Get Smart: Pick and Choose Your Investments in May – The Smart Investor




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It’s seldom that we have two public holidays back-to-back.
But the beginning of May has allowed us to sit back and enjoy a super-long weekend.
Singapore’s reopening has allowed the Ramadan bazaars to set up shop after a two-year hiatus, with hawkers at pasar malams (i.e. night markets) able to hawk their wares once more.
The hustle and bustle of the vendors ushers in good vibes as we take a relaxing break and indulge in a plethora of goodies.
There were plenty of food choices to be found as we navigated the numerous stalls, and after careful browsing, I settled on a bunch of tasty kueh.
Just before I pushed a delicious kueh into my mouth, it got me thinking — how do we go about picking and choosing suitable investments for our portfolio?
It’s important to know exactly what you’re looking for when it comes to investments.
Just as we are all innately aware of our food preferences, building an investment portfolio should also be intensely personal.
Depending on your age, marital status and whether you have kids or not, the choices could be vastly different.
If you’re a young investor with many more investing years ahead, you may choose to go with big-name, growth companies such as Apple (NASDAQ: AAPL).
The smartphone manufacturer has a strong brand and a loyal following and can continue to charge higher prices for its innovative products and services.
The company had just unveiled a record fiscal 2022 second quarter, with revenue climbing by 9% year on year.
Apple also chalked up a new all-time high for its services revenue and hiked its quarterly dividend by 5% year on year to US$0.23 per share.
Microsoft (NASDAQ: MSFT) is  another dependable candidate for long-term growth.
Its recent fiscal 2022’s (FY2022) third-quarter results saw revenue for the first nine months of FY2022 rise 20.1% year on year to US$146.4 billion while net profit jumped 25% year on year to US$56 billion.
These two companies could sit very comfortably in a growth investor’s portfolio and offer a peaceful night’s rest.
But if you prefer the comfort of receiving cash in your bank account every month, you could turn to income-paying equities such as REITs and dividend stocks.
For REITs, one good choice is Mapletree Logistics Trust (SGX: M44U), or MLT.
The logistics-focused REIT just reported a strong set of earnings, with its distribution per unit for fiscal 2022 ended 31 March 2022 rising by 5.5% year on year to S$0.08787.
The distribution yield stood at 4.9% and can comfortably beat the long-term inflation rate.
Blue-chip stocks such as DBS Group (SGX: D05) or Singapore Exchange Limited (SGX: S68) also pay out regular, consistent dividends.
These businesses are likely to be around decades from now and should continue to churn out consistent cash flows.
With the dividends you receive, you can then allocate them to buy more of the same stocks and REITs that paid out these dividends.
This process, known as compounding, is a powerful one that can boost your portfolio’s value while increasing the flow of passive income into your bank account.
The above are just some examples of the stocks you can buy for your portfolio.
The important thing to remember is that you need not rush the process of construction but can build your portfolio gradually, brick by brick.
Along the way, you can also choose to tweak the portfolio or refine it to better suit your purposes.
This portfolio should stand you in good stead as you look forward to a comfortable retirement.
And as the cash starts flowing in from your portfolio of stocks, you can use the money to buy even more Hari Raya kueh and holiday goodies for friends and family in the future.
And that, I assure you, will be a celebration you won’t want to miss!
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Disclaimer: Royston Yang owns shares of Apple, DBS Group and Singapore Exchange Limited.
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