Dividends Don’t Lie – Part 1


The SGX is a great place to hunt for dividend-paying stocks as dividends earned are tax-exempted in Singapore. Recently, I have many people asking me how to build passive income through investing in high dividend yield stocks? Therefore, I decided to come out with a post to teach people what are the things to look out for.

1.Track record of paying dividends

First things first, we must always check the dividends history of the company. This information is readily available on the SGX website. You can go to the link

http://www.sgx.com/wps/portal/sgxweb/home/company_disclosure/corporate%20information

 

We must make sure the company has a track record of paying dividends to the shareholders.

Let us look at two companies as examples – Singtel vs Swiber

 

Singtel

 

Swiber

 

From the history, you can clearly which company have a policy of paying the shareholders dividends consistently.

 

2. Are the dividends payout consistent or increasing?

As income investors who invest in dividend paying stocks, we need to know how Dividend per share is derived.

Dividend per share (DPS) is the sum of declared dividends issued by a company for every ordinary share outstanding. Dividend per share (DPS) is the total dividends paid out by a business, including interim dividends, divided by the number of outstanding ordinary shares issued. A company’s DPS is usually derived using the dividend paid in the most recent quarter, which is also used to calculate the dividend yield. DPS can be calculated by using the following formula:

Dividend Per Share (DPS)
D – Sum of dividends over a period (usually 1 year)
SD – Special, one time dividends
S – Shares outstanding for the period
You can read up more at  : Dividend Per Share – DPS Definition | Investopedia http://www.investopedia.com/terms/d/dividend-per-share.asp#ixzz4dC8FHkdZ

One good paid resource is  SharesInvestor platform (http://www.shareinvestor.com/sg) that provide you with the DPS of the company nicely displayed in a graphical chart.

For those who do not want to pay, you can use open a POEMS brokerage account with Phillip Securities and use the free Stock Analytics tool that provides the company’s DPS for the last 5 years. Please see below for a screenshot which I have captured.

 

I am sure there are other platforms and tools out there beside these 2 that I shared are available for investors. But I usually used these 2.  Usually if the DPS is stable  or rising, the stock will be on my radar.

 

3. Lookout for historical high dividend yield 

Learn how to calculate dividend yield.

 

Good entry point to buy the stock is when the dividend yield based on historical records is at its highest.

 

In my next post, I will be sharing what are the other things to look out for.

 

 

 

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