Dividend stocks are often seen as “boring” or “retiree-friendly” because they are typically stable and slow-increasing investments.
Simply regarding them as providing income for those who are no longer earning a paychecks is selling these stocks short.
For younger investors, dividend stocks offer an opportunity for long-term wealth creation, providing a steady flow of income and growth, and demonstrating resilience during market downturns.
They are also a prime example of the power of compounding in the long run.
Today, we assess how these dividend stocks – Sheng Siong Group Ltd (SGX: OV8), Frasers Centrepoint Trust (SGX: J69U), and Old Chang Kee Ltd (SGX: 5ML) – can fit snugly into a younger investor’s portfolio.
Why dividends matter for younger investors
For younger investors, dividend stocks bring an additional income stream that can be reinvested.
This compounding helps younger investors in wealth accumulation.
Dividend stocks also protect equity portfolios from losses and provide steady gains during sideways markets, while providing measurable returns that act as a cushion in bear markets.
With years of compounding ahead of them, younger investors benefit most from dividend stocks.
Through early reinvestment, compounding leads to exponential growth, turning modest payouts into significant gains in the long term.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong Group operates one of Singapore’s largest supermarket chains, mainly based in the heartlands and focusing on affordable essentials.
According to their Annual Report for 2024, Sheng Siong “endeavours to distribute up to 70% of our net profit after tax to our shareholders”, providing reliable dividend payouts, even during uncertain times.
During the COVID-19 economic slowdown, Sheng Siong continued to deliver dividends to its shareholders, distributing S$0.065 per share for 2020, S$0.062 in 2021, and S$0.0622 in 2022.
Having grown steadily over the years, boosted by pandemic demand and supported by its steady store expansions, revenue increased by S$50.5 million in 1H2025, or 7.1% year-over-year (YoY), with net profit rising to S$72.3 million, a S$2.4 million YoY increase.
Sheng Siong also maintains strong financials with cash and cash equivalents standing at S$367.2 million as of 1H2025, an increase of S$13.8 million from 2024.
Sheng Siong’ paid out a total dividend of S$0.064 per share for 2024.
At the current share price of S$2.15, this translates to a dividend yield of 3.0%.
Sheng Siong offers an attractive combination for young investors who seek both growth (through new outlets in Singapore and China), and stability (from consistent dividend payouts), making it a reliable cornerstone for a dividend-focused portfolio.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust (FCT) primarily owns income-generating retail properties in the suburbs, including Causeway Point and NEX.
These heartland malls serve necessity shoppers, making them resilient during economic downturns, with occupancy rates consistently above 99%.
FCT maintains a decent gearing ratio of 40.4% , well below the regulatory threshold of 50%, and an average cost of debt of 3.7% as of 30 June 2025.
This conservative approach provides financial flexibility for value-generating acquisitions, including the recently completed purchase of Northpoint City South Wing in May 2025.
The trust delivered a distribution per unit (DPU) of S$0.06054 for 1HFY2025, a 0.5% increase from 1HFY2024’s S$0.06022.
With a requirement to distribute at least 90% of its taxable income, FCT paid out S$0.12042 per share in FY2024.
At approximately 5.1%, FCT’s dividend yield compares favorably to consumer stocks like Yeo Hiap Seng Limited (SGX: Y03) and Food Empire Holdings Limited (SGX: F03), at 3.31% and 1.77% respectively.
For younger investors, FCT offers an attractive combination: exposure to Singapore’s resilient suburban retail landscape with steady income from consistent distributions, backed by solid operational metrics.
Old Chang Kee Ltd (SGX: 5ML)
Old Chang Kee is a homegrown F&B brand, well-known for its finger foods and curry puffs.
Brand loyalty has allowed the group to expand steadily, operating 80 outlets in Singapore.
Despite the competitive F&B sector, Old Chang Kee maintains a consistent dividend policy, paying out S$0.02 for the fiscal year ended 31 March 2025 (FY2025), matching FY2024’s payout.
With total dividends of S$2.4 million paid for FY2025, this represents a payout ratio of approximately 21.4% of net profit.
While revenue decreased by approximately S$0.6 million YoY in 2HFY2025, the group’s gross profit margin increased marginally to 69%, attributable to reduced production utilities expenses and better cost management.
For the full FY2025, the Group achieved revenue of S$101.95 million with a robust gross profit margin of 69.2%, up 1.6 percentage points from the previous year.
Net profit rose 17.4% to S$11.35 million, demonstrating strong operational performance.
Old Chang Kee acknowledges ongoing challenges from inflation pressures, including rising raw materials, labour, and rental costs, as well as manpower shortages in Singapore’s aging retail sector.
To address these headwinds, the group is implementing initiatives to reduce operating costs, improve margins, and diversify revenue streams through business-to-business sales.
It continues expanding its retail footprints in strategic high-traffic locations like transport hubs.
For younger investors, Old Chang Kee offers exposure to Singapore’s F&B sector with a familiar local brand.
While its dividend yield may be lower than larger REITs or blue chip companies, the group demonstrates that even smaller companies can reward shareholders consistently while pursuing growth.
What this means for investors
Time is the most powerful ally when it comes to investing, and there is a lot of power hidden in dividend stocks for young investors.
When dividends are reinvested, they compound over time, turning modest initial payouts into significant long-term gains..
Dividends-paying companies span multiple sectors – retail, F&B and REITs – allowing investors to build a diversified, stable, and resilient income-producing portfolio.
Growth stocks might be tempting with their higher risks and higher returns potential, but dividend stocks can generate steady income that helps to offset market volatility.
Get Smart: Power of Compounding With Dividend Stocks
Dividend stocks aren’t only for retirees.
They are ideal for younger investors with time on their side.
By investing early in dependable dividend stocks, younger investors can create reliable income streams that grow alongside capital appreciation.
For Gen Z and millennials, the combination of regular income stability with the exponential power of compounding returns can be the foundation for financial freedom over time.
If you’re nervous, confused, or worried about buying your first stock, then our latest beginner’s guide to investing can help. It’s easy to read yet packed with valuable insights. Download it for free today, and buy your first stock in the next few hours. Click here to get started.
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Disclosure: Wenting does not own shares in any of the companies mentioned.
