I’ve been an active investor, always finding ways to beat SGX market. I started trading when I started working. With the influenced of “Rich Dad Poor Dad”, I’ve been telling myself my money has to work harder than me. Thus, I started my POEMS account.
Like most Singaporean, I started trading Singapore Stock Market, or SGX. I still remember at a point of time I was so crazy over the prices movement I was calling my broker almost every hour. Ever since internet trading was introduced, I started to trade online by myself.
Fast forward till today, I’ve invested over $100k into stocks. Previously I purchased shares for prices movement. I did not know much about trading and purely just looking at charts and prices. Now, though I’m still learning, I started to invest in dividend stocks.
I always prefer to make passive income, rather than 1 huge sum of money. I like stability, with endless stream of money coming in every month. After reading Warren Buffett Way, I started to search for high yield, high dividend counters to invest. I’m going to re-organized my portfolio and rebuild them into a solid dividends-based portfolio. So how to pick the best dividend stocks in SGX?
Some of the criteria I’ve set for myself are
- Must not be a cheap stock ($0.40 and above)
- Must give consistent dividends for the past 5 years.
- The yield must be as high as possible, preferably over 7%. (Meaning if I invest $10,000, I must get $700 every year).
- Must not be in Manufacturing Sector. (I’m an Engineer myself and I know manufacturing sector in Singapore is dying).
- The share prices must not fluctuate too much as I’m looking for long term dividends growth, rather than prices fluctuation. I’m not going to sell these counters and plan to hold for life.
- The PE ratio must be below 15.
Sad to say, with over $100k invested, my current portfolio is bringing me around 2% yield, which means I’m getting only $2000 back per year. My 2013 target is to bring my yield to 5%, drawing back $5000 this year, then roll the money back into stock market. This is called compound interest. Warren Buffett is able to compound his income to USD45B within 50 years! I’m just looking for $1M 🙂
I’ve set these criteria and the next job is to filter out these gold nuggets. Though I can simply buy STI stocks, the yield are usually not that great. So far only Starhub is inside my watchlist. I’ve found a good book called Shares Investor. It’s a bi-weekly book. The first few pages will share the top dividend counters, sort by sector. With that, it makes my work easier.
After filtering out the cheap stocks, I’ve list out several good counters. Further homework is to check the past 5 years dividends and make sure the dividends keep rising and not falling. Lastly, the yield has to be right. I’m calculating how much I will get if I’ve invested $10k to this stock. Different counters will have different yields.
In order to hit my target of 5% yield, I’ve to sell off some of my counters and reinvest in high yield stocks, plus pumping in several more capital. I’ve offloaded 1 of my losing counter (Raffles Edu) and 3 winning counters (Triyards, Golden Agri, Tiong Woon) to offset the balance.
Since these counters’ dividends sucked, my idea is to sell them away, collected the money and reinvest in high dividend counters. I’ve waited for the right chance to sell off these 4 counters as I did not want to lose any money. I want these 4 counters to break even. And finally, today, STI shot up over 30 points. All these 4 counters went up and I offloaded them happily!
With cash in hand, I’m now sitting on the side waiting for the next recession or bad news to happen. I know it’s bad to say this, but to win is not when you sell, it’s when you buy. During 2008 recession, I’ve threw in tons of money and making tons back. I’m sure I won’t get this chance anymore, so I’ll just wait for a dip to go in.
By doing so, I can almost guarantee a nice dividend return, plus some allowance for the stocks to go down. I’m looking at 20-30% drop. Some of the counters I’m monitoring are: SATS, MIIF, Sim Lian, CapitalRChina, 2nd Chance. These counters easily can give over 8-10% yield. Recently I’ve purchase Sabana, giving me 8% yield as well.
So do you trade too? What’s your strategies and counters to recommend? I’ll like to hear from you.