It’s the start of a new year, and for those of you who have braved through a tough 2022, you can look forward to receiving your bonus or annual wage supplement.
But with inflation hovering near 14-year highs, it may not be a good idea to sock that sum of money in a bank account.
Although many banks have been raising their savings deposit rates, parking your money in the bank is still not an effective long-term solution to beating inflation.
In addition, such accounts also come with a host of terms and conditions before you can enjoy the maximum interest rate tier.
It’s a better idea to invest the money in solid, well-managed blue-chip companies that offer a great mix of growth and dividends.
What’s more, with a possible recession looming on the horizon, blue chips are also well-equipped to help weather the economic storm and allow you to sleep peacefully.
If you have S$20,000 to invest, here are four blue-chip stocks that are well-known for their reliability and financial strength.
DBS Group (SGX: D05)
Singapore’s largest bank by market capitalisation needs no introduction.
DBS is a core pillar of Singapore’s economy and has gone through numerous economic cycles unscathed.
The lender reported a sparkling set of results for its fiscal 2022’s third quarter (3Q2022), with net profit hitting a record-high of S$2.24 billion.
There may be more good news to come when the bank releases its FY2022 earnings on the morning of 13 February.
Surging interest rates are a boon for DBS as it can reprice its loans at higher rates, thus boosting both its net interest margin and net interest income.
The higher revenue will flow through to its bottom line, further lifting its net profit.
For 3Q2022, DBS paid out an interim dividend of S$0.36, which translates to an annualised dividend of S$1.44.
The group’s shares offer a trailing 12-month dividend yield of 4.1%.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group enjoys a natural monopoly here with its main competitors being overseas bourses that are larger.
That said, SGX can hold its own as an attractive destination for businesses and investors.
Its December 2022 market statistics showed that derivatives daily average volume rose 8% year on year with record volumes generated across a wide range of asset classes for the whole of last year.
With the Straits Times Index (SGX: ^STI) being one of the rare stock market performers last year, securities daily average value also grew 10% year on year.
For its fiscal 2022 ending 30 June 2022, SGX reported a record-high revenue and also paid out an annual dividend of S$0.32.
The bourse operator’s trailing dividend yield stood at 3.5% and investors can look forward to a good set of results when the group reports its fiscal 2023’s first half (1H2023) earnings on 9 February.
City Developments Limited (SGX: C09)
City Developments Limited, or CDL, is a global real estate company with a property network spanning 104 locations in 29 countries and regions.
The group reported a sparkling set of earnings for its 1H2022 and also quadrupled its interim dividend to S$0.12 from S$0.03 a year ago.
Its 2022’s third quarter (3Q2022) business update also saw a resilient performance, with the property giant and its joint venture associates selling 95 Singapore property units with a sales value of S$281 million.
CDL’s investment properties segment also enjoyed high occupancy levels.
As of 30 September 2022, its Singapore office portfolio boasted a high committed occupancy of 94.3% while its retail portfolio’s committed occupancy came in at 95.3%.
What’s more, CDL’s hotel operations also enjoyed a strong rebound as air travel and tourism resumed.
Room occupancy for 3Q2022 jumped nearly 16 percentage points to 71% while revenue per available room (RevPAR) soared nearly 89% year on year to S$161.9.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is an engineering and technology stalwart with businesses that serve the aerospace, smart city, and defence segments.
The group reported a 19% year on year jump in revenue for the first nine months of 2022 (9M2022), with higher contributions flowing across all its business segments.
STE also snagged S$4.8 billion worth of new contracts in 3Q2022, bringing its order book to a high of S$25 billion as of 30 September 2022.
The group is on a roll as it secured a US$1.1 billion contract in November to modernise the toll collection systems in New Jersey, USA.
STE paid out an interim dividend of S$0.04, bringing its annualised dividend to S$0.16.
Shares of the engineering conglomerate provide a forward dividend yield of 4.7%.
Want to know what to expect in the stock market in 2023? Which were the best performing stocks and blue chips in the Singapore market in 2022? Be prepared for 2023 with our special FREE report. Click HERE to download “Year in Review 2022”
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Disclaimer: Royston Yang owns shares of DBS Group and Singapore Exchange Limited.