat inflation, which has risen to an eight-year high recently.
The SA may earn a 4% interest rate, but you cannot use it to invest in shares or exchange-traded funds (ETFs).
The other option to consider, of course, is to invest your CPF in stable, dividend-paying stocks that offer the chance for long-term capital appreciation.
Here are three dependable dividend stocks that you can deploy your CPF monies into.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is a blue-chip engineering conglomerate that serves customers in more than 100 countries.
Its clients come from the aerospace, smart city, and public security industries.
The group sports a great track record of paying out consistent dividends over the years.
From its fiscal year 2016 (FY2016) to FY2020, STE paid out an annual dividend of S$0.15.
The group posted an admirable set of earnings for its fiscal 2021 first half (1H2021), with revenue inching up 2% year on year and net profit jumping by 15% year on year.
For its fiscal 2021 third-quarter business update, STE reported a robust order book of S$18.2 billion, the highest since the end of 2020.
STE has laid out a clear five-year growth plan to boost its smart city and commercial aerospace arms, and will also invest in digitalisation to power future growth.
Its recent US$2.7 billion acquisition of TransCore, which was backed by investment firm Temasek Holdings, looks set to further its smart city ambitions.
Hongkong Land Holdings Limited (SGX: H78)
Hongkong Land Holdings Limited, or HKL, is a property investment, management and development group.
The group owns and manages over 850,000 square metres of prime commercial and retail properties in Hong Kong, Singapore, Beijing and Jakarta.
HKL has maintained its dividend level of US$0.22 per share for its fiscal year 2020 (FY2020) despite logging an 11% year on year fall in underlying net profit to US$963 million.
For 1H2021, underlying net profit rose by 12% year on year as its property portfolio remained resilient.
Interim dividend per share stayed constant at US$0.06.
HKL’s trailing 12-month yield stands at 4.2% at the last traded share price of US$5.26.
The group’s vacancy rate (on a committed basis) for its Hong Kong office portfolio was 5.5%, down from 5.9% at the end of 2020.
For Singapore, vacancy for its office portfolio on a committed basis stood at just 2.1%, unchanged from six months ago.
Haw Par Corporation Ltd (SGX: H02)
Haw Par is a conglomerate that has three major divisions — healthcare, investments, and others.
Its healthcare division owns the Tiger Balm brand that is famous for its ointments, medicated plasters, and mosquito patches.
Haw Par has a practice of paying out dividends twice-yearly and has increased its annual dividend from S$0.20 back in FY2016 to S$0.30 in FY2020.
A special dividend of S$0.85 was also paid out in FY2018 to celebrate the group’s 50th anniversary.
For 1H2021, the group suffered an 18.6% year on year decline in revenue due to continued border closures, thus crimping demand for sporting events and hampering its healthcare division.
Net profit plunged by 41.8% year on year to S$53 million.
Haw Par, however, kept its interim dividend constant at S$0.15 per share as the group received S$40 million in dividend income from its investments.
Looking ahead, as the economy recovers and borders reopen, the healthcare giant should see its revenue and earnings climb back up once again.
Get Smart: Businesses you can rely on
If you like what you see above, we have more to share.
At the Smart Investor, we have come up with a list of 24 stocks that pay out dependable dividends.
These are companies you can rely on to pay you through good times and bad, enabling you to enjoy a good night’s sleep.
If you are interested to find out about how you can build your sturdy dividend portfolio, then click on the link below to discover more.
Get a head start on dividend investing this year! From 5-9 January, we’re giving you a steep discount off our most popular service, The Smart Dividend Portfolio. Keep a lookout for our announcement! Meanwhile, if you need some ideas to get yourself started, click here to download a FREE copy of the report “Top 9 Dividend Stocks for 2022 – and 3 Tactical Shifts to Maximise Your Profits”.
Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
