As the New Year begins, I have made plans to increase my investment allocation.
You can do the same, too.
By slowly deploying money into high-quality and well-run stocks, you can better position your portfolio for your eventual retirement.
Blue-chip stocks are well-known for their reliability and track record.
If I had a windfall and received a sum of money, I would allocate S$30,000 to these three dependable stocks for their dividends and growth prospects.
DBS Group (SGX: D05)
DBS is no stranger to Singaporeans, being the country’s largest bank by market capitalisation.
The bank offers a comprehensive range of banking, investment, and insurance services to both corporations and individuals.
For its third quarter 2023 (3Q 2023) earnings, DBS reported a blowout set of financial numbers as high interest rates buoyed its net interest income (NII).
For the first nine months of 2023 (9M 2023), total income grew 27% year on year to S$15.2 billion as NII jumped 46% year-on-year to S$10.6 billion.
Net profit for the period was higher by a third at S$7.8 billion.
In line with its strong results, the lender upped its interim dividend by 33% year on year to S$0.48.
For 2024, interest rates are slated to remain higher for longer as the US Federal Reserve continues its battle with inflation.
Elevated interest rates should benefit DBS as it will keep its NII high and support its total income for the year.
The bank recently increased its existing stake in Shenzhen Rural Commercial Bank from 13% to 16.69%, with the transaction expected to immediately add to DBS’s earnings.
Investors should also be pleased to note that DBS has the capital headroom to support higher dividends moving forward, with a sustainable baseline increase of S$0.24 per year barring unforeseen circumstances.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group operates a platform for the buying and selling of a wide variety of securities such as equities, bonds, and derivatives.
SGX has posted an admirable set of financial numbers for its fiscal 2023 (FY2023) ending 30 June 2023 despite the volatility in the stock markets last year.
Revenue rose 8.7% year on year to S$1.2 billion with core net profit increasing by 10.3% year on year to S$503.2 million.
SGX also raised its quarterly dividend from S$0.08 to S$0.085, bringing its annualised dividend per share to S$0.34.
There could be more growth to come for the bourse operator.
FY2023 saw a record performance for its foreign exchange platform where average daily volume (ADV) hit US$75.8 billion.
This momentum may continue with ADV expected to hit US$100 billion by 2025 or earlier.
Back in September last year, SGX also unveiled a new corporate structure that may accelerate growth.
The group targets a high single-digit percentage year-on-year revenue growth and intends to increase the dividend per share by a mid-single-digit percentage.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 142 properties across six property segments.
Its assets under management (AUM) stood at S$9.2 billion as of 30 September 2023 with 56 properties in the US, 85 properties in Singapore, and one in Japan.
For MIT’s first half of fiscal 2024 (1H FY2024) ending 30 September 2023, gross revenue inched up 0.4% year on year to S$344.7 million.
Net property income (NPI), however, slid 0.3% year on year to S$259.4 million while distribution per unit (DPU) fell by 2% year on year to S$0.0671 because of a larger base of units from the REIT’s fundraising exercise last year.
Despite the dip, there are signs that borrowing costs are easing with MIT reporting a 0.5% quarter-on-quarter dip in finance costs for the second quarter of FY2024.
The industrial REIT also completed the yield-accretive acquisition of a data centre in Osaka, Japan, on 28 September 2023 that should contribute to rental income in the third quarter of FY2024.
MIT reported a fall in its cost of debt from 3.5% as of 30 June 2023 to 3.2% as of 30 September 2023.
The portfolio enjoyed an average positive rental reversion of 8.8% for renewal leases for its latest quarter.
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Disclosure: Royston Yang owns shares of DBS Group, Singapore Exchange Limited and Mapletree Industrial Trust.
