Want to Compound Your Wealth? 4 Singapore Blue-Chip Stocks to Consider for Your Portfolio

Compounding is so amazing that it has been termed as the eighth wonder of the world.

This process involves the reinvestment of your money to generate even more money.

Compounding works well with dividend-paying stocks as you can use these dividends to buy shares of the same stocks that paid out the dividends.

Blue-chip stocks are a great place to start your compounding journey.

This category of stocks not only boasts a long track record but comprises businesses that have gone through good times and bad.

Here are four Singapore blue-chip stocks you can consider for your buy watchlist.

OCBC Ltd (SGX: O39)

OCBC is Singapore’s second-largest bank by market capitalisation and offers a comprehensive range of banking, insurance, and investment services.

The lender recently reported a stellar set of earnings for 2023.

Net interest income climbed 25% year on year to S$9.6 billion in line with the increase in global interest rates.

Non-interest income also rose 7% year on year to S$3.9 billion buoyed by higher trading income.

As a result, total income jumped 20% year on year to S$13.5 billion while net profit surged by 27% year on year to S$7 billion.

The bank raised its final dividend to S$0.42, up from S$0.40 a year ago, bringing 2023’s dividend to S$0.82.

Looking ahead, there is a good chance that OCBC can increase its dividend if its earnings continue their upward trajectory.

The bank expects its net interest margin to be in the range of 2.2% to 2.25% (2023: 2.28%).

Management expects Asia to remain resilient and that the bank can enjoy low single-digit loan growth for 2024.

Keppel Ltd (SGX: BN4)

Keppel Ltd is a global asset manager operating in the infrastructure, real estate, and connectivity sectors.

The group reported a record net profit for its recent 2023 earnings while also increasing its total dividend.

For 2023, revenue inched up 5% year on year to S$7 billion.

However, operating profit shot up 90% year on year to S$1.1 billion while net profit leapt 339% year on year to a record S$4.1 billion.

The strong performance was because of the disposal of Keppel’s Offshore and Marine division last year.

Excluding this exceptional item, net profit would have grown by 6% year on year to S$885 million.

A final dividend of S$0.19 was declared, bringing 2023’s total dividend to S$0.34.

Keppel continued to grow its funds under management to S$55 billion, up 10% year on year, while asset management fees increased from S$267 million to S$283 million.

The group’s Vision 2030 strategic goal of monetisation has resulted in S$5.4 billion of value unlocked since 2020.

SATS (SGX: S58)

SATS is a leader in gateway services and food catering for a variety of airlines including Singapore’s flagship carrier Singapore Airlines (SGX: C6L).

The group serves customers in more than 210 locations in 27 countries.

SATS saw a sharp improvement in its financial and operating results for the first nine months of fiscal 2024 (9M FY2024).

Revenue tripled year on year from S$1.3 billion to S$3.9 billion while operating profit came in at S$161.5 million, a turnaround from the previous year’s operating loss of S$43.4 million.

Core net profit stood at S$31.2 million for 9M FY2024.

The airline caterer is seeing better prospects with the surge in demand for aviation and travel.

Its recent acquisition of Worldwide Flight Services has resulted in a larger organisation with greater reach, thus increasing its income streams and allowing the group to partake in the recovery of the aviation and travel sectors.

SATS will continue to strengthen its Singapore hub with several initiatives such as the construction of a Built-up Pallet Centre for the seamless handling of export cargo lodgements.

It also inked a strategic partnership with Shun Feng Express, a Chinese multinational delivery services and logistics company.

Sembcorp Industries Ltd (SGX: U96)

Sembcorp Industries, or SCI, is an energy and urban solutions provider with a balanced energy portfolio of 21.3 GW and a project portfolio spanning more than 14,000 hectares across Asia.

The group reported a mixed set of earnings for 2023 while doubling its final dividend.

Although revenue fell by 10% year on year to S$7 billion, core net profit jumped 38% year on year to S$1 billion.

SCI proposed a final dividend of S$0.08, taking the total dividend for 2023 to S$0.13.

The utility giant continued to build up its renewables portfolio, with its gross renewables capacity rising from 9.8 GW in 2022 to 13.8 GW as of February 2024.

SCI has a target of 25 GW by 2028 as outlined during its Investor Day 2023.

The group expects revenue from its Gas Services division to remain robust for 2024 underpinned by long-term contracts.

Its renewables portfolio should also do well with more greenfield projects commissioned and brownfield acquisitions being progressively completed.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.



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