- 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$376.8 million over the period.
Investors looking for income can consider exchange traded funds (ETFs) that pay out distributions on a regular basis. The 12-month dividend yield of the 10 most popular dividend-paying ETFs listed on SGX, based on fund size held in Singapore, averages 4.2%, with yields ranging from 2.0% to 6.6%. Among these 10 best-yielding ETFs, four are equity ETFs, four are bond ETFs, and two are REIT ETFs.
| ETF | SGX Code | Asset Class | 12M Div Yld (%) | 1Q 2020 Fund Size (S$M) | Expense Ratio(%) | Distribution Frequency | Underlying Index |
| ISHARES BARCLAYS USD ASIA HY BOND ETF | O9P | Bonds | 6.6 | 137.5 | 0.5 | Quarter | Barclays Asia USD High Yield Diversified Credit |
| LION-PHILLIP S-REIT ETF | CLR | REITs | 6.0 | 140.4 | 0.6 | Semi-Annual | Morningstar® Singapore REIT Yield Focus Index |
| PHILLIP SING INCOME ETF | OVQ | Equities | 5.2 | 42.3 | 1 | Semi-Annual | Morningstar® Singapore Yield Focus Index |
| NIKKOAM-STRAITSTRADING ASIA EX JAPAN REIT ETF | CFA/COI | REITs | 5.1 | 200.4 | 0.6 | Quarter | FTSE EPRA Nareit Asia ex Japan Net Total Return REIT Index |
| SPDR STI ETF | ES3 | Equities | 4.6 | 827.8 | 0.3 | Semi-Annual | Straits Times Index |
| NIKKO AM SINGAPORE STI ETF | G3B | Equities | 4.5 | 282.1 | 0.3 | Annual | Straits Times Index |
| ISHARES USD ASIA BOND ETF | N6M | Bonds | 4.2 | 58.1 | 0.3 | Quarter | JP Morgan Asia Credit Index – Core |
| SPDR S&P 500 ETF TRUST | SPY | Equities | 2.1 | 26.3 | 0.1 | Quarter | S&P 500 Index |
| NIKKOAM SGD IG CORP BOND ETF | MBH | Bonds | 2.0 | 523.3 | 0.3 | Annual | iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index |
| ABF SPORE BOND INDEX FUND ETF | A35 | Bonds | 2.0 | 943.6 | 0.3 | Annual | iBoxx 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.
- 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.
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.
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Originally Posted on April 20, 2020 – Highlights of Top 10 Most Popular Dividend-Paying ETFs
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