Being readers of this blog, most of you will know stock markets are great for a long term investment. It helps build wealth by capital appreciation.
A lot has been spoken about the power of compounding and its impact on wealth. But in all these conversations, there’s something that hasn’t been spoken as much. That’s dividends.
Dividends are a great way to build your wealth with liquidity.
What are Dividends?
Dividends are cash given out to the shareholders from the excess profits made by the company as a token of their trust in the company and to stay invested.
Dividends are measured as a percentage of the profits and are paid per share. So for example, if dividends of S$0.30 cents is announced. It’s for one share.
So if you have 100 shares, you get dividends of S$30.
Why are Dividends an important measure?
Dividends immediately let you know the financial health of a company. When a company has excess cash to dole out as dividends then they are in the pink of health.
- Consistent dividends are a sign of consistent profitability.
Dividends are always paid out of the profits. If a company isn’t profitable, then dividends won’t be paid out. So receiving dividends from a company means the company is doing more than well.
- Dividends are a sign that the company is not cash strapped.
Cash flow is the major factor for a business. There should be enough cash generated by the business to keep operations running. At some point of a time, a business will have to stop taking external funding and needs to generate cash from the business. When a business gives out dividends then, it’s a sign that their cash flow is healthy and they have enough cash to run the business.
- Dividends are also a sign that the company cares about it’s investors.
Apple for a long time did not give out dividends(Although they had billions of dollars in cash) and a lot of people considered that as a company not caring about it’s investors.
Investors place a trust on a company and invest and when a company gives out dividends, it shows that they care about the investors and is also a sign that they won’t do anything drastic that will affect the stock price of the company.
It’s more likely, that a dividend paying company has a consistent market rate that doesn’t fluctuate too much.
Benefits of Dividends as an Investor
Generally your stock market investments are liquid. But if your position is at a loss, then you don’t want to sell. Dividend is pure cash transferred to your account every once in a while.
If you have been invested for decades, then you can make thousands of dollars in dividends.
Earn back your capital
When you invest, there’s cash outflow. And you need to earn your capital back. How it’s done in the stock markets is through capital appreciation. Another way to earn your capital back is through dividends that is paid out regularly.
Without further ado, let’s find the Top 10 Dividend Stocks in Singapore
- Challenger Technologies
Challenger Technologies, established in 1982 has been giving consistent dividends for the past 5 years. Having 38 electronic stores all across Singapore and going strong, this is a good company and has a dividend yield of 8%.
- CEI Limited
CEI limited is another company that has been around for more than a decade and a half. They are a contract manufacturer who focus on Printed Circuit Board Assembly, Box Build and Equipment Manufacturing.
- Frasers Commercial Trust
FCT is a company that invests in real estate. Primarily office buildings in Singapore and Australia. The company is valued at $2.1 Billion.
The dividend yield is 7%
This company deals with Industrial Real Estate and as you can see in the name. It’s a REIT. It has a portfolio of 47 properties all over Singapore. It was announced recently that ESR-REIT would merge with VIT creating a $3B fund.
They’ve been giving consistent dividend payouts of 7%.
- Mapletree Logistics
Mapletree logistics is another Real Estate Investment Company that was founded in 2004. Mapletree is a behemoth in Asia. They have properties across Asia in locations such as South Korea, China, Hong Kong, Malaysia, Singapore, Japan, Australia and of course Singapore.
- 6. Capital Land Retail China
There’s another REIT in the list and it’s Capital Land Retail China. This company focuses only on real estate projects in China that is restricted to shopping malls.
They have a dividend yield of 7%
- CDW Holdings
CDW Holdings trades and sources LCD backlights, frameable products, printed circuits. They have large japanese clients and has 7 factories in China. In Shanghai, Suzhou and Dongguan.
They give a dividend yield of 6%.
- Lung Kee
Lung Kee will be the leader in this list in terms of providing dividend. It’s a mould supplier and has been around for 40 years. It has factories in China, Taiwan, Japan and Malaysia.
It has a dividend yield of 14%.
- Karin Technology
Karin has been around for 4 decades and they specialise in various businesses such as electronic components, IT and computers and data control cables. They gave a dividend yield of 11%.
- AIMS AMP Capital Trust
To complete this list is another REIT. The AIMs AMP Capital Trust. This company focuses on income generating industrial projects. It has 27 projects in Singapore and Australia combined. It’s a decade old company and they give a dividend yield of 8%.
So there you have it. The top 10 dividend paying stocks in Singapore. Dividend investing is not new and it has been practised by a lot of successful investors all over the world. Dividend does help in bringing much needed liquidity to the process of investing.
Have you invested in any dividend paying stocks? Share with us.