3 Blue-Chip Companies with Attractive Dividend Yields

Royston Yang
·4-min read
3 Blue-Chip Companies with Attractive Dividend Yields
3 Blue-Chip Companies with Attractive Dividend Yields

Blue-chip companies evoke images of stability and strength.

This is not surprising as the term “blue-chip” refers to a business that has grown over many years to become what it is today.

It’s no wonder, then, that blue-chip companies are highly sought after by investors.

I would add that it’s a bonus if a great blue-chip company also pays out dividends.

As COVID-19 is now ravaging the economy, dividends can also help to augment your cash flow while we wait for a recovery.

Here are three blue-chip companies with attractive dividend yields that you should add to your watchlist.

Singapore Exchange Limited (SGX: S68)

Singapore Exchange Limited, or SGX, is a multi-asset exchange that also functions as Singapore’s sole stock exchange.

SGX offers a wide range of securities on its platform, including equities, fixed income and derivatives.

The bourse operator also offers listing, settlement and clearing services to augment its platform.

SGX had reported a sparkling set of earnings for its full fiscal year ended 30 June 2020.

Revenue was up 16% year on year to a record high of S$1.05 billion.

Net profit jumped 21% year on year to S$472 million, driven by growth across all the group’s business units.

During the fiscal year, SGX expanded its product range and expanded its platform’s capabilities, drawing in a wider group of new customers.

The group also acquired Scientific Beta and BidFX to expand its range of services for clients.

Looking ahead, CEO Loh promises that SGX will have a new and expanded suite of derivative products well ahead of the expiry of its partnership with MSCI on non-Singapore product licences.

SGX bumped up its final dividend to S$0.08 and will be paying an annual dividend of S$0.32 in the new fiscal year.

At the last traded share price of S$8.64, SGX is offering a dividend yield of 3.7%.

Singapore Technologies Engineering Ltd (SGX: S63)

Singapore Technologies Engineering, or STE, is a global technology, defence and engineering group employing around 23,000 people.

The group has four key divisions – aerospace, electronics, land systems and marine.

For the fiscal year 2019, STE reported a 17% year on year jump in revenue to S$7.9 billion, while net profit attributable to shareholders also increased by 17% year on year.

The engineering giant declared a final dividend of S$0.10, taking the total dividend for the year to S$0.15.

At the last traded share price of S$3.22, the shares provide a trailing 12-month dividend yield of 4.7%.

In a business update for the first quarter of 2020, STE touted its diverse revenue streams that help to cushion the negative impact from COVID-19.

The group’s aerospace and electronics divisions also secured S$1.6 billion of new contracts in the first quarter, underscoring the defensive nature of the business.

Venture Corporation Ltd (SGX: V03)

Venture is a provider of technology products, solutions and services with a range of capabilities across product refurbishment and technical support.

The group manages a portfolio of more than 5,000 products and solutions and employs over 12,000 people worldwide.

Venture released its first-half fiscal year 2020 earnings report on Friday.

It was not a pretty picture, as revenue fell 25% year on year to S$1.4 billion.

Net profit after tax declined 28% year on year to S$130.6 million.

The main cause of the poor performance was disruptions to the global supply chain and factory lockdowns in countries such as Malaysia, Spain, US and China due to COVID-19.

Orders from customers in non-essential segments were delayed to later quarters.

However, the group sounded a note of optimism about prospects for the second half of 2020 as a steady recovery has been witnessed.

Venture’s research and development laboratories also have plans to release a number of newly-developed products into manufacturing in early 2021 to drive revenues.

Although net profit fell, free cash flow remained strong at S$265.7 million for the first half.

The group upped its interim dividend from S$0.20 last year to S$0.25.

Together with last year’s final dividend of S$0.50, the trailing 12-month dividend stands at S$0.75.

Venture’s dividend yield was around 4% based on its last traded share price of S$18.84.

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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited.

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