Economies go through natural cycles of boom and bust.
Naturally, investors may be worried about how to tackle the stock market volatility that accompanies such cycles.
The key is to park your money in companies that are termed “defensive”.
Defensive stocks are those that should see steady demand during downturns and whose business remains resilient.
The news gets even better if these stocks pay out a dividend that provides you with a source of passive income as you wait for the inevitable recovery.
These four dividend-paying stocks should provide an oasis of calm as you navigate whatever the economy throws at your investment portfolio.
Parkway Life REIT (SGX: C2PU)
Healthcare is a traditionally defensive sector that has held up well during tough times.
Parkway Life REIT is a healthcare REIT that owns a total of 56 properties in Singapore, Japan and Malaysia worth S$2.3 billion as of 31 March 2022.
With hospitals and nursing homes within its portfolio, the REIT generates stable and dependable rental income.
Parkway Life REIT also has a great track record of paying a core distribution that has been increasing without fail since 2008.
Distribution per unit (DPU) started at S$0.0683 in 2008 and has more than doubled to S$0.1408 in 2021.
For the first quarter of 2022 (1Q2022), the REIT reported a 2.3% year on year increase in gross revenue to S$30.7 million, while net property income (NPI) inched up 1.9% year on year to S$28.6 million.
Raffles Medical Group (SGX: BSL)
Raffles Medical Group, or RMG, is an integrated private healthcare provider that provides a comprehensive range of services spanning primary to tertiary care.
The group’s network comprises three hospitals and more than 100 multi-disciplinary clinics spread out across 14 cities in five countries in Asia.
RMG posted a solid set of earnings for its fiscal 2021 (FY2021), with revenue growing 27.4% year on year to S$723.8 million.
The group pivoted its business to help support the Singapore government on its COVID-19 initiatives such as vaccinations, PCR testing and pre-departure screening.
Operating profit climbed 37.2% year on year to S$121.3 million while net profit rose 27.7% year on year to S$84.2 million.
A final total dividend of S$0.028 was declared, comprising an ordinary dividend of S$0.018 and a special dividend of S$0.01.
RMG is optimistic that foreign patient volumes will rise as borders reopen while its hospitals in China should continue to see higher patient loads.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong is one of the largest supermarket chains in Singapore and operates 65 outlets around the island.
The group sells a wide variety of products from fresh foods to necessities such as toiletries and household products.
Sheng Siong has enjoyed consistent demand for its merchandise through good times and bad as it provides necessity-based shopping.
For 1Q2022, the supermarket operator increased its revenue by 6% year on year while gross profit improved by 9.8% year on year to S$102.7 million.
Net profit jumped by 13.9% year on year even though Sheng Siong received a lower amount of government grants.
A total dividend of S$0.062 was paid out for FY2021.
The group intends to grow steadily in several ways – opening three to five new stores per year, improving the sales mix of higher-margin products, increasing its selection of house brand products, and developing e-commerce capabilities to serve customers in areas where it currently does not have a presence.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is a blue-chip technology and engineering group that serves the aerospace, smart city and defence sectors.
The group has maintained a robust order book that has kept its business running smoothly through the pandemic.
For its 1Q2022 business update, the engineering conglomerate reported a 13% year on year jump in revenue to S$2 billion.
All three of its divisions – commercial aerospace, urban solutions & satcom, and defence & public security, saw year on year revenue rises.
STE had secured S$2.4 billion worth of new contracts in 1Q2022, taking its order book to a three-year high of S$21.3 billion.
The group received approval for its US$2.7 billion acquisition of TransCore last year.
This purchase is expected to boost its Smart City division further.
STE also declared an interim dividend of S$0.04 for 1Q2022, taking annualised dividend for FY2022 to S$0.16.
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Disclaimer: Royston Yang owns shares of Raffles Medical Group.