Top 10 dividend stocks to watch in Singapore

How to select the best dividend stocks in Singapore

A dividend is the payment of a share of a company’s earnings to their shareholders as we have detailed in the dividend definition. Depending on the conditions, owning a share of the company entitles one to the dividend it pays out, which makes choosing this ‘paymaster’ of high importance.

As with selecting a company to work for, one who wishes to see a steady stream of dividend income should likewise pick a quality choice of a stock for greater earning potential. Three of the key factors to look for when choosing where to allow your money to work for you includes finding a stock that pays out relatively high dividends, has a track record of consistent payments and possesses stable fundamentals to keep this payout going. A variety of ways are available to assess the abovementioned factors, but they should typically be present for a stock qualify as one of the best dividend-paying stocks.

Best Singapore dividend stocks to watch

Below we highlight ten stocks with a dividend yield of at least 3.0% in the last 12 months, mid- to large-cap companies that have also seen dividend growth in the last five years. Many of those we have listed below are also popular stocks found in our chart of largest companies listed in Singapore. In descending dividend yield order, they are as follows:

1. DBS Group Holdings Ltd (DBSM)
2. Ascott Residence Trust (ASRT)
3. Singapore Telecommunications Ltd (STEL)
4. Mapletree Logistics Trust (MAPL)
5. Suntec Real Estate Investment Trust (SUNT)
6. ComfortDelGro Corporation Ltd (CMDG)
7. Frasers Centrepoint Trust (FCRT)
8. Capitaland Mall Trust (CMLT)
9. SATS Ltd (SATS)
10. Capitaland Ltd (CATL)

DBS Group Holdings Ltd (DBSM)

Needing little introduction, DBS is well known as one of the largest banks in Asia. It is headquartered in and the biggest bank in Singapore. It also happens to be one with a high-dividend yield on the local Straits Times Index (STI). At 5.9%, not only does DBS have a considerably high-dividend yield, the bank also has a strong track record of paying out regular dividends and issuing special dividends during particular instances of outperformances. The bank also remains committed to growing its dividend. One thing to note with regards to this bank stock is the susceptibility to market fluctuations for prices compared to many of the real estate investment trusts (REITs) names below.

Ascott Residence Trust (ASRT)

Ascott REIT, based in Singapore, focuses on investing in real estate and real estate-related assets, specialising in serviced residences. This REIT has a healthy dividend payout ratio of approximately 56 of its profit as dividend and a strong track record of dividend payments. A diversified portfolio helps to weather macroeconomic changes and the continuous growth sought by Ascott through new acquisitions continues to see this REIT expand.

Singapore Telecommunications Ltd (STEL)

Singtel, one of the largest listed Singapore companies on the Singapore Exchange, is a leading communications group in Asia and perhaps one of the few to come to mind when thinking about dividend stocks in Singapore. It is known to have a two-decade long record of paying dividends and growing dividends over time. As a diversified telecommunications company with operations across Singapore, Australia and various other Asia regions and beyond, the stock is also a clear defensive stock in the local stock market. Given the diversification, Singtel is also regarded as one to be better positioned to weather competition from new entrants in the local Singapore market.

Mapletree Logistics Trust (MAPL)

Mapletree Logistics Trust is another REIT on this list from the REITs-rich Singapore market. It is Singapore’s first Asia-focused logistics real estate investment trust and has a policy to distribute at least 90% of its taxable income and tax-exempt income, if applicable. Mapletree has a diversified portfolio with top geographies counting the likes of Singapore, Hong Kong and Japan. Note that the logistics REIT’s nature of receiving rental income through its portfolio of properties would make the economic situation one determinant of its outlook.

Suntec Real Estate Investment Trust (SUNT)

Suntec REIT is a Singapore-based company that operates real estate and real estate-related assets in three segments – retail, office and convention. Approximately nine-tenths of its retail property is situated in Singapore and the remaining in Australia. In terms of its business segments, office and retail revenue in 2018 had been seen at 36% and 29% respectively. Convention revenue, meanwhile, had been at 19%, a component that can see greater fluctuations depending on the demand and size of convention events. As with many of the diversified portfolios with Australia activity, the fluctuation of the Australian dollar (AUD) also plays a part in affecting the revenue and thereby dividend payout for these companies.

ComfortDelGro Corporation Ltd (CMDG)

ComfortDelGro is a defensive option despite being an industrial stock within the transportation sector. The company operates through eight segments, with most of the revenue derived from its public transport and taxi services. Although CMDG had seen earnings moderating in recent reports, the company had continued to grow their dividends in the last five years. That said, amid the decline of their taxi business from disruptions of ride-sharing apps, the outlook may be a little less certain compared to other peers with dividend growths.

Frasers Centrepoint Trust (FCRT)

Frasers Centrepoint Trust is a Singapore-based REIT operating in the retail space with a portfolio of suburban retail properties. Being 100% Singapore-based, this REIT is perhaps less diversified comparatively but a positive trend in which suburban retail malls are growing in popularity looks to benefit Frasers. Positive rental revisions have also been taken as a positive sign for Frasers.

CapitaLand Mall Trust (CMLT)

Odds are if you have been to Singapore, you would have stepped into one of CapitaLand Mall Trust’s assets and shopped or dined there. The trust operates mostly in the retail arena. Holding approximately 15 shopping malls, as of January 2019, CMLT’s assets are sprawled across Singapore’s suburban areas and downtown core. Its top revenue-generating locations in 2017 included Plaza Singapura, Bugis Junction and the IMM building.

SATS Ltd (SATS)

SATS engages in providing food solutions and gateway services in the region. Think catering for the aviation sector and other food services for healthcare, freight and logistics industries among others. Despite global economic challenges, SATS had noted that demand for aviation services and high-quality food in Asia-Pacific continues to grow and a positive record of profit and dividend growth supporting interests in the stock.

CapitaLand Ltd (CATL)

CapitaLand, headquartered in Singapore, is a diversified real estate group which also oversees subsidiaries such as CMLT listed above. The company owns a global portfolio of over $123 billion as of second quarter (Q2) 2019 across sectors such as retail, industrial and residential. Singapore and China are its key geographies while it also has properties across the globe.

Trading CFDs on dividend stocks

Besides buying and owning the stock, one can also trade CFDs on dividend stocks. An adjustment on equity and stock index positions is made when a dividend is paid.

While high-dividend stocks are usually less volatile in prices, there can be many reasons why the market would find holding the stocks for the short term a viable strategy. In light of the increased risks in the market, the preference for many of these high-dividend defensive stocks had been on the rise. Day traders may also use the dividend capture strategy to generate short-term returns. During times when prices of these dividend stocks are declining, CFDs can also be used as a hedge.

Read more about the top 10 dividend stocks listed on the ASX