Investing in blue-chip stocks is often regarded as a safer alternative than buying out regular stocks.
For one, these stocks belong to more well-established, financially stable companies with strong market presence. They are characterised as having little to no debt and large market capitalisation. As a result, they are less likely to experience large price market fluctuations amidst economic downturns. This also means they are excellent choices for portfolio diversification because they tend to deliver consistent results and are easy to trade due to their liquidity.
Another not so hidden secret about why blue-chip companies are popular is the dividend payouts. These dividends can provide a steady flow of passive income on top of potential capital appreciation. Taking Oversea-Chinese Banking Corporation (OCBC), one of the top Singaporean blue-chip stocks, as an example — the bank provides an annual dividend of S$0.80 per share (as of 2023). That is about S$800 worth of annual bonus if you own a thousand shares. Compared to non-dividend stocks, investing in blue-chip stocks definitely looks a lot more promising for growing wealth.
Related: Guide to Spotting and Buying Undervalued Stocks
How Blue-Chip Stocks Fit Into One’s Investment Portfolio
How much of your investment portfolio should be allocated to blue-chip stocks depends largely on:
- your portfolio diversification strategy
- investment goals
- risk tolerance
- time horizon
- how much you can afford to invest
Allocating anywhere from 20% to 40% or more of your stock holdings to blue-chip companies may provide more consistent returns. If you are risk averse, going with an 80/20 ratio for the blue-chip and other stocks or asset classes may provide even better peace of mind. This combo may be suitable for those who do not have time to monitor their portfolio on a regular basis.
Essentially, blue-chip stocks play a significant role in shaping a stable and long-term investment portfolio that can withstand market challenges. Of course, there will always be a percentage of risk when it comes to investment, but buying into blue-chips companies is perceived as a safer option.
Related: How to Do a Year-End Assessment of Your Personal Finance Portfolio
5 Singaporean Blue-Chip Stocks To Consider This Year
There are several Singaporean blue-chip stocks that have performed well in 2023 and may continue to present favourable results in 2024. If you are wondering which Singaporean blue-chip stocks to buy for the coming year, here are five that you may want to put on your watchlist.
| Companies | Dividend Yield |
|---|---|
| OCBC (SGX: O39) | 6.30% |
| Keppel Ltd (SGX: BN4) | 4.80% |
| Singapore Telecommunications Ltd (SGX: Z74) | 4.36% |
| Singapore Technologies Engineering (SGX: S63.SI) | 4.28% |
| Singapore Exchange Limited (SGX: S68) | 3.47% |
OCBC (SGX: O39)
OCBC is the second largest bank in Singapore which has a net profit growth of 32% to a new high of S$5.40 billion in the first three quarters of 2023. This is the first time that Group has hit a net profit crossing the S$5 billion mark within nine months, a clear indicator that the bank is on track to achieve the target full-year performance.
Adding to the outstanding performance is the 14.2% growth of annualised Return on Equity (ROE) over the preceding year and annualised earnings per share hitting S$1.59, 32% higher than first three quarters of 2022. OCBC’s 2023 dividend yield is also the highest compared to other local banks like DBS and UOB.
Keppel Ltd (SGX: BN4)
Keppel Ltd is another blue-chip company that reported strong growth for the first three quarters of 2023 with increased activities across fund management and investment platforms to raise S$1 billion in equity and made acquisitions of S$600 million.
The company’s revenue growth is recorded at 5% from the previous year and total distributions for the year have reached S$2.70 per share, including dividends in Keppel REIT units worth S$0.18 per share. Considering Keppel’s superior returns and how it has outperformed the Straits Times Index (STI) for the whole of 2022 to September 2023, this stock may continue to generate healthy returns for investors in 2024.
Singapore Telecommunications Ltd (SGX: Z74)
Singtel is the largest telecommunications company in Singapore with a market cap of S$41 billion. The company recorded an 83% increase in net profit to S$2.14 billion as of the first half of the year ending 30 September 2023. The underlying net profit was also up 12% to S$1.12 billion. Despite a challenging macroeconomic environment, the group seems well-positioned to achieve a strong balance sheet by the end of the financial year ending 31 March 2024.
Singapore Technologies Engineering (SGX: S63.SI)
Singapore Technologies Engineering has a diverse portfolio of businesses that span across aerospace, smart city, digital solutions, defence and public security segments. Reportedly, the group has achieved year-on-year revenue growth of 12% in the first nine months to reach S$7.3 billion.
With significant new contract wins crossing over S$11 billion and a strong order book of S$30 billion by the end of 2023 (nearly 30% growth from previous year), Singapore Technologies Engineering is a blue-chip stock that deserves much attention from serious investors.
Singapore Exchange Limited (SGX: S68)
SGX Group reported an adjusted net profit of S$503.2 million, a 10.3% increase from previous year’s S$456.4 million. The total revenue also increased by 8.7% to S$1,194.4 million.
It is worth mentioning that SGX has maintained strong ROE even through the pandemic. Dividend payouts have sustained between S$0.30 to S$0.33 per share from 2018 to 2023 and the group is on track to achieve high single-digit revenue growth while aiming to reward investors with a mid single-digit percentage increase in its dividend per share over the medium term.
Related: How to Rebalance Your Portfolio When S-REITs are Going Through Turbulence
Best Platforms To Invest in Singaporean Blue-Chip Stocks
Smart investing starts with choosing the right trading platform that complements your investment goals. To help you trade with ease, the ValueChampion team has scouted the market and shortlisted the best trading platforms and online brokers for you.
Comparisons of these platforms are based on a range of factors such as commission fees, international market access and exchange rates.
Saxo Markets – Best Overall in Singapore
Saxo offers low cost, great market access and a user-friendly interface to facilitate efficient trading. The commission for trading Singapore stocks is merely 0.08%, with a minimum cost of S$5. There are also higher-tier plans to enjoy lower fees per trade.
uSMART – Best for Beginners
uSMART
With its innovative SMART features, extensive learning affordances, and some of the cheapest commission fee rates for the SG and HK markets, uSMART is the perfect option for new and fresh investors.
Pros
- Lowest commision fees for SG and HK markets
- SMART features for convenient trading process
- Educational features to guide new investors
Cons
- Does not support mutual funds or bonds trading
This online platform charges very low commission fees compared to other local brokerages. The commission for trading Singapore stocks is between 0.02% to 0.05% while other online brokers usually charge around 0.08% to 0.28%.
moomoo powered by FUTU – Cheapest for Trading in Singapore, United States, and Hong Kong
Moomoo
moomoo by FUTU is a great brokerage for investors who are looking for a platform that allows them to get the most bang for their buck.
Pros
- Lowest commission fees in Singapore
- Lifetime $0 commission for US stocks
- No minimum income requirement
Cons
- Commission free trades only apply to US stocks, does not apply to SG or HK stocks
- High margin rates
Enjoy the cheapest online trading rates when you trade Singapore stocks on moomoo platform. The commission for every local trade is only 0.03%. You can even trade for free when you sign up for the current promotion which offers 180-day commission-free trading for Singapore and Hong Kong markets.
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SAXO Capital Markets
An excellent, low-cost platform that offers great market access.
Pros
Cons