You don’t need a lot of money to get started investing.
When I started my investment journey way back in 2004, my capital was a grand total of just S$2,000.
Back then, REITs were still a new asset class in the market.
I used that S$2,000 and applied for the IPO of Suntec REIT (SGX: T82U) back in December that year.
Being allotted some shares from that IPO helped to kick-start my dividend investing journey.
Today, almost 16 years later, I am still holding on to the same Suntec REIT shares I bought many moons ago.
The dividends I received over the years have more than paid for the shares that I own.
For those of you who have just started working, and managed to save up a tidy sum, you can consider buying a few dividend stocks to start building a strong base for your investment portfolio.
S$5,000 is sufficient to start with as lot sizes in Singapore have been reduced to a 100 shares, down from a 1,000 previously.
Here are three dividend stocks you may wish to consider, taking into account the business’ growth prospects and the potential for dividends to rise in future years.
Singapore Exchange Limited, or SGX, operates Singapore’s sole stock exchange.
The group offers a platform for the trading of securities such as equities, bonds, currencies and derivatives.
The bourse operator has enjoyed strong growth in its last fiscal year ended 30 June 2020, with revenue and net profit up 16% and 21% year on year, respectively.
The quarterly dividend was raised from S$0.075 to S$0.08 moving forward, for an annualised total dividend of S$0.32 for the fiscal year 2021.
At the last traded share price of S$8.90, the shares offer a prospective dividend yield of around 3.6%.
CEO Loh Boon Chye is not resting on his laurels, though.
His vision is for SGX to morph into a successful multi-asset exchange, instead of just being merely a stock exchange.
To that end, it has engaged in a series of collaborations to launch new product offerings to attract a wider customer base.
In late August, SGX signed a long-term strategic partnership agreement with FTSE Russell to develop a broad range of multi-asset solutions catered to Asian markets.
In early September, the group announced a collaboration with CryptoCompare to launch crypto indices under the SGX iEdge index suite of products.
And just last week, SGX partnered with ICBC Wealth and Asset Management arms to list the world’s largest Chinese pure government bond ETF, with initial assets under management of US$676 million.
These latest corporate developments showcase the strategic initiatives the exchange is undertaking to grow its business, and by extension, its dividends, for the long-term.
REITs serve as dependable income vehicles and are well-known for churning out consistent dividends.
In Keppel DC REIT’s case, it has remained resilient despite the pandemic and even managed to post a 13.6% year on year increase in its distribution per unit (DPU) for the first half of 2020.
The owner and operator of 18 data centres spread across eight countries has managed to almost triple its assets under management from S$1 billion in 2014 to S$2.8 billion as of 30 June 2020.
The pandemic has accelerated the shift towards digital and led to soaring data usage.
With higher data traffic here to stay, enterprise spending on cloud infrastructure is expected to grow at 22% annually over the next five years.
This trend acts as a powerful tailwind for Keppel DC REIT and will help it to grow its business and DPU further.
Haw Par is probably best known for its Tiger Balm brand of ointments and mosquito patches.
What investors may not know is that the healthcare group also owns significant stakes in United Overseas Bank Ltd (SGX: U11) and UOL Group Limited (SGX: U14).
Haw Par also owns several commercial properties in Singapore and Malaysia and operates a tourist attraction in Thailand.
The conglomerate is well-known for paying out regular, consistent dividends to shareholders.
From 2006 till 2017, Haw Par has paid out an annual dividend of S$0.20. This annual dividend increased to S$0.30 for the fiscal years 2018 and 2019.
As cash balances build up in the group’s balance sheet, it periodically declares a special dividend to reward shareholders.
A S$0.05 special dividend was declared in 2007, S$0.15 in 2015 and a S$0.85 bonanza in 2018 to celebrate the group’s 50th anniversary.
Moving forward, the healthcare division should be able to grow over the long run, and the cash inflows from its investments should help the group to sustain its dividend payments.
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Disclaimer: Royston Yang owns shares in Singapore Exchange Limited, Suntec REIT and Keppel DC REIT.