Blue chip stocks are known for their long track records and excellent reputations.
Investors include blue-chip stocks as the “foundation” of their portfolios. Such companies are resilient to various business cycles.
The great thing about these stocks is that most of them also offer dividends, which act as a source of passive income.
The key is to look for businesses that can grow their profits over time, as increasing profits usually also come with dividend payments.
Here are four attractive Singapore stocks that are well-positioned to report higher profits and could be the next to increase their dividends.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited (SGX) is Singapore’s only stock exchange operator.
The group operates a platform for buying and selling a wide variety of securities, including stocks, bonds, derivatives, commodities and foreign exchange contracts.
SGX reported an encouraging set of earnings for fiscal year 2024 (FY2024) ending June 30, 2024.
Revenue increased by 3.1% year-on-year to S$1.2 billion, and net profit excluding special items increased by 4.5% year-on-year to S$525.9 million.
The stock exchange operator announced a quarterly dividend of S$0.09, up from S$0.085 a year ago.
SGX has a solid track record of increasing dividends as profits grow.
When the group announced its earnings for the first half of financial year 2024 ending December 31, 2023, it also increased its quarterly dividend from S$0.08 to S$0.085.
More could come as SGX reported strong market statistics for December 2024.
The company’s derivatives trading volume reached a record high of 298.4 million contracts in calendar year 2024, an 18% increase from the previous year.
The stock exchange operator is committed to maintaining mid-single-digit increases in dividends per share over the medium term.
If earnings continue to grow, SGX will continue to increase its quarterly dividend.
DBS Group (SGX: D05)
DBS is Singapore’s largest bank by market capitalization and offers a comprehensive range of banking, insurance and investment services.
The group reported strong earnings in the first nine months of 2024 (September 2024).
Commercial book net interest income increased 5% year-on-year to S$11.2 billion, supported by overall interest rate increases.
Net fees and commission income increased 27% year-on-year to S$3.2 billion.
As a result, total revenue increased by 11% year-on-year to S$16.8 billion.
Net profit rose 12% year-on-year to S$8.8 billion, a record high.
The lender rewarded shareholders with a 22.7% year-on-year increase in its quarterly dividend to S$0.54 per share.
DBS is expected to perform well in 2025, with net interest income expected to hover around 2024 levels.
Non-interest income is also expected to increase by high single digits year over year.
CEO Piyush Gupta also said the bank had excess capital of S$5.9 billion, equivalent to about S$2 per share.
Based on the above, DBS may be ready to increase its common dividend when it releases its 2024 earnings on February 10th.
DFI Retail Group (SGX: D01)
DFI Retail Group is a pan-Asian retailer operating over 11,000 stores and employing over 200,000 people as of June 30, 2024.
Back in the first half of 2024 (H1 2024), the retailer reported that underlying net profit more than doubled to US$76 million.
Following this strong performance, DFI Retail Group has increased its interim dividend by 17% year-on-year to USD 0.035.
The group reported a promising business update for the third quarter of 2024 (Q3 2024).
In the quarter, the retailer enjoyed a 4% year-over-year increase in underlying net income, despite a 3% year-over-year decline in underlying sales at its subsidiaries.
DFI Retail Group also announced the sale of a 21.08% stake in Yonghui Superstores to MINISO Group (NYSE: MNSO) for approximately RMB 4.5 billion.
The transaction will strengthen the group’s balance sheet and enable it to repay its debt.
DFI Retail Group has given guidance for 2024 net income of US$190 million to US$220 million.
At the midpoint (US$205 million), this would represent a 32.3% year-on-year increase in real net profit from US$155 million in 2023.
Singapore Technologies Engineering (SGX: S63)
Singapore Technologies Engineering (STE) is a technology, defense and engineering group serving the aerospace, smart cities, defense and public safety sectors.
The engineering giant reported an impressive set of earnings in the first half of 2024.
Sales increased 13.5% year-on-year to S$5.5 billion, and operating profit increased 17.7% year-on-year to S$522.9 million.
Net profit improved by nearly 20% year-on-year to S$336.5 million.
The Board paid an interim dividend of S$0.04 per share in the second quarter of 2024.
STE continued its momentum with its latest Q3 2024 business update.
Revenues in September 2024 rose 14% year-on-year to S$8.3 billion, with broad-based revenue growth across all three segments.
The Engineering Group once again paid an interim dividend of S$0.04, bringing the annual dividend to S$0.16.
STE won contracts worth S$8.3 billion in the fiscal year ending September 2024, bringing its order book to S$26.9 billion as of September 30, 2024.
The quarterly dividend could also be raised if the engineering group reports higher profits in 2024.
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Disclosure: Royston Yang owns shares in Singapore Exchange Limited and DBS Group.
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