Listed on the Singapore Stock Exchange Limited, the SPDR Straits Times Index ETF is an exchange-traded fund.
It will be ex-dividend on February 9th and record date on February 10th of 2021. The payment is due on the 24th of February in the year 2021.
How often does STI ETF pay dividends?
You can invest in the STI ETF in one of three ways. To help you make an informed decision, I’ll go over the pros and cons in this section.
Buy through a brokerage, like any other stock
Any brokerage account with access to the SGX market can be used to invest in the STI ETF.
In order to have your CDP account filled with STI ETF units, you must have your broker be an active trader on the Singapore Exchange (SGX).
Without considering SGX or GST, the average brokerage charge in Singapore is 0.28 percent with a minimum of $25. Normally, the total cost after fees and GST is around S$28. Lot sizes are 10 units, so you must invest in whole lots.
When investing a little sum through these brokerages, you should keep in mind that your percentage fee may be excessive.
- There is a S$28 commission on a single lot of STI ETF worth S$30, which is approximately 100% of the sales charge!
You may be able to save money by choosing a cheap broker like Tiger Brokers or moomoo.
SPDR STI ETF vs Nikko AM STI ETF
The disadvantage of purchasing the STI ETF directly from your broker is that it is a one-time transaction. Alternatively, dollar cost averaging in the STI ETF can be achieved by:
Invest Through Monthly Investment Plans
Dollar cost averaging the STI ETF is a better strategy than speculating on whether the stock market is overvalued or undervalued.
Investing in the STI ETF can be done gradually if you set aside a specific amount of money each month.
People who are just out of school and don’t have a lot of money can benefit from this, especially. In times of low prices, you buy more of the STI ETF, while in times of high prices you buy less. You’d amass a sizable portfolio of stocks over time.
The following table provides a comparison of five different STI ETF monthly investing plans.
STI ETF Regular Savings Plan (RSP) Comparison
Except for FSMOne, which requires a monthly investment of only $50 to get started, all companies require a monthly investment of S$100.
While OCBC and POSB both offer the Nikko AM STI ETF, POEMS only has the SPDR STI ETF. Maybank Both the SPDR and Nikko AM STI ETFs are offered by Kim Eng and FSMOne.
At a minimum of S$6, POEMS charges an astronomical proportion of your monthly investment of S$100 or less. The fee will be increased by 6%! In contrast, if you invest more than $600, you’ll get the benefit of economies of scale and a reduced cost percentage.
In comparison, OCBC charges a minimum fee of $5. Even after exceeding this minimal cost with a larger monthly commitment, your cost can only drop to a maximum of 0.3%
If you are a modest investor, POSB would be the ideal alternative because they charge a flat 1 percent fee regardless of the amount invested.
Similarly, Maybank Kim Eng charges a flat 1% fee on all transactions under S$1,000 per month.
Only POEMS automatically reinvests its dividends into the STI ETF the month after they are paid out. In order to become wealthy, you have learned about the importance of the compounding effect. One strategy to benefit from this effect is to reinvest dividends. Investing on a monthly basis for at least five years is the goal when starting a savings strategy.
POEMS may be a little more expensive, but the long-term benefits will outweigh the initial expense.
OCBC, POSB, and Maybank are the three largest banks in Singapore. Dividends are not reinvested by Kim Eng or FSMOne; instead, they are sent directly to the bank account you specify. Keep in mind that there may be fees associated with handling dividends.
POEMS, POSB, OCBC, Maybank Kim Eng, and FSMOne all permit partial redemption and sale of STI ETF holdings.
Depending on which company you work for, you’ll need to follow their guidelines. Transferring the units to your CDP account* should be an option rather than selling for cash.
Bank of America Poems & Maybank There would be no difference in fees between Kim Eng and other stock brokers. To avoid the minimum fees, you should have accumulated a large number of shares over the years.
As a result, the brokerage cost of 0.28 percent would be marginally less expensive than OCBC’s selling charge of 0.3 percent.
There is a $10 minimum or 0.08 percent of the transaction amount that FSMOne charges when you sell.
Please note that all of these monthly investment plans are held in custodial accounts. This means that the shares will be held by POEMS, OCBC, POSB, Maybank Kim Eng, and FSMOne, and not in your CDP account. To transfer the shares to your CDP account, you’ll have to pay an extra charge.
Use CPF To Invest In STI ETF
Under the CPF Investment Scheme, it is one of four ETFs that can be invested (CPFIS). Applying for a CPFIS scheme account with a local bank and connecting it to your brokerage account is required.
The process of purchasing the STI ETF using CPF funds is the same as if you were using cash, except you must mention this on your brokerage platform.
After the initial S$20,000 in your CPF Ordinary Account, you can invest the entire balance in the STI ETF.
You should be aware that the STI ETF’s value may fluctuate owing to market changes.
Because of this, you must be prepared to take substantial losses before investing in a STI ETF.
How long do you have to hold ETF to get dividend?
Non-qualified dividends and qualified dividends are two types of dividends that an ETF might pay out to investors. The tax implications of receiving one form of dividend versus the other are vastly different.
- The underlying stock must have been held for more than 60 days previous to the ex-dividend date to qualify for long-term capital gains.
- Ordinary income tax rates apply to non-qualified dividends. Total dividends received by an ETF are subtracted from the total dividends received by ETFs that are characterized as “qualifying” payouts.
Diversification
A quick way for investors to gain exposure to a wide range of industries and sectors is to purchase shares of the top 30 SGX companies through the STI. However, keep in mind that the STI is still strongly weighted toward bank companies, despite the diversification.
Affordability
Investing in the top SGX firms through the STI ETF is a low-cost option. S$2.90 was the final closing price on February 23rd, 2021 for SPDR STI ETF (SGX: ES3 ). This means that if you wanted to buy 100 shares of the STI ETF, you would only have to pay S$290.
There are 30 companies in all, so you receive a piece of each. Attempting to reproduce this on your own would be extremely difficult and expensive. Even if the stock were trading at $25 a share, it would already cost S$2,500 to buy 100 lots.
Highly liquid
The STI ETF can be bought and sold on the stock exchange. As long as your brokerage account and Central Depository (CDP) account are open, you can purchase and sell the ETF whenever you like..
Is STI ETF taxable?
Fees and expenditures for the Fund will be covered as much as feasible from the dividends the Fund earns. When dividends earned by the Fund fall short of covering fees and expenses, the Fund will either sell index shares in its portfolio or borrow money in the short term to make up the difference.
They have annual expense ratios of 0.3% and 0.2% for SPDR and 0.288% for Nikko AM.
Thanks to Dennis Teo for mentioning that the Fund is not taxed for dividends received. Dividends are tax-deductible.
The fund management companies are taxed at a rate of 17 percent on the dividends they receive. One of the drawbacks of investing in an ETF is that payouts are slashed even further by tax. Dividends are not taxed if you purchased the companies’ stock directly.
Is STI ETF Safe?
INVESTMENT IN SPDR STI ETF (SGX: ES3) Investment in the STI is as risk-free as it gets because it, too, is diversified throughout a wide range of businesses.
LION-PHILLIP S-REIT (SGX: CLR)
For a while now, Singapore’s real estate market has been booming, attracting a growing number of foreign investors.
In contrast to individual REITs, REIT ETFs allow you to gain access to a larger number of properties.
LION-PHILLIP S-REIT ETF, for example, covers the entire island’s top real estate developers and operators. If you’ve ever shopped in Singapore, you’ve indirectly contributed to the success of the fund’s top holdings, Mapletree, CapitaLand, Ascendas, and Starhill Global.
Designed for both long-term growth and regular income, the LION-PHILLIP S-REIT ETF can be used in any portfolio.
PHLP AP DIV REIT (SGX: BYJ)
Over 70% of the REIT universe in Asia Pacific (excluding Japan) is covered by the PHLP DIV REIT ETF, which gives investors the opportunity to receive dividends.
In order to achieve its stated goal of generating moderate capital growth and reasonably high income, the fund’s underlying assets are composed of 30 of the highest dividend-paying REITs in Asia Pacific.
While the epidemic has hurt the retail and hotel industries, tourism and leisure are projected to rebound. This fund has the potential to soar if and when they do.
Is High Yield Bond ETF?
Debt issued by companies that are not considered investment-grade can be found in High Yield Bond ETFs. Junk bonds, senior loans, and international below investment-grade debt are all investments in these ETFs.
Do I need to declare dividend income in Singapore?
The one-tier corporation tax regime means that divined payments made by Singapore resident companies are generally exempt from taxation (except for co-operatives, as stated above). Singapore does not charge a withholding tax on dividends paid by Singaporean-based corporations to their shareholders. Residents of Singapore are exempt from tax on foreign dividends they receive from non-Singapore companies. A clear example of dividends that are not taxed is dividends from private resident companies or dividends from Singapore Stock Exchange-listed resident corporations.
Tax returns in Singapore allow businesses and individuals to report dividend income under the “Other income” heading. If the corporation specifies that they will supply IRAS with dividend information, then this declaration is not required.
If you have any questions concerning declaring dividend income, our Singapore accountants are here to assist you.
