Buying a stock is easy.
But finding the right stocks for yourself is not as straightforward.
It’s even harder to find a suitable company to buy to hold forever.
Many factors come into play in deciding which stocks to buy.
You may, for instance, look at the strength of the company’s underlying business and its leadership within its industry.
This dominance allows the company to continue growing and also helps it to remain resilient to crises such as the COVID-19 pandemic.
Another favourable trait is a long runway for growth and a company’s ability to execute well.
A third attribute that great companies should have is the ability to pay out increasing levels of dividends as the business improves over time.
Taken together, these three aspects qualify a company for a place in an investor’s long-term investment portfolio.
Here are three Singapore companies with the above attributes that you can consider to keep forever.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank Ltd, or UOB, is one of Singapore’s three large local banks.
The bank was founded in 1935 and provides a comprehensive suite of services to corporations and individuals.
UOB has an extensive regional presence with around 500 offices in countries such as Indonesia, Singapore, Malaysia and Thailand.
For the first nine months of 2020, UOB reported a 33.3% year on year decline in net profit after tax, chiefly due to an increase in total allowances because of the pandemic.
Net interest margin also fell from 1.79% to 1.57% as governments around the world lowered interest rates to stimulate their respective economies.
However, UOB’s assets under management increased by 7% year on year to S$130 billion.
The bank is also investing in its digital bank called TMRW to better engage digitally-inclined millennials and make the banking experience more convenient and seamless for them.
These technology investments have resulted in a more than doubling in PayNow personal transactions and a near nine-fold increase in corporate PayNow transactions for the bank.
UOB’s extensive network and track record should stand it in good stead over the long-term as it should be able to successfully navigate itself through this crisis.
From 2016 through to 2019, the annual dividend increased from S$0.70 to S$1.30, but last year saw its interim dividend reduced by almost 30% year on year as the Monetary Authority of Singapore called on banks to moderate their dividend payments.
When the crisis passes and business conditions improve, there is reason to believe that UOB can continue to increase its dividend once again.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore sole stock exchange operator.
The group maintains a platform for the buying and selling of a wide range of securities such as equities, fixed income and derivatives.
Over the years, SGX has morphed into a multi-asset exchange as it embarked on a series of collaborations to widen its suite of products and services.
One of these partnerships involved a memorandum of understanding signed with CCDC of China to strengthen China-Singapore bond markets.
These savvy moves have enabled SGX to strengthen its competitive moat and attract more clients to tap on its products for portfolio management and hedging.
The group’s latest market statistics for December showed growing investor demand for ETFs.
Total securities market turnover value rose 21% year on year during the month while ETF turnover more than doubled to S$350 million.
SGX recently upped its quarterly dividend from S$0.075 to S$0.08 when it reported its full fiscal year 2020 earnings ended 30 June 2020. Full-year dividend now stands at S$0.32.
Haw Par Corporation Ltd (SGX: H02)
Haw Par Corporation is a conglomerate with four key divisions: healthcare, leisure, property and investments.
Its healthcare segment is branded under its signature “Tiger Balm” and consists of products such as balms, mosquito patches and pain patches.
For the fiscal year 2019, healthcare made up the bulk of revenue and contributed around 37% of operating profit.
Though COVID-19 affected sales of healthcare products for the first half of 2020, the Tiger Balm franchise remains strong.
Once lockdowns and movement restrictions are lifted and events such as triathlons and competitions resume, Tiger Balm should continue to do well.
Despite reporting a 19% year on year fall in net profit after tax for the period, Haw Par kept its interim dividend constant at S$0.15.
The group was able to do so as it continues to receive S$56.1 million of dividend income from its investments in UOB and UOL Group Ltd (SGX: U14).
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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited.
