Prioritise quality over yield when looking at dividends, says Bank of Singapore

SINGAPORE (April 17): As global markets enter into a consolidation phase, Bank of Singapore (BoS) is advising investors to brace themselves for higher volatility by seeking shelter in “dividend growers” – quality companies with strong balance sheets – to support dividend growth over time.

While dividends can serve as an additional source of returns when stock markets are moving sideways, not all high-paying dividend stocks are created equal, says BoS investment strategist James Cheo in a Monday report.

“There is a need to focus on quality companies that can grow their dividends. Dividend growers tend to be strong franchises built to withstand uncertain market conditions. These are excellent businesses with strong balance sheets and ample free cash flow to support dividend growth,” he comments.

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