The Smart Investor
    Facebook Instagram
    Sunday, September 24
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Blue Chips»3 Promising Blue-Chip Companies to Add to Your CPF Investment Account
    Blue Chips

    3 Promising Blue-Chip Companies to Add to Your CPF Investment Account

    Royston YangBy Royston YangJune 11, 2020Updated:July 13, 20205 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    During tough times such as the current pandemic, our CPF account is something that can be relied upon.

    The Ordinary Account (OA) offers a 2.5% guaranteed interest rate, and the first S$20,000 even gets a slightly higher 3.5% interest rate.

    Although the CPF Special Account (SA) provides an even better interest rate of 4%, the use of these funds is limited as they have been earmarked for one’s retirement.

    The OA provides significantly more flexibility on how you can deploy the monies.

    The funds from OA can be used to purchase an HDB flat, pay for your children’s education, or invested for higher returns through the CPF Investment Account.

    On that last point, it’s worth considering investing one’s OA funds, as the 2.5% interest rate is hardly sufficient to beat inflation.

    Here are three promising blue-chip companies that can provide a higher dividend yield than the guaranteed 2.5% interest rate on the OA.

    Singapore Exchange Limited (SGX: S68)

    Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.

    The bourse operator has been diversifying its product offerings over the last few years under the stewardship of CEO Loh Boon Chye.

    Now, SGX is deemed o be a multi-asset exchange, offering a suite of products and solutions for investors and fund managers to manage and hedge their portfolios.

    SGX reported a strong set of earnings for its third-quarter fiscal year 2020 ended 31 March 2020.

    Revenue, at S$296 million, was up 29% year on year. Net profit surged 38% year on year to S$138 million.

    The group declared an interim quarterly dividend of S$0.075. Annualised, the total annual dividend will be S$0.30.

    At the last traded price of S$8.37, the trailing 12-month dividend yield for SGX stands at 3.6%.

    Although SGX recently reduced its licence agreement with MSCI and will stand to suffer a 10% to 15% drop in net profit as a result, we believe the group will be able to sustain dividends at the current level.

    Loh also plans to work on SGX’s suite of derivatives or collaborate with other partners to do so.

    OCBC Ltd (SGX: O39)

    Oversea-Chinese Banking Corporation, or OCBC, is one of Singapore’s three big banks.

    The bank offers a comprehensive range of banking products and services such as corporate banking, investments and insurance to both individuals and corporate customers.

    For the first quarter of 2020, net profit from banking operations saw a 28% year on year decline as the bank set aside higher levels of provisions for bad loans due to COVID-19.

    However, customer loans were up 5% year on year while the net interest margin (NIM) remained stable at 1.76%.

    While the bank is unsure of how bad the pandemic’s impact will be, it has a strong track record of delivering sustainable earnings through various economic cycles.

    OCBC expects its NIM to compress due to lower global interest rates, while non-performing loan ratio may also spike up in the near-term.

    We believe that the bank will turn out fine over the long-term, as it is well-capitalised and managed under CEO Samuel Tsien.

    OCBC paid out a total dividend of S$0.53 last year, representing 47% of its earnings.

    At the last traded share price of S$9.88, the trailing 12-month dividend yield was 5.4%.

    Singapore Technologies Engineering (SGX: S63)

    Singapore Technologies Engineering, or STE, is a diversified engineering conglomerate with four distinct divisions — aerospace, electronics, land systems and marine.

    The group employs around 23,000 people across Asia, US, Europe and the Middle East, and serves customers in the defence, government and commercial segments.

    STE released a business update for the first quarter of 2020.

    Aerospace and Electronics divisions experienced negative impacts.

    For the maintenance, repair and overhaul business, STE is in discussions with customers on rescheduling.

    Some tenders for the Electronics division have been put on hold, while project milestones and delivery schedules have suffered delays.

    However, this weakness was offset by strong contract wins for both divisions during the quarter, amounting to a total of S$1.6 billion.

    Also, STE’s defence business remains strong and provides some stability to revenue.

    The group’s order book as at 31 March 2020 stood at S$16.3 billion and provides good revenue visibility as these are multi-year contracts signed with long-term customers.

    STE paid out a total dividend of S$0.15 per share for the last five fiscal years, underscoring the stability of its business model.

    This works to a dividend yield of around 4.2% at the last traded price of S$3.59.

    With share prices battered to multi-year lows, many attractive investment opportunities have emerged. In a special FREE report, we show you 3 stocks that we think will be suitable for our portfolio. Simply click here to scoop up your FREE copy… before the next stock market rally.

    Click here to like and follow us on Facebook and here for our Telegram group.

    Disclaimer: Royston Yang owns shares in Singapore Exchange Limited.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Sleeping Man

    Get Smart: Should You Invest Like Rip Van Winkle?

    September 24, 2023

    Top Stock Market Highlights of the Week: US Federal Reserve, Singtel, Singapore Post and Public Transport Fare Hikes

    September 23, 2023
    Garden with Path and Flowers

    Tend to Your Investments as You Would a Garden

    September 22, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.