Get Smart: Accumulating More Dividends for Your CNY Hongbaos

On behalf of everyone at The Smart Investor, here’s wishing you and your loved ones a Happy Lunar New Year!

2025 will usher in the Year of the Wood Snake, a symbol of knowledge, wisdom, and intelligence.

With its ability to shed and renew its skin, the Snake also represents transformation and rebirth.

The New Year festivities involve both the enjoyment of great food and the gift of red packets (hongbao) to our parents and children.

Dividends to fill your hongbaos

As you think of how much to fill each red packet, dividends can come in handy.

If you own dividend-paying companies within your portfolio, these dividends can help you to fill up these hongbaos.

The beauty of dividends is that they act as a stream of passive income that helps you to supplement your earned income.

And if this flow of dividends is large enough, you may even have some leftovers for spending during the holiday season even after you’ve filled up all your hongbaos.

For example, you could use these excess dividends to spend time with your family members over a delicious hotpot reunion dinner.

The income will go a long way in paying for the family meals and more importantly, valuable time with your family and relatives.

So, how can you start earning these dividends and which stocks can supply me with a steady stream of dividends?

We’re glad you asked.

Solid dividend names to choose from

Dividend investors in Singapore are a lucky bunch as there are a plethora of dividend-paying stocks that you can choose from.

What’s even more attractive about dividends is that they are not taxable in Singapore, unlike rental income derived from owning an investment property.

For starters, you can look to the list of blue-chip stocks that make up the Straits Times Index (SGX: ^STI) for a flavour of which dividend stocks you’d like to purchase.

The three local banks immediately come to mind and these lenders have an enviable track record of dividend payments.

DBS Group (SGX: D05) has paid dividends for more than two decades.

What’s more, the bank has raised its latest quarterly by 22.7% year on year to S$0.54 per share.

In short, you can get an annual dividend of S$2.16 from owning the shares, giving you a dividend yield of close to 5%.

Meanwhile, OCBC Ltd (SGX: O39) also upped its interim dividend by 10% year on year from S$0.40 to S$0.44.

Singapore’s second-largest bank’s trailing 12-month dividend stood at S$0.86, giving its shares a trailing dividend yield of 5%.

REITs, or real estate investment trusts, are another promising source of dividends.

These trusts are bundles of real estate portfolios that are mandated to pay out a regular distribution to enjoy tax benefits.

Examples of REITs that paid out a distribution back in December 2024 are AIMS APAC REIT (SGX: O5RU), First REIT (SGX: AW9U), and Frasers Logistics & Commercial Trust (SGX: BUOU).

If you’d like to expand your stock selection, there are also solid dividend-paying stalwarts such as Haw Par Corporation (SGX: H02), which owns the famous Tiger Balm brand, along with supermarket operator Sheng Siong (SGX: OV8).

Transforming your portfolio

If your portfolio does not contain many dividend stocks, don’t fret.

The Year of the Snake is a great opportunity for you to transform your portfolio, similar to how the snake sheds its skin.

You can shed your “old” positions and take up new, dividend-paying ones that promise to fatten your wallet for many years to come.

All it takes is a quick review of your portfolio to decide which stocks you should replace with solid dividend-paying names.