Profile 3: Robert, 65 years old, male (see cover story here)
Robert is a married 65-year-old who has just retired. Before his retirement, Robert enjoyed a steady increase in his income throughout his 40-year career, where he rose through the ranks in a statutory board.
Throughout his years as a successful career person, Robert is considered to have done well for himself. He has provided his family of four with a comfortable lifestyle. The family was able to go on holiday to places like Australia and Europe at least once a year, and both of his children studied abroad.
Now that Robert has retired, he has amassed a good amount of savings. However, he is also exploring investing his money to enjoy getting a monthly passive income.
As Robert is unfamiliar with investing and is no longer drawing a steady income, he is leaning towards a conservative portfolio comprising value stocks that will yield healthy dividends.
Through his savings accounts and mortgage, Robert is familiar with names such as DBS Group Holdings (DBS), Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB).
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The banks, which are blue chip stocks, are some of the largest stocks on the benchmark Straits Times Index (STI) and have enjoyed steady growth in their earnings.
DBS, for instance, logged record-high earnings of $2.24 billion, 32% higher y-o-y in the 3QFY2022 ended Sept 30. OCBC also reported a record net profit of $1.6 billion, up 31% y-o-y for the 3QFY2022. In the same quarter, UOB saw earnings surge by 34% y-o-y to $1.4 billion in the 3QFY2022.
All three banks offer generous dividend yields too, at 4.18% for DBS, 4.59% for OCBC and 3.88% for UOB. DBS pays its dividends quarterly while OCBC and UOB pay their dividends twice a year.
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Now Robert’s housing loan has been fully paid off, he’s considering moving to a smaller place once the children have moved out. In his search for his next house, he may come across property agents from PropNex and APAC Realty to help with his search.
For his household, Robert, like many Singaporeans, shops at the supermarkets under the Sheng Siong Group, known for their pocket- friendly prices.
Regarded by most as a recession-proof counter, Sheng Siong has enjoyed a surge in its earnings, especially during the Covid-19 period, when restrictions were imposed and most families had to stay home. The group’s annual dividend yield is around 3.81%.
As someone who should be familiar with the household and phone bills, Robert would also have come across names such as Sembcorp Industries, Singapore Telecommunications (Singtel), StarHub and M1 (a subsidiary of Keppel Corporation), which are also part of the benchmark STI and considered blue chips.
When it comes to his meals, Robert is a man of habits. For breakfast, he would enjoy two slices of bread from Gardenia and a halfboiled egg. Gardenia is part of QAF’s bakery business. The stock has an annual dividend yield of around 6%.
On weekends, Robert and his wife take a break from doing the regular household chores and head to their nearest coffee shop for a leisurely breakfast. While some coffee shops are privately-owned, a listed stock in the form of Kimly is a major player in this space, owning 84 coffee shops and food courts in Singapore.
When it comes to passive income, Singapore REITs (S-REITs) are known for their attractive dividend yields, attractive entry prices, and low volatility.
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The dividend yield for S-REITs averages around 5% to 6%. While S-REIT prices have generally taken a hit, the increasing interest rate environment has increased their average yield to around 7%, and S-REITs are still considered stable investments, especially in the mid to long term.
As someone who has worked in the CBD and visits the malls around his neighbourhood and in the city, Robert is very familiar with the properties owned by REITs such as CapitaLand Integrated Commercial Trust (CICT), Lendlease Global Commercial REIT (LREIT) and Frasers Centrepoint Trust (FCT).
For instance, CICT owns CapitaSpring, Funan and Bugis Junction, while LREIT owns 313@Somerset. FCT, which has a portfolio of mostly suburban malls, owns Waterway Point, Tampines 1 and Tiong Bahru Plaza. On some weekends, Robert and his family visit VivoCity, which is owned by Mapletree Pan Asia Commercial Trust (MPACT), for a leisurely lunch and some shopping.
While investors may think that Singapore stocks are only affected by developments here, companies do invest in assets overseas. For example, during his travels, Robert has stayed in properties such as the Mercure in Perth, Australia, and the Grand Millennium Auckland in New Zealand. These are, of course, in the portfolios of REITs such as CDL Hospitality Trusts (CDLHT) and CapitaLand Ascott Trust (CLAS).
When borders were closed, Robert and his family booked staycations at the Hilton Singapore, which is owned by OUE Commercial REIT (OUE C-REIT), and CDLHT’s W Singapore Sentosa Cove.
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