The following is a guest post by Joe Ng Boon Leng. You may contact him by leaving your comments below.
There are a total of 490 CPF stocks that can be purchased out of the 800 companies listed in SGX. Obviously not all the stocks are suitable for our investment. We have to identity which are the growth stocks.
For growth stocks, it must meet a few criteria: The stocks are not volatile which means even when the market is booming, they do not move much; and its fundamentals are strong (strong cash flow, low debt, etc); its economic moat is wide (will not easy for the competitor to duplicate or cut the price for their success); and there is demand in the market.
I shall touch on 3 counters as they have fulfilled most of the criteria that I have mentioned above. I own them and have been receiving the dividend till today.
First is the Straits Times Index Exchange Traded Fund. This is a capitalization-weighted stock market index that is regarded as the benchmark index for the Singapore stock market. It consists of a pool of 30 stocks that are selected to track our market. It is reviewed quarterly to determine changes to the constituents. The prices never depend on an individual company’s performance. Rather, it depends on the market. You can get around 3% dividend yield annually with minimum risk. A cautionary word is not to buy the STI when it is at 52 weeks high, P/E ratio is above 15 or when the annual dividend yield is less than 3%.
Second is Capitaland Commercial Trust (CCT). The company owns a series of commercial properties in the prime locations of Singapore. Why I choose this? Being a commercial hub with scarce land resources, location at prime area commands a good rental. For past decade, CCT always performs better than the market occupancy rate. Its average dividend yield is above 5%. Having said that, you would still need to review its financial report quarterly for any changes. The stock is worth buying when the stock price is lower than NAV and debt ratio lower than 35%.
Third is the Parkway Life Reit (PLife REIT). The company invests in hospitals and nursing homes. They have properties in Singapore, Japan and Malaysia. With longer lifespan, demand for medical needs/care are far shooting upwards, the dividend yield on the average is 4%. The stock price is normally above the NAV and debt ratio is around 35%-40%. Consider to buy the stock when it is at the lower end of 52 weeks price and there is no sudden increase in debt. Again, it is essential to review the quarterly report.
As the counters I recommended are more for dividend collection and long-term growth, please do not invest if it falls below the dividend yield I had cited.
Disclaimer: The above is only for educational purpose. Joe does not represent any company. Please invest at your own risk.
2 thoughts on “Investing in Growth Stocks using CPF”
Thanks for the great sharing!! Looking forward to see more posts from you!
Thanks Jeffrey…. Great to have your support and taking times to read the article.