What You Must Know Before Investing In Singapore Dividend Stocks
Are you looking on how to yield consistent cashflow from your stock investments?
Dividends are a good way to “extract
” cash from the companies you are holding on to in your stock portfolio, however, not all stocks are suitable candidates for investing as dividend stocks.
Some people invest in stocks mainly for capital gains – these stocks are called growth stocks. Although they are geared towards growing your capital, these may not necessarily yield dividends because high growth companies typically would want to reinvest their capital towards growing their businesses.
Others may invest in stocks which are turn-around in nature. Unless a company is consistently profitable, it is challenging for a business to continue paying out dividends on a regular basis. So what exactly are the factors to consider before hunting for Singapore dividends stocks?
Important factors in hunting for the right dividend stock in Singapore:
1. Track record of issuing consistent dividends
If you’re looking for Singapore dividend stocks to generate cash-flow from, make sure the company in question already has a strong history of issuing dividends! Not all companies do that. One of the most important factors as mentioned above is profitability. If a company is not consistently profitable, it is difficult to for it to give out dividends because it’s cash would get lesser and lesser.
2. Pay-out Ratio
The pay-out ratio is the proportion of company earnings paid out to it’s shareholders. Sometimes, companies pay out dividends that are more than their earnings for certain years. Don’t get too happy on these one-off dividends and start jumping onboard the stock! The key is sustainability. Do you expect the company to keep paying out more money then they earn for years to come?
3. Dividend Yield
Dividend Yield is expressed as a percentage, of the amount of dividend paid out over the current share price. Make sure the dividend yield is something attractive to you! Some new investors jump onboard extreme low dividend yields of <1% thinking that some cash is better than none. However, the truth is that you could be wasting your capital that could be better deployed!
4. Business Model and Company Fundamentals
The prerequisite of what we do at Value Investing College is to ensure that all of your stock holdings are fundamentally sound and rock solid companies. If you invest in a company that claims to give high dividend yield, but on its own, has a terrible business model, questionable management and poor cashflow, your capital is still bound to go down the drain!
To learn how you can profit from picking the best companies around and generate cash from Singapore dividend stocks… and more secrets that the savvy investor uses on the stock market, come join us in our legendary workshop by registering below now: