Long term investors seek companies that can sustain, or better still, grow their profitability for the foreseeable future.
As a matter of fact, no one can accurately predict the future, same for predicting a company to consistently be profitable over the long term. Therefore average investors might want to limit their investments to those companies that have a more predictable business, or in other words, blue chip stocks.
Now, the conventional wisdom is that blue chip companies are boring investments since they don’t usually grow much given their size. This is true, to a certain extend. Yet, there are some blue chip companies which continued to grow their profitability over time, despite their size.
In this article, we will look at two blue chip companies that more than doubled their profits in the last decade.
DBS Group is a company that needs little introduction. Its financial products and services can be found not only locally in Singapore, but also in overseas. In fact, DBS was already a massive company a decade ago, Yet it’s still managed to grow its profitability in the last ten years.
From 2008 to 2017, DBS’s total income grew by 98%, from S$ 6.0 billion to S$11.9 billion. Not only did the top line grew during that period, but net profit also grew by 132%, from S$ 1.9 billion in 2008 to S$ 4.4 billion in 2017.
What’s more, DBS Group improved its dividend per share from S$0.65 in 2008 to S$ 1.43 in 2017 (including an S$0.50 special dividend). In other words, the dividend was up by 120% or 43% (excluding special dividend) during the period!
The second blue chip company we’ll look at is Thai Beverage Public Company Limited (SGX: Y92).
For those who are new to the company, Thai Beverage with the bulk of its operation in Thailand. It operates in four different segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages.
Thai Beverage did even better than DBS Group in growing its business over the last decade. Here are the growth figures you need to pay attention to:
From 2008 to 2017, Thai Beverage’s revenue grew by 91%, from THB 106.2 billion to THB 203.3 billion. Net profit also grew even more, up by 227%, from THB 10.6 billion in 2008 to THB 34.7 billion in 2017.
From the above, we see that both DBS Group and Thai Beverage continued to grow their profitability over the decade despite their respective size.
In fact, there are other blue chip companies that managed to double their profitability over that period of time. For those who want to know more, click here.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn't own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Holdings Ltd.