Can you imagine a stream of income on top of your salary through dividend? Read further to know about how you can earn through dividend investing.
The money you earn from your 9 to 5 job is never enough. On top of that work pressure and unsatisfied boss and tax on the income, you earn. What can you do? You have family and needs that can only be filled by the money you are earning from that less paying job.
What if I tell you there is a way by which you can generate the stream of income in your bank account and there is no work pressure.
Of course, you can’t leave your job for all kind of reasons and you will need your hard earned money to generate another stream of income which I am talking about.
How can you make money like that?
Well, there are many types of investing and I am talking about income that is tax-free in Singapore.
Lets first talk about types of investment and understand why you need investment.
You and I and people like us want to live a financially stable life and with a better standard of living. But with the continuous increase in inflation if become tough at a times. Plus you are not planning to work all life. You need time to spend with your family and you have other plans as well.
Investment helps you to achieve all the above things and more. And there is more than one way of investing. Following are the important categories of investing.
When an investor spot the companies which are primarily focused towards growth in their mid and long-term duration and invest in them. It is not necessary that these companies will give good return all the time.
It will totally depend upon how the market is running for them. Sometimes these companies face loss and less revenue and it is tough for them to pay a high dividend.
Investment in the companies which are under-priced in the present and we are expecting to hike on price in the future. The stability of and success of the company does not matter here. It is all expectation based.
This is the finest one. In this investment, your investment portfolio will replace your salary.
Investing in the companies which regularly pay the dividend and they have good revenue generation and profit growth. You can say that it will be income your generating portfolio.
Dividend investing is the most beneficial. In this, your complete focus is on dividend irrespective of the market. In growth and value investing, investing is on the basis of overall company profile, whereas in dividend investing your overall focus is high paying dividend stocks.
It is tax-free in Singapore!
Unlike a few other countries income that you will get from investing in dividend stock in the Singapore stock market are tax-free in Singapore. Imagine a legitimate salary that won’t be affected by government interference. It is very advantageous and helpful for financial stability.
Hedge against Inflation
If you invest in a strong company that generates high revenue and regularly increase the dividend for their shareholders, it can be very helpful during the time of high inflation in some case in the financial crisis.
Let us help you with how you should process to make income from dividend investing in Singapore.
1. Select the companies that have been increasing the dividend over the years
There are companies listed in the Singapore Stock Market which increase the dividend over the past years. For example, Lung Kee (Bermuda)(SGX: L09), 2013- 0.045 2018-0.7, UMS Holding (SGX: 558) 2013- 0.035, 2018-0.54, there is a very good increment in their dividend payments from 2013 to 2018. There are more companies like that provide good dividend on regular basis.
You can do research in SGX free stocks scanner, stock facts to get the details of the company.
You should also check the improvement in their revenue, profit, and effects of dividend increment on the company.
2. Invest in the companies with long dividend payments record
There are more than 30 companies in SGX which never fails to pay the dividend to their shareholders. In this also you have to do research on the SGX website, company websites, investment related websites to know the details of dividend history, annual report, balance sheet, announcements.
They are mostly blue chip stocks of STI (Strait Time Index), those are too big to fail.
You should also check their performance during the financial crisis. By this, you will get the idea of how these companies will perform if the future brings a new crisis.
3. Never forget to diversify your portfolio
Although investing in high dividend paying stocks of Singapore is rewarding but you should always consider diversification. You can always earn money from investing in dividend providing ETFs, REITs, STI or may even in bonds. Diversification helps you to minimize the risk factor in the investment portfolio.
4. Grab the knowledge of financial ratio
Financial Ratios will help you to understand the company’s performance. Here the ration which you should keep in mind while choosing a company for dividend investing.
Also, check for cash flow and debt levels.
5. Stay aware
After all these analysis and research you can’t sit back and relax. You should always stay aware of all the new and announcement related to the company and market. If your goal changes then you should always find a way to re-balance your investing portfolio.
Dividend investing will be essential when living in Singapore will get expensive. Inflation will always be in the economy and living standard will increase eventually.
The income you will generate by investing in Singapore high dividend paying stocks will help you to keep in the race and it will act as your safe vault for retirement.