We look at the share price performance of three Singapore blue-chip companies that have a track record of paying out consistent dividends to shareholders.
Stock markets have been volatile this year as the US Federal Reserve continues its rate-hiking policy to combat inflation.
With all the turmoil, it is understandable for investors to seek stability and certainty as they navigate the choppy economic waters.
Here is where blue-chip stocks play a pivotal role in helping to anchor an investment portfolio.
Blue-chip stocks are well known for their strong brand franchise, long operating track record and resilience through good times and bad.
With such attributes, they act as the reliable bedrock of a sturdy portfolio built to withstand external shocks and surprises.
What’s more, most blue-chip stocks also pay out a dividend.
This flow of passive income will bring a smile to your face as you hunker down and wait for the economic storm to pass.
Here are three reliable blue-chip stocks that have paid out consistent dividends over the years.
#1 – Singapore Technologies Engineering (SGX: S63)
Singapore Technologies Engineering, or STE, is an engineering, technology, and defence group with businesses that cover the smart city, aerospace, defence, and public security sectors.
The group serves customers in more than 100 countries and has operations spanning four continents.
The business reported a respectable set of earnings for the first half of 2023 (1H 2023).
Revenue grew 13.9% year on year to S$4.9 billion while operating profit jumped 16.8% year on year to S$420.8 million.
Net profit inched up 0.2% year on year to S$280.6 million but this number was muddied by one-off expenses.
Stripping out these expenses, the net profit for STE would have climbed 30% year on year to S$300 million.
With the higher profit, STE's share price has gone up by 12% year-to-date as of 14 November 2023.
The engineering giant has a long history of dividend payments.
This annual dividend was increased to S$0.16 in 2022 and STE started paying out S$0.04 every quarter and is still doing so for 1H 2023.
Looking at its order book, STE snagged a total of around S$9.5 billion in new contracts for 1H 2023, with S$4.7 billion coming from the second quarter.
Of the S$4.7 billion, the bulk (S$2.3 billion) was for its Commercial Aerospace division with another S$1.9 billion for its Defence & Public Security division.
The remainder went to its Urban Solutions & Satcom (Satellite Communication) division.
As of 30 June 2023, STE’s order book stood at a record high of S$27.7 billion, up 20% from S$23 billion just six months ago.
S$4.4 billion of this order book will be delivered in the remaining months of 2023.
#2 – Venture Corporation Limited (SGX: V03)
Venture Corporation was formed from the amalgamation of three companies in 1989.
The technology product, services and solutions group employs 12,000 employees and is well-versed in technology domains such as life science, genomics, medical devices, healthcare, luxury lifestyle, and others.
Venture is reeling from the current cyclical semiconductor downturn that has affected all related players within the industry.
For 1H 2023, revenue fell by 12% year on year to S$1.6 billion while net profit tumbled 20% year on year to S$140 million.
As a result of the decline in profit, Venture's share price has fallen by 26% year-to-date to reach $12.69 as of 14 November 2023
Despite the lower profit, the technology group maintained its interim dividend of S$0.25 per share.
Venture is also a dividend stalwart.
From 2018 to 2019, it paid out an annual dividend of S$0.70 per share but increased it to S$0.75 in 2020 where it has stayed for the past three years.
Looking ahead, Venture intends to work with its customers and partners who intend to shift their production out of Southeast Asia.
It also reported success in new customer acquisitions and new product introductions and plans to scale the business in these two ways.
#3 – Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
Being Singapore’s sole bourse operator gives the group a strong market position that has seen it generate high margins and return on equity (ROE).
For its recent fiscal 2023 (FY2023) ending 30 June 2023, SGX reported an 8.7% year on year rise in revenue to S$1.2 billion.
Net profit surged 26.5% year on year to S$570.9 million but included one-off and non-recurring items.
Excluding these, net profit would still have climbed 10.3% year on year to S$503.2 million.
For FY2023, the adjusted net profit margin came in at 42.1%, up slightly from 41.5% a year ago.
ROE stood at an impressive 33.6%, demonstrating that SGX operates a solid, high-quality and high-return business.
It is hence not a surprise that SGX's share price has gone up by 9% year-to-date, to close at S$9.70 on 14 November 2023.
When it comes to dividends, SGX has been a bastion of certainty.
The bourse operator has been dishing out an annual dividend since FY2001 and has a track record of paying dividends for more than two decades.
Since FY2018, SGX has paid a yearly dividend of S$0.30 but increased this to S$0.32 in FY2021 and FY2022 despite the onset of the pandemic.
For FY2023, SGX further raised its annual dividend to S$0.325 when it raised its quarterly dividend would increase from S$0.08 to S$0.085 in the fourth quarter.
What would Beansprout do?
If you are an investor who values certainty and safety, blue-chip stocks should be in your investment portfolio.
STE, Venture and SGX have decades of operating history, and demonstrated an ability to overcome past economic crises.
More importantly, they have a track record of providing a reliable stream of dividend income in the past.
As such, we would add these names to our watchlist for a dividend portfolio.
You can learn more about these Singapore blue chip companies paying out a consistent dividend here:
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