These Blue-Chip Stocks You Can Rely On During a Recession
Blue-chip companiesare considered by many to be robust businesses with great track records.
By including some of these stocks in your investment portfolio, you can be confident of a good night’s sleep.
Not only are blue-chip stocks better equipped to handle economic cycles, but they are also more likely to survive a downturn.
This becomes all the more important as Singapore faces a possiblerecessionin the next two years.
Previously, wehighlightedthree blue-chip stocks that you can consider for your watchlist should there be a market crash.
Here are another three that may be suitable for your portfolio if you want to tide through a recession unscathed.
OCBC Ltd (SGX: O39)
OCBC$OVERSEA-CHINESE BANKING CORP(O39.SI)$ needs no introduction, being one of Singapore’s three big banks.
The lender impressed byreportinga 35% year on year jump in net profit to S$4.86 billion for its fiscal 2021 (FY2021).
The bank’s diversified franchise not only helped it to cushion against economic challenges but also allowed it to deftly navigate business volatility.
For its fiscal 2022’s first quarter (1Q2022), OCBC’s net interest income increased by 4% year on year and its loan book also grew 8% year on year.
The strong fee income numbers, along with growth in its wealth management and insurance arms, point to resilience on the lender’s part.
Rising interest ratesmay represent more upside for OCBC in the coming quarters.
The bank has projected that its net interest income (NII) could rise by close to S$700 million, or around 12% of its FY2021 NII if interest rates rise by a full percentage point.
OCBC also paid out an FY2021dividendof S$0.53, and its shares provide a dividend yield of 4.5%.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT$MAPLETREE INDUSTRIAL TRUST(ME8U.SI)$ , is an industrial REIT that owns 143 properties valued at S$8.8 billion as of 31 March 2022.
The REIT’s assets under management (AUM) are roughly equally split between the US and Singapore with data centres make up slightly more than half of the total portfolio.
The REIT’s sponsor is Mapletree Investments Pte Ltd, a unit ofTemasek Holdings, and owns 25.8% of MIT.
MIT has weathered economic cycles over the years but still managed to quadruple its AUM from S$2.2 billion back in fiscal 2011 (FY2011) to the current S$8.8 billion.
For its fiscal 2022 (FY2022) earnings for the year ended 31 March 2022, the REIT reported a 36.4% year on year jump in gross revenue to S$610.1 million.
Net property income climbed 34.5% year on year to S$472 million while distribution per unit increased 10% year on year to S$0.138.
Investors who purchase units of MIT stand to receive a historical distribution yield of 5.6%.
The REIT has several growth avenues to raise its DPU.
It is currently redeveloping the Kolam Ayer 2 cluster at a project cost of S$300 million, with expected completion by the first half of next year.
MIT also has a right-of-first-refusal with its sponsor over the sale of a 50% interest in Mapletree Rosewood Data Centre Trust.
Singapore Exchange Limited (SGX: S68)
Being Singapore$SINGAPORE EXCHANGE LIMITED(S68.SI)$ ’s sole stock exchange operator, Singapore Exchange Limited, or SGX, enjoys a natural monopoly.
The bourse operator provides a platform for the trading of securities such as equities, bonds and derivatives.
Investors can feel confident that SGX will continue to enjoy healthy trading volumes even during a downturn as the group is morphing into amulti-asset exchange.
Recently, the group had allowed the listing of threespecial purpose acquisition companies, or SPACs, to broaden the range of investment choices for investors and to spur higher trading volumes.
SGX also boasts a great track record of dividend payments, doling out consistent dividends to shareholders since fiscal 2001 (FY2001).
From FY2021 onwards, the group will pay out S$0.08 per quarter, totalling S$0.32 per fiscal year, giving its shares a trailing dividend yield of 3.3%.
Its recent market statistics report for April shows record trading volume for derivatives as macroeconomic uncertainty persisted with the outbreak of theRussia-Ukraine war.
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