3 blue chip stocks you can count on during a recession
Blue chip companies are considered by many to be robust companies with excellent track records.
By including some of these stocks in your investment portfolio, you can be assured of a good night’s sleep.
Not only are blue chip stocks better equipped to handle economic cycles, they are also more likely to survive a downturn.
This becomes all the more important as Singapore faces a possible recession in the next couple of years.
Previously, we’ve highlighted three top stocks you can consider for your stock market crash watchlist.
Here are three more that might fit your wallet if you want to weather a recession unscathed.
OCBC Ltd (SGX: O39)
OCBC needs no introduction, being one of the big three banks in Singapore.
The lender impressed by reporting a 35% year-on-year increase in net profit to S$4.86 billion for its financial year 2021 (FY2021).
The bank’s diverse franchise has not only helped it hedge against economic challenges, but has also allowed it to deftly navigate business volatility.
For the first quarter of its fiscal year 2022 (1Q2022), OCBC’s net interest income increased 4% year-on-year and its loan portfolio also increased 8% year-on-year.
Strong figures for fee income, along with growth in its wealth management and insurance businesses, indicate resilience on the lender’s part.
Rising interest rates could represent more benefits for OCBC in the coming quarters.
The bank has forecast that its net interest income (NII) could increase by almost S$700 million, or about 12% of its NII for the financial year 2021 if interest rates rise by one percentage point. complete.
OCBC also paid a dividend for the 2021 financial year of S$0.53, and its shares offer a dividend yield of 4.5%.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT that owns 143 properties valued at S$8.8 billion as of March 31, 2022.
The REIT’s assets under management (AUM) are roughly evenly split between the US and Singapore, with data centers accounting for just over half of the total portfolio.
The REIT’s sponsor is Mapletree Investments Pte Ltd, a unit of Temasek Holdings, and owns 25.8% of MIT.
MIT has withstood economic cycles over the years but still managed to quadruple its assets under management from S$2.2 billion in FY11 (FY2011) to S$8.8 billion. current Singapore dollars.
For its FY2022 earnings (FY2022) for the year ended March 31, 2022, the REIT recorded a 36.4% year-on-year increase in gross revenue to S$610.1 million.
Net property income increased 34.5% year-on-year to S$472 million, while payout per unit increased 10% year-on-year to S$0.138.
Investors buying shares of MIT are expected to receive a historical distribution yield of 5.6%.
The REIT has several growth avenues to increase its DPU.
It is currently redeveloping the Kolam Ayer 2 cluster at a project cost of S$300 million, with completion expected by the first half of next year.
MIT also has a right of first refusal with its sponsor on the sale of a 50% stake in Mapletree Rosewood Data Center Trust.
Singapore Stock Exchange Limited (SGX: S68)
Being Singapore’s sole stock exchange operator, Singapore Exchange Limited, or SGX, enjoys a natural monopoly.
The stock trader provides a platform for trading securities such as stocks, bonds and derivatives.
Investors can be sure that SGX will continue to enjoy healthy trading volumes even in a downturn as the group transforms into a multi-asset exchange.
Recently, the group cleared the listing of three Special Purpose Acquisition Companies, or SPACs, to broaden the range of investment choices for investors and spur higher trading volumes.
SGX also has an excellent dividend payout record, paying out consistent dividends to shareholders since fiscal 2001 (fiscal 2001).
From fiscal 2021, the group will pay S$0.08 per quarter, for a total of S$0.32 per fiscal year, giving its shares a rolling dividend yield of 3.3%.
Its recent report on market statistics for the month of April shows record trading volume for derivatives as macroeconomic uncertainty persists with the outbreak of the Russian-Ukrainian war.
The increase in volume shows that traders and portfolio managers will use SGX’s wide range of products and solutions in times of uncertainty, ensuring that trading volumes will remain healthy in good times and bad.
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Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust and Singapore Exchange Limited.