Exploring Best Dividend Stocks in Singapore [2024 Guide]

In the heart of Singapore's vibrant financial scene, dividend stocks emerge as a beacon for investors seeking both passive income and financial growth. The year 2024 beckons with the promise of high dividend yields, especially following a year that defied economic uncertainties with unexpectedly strong payouts. This article aims to guide you through the best dividend stocks in Singapore for 2024, offering insights into making savvy investment choices that yield tangible returns. 

Understanding the intricacies of dividend investing is crucial, from selecting the highest-yielding stocks to navigating the market's fluctuations. Here, we'll dissect the key players across various sectors, providing a streamlined analysis that equips you with the knowledge to enhance your portfolio's resilience and profitability. Embark on this journey to financial wisdom, where dividends are not just a strategy but a pathway to achieving fiscal stability and success.

How to Pick the Best Dividend Stocks

Selecting the best dividend stocks is a nuanced process that involves more than just eyeing the highest yields. It's about understanding and evaluating a set of key financial indicators and market trends that point towards a company's ability to maintain and potentially increase its dividend payouts over time. Here's a streamlined guide to help you navigate through the process of picking the most promising dividend stocks in Singapore.

Understanding Key Metrics

• Dividend Yield: This is the dividend per share divided by the stock's price per share, expressed as a percentage. While a high yield is attractive, it's essential to balance this with the company's ability to sustain such payouts in the long term. Look for stocks with a solid history of dividend growth, which often indicates stable profitability and a commitment to returning value to shareholders.
• Payout Ratio: This metric shows the proportion of earnings paid out as dividends to shareholders. A lower payout ratio may suggest that a company has ample room to grow its dividends. However, it's also crucial to consider the company's debt-to-equity ratio; a lower figure here indicates financial health and a sustainable dividend policy.
• Share Price Performance: Over the past 12 months, the stock's price performance can give insights into the company's current market standing and growth potential. Alongside, analyzing long-term profitability and debt levels helps assess the firm's viability and stability.

Dividend Investing Challenges

It's crucial to remember that dividends are not guaranteed; a company's financial health can change, impacting its ability to distribute dividends. High yields can be enticing, but they require a deeper dive into the company's fundamentals to ensure consistency. The pandemic has shown that even strong companies can face unprecedented challenges that affect dividend payouts.

Strategic Selection Tips

• Historical Dividend Performance: Prioritise companies with a history of maintaining or increasing dividends. This consistency is a positive sign of financial health and shareholder value.
• Financial Health: Utilise financial data platforms to review essential metrics like long-term profitability and the debt-to-equity ratio. A strong financial foundation is key to sustainable dividend payments.
• Dividend Dates and Yield: Familiarise yourself with the ex-dividend date to ensure eligibility for dividends and consider the dividend yield for its current attractiveness.
• Economic and Industry Trends: Economic resilience and growth potential in a company's industry are vital. Consider broader economic conditions, government policies, and sector-specific trends to make informed choices.

By weaving together these insights, investors can better position themselves to select dividend stocks that not only offer attractive yields but also stand on a solid foundation of financial health and industry strength. Diving deep into these aspects will equip you with the tools to build a resilient and profitable dividend investment portfolio in Singapore.

Best Dividend Stocks in Singapore in 2024

When exploring the best dividend stocks in Singapore for 2024, it's essential to consider a variety of factors such as dividend yield, company performance, and industry trends.

Source: morningstar.com

DBS Group Holdings Ltd. (D05)

DBS Group Holdings Ltd. is a premier multinational banking and financial services corporation based in Singapore, serving as a cornerstone in the financial landscape of Southeast Asia. Known for its forward-thinking approach and emphasis on innovation, DBS has consistently been at the forefront in leveraging technology to enhance banking services.Despite the economic challenges posed by the pandemic and recent ATM service disruptions, DBS reported a record net profit of S$10.3 billion in 2023. The bank's robust performance and strategic acquisitions, such as Citigroup’s Taiwan consumer banking business, signal its growth trajectory and commitment to increasing shareholder value.

United Overseas Bank Ltd (U11.SI)

United Overseas Bank Ltd (UOB) stands as a testament to enduring strength and stability in Singapore's banking sector. With its extensive network spanning across Asia, UOB has played a pivotal role in supporting regional businesses and economies.

Despite the turbulent economic climates, UOB has maintained a commendable dividend distribution record, underscoring its sound financial management and operational resilience. In 2023, the bank reported S$6.1billion profit..

OCBC (O39.SI)

Oversea-Chinese Banking Corporation (OCBC) stands as a pillar in Singapore's banking sector, with a robust presence extending into key Asian markets like China, Indonesia, and Malaysia. The bank's strategy, deeply rooted in sustainability and innovation, has propelled its expansion and solidified its market position. 

With a notable financial performance, including achieving S$7.02 billion in profits in 2023, OCBC has demonstrated its financial resilience and commitment to growth. The bank's focus on digital transformation is set to enhance customer experience and operational efficiency further. This approach, backed by strong financial fundamentals, makes OCBC a compelling prospect for investors looking for growth and reliability in their investment portfolio.

Singapore Telecommunications Limited (Singtel) (Z74.SI)

Singapore Telecommunications Limited, more commonly known as Singtel, is a beacon in the telecommunications industry, not just in Singapore but across the Asia-Pacific region. As the oldest and most established telco in the country, Singtel has built a diversified portfolio that spans across multiple digital fronts, including mobile, internet, and digital services. This diversification has enabled Singtel to navigate the highs and lows of market dynamics successfully, ensuring a consistent return to its shareholders through regular dividends. 

The company's strategic focus on expanding its digital services and maintaining a robust core telecom business provides a solid foundation for growth, making Singtel a standout option for investors looking for dividend-paying stocks in the telecommunications sector.

Singapore Exchange Limited (SGX) (S68.SI)

The Singapore Exchange Limited, or SGX, is at the heart of Asia's most international, multi-asset exchange. SGX plays a crucial role in Asia's financial market, offering a comprehensive range of services, including trading, clearing, settlement, and market data. Its diversified business model allows it to generate steady revenue streams across various market conditions. 

In 2023, SGX reported net profit of S$503million. With its strategic emphasis on expanding its derivatives business and innovating in the digital assets space, SGX is well-positioned to maintain its pivotal role in the financial ecosystem, offering potential for sustained dividend payouts.

CapitaLand Investment Limited (9CI.SI)

CapitaLand Investment Limited stands out as one of Asia's leading real estate conglomerates, with its headquarters in Singapore. The company boasts an impressive and diverse global portfolio, encompassing a variety of sectors including residential, commercial, business parks, industrial, and logistics properties. Central to CapitaLand's growth strategy is its focus on asset recycling and management, aimed at creating value across its vast portfolio. 

In 2023, CapitaLand reported significant earnings, with profits amounting to S$781 million, highlighting its robust financial health and operational success. CapitaLand’s dedication to innovation and sustainability, paired with its expansive footprint in burgeoning markets, positions it as an attractive investment option for those seeking exposure to the real estate sector, promising both reliability and growth.

Keppel Corporation Limited (BN4.SI)

Keppel Corporation Limited, a conglomerate known for its broad spectrum of operations including Offshore & Marine, Property, Infrastructure, and Investments, showcases significant resilience in the fluctuating market. With its strategic pivot towards renewable energy and sustainable urban solutions, Keppel Corporation is not just aligning with the global shift towards green economies but also actively contributing to urbanization efforts. 

In 2023, the company made a notable financial achievement by generating S$4.1 billion, underlining its robust operational efficiency and forward-looking approach. By focusing on high-growth sectors like renewable energy and data centers, Keppel Corporation aims for long-term expansion, ensuring its position as a key player in its respective industries without compromising on shareholder returns.

ST Engineering (S63.SI)

As a global powerhouse in technology, defense, and engineering, ST Engineering specialises across a spectrum including aerospace, electronics, land systems, and marine sectors. 2023 was a standout year for ST Engineering, as it achieved a net profit of S$586.5 million, marking an impressive 9.6% increase compared to the previous year. This performance not only underscores the company's robust growth strategy and its ability to secure significant contracts worldwide but also strengthens its position as a leading player in the industry. 

ST Engineering's commitment to innovation and its diversified business operations have been central to its success, enabling the company to navigate the complexities of global markets effectively. For investors with an interest in the technology and engineering sectors, ST Engineering presents a compelling investment opportunity, supported by its strong financial health and potential for sustained growth.

Great Eastern (G07.SI)

Great Eastern Holdings Ltd., a stalwart in the insurance industry, reported a remarkable profit of S$774.6 million in 2023. This achievement underscores the company's robust position in the market, characterised by its comprehensive range of insurance services. Operating through key segments such as Life Assurance, which encompasses life insurance, long-term health, accident insurance, and annuity business, and Non-Life Insurance, covering short-term property and casualty contracts, Great Eastern has demonstrated its capacity to meet diverse customer needs effectively. 

Additionally, its involvement in Fund Management and Financial Advisory business indicates a well-rounded approach to financial services, catering to a broad spectrum of consumer financial security and investment needs. This financial performance highlights Great Eastern's commitment to excellence and innovation in the insurance sector, reaffirming its status as a leading insurance provider in the region.

Haw Par (H02.SI)

Haw Par Corporation Ltd., the esteemed company behind the iconic Tiger Balm, demonstrated remarkable financial performance in FY23, with its profits soaring by 46% year-on-year to $216.6 million. This financial uptick, as reported in a recent bourse filing by the company, is a testament to the robust demand and continued relevance of its healthcare products in the market. 

Haw Par operates across diverse sectors, including healthcare, where it produces and markets the globally recognised Tiger Balm and Kwan Loong analgesic products. Additionally, the company has interests in leisure, offering family and tourist-oriented leisure options such as oceanariums. 

It also owns and manages a portfolio of investment properties across Asia, further diversifying its income sources. Beyond real estate and consumer healthcare products, Haw Par engages in strategic investment activities, holding both quoted and unquoted securities across the Asia region. This multifaceted operational approach underscores Haw Par's dynamic business strategy and its ability to generate stable revenue streams across various sectors, positioning it for continued growth and success.

Deciding Best Dividend Stocks Based on Past Performance (Trailing Annual Dividend Yield)

Source: morningstar.com

How to Invest in Dividend Stocks in Singapore

Here's a comprehensive guide on how to embark on this investment journey:

• Select a Broker: Your first step is to choose a reputable brokerage firm. Look for brokers that offer competitive fees, user-friendly trading platforms, and access to a broad array of dividend stocks listed on the Singapore Exchange (SGX). Read our best online brokerage comprehensive guide to find out more.
• Open and Fund your Account: Two key components in this process are setting up a brokerage account and a Central Depository (CDP) account. But of course, you can also opt for a custodian account in which you don’t need to apply for a CDP account.
• Research Companies: Before diving into stock purchases, take the time to research potential companies. Look into their financial health, market position, and prospects for growth. Utilizing both technical and fundamental analysis from Morningstar and Yahoo Finance can provide a comprehensive view of a stock's potential. Assessing factors like market cap, price movements, revenue, profit, dividend yield, and the company's track record of dividend payments can also offer insights into the sustainability of its dividends.
• Select and Buy Stocks: With your research in hand, select the stocks that meet your investment criteria. Consider the financial stability of the companies, their dividend history, and how they fit into current industry trends. When you're ready to buy, place your orders through your brokerage platform, specifying the stock symbol, the number of shares you wish to purchase, and the type of order you're placing (e.g., market or limit order).
• Timing and Averaging: Effective timing can enhance your investment returns. Stay informed about market trends to identify opportune moments to buy. Additionally, consider employing a dollar-cost averaging strategy by investing a fixed amount regularly. This approach helps mitigate the impact of volatility, potentially smoothing out your investment returns over time.

Investing in dividend stocks requires a mix of strategic planning, ongoing research, and continuous monitoring of your investments and the broader market. By following these steps and staying committed to your investment goals, you can build a robust dividend stock portfolio that provides both income and growth potential.

Low-Risk Alternative to Dividend Stocks: StashAway Simple™ Plus

In the pursuit of stable returns, dividend stocks are a popular choice among investors in Singapore. However, for those seeking a lower-risk alternative with competitive yields, StashAway Simple™ Plus offers an attractive option. This cash management portfolio boasts a yield to maturity of 3.8%, structured around a robust selection of short and ultra-short duration bond funds, including the LionGlobal SGD Enhanced Liquidity Fund, Nikko AM Shenton Short Term Bond Fund, and LionGlobal Short Duration Bond Fund.

Unlike dividend stocks, which can exhibit price volatility and variability in payout, Simple Plus provides a more predictable and stable investment return. It is designed to minimise risk through a careful blend of bond funds that offer high-quality, short-term investment opportunities. With a recommended holding period of at least 12 months, investors can expect to see maturity of the bonds align closely with their initial yield predictions, despite potential short-term market fluctuations.

Additionally, the management fee for Simple Plus is modest at 0.2% per annum, which is embedded in the yield, ensuring no additional costs impact the investor’s return. For those looking to diversify their investment approach away from the fluctuations of the stock market while still aiming for solid returns, StashAway Simple™ Plus presents itself as a compelling, low-risk financial tool.