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3 Rock-Solid Blue-Chips That are Paying More Than Your CPF

·4-min read
3 Rock-Solid Blue-Chips That are Paying More Than Your CPF

Many Singaporeans view the Central Provident Fund (CPF) system as a safe place to park their money.

After all, the CPF Ordinary Account (CPF OA) pays an interest rate of 2.5% and is guaranteed by the Singapore government.

In addition, voluntary contributions to the CPF also enable you to claim tax reliefs to reduce your taxable income.

However, some investors may not be satisfied with the return provided by the CPF OA.

If you are more income-oriented, you’d want to look for investments that pay a dividend yield that is higher than what the CPF OA is providing.

Here are three blue-chip companies that have proven to be resilient in the last 12 months and are also paying a yield above 2.5%.

Singapore Exchange Limited (SGX: S68)

Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.

The group operates a platform for the buying and selling of a wide variety of securities such as shares, bonds and derivatives.

The bourse operator reported a strong set of earnings for its fiscal 2021 half-year ended 31 December 2020 (1H2021).

Revenue increased by 9% year on year to S$521 million while net profit rose by 12% year on year to S$240 million.

SGX’s interim quarterly dividend per share inched up from S$0.075 to S$0.08.

Annualised dividend stands at S$0.32, which translates to a prospective dividend yield of around 3.1% at the last traded share price of S$10.34.

The group has announced several promising business development initiatives this year.

In January, SGX and Temasek announced a joint venture (JV) to advance digital asset infrastructure through smart contracts, ledger and tokenisation technologies.

This JV would go on to partner with Covalent Capital to build a comprehensive digital infrastructure for Asia-Pacific’s fixed income space.

Separately, SGX has also tied up with Trumid and Hillhouse Capital to launch a new Asian bond trading platform.

More recently, SGX announced that it’s working with a consortium of partners that includes DBS Group (SGX: D05), Temasek and Standard Chartered PLC (LON: STAN) to set up a global carbon exchange and marketplace called Climate Impact X.

Keppel DC REIT (SGX: AJBU)

Keppel DC REIT owns a portfolio of 19 data centres spread across eight countries.

As of 31 March 2021, the REIT’s assets under management stands at S$3 billion.

The REIT announced a pleasing set of earnings for its fiscal 2021 first quarter (1Q2021).

Gross revenue rose 10.6% year on year to S$66.7 million while net property income increased by 10% year on year.

Distribution per unit (DPU) jumped by 18.1% year on year to S$0.02462.

When annualised, DPU for 2021 is S$0.09848, giving its shares a prospective dividend yield of 3.8% at the REIT’s last traded share price of S$2.57.

The REIT has room to gear up for acquisitions as its aggregate leverage stood at 37.2% as of 31 March 2021.

The outlook for data centres remains sanguine with enterprise spending on cloud infrastructure expected to grow at an annual rate of more than 20% through 2025.

Singapore Technologies Engineering Ltd (SGX: S63)

Singapore Technologies Engineering Ltd, or STE, is a technology, defence and engineering group that serves customers in more than 100 countries.

The group recently announced a new organisation structure that streamlines its previous four business divisions into two main, core divisions, namely Commercial, and Defence and Public Security.

STE announced an annual dividend of S$0.15 for its fiscal year 2020, similar to what was paid out in 2019.

The trailing 12-month dividend yield is around 3.9% at STE’s share price of S$3.87.

The group’s recent 1Q2021 business update demonstrated healthy business momentum.

Over S$1.55 billion worth of contracts were secured during the quarter.

With the clinching of these contracts, STE’s order book remains robust at S$15.7 billion as of 31 March 2021.

The group’s urban solutions segment is also positioned for strong growth as smart cities grow in importance.

Smart mobility solutions have already been implemented in 48 cities worldwide, underscoring the growing demand for such technology.

STE continues to explore new, innovative technologies such as software-defined network services to drive its next lap of growth.

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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited, DBS Group and Keppel DC REIT.

The post 3 Rock-Solid Blue-Chips That are Paying More Than Your CPF appeared first on The Smart Investor.

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