With interest rates normalise, chasing the highest yield is no longer a viable strategy.
Investors now prioritize reliability.
Come along as we uncover income stocks capable of weathering market volatility while providing sustainable, resilient payouts.
What “Safe Income” Really Means (and What It Doesn’t)
Many investors equate “safe income” with the highest dividend yield.
Abnormally high yields often signal falling share prices or business distress.
Safe income stems from stable, recurring cash flows across economic cycles.
A single strong year does not guarantee long-term reliability.
The size of the dividend is less critical than a company’s ability to maintain it.
Even market leaders face risks; for example, SATS Ltd (SGX: S58), paused dividends for three years (FY2020/2021 to FY2022/2023) following a sharp decline in Free Cash Flow (FCF) during the pandemic.
In 2026, safe income requires a combination of sustainability, visibility and resilience.
The First Filter: Business Quality Over Yield
a. Essential or Recurring Demand
Prioritise companies providing indispensable services, such as infrastructure, exchanges, and defensive consumer sectors.
Examples include Keppel Infrastructure Trust (SGX: A7RU), Singapore Exchange Ltd (SGX: S68), and SBS Transit Ltd (SGX: S61).
b. Earnings Visibility
Predictable earnings often outweigh rapid growth.
While Singtel (SGX: Z74) may show modest revenue growth, its recurring cash flows are diversified across regions, supporting long-term dividend payments.
The Balance Sheet Test: Can the Dividend Survive a Shock?
Dividends are discretionary, but debt repayments are not.
To assess durability, examine gearing (debt-to-assets ratio), interest coverage, and debt maturity profiles.
When cash becomes tight, companies with high gearing are far more likely to cut dividends to preserve cash.
For example, Keppel DC REIT (SGX: AJBU) maintained a moderate 29.8% gearing in 3Q2025, well below the MAS’s 50% limit.
Thin interest coverage or clustered short-dated debts expose a company to rising costs that can eat into FCF.
Ideal candidates typically feature gearing below 40% and well-spread debt maturities ensuring dividends are funded by FCF rather than new debt.
Dividend Track Record: Consistency is Key
Consistency often matters more than sheer generosity.
Analyse management’s actions during market downturns and avoid companies that fund dividends through debt.
SGX, for instance, has maintained uninterrupted payouts since FY2003, building significant investor trust.
Cash Flow Matters More Than Profit
Dividends are paid from cash, not accounting profits.
Impressive paper earnings do not always translate into cash in hand.
In contrast, a strong FCF allows a company to grow dividends without overextending.
Conversely, payouts exceeding FCF signals that a business is financially stretching itself.
Valuation Still Matters — Even for Income
Even “safe” blue chips can be poor investments if overpurchased.
Comparing current yields against historical averages and assess the Price-to-Earnings (P/E) ratio.
While iFAST Corporation Ltd (SGX: AIY) P/E ratio of 35.7 is characteristic of a growth-oriented fintech stock, the sustainability of this premium depends on whether the company can maintain an earnings growth rate that offsets its valuation multiple.
Purchasing at reasonable valuations ensures you benefit from both dividends and capital growth, creating powerful compounding effects.
Common Traps Income Investors Should Avoid in 2026
Buying into a price collapse without recognizing deteriorating fundamentals ( “yield traps”) is one of the most common mistakes investors make.
Likewise, one-off special dividends are sometimes mistaken for an ongoing recurring income.
This can give a false sense of security and inflate expected returns.
Another trap is ignoring sector concentration risk.
Piling into one sector, such as REITs or healthcare, can expose investors to sector-specific cycles.
Overconfidence in recent dividend hikes can also be dangerous as a recent dividend hike does not guarantee future growth.
Building a Safer Income Portfolio
A key strategy for a resilient income portfolio is diversification across sectors and income types.
By doing so, you can minimise the impact of a bearish condition in any single sector.
A robust strategy blends “defensive anchors” for stability with “compounders” and selective growth stocks for appreciation.
With patience and discipline, investors can benefit from long-term compounding rather than chasing quick gains.
Get Smart: Safe Income Is Built, Not Found
In 2026, safe income stocks are no longer defined by headline yield or short-term price movements.
Focus on quality businesses with fortified balance sheets and reliable cash flow.
By prioritising these fundamentals, you can create a resilient income stream that weathers volatility and grows steadily over time.
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: Wenting does not own any of the stocks mentioned.
