Dividend investing in Singapore involves purchasing stocks of companies listed on the Singapore Exchange (SGX) with the objective of receiving regular dividend payments. Here are the steps to get started with dividend investing in Singapore:
1. **Educate Yourself:**
Understand the basics of dividend investing, including how dividends work, different dividend payment schedules, and factors that influence dividend payouts. Check out the www.sgx.com. From there you can check the stock screener whereby you can filter the dividend yields on every company. Take note high dividend yield does not mean it is a good company and a low dividend yield does not mean the company is not growing. There are a lot of youtube videos to check on what is dividend investing and what stocks and ETFs to go for. Always start with a small amount and as you educate yourself more and more comfortable, you can go for higher amount.
2. **Set Investment Goals:**
Define your investment objectives, risk tolerance, and time horizon. Determine how much you can invest in dividend-paying stocks and what level of income you aim to generate from dividends. The reason is so that you only invest on the money that you do not need and take note. Investment is always for the long term as market will go up and down over the years. For my own target, i'm looking at generating $50k per year whereby it will be sufficient to cover my household expenses. The next bound i'm looking at is $100k per year whereby i can afford to invest the other $50k in other riskier assets like bit coin, antiques, collectibles and art collection or additional stocks, real estates etc. After that my next bound is $250k per year.
3. **Open a Brokerage Account:**
Choose a reputable brokerage firm in Singapore that offers access to the SGX. Compare brokerage fees, trading platforms, research tools, and customer service to select the best option for your needs. I have 3 trading accounts, poems, tiger and Moomoo. My largest portfolio is in my poems account, follow by Moomoo and tiger. There are f
4. **Research Dividend-Paying Stocks:**
Conduct thorough research on dividend-paying stocks listed on the SGX. Look for companies with a history of consistent dividend payments, strong financial performance, and sustainable business models. Consider factors such as dividend yield, payout ratio, dividend growth, and company fundamentals. Also on the industry and whether you are familiar with it. Must understand the business model and whether the business have economic MOATS.
5. **Diversify Your Portfolio:**
Build a diversified portfolio of dividend-paying stocks across different sectors and industries to reduce risk. Avoid concentrating too much of your investment in a single stock or sector. I make a mistake of focusing on a few stocks and right now my portfolio is down about 25%. I'm focusing on the bank stocks this year and build up my bank portfolio for this year before going for other industries like REITS.
6. **Evaluate Dividend Metrics:**
Analyze key dividend metrics such as dividend yield (annual dividend per share divided by the stock price), dividend payout ratio (percentage of earnings paid out as dividends), and dividend growth rate. Focus on stocks with attractive dividend yields and sustainable payout ratios. One of the things i learn is that as i buy a certain stock after the research, instead of going all in. i should dollar cost averaging. Take example i want to buy DBS bank, as the price is $36, how can i ensure that i did not buy at the highest price, i will slowly dollar cost averaging for the next 12 months so over time even if the price goes up and down, my average price will still be lower than the highest point as it is impossible to time the market.
7. **Monitor Company Performance:**
Stay informed about the financial performance and dividend policies of the companies in your portfolio. Monitor quarterly earnings reports, dividend announcements, and corporate developments that may impact dividend payments. It can also be a buying opportunity as long as the company still maintain it's economic MOAT.
8. **Reinvest Dividends:**
Consider reinvesting dividends to compound your returns over time. Many brokerage platforms offer dividend reinvestment plans (DRIPs) that automatically reinvest dividends to purchase additional shares of the same stock. For my account in SRS, i've been investing into the S&P 500 and reinvest all the dividends that i got back. So far for the 15 months i've been investing, my portfolio has been up for 17%/
9. **Review and Adjust Your Portfolio:**
Regularly review your dividend portfolio to assess performance, make necessary adjustments, and rebalance holdings if needed. Reevaluate your investment goals and adjust your strategy accordingly. Definitely need to review to see which industry to keep a balance. Currently i'm building my portfolio based on industries. Banking, Telecommunications, Reits, Consumer, Technology, Waste management. I'm adjusting my portfolio as i progress. This year i'm going to increase my percentage for Banks to go up to at least 30% of my portfolio.
10. **Stay Patient and Disciplined:**
Dividend investing requires patience and discipline. Stay focused on your long-term investment objectives, avoid emotional decision-making, and be prepared to ride out market fluctuations. Nobody would want to see the portfolio goes down but this will happen. Just need to have conviction as long as the company do not go bust.
By following these steps and maintaining a disciplined approach to dividend investing, you can build a portfolio of dividend-paying stocks that generate regular income and contribute to long-term wealth accumulation.
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