Are Singapore companies paying enough dividends?

This might have seemed like a silly question a year ago. At that point, the interest rates you could collect on a passbook savings account were still tiny. From a retail shareholder’s perspective it didn’t really matter how much companies paid out, because it was bound to be more than leaving the cash in the bank.

You still have to be a millionaire and leave your hard-earned Singapore Dollars in a fixed deposit for two years to collect a paltry 1.8%.

But there are plenty of special offers around, including one from DBS Bank offering 5.7% on amounts greater than S$200,000 if you buy certain structured products.

Interest rates are rising to a point at which equities investors will find it less attractive and more risky to invest in shares. At least, those investors who want to earn a steady income stream.

At the same time, the companies they invest in are having to pay higher interest rates on the debt they carry, leaving less money to hand back to shareholders.

Taken together, we arrive back at the original question: Are Singapore companies paying enough dividends?

Please start your comments with a ‘yes’ or a ‘no’, and give your reasons.

Other questions you might consider are:

1. if they’re not paying enough, how much should they pay?
2. how much less likely are you to buy shares, given that you might make more money from leaving your cash in the bank?