I’ve been looking to generate an income stream through the purchase of shares that pay high dividends. After evaluating the pros and cons of buying shares overseas, I decided to concentrate on shares in Singapore. The three main reasons for this are the currency risk factor, foreign taxes and Asia being where the growth is at the moment.
While researching which shares to purchase I stumbled upon the Investment Moats blog which has a handy list of some of the better dividend paying shares in Singapore. The list also includes useful information on important statistics that indicate the listed companies’ ability to keep paying their dividends. I found this very useful to narrow down the companies I would eventually purchase. After all, you probably don’t want to buy a share of a company that is paying dividends out of its cash reserves, or worse, from borrowings.
After doing the research I decided to go with the following companies:
Starhub with a yield of 7.7% is a stable telecommunications company with a record and ability to pay out a very good dividend. I’m kicking myself for not buying this stock when it was around $2.20. I thought the market was going to correct at the time, so I held off.
Singapore Press Holdings with a yield of 6.6% is a media company with a monopoly in Singapore. It has solid earnings and dividends over the years too.
SP Ausnet is a Singaporean power utility company with a yield of 8.2%. It’s main operations are in Victoria, Australia and the stock is listed on the ASX too. Everyone needs power, so this should be a stable earner too.
Singapore Post is another monopoly, but has moved more into the retail side of things to support government/citizen interaction, bill payments, and other financial services. The yield is a bit lower at 5.3%, but this is a fairly defensive play.
There are a couple of other stocks I’m looking at too, but they need a bit more investigation before I commit.
Hopefully the stocks I’ve selected will keep paying the dividends at similar yields over the time I hold them. They are certainly paying a lot more than what my money would get while it’s sitting in the bank!
Disclaimer: The above is my own opinion and not financial advice.