Highlights of Top 10 Most Popular Dividend-Paying ETFs

  • Investors looking for income can consider ETFs that pay distributions on a regular basis. The 12M dividend yield of the 10 most popular  dividend-paying ETFs on SGX averages 4.2%, with the yields ranging from 2.0% to 6.6%.
  • The three most popular ETFs with the highest 12M yields are: iShares Barclays USD Asia High Yield Bond Index ETF (6.6%), Lion-Phillip S-REIT ETF (6.0%) and Phillip SING Income ETF (5.2%). The trio average a 5.9% yield.
  • In the YTD, the top five dividend-paying ETFs with the highest net inflows were: SPDR STI ETF, NikkoAM-StraitsTrading Asia ex Japan REIT ETF, Nikko AM Singapore STI ETF, NikkoAM SGD Investment Grade Corporate Bond ETF and Lion-Phillip S-REIT ETF. The five have a total net inflow of S$376.8 million over the period.

Investors looking for income can consider exchange traded funds (ETFs) that pay out distributions on a regular basis. The 12-month dividend yield of the 10 most popular dividend-paying ETFs listed on SGX, based on fund size held in Singapore, averages 4.2%, with yields ranging from 2.0% to 6.6%. Among these 10 best-yielding ETFs, four are equity ETFs, four are bond ETFs, and two are REIT ETFs.

ETFSGX CodeAsset Class12M Div Yld (%)1Q 2020 Fund Size (S$M)Expense Ratio(%)Distribution FrequencyUnderlying Index
ISHARES BARCLAYS USD ASIA HY BOND ETFO9PBonds6.6137.50.5QuarterBarclays Asia USD High Yield Diversified Credit
LION-PHILLIP S-REIT ETFCLRREITs6.0140.40.6Semi-AnnualMorningstar® Singapore REIT Yield Focus Index
PHILLIP SING INCOME ETFOVQEquities5.242.31Semi-AnnualMorningstar® Singapore Yield Focus Index
SPDR STI ETFES3Equities4.6827.80.3Semi-AnnualStraits Times Index
NIKKO AM SINGAPORE STI ETFG3BEquities4.5282.10.3AnnualStraits Times Index
ISHARES USD ASIA BOND ETFN6MBonds4.258.10.3QuarterJP Morgan Asia Credit Index – Core
SPDR S&P 500 ETF TRUSTSPYEquities2.126.30.1QuarterS&P 500 Index
NIKKOAM SGD IG CORP BOND ETFMBHBonds2.0523.30.3AnnualiBoxx SGD Non-Sovereigns Large Cap Investment Grade Index
ABF SPORE BOND INDEX FUND ETFA35Bonds2.0943.60.3AnnualiBoxx ABF Singapore Bond Index Total Return Series
Average   4.2    

Source: Bloomberg (data as at 16 Apr 2020)

The three most popular ETFs on SGX with the highest 12-month dividend yields comprise a bond ETF, a REIT ETF and an equity ETF. They are the iShares Barclays USD Asia High Yield Bond Index ETF (6.6%), Lion-Phillip S-REIT ETF (6.0%) and Phillip SING Income ETF (5.2%). The trio average a yield of 5.9%, with the first fund paying distributions on a quarterly basis, and the remainder maintaining semi-annual payouts.

3 most popular SGX ETFs 2020
  • iShares Barclays USD Asia High Yield Bond Index ETF

    With the Barclays Asia USD High Yield Diversified Credit Index as its underlying benchmark, this ETF tracks US dollar-denominated high yield bonds issued by Asian governments and Asian domiciled corporations.
  • Lion-Phillip S-REIT ETF

    Rolled out by Lion Global Investors and Phillip Capital Management in October 2017, the fund tracks the Morningstar® Singapore REIT Yield Focus Index. This is the first REIT ETF in the world with Singapore REITs accounting for 100% of its constituents.
  • Phillip SING Income ETF

    This ETF focuses on 30 high-quality SGX-listed stocks offering investors a cost-effective and diversified exposure to the Singapore market. By using a rule/factor-based approach for stocks selection, the ETF aims to deliver stable and quality income for investors.

In the 2020 year-to-date, the top five dividend-paying ETFs with the highest net inflows were: SPDR STI ETF (+S$243.1 million), NikkoAM-StraitsTrading Asia ex Japan REIT ETF (+S$41.3 million), Nikko AM Singapore STI ETF (S$40.1 million), NikkoAM SGD Investment Grade Corporate Bond ETF (+S$27.5 million) and Lion-Phillip S-REIT ETF (+S$24.8 million). The five funds have a total net inflow of S$376.8 million over the period.

Top five dividend paying ETFs SGX

How ETFs Distribute Dividends

Direct-replication ETFs track underlying markets by holding the constituents (stocks or bonds) of the index it is tracking. Throughout the course of the year, the ETFs receives distributions from the underlying constituents. For stocks, dividends represent a way for the relevant company or trust to distribute some of its profits back to its investors. When ETFs own dividend-paying stocks, they collect the full dividends from each constituent stock and subsequently pay out those dividends to the ETF shareholders. These dividends can be distributed in two ways: via cash payouts to investors, or reinvestments into the ETF’s underlying assets.

Similar to an individual stock that pays dividends, an ETF sets an ex-dividend date, a record date and a payment date. Just like owning an individual company stock, these dates determine who receives the dividend and when the ETF pays the dividend.

Fixed-income ETFs similarly collects interest from underlying bonds held by the ETF and subsequently pays out those as distribution (interest) to ETF shareholders. Investors should note that historical dividend yields and payments do not represent future dividend yields and payments, as there is no guarantee of future dividend payments. Where dividends are paid out, the net asset value of the relevant share class will be reduced by the gross amount of such dividends on the ex-dividend date.

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.

Investors can also invest in the STI ETFs using a Regular Shares Saving Plan (RSS). Click here to find out more.

To find out more about ETFs, visit www.sgx.com/etf.

Originally Posted on April 20, 2020 – Highlights of Top 10 Most Popular Dividend-Paying ETFs

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Singapore Exchange and is being posted with permission from Singapore Exchange. The views expressed in this material are solely those of the author and/or Singapore Exchange and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.