Blue-chip stocks are well known for their reputation and track record.
Their resilience makes them a favourite for investors who are looking for stable returns without losing too much sleep.
If you are an income investor, a bonus is that most blue-chip stocks also pay out a dividend.
It is a good idea to include a layer of strong blue-chip stocks to act as the bedrock for your investment portfolio.
During times of economic uncertainty, these stocks can give you peace of mind while churning out a stream of passive income.
If you have S$30,000 to spare from your savings or bonus, these three stocks could go into your buy watchlist.
DBS Group (SGX: D05)
DBS needs no introduction, being Singapore’s largest bank by market capitalisation.
The lender has gone through many economic cycles unscathed and this is a testament to not just its brand strength but also its effective risk control policies.
DBS has benefitted from the recent sharp surge in interest rates as its business thrives on lending money to individuals and corporations.
For the first half of 2023 (1H 2023), the bank reported a strong set of financial results that saw total income jump 34% year on year to S$10 billion.
Net interest income surged by 61% year on year to hit S$7 billion in tandem with the lender’s increase in net interest margin from 1.52% in 1H 2022 to 2.14% in 1H 2023.
Net profit climbed 44% year on year to S$5.2 billion.
In line with the good performance, the bank raised its quarterly dividend from S$0.36 in the second quarter of 2022 to S$0.48 for its latest quarter.
CEO Piyush Gupta expects slower loan growth for 2023 as high interest rates dampen demand for loans.
However, the prospect of higher for longer interest rates means there may be further upside for DBS’s net interest margin.
Elsewhere, Gupta also views China as an important growth engine for the bank but the country needs to sort through several headwinds first.
He is also upbeat about India’s prospects with the bank planning a two-prong strategy to grow there.
It will focus on small and medium enterprises and large corporations and projects that total income from this country can increase by two and half times with net profit tripling by 2026.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group enjoys a natural monopoly and has also been consistently paying out an annual dividend since 2001.
SGX is slowly morphing its business into a multi-asset exchange that provides investors and fund managers with a wide range of investment choices in equities, fixed income, derivatives, commodities, and foreign exchange (FX).
For its recent fiscal 2023 (FY2023) results ending 30 June 2023, the bourse operator’s revenue rose 8.7% year on year to S$1.2 billion.
Net profit, adjusted for exceptional and one-off items, climbed 10.3% year on year to S$503.2 million.
The group also upped its quarterly dividend from S$0.08 to S$0.085, bringing its annualised dividend per share to S$0.34.
The bourse operator saw a record high trading volume for its iron ore product, with daily average volume hitting 140,000 for FY2023, up from 99,000 in FY2022.
SGX intends to build a fully integrated and scalable FX platform for international FX futures to attract more participants.
The group has also communicated its intention to increase its dividend per share by a mid-single-digit compound annual growth rate.
Keppel Ltd (SGX: BN4)
Keppel is an asset manager with three distinct divisions – infrastructure, real estate, and connectivity.
The group has transformed in recent years after it divested its offshore and marine division to Seatrium Limited (SGX: S51).
With a new asset-light focus, Keppel has set its sights on growing its funds under management (FUM) to S$200 billion by 2030 as outlined during its recent Investor Day.
The group’s recent business update for the first nine months of 2023 (9M 2023) demonstrates its progress towards achieving its strategic goals.
Revenue grew 5% year on year to S$5.3 billion for 9M 2023 with net profit climbing significantly year-on-year.
It also saw continued momentum in building its FUM.
FUM ended 1H 2023 at S$53 billion with asset management fees for 9M 2023 coming in at S$178 million.
Keppel has also announced nearly S$5.3 billion in asset monetisation since the programme commenced in October 2020.
Its long-term goal is to monetise S$17.5 billion of assets.
Meanwhile, Keppel is also going asset-light for its urban solutions under its Real Estate division.
It has implemented sustainable urban renewal initiatives across eight projects and invested in an assisted living facility in China.
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Disclosure: Royston Yang owns shares of DBS Group and Singapore Exchange Limited.