By MoneyBees
Compare reinvesting your dividends with taking them as cash over the years, from your own yield and price growth, with the ending value, cash collected and income each way.
Using each dividend to buy more of the same share or fund instead of taking it as cash. The new units pay dividends too, so your income and holding grow faster than the price alone.
It depends on the yield and how long you hold. S$10,000 at a 4% yield and 3% price growth is worth S$11,449 after two years reinvested, against S$11,421 in shares and cash taken out. Over 20 years the gap is far larger.
Individuals pay no tax on dividends from Singapore resident companies under the one-tier system, except dividends from co-operatives. Foreign dividends received by resident individuals are not taxable either, unless received through a partnership in Singapore.
Another country may withhold tax before the dividend reaches you. Singapore does not tax it again, but you keep less. Enter the rate withheld to see the effect on your yield.
A scrip dividend scheme is one way to reinvest: the company pays you new shares instead of cash, sometimes at a discount. You can also reinvest by buying more yourself, which costs brokerage fees.
Reinvesting suits money you will not need for years. Taking cash suits you if you live on the income or want to invest it elsewhere. The calculator shows what each choice is worth; it does not pick one for you.
No. A share's price can fall when its dividend looks at risk, which lifts the yield. Total return is price growth plus dividends, so look at both.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).