Mid Year Review (3) – SG saves the day

The returns of my US and HK stocks have been disappointing – see previous posts.

My SG stocks are holding up much better. In fact, STI index is up 4% year to date. Like its US counterparts, it hit the lowest point in mid June this year but has since recovered strongly.

Photo by Maxim Cravzov on Pexels.com

~60% of my equity investment are in SG stocks. It used to be higher but I had progressively diversified away from SG to HK and US.

Some of you may wonder why I am invested in SG. I know many friends have ditched SG for US and they are making a lot more money $$ than me. But they may also be losing more sleep recently due to the volatility šŸ™‚

Besides the fact that SG is my home country and SG$ is the currency I use everyday (i.e. reduce FOREX exposure), a major attractiveness of the SG market is its relatively high dividend yield.

Using STI ETF (or ES3) as a proxy, in the last 5 years, the annual dividend distributed per unit ranged from 8.3 – 12.0 cents and averaged at 10.83 cents (or 11.5 cents if exclude 8.3 cents).

Last year dividend of 8.3 cents was the lowest because of COVID. It has since recovered to 11.2 cents. Based on current price of $3.34, dividend yield for last 5 years ranged from 2.5% – 3.6% (or average 3.25%).

This is better than the dividend yield of S&P 500 ETF (SPY) of 1.45% (before 30% withholding tax) and of Hang Seng Index (2833 HK) of 3.1%. Furthermore, it does not have the extreme volatility associated with these two markets.

For a passive income investor, this is perfect.

The SG market can offer high dividend yield because (1) dividend distributed in SG is tax free and (2) the SG market is dominated by the 3 major local banks, Singtel and a few large Reits – which offer good dividend yields.

MY SG portfolio has a 5% loss year to date, which is more manageable, especially when compared to my losses in US and Hong Kong shares.

On an overall basis, my equity portfolio has a loss of 18% year to date.

Not a good situation to be in but not too dire as well. Hopefully the overseas markets will continue to recover and make up the lost ground.

My next review post would be on my index portfolio, which manages to fare slightly better than my equity portfolio.

Meanwhile, have a Great Singapore National Day Holiday !

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