10 Best dividend stocks in Singapore
You have probably started trading stocks but maybe you’re not seeing much improvement in your portfolio’s value. If you want a consistent payout over the long term, then dividend stocks in Singapore could be the thing for you!
Successful companies usually set aside a part of their profits, to be paid as dividends to their shareholders. These dividends are distributed over an extended period as long as the company is making enough profits to fund the payouts.
This incentivises more people to invest in the company’s stock and makes existing shareholders maintain their positions. Hence to ensure you make the right decisions, we will first discuss how to pick the best dividend stocks in Singapore and then go into our list of 10 stocks you could invest in.
By the way:
When was the last time you've done a proper Investment plan or reviewed your investments?
In Singapore, having a proper investment plan could spell the difference between a rich quality of life for you & your loved ones and a not-so-good quality of life...
And people are starting to realize this.
How to pick the best dividend stock?
Photo by Hakan Nural on Unsplash
Naturally, you would feel that the best dividend stock is always the highest-paying one. While you’re not entirely wrong, there is more to choosing a dividend stock than its yield.
Since dividends are derived from the profit a company makes, choosing a profitable company with a sustainable business model is critical. This will ensure you the best dividend income from your stocks over a long time.
To identify such companies with good fundamentals, we can use some of the following indicators:
Low Debt to Equity Ratio
Capital Expenditure (CapEx)
Consistent dividend payouts
Good growth
High dividend payout ratios
We also picked stocks with a higher dividend rate than the Singapore Savings Bond (SSB) rate of 2.17%. This was to highlight dividend stocks in Singapore that are a better option than just investing in the SSBs.
Thus here is our list of the 10 best dividend stocks in Singapore, that you could consider investing in:
1. Lian Beng
Image Credits: Property Giant
Current Price: S$0.52
Dividend Yield: 5.71%
Lian Beng Group is involved in building construction and civil engineering activities with clients in both the private and public sectors. Another part of its business is also leasing construction machinery and equipment.
As a company that is a G8 registered contractor with Building and Construction Authority (BCA), it can tender for public sector projects of unlimited contract value. This makes the company highly profitable and sustainable due to the vast profit-making opportunities through public contracts.
Despite any crisis or economic downfall, there will generally be a demand for private contractors from the government as the government is not a profit-seeking entity. Hence it is almost certain that large contractors like Lian Beng will continue to receive tenders from the government in the long run.
It is thus evident that this is a sustainable business which has the potential to continue making profits into the future, making this a good dividend stock in Singapore.
2. Netlink NBN Trust
Image Credits: PNGitem
Current Price: S$0.945
Dividend Yield: 5.43%
NetLink NBN Trust is a company unfamiliar to most Singaporeans. Did you know that it is the backbone of most mobile service providers that we patronise?
This company operates the Next Generation Nationwide Broadband Network (Next Gen NBN) which includes the operation and management of fibre cables, manholes and ducts. This network provides nationwide coverage to homes and industrial properties.
Mobile service providers like M1, Singtel and Starhub, which have a large consumer base in Singapore, use this network.
Internet coverage has become inevitable in this day and age for the proper functioning of most of society. Therefore, the key feature of this company is that it provides this essential service which will always be in demand regardless of the economic state of the country.
Furthermore, with the advent of greater technologies in this space like 5G, the demand for NetLink’s services will continue to stay high. It’s thus assured that the company has the potential to continue being highly profitable, which makes it a good dividend stock in Singapore.
3. Starhub Ltd
Image Credits: Starhub
Current Price: S$1.23
Dividend Yield: 5.2%
Starhub is a well-known info-communication company that provides cable, mobile and internet services to both consumer and corporate markets.
Starhub has made a good recovery in gross profits from $1.04 Billion in 2020 to $1.07 Billion in 2021. Currently, the trailing twelve-month (TTM) gross profit stands at $1.11 Billion.
Hence positive finances and a large share in the telecom providers market in Singapore make Starhub one of the best stocks for good dividend payouts.
4. ST Engineering Ltd
Image Credits: Seek Vector Logo
Current Price: S$3.880
Dividend Yield: 4.58%
ST Engineering is a government-linked company, and a majority of it is owned by the state holding company, Temasek Holdings. This is a global technology, defence and engineering company providing services in sectors including aerospace and electronics.
It is one of the largest companies listed on the SGX and about a third of its revenue comes solely from defence contracts. The Singapore government also recognises ST Engineering as the main company to meet its defence needs.
By mainstream economic theory, the government is not a profit-seeking entity.
Therefore, there may be inefficiencies in awarding the most cost-efficient bid for tenders posted by the government.
The company will thus make more profits relative to similar commercial contracts.
The government’s goal is to instead maximise society’s welfare. The act of enhancing defence systems and capabilities is a form of enhancing society’s welfare.
The number of contracts to enhance Singapore’s defence will not fall anytime soon, especially given the heightened tensions between major powers worldwide.
Therefore with a third of its revenue source being almost a given, it is safe to assume ST Engineering is one of the best dividend stocks in Singapore.
5. DBS Group
Image Credits: Logos Download
Current Price: S$32.79
Dividend Yield: 4.4%
DBS is one of the largest banks in Singapore and is well known by many Singaporeans for its excellent consumer and corporate banking services. It is also a global leader with accolades such as “World’s Best Bank” from Euromoney and “Safest Bank in Asia” from Global Finance, backing its name.
The key attribute of this stock is its consistent dividend payouts. Despite the pandemic and the ensuing financial crisis in 2020, the bank still paid out dividends, albeit relatively lower than usual.
DBS also introduced quarterly dividend payouts in 2019 to ensure that shareholders received regular income streams. Hence, the company’s aim to ensure a consistent payout makes DBS one of the best dividend stocks in Singapore.
6. United Overseas Bank Limited
Image Credits: 1000 Logos
Current Price: S$27.33
Dividend Yield: 4.39%
UOB, like the bank mentioned above, is a well-known bank in Singapore amongst residents here. UOB is also well-established in the region with offices in countries like Malaysia, Thailand and Indonesia.
UOB provides a range of financial services including, corporate banking, investment banking and treasury services.
UOB boasts an attractive dividend payout ratio of 50.3%. For the uninitiated, the dividend payout ratio measures how much of the company’s earnings are set aside for dividends.
Usually, a ratio below 100% is good as it means that the company is earning enough to cover its dividend payouts. This also means that there are sufficient funds to build upon, to make future dividend payments.
Therefore, UOB’s good dividend payout ratio is a great indicator that it has the potential for consistent dividend payouts in the long run hence making it a good dividend stock in Singapore.
However, one possible downside is that UOB has one of the largest Debt to Equity ratios on this list, at 80.299. This is not a comfortable margin as it means a higher risk of defaulting in uncertain economic environments when the company’s investments and revenues may be unstable.
This may imply a risk for you as a shareholder as you might lose dividend payouts in the future. You may thus be unsure if you can afford that risk if you are considering this stock.
It’s not uncommon to be unsure of your risk appetite, and Techiya has the perfect solution — a risk calculator to better know your risk profile.
7. Boustead Singapore Limited
Image Credits: bousteadprojects
Current Price: S$0.92
Dividend Yield: 4.37%
Boustead is an entity based in Singapore that provides global engineering services and geo solutions. It provides engineering solutions in 3 specific fields — energy, water & wastewater and industrial real estate.
Under its geospatial side of the business, it provides consulting services and distributes geospatial technologies made by the supplier ESRI, to countries in the region.
Boustead has a relatively low debt-to-equity ratio of 14.647, meaning it’s not carrying much debt on its books relative to its assets.
This implies that the company’s expenditure is sourced more from its revenue streams and less from debt thus reducing the liabilities of the company. This makes for the company’s good financial state, which means it is a profitable venture.
Therefore shareholders can expect consistent dividend payments from the company, making it a good dividend-paying stock in Singapore.
8. Micro-Mechanics Holdings
Image Credits: micromechanics
Current Price: S$3.00
Dividend Yield: 4%
Micro-Mechanics is a company that designs and produces consumable parts for the semiconductor industry here in Singapore. It has a large international exposure with manufacturing facilities in countries including China and the Philippines, and marketing offices in countries like the US or Switzerland.
An attractive feature of this company is its low debt to equity ratio of 2.312 which is the lowest among the listed companies. A low debt-to-equity ratio indicates that the company does not have much leverage on its books.
The company not operating much on borrowed money is a sign of a sustainable business model and a lower risk of defaulting on its debt.
These attributes indicate that the company can sustain profits meaning you can receive dividends in the long run, making this a good dividend stock in Singapore.
9. Great Eastern
Image Credits: AsianBusinessHub
Current Price: S$19.42
Dividend Yield: 3.35%
Great Eastern is a well-known and oldest life assurance provider in Singapore. It provides personal accident, health insurance and annuity plans to customers in both Singapore and Malaysia.
This company has a very good dividend payout ratio of 33.11% relative to other listed companies. This means that the company only uses that percentage of its revenue to pay dividends.
This is a good indicator that the company has sufficient revenue to cover dividend payments with a larger balance remaining, to cover future payouts. Hence a good dividend payout in the future is almost certain, making this a good dividend stock in Singapore.
10. SGX
Image Credits: SGX
Current Price: S$9.91
Dividend Yield: 3.23%
Some of you might be surprised to see this here but yes, SGX the primary stock exchange of Singapore does offer dividend stocks, albeit good ones. The SGX provides trading, clearing, settlement, custody and market data services.
The SGX is also highly profitable with its profits rising from S$447 million to S$456 million as of June 30th this year. With Singapore being a stable and prosperous economy, it attracts a great volume of investments which makes SGX a profitable entity in the long term.
With good prospects for profitability, the SGX dividend stock is a good one to invest in, without having to worry about its sustainability.
Conclusion
Dividend stocks in Singapore are a good offering that investors like us can take advantage of through analysis of the companies and their finances. We hope our list makes it easier for you to get an idea about the possible stocks you could invest in.
However, there is a chance you are still unsure of which of these dividend stocks to pick for the best returns or how much you should invest in them.
If that’s the case, you need a financial advisor to address your needs, given your financial state. However, you won't be alone if you consider a financial advisor 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 that you will sustainably meet your financial goals. With regards 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, want, and goal
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!
If you are also wondering how to invest in these dividend stocks in Singapore, check out our list of the 9 best investment apps in Singapore that you could use!
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