If you are a Singapore resident and hoping to rely on dividends as a main form of your passive income, you don’t have to look overseas, our Singapore market is a great place to help you do so.
Finding that difficult to believe … just read the following:
Don’t know how to choose stock, then just buy STI ETF off the market.
What is its dividend yield?
3.5% this year and 3.0% historically. Not bad, isn’t it? esp if it can be sustained year after year …. it sure beats the fixed deposit.
Yes, stock prices goes up and down, so will STI index but if you are investing for dividend, then why be so bothered, just chill and collect dividends twice every year.
Better still, if you adopt a regular purchase regime, say you buy $250 worth of STI ETF every month, on “bad” years when the STI ETF price is lower, you will actually get even more shares and you can just hang on for the market to rebound … and in the meantime, what do you do?
Chill and collect dividend lah, what else …
ABF SG Bond ETF
Scared of the ups and downs of equity investment, how about bond then?
ABF SG Bond is a good start – it is classified as a low risk product because it invests largely into sovereign and quasi-sovereign bonds issued or guaranteed by the government of Singapore or any government of People’s Republic of China, Hong Kong SAR, Indonesia, Korea, Malaysia, Philippines or Thailand. Its portfolio is predominantly Singapore Government bonds, which has been rated AAA across all 3 major credit rating agencies consecutively for at least 19 years (Standard & Poor’s, Moody’s and Fitch). Moreover, Singapore Government Bonds are one of the world’s highest-yielding AAA-credit rated government bonds. The Fund also invests in quasi-government bonds issued by entities such as HDB, Temasek, and LTA. Both these Singapore Government and Quasi-government Bonds are placed in the risk-free category.
How’s the yield? 2.0 to 2.5% in recent year. Not bad what … for a low risk product.
Singapore Saving Bond
Still scared – then Singapore Saving Bond lor.
The graph below shows the 1st year interest rate of the 10 years Singapore Saving Bond from the first to the latest issue. As you can see, the last few issues are yielding 1.6+%. And remember its risk free, their capital is guaranteed by our government. In fact, it is so good that you can withdraw your capital and still be paid up to that month’s interest (unlike FD … no interest for premature withdrawal)
And the first year yield is the lowest of the 10 years bond. So what you see below is a conservative estimates of the yield you will get. SSB rewards you for keeping the bond to maturity.
The only pity is that each of us can only invest up to $ 100,000. But it is still good enough for many of us … for the super-rich people, they will have other options.
What are you waiting for? Quick !!!
Lion-Phillip S-REIT ETF
You are aggressive type right? I know, I know, 2-3% yield is not enough.
Then maybe Lion-Phillip S-Reit ETF will suit you better. It is dedicated entirely to Singapore real estate investment trusts (REITs).
How about that, BE a landlord man!
Its dividend yield is ~ 5%. Nice!
Feeling that risk is too concentrated as it only has Reits listed in Singapore?
Then maybe you want to consider Phillip SGX APAC Dividend Leaders REIT ETF and NikkoAM-StraitsTrading Asia ex Japan REIT ETF. They have Reits that are listed overseas in Australian, Japan, Hong Kong etc. Indicative yield … same same 5%.
Nikko AM SGD Investment Grade Corporate Bond ETF
Want to try something new?
How about this new Investment Grade Corporate Bond ETF?
It offers us an easy access to S$ denominated investment grade bonds issued by high quality (i.e. greater financial strength) corporations. Our risk is diversified as there are many bonds within this ETF, so even if one collapses (like some of O&M companies a while ago), it is only a small part of the overall portfolio within this ETF.
In terms of risk profile, it is definitely higher than our government, statutory board issued bonds but its return is also higher. 3% is the indicative yield mentioned. Not bad for a bond to match STI ETF.
Many of our local stocks pay good dividends – it is not difficult to find a financially strong company providing >3% dividend yields to their investors based on the current share prices … these companies are well-known to many of us : Singtel, DBS, SGX, Capitaland Mall, Hong Leong Finance, Frasers Property …. etc
If you can do your own research to discover the gems among the locally listed companies, you can try to buy specific stocks to maximise your gain/yields. However, if you are not comfortable, then ETF is a nice entry option and their yields are pretty good too! See above 🙂
By the way, let me use this opportunity to share the dividend declared by the companies on my watchlist. By now, all the companies in my watchlist have already released their results and declared their dividends if any.
There are 73 companies on my watchlist. And look at the table, 53 of them declared dividend for this quarter. That’s 73% !
And out of these 53 companies, 42 of them declared dividend amount that matched my expectations. That gives me enough confidence that I can rely on them for regular income.
So, isn’t Singapore market a GREAT place for us who seek dividends for passive income?
And better still, for us, as a Singapore resident, we can invest for dividend without being concerned with currency exposure, withholding tax and in fact, even personal tax for that matter. There is no tax on dividend at all in Singapore.
Best of best man folks !!!!
It’s great to be here … Majulah Singapura!!!