Dividend Stocks in Singapore
Dividend stocks refer to shares of companies that regularly provide dividend payments to shareholders, which can provide investors with a source of passive income. Many companies on the Singapore stock market offer relatively high dividend yields, which are potentially excellent for investors looking for a lower-risk way to generate steady returns on their investments.
When evaluating a dividend stock, you may find that there is a yield percentage value associated with each stock. For instance, Singtel (SGX: Z74) has a dividend yield of 4.41% in 2022, which means that investors received 4.41 cents on every dollar invested that year.[1]
While higher dividend yields may make a stock look more attractive, it may not necessarily be a good thing. Companies should set aside a reasonable and balanced amount of money for dividend payments each year so that they will still be able to reinvest profits into the company to facilitate growth and expansion.
Properties of Dividend Stocks
Unlike growth stocks, dividend stocks tend to appreciate slower in value. This is because the value of these stocks will decrease by the corresponding dividend payment amount after each dividend payment. With each year, a significant amount of the asset appreciation value of the stock is returned to you as cash, which is why the value of the share prices can be expected to grow at a slower pace.
Dividend stocks are also preferred when the economy slows down because they potentially are better able to retain their value even during market downturns. Hence, they serve as an excellent way for investors to diversify their portfolios.
Investors of dividend stocks can expect to generate returns from both asset appreciation as well as dividends. Furthermore, investors can choose to reinvest the dividend payments that they receive, which will allow them to benefit from a compounding effect that can significantly boost their overall returns in the long run.
Dividend Stocks in Long-Term Investment
One of the best times to buy dividend stocks is when you are currently putting together a portfolio for the long term. By adding dividend stocks to your portfolio and reinvesting the dividends, your returns will compound year after year, potentially allowing your portfolio to grow exponentially. Hence, if you have a longer time horizon, consider picking out a few high-performing dividend stocks and adding them to your portfolio.
During periods of increased uncertainty in the markets, you can also shift a portion of your portfolio away from growth stocks towards dividend stocks such that your portfolio will be better able to withstand unforeseen volatility in the market. If your portfolio currently consists of higher-risk stocks, dividend stocks can also serve as an excellent way to diversify and lower your overall risk.
Dividend stocks are also popular with investors who are looking to retire early by living off their yearly dividend payments. Suppose you can build up a significant portfolio of dividend stocks. In that case, you can potentially pay for your living expenses purely through your yearly dividend payments, which can essentially allow you to live “for free.”
Dividend Stocks: Indicators to Look Out For
When identifying dividend stocks to invest in, there are a few indicators that investors can look out for, which will provide investors with a better idea of whether a particular company will perform well in the long run.
To begin, look at the company’s dividend payment history. Companies that have been able to consistently pay dividends to investors over a longer time period are generally those that have strong leadership and direction and can deliver on their promises. Hence, they can be expected to continue performing well in the future. An example of this is Singapore Exchange Limited (SGX: S68), which has been paying out dividends over the past 21 years.[2] Given its past performance, it is more likely that the company will remain stable and continue to grow in the long run than those whose dividend payment is not that stable.
Additionally, you can look at a company’s dividend growth. A company that can increase dividend yields year on year suggests that the company can manage its finances effectively and has been growing its operations steadily. For example, from historical data, Sheng Siong Group Ltd (SGX: OV8) has raised its dividend yields for 7 out of 10 years that it has been listed.[3]
Created based on the data on https://www.dividends.sg/view/ov8
Images provided are not current and any securities are shown for illustrative purposes only.
Top Performing Dividend Stocks in Singapore
Mapletree Industrial Trust (SGX: ME8U) is a real estate investment trust that manages properties across the world, with a market capitalization of $6.03 billion (as of 26/11/2022).[4] It currently has a dividend yield of 6.20% and has consistently raised its dividend yields from 3.35% in 2011 to 6.20% in 2022.[5]
Golden Agri-Resources Ltd (SGX: E5H) has provided investors with a significant dividend payment of 6.59% in 2022, which ranks among the highest in Singapore. Most of the company’s revenues are generated from the palm oil industry. Currently, it has a market capitalization of 3.72 billion (as of 26/11/2022). However, its dividend payments are slightly more volatile, with the largest dividend payment being 13.78% in 2007 and the lowest being 0% in 2009.[6]
Singapore Tech Engineering Ltd (SGX: S63) is another company that paid out a relatively high dividend yield of 5.16% in 2022, with its historical dividend yield fluctuating between 3.5 and 5.2%. The company is regarded to be extremely stable, with stakes in defense, technology, and engineering across the globe. It has a market capitalization of 10.90 billion and is currently one of the largest defense and engineering companies in Asia.[7]
Investing in Dividend Stocks
You can start investing in dividend stocks through moomoo, which is an all-in-one investment app where you will be able to search for your preferred stocks and get an in-depth analysis of the company. You will be able to view information such as quotes, comments, news, financials, and analysis regarding any stock, which serves as valuable information that can allow you to make an informed investment decision. So, download the moomoo app now to get a trial of these great functions following the tutorial below.
To look at the dividend payout history of any company, click on the company’s stock, and click on the summary tab as seen on the screenshot in the bottom right. Then, click on ‘Management,’ which will bring you to the ‘Dividends’ section. There, you will be able to see the company’s dividend history, which tells you how much was paid out as well as the date that the dividends were paid. This will then help you to understand the frequency of dividend payments as well as dividend yields.
Following that, you can look at the financials and professional analysis of the stock, which can help you ultimately decide whether you would want to invest in that company.
Images provided are not current and any securities are shown for illustrative purposes only.
Conclusion
Dividend stocks are fantastic financial assets that every investor should include in their portfolio as they provide dual benefits in terms of asset appreciation and dividend payments, and help in diversification.
All in all, as we move into 2023, many investors expect that dividend stocks can outperform the general market due to the current market climate of high-interest rates and negative market forecasts. Nevertheless, please note that all investments involve a certain amount of risk, and investors should be wary and take the necessary steps to protect themselves.
Disclaimer: None of the information in this article represents a solicitation of an offer to buy or sell any financial products, to make any investment, or to participate in any trading strategy.
[1]https://www.dividends.sg/view/Z74
[2]https://sg.finance.yahoo.com/news/5-singapore-dividend-stocks-dividends-233000042.html
[3]https://www.dividends.sg/view/ov8
[4]https://finance.yahoo.com/quote/ME8U.SI/
[5]https://www.dividends.sg/view/me8u
[6]https://sg.finance.yahoo.com/quote/E5H.SI/
[7]https://www.dividends.sg/view/S63
