Every investor dreams of owning the next Amazon, where one stock, held for life would make a big difference to their portfolio.
Such businesses should ideally have a strong competitive moat and a track record of consistent, steady growth.
They should also demonstrate the ability to remain resilient in the face of crises such as the COVID-19 pandemic.
Ideally, these companies should also be able to pay out increasing dividends over the years as their profits and cash flow improve.
To be frank, there aren’t many companies out there that display such attributes.
But if you do find such stocks, it’s a good idea to hang on to them.
Holding them over years can help you to compound your wealth and also increase your flow of passive income.
If done right, investing can help you to achieve a comfortable retirement.
Here are three stocks that I never plan to sell.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange.
SGX operates a platform for the buying and selling of shares, derivatives and currencies.
It also provides listing, settlement and clearing services for listed companies.
The bourse operator enjoys a natural monopoly by being the only stock exchange operator in Singapore.
The group also reported a strong set of results for the fiscal year ended 30 June 2020.
Revenue was up 16% year on year to S$1.05 billion, while net profit jumped 21% year on year to S$472 million.
The quarterly dividend was raised to S$0.08 per quarter from the S$0.075 paid out a year ago.
Since the results were announced, SGX has continued on its journey to evolve into a multi-asset exchange.
Some recent initiatives include the listing of the world’s largest Chinese pure government bond exchange-traded fund (ETF), which started trading on 21 September.
SGX has also signed a heads of agreement with New Zealand Exchange (NZX) in a global partnership to help grow NZX’s dairy derivatives together.
If these initiatives are successful, SGX should see its revenue, net profit and dividends continue to rise over time.
DBS Group Holdings Ltd (SGX: D05)
DBS is no stranger to many investors, being one of Singapore’s three largest banks.
The group offers a comprehensive range of banking services to both individuals and companies.
Despite the COVID-19 pandemic, DBS reported an admirable set of earnings for the first half of 2020.
Total income rose by 7% year on year, driven by a 42% year on year jump in non-interest income.
Profit before allowances rose 12% year on year to S$4.7 billion.
However, due to the pandemic’s impact, the bank has hiked up its allowances nearly six-fold from S$327 million to S$1.9 billion.
Consequently, net profit after tax fell 26% year on year to S$2.4 billion.
The quarterly dividend was slashed from S$0.33 to S$0.18 as the Monetary Authority of Singapore had called on local banks to moderate their dividend payments in light of the crisis.
CEO Piyush Gupta has reaffirmed that a 5% year on year growth in loan book is expected for the full fiscal year 2020.
Net interest margin, however, is expected to fall to 1.6% from the current 1.74% due to overall lower global interest rates.
The bank’s franchise remains strong and it remains well-capitalised.
Once the crisis has abated, the bank should be able to reinstate its quarterly dividend and continue to grow its top and bottom lines.
Nike (NYSE: NKE)
Nike is a market leader in the sports footwear and apparel industry and has long been recognised for its innovative shoes that are worn by top athletes.
From January till June, the company had to temporarily shut its physical outlets due to lockdowns imposed by governments around the world to tackle the COVID-19 pandemic.
As stores began to reopen, social distancing measures meant that some had to operate on shorter hours and had to close earlier.
For Nike’s fiscal year 2021’s first quarter ended 31 August 2020, it reported revenue that was down just 1% year on year.
However, digital sales increased by 82% year on year as a result of the company’s digital acceleration initiatives.
As a result, net profit rose by 10% year on year to US$1.5 billion.
Quarterly dividend increased from US$0.22 to US$0.245, reflecting confidence in the company’s prospects.
With the brand’s strength and its successful digital strategy, Nike should be able to register continued long-term growth despite the headwinds in the industry.
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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited, DBS Group Holdings Ltd and Nike.
