The Straits Times Index (SGX: ^STI), or STI, represents Singapore’s blue-chip index and is made up of 30 different blue-chip companies.
The STI is widely used as a barometer for sentiment for the local bourse.
However, the 30 stocks that make up the coveted list can change from time to time.
Every quarter, the index is reviewed and changes may or may not be made.
One or two of the 30 companies may even be replaced.
The last change happened way back on 22 June 2020, when Singapore Press Holdings (SGX: T39) was dropped in favour of Mapletree Industrial Trust (SGX: ME8U).
Before that, Mapletree Logistics Trust (SGX: M44U) took the place of Golden Agri-Resources Ltd (SGX: E5H) further back in December 2019.
During the review of the STI last month, no changes were made to the constituents.
Moving forward, some of the current STI stocks could be replaced by other companies.
Who may some of these candidates be?
The Singapore Exchange Limited (SGX: S68), or SGX, maintains a list of reserve stocks that could be injected into the STI should any company need to be replaced.
Here are the five companies on that reserve list.
As it turns out, all five of these potential blue-chip stocks also pay a dividend, which should delight income-seeking investors.
Olam International Ltd (SGX: O32)
Olam is an international food and agriculture business that supplies food ingredients, feed and fibre to customers worldwide.
In the company’s latest earnings report for the first six months of 2021, revenue rose 33.7% year on year to S$22.8 billion, while operating income jumped 51.4% year on year to S$641.6 million.
The group also proposed an interim dividend of S$0.04 per share.
Trailing 12-month dividend stands at S$0.08, which translates to a trailing dividend yield of 4.5%.
Olam has also announced plans to spin-off its food ingredients arm, Olam Food Ingredients (OFI).
OFI will be headed for a concurrent initial public offering (IPO) on the London Stock Exchange (LON: LSEG), as well as the Singapore Exchange (SGX: S68), in the first half of next year.
For the year ended 31 December 2020, OFI generated US$9.1 billion of revenue and booked an operating profit of US$551 million.
OFI has 100 manufacturing facilities in 48 countries and employs more than 15,000 employees.
Suntec REIT (SGX: T82U)
Suntec REIT manages retail and office properties in Singapore, Australia, and the UK.
The REIT reported a respectable set of earnings during its fiscal 2021 third quarter (3Q2021) business update.
Gross revenue increased by 16.5% year on year to S$92.7 million while net property income (NPI) surged by 45.5% year on year to S$68.8 million.
Distribution per unit (DPU) climbed by 20.8% year on year to S$0.02232 for the quarter.
This DPU represents an annualised yield of 5.9% for unitholders.
Keppel REIT (SGX: K71U)
Keppel REIT is the owner of several Grade A commercial properties in key business districts around Asia.
The REIT has assets under management (AUM) worth S$8.7 billion in Singapore, Australia and South Korea.
Keppel REIT reported healthy financial numbers for the first nine months of 2021 (9M2021).
Property income jumped by 34.8% year on year to S$162.2 million while NPI attributable to unitholders surged by 42.6% year on year to S$116.8 million.
Distributable income rose by 20.8% year on year to S$159.9 million.
The REIT’s trailing 12-month DPU stood at S$0.0587.
The trailing 12-month distribution yield stood at 5.1%.
The REIT also reported healthy portfolio metrics.
As of 30 September 2021, committed portfolio occupancy remained high at 97.1%, while the REIT’s weighted average lease expiry (WALE) stood at a long 6.1 years.
Aggregate leverage stands at 37.6% and the REIT’s cost of debt remained low at just 1.99%.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, owns and invests in a portfolio of suburban retail malls in Singapore.
FCT’s retail portfolio comprises nine malls, including Causeway Point, White Sands, Century Square and Tampines 1, as well as an office building.
The retail REIT reported an impressive set of earnings for its fiscal year ended 30 September 2021 (FY2021).
Gross revenue soared by 107.5% year on year to S$341.1 million and NPI more than doubled year on year to S$246.6 million.
DPU climbed by 33.7% year on year to S$0.12085.
FCT’s historical dividend yield stood at 5.4%.
The REIT’s retail portfolio occupancy remained healthy at 97.3%.
Shopper traffic is hovering at 50% to 60% of pre-pandemic levels between July to September 2021, but tenant sales have almost recovered to pre-COVID levels.
Netlink NBN Trust (SGX: CLJU)
NetLink NBN Trust designs, builds, owns and operates the passive fibre network of Singapore’s next-generation nationwide broadband network (NBN).
The network is a Singapore government initiative to provide ultra-high-speed broadband access nationwide.
As the main fibre network provider in Singapore, NetLink has a resilient business model that has helped the company emerge relatively unscathed from the pandemic.
For the group’s fiscal 2022 first half (1H2022) ended 30 September 2021, revenue inched up 3.6% year on year to S$187.9 million.
NetLink’s DPU for 1H2022 stood at S$0.0256.
Annualised DPU of S$0.0512 translates to a dividend yield of 5.2% for unitholders.
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Disclaimer: Royston Yang owns shares of Suntec REIT, Mapletree Industrial Trust, Singapore Exchange Limited and NetLink NBN Trust.
