Guide to Investing in Dividend ETFs in Singapore and How to Choose Them

It’s a well-known fact that investors in Singapore love dividend stocks. It’s not hard to see why since dividend stocks provide investors with a regular income stream and capital appreciation.

For investors who are looking to dividend income, dividend exchange traded funds (ETFs) are also an alternative to stocks. Dividend ETFs are great for those who are looking to generate passive income but may not have the time to actively monitor and manage individual stocks.

Want to diversify your investments with dividend ETFs? In this article, we cover what to look out for before investing in a dividend ETF and highlight a few ETFs to keep an eye on.

Table of Contents

How to Choose Dividend ETFs

Dividend Yield

The first thing to look at when evaluating an ETF is its dividend yield. Dividend yield is a ratio that shows how much dividend income you earn for every dollar invested and is calculated by dividing the annual dividends paid per share by the price per share.

Dividend Yield = Annual Dividends Per Share / Price Per Share

Looking at the dividend yield gives you an idea of the dividends you can expect to earn over the next year. To illustrate, an ETF has a market price of $150 and a dividend yield of 6.67%, earning you about $10.05 in dividends.

It’s worth noting that high yields are not good indicators of strong performance and could be because of falling stock prices, potentially leading to the elimination or cutting of dividends.

Expense Ratio

Expense ratio measures the cost of owning a dividend ETF. It indicates the costs associated with managing and operating the ETF, such as management fees, administrative fees, and trading costs. These fees are deducted from your investment and will vary across different ETFs.

Here’s an example of how expense ratio works: 

A fund charges an expense ratio of 0.25%. That means you’ll be paying $25/year for every $10,000 invested in the fund.

Note that any expense ratio higher than 1% is usually considered high and should be avoided since high expense ratios could cost you thousands of dollars over the course of your investment lifetime.

Assets Under Management (AUM)

AUM refers to the total value of assets that an ETF manages. Broadly speaking, the more AUM the ETF has the better. A dividend ETF with the higher AUM is preferred since a higher AUM is an indication that the ETF is more established and well-trusted and tends to have higher liquidity.

Dividend ETFs in Singapore to Hold Long-Term

SPDR® Straits Times Index ETF (ES3)

Dividend yield (12M)4.13%
Assets under management$1,504.15 million
Expense ratio0.26%
Distribution frequencySemi-annually
As of Feb 2024

SPDR® Straits Times Index ETF is Singapore’s first locally created ETF. It has a long history dating back to 1966 and designed to track the performance of the top 30 listed on the Singapore Exchange.

With a dividend yield of 4.13% (as of 7 Feb 2024), the STI ETF is a great option for investors looking to generate passive income. It also offers investors diversified exposure to leading companies across a range of sectors such as telecommunications, consumer staples, and technology.

Lion-Phillip S-REIT (CLR)

Dividend yield (12M)5.31%
Assets under management $369 million
Expense ratio0.60%
Distribution frequencySemi-annual
As of Dec 2023

The Lion-Phillip S-REIT ETF is managed by Lion Global Investors and Phillip Capital Management, two well-established financial institutions in Singapore. Both institutions have a proven track record of managing Asian equities and as an investor, you can rest assured knowing that your investments are being taken care of by experienced professionals.

Apart from that, this ETF provides you exposure to a diversified portfolio of S-REITs, with its holdings spanning sectors like retail, industrial, office, and healthcare.

NikkoAM-StraitsTrading Asia ex Japan REIT (CFA)

Dividend yield (12M)5.86%
Assets under management $371.95 million
Expense ratio0.55%
Distribution frequencyQuarterly
As of Feb 2024

The NikkoAM-STC Asia REIT ETF is another dividend ETF. With an AUM of $371.95 million, this ETF is one of the largest REIT ETFs in Singapore.

It exposes investors to sectors like retail and hospitality and gives you the chance to invest in real estate in Asia in countries like India, Hong Kong, and South Korea.

How to Buy Dividend ETFs in Singapore

Here are the steps to buying dividend ETFs in Singapore:

  1. Open a CDP securities account
  2. Select your preferred brokerage platform (one that’s regulated by the Monetary Authority of Singapore (MAS)) and sign up for an account
  3. Fund your trading account and start trading!

Generating Dividends in Singapore with Dividend ETFs

Investing in dividend ETFs is a great way to generate regular dividend income. Plus, dividend ETFs offer investors like you diversification without the hassle of active stock picking and monitoring.

If you’re looking for a way to earn dividends, Syfe’s REIT+ is also a good choice for investors who want to generate dividend income and invest in REITs. Dividend payouts are made quarterly and you can choose between having them paid directly into your bank or reinvesting them automatically.

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