Dividend Stocks - Better than Insurance or Housing Investments Out There

Its unfortunate the topic of dividend investing is not touch more these days. Among markets like SGX and overseas, many REITs/Business Trust with sustainable cashflow are giving above 7% yields annually, this far outperforms any insurance or housing investments our local advisory has been touting. 

Buying these dividend companies are simple and in my view, definitely more rewarding than the investment fads peddled. WIth a cashflow of 7-10% yields to support; they are definitely better than property and insurance products. Even pairing a simple term insurance plan with these dividend stocks will outperform many insurance-linked (ILPs).

SGX Dividend Giants

SGX has a few worthy to mention REITs. While they are not household names, the business they are in are stable and tenants leased to are strong.

Elite UK REIT (10% Dividend)

The REIT has a concentration of only 01 major tenant and that is the United Kingdom government. Two ministries of the government rent office space from Elite UK. Having such a strong tenant, the risk of default is low and the UK has signed leases with the REIT that runs to year 2028 with no early termination. The rental contracts has annual increase in rent, in line with UK inflation rate.

The REIT carries a 10% dividend yield and leverage ratio is healthy in the low 40%. In terms of property, this is a good investment. 

UtdHampshire US REIT (9.5% Dividend)

The REIT is in the staple essentials of USA and operates strip malls countrywide. This is where residents in the community go to buy their groceries, buy medical products and neccessities. Tenants of Utdhampshire are Walmart, Home Depot etc. Putting it in the local context, it is like to going to your town centre or HDB shopping mall to make a weekly grocery purchase. Essentially, the REIT is in the essential retail business for USA (no pun intended)

Leverge wise, the REIT is not running afoul of MAS's current leverage requirements. Balancing its capital requirements and only distributing 90% of its earnings as dividend, the REIT gives 9.5% dividend and uses the remaining capital for CAPEX. This is commendable.

Overseas Dividend Masters

LINK REIT (8% Dividend)

Similar to UtdHampshire REIT, Link REIT operates neighbourhood malls in Hong Kong and Singapore. LINK REIT model is that it operates malls where residents in the commmunity make frequent commutes to buy neccessities and grocery.

Because LINK REIT employs a very low leverage (19.5% as compared to others of 35-45% leverage), the REIT's dividend is not as much. However, an 8% dividend while employing a low leverage ratio of 19.5% is commendable. LINK REIT is well known in the investment community and is a "role model" REIT that Businesstimes looks at and had considered for Singapore REITs to follow.

China State Owned Companies (SOE) (7% - 9% Dividend)

Unloved but delivering consistent strong earnings, many of these Chinese SOEs have given comparably high dividends. As these are majority owned by the Chinese government, the risk of them defaulting is remote given their economic importance to China.

Many of these companies are traded on the Hong Kong market and can be bought by us Singapore investors via Hong Kong market. After factoring the dividend taxes, their yields are 7-9%. My picks among these SOEs are Agricultural Bank of China, ICBC, Petrochina, Sinopec. They are the market leaders in their industry and have economic importance to China.