Building Wealth Through Dividend ETFs in Singapore: 3 Smart Picks Compared
Dividend investing has long been a favorite strategy among investors seeking steady income and capital appreciation. In Singapore, where the market favors income-generating assets and the cost of living is high, dividend-focused Exchange Traded Funds (ETFs) offer an efficient way to earn passive income while growing wealth over time.
But with multiple options available, which dividend ETFs should investors in Singapore consider? In this post, we’ll explore what dividend ETFs are, why they’re great for Singapore-based investors, and compare three top options you can invest in today.
What Are Dividend ETFs?
Dividend ETFs are funds that invest in a basket of dividend-paying companies. Instead of picking individual dividend stocks, you buy one ETF that provides exposure to a broad group of income-generating companies, often spread across different sectors or regions.
Why Dividend ETFs Make Sense in Singapore
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Reliable passive income stream — ideal for supplementing salary or retirement income.
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Diversification — exposure to multiple companies reduces individual stock risk.
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Liquidity and low fees — ETFs trade like stocks and are cost-effective.
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Access to global income sources — with SGD-hedged or region-focused options.
Top 3 Dividend ETFs in Singapore (2024)
1. Lion-OCBC Hang Seng Tech Yield ETF (SGX: HSTY / HSTY.SI)
Overview:
This ETF focuses on high-yielding Chinese technology and internet companies listed on the Hong Kong Stock Exchange. It aims to deliver a combination of income and growth from the tech sector while tracking the Hang Seng Tech Yield Index.
Key Details:
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Listed on SGX in SGD and USD versions
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Dividend payout: Quarterly
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Underlying includes Alibaba, Tencent, Meituan, JD.com
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Current yield: ~5–6%
Pros:
✅ Attractive yields from established Asian tech firms
✅ SGD-listed and accessible via local brokers
✅ Exposure to undervalued China tech companies
Cons:
❌ Exposure to regulatory risk in China
❌ Tech sector volatility
❌ Concentrated in one sector (technology)
Best for:
Investors with a medium to high risk appetite who want tech growth with dividend income.
2. Nikko AM SGD Investment Grade Corporate Bond ETF (SGX: MBH / MBH.SI)
Overview:
This ETF provides exposure to high-quality corporate bonds in Singapore dollars. Unlike equity-based dividend ETFs, this one focuses on income from fixed-income securities, offering more stability and consistent yield.
Key Details:
Pros:
✅ Lower volatility than equity ETFs
✅ Reliable quarterly income
✅ Suitable for CPF/SRS accounts
✅ Good for capital preservation
Cons:
❌ Limited upside potential compared to equity-based ETFs
❌ Interest rate sensitivity
❌ Not a growth-focused fund
Best for:
Conservative investors or retirees seeking predictable income with lower risk.
3. SPDR® Straits Times Index ETF (SGX: ES3)
Overview:
This is Singapore’s oldest and most popular ETF. It tracks the Straits Times Index (STI), which consists of the 30 largest and most liquid Singapore companies—including dividend stalwarts like DBS, OCBC, and Singtel.
Key Details:
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Tracks the STI (heavyweight banks and REITs)
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Annual dividend yield: ~4%
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Semi-annual distributions
Pros:
✅ Strong exposure to Singapore blue-chip companies
✅ Stable dividends, with potential capital appreciation
✅ Highly liquid and established fund
✅ Great for local investors familiar with the holdings
Cons:
❌ Limited international diversification
❌ Heavy weight on financials (~40%)
❌ Performance tied to Singapore economy
Best for:
Investors who want a reliable, low-cost dividend fund rooted in Singapore’s economy.
Side-by-Side Comparison
How to Choose the Right Dividend ETF
When choosing a dividend ETF, consider these key questions:
1. What is your risk appetite?
If you can handle volatility and are investing for long-term growth, the Lion-OCBC Hang Seng Tech Yield ETF may offer higher returns.
If capital preservation and consistent income are priorities, the Nikko AM Corporate Bond ETF is a better match.
2. Do you want local or global exposure?
Prefer staying close to home? SPDR STI ETF is anchored in familiar names with strong local relevance.
Looking abroad? The Lion-OCBC ETF opens the door to China’s tech juggernauts.
3. How often do you want dividends paid out?
Some ETFs pay quarterly, while others pay semi-annually. Match this to your cash flow needs.
Final Thoughts: Build Your Passive Income the Smart Way
Dividend ETFs are excellent building blocks for a long-term income strategy. They offer simplicity, broad exposure, and reliable payouts—key pillars for anyone chasing financial independence or retirement goals in Singapore.
Here’s a quick recap of how you might position them:
🔹 Use Nikko AM Bond ETF as a stable income core
🔹 Add SPDR STI ETF for blue-chip equity yield
🔹 Top off with Lion-OCBC Tech Yield ETF for higher growth potential
As always, diversify and rebalance regularly. Consider pairing these ETFs with CPF or SRS accounts to optimize tax efficiency too.
And remember: it’s not timing the market—but time in the market—that matters most.
