The Straits Times Index (STI) is a great starting point for anyone looking to invest in some of Singapore’s largest companies. The STI tracks the performance of the top 30 companies listed on the Singapore Exchange (SGX), many of which are considered blue-chip stocks. These companies have a strong track record of stability, profitability, and consistent dividend payouts, making them attractive to investors seeking steady returns.
As Singapore-based investors, we also have an advantage, as we are familiar with many of these companies. This familiarity allows us to understand better their business models, market conditions, and long-term growth prospects. Additionally, being close to local news and regulatory changes helps us stay informed about developments that could impact these companies.
On 23 September 2024, the STI reached a price level of 3,638—a 17-year high. Over the past 12 months, it has risen by about 13%, from 3,174 on 6 October 2023 to 3,589 as of 4 October 2024.
In this week’s edition of 4 Stocks This Week, we examine some of the STI companies that have performed exceptionally well over the past 12 months.
#1 Trio Of Local Banks (DBS, OCBC, UOB)
In this analysis, we’ll group the three local banks—DBS (D05), OCBC (O39), and UOB (U11)—together. Over the past 12 months, the share prices of all three banks have performed well, with DBS up about 25%, OCBC up around 16%, and UOB up roughly 13%. Additionally, all three banks have recently increased their dividends, reflecting their confidence in maintaining strong profitability.
With interest rates likely to soften, it will be interesting to see how this affects our local banks. As interest rates have risen over the past few years, these banks have benefited from expanding net interest margins. It will be crucial to watch how they adapt to a potential reversal of this trend.
#2 Singtel
Singtel (Z74) holds the next largest market capitalisation on the SGX outside the three local banks. The past 12 months have been exceptional for Singtel, with its share price rising to $3.19 as of 4 October, marking a 34% increase from $2.37 a year ago.
In addition to its strong price performance, Singtel has announced a dividend increase for 2024, marking the third consecutive year of dividend growth. This underscores the company’s commitment to returning value to shareholders and reflects confidence in its ongoing financial performance.
Read Also: Local Telcos Dividend Yield And Share Price Performance
#3 Singapore Exchange (SGX)
The Singapore Exchange (SGX) (S68) is a leading multi-asset exchange in Asia. It serves as the primary marketplace for buying and selling securities in Singapore and offers a comprehensive range of products, including equities, fixed income, derivatives, and commodities.
As an investor, you can also invest in SGX by purchasing its shares. The company has performed well over the past year, with its share price rising to $11.68 as of 4 October—an increase of about 20% over the past year. SGX has also raised its dividend to 34.5 cents per share, enhancing its appeal to income-seeking investors.
Recently, there has been ongoing discussion about how SGX can revitalise the local stock market, which has experienced more delistings of existing companies than new listings. A taskforce has been formed to explore ways the exchange can address these challenges and continue to position itself as an attractive destination for companies looking to list.
If initiatives to rejuvenate the exchange bear fruit, they could serve as a catalyst for sustained growth for the company. Successfully attracting more listings and increasing market activity would boost trading volumes, enhance liquidity, and potentially drive up SGX’s revenue streams. This would improve its standing in the region and increase investor confidence, further strengthening SGX’s long-term growth prospects.
#4 Netlink Trust
Perhaps a surprise entry for some of us would be Netlink Trust (CJLU). Known as a highly defensive stock, Netlink Trust generally enjoys stable revenue, profits, and dividend payouts. However, in its latest 1Q2025 results announced on 2 August 2024, the company reported a 2.9% decline in revenue compared to the same period last year, with profit after tax down by 9.1%.
Why has Netlink Trust’s share price increased by about 9%, from $0.835 on 5 August 2024 to $0.91 as of 4 October 2024?
The likely explanation for this is the interest rate cut that the US Federal Reserve announced during the September 2024 meeting.
When interest rates fall, fixed-income assets like government bonds and money market funds become less attractive for income-seeking investors. For instance, when rates are at 5% annually, money market funds may be appealing for regular payouts. However, these investments lose their allure if rates drop to 3%.
Investors may turn to other asset classes, such as stable, dividend-paying companies, to maintain a 5% or higher yield. This is where Netlink Trust comes into play.
With a current dividend yield of about 5.8%, stocks like Netlink Trust become an attractive option for income-seeking investors. Thanks to its generally defensive nature, Netlink Trust offers stability and consistent cash flow. Its business model, centered around providing essential fibre broadband infrastructure in Singapore, is relatively immune to economic cycles, enhancing its appeal. This makes Netlink Trust a strong choice for investors looking to build a more resilient, income-generating portfolio.
The post The STI Hit A 17-Year High. 4 Stocks That Have Performed Exceptionally Well The Past 12 Months appeared first on DollarsAndSense.sg.
