02 Oct How to Grow Your Dividends by Investing Globally
Everybody loves receiving a steady stream of passive income.
Investing in income-producing stocks can help you achieve this goal.
You can find good stocks to invest in Singapore or aboard.
Yet, most investors have a home bias, or the inclination to invest in stocks that are listed in one’s home country.
However, there are opportunities out there for the adventurous investor.
By investing globally, you can get exposure to a wider variety of companies and industries.
If your goal is to grow your dividends over time, there are plenty of options you can choose from in other markets.
Let’s take a look at some examples of great dividend generators.
REITs are generally recognised as dependable income-yielding investments.
Singapore, being a REITs hub, offers an impressive array of REITs to invest in.
Not all these REITs contain local properties within their portfolios.
For instance, Keppel DC REIT (SGX: AJBU), owns a portfolio of data centres across Singapore, the UK, Australia and Germany.
Frasers Logistics & Commercial Trust (SGX: BUOU), owns a portfolio of 100 properties across five countries such as The Netherlands and Germany.
Both REITs have seen their distribution per unit (DPU) rising steadily since their IPOs.
Beyond that, REITs that are listed in other stock markets can also provide great opportunities for investors to gain exposure to assets that local REITs do not own.
One example is American Tower (NYSE: AMT). The REIT owns and operates a portfolio of around 181,000 communication towers that are leased to wireless service providers and other communication service providers.
American Tower is tapping on the 5G upgrading wave (for network infrastructure) as a long-term catalyst.
Since 2012, quarterly DPUs have increased uninterrupted, and the REIT has the potential to continue to pay ever-increasing dividends over the long-term.
Solid US-listed businesses
Another great source of rising dividends is well-established companies that are listed in the US.
Take Nike (NYSE: NKE) for example.
The sporting footwear and apparel giant has seen its dividend increase over 18 consecutive years.
The company has even managed to increase its quarterly net profit by 10% year on year even during this pandemic.
With its pivot to digital sales, Nike should be able to regain demand for its products, providing it with the potential to continue raising its dividends.
Starbucks (NASDAQ: SBUX), a global coffee chain with more than 32,000 stores around the world, recently announced that it will raise its quarterly dividend from US$0.41 to US$0.45.
Annualised dividend now stands at US$1.80, up from US$1.64 before the increase.
What’s impressive is that the coffee giant has initiated its dividend back in 2010 and has increased it in each of the past ten years.
There are many other such companies with uninterrupted dividend increases.
All it takes is for the discerning investor to search harder for them.
Apart from sportswear and coffee chains, businesses in other industries may also pay out rising dividends over the years.
Sanofi SA (EPA: SAN), a global pharmaceutical company dealing with speciality care and vaccines has seen its dividends increase since 2008.
Even during the Global Financial Crisis, Sanofi raised its dividend from €2.20 in 2008 to € 2.40 in 2009.
This unbroken track record of increasing dividends underscores the company’s commitment to rewarding shareholders over the long term.
As unlikely as it seems, even a pharmaceutical company has displayed a spectacular track record of increasing dividends.
Get Smart: Broaden your horizons
As investors, you don’t have to limit yourself to just Singapore.
The examples discussed above demonstrate the vast opportunities out there for investors to grow their dividends in non-Singaporean businesses.
You can either choose to invest in a Singapore-listed company with overseas exposure or select a company that’s listed on an overseas stock exchange.
What’s important is that you keep an open mind and not limit yourself to investing in a narrow subset of businesses.
Your ultimate goal is to deploy your capital in a range of businesses that can help you to grow your passive income over time and provide steady capital gains.
By selecting the best investment candidates from various markets, you are maximising the potential of your investment portfolio to achieve the best result it can.
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Disclaimer: Royston Yang owns shares in Keppel DC REIT, Frasers Logistics and Commercial Trust, American Tower, Nike and Starbucks.