The word “blue-chip” evokes images of stability, a good reputation and safety.
These are the attributes investors are looking for during uncertain times.
And the world is beset with numerous uncertainties right now as investors are faced with a deluge of bad news such as high inflation, increasing interest rates and falling stock prices.
That’s why I take comfort in parking some money in blue-chip companies, knowing that they’ve been through adversity before and still came out fine.
It’s always useful to keep some spare cash in your kitty to take advantage of attractive opportunities that the market may throw up from time to time.
Here are four Singapore blue-chip stocks I plan to accumulate if I had S$20,000 to spare.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank, or UOB, is one of Singapore’s three big banks.
The lender has proven its resilience by reporting a net profit of S$2 billion for its fiscal 2022’s first half (1H2022), flat against a year ago.
The bank has also declared an interim dividend of S$0.60, giving its shares a 12-month trailing dividend yield of 4.6%.
There are good reasons to feel optimistic about UOB’s future.
Rising interest rates will boost the bank’s bottom line as the group’s net interest margin improves.
UOB also announced a brand refresh last month with a strategic intent to intensify its focus in ASEAN to develop its business further.
CEO Wee Ee Cheong is targeting for UOB to be the most preferred bank for both consumers and businesses across its key markets by 2035.
There’s also the bank’s acquisition of Citigroup’s (NYSE: C) consumer banking business to look forward to that will boost its franchise in four countries – Malaysia, Indonesia, Thailand and Vietnam.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is a technology and engineering group with a portfolio that spans the aerospace, smart city, and public security segments.
The group reported an admirable performance for 1H2022, with revenue rising 17% year on year to S$4.3 billion.
Operating profit rose 8% year on year, but it would have increased by 45% year on year when excluding the effects of government support and a one-off restructuring expense.
A second interim dividend of S$0.04 was also paid out, bringing the annualised dividend to S$0.16 for a forward dividend yield of 4.5%.
STE had clinched S$3.1 billion of new contracts in the second quarter, taking its order book to a multi-year high of S$22.2 billion as of 30 June 2022.
Venture Corporation Limited (SGX: V03)
Venture is a provider of technology products, services and solutions. The group manages a portfolio of 5,000 products and solutions and employs 12,000 people worldwide.
The group has proven its ability to continue growing, posting a 25.4% year on year jump in revenue for 1H2022 to S$1.8 billion.
Net profit climbed 24.1% year on year to S$174.3 million.
Venture also paid out an interim dividend of S$0.25, and with a trailing 12-month dividend at S$0.75, its shares provide a trailing dividend yield of 4.6%.
The group expects demand to hold up for the second half of 2022 and sees resilient demand for its products across its customer base.
Venture will be developing new technologies and capabilities and adding new manufacturing capacity in line with this sustained demand.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
As such, the bourse operator enjoys a natural monopoly that will keep its business secure during challenging times.
The group also reported a good set of numbers for its fiscal 2022 (FY2022) ending 30 June 2022.
Revenue edged up 4% year on year to S$1.1 billion, the highest since its listing.
Net profit inched up 1% year on year to S$451 million and SGX paid out a dividend of S$0.32 for FY2022.
Shares of SGX offer a historical distribution yield of 3.4%.
The group continues to see a healthy pipeline of equity listings and FY2022 has seen an increase in funds raised at IPO, higher assets under management for ETFs, and a higher amount raised through bond issuances.
SGX also plans to tap on its over-the-counter foreign exchange platform to achieve a higher average daily volume that should eventually see this division contribute a larger portion to group revenue (currently: 5%).
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited.
