6 blue-chip stocks for investors to buy in Singapore
So, perhaps you’ve seen the movie Wall Street and walked away in total awe of Gordon Gekko. You’re all psyched up to be a stockbroker yourself. You probably went home and did a quick search on how to start trading and came across the term “blue-chip stocks”.
What exactly is a blue-chip stock?
The origin of its name comes from poker. Yes, that’s right, the card game. Blue chips have the highest value in the pool.
Blue-chip stocks are stocks of large, well-established and financially-sound companies that tend to come with a long-standing history and are typically at the top of their respective industries.
So if you’re a young investor thinking of pumping some of your hard earned money into stocks, blue chips are definitely something worth considering.
Which blue-chip stocks do I invest in?
While there is no hard and fast rule as to which stocks you should be investing in, shortlisting companies that have exhibited good performances on a consistent basis for an extended period of time, is probably a good place to start.
You should then try to get your hands on as much information as possible to find out about the future plans of the company; are they planning to enter into a new risky venture? What is their gameplan to deal with a close competitor? Is there a succession issue now that the CEO is panning to retire? There are a myriad of things for you to keep an eye on.
It is also highly beneficial to develop an interest in the overall industry that the company operates in, to keep up-to-date with events on a macro level that might affect the company's earning potential.
Here are some of the best-performing blue-chip stocks in Singapore:
1. Hutchison Port Holding Trusts
They offer the highest yield percentage at a staggering 8.2%. According to SGX.com, Hutchison Port Holding Trusts predominantly invests in, develops, operates, and manages deep-water container ports in Guangdong Province of the People’s Republic of China, as well as in Hong Kong and Macau.
The company was incorporated in 2011 and is based in Singapore. Hutchison Port Holdings Trust reported unaudited consolidated earnings results for the second quarter ended and six months June 30, 2016. For the quarter, the company reported revenue and other income of HKD2,937.8 million (S$514.4 million) against HKD3,127.9 million a year ago.
Hutchison Port Holdings expects to open a second container terminal in Pakistan by October, increasing its container handling capacity and allowing it to compete with other shipment hubs in the region.
2. Yangzijiang Shipbuilding (Holdings) Ltd.
Yangzijiang Shipbuilding (Holdings) Ltd. is an investment holding company. It provides agency services for ship building and related activities. As of August, it provided a yield percentage of 5.7%.
According to SGX.com, Yangzijiang Shipbuilding (Holdings) Ltd. announced unaudited group earnings results for the second quarter reporting a net profit attributable to equity holders of the company of RMB415,400,000 (S$84.5 million) or 10.84 cents per diluted share.
3. Keppel Corporation Limited
Keppel provided a yield percentage of 5.6%. It is an investment holding company, which primarily engages in the offshore and marine, property, infrastructure, and investments businesses.
According to SGX. com Keppel Corporation reported earnings results for the first half of 2016. For the period, the company reported revenue of S$3,368 million compared to S$5,377 million a year ago.
4. CapitaLand Commercial Trust
With a similar yield of 5.6% to Keppel, CapitaLand is a decent blue-chip stock to invest in too. The real estate investment trust giant owns and invests in the real estate markets of Singapore.
CapitaLand Commercial Trust reported unaudited earnings results for the second quarter and six months ended June 30, 2016. For the quarter, the trust reported gross revenue of S$67.57 million against S$69.11 million a year ago. Net property income was S$51.45 million against S$53.86 million a year ago.
5. Starhub Ltd
Telecommunication services giant StarHub Ltd offered a yield percentage of 5.4% as of August 28 2016. StarHub reported unaudited consolidated earnings results for the second quarter and six months ended June 30, 2016. For the quarter, total revenue was S$585.7 million against S$589.5 million a year ago.
StarHub has recently introduced a 2-in-1 pack dubbed 'SurfHub'. Customers who activate the SurfHub offer will receive a bundle of two StarHub services, a 4G mobile postpaid line with at least 12GB of data and 1 gbps fibre home broadband subscription, for a starting price of S$96.56 per month as was reported on SGX.com.
6. CapitaMall Trust
The final pick is CapitaMall Trust (CMT) which is a publicly owned real estate investment arm of CapitaLand Ltd. The firm invests in income producing retail properties and provided for a yield percentage of 5.1%.
CMT is reported to have increased the net lettable retail area of Funan Digital Life Mall by 8.7% to 324,000 square feet from 298,000 square feet previously as part of the property’s redevelopment
The way of the Gekko
The realm of stock investment is undoubtedly one which is clouded in a constant fog of uncertainty and layered with pitfalls at every corner.
Even when investing in blue-chip stocks, nothing is ever 100% risk-free, so you should never take things for granted and do your homework before parting with your hard-earned money.
That being said, as Mr. Gekko would surely agree, with uncertainty and risk comes opportunity.
**(Publisher’s Caveat) The views of the writer are that of his own, based on facts published on SGX.com, and should not be construed as investment advice in any form or manner.