The term "blue chip" originates from poker, where blue chips represent the highest value compared to other colored chips. In the world of finance, blue chip stocks are typically those that exhibit long-term stable growth and operate on a large scale.

These stocks are considered to be relatively safe investments, as they are typically less volatile than the stocks of smaller-cap companies. Blue chip companies also tend to be well-established and have a track record of generating consistent earnings, allowing them to return some of their profits to shareholders in the form of dividends and providing investors with a reliable source of income.

However, blue chip stocks are not without risk. They can be affected by the same economic factors that affect all stocks. In addition, as blue-chip companies are larger in scale, they may be less nimble and, thus, slower to respond to changing market trends.

These stocks are primarily valued for their strong fundamentals rather than for speculative reasons. This means that investors can expect these stocks to experience a slower yet steady rise in value over the years rather than an explosive increase in value typically associated with industries such as tech that are more speculative in nature.

Regardless, for many seasoned investors, blue chip stocks form a core part of their investment portfolio. These stocks can provide stability and growth and can generate a good source of passive income via dividend payments.

Introduction of Blue-Chip Stocks in Singapore

The following are a few examples of blue-chip companies in Singapore, all of which are market leaders, with relatively high market capitalizations, and a strong track record of financial robustness and stable growth.

DBS Group Holdings (SGX: D05)

Headquartered in Singapore, DBS is the largest bank in Singapore and one of the leading banks in Hong Kong by assets under management. Apart from the strong presence in the above core markets, the acquisition of Lakshmi Vilas Bank has strengthened DBS's operations in India, and the acquisition of Citibank’s Taiwan operation is expected to bring additional growth opportunities in Greater China. DBS's wealth management division is one of the largest in Asia, with assets under management of S$297 billion as of the end of 2022.

As of June 15, 2023, DBS Bank boasts a market capitalization of S$80 billion, making it the largest blue chip stock on the SGX by market capitalization. The company has honored its commitment to delivering value to shareholders, paying out dividends for 18 consecutive years.

Singapore Telecommunications Ltd (SGX: Z74)

Singtel is Singapore's largest telecom operator, with a market capitalization of over S$41.77 billion and a net profit of over S$2.2 billion in 2023 fiscal year. It has a huge customer base of over 4 million mobile subscribers in Singapore. Furthermore, subsidiaries of the company have full or partial ownership in companies with significant market share in countries like Australia and India, which points towards a strongly diversified income stream that adds to the stability of the conglomerate.

According to historical data, the company has been paying out dividends for over 20 consecutive years. Singtel is also a constituent stock of the Straits Times Index (STI), Singapore's benchmark stock index.

Jardine Cycle & Carriage Ltd (SGX: C07)

Jardine Cycle & Carriage is the exclusive distributor of Jaguar and Land Rover vehicles in Singapore, Indonesia, Malaysia, and Myanmar. It also has a 50% stake in Astra International, one of the largest conglomerates in Indonesia.

Jardine Cycle & Carriage has a market capitalization of over S$13.4 billion and has been a blue-chip stock on the Singapore Exchange for many years. The company has a strong track record of dividend growth and has paid dividends for 15 consecutive years.

Wilmar International Ltd (SGX: F34)

Wilmar International is one of the world's largest agribusiness companies. It has operations in over 50 countries and is involved in the production of a wide range of food and beverage products.

Wilmar International has a market capitalization of over S$25.3 billion and is a popular blue-chip stock among Singapore investors. The company has a strong track record of dividend growth and has paid out dividends for over 17 consecutive years.

Singapore Exchange Ltd (SGX: S68)

Singapore Exchange (SGX) is one of the largest exchanges in Asia and operator of Singapore's stock exchange. With a market capitalization exceeding S$10.3 billion, SGX is a popular blue-chip stock among Singapore investors. As of the end of May 2023, the total market capitalization of all companies listed on the exchange was close to $802.1 billion, highlighting its steady growth.

SGX has also established a reputation for consistent dividend growth, paying out dividends for more than 18 consecutive years.

While the aforementioned blue-chip stocks are among the many listed on SGX, there are numerous other investment opportunities to be found among the constituent stocks of the Straits Times Index (STI), which consists of the top 30 blue-chip stocks in SGX by market capitalization. To access these Singapore blue-chip stocks via the STI, investors can follow the process below.