I’d be lying if I said that I wasn’t disturbed by the Russian-Ukraine war.
Singapore may be far removed from this conflict but the biggest European war to break out since the end of World War II is a grim reminder that life can be unpredictable.
The same goes for investing too.
Valuations of growth stocks have plunged in the wake of the US Federal Reserve’s decision to raise interest rates.
As a result, their share prices have also plummeted.
Take cloud computer company Fastly (NYSE: FSLY) for instance.
Shares of the edge computing firm have declined by 75% in the last one year.
Meanwhile, Lemonade (NYSE: LMND), an insurance company that taps on artificial intelligence, has seen its share price shrivel by 88% from its all-time high of US$163.93 in February last year.
After seeing such declines, you may wonder if there is anything dependable left in investing.
Is anything certain anymore?
If you’re searching for certainty, there’s one area you can focus your attention on.
And that is the realm of dividend stocks.
The ability to pay out a dividend provides some measure of assurance that a business is doing a good job.
If that dividend is rising, then it’s even better proof that the business can weather challenges and tough times.
Take DBS Group (SGX: D05) as an example.
The blue-chip bank, Singapore’s largest, recently reported a record net profit of S$6.8 billion.
Its quarterly dividend was also raised from S$0.33 per quarter to S$0.36.
The dividend increase is ample proof that the lender is confident of its prospects, and investors should be, too.
Mapletree Industrial Trust (SGX: ME8U), an industrial REIT, has shown its ability to keep raising its distribution per unit despite the effects of the pandemic.
Such stocks represent an oasis in the desert as they provide welcome relief from the lingering uncertainty associated with current events.
Cold, hard cash
Growth investors also face another problem.
The gains that they saw back in late 2020 until late 2021 were unrealised.
With share prices of growth stocks witnessing a steep decline, most of these profits have all but evaporated.
But a dividend that goes straight into your bank account is a return that is already locked in.
And even if the stock subsequently declines in price, at least you’ve got that cold, hard cash that you can choose to utilise in whatever way you wish.
To me, this certainty is priceless.
An eye on retirement
It can be argued that these events — whether they be a pandemic or a war, are all short term in nature.
They should disappear or resolve themselves within a few months or years.
However, there is one certainty that will remain true — eventually, there will be a time where you will have to call it a day and retire.
Unfortunately, the economic uncertainty has become stark as the US and Singapore report high inflation rates that will all but crimp your spending power.
To combat the effects of inflation, your best bet is to park some money in well-run businesses.
And one option is to select stocks with stable or growing dividends that provide a yield that exceeds the long-term inflation rate.
Singapore Exchange Limited (SGX: S68), Singapore’s sole bourse operator, pays out an annual dividend of S$0.32 per share.
Income-seeking investors can reliably count on the stock exchange operator to keep its dividend constant even as it seeks new avenues for growth.
By allocating your spare cash to investments that can maintain or grow their dividends, you are building up a stream of passive income that can last you through your retirement.
Sources of certainty
The world may be an inherently uncertain place, but you should actively seek out sources of certainty.
And there’s probably nothing more certain in investing than receiving dividends.
That’s what we do at The Smart Dividend Portfolio.
By building a portfolio of dividend-paying stocks, we help to reduce the uncertainty in our lives to prepare ourselves for our eventual retirement.
You can do the same, too.
Don’t hesitate — join us now as we embark on a journey to find the best dividend stocks in Singapore.
You won’t have to worry about uncertainty any longer.
And your future self will also thank you for your actions.
For over 30 years, David Kuo has successfully built many winning portfolios. What’s his secret? We break it down for you in our latest FREE special report. Discover his strategies and stock insights for 2022. Click here to download now.
Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust, DBS Group and Singapore Exchange Limited.