Blue-chip stocks are well known for their strong business models and solid track records.
These reasons are why such stocks are popular among both new and veteran investors.
The great news is that most blue-chip stocks also dish out a dividend, which lets income investors build up a steady source of passive income.
To identify dependable investments, you need to look for stocks that are reporting increasing profits and have great potential for further growth.
Here are three such blue-chip stocks that you may consider adding to your buy watchlist.
United Overseas Bank (SGX: U11)
United Overseas Bank, or UOB, is Singapore’s third-largest bank by market capitalisation.
The lender reported a solid set of earnings for its third quarter of 2024 (3Q 2024).
Net interest income inched up 1% year on year to S$2.5 billion while fee income improved by 7% year on year to S$630 million.
With other non-interest income soaring 70% year on year to S$744 million, UOB’s total income managed to grow by 11% year on year to S$3.8 billion.
Operating profit increased by 10% year on year to S$2.2 billion.
UOB’s net profit stood at S$1.6 billion, up 16% year on year.
During the quarter, the bank saw healthy loan growth of 5% year on year to S$334 billion.
Net interest margin (NIM), however, dipped by 0.04 percentage points from 2.09% in 3Q 2023 to 2.05%, but NIM stayed constant quarter-on-quarter.
Fee income was higher as it was driven by wealth demand and a pick-up in credit card spending.
UOB has provided a sanguine outlook for 2025.
The bank expects high single-digit loan growth with double-digit fee growth, resulting in higher total income.
CEO Wee Ee Cheong said that UOB is looking to actively manage its capital and has around S$2 billion to S$2.5 billion of excess capital from Basel IV reforms.
The bank is open to investing for growth or returning it to shareholders via share buybacks or higher dividends.
Singtel (SGX: Z74)
Singtel is Singapore’s largest telecommunication company and provides a comprehensive range of services including mobile, broadband, pay TV, data centre, and cybersecurity services.
The telco announced a resilient set of earnings for the first half of fiscal 2025 (1H FY2025) ending 30 September 2024.
Operating revenue dipped by 0.5% year on year to S$7 billion.
Operating expenses fell by 3.7% year on year to S$5.2 billion, and operating profit improved by 7.4% year on year to S$1.9 billion.
Singtel’s net profit plunged by 42% year on year to S$1.2 billion because of the presence of an exceptional gain in 1H FY2024.
The group’s underlying net profit increased by 6% year on year to S$1.2 billion and formed the basis for management’s declaration of the telco’s core dividend.
Optus performed well for the half year, with operating profit shooting up 58% year on year to A$223 million.
NCS also performed well, with revenue up 3% year on year and operating profit climbing 40% year on year to S$130 million.
However, both Digital InfraCo and Singtel Singapore saw stable year-on-year performances with operating profit at S$39 million and S$439 million, respectively.
Singtel declared a total interim dividend of S$0.07, 35% higher than the S$0.052 paid out a year ago.
The S$0.07 dividend comprises a core dividend of S$0.056 and a value realisation dividend of S$0.014 that was derived from the proceeds of capital recycling.
Looking ahead, Singtel plans to focus on its ST28 strategy for 2H FY2025 to drive operating profit improvement.
The group will also support its regional associates and focus on active capital management.
SATS Ltd (SGX: S58)
SATS is a provider of air cargo handling services and food catering.
The group’s Gateway Solutions division provides airfreight and ground handling services while its Food Solutions division serves airlines and corporations and operates central kitchens.
The group reported a strong set of earnings for the first half of fiscal 2025 (1H FY2025).
Revenue rose 14.8% year on year to S$2.8 billion while operating profit more than tripled year on year from S$72 million to S$240.1 million.
Net profit stood at S$134.7 million, reversing the prior year’s net loss of S$7.8 million.
SATS generated a positive free cash flow of S$113.2 million for 1H FY2025, reversing the negative free cash flow of S$20.7 million in 1H FY2024.
An interim dividend of S$0.015 was declared.
The group saw a 5.5% year-on-year increase in flights handled to 316,000 for 1H FY2025.
Cargo tonnage also increased by 17.5% year on year to 4.4 million tonnes while aviation meals served climbed 26.1% year on year to 32.3 million.
SATS expects this positive momentum to carry on as demand for travel and air cargo reaches its seasonal year-end peak.
The group will continue to scale the business to achieve sustainable revenue growth and drive operating leverage to improve cost efficiency.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
