Dear readers, I have come across many who have invested significant amounts of monies constructing a portfolio consisting of high dividend stocks including business trusts and Reits. And often these investments could run into the league of few hundred thousands dollars. The logic is simple, invest $100,000 for a six-percent dividend-yield equity and the investor could pocket $6,000 per year or $500 per month for as long as he holds the stock. As well as to mention, that the dividend could head up if the stocks perform well.
But in today’s economy which has seen disruption in technology, ever-increasing competition and macro-volatilities, it is important to examine whether the dividends stock investors are holding would continue to deliver the same high dividend rate as before and on even whether the stock could head south in terms of the capital gains.
From how I see it, Reits and Business Trusts are ultimately stocks which are also subject to the vagaries of the global economy. And it is no guaranteed that the same high dividend rates will be sustained and investors may not always profit from the capital side of holding the stocks.
On the other side of the coin, I also noted how a number of investors had invested in a number of small to mid-cap stocks with the hope of them being multi-baggers some day. But the reality turns out that these become multi-beggar with some even being delisted at no or low exit offer.
And that is why the model espoused by SG STOCKS INVESTING by having a bulk of your investment in STI ETF really makes a lot of sense. The STI ETF tracks the Straits Times Index and the Straits Times Index is constantly rejuvenated with and diversified across many of the better-performing stocks on Singapore Stocks Exchange. The STI being an index will never go bust and it pays a decent dividend rate at very well-diversified risks. And that is why the STI ETF should form the bulk of an investor’s portfolio who wants to grow his monies for the long-term. And after setting aside the bulk into the STI ETF, the investor would then channel the remaining portfolio into selective international picks with multi-bagger potentials to turbo-charge his investments.
And that is what investing is really about!