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5 Best Dividend-Yielding Strategies in Singapore

‘UK bonds are now more volatile than Bitcoin’

If that statement seems outrageous to you, then maybe it’s not such a good idea for your to check your portfolio today.

Economies around the world are shrinking, and very quickly, I must add.

The US is on the brink of a recession. Meanwhile, the UK is in a similar crisis amidst unprecedented volatility of UK bonds in response to fiscal measures.

So you get the picture — everyone is not doing so well, and the future looks bleak.

If you do then end up checking your portfolio and see nothing but red, instead of panic selling, consider alternatives.

One of the most stable ways to earn a small income on your investments in Singapore, despite tumultuous times like this is to maximise your dividend returns.

Established companies, and those with the potential to ride out of the storm mostly unscathed, will continue paying dividends. So even if their stock prices are constantly dropping, you could still earn a good sum from their dividend payout at the end of the month.

Thus, this article aims to give you a clear idea of how you can maximise those dividends returns.

What are dividends?

For starters, dividends are payouts that a company makes to its existing shareholders consistently in Singapore every quarter.

A dividend payout is a way for companies that are making healthy profits to distribute a share of their earnings to investors. This helps incentivise existing investors to stay and others to consider investing in the company.

There are different dates to take note of when pursuing a dividend investment strategy:

  • The declaration date is when the company announces the dividends, which is up for approval by the shareholders.

  • The ex-dividend date is essentially the deadline to be eligible for dividend payouts. Hence if you buy the company’s stock after its ex-dividend date, you won’t receive the dividends.

  • The record date is another deadline for the company to decide which shareholders will receive the dividends

  • Lastly, the payment date is when the shareholders receive the dividend payout.

Why invest in dividends?

Photo by Kanchanara on Unsplash

One of the biggest reasons to pursue a dividend-investing strategy in Singapore is the ability to stay afloat even during a ‘bear market’ (a market experiencing price declines over an extended period).

Well-established companies with large market shares and strong financial backing will continue to pay out your dividends even if the market is volatile. These companies usually have sufficient cashflow, and large reserves to ride out the occasional bear markets.

Hence, even if their profits are momentarily affected, if they made good profits in previous years, they will still be able to finance the payouts.

Dividend-Yielding Strategies in Singapore

Image Credits: Tech Daily

a) Create a sustainable portfolio

Creating a sustainable portfolio to maximise your dividend returns in Singapore comes down to picking the right stocks to invest in. Here are some factors to consider when picking your dividend stocks in Singapore.

Dividend Yield

The dividend yield is calculated by dividing the dividend value per share by the current share price. It’s a metric that functions as an easy way to compare the payouts of different companies.

The higher the yield, the better your returns. Hence, compare the historical dividend yields of companies that you’re considering, to shortlist the few you may want to invest in.

However, you shouldn’t stop at comparing the dividend yields of stocks (a very common mistake) when picking the right one to invest in in Singapore. Read on to find out which other factors you should also consider before picking your stock.

Dividend Payout Ratio/Cash flow

The dividend payout ratio is calculated by dividing the total dividend payout by the net income of the company. The commonly accepted rule is that this ratio should be below 1.

For example, if a company has a net income of $5 billion, and its dividend payout is $4 billion, the payout ratio is ⅘ = 0.8. This is good as it means that the dividend payout is fully funded by its income, thus assuring that the dividend payouts are sustainable.

Hence, the lower the payout ratio, the better as it means that the company has more spare cash to reinvest into the business. This allows the scaling of the company, which potentially results in higher future income, thus, sustained payouts.

The free cash flow payout ratio is a similar factor, which determines how much free cash is sitting on the company’s books. Since dividends are usually paid in cash, we want to ensure the companies have sufficient free cash to fund the payout.

Debt to Equity Ratio

Ideally, you would want your dividends to be coming from the company’s operating profits which refer to the profit margin on their product or services. This often correlates to a sustainable dividend payout over an extended period in Singapore

If your dividend payouts are, however, financed by new debt or the sale of assets, there is little guarantee of a sustained dividend payout over a long time.

Gaining more liability or the sale of assets only generates a temporary influx of cash but are not indicators of a business that can sustain profits.

Thus one of the key factors to look for is the Debt to Equity ratio. This ratio is calculated by dividing the company’s debt value by its asset value.

This ratio is a good indicator of how much debt a company has accumulated thus the lower the ratio, the better when it comes to picking a dividend stock in Singapore. If the ratio sits above 2.0, you should probably take a pass on that stock.

Diversify stock selections across different countries/industries

When it comes to investments, the golden rule is never to put all your eggs in one basket and dividend investing in Singapore is no exception.

It is always good to practise diversifying your portfolio into different industries and markets.

Even though companies with good fundamentals tend to continue paying dividends during turbulent market conditions, it is not a guarantee. Sudden shocks to the economy, like the war in Ukraine could cause companies to run huge losses, thus possibly ceasing dividend payouts.

Find out more about the 10 dividend stocks in Singapore we recommend investing in based on most of the factors we have discussed above!

b) Invest for a higher dividend yield

Investing for a higher dividend yield in Singapore is a pretty simple strategy. As we have discussed, a higher dividend yield refers to a greater dividend payout concerning the share price.

Thus this strategy focuses on solely choosing stocks which offer a high dividend yield which will directly translate to greater dividend returns on your investments in Singapore.

However, a higher-yield stock is not necessarily a very safe investment. This is because the yield is subject to reductions at any time if the company cannot sustain the high payouts over the long run.

Hence it is important to ensure your company has good fundamentals, using the list of factors provided under the first strategy, to prevent losses in the future.

c) Invest for dividend growth

A dividend growth strategy in Singapore capitalises on dividend growth stocks.

Dividend growth stocks have a record of increasing their great dividend returns in the long run. Hence the first step is to identify such stocks by comparing their current dividend per share values and those around 10 years ago.

For experienced investors, one way to pick stocks will be the Gordon dividend growth model.

This model assumes a constant increase in dividend payout infinitely and calculates the present value of a stock. If the value is under the current price of the stock, it is undervalued thus representing greater growth potential.

This indicator is another way to pick stocks that have good dividend growth potential.

Next will be to shortlist the best dividend stocks in Singapore using the factors we listed under forming a sustainable portfolio. Make sure to diversify your portfolio with stocks from various sunrise industries to maximise your returns.

Lastly, track the performance of your stocks to ensure there is a good dividend growth rate, else it would be better to swap them out.

d) Reinvesting dividends

Reinvesting dividends from stocks in Singapore is a good strategy if you don’t necessarily require your dividend income for necessities. This allows you to compound investments.

Dividends are paid out relative to the quantity of stock you hold. Hence, when you reinvest dividends to buy more stock, you will receive more dividends the next quarter, which you use to purchase more stocks and so on.

You can pursue this strategy in 2 ways. First, you can opt for your stock broker to automatically reinvest your dividends. Another option is to do it manually with the dividends you accumulated.

For those who prefer a hands-on approach to invest, the latter option may be preferable as you have greater control. This allows you to easily stop your investments if you deem the stock to be no longer favourable.

If you, however, prefer a less active way to invest but are unsure of how much risk you can take when opting for automated dividend reinvestments, fret not.

Techiya has the perfect solution — a risk calculator to better know your risk profile.

e) Adjust portfolio according to the market

Dividend yields, which we discussed earlier, move inversely to the stock price. Hence, an increase in the price of stocks you bought, by a large margin, may not be so favourable after all.

In this scenario, you would be at a disadvantage as your dividend yield will be low compared to other stocks. Hence if you chose to reinvest your dividends, you can only buy a fewer number of additional stocks than before.

Therefore, it is imperative to monitor the performance of your stocks. If they don’t perform favourably to your dividend investing strategy, swap them out for better stocks, to maximise the returns of your portfolio.


These 5 strategies would hopefully give you a good picture of different ways you can maximise your dividend returns in Singapore. There is certainly more to just putting some money in your favourite stock and watching your dividends roll in!

If you’re however unsure of how much you should invest in these stocks to earn a significant dividend income, or the current markets are spooking you out, what you need is a financial advisor.

You won't be alone if you consider one as around 61% of Singaporeans reportedly consult one, so there’s no need for hesitation.

Contrary to their reputation for pushy sales tactics, financial advisers help new investors cut through the noise.

They can arrange your investments and build a financial plan that helps ensure you will sustainably meet your financial goals. With regard to investment planning, they do the following:

  • Identify your current life stage

  • Identify your goals, needs and wants

  • Find out how much you will need for each need, wants, and goals

  • Plan how you can achieve these goals

  • Build and optimise your financial investments

To help you take control of your personal finance, Techiya offers a free comprehensive and personal financial assessment worth over $200 for individuals; don’t miss out on this!



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