3 Step Guide To Build Your Own Dividend Portfolio


Dividend investing is extremely popular and attractive in Singapore due to its relatively high returns compared to other countries in the SEA region. Singapore's stock market is famous for its niche of high-quality dividend stocks such as REITs and banks. Furthermore, dividends in Singapore are tax-free and are a good way to receive passive income. Who doesn't like seeing money enter their bank account regularly without working? It is one of many strategies to increase your income streams and helps you achieve your financial goals earlier. I would be explaining how you can create your own dividend portfolio as a beginner investor in Singapore.

 

1. Determine your investment goal

The first step is to determine your financial goal such as how much you would want to receive from your dividend stocks monthly. For example, your goal could be to receive $1,000 monthly from your dividend stocks to supplement your income. That would add up to be $12,000 annually from your dividend portfolio. You have to be realistic with your financial goals given your own financial situation. A good way to make goals is using the SMART (Specific, Measurable, Attainable, Realistic, Time) method. You can find out more about SMART goals here.

 

2. Decide your dividend yield

Next, you must decide the dividend yield that you are looking for. A good starting dividend yield to look for in Singapore is 4-6%. Naturally, there are higher risks associated with a higher dividend yield. Assuming you have decided on a 5% dividend yield return, you would then require a dividend portfolio of $240,000 to achieve your financial goal. This may seem like a large sum initially but it is easily achievable with the help of compound interest over the years. The earlier you start investing, the less amount of money you would require to achieve your goal. Stop procrastinating! 

 

3. Choose which stocks to buy

The last step is to decide which dividend stocks to purchase. You can start by finding dividend stocks in Singapore with a regular 5% dividend yield. As a beginner investor, I would suggest starting with blue-chip dividend companies such as well known REITs or banks such as DBS and UOB. A blue-chip dividend company is a company with large market capitalisation and is included in the Straits Times Index (STI) which is a fund that includes the top 30 companies in the Singapore market. As you research and learn more about the stock market, you can start purchasing smaller companies with higher dividend yield depending on your own risk appetite.

 


I hope this helps and you can join me on my journey of dividend investing to financial freedom. 

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