It can be tough to find great companies to just buy, hold and forget.
While it is true that we need to constantly monitor and keep an eye on the underlying health of the businesses within our portfolio, some businesses are positioned so well that they are more reliable than others.
Here are three Singapore companies that you should feel relatively secure buying and then holding forever.
DBS GROUP HOLDINGS LTD
DBS is probably the most familiar name among the three big banks in Singapore.
Post Office Savings Bank (POSB), with its familiar squirrel mascot, was acquired by DBS in 1998. In effect, most of the POSB customers become customers of DBS.
The bank is important for Singapore's economic growth, and we believe the Government will step in should anything unfortunate happen to DBS. This makes it an almost fail-safe investment that you can tuck under your pillow and sleep well at night.
Of course, even if a business does not collapse, it may also not perform well for many years. DBS doesn't disappoint on this front, though.
Under the capable leadership of CEO Puyish Gupta, the bank logged yet another record net profit of $6.39 billion for the fiscal year 2019, up 14 per cent year-on-year.
Return on equity also hit a new record high of 13.2 per cent, while DBS' quarterly dividend was hiked by 10 per cent from $0.30 to $0.33. With an implied full-year dividend of $1.32, DBS' shares are offering a dividend yield of around 5.3 per cent.
SINGAPORE EXCHANGE LIMITED
Singapore Exchange Limited, or SGX, is Singapore's only stock exchange operator. SGX's business used to be dependent on the volume of equities trade, but over time, it has grown less reliant on equities as a revenue driver.
The group now bills itself as a multi-asset exchange, and offers a diverse range of derivative products such as methanol futures and swap contracts, rubber derivative products and China A-shares index futures, to name a few.
These securities are important in providing opportunities for traders and fund managers to hedge and manage their portfolios.
Under CEO Loh Boon Chye, SGX has slowly shifted its focus to derivatives, with this segment making up more than 50 per cent of total group revenue for the fiscal year 2019 (ended 30 June 2019).
The bourse operator has been reporting stellar numbers too in its latest fiscal 2020 half-year report, with revenue up 11 per cent year-on-year and net profit after tax up 14 per cent year-on-year.
With SGX being the sole stock exchange in Singapore, it has a strong monopoly position that is unlikely to be toppled anytime soon. This translates to peace of mind for investors who own shares in this business.
SINGAPORE TELECOMMUNICATIONS LIMITED
Singapore Telecommunications Limited, or Singtel, is Singapore's leading and largest telecommunications company (telco). The group offers a wide range of services from cable TV to mobile services as well as internet access for customers.
Though Singtel has seen its associates being hit by various headwinds over the last few years, its core business remains relevant and resilient as it continues to command the lion's share of the market for subscribers (49.9 per cent for the quarter ended 31 Dec 2019).
With the Government's recent announcement of 5G trials, and with all the telcos in Singapore putting in a bid for four 5G licenses, Singtel is poised to lead the 5G wave to enable Singaporeans to enjoy faster connection speeds and enhanced connectivity.
Singtel represents an integral cog in the 5G infrastructure and network build-up plan by the Infocomm Media Development Authority (IMDA), and the next few years should be exciting ones for the telco as it gears itself up for its next phase of growth.
GET SMART: PEACE OF MIND IS PRICELESS
The three Singapore companies above are stalwarts and market leaders in their respective industries. Though each may encounter short-term challenges (brought about by the Covid-19 virus outbreak and competition), the long-term investment thesis for all of them looks sound.
Importantly, these three companies represent vital pillars of Singapore's economy, and owning them means that investors can enjoy peace of mind.
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This article was first published in The Smart Investor. All content is displayed for general information purposes only and does not constitute professional financial advice. Disclaimer: Royston Yang owns shares in Singapore Exchange Limited.