Singapore Exchange Limited (SGX: S66), or SGX, last closed at S$17.50.
Shares have been up about 43% over the last year, after a prolonged stagnation.
The rally is due to solid fundamentals with increased trading volumes, new initial-public-offerings (IPOs) and encouraging policy support.
Thinking about adding this blue-chip to your portfolio for the first time?
Let’s dive into the facts and see if now is the right time for you to buy.
Why SGX Attracts Long-Term Income Investors
SGX has been a long-term dividend income player.
This is possible as SGX is a natural monopoly, serving as Singapore’s sole approved and regulated stock exchange.
This dominant market position allows the business to generate robust cash flows with minimal capital expenditure.
Beyond its consistent yield, SGX has historically rewarded long-term shareholders with both dependable dividends and steady capital appreciation.
What Has Changed Recently?
So, what has led to the sharp rally?
Recent market gyrations have increased trading and derivatives volume.
Combined with positive policy initiatives and market reforms to boost the local market, this has translated to heightened interest in Singapore markets.
The macroeconomics tailwinds and SGX making inroads in growing its data, derivatives, and fixed income offerings means that exchange has been able to grow its revenues and profits.
These factors have led to investors pushing up the share price.
The Case for Buying SGX Even After the Rally
SGX’s resilient business model, which depends on market activity (instead of market direction), supports its revenue and profit-generating ability.
Coupled with SGX’s recent initiatives in diversifying its offerings (data, derivatives, and fixed income), has led to reduced reliance on equity trading.
Additionally, SGX has a solid dividend track record, having paid an annual dividend since 2003.
This record spans market cycles, including severe market stresses seen during the 2008 financial crisis and the more recent COVID downturn.
Putting this in perspective, SGX’s recent annual 2025 dividend amounts to S$0.375 per share, resulting in a healthy payout ratio of 61.9%.
This dividend payout is supported by the healthy free cash flow of S$773.6 million for the fiscal year ending June 2025 (FY2025).
Looking into the future, SGX has decent growth drivers such as the expansion of product offerings, including derivatives, commodities, fixed-income, and foreign exchange.
Alongside increased listings and investment inflows from the SGX initiatives, the future looks bright for the bourse operator.
The Case Against Buying Right Now
However, if you decide to buy SGX shares now, you will have to contend with stretched valuations.
Following the recent rally, SGX is trading at a forward price-to-earnings (P/E) ratio of 27.6 times.
This metric is elevated compared to its 10-year historical average P/E of 21.9 times.
Buying at these levels offer lower margin of safety for new buyers.
Besides heightened valuations, investors have to consider the cyclical nature of trading volumes, which can fluctuate from quarter to quarter.
Furthermore, IPO listings are dependent on market conditions, usually spiking during market booms and can contract severely during market downturn
What Long-Term Investors Should Focus On
If you are a long-term investor, your main focus should be on underlying fundamentals instead of sentiment based on share price appreciation.
Focus on the current dividend yield relative to history.
Currently, SGX offers a trailing annual yield of 2.1% compared to the 10 year average of 3.44%.
Monitor the sustainability of the increased volume in trading and pay attention to the exchange’s ability to diversify away from equity trading.
Get Smart: Focus on the Business, Not the Price Chart
As the saying goes, “time in the market” beats timing the market.
For investors seeking consistent annual income, SGX is a solid choice to just “buy-and-hold”.
Timing the market could result in missing out on a steady stream of dividend income.
A dollar-cost-averaging (DCA) strategy may be prudent here.
By spreading your entry over time, you can mitigate the risk of buying at a premium while ensuring you don’t miss out on steady dividend payments.
There is no “perfect” time to establish an SGX position in your portfolio.
If you’re an income-focused, long-term investor seeking stable dividends backed by a natural monopoly, SGX presents a compelling option even at these levels.
Many Singapore stocks fall behind inflation, which means your money quietly loses strength over time. Dividend stocks have a very different track record. Some continued delivering 6% to 13% every year across the toughest market conditions.
In this FREE report, discover 5 crisis-tested dividend stocks that kept rewarding investors while the market struggled. Download your dividend investing guide now.
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Disclosure: Wilson.H does not own shares in any of the companies mentioned.
