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271021 - How much do you need in your dividend portfolio

$12,000 Dividend Per Year: Here's How Much You Need To Invest!

profileMing Feng

Your 5Cs Singaporean Dream? Outdated.

There might just be a new definition for the Singaporean dream.

Forget the typical 5Cs (car, cash, credit card, condominium and country club membership) that was commonly used to determine how successful someone is in life.

And allow me to present to you the cold hard truth.

The new Singaporean Dream is… TO JUST SURVIVE!

Source: Giphy

With crazy car prices, expensive property prices (don’t even need to look at condos), and seriously… who goes to country clubs anymore?!

A Singaporeans’ evolved goal in life is to generate enough passive income and retire early.

Retirement Age vs Years of Good Health

The official retirement age of Singapore is a number that was decided based on policies which are collectively beneficial for the country and its economy.

However, this might not necessarily benefit us as individual Singaporeans.

And that’s because the age could be determined by the life expectancy instead of the average age of Singaporeans who are still in good health

Also, while the retirement age can always be pushed back, the average age where Singaporeans are still healthy is a little harder to maintain or improve — given our high-stress environment and ever-changing lifestyles.

So if you want to retire early, it’s really up to us to start planning early.

“How to do that,” you ask?

One of the many ways is to build a dividend income portfolio to achieve financial freedom before the prescribed retirement age.

TL;DR: How Much You Need to Invest to Have a Sustainable Dividend Income Portfolio?

What Is a Dividend Income Portfolio?

What exactly is a dividend income portfolio, and what is all the hype about?

Dividend stocks are stocks that give dividend payouts based on their profits over the year. Should an investor invest in a dividend stock, he receives income in the form of dividend given out by the stock.

The Rule of the Dividend Income Portfolio Building Game

Source: Giphy

Imagine this: Your stocks portfolio gives you enough every year to a point where you no longer have to depend on your salary for your expenses.

That is the goal of every investor and this is how to build a dividend income portfolio:

  • Certain stocks give dividend payouts based on their profits over the year.
  • Investors can use his prefered method to identify and screen out solid stocks and investment instruments to invest in.
  • From there, investors will build his investment portfolio.
  • The objective is to build an investment portfolio which can replace your expenses and salary.
  • Once that objective is achieved, financial freedom may not be too far away!

Dividend Investing – How much should you be investing in total?

Back to the rule of building an investment portfolio which can replace your expenses or salary, we work backwards to find out the portfolio size required to achieve it.

From here, we can all plan ahead and hopefully, retire early.

Source: Giphy

I’m thinking of a holiday to celebrate this milestone at the Maldives before the age of 40 years old. How about you?

Set a target.

Identify how much you want your investment portfolio to fetch you every month.

Monthly DividendTotal dividend required each year
(Monthly expenses for Singaporeans after retirement)
(Median take-home salary of Singaporeans)
(Median household spend per month)

Here are some of the numbers we use for better estimation of the amount we need for retirement:

  • Basic monthly expenses for Singaporeans after retirement is at $1,200 per month.
  • Median take-home salary of a typical Singaporean worker at $3,875 per month.
  • $4,906 is the median household income per month.

With the total dividend we aim to achieve each year in mind, we worked backwards to find out the percentage of dividend yield and the size of the portfolio needed.

What is the Dividend Yield?

The dividend yield is the percentage of a company’s dividend compared to its share price.

It can be calculated using:

Dividend Yield = (Annual Dividend)/ Share Price

How Much Does Your Portfolio Need to Be?

For better illustration, we’re looking at a dividend yield of at least more than 3%.

Anything below the interest rate of Singapore Savings Bond (SSB) makes no sense for the risk that the investor will be taking.

Total dividend required each yearPortfolio size with X% dividend yield

Few things to take note of, when dividend investing:

  • A company with the highest dividend yield may not necessarily mean that it is the safest stock
  • The above demonstrates that to achieve that amount of dividend, you need to have a good amount of savings first
  • The faster you manage to achieve the above where your dividend yield income every year exceeds your expenses, the sooner you will achieve financial freedom!

Seriously, we cannot emphasise enough on the importance of starting early and making use of the power of compounding to achieve financial freedom faster.

Further Reading: Some Examples of Share Counters and Their Dividend Yields

The total dividend yield of your portfolio depends on the amount one invests in each stock and the dividend yield of these stocks.

To list down some of the stocks and their dividend yield.

Note: data is correct as of February 2019.

For stocks in SGX with a dividend yield of 3-4%:

Company NameCodeP/EDividend Yield (%)
AP Oil5AU10.733.05%
Asia EnterprisesA5533.193.23%
Asian Healthcare1J320.753.41%
BHG Retail ReitBMGU137.353.82%
BRC AsiaBEC19.873.55%
Brook CromptonAWC103.17%
Chuan HupC3313.433.85%
F & NF9913.093.47%
Geo Energy ResRE45.223.64%
Hai LeckBLH10.693.51%
Hong Leong FinS4115.153.79%
Jardine C&CC0714.263.09%
JB FoodsBEW9.393.09%
Keppel CorpBN430.463.45%
Keppel DC ReitAJBU22.453.63%
Mapletree Com TrN2IU103.533.76%
OCBC BankO3911.213.41%
Q&M DentalQC718.673.59%
Sarine TechU7713.662.98%
SBS TransitS6111.373.99%
Sing PaincareFRQ14.243.95%
Spindex Ind5647.213.38%
ST EngineeringS6321.663.88%
SUTL EnterpriseBHU9.854.00%
Tat Seng PkgT124.633.29%
Wilmar IntlF3412.33.20%
YZJ Shipbldg SGDBS68.563.24%

For stocks in SGX with a dividend yield of 4-5%:

Company NameCodeP/EDividend Yield (%)
Ascendas ReitA17U23.394.29%
AVJennings A$A0513.234.10%
Bumitama AgriP8Z8.454.54%
Bund CenterBTE28.454.33%
CapLand IntCom TC38U14.374.26%
DairyFarm USDD0128.424.01%
Del Monte PacD036.464.26%
Frasers L&C TrBUOU7.934.82%
Jiutian ChemicalC8R4.534.02%
Keppel ReitK71U185.894.93%
Lum ChangL1951.964.27%
Mapletree Ind TrME8U38.374.11%
Mapletree Log TrM44U18.144.01%
MoneyMax Fin5WJ3.744.84%
NetLink NBN TrCJLU41.924.98%
Olam IntlO3218.464.50%
Reclaims GlobalNEX4.745.00%
SBS TransitS6111.373.99%
Sheng SiongOV816.694.24%
SIIC EnvironmentBHK4.124.35%
SUTL EnterpriseBHU9.854.00%
Union Gas1F216.144.13%
VICOM LtdWJP27.174.52%
World PrecisionB495.74.44%

For stocks in SGX with a dividend yield of 5-6%:

Company NameCodeP/EDividend Yield (%)
AIMS APAC ReitO5RU9.795.58%
ARA LOGOS Log TrK2LU6.025.48%
Choo Chiang42E8.675.19%
Combine WillN0Z4.15.59%
CSE Global54411.455.39%
Fu YuF1311.665.79%
Global InvB736.55.06%
Global Palm ResBLW135.24%
Low Keng HuatF1E15.695.38%
PNE IndustriesBDA17.595.75%
Reclaims GlobalNEX4.745.00%
StarhillGbl ReitP40U26.095.17%
Suntec ReitT82U86.365.07%
Tai Sin Electric50010.795.56%
Yanlord LandZ253.635.86%

For stocks with a dividend yield of 6-7%:

Company NameCodeP/EDividend Yield (%)
APAC RealtyCLN11.396.36%
Ban LeongB266.246.49%
China EverbrightU9E4.526.41%
Cromwell Reit SGDCWCU11.226.65%
Dasin Retail TrCEDU34.876.48%
IREIT Global SGDUD1U7.826.77%
Japan Foods5OI19.916.02%
Nomura Yen1kN3331.676.32%
RE&S Hldg1G18.226.14%
Singapore O&G1D812.846.73%
Stamford TyresS2919.16.25%
UOB Kay HianU107.56.01%
YHI IntlBPF66.47%

For stocks with a dividend yield of 7-8%:

Company NameCodeP/EDividend Yield (%)
Asian Pay Tv TrS7OU11.427.35%
EC World ReitBWCU20.837.26%
EliteComREIT GBPMXNU14.797.64%
HC Surgical1B110.417.21%
HPH Trust USDNS8U11.237.89%
Karin TechK2912.227.40%
New ToyoN0811.247.50%
Pan HongP361.717.69%
Sabana ReitM1GU11.567.11%
Sasseur ReitCRPU17.587.55%

If you’re wondering how we got the above information, we used the Singapore Exchange Limited’s Stock Screener and sorted the information with the ‘Dividend Yield’ filter.

Before you start building your portfolio it’s important to understand what exactly is dividend investing all about.

The dividend yield alone is not the best indicator of whether you should add a particular stock or share counter to your portfolio.

For instance, not all high dividend-paying stocks are good investments.

It is important to understand why they are able to pay such high dividends, and whether these dividends are sustainable for the companies as well.

As with any form of investment, you need to do your due diligence before putting your hard-earned money in.

Once you’ve done your homework, you’ll then be able to start building your portfolio to give yourself a headstart towards early retirement.


About Ming Feng
A stint in Bloomberg gifted me with a beer belly, which only grew larger when I moved on to become a Professional Trader. Now I turn caffeine into digestible finance-related content.
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