Are there really stocks that you can hold forever?
We understand your hesitation.
If the pandemic taught us one thing, a lot can happen in the world that alters the business landscape.
“Forever”, in this sense, appears to be a pipe dream.
There is nothing wrong, though, in seeking businesses with the mindset of holding them forever. Similarly, there is also nothing wrong in casting your net to capture companies which will last the test of time.
How long, you may ask?
Long enough to pass it down to your children or loved ones.
What are the factors you should look for?
For starters, they will need to have a strong competitive moat, an established brand name, great long-term growth catalysts, and display a pattern of rising dividends.
If you think that seems like a lot to ask for, we have three such candidates lined up.
Read on to find out why we believe these three Singapore stocks can be held forever.
1. DBS Group (SGX: D05)
DBS Group needs no introduction, being Singapore’s largest bank with a market capitalisation of around S$88 billion.
The lender has a sterling reputation here and is also 29.1% owned by Singapore’s Temasek Holdings.
The bank has cemented its reputation by coasting through the pandemic with record-high profits.
For 2021, the bank’s net profit shot up 44% year on year to S$6.8 billion and it increased its quarterly dividend from S$0.33 to S$0.36.
As the US Federal Reserve hiked interest rates aggressively last year, DBS saw its net profit climb another 20% year on year to hit S$8.2 billion in 2022.
The bank also raised its quarterly dividend to S$0.42 and declared a special dividend of S$0.50 last year, bringing its total 2022 dividend to S$2.00 per share.
Just recently, DBS Group has once again knocked the ball out of the park.
The bank’s fiscal 2023’s first half (1H 2023) net profit hit a record-high level of S$10 billion.
The lender gave an optimistic outlook for the remainder of 2023 and further raised its quarterly dividend to S$0.48, bringing its annualised dividend to S$1.92 per share.
DBS is headed by CEO Piyush Gupta, and can offer investors a great mix of stability, growth, and rising dividends for the foreseeable future.
2. Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group enjoys a natural monopoly by being the only bourse operator in Singapore.
Of late, SGX has morphed into being more than just a stock exchange; it is also advancing on its plan to become a multi-asset exchange offering a suite of products such as stocks, bonds, derivatives, currencies, and options for investors to construct and manage their investment portfolios.
The group reported a 4% year-on-year increase in revenue to S$1.1 billion for its fiscal 2022 (FY2022) ending 30 June 2022.
Net profit inched up 1% year on year to S$451 million.
Moving on, for the first half of FY2023 (1H FY2023), SGX’s revenue jumped 10% year on year to S$571 million while net profit climbed 30% year on year to S$285 million.
Annual dividends have been on the rise, going from S$0.26 in FY2009 to S$0.32 in FY2022.
SGX also saw rising daily average volume across equities, foreign exchange, and commodities for 1H FY2023.
What’s more, its over-the-counter foreign exchange business is on track to achieve an average daily volume of US$100 billion soon, with 1H FY2023 clocking up a volume of US$68 billion.
The bourse operator recently launched Singapore Depository Receipts in partnership with the Stock Exchange of Thailand, allowing Singapore investors to have access to three Thai-listed blue-chip stocks.
SGX has also inked a deal with NSE International Exchange for the full-scale trading operations for the NSE IX-SGX GIFT Connect, a first-of-its-kind financial corridor between Singapore and India.
These initiatives, along with the strong market position that SGX possesses, should enable the group to continue posting steady growth in profits and dividends in the coming years.
3. Raffles Medical Group (SGX: BSL)
Raffles Medical Group, or RMG, is an integrated healthcare player providing a comprehensive range of services spanning primary to tertiary care.
The group owns Raffles Hospital in Singapore and three hospitals in China along with over 100 multi-disciplinary clinics offering specialist care, dental services, and health screening.
The healthcare player enjoys a good reputation that has enabled it to thrive through the pandemic as it worked with the Singapore government to offer PCR tests and mass vaccinations.
Back in 2021, the group’s revenue improved by 27.4% year on year to S$723.8 million with net profit climbing 27.7% year on year to S$84.2 million.
In line with the good results, RMG raised its annual dividend from S$0.025 in 2020 to S$0.028 in 2021.
In 2022, RMG’s revenue rose 5.9% year on year to S$766.5 million while its net profit surged by 70.5% year on year to S$143.5 million.
Management hiked its annual dividend by 35.7% year on year to S$0.038.
For 1H 2023, RMG turned in a commendable performance with revenue dipping by 9.5% year on year as COVID-related revenue fell.
Despite this, net profit inched up 0.5% year on year to S$59.9 million while free cash flow remained healthy at S$120 million.
Chairman Dr Loo Choon Yong is seeing medical tourism recover to 70% of pre-pandemic levels and also plans to increase capacity in its current hospitals and beef up its team of specialists to serve more patients.
RMG is also not ruling out acquisitions to grow the business if there are compelling opportunities as the group seeks to tap on its cash hoard of S$299.6 million as of 30 June 2023.
With Singapore’s ageing population and the government’s launch of Healthier SG acting as catalysts for RMG, its long-term future looks assured.
Get Smart: Strong stocks to last a lifetime
The above are three candidates for stocks you can own for a lifetime.
But as investors, you also need to keep an eye on the company’s performance and fundamentals.
Remember that investing is more than just about which stock to buy; you also need to know how much of each stock to buy.
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Disclosure: Royston Yang owns shares of DBS Group, SGX, and Raffles Medical Group.
