5 Top Singapore Stocks to Buy in 2023

January 3, 2023

For most global investors, 2022 was a year to forget. That was down to fast-rising interest rates, decades-high inflation and the US stock market seeing its worst yearly performance since 2008.

However, for investors in Singapore stocks, the picture was rather different. In 2022, the benchmark Straits Times Index (STI) actually recorded a positive return of 4.1%.

Contrast that to the S&P 500 Index in the US, which was down around 20% in 2022. So, what’s in store for investors now that we’re in 2023?

Well, given that Singapore’s STI has a lot of “value” stocks within it, there may be a continuation of that outperformance in 2023.

With that in mind, here are five top Singapore stocks for investors to buy in 2023.

1. Sembcorp Industries

For any investor who wants both long-term growth potential and passive income, then Sembcorp Industries Limited (SGX: U96) has become a solid option.

That’s because the energy and urban development firm is in the midst of a multi-year transition to turn its power portfolio from “brown to green”.

That means shedding itself of carbon-intensive assets (like its coal plants) and buying up renewable energy assets.

In fact, Sembcorp Industries is already nearly at its 2025 target of owning 10 gigawatts (GW) of renewable energy assets.

That came on the heels of multiple acquisitions of clean energy assets by Sembcorp Industries in the fourth quarter of 2022.

All this has translated into a stronger earnings outlook while it also benefits from higher energy prices through its conventional energy business.

In the first half of 2022, Sembcorp Industries’ EBITDA came in at S$865 million, up 35% year-on-year. Meanwhile, the company also doubled its dividend per share (DPS) to 4.0 Singapore cents.

For Singapore investors looking for stable renewable energy growth over the next few years, Sembcorp Industries fits the bill.

2. CapitaLand Ascott Trust

With the global reopening in full swing as Covid-19 lockdowns fall by the wayside, CapitaLand Ascott Trust (SGX: HMN) is set to be a winner in 2023.

That’s down to two factors. Firstly, the reopening of Asia (which has lagged Europe and the US) is still ongoing and will receive a turbocharged boost from China’s reopening.

Inevitably, that will boost CapitaLand Ascott Trust, which is focused on hospitality-geared properties such as serviced residents, hotels, rental housing, and student accommodation.

Perhaps more importantly, though, the majority of CapitaLand Ascott Trust’s properties are located in Asia (see below), meaning it’s in a great position to benefit from the “revenge travel” trend from China.

CapitaLand Ascott Trust geographical breakdown

Source: CapitaLand Ascott Trust Q3 2022 business update

In addition, the trust is one of the few property owners listed in Singapore that gives investors exposure to the positive long-term trend of student accommodation.

Its results back up the optimism. In its latest Q3 2022 earnings, CapitaLand Ascott Trust’s gross profit reached around 90% of its pre-Covid levels.

With a gearing ratio of only 35.8% and interest coverage of 4.3x, the trust is in a good position to keep growing despite higher interest rates.

Currently, CapitaLand Ascott Trust shares give investors a 12-month forward dividend yield of 4.5%.

3. DBS Group

Yes, Singapore’s bank stocks did well in 2022 but it could well continue for the likes of DBS Group Holdings Ltd (SGX: D05).

As Singapore’s largest bank, DBS is in pole position to keep benefitting from higher interest rates in 2023.

I wrote about it recently, and my conviction hasn’t changed, that DBS is one Singapore dividend stock I’m confident could continue to surprise to the upside in 2023.

With the bank benefitting from a larger deposit base than its smaller peers, and also seeing more upside from net interest income (NII) and net interest margin (NIM), DBS could also see a higher dividend payout for 2022.

Indeed, it raised its DPS by close to 10% last year – hiking it from 33 Singapore cents to 36 Singapore cents.

While consensus expectations are for the US Federal Reserve to start cutting rates in the second half of 2023, I tend to be contrarian on this front given the still-robust state of the jobs market in the US.

That could mean that DBS shares continue to go higher in 2023. Currently, DBS shares offer investors a dividend yield of 4.2%.

4. Thai Beverage

Any reopening stock isn’t complete without mentioning the F&B sector. In that space, Thai Beverage PCL (SGX: Y92) is destined to be a beneficiary.

The company, also known as ThaiBev, owns a stable of solid alcohol brands, including Chang beer, Saigon beer, and a number of spirit labels.

The company saw a solid set of full-year fiscal 2022 results towards the end of the year.

ThaiBev saw its revenue and EBITDA both increased by over 30% in its Q4 FY2022 period, with the total net profit for FY2022 coming in at THB 30.1 billion (S$1.17 billion). That was up 22% year-on-year from FY2021.

With its exposure to the Thai economy, a potentially stronger Thai baht in 2023, and the imminent return of Chinese tourists to Thailand, the drinks firm is expected to benefit.

Add in a solid dividend yield of close to 4% and ThaiBev looks like one drinks company that you could raise a glass to in 2023.

5. Singapore Technologies Engineering

Last, but not least, is Singapore Technologies Engineering Ltd (SGX: S63), a technology and engineering groups that serves clients in over 100 countries.

Its engineering prowess saw it rack up a solid 2022 as its business saw multiple tailwinds. In its latest Q3 2022 period, ST Engineering saw order wins of S$4.8 billion, which was up 60% quarter-on-quarter and a whopping 163% year-on-year.

All this has driven a strong pipeline of wins, with its latest being a S$1.4 billion rail contract for the Kaohsiung Yellow MRT line, the largest rail contract in its operating history.

That’s also fed down to its dividend, which is giving investors a 12-month forward yield of 6.5%.

While it could be impacted from an economic slowdown, the continued need for infrastructure buildout globally should support its broader business.

Singapore Technologies Engineering is also one of the few Singapore stocks that pays a quarterly dividend.

Ushering in 2023 with solid Singapore stocks

When we think about the horrors of 2022, it’s important that, as investors, we are diversified across sectors.

With Sembcorp Industries, DBS, CapitaLand Ascott Trust, ThaiBev, and ST Engineering, investors in Singapore will have a strong foundation on which to build.

It’s also a timely reminder that the Singapore stock market could continue its outperformance in 2023. As always, accessing both growth and income is key for investors over the long term.


Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares in Sembcorp Industries and DBS Group Holdings Ltd.

Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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