When investing, I like to look for stocks with favourable attributes such as a strong competitive moat and resilience.
Better still if the company pays out a consistent dividend that serves as a source of passive income flow.
The recent weak sentiment has thrown up opportunities to buy a variety of companies at more attractive valuations.
A word of caution, though.
Remember to pace your purchases and not go “all in” so that you allow yourself to buy more should share prices fall.
If I had S$20,000 to spare, here’s where I will consider parking that money.
DBS Group (SGX: D05)
The bluest of the blue chips has to be DBS Group, Singapore’s largest bank.
DBS offers a comprehensive range of banking services to both corporates and individuals.
The bank has proven resilient thus far, reporting its second-highest net profit for the first quarter of fiscal 2022 (1Q2022).
It has also been active on the acquisition front, buying up India’s Lakshmi Vilas Bank in 2020 and more recently, Citigroup’s (NYSE: C) Taiwan consumer banking business.
The lender is also trying to broaden its income streams by setting up a digital exchange and has also collaborated with Singapore Exchange Limited (SGX: S68), Temasek Holdings and Standard Chartered Bank (LON: STAN) to set up Climate Impact X, a carbon credits marketplace.
Meanwhile, the US Federal Reserve has raised the benchmark interest rate by 0.75 percentage points recently, its biggest increase since 1994.
DBS should see its net interest margin and income rise in tandem with the rising interest rate.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong is one of the largest supermarket chains in Singapore and operates 65 outlets across the island.
The group sells a wide variety of products ranging from fresh foods to essentials such as toiletries and household products.
The retailer is a good investment option for those who are seeking stability, as its focus on essential goods puts it in a good position to weather downturns.
For 1Q2022, Sheng Siong announced a 6% year on year rise in revenue to S$358 million.
Net profit improved by 13.9% year on year to S$35.2 million.
The group paid out a total of S$0.062 in dividends for FY2021, translating to a historical dividend yield of 4.1% for its shares.
CEO Lim Hock Chee plans to grow the business by opening three to five new stores per year over the next three to five years.
He also plans to improve on Sheng Siong’s e-commerce capabilities to reach customers in areas where the group does not currently have a presence.
UMS Holdings (SGX: 558)
If you’re looking to gain exposure to the growing semiconductor industry, UMS Holdings may be a good choice.
The group is a one-stop-shop that provides equipment manufacturing and engineering services to manufacturers of semiconductors and related products.
UMS reported a good set of numbers for 1Q2022, with revenue surging 71% year on year to S$84.7 million.
Net profit rose 26% year on year to S$19.4 million, and the group declared an interim dividend of S$0.01, unchanged from last year.
Free cash flow was healthy at S$18.7 million, up from S$14.8 million a year ago.
CEO Andy Luong is optimistic about the group’s outlook as he sees accelerating capital expenditure from global wafer fab players.
Fab equipment spending is set to post healthy growth and will remain above the US$100 billion mark. Industry capacity is projected to rise by 8% this year and a further 6% next year.
Raffles Medical Group (SGX: BSL)
If you’re looking for a recession-proof industry, healthcare immediately comes to mind.
Raffles Medical Group, or RMG, is an integrated healthcare provider operating in 14 cities within five countries.
The group operates three tertiary hospitals and more than 100 multi-disciplinary clinics that offer a wide range of medical and diagnostic services.
The hospital operator reported a sparkling set of earnings for FY2021 as it successfully pivoted its business to help the government manage the COVID-19 pandemic.
Revenue climbed 27.4% year on year to S$723.8 million while net profit rose 27.7% year on year to S$84.2 million.
A final dividend of S$0.028 was paid out, giving its shares a trailing dividend yield of 2.5%.
With borders reopening around the world, medical tourism should also resume, boosting RMG’s prospects for FY2022.
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Disclaimer: Royston Yang owns shares of DBS Group, Singapore Exchange Limited and Raffles Medical Group.
