Now is the best time to invest in Singapore dividend stocks. According to an article published in Reuters.com, Singapore ranks second among the Asian countries that offer the highest dividend yields in the region.
When a dividend yield is high, it signifies a higher income for investors. It means the stocks that you invested in a company pay out a high percentage of the value of a share. The higher the yield, the more money is earned during a dividend pay out.
Of course, investing in Singapore shares go beyond the current dividend yield. Just because you see that one company offers a high dividend yield, that does not necessarily mean it is the best investment option for you. There are a lot of factors that you need to consider in order to make a smart choice about where you will put your money to grow.
Helpful tips when choosing Singapore dividend stocks to invest in
It can be tricky to understand what Singapore dividend stocks to invest in. The truth is, it takes experience and a few attempts to get it right. But as you make one investment decision after another, you are bound to make choices that will help you understand the signs that lead to the best dividend stocks in Singapore.
Here are a few tips that can help you get started.
Get to know the business.
Before you invest in any stock, you have to make sure that you understand that business. After all, you are buying part ownership of that company. You want to make sure that you understand the sector that it is in so you can determine if the company is headed towards higher revenues or not. Investing your money is not like gambling wherein you pick the top companies in the SGX and hope that they will do good. You are putting your hard earned money in hopes that it can help increase your personal net worth. If you do not understand the business, how can you say that it will help you profit?
Look at the dividend history.
To be specific, you want to look for a company that strived to give investors consistent dividend yields for their shareholders. Do not be too quick to invest in a company just because they offer a high dividend yield now. That might not be the same yield in a couple years and you could end up losing on your investment. When a company history shows that there is a year when it did not give out dividends, you need to look further and understand why. That might be a sign of an unstable company that could increase the risk of your investment.
Check if the dividend yield percentage is higher than the inflation rate.
That means you should look for a percentage yield of 5% to 7%. Obviously, you are after the growth of your investment. The only way to do it is to look for Singapore dividend stocks that can beat the inflation rate. According to StraitsTimes.com, Singapore REITs offer yields of up to 7%. With an inflation rate of 2%, REITs should exceed your expectations. This sector is actually considered to be one of the best performers in 2016.
Consider the assets vs the liabilities.
Usually, if the assets exceed the liabilities, that is a good sign of their cash flow. A healthy cash flow means the company can pay out dividends even if there is a decrease in revenues. Of course, you want to consider the cash flow history of the company. This will help you determine if the current state of their finances is following a trend. If not it is probably influenced by a one-time event that caused a significant change.
How to manage your Singapore dividend stocks
When investing in Singapore dividend stocks, it is always a good idea to put your money in different sectors. Putting all your investments in one basket increases the risk of losses during market fluctuations.
Here’s the thing: nobody is right about the market at all times. That being said, no company will stay on top or will keep on improving. There are unforeseen circumstances in the market that can compromise the promised gains of a dividend stock. By diversifying your investments, you get to minimise the risk and balance out any losses and gains across the different sectors in the local market. Your portfolio will not suffer greatly in case you make a mistake with one stock.
Not only that, you also need to know when it is the right time to sell your stocks. The truth is, selling is also just as tricky as choosing the right Singapore dividend stocks to invest in.
There are basically two signs that will tell you if it is a good time to sell.
When the share increased in value. This is when you sell your shares when it is valued higher than when you bought it. The higher the difference in the value, the more profit you will earn.
When the share has no chance of recovering. If you see that the value of the share is going down and it does not seem like it will recover, then you may want to pull out what is left of your investment. Just consider it a loss and move on.
Investing in Singapore dividend stocks require constant effort in learning and analysing the market. Make sure that you are ready to dive in and understand the complexities of investing so you can choose a good investment strategy to grow your personal wealth.Recommend0 recommendationsPublished in