It’s been a wild year for 2020 because of the pandemic crisis. Financial markets were going up and down furiously, keeping everyone on their toes.
It’s not an easy year for many investors.
Anyway, today, we’re looking at some solid, stable Singapore companies which you can consider for your retirement portfolio in the midst of this pandemic.
Ascendas Real Estate Investment Trust (Ticker: A17U.SI)
Ascendas Real Estate Investment Trust needs little introduction. This Singapore REIT owns and manages one of the largest portfolios of industrial and business park buildings.
Today, it owns 200 properties across Singapore, Australia, UK and the US.
Now Ascendas has a strong strategy.
It knows many developed countries are growing their information technology, finance and biomedical research. And it sets out to capture all these companies as tenants.
Its recent share raising is funding 2 major office properties in San Francisco, where both tenants are one of the biggest internet companies around — Stripe and Pinterest.
In Singapore, some of its key tenants include Citibank, J.P. Morgan Chase, Singapore Telecommunications and A*STAR Research.
And all of its tenants take up less than 5% of its gross revenues. Which means, if one of them decides to leave, Ascendas can simply find another tenant to fill their spot without worrying about a huge loss in rental income.
Its recent 1H2020 financial results have been steady. Gross revenues hit SGD521 million, up 14.6% from SGD455 million. Its total amount available for distribution grew by 3.7% to SGD263 million.
So far, it has rewarded its unitholders well. Ascendas’ dividends per share grew from SGD2.73 cents in FY2003 to 11.49 cents per unit in FY2019.
Now, the biggest concern for Ascendas are tenants in the F&B sector. You see, many of them are small businesses which have been affected by the pandemic crisis this year. And that caused Ascendas to lower their rents to retain these tenants.
But so far, Ascendas has managed their rental income well, given its steady financial results.
If you’re a dividend investor looking to grow your wealth in retirement, Ascendas REIT might be a candidate for you.
Singapore Exchange (Ticker:S68.SI)
The Singapore Exchange dominates the financial exchange in the island city.
It offers a full suite of services including company listing, trading, settlement and clearing of stocks, bonds and derivatives.
Every time someone buys or sells stocks, bonds or derivatives on its platform, it makes a small fee.
Every time a company wants to put itself on the stock market, the Singapore Exchange makes a small fee.
And it all adds up. Its latest financial results ending Jun 2020, Singapore Exchange sales grew 16%, hitting SGD1.05 billion, while net earnings grew 21%, hitting SGD472 million.
Its “cash equities” business saw higher trading volume, and more people are getting onto the stock market. New retail Central Depository Accounts (CDP) grew 35% year on year. You need to open a Central Depository Account to buy and sell Singapore related securities.
Now, the best part about Singapore Exchange is it needs little investment to maintain its business. In fact, most of its capital reinvestment goes into upgrading its IT infrastructure and making sure it has the latest technology to run its operations.
I’d say this is a “capital-efficient” business.
That’s why, you see, Singapore Exchange generates very strong free cash flow (FCF). Its FCF grew massively from SGD294 million in FY 10/11 to SGD590 million in FY 19/20.
So far, the Singapore Exchange has rewarded its shareholders well. It grew its dividends per share from 5.5 cents per share in FY 00/01 to 30.5 cents per share in FY 19/20.
The biggest risk for Singapore Exchange is the lack of homegrown, high-quality Singapore companies listing on its exchange.
Of course, management tries to make this up by attracting foreign companies.
Today, it has about 40% of its listed companies and more than 80% of its listed bonds coming outside of Singapore. And this makes Singapore Exchange one of Asia’s most global and connected financial exchanges.
Sometimes, investing can be simple.
DBS Group (Ticker: D05.SI)
You’d say DBS Group dominates the banking industry in Singapore.
DBS, like any other banks, does many things. From underwriting public share offerings to trading to lending money and managing wealth for the rich. Most banks focus on a few key areas. But DBS is the top in Singapore in nearly every category.
So far, in its latest financial results, DBS collected about SGD4.7 billion of lending fees, and SGD1.5 billion of service-related fees, which includes brokerage, investment banking and transaction services.
For customers’ deposits, it ranks top with SGD447 billion. This is on the back of its well-established banking franchise in the eyes of consumers.
You see, DBS is not only Singapore’s largest bank, but it’s also a very profitable one.
One way to measure this is by using the return on equity (ROE). Simply put, it calculates how much money a bank makes from the equity its shareholders put in to give the bank capital. If you look at DBS, its ROE has averaged around 11% between 2010 to 2019.
So far, DBS has been heading in the right direction. Considering Singapore has a growing wealth hub, the Bank is increasingly putting resources to grow its wealth management segment. A third of its income is coming from wealth management. Today, its wealth management business is one of the largest in Asia, with at least SGD245 billion of assets under management.
As such, it’s able to reward its shareholders well. So far, it grew its dividends per share from 28 cents in 2010 to SGD1.50 per share in 2019.
Given Singapore’s status as one of Asia’s global financial hubs, DBS is well-positioned to continue growing with the economy.
There you have it, if you want to grow your wealth safely in retirement, perhaps these 3 dividend stocks can help you achieve that.
Sometimes, investing can be simple.