Dividend Investing Singapore: Complete Beginners Investor Guide
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Dividend investing is just amazing, and as a investor myself, I really like to invest in dividend paying stocks.
Here we will look at some of the information you may want to know when investing in Singapore for dividends.
What is Dividend Investing In Singapore?
Dividend investing is a form of investing strategy where investment is focused on gaining and growing dividend income from your investment in securities. Dividend distribution can come from investing in dividend paying stocks which are usually blue chip stocks, dividend paying ETFs, or REITs (S-REITs).
These dividend are generally excess earnings the company made that are distributed to its shareholders.
Types of Dividend in Singapore
Here back in Singapore, dividends are classified as final or interim dividends.
- Final dividends are declared at a company’s annual general meeting following the end of a financial year, based on the full year’s profits.
- Interim dividends are distributed before a company’s annual earnings are finalized.
Interim dividends can be issued semi-annually, quarterly, or even monthly and final dividends are issued at the end of the financial year.
Sometimes, we may also see one-off dividend payment which can be issued by directors of the company.
- Special dividend are one-off dividend distributed by the company usually after the company makes exceptional profits.
How to Calculate Your Dividend Yield?
To calculate your dividend yield, you will need two crucial pieces of information: the annual dividend per share that a company pays and the price per share.
The formula to determine the dividend yield is:
Dividend Yield = (Annual Dividend Per Share / Price Per Share) x 100
Here’s a simple step-by-step process:
- Identify the Annual Dividend: Find the total dividends a company has paid within a year or trailing 12 months (TTM) dividend distributed.
- Determine the Share Price: Look up the current price for a single share of the company’s stock.
- Apply the Formula: Divide the annual dividend by the share price, then multiply by 100 to get a percentage.
Dividend yield is dynamic and will change as the share price fluctuates.
Income-focused investors need to keep track of these changes. Keep your dividend yield expectations realistic, and choose stocks with consistent and sustainable dividend payments.
Calculating Your Total Future Dividend Income
As a dividend investor, you need to know your potential dividend income to get a rough idea on how much dividend you maybe getting. While past result is not a indication of future performance, this offers you an insight on how you can best use your money for future investment.
To calculate your future total dividend income, you will need two crucial pieces of information: the dividend yield (TTM) and your current value of your securities (No. of Shares x Price Per Share).
The formula to determine the dividend income is:
Dividend Income = Dividend Yield (%) x (No. of Share x Price Per Share)
Here’s a simple step-by-step process:
- Identify Your Current Value of Your Security: The number of shares you hold multiply by current price of share.
- Determine the Dividend Yield: Look up the total trailing 12 months dividend distributed divided by price for a single share of the company’s stock.
- Apply the Formula: Multiply dividend yield to current value of your security.
Dividend Distribution Frequency
Singapore-based companies typically follow a quarterly dividend payout schedule.
The dividend payout frequency generally aligns with the announcement of companies’ quarterly earnings.
- Singapore REITs Dividend Distribution Frequency
- Singapore ETFs Dividend Distribution Frequency
- Singapore Blue Chip Stocks Dividend Distribution Frequency
However, the frequency of dividend payments can vary. Some entities, such as Real Estate Investment Trusts (REITs) offers higher dividend payout compared to other form of investment.
- Interim dividends are paid during the financial year.
- Final dividends are proposed at the fiscal year-end and approved at annual general meetings.
The decision on the frequency and timing lies with the company’s management, dictated by the company’s cash flow, earnings stability, and financial strategies under the Singapore Companies Act.
Dividend Tax Implications in Singapore
Warning & Disclaimer: I know I am being very long-winded, but you need to know I am not your financial adviser or lawyer. Information found on our website is purely from my own understanding from years of reading and investing. I am only sharing what I know and should never be used as financial advice. You should visit the official website and read about all the tax/investing/financial information or get advice from real professionals. Here are some sources where I get my information for this complete guide: IRAS, SSO. By accessing this website you’ve agree on our T&C.
Singapore operates under a one-tier tax system, which ensures that your dividends are tax-exempt at the individual shareholder level.
PS. I was confused about this as well, but this is something very important to know and understand if you are investing in Singapore.
Singapore’s One-Tier Corporate Tax System
Singapore’s one-tier corporate tax system offers dividends distributed from resident companies to be generally tax-free for individuals, except for co-operatives. Similarly, foreign dividends are non-taxable unless received through a partnership.
Income distribution from Real Estate Investment Trusts (REITs) is exempt, except when related to a trade, business, or profession within REITs.
What is One-Tier Tax System? One-tier tax system is when tax are paid by the company on its chargeable income. Therefore, when you receive dividends from companies there is no additional dividend tax to be paid in Singapore, whether they are final, interim, or special dividends.
Non-Taxable Dividends In Singapore
- Dividends from Singapore resident companies under the one-tier system (excluding co-operatives).
- Foreign dividends received by residents (except through a Singapore partnership).
- REITs income distribution (unless connected to a partnership or business activities).
Taxable Dividends In Singapore
- Co-operative dividends (e.g., MCCY Registry, NTUC Fairprice).
- Foreign-sourced dividends via a Singapore partnership (may qualify for exemption).
- REITs income connected to a partnership or business activities.
Reporting of Any Taxable Dividends In Singapore
- Declare taxable dividends in the ‘Other Income’ section of the Income Tax Return.
- For tax-free dividends, report as specified by the company or in the Income Tax Return if not indicated.
Understanding the difference between taxable and non-taxable dividends ensures sound financial planning and compliance.
PS. I was really confused about this initially, but hopefully, this help you to gain a better understanding the next time someone ask you about this deep and complicated topic. If in doubt, go and get guidance from the real professionals.
List of Important Dividend Dates to Know
Understanding the timeline for dividend distribution in Singapore is vital if you’re investing in dividend-paying stocks.
Familiarize yourself with the essential dates involved in this process:
- Declaration Date: The company’s board of directors announces the dividend. This indicates the amount being distributed, as well as sets the upcoming record and payment dates.
- Ex-Dividend Date: To be eligible for the dividend, you must own the stock before this date. Stock exchanges set this date, usually two business days before the record date due to the T+2 settlement period.
- Record Date: You must be registered as a shareholder on this date to receive the dividend. Remember, purchasing shares on or after the ex-dividend date means you won’t get the declared dividend.
- Payment Date: This is when the dividend lands in your account, which could be through mail or electronic transfer.
Here’s a simple comparison table to help you keep track:
| Date Type | Explanation | Significance |
|---|---|---|
| Declaration Date | The board announces the dividend’s details. | Marks the official announcement of dividend payout. |
| Ex-Dividend Date | The cutoff for being eligible to receive the dividend. | Buy before this date to get the dividend. |
| Record Date | The date by which you must be on the books. | Determines the list of shareholders who will get paid. |
| Payment Date | When the company distributes the dividend to shareholders. | The day you receive your dividend income. |
Being aware of these dates and Singapore’s tax policies can help you manage your investments more effectively.
Types of Investment That Pays Dividends
When you invest in dividend-paying assets in Singapore, you’re typically looking for a regular income stream in addition to potential capital gains.
Singapore REITs
Real Estate Investment Trusts (REITs) in Singapore are popular for their potential of consistent dividend yields.
REITs manage a portfolio of properties and are required to distribute at least 90% of their taxable income to shareholders annually.
This makes them an attractive option if you’re looking for regular cash dividends. The stock price of REITs can fluctuate, but they often provide a balance of income and growth.
Dividend Stocks
Individual companies may pay out dividends to shareholders, typically from profits.
Dividend stocks in Singapore could provide you with quarterly or semi-annual dividends.
The consistency and size of these payments can vary based on the company’s dividend policy and current earnings. Just remember that while these dividends provide income, they’re also taxable.
Blue Chip Stocks
Blue chip stocks are shares of large, well-established, and financially sound companies. They have operated for many years. These companies have a reputation for being able to weather economic downturns. They are also known for paying out steady dividends.
Here’s a brief comparison:
| Stock Type | Dividend Yield | Stock Stability |
|---|---|---|
| Singapore REITs | Generally higher | Variable |
| Dividend Stocks | Varies significantly | Depends on company |
| Blue Chip Stocks | Generally stable | More stable |
Dividend Paying ETFs
Exchange-Traded Funds (ETFs) that focus on dividend-paying stocks can be a hands-off way to gain exposure to a diversified portfolio of dividend stocks.
These ETFs are traded on the Singapore Exchange (SGX) and can include both domestic and foreign dividends.
The net asset value (NAV) of the ETF and the stock price determine its value.
Meanwhile, the dividend yield is an important factor for income-focused investors.
Just Getting Started in Dividend Investing?
When you are investing in Singapore stocks, you need to know which are the good brokers you can trust to get started in investing.
Of which I’ve tried out many of the broker and find a few of them to be much better than the rest.
You can use this resource as your decide on which trading platform to sign-up for an brokerage account.
- Top brokerage for investing and trading in Singapore
- Best broker for trading Singapore listed stocks
I personally like to use Moomoo for most of my investment, you can check them out if you like as well.
BEST FOR: Beginner Retail Investors and Professional Traders Looking For All-In-One Trading App to Invest in SG, US, HK and China.
securely through Moomoo’s website
Disclaimer: All views expressed in the article are independent opinion of the author, based on my own trading and investing experience. Neither the companies mentioned or its affiliates shall be liable for the content of the information provided. The information was accurate to the best knowledge of the author. This advertisement has not been reviewed by the Monetary Authority of Singapore. * T&C Applies
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Antony C. is a dividend investor with over 15+ years of investing experience. He’s also the book author of “Start Small, Dream Big“, certified PMP® holder and founder of IncomeBuddies.com (IB). At IB, he share his personal journey and expertise on growing passive income through dividend investing and building online business. Antony has been featured in global news outlet including Yahoo Finance, Nasdaq and Non Fiction Author Association (NFAA).
