It’s always good to be prepared for investment opportunities.
Keeping cash handy and staying updated on the latest business developments can help you to decide on whether to pull the trigger.
Of course, falling share prices also help as lower valuations increase the margin of safety, all else being equal.
With Prime Minister Lee Hsien Loong warning of a possible recession in the next two years, there may be plenty of chances to buy stocks more cheaply.
You can position yourself to invest in strong, blue-chip businesses that can withstand any downturn that comes along.
Here are three that are ripe for the picking should the stock market suddenly crash tomorrow.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns a portfolio of 21 data centres spread across nine countries.
The portfolio was worth around S$3.5 billion as of 31 March 2022.
The REIT reported a mixed set of results for its fiscal 2022 first quarter (1Q2022).
Gross revenue slid by 0.9% year on year to S$66.1 million while net property income dipped by 1.4% year on year to S$60.1 million.
Distribution per unit (DPU), however, rose 0.2% year on year to S$0.02466.
Based on the annualised DPU of S$0.09864, Keppel DC REIT’s units offer a forward distribution yield of around 5.1%.
The REIT had also completed a couple of acquisitions last year, including an investment in the bonds and preference shares of M1 and the purchase of a second data centre in London.
These yield-accretive acquisitions should boost DPU for this year.
Investors also need not worry about the effects of rising electricity costs as the REIT can pass these costs through to its clients.
DBS Group (SGX: D05)
As Singapore’s largest bank, DBS needs no introduction.
The lender has been a bastion of stability throughout the pandemic and reported a record-high net profit of S$6.8 billion for its fiscal 2021 (FY2021).
The momentum has carried on into 1Q2022, with the bank reporting a rebound in net interest margins along with a robust loan book.
An interim quarterly dividend of S$0.36 was paid out, translating to a forward dividend yield of 4.7%.
The bank has several things going for it, other than being a rock-solid business that pays out consistent dividends.
First off, rising interest rates are a boon for the bank as its net interest margin and net interest income (NII) will receive a boost.
DBS estimates that it will see a S$1.9 billion uplift in its NII for every percentage point increase in interest rates.
The bank is also firing on many cylinders with new initiatives such as Climate Impact X, a carbon credits platform, and a new digital exchange.
Acquisitions such as the purchase of Citibank Taiwan and Lakshmi Vilas Bank in India will also help to expand its franchise.
All in all, these moves are poised to add around S$1.2 billion to its revenue and S$500 million to net profit by 2024.
CapitaLand Investment Limited (SGX: 9CI)
CapitaLand Investment Limited, or CLI, is a global real estate investment manager with S$122.9 billion of real estate under management and S$86.2 billion of funds under management as of 31 December 2021.
CLI is a spin-off from CapitaLand Limited in a corporate exercise last year that saw the latter’s development arm privatised.
The group’s 1Q2022 business update showed its resilience as it grew its fee income-related business by 17% year on year to S$262 million.
Its real estate investment business saw revenue jump 28% year on year.
CLI also continued to grow its lodging management division, adding 11,000 units year on year while enjoying a revenue per available unit (RevPAU) uplift of 34% year on year from improving conditions.
Its annual divestment target of S$3 billion was already more than half achieved by 1Q2022, and the group is active in recycling its capital into higher-yielding assets and investments.
The business outlook remains sanguine and there is a high chance of a dividend boost from the property giant for this year should its business continue to do well.
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Disclaimer: Royston Yang owns shares of DBS Group and Keppel DC REIT.
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