Core Insights - Many Singapore investors are attracted to dividends for the steady income they provide, but there are risks associated with chasing high yields without understanding the underlying financial health of the companies [1][2] Mistake 1: Confusing High Yield with High Return - High dividend yields of 8% to 10% often indicate underlying financial struggles within a company, such as declining earnings or cash flow issues [3][4] - The case of Hyflux illustrates how high yields can mask financial problems, leading to significant losses for investors when the company collapsed [5][6] Mistake 2: Ignoring Dividend Sustainability - Sustainable dividends come from companies with strong earnings, cash reserves, and manageable debt levels [9][10] - Keppel Infrastructure Trust exemplifies a resilient income portfolio, with a 31.2% year-on-year increase in distributable income and a stable DPU supported by long-term contracts [11][12][13][14] Mistake 3: Overloading on REITs and Income Plays - Heavy concentration in REITs can be risky, especially during periods of rising interest rates, which can lead to higher refinancing costs and reduced distributions [15][16] - Suntec REIT's experience from 2022 to 2024 highlights how high yields can be deceptive, as its DPU fell significantly due to increased borrowing costs [17][18] Comparison of Companies - ST Engineering, despite a lower yield of about 2%, has shown consistent dividend stability and growth, supported by strong revenue and a solid order book [19][20][22][23] - The contrast between ST Engineering and leveraged REITs like Suntec REIT emphasizes the importance of sustainable income over high headline yields [23] Diversification Strategy - A well-rounded investment portfolio should include a mix of reliable REITs, infrastructure trusts, and growth-oriented companies to mitigate risks associated with yield fluctuations [24][25] Conclusion for Investors - Focusing solely on high yields can lead to poor long-term results; instead, investors should prioritize companies with stable cash flows and a history of consistent dividend payments [26][28]