5 Rules for Building a Dividend Portfolio That Lasts a Lifetime

Core Insights - Dividend investing focuses on building a sustainable income stream that grows over time rather than just seeking high payouts [1][22] Rule 1: Focus on Dividend Growth, Not Just Yield - High yields can indicate higher risk or unsustainable payouts; consistent dividend growth based on real profits and strong cash flow is more important [2] - Singapore Exchange (SGX: S68) has consistently increased its dividend from S$0.32 per share in FY2022 to S$0.375 in FY2025, showcasing steady performance [3] - Parkway Life REIT (SGX: C2PU) has increased its core distributions every year since 2007, with a 2.3% increase to S$0.1156 for 3Q2025 [4][5] Rule 2: Prioritise Quality and Resilience - Quality companies with stable earnings, solid balance sheets, and manageable debt are essential for a successful dividend portfolio [6] - CapitaLand Integrated Commercial Trust (SGX: C38U) reported a 1.6% YoY increase in net property income to S$294.4 million for 3Q2025 [7] - Singapore Technologies Engineering (SGX: S63) reported a 9% YoY revenue increase to S$9.1 billion for 9M2025, maintaining consistent dividend payouts [9][10] Rule 3: Diversify Across Sectors and Markets - Concentrating investments in a single sector can lead to vulnerabilities; diversification across sectors mitigates risks [11][12] - A suggested allocation is 40% in REITs, 30% in banks, 20% in consumer staples/utilities, and 10% in overseas stocks to ensure steady income [12][13] Rule 4: Reinvest Dividends to Boost Compounding - Reinvesting dividends can significantly enhance portfolio growth over time, as compounding increases the number of shares owned [15][16] - For example, DBS Group's dividends increased from S$1.09 per share in 2021 to an annualized S$3.00 per share in 2025 for those who reinvested [16][17] Rule 5: Review Regularly but Avoid Overreacting - Regular portfolio reviews are important, but investors should focus on fundamentals rather than market fluctuations [18][20] - Singapore Telecommunications Limited (SGX: Z74) proposed a total FY2025 dividend of S$0.17, up from S$0.15 in FY2024, demonstrating stability despite market conditions [19] Conclusion - A strong dividend portfolio combines growth, quality, and discipline, focusing on companies that consistently raise payouts and maintain solid financials [22][23]