It’s easy to find a company that has done well in a single year.
Increase that criteria to five years, and the number of companies that fit the bill starts to thin out.
Along this vein, the share price provides a good proxy for how the underlying business has performed.
A caveat, though.
The time horizon that is studied has to be long enough to eliminate sentiment-based factors.
As Warren Buffett once quipped: “If the business does well, the share price should naturally follow”
A period of five years is a suitably long period to review if a business has done admirably, or if it has fallen short of expectations.
The same yardstick is used for blue-chip companies too to assess which have done creditably.
However, not all blue-chip companies are alike.
Some have characteristics that enable them to do well over the long term, while others may falter due to competition or changes in the business environment.
Here are four blue-chip businesses that chalked up great share price performance over the last five years.
Keppel DC REIT is a REIT that owns and operates a portfolio of 19 data centres across eight countries.
These properties were valued at S$3 billion as of 31 December 2020.
The REIT achieved the best share price performance over the last five years, more than doubling from S$1.08 to the current S$2.72.
Data usage was steadily rising even before the pandemic, contributing to increased demand for data centres to store increasing amounts of information.
Over the years, Keppel DC REIT also grew by acquisitions as it expanded its portfolio of data centres.
Back in June 2016, the REIT’s portfolio comprised just nine data centres in six countries.
The current crisis has accelerated the shift from physical to online transactions and payments, thereby boosting data centre requirements.
Keppel DC REIT continued to report healthy increases in gross revenue and distribution per unit (DPU).
For its first quarter of 2021, gross revenue was up 10.6% year on year while DPU jumped by 18.1% year on year to S$0.02462.
Venture is a leading provider of technology products, services and solutions.
The group has a portfolio of more than 5,000 products and solutions and employs around 12,000 people worldwide.
Venture’s share price has jumped by 146.8% over the last five years from S$8.37 to the current S$20.66.
A surge in global demand for semiconductors and electronic equipment contributed to the group’s impressive performance over the period.
For context, in 2015, Venture’s revenue stood at S$2.7 billion. By 2020, its revenue had grown to around S$3 billion, an increase of 13.3%.
Net profit, however, almost doubled from S$154 million in 2015 to S$297.3 million in 2020.
Over the same period, the total annual dividend also increased from S$0.50 to S$0.75, an increase of 50% increase.
DBS is one of Singapore’s three largest banks and offers a comprehensive range of investment and banking solutions.
The lender’s share price has soared 89.4% from S$15.28 in April 2016 to the current S$28.94.
DBS has demonstrated its resilience through the pandemic, with revenue staying flat year on year at S$14.6 billion despite the tough environment.
Back in 2015, DBS’ revenue stood at S$10.8 billion.
Between 2015 and 2020, net profit after allowances rose from S$4.3 billion (less one-off items) to S$4.7 billion. The gain happened despite the pandemic..
The amount of dividend paid out by the bank has also risen steadily over the years.
Back in 2015, DBS paid out a total dividend of S$0.60 per share.
For 2020, the annual dividend stood at S0.87, down from S$1.23 in 2019 but still higher than the amount paid five years ago.
Investors should note that DBS reduced its dividend in 2020 after the Monetary Authority of Singapore called on banks to moderate their dividend payments.
The fourth best-performing blue chip is none other than Mapletree Logistics Trust, or MLT.
MLT is a REIT focusing on logistics properties, and its portfolio comprises 163 logistics properties spread out over nine countries as of 31 March 2021, valued at S$10.8 billion.
The REIT’s unit price has soared by 87% from S$1.07 to its current S$2.00 over the last five years.
MLT has been growing principally through acquisitions over the years.
Back in March 2016, its portfolio consisted of just 118 properties in eight countries worth S$5.1 billion.
DPU has also trended up over the same period, from S$0.0738 for the fiscal year 2016 to S$0.08326 for the fiscal year 2021.
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Disclaimer: Royston Yang owns shares in DBS Group and Keppel DC REIT.