Here’s How Much You’d End Up with If You Had Invested S$10,000 in ST Engineering 12 Years Ago

It’s always intriguing to see how much our money would have grown had we held on to strong businesses over a long period.

This exercise gives us an indication of a stock’s financial strength and consistency.

It can also tell us if a business can weather recessions and yet deliver.

Investors in Singapore Technologies Engineering Ltd (SGX: S63), or STE, may wonder if the blue-chip engineering giant has delivered a good return if held for more than a decade.

At the same time, we also assess if the group can continue to perform well based on its current prospects.

A dividend stalwart

STE went public 25 years ago in December 1997 and has been a component of the Straits Times Index (SGX: ^STI) ever since.

Temasek Holdings, a Singapore investment firm, holds a 51.69% stake in the engineering group as of 28 February this year.

Assuming you invested S$10,000 in STE back in July 2010, you would receive around 3,000 shares of the group.

The share price closed at S$4.10 recently, chalking up a 24% gain for the stock over 12 years.

This means that your original S$10,000 would have grown to S$12,400, giving you a S$2,400 capital gain.

While this may not seem impressive, STE’s strength is in its consistent dividend payments over the years (see below).

Source: ST Engineering’s Annual Reports; Author’s Compilation

The group has paid out a consistent dividend over the last 12 years amounting to S$1.8185 per share.

Your 3,000 shares would have netted you a total of S$5,455.50 in dividends from 2010 to 2021.

Add this to the S$12,400, and your total will come up to S$17.855.50 for a 78.6% total return.

Over 12 years, this translates to a 4.9% compound annual growth rate, which beats the long-term inflation rate of around 2% to 3%.

From strength to strength

The question is, can STE deliver the same level of returns moving forward?

First off, let’s look at STE’s order book.

Its fiscal 2022’s first quarter (1Q2022) market update saw the group clinch a total of S$2.4 billion in new contracts across all three of its divisions.