Dividend stocks are a powerful investment option for generating steady income and moderate capital growth. For Singapore investors, these stocks serve as an attractive alternative to bonds and fixed deposits, offering potential returns through regular payouts and long-term value appreciation. However, dividend investing comes with its own set of risks, including price fluctuations and economic uncertainties.
This comprehensive guide explores the best dividend stocks in Singapore for 2024–2025, analyzing factors like dividend yield, payout ratios, and growth potential. Whether you’re a seasoned investor or just starting, this guide will help you make informed decisions and build a reliable income stream.
What Are Dividend Stocks?
Dividend stocks are shares in companies that pay out a portion of their earnings to shareholders as dividends. These stocks provide more than just periodic payouts; they come with several key features:
1. Regular Payouts: Dividend-paying companies distribute earnings on a consistent schedule—quarterly, half-yearly, or annually. Some even offer special year-end dividends.
2. Stable Earnings History: These companies, often in sectors like finance, utilities, and consumer goods, boast a track record of consistent earnings.
3. Management Decisions: Dividends are determined by company management based on factors like earnings, cash flow, and projected growth.
4. Dual Benefits for Investors: Investors gain both regular income from dividends and the potential for capital growth as stock prices rise.
Dividend stocks are a reliable choice for those seeking steady income and long-term financial growth.
Key Factors to be Considered When Choosing Dividend Stocks
The financial metrics should help you determine a company’s viability in paying dividends to investors:
- Dividend Yield: The indicator shows a ratio dividing dividends by stock price. The ratio is higher if a company pays higher dividends. However, you should not ignore situations when a company pays unusually higher dividends, which may signal financial distress unrelated to performance.
- Payout Ratio: This metric measures the proportion of a company’s earnings to be paid as dividends to shareholders, calculated by dividing earnings by dividends. A higher dividend payout ratio indicates a higher payout ratio. In addition to being statutorily required to pay a definite ratio of dividends, a company with a high payout ratio may affect its future growth prospects, leading to lower growth in stock value.
- Payment Frequency: Investors should meet their financial conditions when aligning with a company’s dividend policy. Though it may not be typical for a company to change its dividend payment policy abruptly, investors should understand its payment frequency, such as paying quarterly or annually, to match their financial needs.
Top Dividend Stocks in Singapore (2024 to 2025)
From banking giants to real estate trusts and innovative technology firms, these companies stand out for their stable payouts, growth potential, and resilience in changing market conditions.
Here’s a list of the top dividend stocks in Singapore for 2024–2025 to help you build a strong, income-focused portfolio.
1. Singapore Stock Exchange Ltd. (SGX; S68)
SGX, located in a regional financing center, operates comprehensive financial services such as security and derivative trading, clearing and settlement, market data, and indices.
Growth Potential
- Broadening New Businesses: As a financing hub, SGX actively expands international high-quality businesses like SPAC(special purpose acquisition companies) and enhances portfolio features to increase trading liquidity and volume.
- Growing ETF Market: SGX aims to expand the ETF sector. ETFs are funds that track market indexes, such as the Strait Times index. They are becoming popular and attracting financing regionally.
- Expanding Derivative Market: Derivative hedging and investing have become popular for individual and institutional investors. SGX has expanded by launching new products, such as foreign exchange futures and other ESG-related derivatives, in addition to existing derivative businesses to boost business volume and market depth.
Financials
- Dividend Yield: 2.89%(as of Dec 13, 2024), paid quarterly with a special year-end dividend.
- Dividend History: the exchange has maintained a stable dividend policy over the past decade.
Challenges
Unlike bonds or fixed deposits, dividends are not guaranteed. The exchange operator faces multiple challenges, such as regional rivals, economic fluctuations, and geopolitical tensions, affecting its business and dividend policy.
2. DBS Group Holdings Ltd. (D05)
As one of the largest banking headquartered in Singapore, DBS offers multi-banking businesses, such as consumer banking, wealth markets, institutional banking, and treasury markets, and spawns its presence in regional main markets, like Hong Kong, China, Taiwan, India, Southeast Asia.
Growth Potential
- Expanding in High-Growth Markets: DBS has expanded its business in the Guandong-Hong-Kong-Macau Greater Bay Area through acquisitions and developing existing networks to enhance returns for the group.
- Risk Containment: The group has improved its asset quality by keeping its non-performing loan ratio to 1% or lower, weathering recessions and economic uncertainty.
Financials
- Dividend Yield: 4.93%(as of Dec 13, 2024), paid quarterly.
- Dividend History: DBS aims to provide a stable dividend stream to shareholders and has kept the policy the same since then.
Challenges
Like other financial institutions, the group confronts the region’s economic, competition, and geopolitical disputes.
3. Singapore Telecommunications Ltd. (Singtel; Z74)
Singtel operates telecommunications and digital service providers offering mobile, broadband, and fixed-line services to individuals and corporate clients in nearby regions besides Singapore.
Growth Potential
- Joint Ventures: Singtel continues to explore digital financial services through joint ventures with expertise, such as a joint corporation of Singtel and Grab – GXS Bank, to provide digital banking services beyond borders.
- Data Centers and Digital Infrastructure: The operator invests in fast-growing industries like AI and cloud computing by partnering with industry leaders to meet the burning demand in the region.
Financials
- Dividend Yield: 3.64%(as of Dec 13, 2024), paid half-yearly.
- Dividend History: Singtel has committed to a stable dividend policy for shareholders, like other big enterprises, over the past decade.
Challenges
Singtel adapts to demand fluctuations from emerging industries through flexible business approaches, which may harm its earnings and dividend policy.
4. CapitaLand Integrated Commercial Trust (C38U)
CapitaLand, one of Singapore’s largest commercial REITs, operates a portfolio of retail, office, and integrated developments in primarily Singapore, Germany, and Australia. The REIT’ provides a stable and regular income to its stakeholders.
Growth Potential
- Resilient and Quality Properties: Despite market uncertainty, CICT’s portfolio provides a solid rental income of 9.2% in 2024, underlining its robust assets and solid property management capability.
- Growth through Acquisitions: Acquisition and redevelopment are CICT’s tactics for growing its portfolio. The recent examples are 6 Battery Road and Wilkie Edge, which are prone to increase the group’s portfolio return.
Financials
- Dividend Yield: 5.64%(as of Dec 13, 2024), paid between quarterly and half-yearly.
- Dividend History: CapitaLand has maintained a stable dividend policy to unitholders, though it changed the frequency in 2021.
Challenges
Sliding occupancy: The CICT’s occupancy rate has come down due to the rise of e-commerce, fierce competition, and economic uncertainty, creating a headwind for the group.
5. ST Engineering (S63)
ST Engineering offers technological solutions, such as security, aerospace, marine, and defense, to global clients. With its presence in over 100 countries, ST represents the name of technological innovation.
Growth Potential
- Electric Bus: The launch of the electric bus project is aligned with Singapore’s target of converting half of the local buses into electric vehicles by 2030, which will bring significant profits to the corporation.
- Structure Transformation: Under the trend of global structural digitalization and industry cybersecurity, ST Engineering could benefit from the market opportunities through its expertise.
Financials
- Dividend Yield: 3.53%(as of Dec 13, 2024), paid quarterly.
- Dividend History: ST Engineering’s primary policy for sharing profits with shareholders is a regular and stable dividend policy.
Challenges
- Debt Reduction: ST Engineering is working to reduce the debt leverage while getting new investments and deals. Any mishaps in financial management may cause disruptions to the company’s financial soundness.
- Supply Chain Disruptions: Recent experiences of disruptions like the pandemic may increase the company’s work delays and costs in future projects.
6. Sheng Siong Group Ltd. (OV8)
Sheng Siong Group is a leading supermarket chain in Singapore with over 60 outlets nationwide. The group’s “ value for money and convenience” policy, combined with its in-house brands, has earned it a robust customer base and sales volume.
Growth Potential
- Operating Efficiency: Sheng Siong has improved its profits through effective cost management and supply chain enhancement, boosting its margins and returns from equity.
- E-commerce Expansion: The company leverages the e-commerce trend due to the post-pandemic consumption pattern and increases the market share of online grocery shopping, growing Sheng Siong’s revenue and profits.
Financials
- Dividend Yield: 3.53%(as of Dec 13, 2024), paid half-yearly.
- Dividend History: The group has maintained a stable and predictable dividend policy.
Challenges
- Rising Costs: Like other companies in the market, Sheng Siong faces rising rental, labor, and other costs, which increase product price pressure and reduce margins.
- Market Saturation: The group confronts high market penetration and may have to grow by expanding overseas.
7. Hongkong Land Holdings Ltd. (H78)
Hongkong Land is a real estate company that develops premium commercial and residential properties across Singapore, Hong Kong, Jakarta, and Beijing.
Growth Potential
- Improvements & Renovations: One of the group’s strategies focuses on improvements and renovations on its premium offices across regions, such as Hong Kong and other cities, to meet demand from recovery.
- Strategic Shift of Focus: Hongkong Land plans to center on two tactical directions in the following years: 1. Sell unprofitable properties and invest in potential assets; 2. Enhance returns from existing properties to increase the group’s profits.
Financials
- Dividend Yield: 4.82%(as of Dec 13, 2024), paid half-yearly.
- Dividend History: The group is committed to a stable dividend policy.
Challenges
In addition to factors affecting property developers, Hong Kong Land is more vulnerable to China’s elements as it has a more prominent market exposure than other developers, creating more headwinds for the group.
Trends and Insights for Dividend Investors
Dividend stocks are becoming increasingly popular in Singapore due to several compelling trends. The rise of dividend-focused ETFs has captured the attention of investors, making dividend-paying stocks more accessible and attractive.
Additionally, the robust performance of Real Estate Investment Trusts (REITs) has reinforced interest in dividend investments, showcasing their resilience even in uncertain market conditions. Beyond REITs and ETFs, investors can explore a diverse range of sectors, including banking, utilities, and finance, which offer attractive dividend opportunities.
Furthermore, Singapore’s tax-efficient environment, where dividends are typically not taxed, has enhanced the appeal of dividend stocks, solidifying their role as a preferred choice for income-focused investors.
Final Thought
Dividend stocks offer a compelling alternative to traditional income-producing investments like bonds and fixed deposits. While they provide the potential for stable, regular income and capital appreciation, investors should be mindful of the inherent risks, such as price fluctuations. Thorough research is essential to making informed decisions and maximizing returns in dividend stock investing.
Key Takeaways:
- Dividend stocks provide regular income and moderate capital growth, making them a reliable alternative to traditional fixed-income investments like bonds and fixed deposits.
- Investors should focus on dividend yield, payout ratios, and payment frequency to assess a company’s ability to sustain and grow its dividend payments.
- Singapore’s tax-efficient environment and diverse options across sectors like banking, REITs, and utilities make dividend stocks an appealing choice for income-focused investors.
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