These 3 top-rated stocks are perfect for your CPF, Money News investment account
Every Singaporean’s CPF (OA) ordinary account offers 2.5% interest which is relatively risk-free. It’s awesome. However, the 2.5 percent interest can barely cover inflation that ranges from 2 to 3 percent.
Fortunately, CPF OA allows you to open a CPF (IA) investment account with which you can invest in stocks to grow your wealth.
Here are three top-notch actions that are perfect for your AI CPF.
1. DBS GROUP HOLDINGS LTD
DBS Group no longer needs to be introduced. As Singapore’s largest bank, the group offers a wide and comprehensive range of personal and business banking services.
Under the able leadership of CEO Puyish Gupta, the bank has recorded steadily increasing income and net profit.
DBS’s full-year 2019 net profit increased 14% year-on-year to a new record high of $ 6.39 billion, while the bank’s return on equity increased from 12, 1% to a record 13.2%.
The bank increased its quarterly dividend from $ 0.30 to $ 0.33, and the annual dividend now stands at $ 1.32 per share. This equates to a 5.3% dividend yield at DBS’s closing price of $ 25.10, more than double the 2.5% interest rate of CPF OA.
2. SINGAPORE EXCHANGE LIMITED
Singapore Exchange, or SGX, is Singapore’s only stock exchange operator and operates a platform for buying and selling securities such as stocks (stocks), fixed income securities (bonds), and derivatives.
The brokerage firm reported a strong set of earnings in the first half of 2020 (it has a June 30 year-end), with operating income up 11% year-on-year to $ 478.5 million and net profit up 14% year-on-year. year to $ 213.3 million.
The group generates constant and reliable free cash flow and has, over the years, undertaken acquisitions to strengthen its various capacities.
Recent market statistics released by SGX for January 2020 show that there has always been widespread growth in trading activity across the group’s wide range of assets, including spot stocks, equity derivatives and foreign exchange contracts.
SGX pays a quarterly dividend of $ 0.075, for an annual dividend of $ 0.30 per share. At the closing price of $ 9.26, the group’s shares offer a 12-month dividend yield of 3.2 percent.
3. SATS SARL
SATS is a leading provider of airline catering and ground handling services. The group also operates central kitchens which offer a wide range of food products to customers such as Haidilao.
The group reported disappointing results, with net profit for the first nine months of fiscal 2020 (the group has a year-end on March 31) down 12% year-on-year, although revenue increased by 11.2%. from year to year.
This is explained by the integration of Ground Team Red, a new subsidiary acquired by SATS, as well as by the increase in expenses related to personnel costs and depreciation.
The recent Covid 19 outbreak has also clouded the group’s short-term outlook, as SATS is sensitive to air travel and tourism. However, the long-term outlook for SATS should remain optimistic. The group has pledged to spend $ 1 billion on mergers and acquisitions to strengthen its market share in key markets in its three main segments.
The group paid an annual dividend of $ 0.19 per share ($ 0.06 interim and $ 0.13 final) for fiscal 2019.
Due to Covid 19, SATS could reduce its dividend to cope with the drop in net income and cash flows. Even though we assume an annual dividend of $ 0.16, SATS shares still offer a sliding dividend yield of 3.5% at the closing price of $ 4.51.
GET SMART: THE NEED TO INVEST
The CPF scheme was put in place to guarantee Singaporeans a comfortable retirement. With the Singapore government’s Triple-A credit rating, it is almost certain that you can count on the 2.5% interest in your OA to build up your retirement funds.
However, in order to supplement your income and grow your nest egg, you need to consider investing your money. The three stocks above could be a very good starting point for a growth and income oriented portfolio.
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This article first appeared in The smart investor. All content is posted for general information purposes only and does not constitute professional financial advice. Disclaimer: Royston Yang owns shares in SATS Ltd and Singapore Exchange Limited.