Got $10,000? 2 Singapore Stocks to Buy and Hold Forever
January 16, 2023
Recently, investors have found themselves talking a lot about the unpredictability of the stock market. That has been on the back of one of the most volatile periods for stock investors in the past decade.
So, while there is volatility, it’s all part of investing. However, as individual investors, we are all different. Some of us may be able to better tolerate volatility than others.
As a result, no matter what your risk tolerance, it’s worth having stable and consistent companies in your portfolio.
These are sometimes referred to as your “forever” stocks, ones you can confidently hold for the next decade or so.
So, for Singapore investors, if you have S$10,000 that you want to invest, here are two local stocks that they can buy and hold forever.
1. DBS Group
Anyone who hasn’t been living under a rock for the past 50 years has most likely heard of Singapore’s largest bank, DBS Group Holdings Ltd (SGX: D05).
It’s a massively successful financial services firm that has a presence in not only Singapore but also in key North Asian markets like Hong Kong, China, and Taiwan.
In fact, it has sizably expanded its North Asian presence by purchasing Citigroup Inc’s (NYSE: C) retail operations in Taiwan.
While it’s by no means any guarantee of success, it’s also good to know that in Temasek’s portfolio, DBS is its largest single holding – making up 7% of its overall portfolio (see below).
Source: Temasek “Our Portfolio” webpage
With interest rates set to stay higher than expected, and for longer than expected, it seems obvious that bank stocks will benefit from this.
However, while this may be reflected in the price, what may not be reflected in DBS’s current share price is how long interest rates could stay elevated.
With a strong balance sheet and Singapore’s biggest – and by default best – funding base, DBS is well-positioned to keep outperforming if interest rates stay higher than they have for the past decade or so.
Finally, with a dividend yield of over 4% and a dividend per share (DPS) that has grown by a compound annual growth rate (CAGR) of around 10% over the past decade, it’s a worthy dividend stock to hold on to.
2. CapitaLand Ascendas REIT
So, what if interest rates don’t stay elevated and instead come down? Well, it’s best to have a Singapore REIT in that instance and one of the biggest around is CapitaLand Ascendas REIT (SGX: A17U).
It has a massive collection of logistics, industrial, and data centre properties across Singapore, the US, the UK, Europe, and Australia.
With its real estate portfolio valued at S$16.5 billion, as of 30 September 2022, CapitaLand Ascendas REIT is a true heavyweight in the Singapore REIT market.
More recently, it has also expanded into the cold storage segment in Singapore with its maiden deal in the city state.
Beyond that, during the Covid-19 pandemic, CapitaLand Ascendas REIT also took the opportunity to buy a number of data centres in both the US and Europe.
This gives the REIT further avenues for growth over the next decade while also growing its dividend payouts for shareholders.
With a relatively reasonable gearing ratio of 37.3%, it still has a humungous S$4.4 billion in debt headroom before it hits the 50% aggregate leverage limit (imposed by the MAS).
Increased demand for logistics properties and data centres, combined with CapitaLand Ascendas REIT’s huge portfolio and positive rental reversions that can offset inflation, means investors have a REIT that can stand the test of time.
Buy, hold and receive dividends
Buying and holding DBS and CapitaLand Ascendas REIT over the next decade will see shareholders receive dividends but also have some exposure to growth opportunities.
While these avenues may be more limited in the slower-growing REIT sector, real estate is always a strong sector to be in when inflation is higher than normal.
With both stocks yielding over 4%, and offering investors the chance to receive increased payouts in the future, it could be a great time to buy DBS and CapitaLand Ascendas REIT.
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.