Besides relying on your CPF life monthly payouts and/or allowance from your children. Do you know you  can rely on dividend payments?  Dividends are a form of passive income paid out to shareholders of the company. 

Do note that it is wise to invest in stable, bluechip companies with good fundamentals for your twilight years.

Here are 3 stocks for you to consider investing in.

These are three names that I believe

- have a great track record

- will still do well for the foreseeable future.

#1 Ascendas REIT

Ascendas Reit is Singapore’s first and largest listed business space and industrial Real Estate Investment Trust.

It's portfolio is well-diversified across five major segments of the business space and industrial property market.

Ascendas has a strong management team and keeps itself relevant by restructuring its strategies. 

For instance, Ascendas move towards overseas acquisitions could be attributed to slow domestic growth. According to JTC industrial reports, rental for industrial space across all market segment fell 1.5% YoY. In fact, rent has been declining/ remain flattish since 2015.

In 2020, only 1 out of 7 acquisition was in Singapore, a 25% stake in Galaxis. The other 6 acquisition were in USA, Europe and Australia. 

DPU has generally been growing well throughout the years with the exception of 2019. Where it fell from 16.035 in FY18 to 11.490 in FY19

However, it has managed to grow it from 11.490 in FY19  to 14.688 in FY20

Below is a chart to better reflect Ascendas DPU growth. 

Ascendas Reit is a fundamentally stable company with a strong sponsor Capitaland. 

It has a stable portfolio occupancy rate of 91.7% Rental reversion swung from negative 2.3% in 3Q20 to positive 2.5% in 4Q20.

The recovery was supported by strong positive rental reversion of 18.8% for its US portfolio driven by business park properties in Portland.

On a full-year basis, rental reversion was positive at 3.8% in 2020.

Ascendas has leveraged on the low-interest rate climate to raise funds. It also carried out equity raising in Nov 2020 in anticipation of overseas acquisition.

If the acquisitions of overseas properties such as DCs and Offices are accretive, Ascendas will see YoY increase in DPU in years to come. 

Hence, Ascendas is definitely a REIT to consider.

To read more on Ascendas do check out our article "3 things you didn't know about Ascendas reit"

#2 Capitaland

Capitaland is Asia's largest diversified real estate group. It is also the sponsor of 6 listed REITS in Singapore with stakes in them. The parent organization is Temasek Holdings. 

It has 20 properties in Singapore and if you live in Singapore, you surely have been to one. 

Capitaland has shown double digit YoY growth since 2017 from its fund management. It receives a steady dividend income from it's associates, joint ventures and other investments. 2020 it received a record ($403M)

On top of that, the announcement of the restructuring into an asset light business was a major plus

Capitaland will spin off it's investment management arm while it privatises it's development arm. Following this announcement, it's share price jumped 20%

Why being asset-light is desirable?

This is because on average, asset light companies earn a better return on assets. In addition, Capitaland is trading at a discount P/NAV wise, at 1x NAV. This is compared to other REIMs that are trading at 2.6x NAV. 

Hence, being a stable blue chip company with huge growth prospect, this could REIT is a steal today.

#3 DBS Bank

I am sure many will agree DBS bank is the backbone of the Singapore's economy. It is an integral entity for our country to function and it is the most stable company, in my opinion. 

Why? This is because if anything were to happen to it, I am pretty certain the government will step in to help. Besides that, it has an exceptional management team. 

DBS reported a stellar performance in 1Q21 with $2B in net profits. (98.5% QoQ growth)

Singapore is a financial hub serving as a global gateway to Asia. Hence, the banking sector is extremely resilient. 

COVID 19 has caused much disruptions to the economy. However, DBS managed to bounce back even stronger with 72% YoY growth. 

We have also witness DBS loans under moratoriums contracted by 70%. (loans with longer repayment period)

The table below shows the dividends paid out to shareholders

It is evident that dividends have been growing with the exception of 2020 where it decreased by 1.61% 

This was due to the pandemic, where MAS has called on banks to cap their total dividends per share at 60% of FY19 levels for FY20, while offering the scrip dividend option.

However, with the resiliency of the sector evident in the earning reports, MAS is likely to ease it's stance on dividend cap imposed. Singapore banks have preserved sufficient capital, reported by DBS analyst Lim Rui Wen.

Investors can expect higher dividends for FY21. It is forecasted to possibly be a gradual two-stage relaxation on the cap. 

Management of banks have signalled their willingness and ability to commit to higher dividends in FY21, subjected to MAS guidelines.

If  dividends cap were to be removed, we can expect it to return to 2019 levels. DBS dividend yield could be around 5.24% at a share price $28.60.

Closing thoughts

Investing has it's inherent risk and you should invest in a blue chip stock that doesn't have crazy swings. 

Fundamentals of a company such as it's debt ratio, earnings and dividends are some other factors to consider. If a stock promises high dividends of more than 7% it should set off some alarms and do proper research before investing into it.

Click to watch video to know the latest update update ARE BANKS STILL CHEAP?

Last updated on June 9th, 2021 at 04:58 pm

Kasper Toh: Enthusiastic Research Associate and Writer at The Astute Parent!
Related Post