4 Singapore Stocks For Your Retirement Portfolio
Planning for one’s retirement can be a major challenge, as there are so many aspects to take care of. Aside from setting aside enough savings as a buffer against financial calamities or family emergencies, it’s also important to build up a strong and resilient investment portfolio that can provide both steady growth and a stream of passive income.
This is where proper due diligence plays a key role in determining which companies investors include in their retirement portfolios. Necessary characteristics include a great track record of handling crises and emerging unscathed, along with a history of growing dividends.
So, here are four well-run companies that deserve a place in investors’ retirement portfolios.
1. Venture Corporation Limited
Venture Corporation Limited (SGX: V03) is a leading global provider of technology solutions, products and services with capabilities spanning market research, design and development. The group has more than 30 subsidiaries and employs 12,000 people worldwide.
Venture is one of the largest players in the electronic contract manufacturing space and is a leading original equipment manufacturer (OEM) for many multinational clients. The group has a long track record of growth and has survived through many downturns in its history, having being listed 27 years ago in 1992.
Its Q2 2019 earnings report showed a year-on-year fall in both revenue and profit but H1 2019 still saw slight year-on-year revenue growth and flat net profit. Venture’s free cash flow for H1 2019 soared significantly higher, though, to S$194 million from just S$77 million during the same period last year, and the group also declared an unchanged interim dividend of 20 Singapore cents. At the last closing price of S$14.98, Venture offers an enticing dividend yield of 4.7%.
2. Singapore Exchange Limited
Singapore Exchange Limited (SGX: S68), or SGX, is Singapore’s sole stock exchange and offers a trading platform for the purchase and sale of securities such as equities, fixed income and derivatives. The group also offers trading, listing, settlement and clearing services.
SGX operates in a natural monopoly as it is the only stock exchange in Singapore, and this provides it with a strong competitive moat. Moreover, the group’s recent full-year 2019 earnings showed a stellar set of numbers, with revenue at its highest since SGX’s initial public offering (IPO) in 2000 and net profit at an 11-year high. Management has done a great job in moving SGX away from being purely an equities platform and into a multi-asset stock exchange.
The shares pay a quarterly dividend of 7.5 Singapore cents and offer a historical dividend yield of around 3.6%.
3. OCBC Bank
Overseas-Chinese Banking Corporation Limited (SGX: O39), or OCBC, is one of Singapore’s three largest banks. The group offers a comprehensive range of banking services and is the second-largest financial services groups by assets. OCBC’s key markets are Singapore, Malaysia, Indonesia and Greater China, and the bank has more than 570 branches in 19 countries and regions.
OCBC has a dominant position in Singapore’s banking industry and also a long history and track record, being formed in 1932 from the merger of three local banks. In its recent H1 2019 earnings, the bank reported record second quarter and first-half profits, driven by earnings growth across the bank’s banking and insurance business. The bank’s loan book grew by 4% year-on-year and net interest margin expanded by 12 basis points.
The bank also hiked its interim dividend by 25% from 20 to 25 Singapore cents, and the bank’s trailing dividend yield now stands at 4.5%. As the bank continues to perform well, investors can look forward to higher profits over time, along with more dividend increases.
4. Mapletree Industrial Trust
Mapletree Industrial Trust (SGX: ME8U), or MIT, is a REIT that invests in industrial properties. Its portfolio comprises 87 industrial properties in Singapore and 14 data centres in the United States. The REIT had total assets under management of around S$4.8 billion as of 30 June 2019.
Source: Mapletree Industrial Trust investor presentation
The chart above shows how distribution per unit (DPU) for the REIT has consistently increased over the years, including the most recent Q1 2019/2020. With a strong sponsor in Mapletree Investments Pte Ltd and high occupancy rates of 90.8%, the REIT offers both stability and safety. With a redevelopment project coming up in the Kolam Ayer precinct, investors can look forward to higher DPU in the years ahead. The units currently offer a 5.4% distribution yield that is paid quarterly.