$200K/Year in Dividends
There's an interesting interview with a well-known local blogger who earns $200K/Year from dividends mainly invested in Singapore stocks.
You can watch the main interview here:
Interview With AK: An Investor Who Collected $200K In Dividends In 2022
I summarised the main summary of the interview further below and its worth a listen as it provides some valuable investing lessons.
Firstly, it shows the importance of sticking to an investment philosophy that suits you mentally, and makes sense to you intellectually as well.
There's a strong focus on passive income and focusing on dividend income stocks that suits AK and he's stuck with it throughout the years.
One thing to note is. that he's quite a sharp investor who does thorough fundamental analysis and keeps up with the companies he follows.This is not a passive sit back and collect income approach.
He actively reviews his portfolio and divest or invest positions accordingly.
Secondly, the interview also highlights the importance of diversification. A few years back, AK moved away from a 90% allocation to REITs down to 50% now.
He has a significant portion invested in DBS, UOB and OCBC, the major Singapore banks, which have benefited from higher interest rates while REITs have been negatively impacted.
Thirdly, a key takeaway is the power of compounding, as a large chunk of AK's returns have come from reinvesting dividends and letting that money snowball over decades.
Compared to the US, Singapore is a small market, but we have a huge advantage in that dividends and capital gains are not taxed. This allows Singaporean investors like AK to earn much higher net returns.
All in all, this is an interview worth watching and there are plenty of nuggets of wisdom for income investors.Regards,Richard (Jun Hao)
10 Key Takeaways of AK Interview
1. AK has been retired for 8 years now after working and investing prudently for decades. He enjoys early retirement and encourages others to consider it if they have the means. Having hobbies and interests lined up is crucial.
2. Last year, AK earned over $200,000 in dividend income alone, showing the power of long-term dividend investing. He started blogging about his investments in 2009 but his journey began 30 years ago being very frugal and saving.
3. AK traded stocks successfully for 10 years but found it stressful. The global financial crisis led him to invest heavily in REITs for their high yields, turbocharging his portfolio.
4. Over the years, AK diversified from 90% REITs to around 50% now. He invested more in banks and strong non-REIT businesses as interest rates rose. A balanced portfolio is crucial.
5. Growth stocks are riskier to AK. He prefers the predictability of dividends. Researching growth potential is challenging compared to assessing dividend track record. Patience and pragmatism are key virtues.
6. The pandemic reinforced the need for investing in companies with strong balance sheets, not just high dividends. Some cuts were necessary for survival. AK will hold or sell depending on outlook.
7. AK focuses on Singapore stocks as he doesn't have millions to invest. He selects resilient businesses trading at reasonable valuations. Speculative bets are a small part.
8. Investing for income has evolved over decades for AK, not a simple set-and-forget approach. He reviews holdings periodically and makes changes when necessary.
9. AK is wary of buying complex products from banks and emphasizes self-education. With books, blogs and selective YouTube channels, retail investors can equip themselves.
10. Core principles are prudence, patience and pragmatism. Avoid extreme optimism and pessimism. Stay focused on business quality and valuations, not chasing hype.