Singapore dividend stocks continue to offer compelling income potential. Here’s how investors can make the most of the current landscape and earn income.
Singapore’s equity market is positioned to continue its resilient performance, with benchmark indices trending positively and dividend yields holding firm above historical averages. This financial health enabled companies to increase dividend payouts at a faster rate than earnings growth, signaling a strong commitment to shareholder returns even as earnings momentum begins to moderate.
While the underlying fundamentals are encouraging, investors should note the recent “yield squeeze,” as rising government bond yields have narrowed the spread against equity dividend yields. Despite this, the underlying strength and prudent capital management of Singaporean corporations continue to make them a compelling source of dependable income for investors.
To help investors navigate this landscape, we maintain a curated dividend stock tracker that identifies compelling opportunities across the market spectrum. This quarter, our tracker features a mix of stalwarts and promising mid-caps. It includes large-cap leaders like DBS Group and Singapore Telecommunications, known for their stable payouts, alongside resilient mid-cap players such as SBS Transit and UOB-Kay Hian, which offer attractive yields backed by strong performances.
Singapore Equities Have Held Up Well
The graphs below track the performance of the SG Index, alongside their respective dividend yields. The SG Index offers a more holistic view by capturing the top 85% of Singapore’s market capitalisation.
Sources: Bloomberg, Syfe, as of 26 June 2025
The broader trend has been constructive, with both indices trending higher and dividend yields consistently exceeding their historical average of 4%. Singapore equities continue to stand out as dependable, income-generating instruments in a region often characterised by volatility.
Dividends Remain a Priority for Companies
Dividends are ultimately a function of two critical variables: profitability and payout policy.
While profitability reflects the underlying performance of the business, the payout ratio is a strategic decision determined by balance sheet strength and the company’s internal capital requirements—be it for reinvestment, expansion, or acquisitions.
Against this backdrop, Q4 2024 earnings data offers a revealing narrative. The STI constituents posted an average year-on-year earnings per share (EPS) growth of 10%, yet dividends per share (DPS) rose by an even stronger 12%. This divergence suggests that, despite prevailing macro uncertainties, corporates have elected to reward shareholders more generously—either signalling confidence in the durability of earnings or responding to investor preference for capital return over retention.
As illustrated in the chart below, companies in the STI and SG Index have kept their dividend payouts steady, consistently returning about 55% to 66% of their profits to shareholders. While EPS momentum has begun to moderate, DPS growth has been sustained.
Sources: Bloomberg, Syfe, as of 26 June 2025
However, Yield Squeeze is Happening
The yield spread—which is the difference between the dividends paid by Singapore stocks (like those in the STI and SG Index) and the interest earned from 10-year Singapore government bonds—helps investors decide whether stocks or bonds offer better income.
When this gap widens, it usually means investors are feeling cautious and want more reward for taking the risk of owning stocks instead of safer government bonds. When the gap shrinks, it shows growing confidence in companies’ earnings and their ability to keep paying dividends, which often leads to more money flowing into stocks.
Still, recent market ups and downs have made Singapore dividend stocks look more attractive compared to bonds. That said, markets remain unpredictable, so investors should stay watchful as the situation can change quickly.
How to Position Your Portfolio for Sustainable Income
For investors focused on yield, this environment calls for smart positioning. While the overall dividend landscape in Singapore remains attractive, not all income opportunities are created equal—especially as earnings momentum begins to cool.
In this context, dividend-paying equities with stable earnings, high cash flow, and strong capital discipline are likely to remain at the forefront. Among these, Singapore banks continue to stand out.
SG Banks: Still Anchors of Income and Stability
Singapore’s banking sector, led by names like DBS, UOB, and OCBC, has long been a mainstay for income-focused investors. These banks have consistently delivered above-market dividend yields, underpinned by:
- Solid net interest margins
- Resilient fee income
- Prudent credit provisioning
- Strong capital buffers
Even as net interest income may moderate in H2 2025 amid falling rates, the sector’s fundamentals remain intact. Banks have signalled a continued commitment to high payout ratios, and are well-positioned to maintain or even grow dividends thanks to healthy balance sheets and diversified revenue streams.
Syfe’s SG Banks Bundle, available via Syfe Brokerage, provides a curated and cost-efficient way to gain exposure to Singapore’s top income-generating financial institutions. With regular rebalancing and no hidden fees, it’s an easy way to build yield resilience into your portfolio.
What About Global Dividend Stocks?
For investors looking to diversify beyond Singapore, global dividend equities also remain an attractive option.
Syfe’s Core Equity100 portfolio offers exposure to high-quality global stocks, including established dividend payers across the US and global markets. The portfolio includes blue-chip names with strong payout histories, blended with growth-oriented exposures that can compound over time.
This mix makes Core Equity100 well-suited for investors seeking returns that combine capital growth with a stream of passive income over the long term.
3 Key Principles for Income Investors Today
To navigate 2025’s income landscape, investors should focus on:
- Quality Over Yield: Instead of chasing the highest headline yield, it’s better to prioritise companies with sustainable payout ratios, strong balance sheets, and consistent cash flows.
- Diversification: Blend local stalwarts like Singapore banks with global dividend leaders to spread risk across geographies and sectors.
- Yield Benchmarks: With interest rates falling, even a 4–5% yield from equities now stacks up well compared to cash or government bonds. Focus on relative income value, not just absolute numbers.
Final Thoughts: Singapore Still Shines for Steady Income
Despite the yield squeeze and narrowing spreads against sovereign bonds, Singapore dividend equities continue to offer compelling value. Corporate discipline, robust fundamentals, and an investor-aligned approach to capital returns mean that dividends are a reflection of long-term business resilience.
As the macro backdrop evolves in H2 2025, investors would do well to look beyond short-term yield compression and focus on the bigger picture: sustainable, predictable income in a market that continues to reward prudence and performance.
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