Is Dividend Investing Outdated

Is Dividend Investing Outdated?

Dividend investing shares a close resemblance to what Stereotypical Asian parents’ advice on wealth management.

Is Dividend Investing Outdated
Is Dividend Investing Outdated

Get a good job in a big company -> Invest in big stable company

Get a decent salary -> Get a decent dividend yield

Life is more stable -> Your returns have little volatility and you can expect stable returns

Probably that is why the Straits Times Index (STI) consists mostly of “good, stable” companies that gives “good, decent” dividends over the years. Companies such as Grab (headquarters in Singapore), SEA Group or more commonly known as Shopee (Founder Forrest Li is a Chinese-Born Singaporean) and Razer Inc (Singaporean-American multinational technology company) are heading or have headed over to other countries to list their companies.

Is Dividend Investing Outdated SE Share Price
Is Dividend Investing Outdated SE Share Price (1479% Returns over 4 years!!)

Are you missing out?

What is Dividend Investing?

A dividends is a payout from the company’s net profit. The payout comes in fixed frequency, often quarterly or half yearly. You can choose to receive the dividends in cash or reinvest into the business with your dividends.

Take for example: DBS Singapore (SGX: D05).

I did an analysis last year on DBS. Click here to read more. DBS is currently traded at ~$30 (30 April 2021). The dividend yield is 2.45%. If you invested $1,000,000 into DBS, a dividend yield of 2.45% means that every year you can expect to receive $24,500 from DBS. This is a decent money of money for your retirement.

Is Dividend Investing Outdated DBS Share Price
Is Dividend Investing Outdated DBS Share Price

It is wise to assume that mature rational companies will only payout dividends when there is a positive net profit. They are already beyond the growth phrase where they might need to reinvest into R&D etc. (Do note the following if you are investing in foreign companies for dividends)

However, if you look at the price trend from 1 Feb 2000 ($21.30) until today 30 April 2021 ($30). This works to be 1.64% CAGR for the last 21 years (without taking into account dividend yield). Is this method of investing outdated?

Dividend Investing Is Not Fast Return Game

Dividend investing typically require a large amount of capital. To get a return of $24,500, you would need $1,000,000 worth of capital. It would take approximately 40 years for you to break even from your investment. However, this might be suitable for people who have a large amount of capital and are passive when it comes to investing.

Upon identifying a matured company that is giving good dividends, you will be able to enjoy the dividends for years to come.

Looking at the way industries are disrupted now, it is more relevant than ever to identify matured companies that still keeping up to date.

Stock Price Is Still Relevant

Even if the company is decent, share price still matters. You do not want to see a company whose share price is going down. Psychologically, this is proven to be extremely hard for most people. I know of people who are unable to sleep at night because of a 10% drop in one of their position.

Secondly, your capital is being depreciated as the share price goes down. Dividend investing requires one to have a steel resolve (as much as those invested in growth companies).

Quality Company Matters

At the end of the day, picking quality companies matters (whether it is a value or growth company). You would want to invest in a company that has a long term horizon, preserving its’ market share or even growing its’ market share. This would mean that your dividend will probably increase as the companies serves more market.


Final Thoughts By Wealthdojo

Dividend investing is still relevant to those investor who seeks out dividends as a way of generating passive income. At the end of the day, it matters more on the quality of the company than the dividend it is currently giving.

Growth investing and value investing are the most popular themes in investment market today. Some people prefer one over the other. Personally, I would say why not both?

There are many instruments and assets that are available to you. Are you aware of them?

Wishing you a good May Day.


Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

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The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Should you buy DBS Group Holdings Ltd (SGX D05) now

Should you buy DBS Group Holdings Ltd (SGX: D05) now?

Should you buy DBS Group Holdings Ltd (SGX D05) now? $19 seems to be a popular price that people will talk about DBS Group Holding. In wealth management, investing in good companies are essential to build up the capital to achieve our financial freedom. This article will hold some of my thoughts I have regarding DBS Group and some of it will shock you. Is it a mistake or will we have regrets? (Read all the way down).

Should you buy DBS Group Holdings Ltd (SGX D05) now
Should you buy DBS Group Holdings Ltd (SGX D05) now? Introducing the cat indicator. Meow~


Is DBS Group a Good Company and Undervalued?

Should you buy DBS Group Holdings Ltd (SGX D05) now numbers
Should you buy DBS Group Holdings Ltd (SGX D05) now?

These are the numbers that I look for in a banking stock. You can find this numbers from the annual report of DBS Group. We want to analyse whether the bank is first a profitable and efficient bank.

To look at profitability, we want to look at the Net Interest Margin (NIM) to be as high as possible. Banks earns a spread by borrowing money from people like me and you and giving them out as loan. We also want to see non-performing loans (NPL) to be as low as possible. There will be people who will default on their loans given various situation, we want to see it as low as possible.

Next we want to see the efficiency of the bank in terms of operations and per dollar invested. We have used the cost to income ratio which we want as low as possible. A lower cost to income ratio means their expense is low as compared to the revenue. Return on equity (ROE) we want it as high as possible.

Personally, I think it is quite a good company based on these set of numbers.

The valuation is also attractive at PB 0.99. This means you are buying it at 99 cents for every dollar it is worth. On dividends, it gives a 6.95% dividends based on previous dividends.



It really looks not bad isn’t it.


The Forgotten Track Record

As investors, we like to talk about track record. I realised that this only applies to numbers, valuations and also share prices. There are numerous things we forget and we are more forgiving and tolerant to these companies who have better numbers. Let’s talk about the forgotten track record that DBS Group has.

2020: Hin Leong Trading

DBS has the highest loan exposure to HLT at US$290 million, while OCBC and UOB are owed US$220 million and US$100 million, respectively. The sharp plunge in oil prices, along with the COVID-19 pandemic, had brought one of Asia’s largest oil traders to its knees. (Source: The Business Times: DBS, OCBC, UOB faced with over US$600m total exposure to Hin Leong)

The exposure is considered immaterial to DBS Group’s Profits.

2017: Energy Saga

DBS Group Holdings Ltd. reported a surprise drop in third-quarter profit as Southeast Asia’s largest bank boosted bad-loan allowances more than sixfold in an effort to deal with its problem lending to the regional oil and gas services sector. (Source: Yahoo Finance: DBS Profit Sinks as Bank Tries to Put Bad Energy Loans Behind It)

Allowances for bad assets of S$1.66 billion compared with S$261 million in the year-earlier period.

This would easily be blamed on the cyclical energy market when oil and gas services first got the worse hit.

2007: Lehman Brother Mini Bonds

Following the collapse of the Lehman Brothers, about 10,000 retail investors in Singapore lost all or a large part of their investments total-ling over S$500 million in structured investment products linked to the American investment bank. They were mis-sold these relatively high-risk products to investors, many of whom were the elderly and less educated. (Source: NLB: Lehman Brothers Minibond saga)

There are perhaps many more examples but forgotten with time.


The Way Forward

This section is my own personal opinion. While it may or may not contribute to the bottom line of DBS Group, I strongly believe it will contribute to a great brand which is largely intangible.

$500 minimum deposit of a fine of $2 will apply

I struggle to accept that DBS bank, our people’s bank have such a rule. The people who are most needy will be those with less than $500 as their minimum deposit. These people are from the lower income group and would need as much liquidity as they can get. I also struggle to accept that additional dormant accounts would cost the bank money. In my limited knowledge, I can only guess it will take extremely huge number of dormant accounts to really make a dent in the bottom line of the company.

Legacy Issues

DBS remains the bank to have the longest queue for its’ ATM or for bank tellers. I can only guess vast amount of paperwork that still continues to be done today. I’m also unsure of any technological advance in the company as we are only exposed to the mobile app and internet banking features which largely remains the same since 3 years ago.


Fintech has disrupted lives around the world. I haven’t seen much in this space for DBS Group. The one that is most impressive on their website is was dated July 2018 for projects in 2017. (Source: Case study: DBS – the edge)

Negative Interest Rates

With the world moving towards negative interest rates, will we follow suit? Will our NIM will be affected in the future.


No one will care about your money as much as you do.

Before you invest in any company or popular investment opportunity, be sure to do your own due diligence. If you wish to learn more about investing, I hope to nurture genuine relationships with all of my readers. Please feel free to contact me on my Instagram (@chengkokoh) or Facebook Page or my Telegram Channel! Or subscribe to our newsletter now!