Today creating multiple streams of income is more common than ever. It allows employees to rely less on their salary by maximizing opportunities to grow their wealth by investing in different financial sectors. One of the best ways to grow your wealth is by investing in dividend stocks.
Dividend stock gives you a passive income stream since you will regularly receive cash from the stock. It is no surprise why most investors love high dividend stocks. However, before you decide that you want to put your money, you should know that it is not all future proof.
Dividend stocks can go down, and your dividend income can get cut at any time with no warning. This post will take you through all you need to know while investing in dividend stocks while giving you a list of the best dividend stocks in Singapore.
What You Should Look For When Dividend Investing?
1. Long-Term Profitability
Long profitability should be one of your key considerations when vetting dividend-paying companies. Go for companies with long-term earnings growth stocks expectations ranging between 5% – 15%. Keep away from companies whose growth stocks expectations are more than 15%.
Look for companies with at least five years’ track records for a high dividend payout ratio that signals dividend growth.
2. Debt Equity Ratio
While investing, keep away from companies that have excessive debts. Companies with huge debts tend to channel their funds to pay the debt rather than their dividend payment programs. Keep in mind that dividends are derived from the company’s profits and you might be sacrificing your capital gains.
The 8 Best Dividend Paying Stocks to Buy In Singapore (2023)
Here is a list of the top 8 dividend stocks in Singapore:
1. Powermatic Data Systems (SGX: BCY)
- Latest Dividend Yield: (25.99%)
- Share Price: ($0.08)
- Products and Services Portfolio: design and manufacture of wireless connectivity devices
Powermatic Data Systems Ltd is an investment holding company involved in the design and manufacture of wireless connectivity devices. They also provide wireless solutions. It operates through Freehold Property Investment and Wireless Connectivity Product segments.
Freehold Property Investment involves the maintenance and lease of the Harrison Industrial Building, while the Wireless Connectivity products segment involves manufacturing, marketing, and distributing wireless connectivity products.
The company has had a high dividend growth rate of 25.99 over the past ten years. It offers one of the highest dividend payouts in Singapore.
2. Hotel Properties Limited (SGX: H15)
- Latest Dividend Yield: (16.65%)
- Share Price: ($0.08)
- Products and/or Services Portfolio: Hotel ownership, management and operation, and property development.
Hotel Properties Ltd is an investment holding company involved in hotel ownership, management, operation, and property development. The company operates through there business segments:
- Hotel – This involves the operation of hotels galleries and providing hotel management services.
- Properties involve the rental and sale operation of residential properties and commercial units.
- Others – This segment involves distribution and retail operations and all other activities on quoted and unquoted investments.
Hotel properties have had a CAGR of 16.65% for the past decade.
3. Lian Beng (SGX: L03)
- Latest Dividend Yield: (9.16%)
- Share Price: ($0.022)
- Products and/or Services Portfolio: construction of residential, industrial, commercial, and civil engineering projects.
Lian Beng Group Ltd is an investment holding company listed in Singapore Exchange, involved in constructing residential, industrial, commercial, and civil engineering projects. It is involved in the following segments:
- The Dormitory Segment: It involves the rental of dormitory units and providing dormitory services.
- The Investment Holding Segment: Investments in quoted and unquoted securities and properties for long-term capital appreciation, rentals, and dividend yields.
- The Property Development Segment: This is involved in developing and selling residential, commercial, and residential properties.
Lian Beng Group has had a CAGR of 9.16% in the past ten years.
4. UOB (SGX: U11)
- Latest Dividend Yield: (8.97%)
- Share Price: ($1.3)
- Products and/or Services Portfolio: Financial services
UOB United Overseas Bank Ltd (Singapore) offers financial services. The company operates in the following segments:
- The Group Retail (GR) – This provides clients with financial solutions.
- Group Wholesale Banking (GWB) offers customized financial services and sector insights.
- Global Markets (GM) – This segment manages the bank’s liquidity, investments, and financial instruments.
- Others – Cover non-banking activities and other corporate functions.
UOB has had a dividend growth rate of 8.97% for the past ten years.
5. DBS Bank (SGX: D05)
- Latest Dividend Yield: (4.2%)
- Share Price: ($31.24)
- Products and/or Services Portfolio: Financial services
DBS offers financial services in Singapore. The Monetary Authority of Singapore recently removed the dividend cap on banks. This has led to DBS having a 4.2 % annualized dividend yield which is considerably high compared to other cash savings accounts that pay below 1%. Broad-based loan growth, fee income up, and costs are under control.
If you invest in DBS, you can get three times the higher yield on the DBS stock than putting your money in a one-year fixed deposit account of 1.15%.
6. CapitaLand Limited (SGX: C31)
- Latest Dividend Yield: (8.01%)
- Share Price: ($4.09)
- Products and/or Services Portfolio: consultancy services
Capital Land Ltd is an investment holding company involved in providing consultancy services. It operated in segments that include:
- CapitaLand Singapore, Malaysia, and Indonesia (CL SMI) – This segment is involved in residential, commercial, shopping malls, serviced residential properties in Singapore, Indonesia, and Malaysia.
- CapitaLand China (CL China) – Involves residential, commercial, shopping, and serviced residentials in China.
- CapitaLand Vietnam (CL Vietnam) – Involved in residential, commercial, and serviced residential property in Vietnam.
- CapitaLand International – Involved in commercial shopping malls and serviced residential property in Europe, the Middle East, and the United States.
CapitaLand has since restructured and is now listed as Capital Investment Ltd (9Cl) on SGX as of 20th September 2021.
7. Dairy Farm International Holdings Ltd (SGX: D01)
- Latest Dividend Yield: (4.7%%)
- Share Price: ($3.49)
- Products and/or Services Portfolio: Retail services
The company owns Giant, Cold Storage,7-Eleven, and Guardian. Their stick price took a dip from COVID, and it is yet to recover. The main reason for the dip is the sudden change in the supply chain, with more people changing their retail patterns and shopping more online.
Dairy Farm Ltd has to adapt to the new way of offering retail services to keep up with the emerging trends in the market.
The dividend payout is still considerably high compared to other Singapore stocks from similar industries.
8. Great Eastern (SGX: G07)
- Latest Dividend Yield: (5.52%)
- Share Price: ($0.6)
- Products and/or Services Portfolio: Insurance services
Splendid Eastern Holdings Ltd provided insurance services and operated through the following segments:
- Life Assurance – Provides different types of products that include life insurance, accident, long-term health insurance, annuity business written that includes the unit-linked businesses.
- Non-Life Insurance Segment – Offers short term and casualty contracts
- Shareholders Segment – Comprise of fund management and Financial Advisory businesses
The Great Eastern CAGR over the past ten years is 5.52%.
How To Start Trading Dividend Stocks Online?
Here are the steps to follow to start trading dividend stock online:
1. Select a Broker
Before you start trading stocks, you have to find the right broker. You will be depositing your funds in a broker account, so you will make sure you choose a safe broker. Choose a broker that is regulated by any of the following financial institutions:
- The Financial Conduct Authority (FCA)
- Monetary Authority of Singapore (MAS)
- The US Securities and Exchange Commission (SEC)
- Cyprus Securities and Exchange Commission (CySEC)
- The Australian Securities and Investments Commission (ASIC)
A good online broker will allow you to trade and manage your portfolio using a desktop and a handheld device. Trading through your mobile device appeals to many due to its convenience.
The best brokers will offer you a chance to try out their interface for free before investing funds. Most have demo accounts that will take you just seconds to set up. Once you have set up, you can trust your trading experience with virtual funds.
It is a risk-free way to test a broker’s capabilities and trading skills, and we highly recommend this before you invest your actual funds.
2. Open and Fund Your Account
You will take a few minutes to set up an account with an online broker and invest in Singapore’s best dividend yield stocks. Opening a stock account is a great way to have a long-term investment in high-yield stocks since it can generate your income for the few years to come.
3. Deposit Your Funds
The registration process involves providing your personal information, verifying your email, and finally uploading proof of identity.
Some accounts will confirm instantly, while there are those you will have to wait for a short while to get your account approved, after which you can wire money into your account.
You can fund your trading account through a bank transfer or a debit/credit card; payments using your card are credited immediately. Once your funds are credited, you can start stock trading immediately.
4. Research Companies Using Technical and Fundamental Analysis
Suitable dividend trading relies on getting long-term prospects of a company. The best brokers will offer an in-depth fundamental analysis of the different stocks available. The analysis might be in the form of research notes, news reports or comments, and insights from industry experts,
Taking advantage of free research is the first step. Once you know which is the best dividend stock in Singapore, you should consider Technical Analysis to optimize your trade entry point.
The technical analysis considers historical price data to create indicators that help stock traders trace the short-term stock dips in price.
5. Open and Order Ticket and Set Your Position Size
There is no minimum quantity of stock to buy in Singapore. So you need to state the quantity you want to buy.
6. Set Your Stops and Limits
Certain order types will need you to consider, including ‘Take Profit” and ‘Stop-Loss.’ These instructions are built into the system to close out your trades when the price reaches a certain level.
Stop-loss will help you be in a position to bail out if the prices of the stocks are dipping. Take Profits allows you to lock into your profits if the prices of the stock increase. They are great tools if you look to trade automatically and do other activities during the day.
Another approach is to manage the risk by trading in small amounts. High-dividends in Singapore are somewhat secure investments but always keep in mind to only trade the amount of money you are willing to lose.
Ensure that you keep your emotions aside and avoid panicking when you experience a short-term price slump. If you do not have “Stop Losses” on your account, you will experience a momentary price slump before the price goes back to normal.
7. Select and Buy Singapore Dividend Stocks
Once you have filled in all your trading instructions, all that is left now is to click and buy. When you ‘buy,’ you convert part of your cash into stock positions, which will fluctuate based on the live market prices.
Your profit and losses will appear on the portfolio area of your dashboard. Always keep an eye on it since it will show you what you bought and see if that is what you intended to purchase. Even experienced investors can make errors while trading, so it is essential to always keep an eye on them.
Always make sure that you buy your high dividend Singapore stock outright and not in the CFD format. CFDs have extra functionality compared to buying outright, but they accrue daily financing fees.
The fees stack up over time, and if you are looking to hold the high-yielding position for longer than a few weeks, it is better to avoid trading it as CFD. You can read more on the best Singapore dividend Stocks here.
We Are Answering Some Of Your Most Asked Questions:
1. What are CFDs?
CFDs are complex financial instruments with a high risk of losing money quickly due to leverage. Research has shown that 68% of retail investors’ accounts will lose money when trading CFDs with their providers.
Before you trade with CFDs, you should understand how they work and make sure you know whether you can afford to lose your money.
2. What are the Factors to Consider Before Investing in Singapore Dividend Stocks?
Here are some of the things you need to consider before investing in the blue-chip dividend-paying stock in Singapore:
You might want to check the dates the company you invest in pays out its dividends. Also, make sure that you are familiar with all the terminologies used in stock trading.
The good thing about dividends is that they will be ‘priced in’ to the share price. This means that if you sell your dividend before the dividend ex-date, you will not lose out.
Your Trade Entry Point
Dividend yields are greatly determined by the price you buy in at. The dividend paid to the shareholders is paid according to the number of shares you hold. The lower the cost of your shares, the higher your yields.
Pay Attention to the Economic Trends
High-yield stocks are not immune to economic downtimes. A great example is a COVID19 pandemic that rocked most business models. The global economy came to a halt, making international trade.
Most stocks hit their lowest levels. In such an event, you will find that most investors will opt-out.
Choose the Right Broker
Before you start trading, you must have a broker account. Make sure you choose a credible brokerage company regulated by the financial authorities. This will protect you from fraud.
Trade with the Amount You Can Afford to Lose
The first rule about trading stocks is to make sure you trade amounts that you are okay losing.
Our Final Thoughts
Singapore dividend stocks are unique asset classes that have great returns over time. You can easily buy stock from your broker, but you have to do your due diligence before choosing your ideal broker.
Do your market research and technical analysis to know the best high yield company stocks with the best returns. The dividend stock market is not the most exciting market to invest in, but it offers a reasonable risk-return ratio in terms of returns.
- Dividend stocks offer a low-risk way to invest your money.
- While choosing a broker, make sure that they are regulated by financial authorities to avoid losing money.
- Most firms with high-dividend stocks offer protection from economic slumps.
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