During turbulent times, it’s comforting to know that some businesses can offer stability and peace of mind.
The outbreak of the Russia-Ukraine war, coupled with runaway inflation, has resulted in volatility in the stock market.
Blue-chip stocks remain popular as their track record and reputation offer investors a haven from economic troubles.
And it’s even better if these companies enjoyed catalysts that can bring their business to the next level.
These tailwinds can help to sustain business growth over the long term and provide a handsome return on your investment.
Here are three Singapore blue-chip stocks that could outperform the broad market.
DBS Group (SGX: D05)
DBS needs no further introduction, being the largest of the three Singapore banks.
The lender had just reported a stellar performance during its latest fiscal 2021 (FY2021) earnings as net profit surged to a new record-high of S$6.8 billion.
But there may be more to come from the bank as it gears up for an economic recovery.
Business momentum is expected to remain healthy, with mid-single-digit year on year loan growth.
Rising interest rates will also boost the bank’s net interest income (NII), with each 0.01% increase contributing S$18 million to S$20 million of NII.
DBS is also opening up new sources of revenue with the launch of a digital exchange and partnering with Singapore Exchange Limited (SGX: S68) to launch Climate Impact X, a global carbon credit marketplace for the trading of high-quality carbon credits.
In addition, the lender has also been acquiring to grow its franchise.
In late 2020, it bought over troubled Indian bank Lakshmi Vilas Bank for around S$463 million.
Just two months ago, DBS announced the purchase of Citigroup’s (NYSE: C) Taiwan consumer banking business for close to S$2.2 billion.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is a technology and engineering conglomerate with diverse businesses across the aerospace, smart city, defence and public security sectors.
The group announced a resilient set of earnings for FY2021, with revenue rising by 7.5% year on year to S$7.7 billion and net profit increasing by 9.3% year on year to S$570.5 million.
And that’s not all that STE has going for it.
The group also reported a record order book of S$19.3 billion as of 31 December 2021, of which S$6.6 billion will be delivered this year.
It also recently concluded its acquisition of TransCore, a market leader in electronic toll collection solutions and a provider of intelligent transportation systems.
The purchase will further STE’s smart city ambitions, in line with what the engineering giant has communicated in its five-year growth plan during its Investor Day last year.
STE’s board has also approved a dividend increase from S$0.15 per share to S$0.16, with a policy to pay dividends every quarter instead of half-yearly.
This increase seems to signal better days ahead for STE as it continues to execute its strategic initiatives.
Keppel Corporation Limited (SGX: BN4)
Keppel Corporation is a conglomerate with four distinct divisions — energy and environment, urban development (i.e. real estate), connectivity, and asset management.
The group reported a sparkling set of earnings for FY2021, with its net profit hitting the highest level in six years at S$1 billion.
Its FY2021 dividend, at S$0.33 per share, was also more than triple the S$0.10 per share that was paid out a year ago.
Surging oil prices should deliver a boost to Keppel’s energy and environment division, which snagged S$3.5 billion worth of new orders last year.
Keppel’s pivot to renewables and green energy solutions is also showing results, with nearly 40% of its order book of S$5.1 billion belonging to this category.
The group is advancing on its Vision 2030 plan which involves a business transformation and asset monetisation to unlock value for its shareholders.
Recurring income was boosted by 33% year on year to S$292 million, with nearly half of this amount contributed by REITs and business trusts.
Around S$2.9 billion worth of capital has been unlocked through asset divestments, and Keppel is on track to exceed its S$5 billion targets by end-2023.
Its asset management arm under Keppel Capital had assets under management of S$42 billion at end-2021 and has grown its asset management fees from S$149 million in FY2019 to S$233 million in FY2021.
By riding on these tailwinds, Keppel should be able to continue growing both its top and bottom lines for the foreseeable future.
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Disclaimer: Royston Yang owns shares of DBS Group and Singapore Exchange Limited.
