This is a continuation of our series on income investing. You can check out Parts 1 and 2 here and here.
Some of the common sectors where dividend stocks can be found include telecommunication, banks, utilities, and real estate.
Dividend stocks are generally established companies that provide necessary products and/or services, thereby generating a consistent income stream.
Innovation and marketing are not as important for these companies, giving them the ability to pay-out the excess cash as dividends.
The Singapore Market
When considering Singapore dividend stocks, Real Estate Investment Trusts (REITs) are often in the spotlight.
A competitive tax environment and growing private wealth industry are some of the reasons why Singapore is becoming a global REITs listing hub.
REITs are a niche group of dividend stocks which revolve around income-generating real estate such as hotels, shopping malls, commercial and industrial buildings.
They are considered stable dividend payers as they are required by MAS to pay out 90% of their taxable income to their investors.
Aside from REITs, other popular Singapore dividend stocks include banks and telecommunication companies.
The local banks, DBS Group Holdings Ltd (SGX: D05), United Overseas Bank Ltd (SGX: U11) and OCBC Ltd (SGX: O39) are considered the gold standard for dividend stocks. They often offer stable dividend yields around the 3-4% range.
If you are a Singaporean, you will probably be familiar with Singtel (SGX: Z74) and Starhub (SGX: CC3).
These two telecommunication giants of Singapore also fall under the dividend stock category.
They often offer dividends around the mid-single digits.
The US Market
The two main stock exchanges in the US are the New York Stock Exchange (NYSE) and NASDAQ.
They have a richer history than the SGX, with many more mature dividend companies listed.
This history has resulted in titles bestowed upon a selected few US dividend stocks, namely dividend aristocrats and dividend kings.
Dividend aristocrats are companies which have increased their dividend payments for 25 consecutive years or more.
Some examples include popular fast-food franchise MacDonald’s (NYSE: MCD) and multinational oil company ExxonMobil (NYSE: XOM).
Dividend kings are companies which have achieved an even greater milestone of dividend increases for 50 consecutive years or more.
Pharmaceutical company Johnson & Johnson (NYSE: JNJ) and world-renowned beverage company Coca-Cola (NYSE: KO) fall under this esteemed category.
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