Singapore’s Central Provident Fund (CPF) Ordinary Account (OA) remains one of the safest options for savings, offering a fixed interest rate of 2.5%.
However, the steady but conservative approach may not be sufficient to build wealth or beat inflation in the long run.
While CPF provides capital protection and predictability, it offers limited potential for higher compounding.
For investors seeking better returns, the stock market presents an additional avenue.
Instead of replacing CPF, we can use it to form a stable base while supplementing it with higher-return assets.
CPF vs Stocks – Why CPF OA May Not Be Enough
An easier way to compare CPF with stocks would be to appreciate that they are two separate but complementary instruments of investment.
The 2.5% rate from CPF is often deemed “stable and safe”, while the equities in the stock market give you access to growth and dividend income, but at the cost of market risks.
When selecting stocks to complement CPF, the focus should be on businesses capable of generating sustainable income over time.
This is typically supported by consistent free cash flow, resilient demand, diversified revenue streams and strong balance sheets.
DBS Group (SGX: D05) — The Dividend Growth Blue Chip
DBS has grown from a traditional bank to become a capital-return powerhouse, driven by a robust capital return strategy and backed up by resilient profits and increased fees from wealth management.
For its first quarter of 2026 (1Q2026), net profit attributable to shareholders edged up 1% year on year to S$2.93 billion, maintaining a healthy return on equity of 17.0%.
The bank declared a dividend of S$0.81, comprising S$0.66 ordinary dividends and S$0.15 capital return, bringing its 12-month trailing dividend to S$3.12.
Management has re-affirmed its commitment to maintain the capital return dividend at S$0.15 per quarter until 2026 and 2027.
CapitaLand Integrated Commercial Trust (SGX: C38U) — The REIT Income Generator
CapitaLand Integrated Commercial Trust (CICT) has exposure to a diversified pool of existing commercial buildings in Singapore, where there is the prospect of stable income generation due to the gradual revival of tourism and office demand.
Its portfolio consists of high-quality assets, including Plaza Singapura (slated for asset enhancement), Raffles City, CapitaSpring, and the upcoming acquisition, Paragon.
At the current unit price of S$2.30 and FY2025 distribution per unit (DPU) of S$0.1158, CICT offers a yield of about 5%, while maintaining aggregate leverage of about 38.5%.
CICT has converted its steady rental revenue into stable cash flow, providing yield performance superior to CPF yet without compromising the quality of its assets.
Sembcorp Industries (SGX: U96) — The Cash Flow Compounder
Sembcorp has pivoted towards an energy and utilities business model that sees higher exposure to renewable energy assets.
A key strength of the business lies in its ability to generate sustainable cash flow from its power operations.
Free cash flow turned positive at S$208 million in FY2025 (from -S$196 million), driven by operational improvements and divestments.
The group declared a total ordinary dividend of S$0.25 for FY2025, a 9% increase compared to S$0.23 a year ago.
While lower Singapore margins and pressures in China may impact near-term results, Sembcorp’s expansion in renewables and the pending Alinta Energy acquisition are expected to broaden earnings and support long-term dividend sustainability.
Singtel (SGX: Z74) — The Structural Growth Leader
Singtel has evolved beyond a traditional telecommunications provider into a regional digital infrastructure player.
Looking at the FY2026 guidance, the telco is projected to report a healthy growth rate of their operating EBIT in the range of high single digits to low double digits, driven by a favorable performance in their regional markets.
Contributions from associates are also projected to be strong, with S$1.1 billion in dividends expected from regional businesses.
Singtel continues to provide stable cash flow, aided by efficient cost management and recurring revenues from telecommunications activities, with a current dividend yield of about 3.7%.
ST Engineering (SGX: S63) — The Defensive Anchor
The profits of ST Engineering are backed by multi-year contracts within the domains of defence, aerospace and urban solutions, with diversification of its order books guaranteeing robust revenue visibility.
The company retained an order book worth about S$33.2 billion as of end FY2025, with a fair portion expected to be delivered in 2026.
This translates to robust revenue visibility despite any economic uncertainty.
The company declared a total dividend of S$0.23 per share for FY2025, which includes a one-off special dividend of S$0.05 from divestment proceeds.
Its base ordinary dividend stands at S$0.18 per share, up from S$0.16 a year ago.
Given its structural stability and defensive characteristics, ST Engineering serves as a reliable portfolio anchor.
Managing Risks and Building a Balanced Approach
Overreliance on high-yield stocks can backfire if their dividends are not supported by sustainable earnings and cash flow.
Additionally, over-concentrating on a single stock or sector exposes investors to unnecessary volatility.
To mitigate these risks, building a diversified portfolio that combines defensive income, cyclical opportunities and structural growth can help to effectively balance risk and return.
Get Smart: Build Beyond the Baseline
The CPF OA is a reliable system to accumulate wealth for retirement.
However, it should not be regarded as the “complete” solution for wealth building.
Investors aiming to increase their assets significantly need to move away from guaranteed returns and think about other ways to allocate money efficiently.
By combining CPF with fundamentally strong dividend and growth stocks, you can build a portfolio that balances stability with long-term wealth accumulation.
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Disclosure: Darien C. does not own shares of any companies mentioned.
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