The Central Provident Fund (CPF) scheme offers an effective way for Singaporeans to save up for retirement.
The Ordinary Account (OA) bears an interest rate of 2.5%, with an additional 1% for the first S$20,000.
This means that savers can earn a maximum of 3.5% on their first S$20,000 in the OA, while all amounts above this threshold earn 2.5%.
What’s more, the CPA OA can also be used for investments by opening a CPF Investment Account if you are willing to take additional risk.
However, some investors may feel that the yield offered by the CPF OA is too low.
We introduce four Singapore stocks, two REITs and two non-REIT companies, that offer a higher yield than that provided by the CPF OA.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 105 industrial and commercial properties worth around S$6.7 billion as of 30 September 2022.
These properties are located in five countries – Singapore, the UK, Australia, the Netherlands, and Germany.
FLCT pulled off a mixed performance for its fiscal 2022 (FY2022) ending 30 September 2022.
Revenue dipped by 4.1% year on year to S$450.2 million while adjusted net property income (NPI) by 3.7% year on year to S$342.1 million.
Distribution per unit (DPU) slipped by 0.8% year on year to S$0.0762.
Units of FLCT offer a trailing distribution yield of 6.7%.
Despite the dip in DPU, the REIT’s occupancy rate stayed high at 96.4%.
Aggregate leverage stood at 27.4%, giving FLCT a debt headroom of S$3.2 billion before it hits the 50% gearing limit set by Singapore’s central bank.
Investors should also note that the REIT enjoys a low cost of borrowings at 1.6% and has 81.7% of its loans at fixed rates.
These two attributes help to mitigate a sharp rise in borrowing costs that may eat into its future DPU.
DBS Group (SGX: D05)
DBS needs no introduction, being Singapore’s largest bank by market capitalisation.
The blue-chip lender recently reported a sterling set of earnings for its fiscal 2022’s third quarter (3Q2022), with net profit hitting a record-high of S$2.2 billion.
The bank also declared a S$0.36 interim dividend for 3Q2022, up from the S$0.33 paid out a year ago.
DBS’ trailing 12-month dividend stands at S$1.44, giving its shares a trailing dividend yield of 4.1%.
The group is poised to enjoy higher net interest income as interest rates rise alongside the sharp benchmark rate hikes instituted by the US Federal Reserve.
Already, the bank has estimated that its net interest margin could reach around 2.25% by the middle of next year, up from the 1.9% in 3Q2022.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (Holdings) Ltd, or MMH, designs and manufactures high-precision tools and parts used in the manufacturing processes for the semiconductor industry.
The group has five manufacturing facilities in Singapore, Malaysia, China, the Philippines, and the US.
MMH reported a 14.6% year on year decline in its net profit for its fiscal 2023’s first quarter (1Q2023) ending 30 September 2022.
Operating cash flow, however, remained healthy, rising from S$4.5 million in the prior year to S$6.1 million.
For FY2022, the group paid out a total of S$0.14 in dividends, giving its shares a trailing dividend yield of 5.1%.
Looking ahead, the World Semiconductor Trade Statistics expects the global semiconductor market to contract by 4.1% year on year in 2023 to US$557 billion.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT that owns a total of nine suburban malls and an office building, with assets under management totalling S$6.2 billion.
FCT reported a resilient set of earnings for FY2022, with gross revenue inching up 4.6% year on year to S$356.9 million.
NPI increased by 4.9% year on year to S$258.6 million, and DPU edged up 1.2% higher year on year to S$0.12227.
The retail REIT’s units offer a trailing distribution yield of 6%.
FCT reported a healthy committed occupancy rate of 97.5% along with a positive rental reversion of 4.2% for FY2022.
In another piece of good news, tenant sales were also 10% above pre-COVID levels on average.
The REIT’s gearing level stood at 33% with 71% of its borrowings hedged to fixed rates, so investors need not worry about a sharp jump in borrowing costs for FY2023.
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Disclaimer: Royston Yang owns shares of DBS Group, Micro-Mechanics (Holdings) Ltd and Frasers Logistics & Commercial Trust.
