Everyone loves a discount.
Discounts may come in different forms, such as a reduction on your bill or a rebate that helps to reduce your overall cost of purchase.
For instance, I was alerted by my wife to the rebate system that e-commerce websites such as Fave and Shopback use to entice customers.
By paying at a vendor using the app, you accrue a small percentage of the bill (e.g. 1% to 5%) as a “credit” that can be used to offset future purchases.
It encourages you to continue spending at your favourite merchants.
This system is not isolated to just e-commerce platforms, though.
A similar system has existed for decades in the stock market – you just need to understand how it works to take advantage of it.
Stock market “cashback” in your everyday life
Each of us has favourite brands that we purchase regularly.
These products and services can range from bank services, and grocery shopping at your regular supermarket.
For instance, I regularly bank at both DBS Group (SGX: D05) and OCBC Ltd (SGX: O39).
Every once in a while, I will visit my nearby Sheng Siong (SGX: OV8) outlet to shop for groceries and necessities.
And when I am preparing myself for a hike at Windsor Nature Park, I will purchase Tiger Balm insect repellent, a product of Haw Par Corporation (SGX: H02).
If you are a driver, then you have probably brought your vehicle in for inspection at VICOM Ltd (SGX: WJP).
And I am sure most of us would have shopped at popular malls such as Funan and Raffles City, which are both part of retail and commercial REIT CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT.
Others may prefer to visit a heartland mall such as Northpoint, Hougang Mall, or Waterway Point, which are part of Frasers Centrepoint Trust’s (SGX: J69U), or FCT, portfolio of malls.
“Cash back” dividends
The great thing about the listed companies above is that all of them pay out a dividend.
DBS’s shares currently sport a 5.3% forward dividend yield.
Retailer Sheng Siong offers a 3.8% dividend yield while Haw Par pays out a twice-yearly dividend of S$0.30 in total, providing you with a nice “refund” on your stock investment.
VICOM’s shares provide a decent 3.8% dividend yield as well.
The two REITs mentioned above also dole out regular distributions.
CICT and FCT units provide a trailing distribution yield of 5.3% and 5.7%, respectively.
Get Smart: Cash back and capital appreciation
The reward for owning a stock is beyond the dividends received of course. As a shareholder, you’ll also enjoy capital appreciation if the business performs well.
The best news of all – there’s no “limit” to how high your cash back can be as there is no maximum limit for dividends, unlike for e-commerce platforms that usually cap your cash back percentage.
And as the dividend payout increases over time, you also enjoy a larger cash amount. To me, cash in my pocket always makes me a happy shareholder.
Until next time…
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Disclosure: Royston Yang owns shares of DBS Group and VICOM.