Why dividends are my favorite passive income

Actually, the "What Is A Dividend" article covers this in depth...but I really must say, dividends are truly my best, favorite and recommended form of passive income.

I'll give you a list of pros and cons.

pros of dividends

  1. "Most passive" form of passive income - when dividend companies pay out dividends, the dividends are usually wired either to your bank account, your brokerage account or mailed to you as cheque. In Singapore, it's wired directly to my account, and it's always wonderful to find additional money in my account =D

  2. Traditional, tested, organized - usually all you need is a bank account, a brokerage account and maybe an approved regulatory account (in Singapore it's having a CDP account with SGX) - and you can start investing in dividend stocks and waiting for dividends (which is very, very different compared to cryptocurrency investing that is so highly fragmented and speculative). The companies that have been paying dividends tends to have been around for years if not decades.

  3. Liquid and quick - if I want to "liquidate" my stocks to get cash, it is so easy - just a call/SMS to my broker, and it's done, or I can do it myself, and the money is wired to my bank account in just a couple of days. Cryptocurrency is so much more difficult, tedious and fragmented.

  4. Physical companies - companies that pay out dividends traditionally are physical, real world companies that serve a physical need. An example would be Coca-Cola, which sells real cola to people all over the world. Or Pepsi. Or a REIT (real estate investment trust) that deals with property rental. You can go to their HQ, meet their team, listen to AGMs, see the documents etc.

cons of dividend stock investing

  1. You need money - to have a sizable dividend payout, you need to have a sizable investment amount. 10% of $1 is 10 cents. For you to retire on your dividends, it'd depend on how much you need a month, translate that to amount of dividend stocks value and their dividend yields.

  2. You need time - assuming you are young, and you have to slowly earn, save and invest your savings over long time to have the compounding effect to kick in. Unless you have a large pot of gold, but still, you'll need time to research and study

  3. The dividends are small, 3-10% - this is linked back to item 2, because the dividends of stable companies tend to be small, between 3-8% is more realistic, unless your entrypoint is spectacular.

  4. Companies can go bust - every company has risks (even if they had been around for 10-20 years), and that's why you need to spend some time to understand the fundamentals of any company, before you invest into them.

Tip of the day: index investing

If you want an easy approach to investing without having to research the companies to invest into, then I recommend you invest into index stocks. This is also advised by Warren Buffett, because index investing is so simple, and index funds, once normalized, has only gone up through the years...ON TOP of dividend payouts and multiple depressions.

Downside to index fund investing is that the dividend yield tends to be very, very low. Singapore's STI ETF dividend yield is about 2.6%.

But it is very, very, very safe and very defensive.

It'd depend on your investing philosophy, approach, how hands-off/optimized you want your investment to be etc. If you are a very, very busy person and/or want 100% safe - then go with index investing.

join the passive income family

Don't drown in the details - get the free fundamentals of passive income and early retirement and make your first $100 online.

Join the passive income family & newsletter below and get a bonus "Boring Blueprint To Passive Income & Early Retirement"

  • Learn how I started with less than $100 in my bank account from 2005-2008
  • ...turned my life and money around and by 2014
  • ...paid up my $390,000 flat in full in less than 5 years
  • ...starting making USD 40+ online per month
  • ...invested in dividend stocks for passive dividend income for recurring cashflow...for life!

You will also get subscriber-only Passive Income Tips, Starting & Growing Online Businesses Updates, Special Offers/Discounts and More - see you on the inside!

Talk soon!


Please note that all fields followed by an asterisk must be filled in.

No spam ever - your email is never shared and you can unsubscribe anytime with one click.

Enjoyed this article? Share it with your friends by clicking one of the buttons:

Even better - share your thoughts and comments below:

Back To Top

Search In NigelChua

Current Projects

Nigel Chua

Nalco Group

Therapy Entrepreneurs

Xtend Health Asia

Wisdom Of Seneca

Bee Pollen For Health

#1 Recommended Online Business University And Platform

Solo Build It!

More than 95% of my online businesses and publishing works use the Solo Build It platform, for good reason. Find out here.

GetResponse Email Marketing

Building a relationship with your audience, customers and readers are highly important for any offline and online business, and I recommend GetResponse for their services, great price, ease-of-use.

Try GetResponse today (1st month free)

Bonus: learn how to use an email autoresponder

The Hoth

TheHoth can help to outsource your guest posting, article writing and backlinking marketing activities. Visit them here.

Google Suite

Google Suite (GSuite) is THE recommended Google tools for email, calendar, documents, sheets - for productivity  and communication.

GSuite/GMail one month free trial available here.


Shopify has made it very easy to start an ecommerce business, solving most of the tech and logistical barriers and even has product suppliers with Oberlo!

Try Shopify today

Books I'm Reading

Holy Bible

Tribe Of Mentors

Seneca Letters From A Stoic

Seneca On The Shortness Of Life

See my full book/read list here.

Blogs I'm Following

Tim Ferriss

Pat Flynn

Tony Robbins

Ramit Sethi

Personal Goals

SGD 2,000,000 invested in dividend stocks with average 5% returns per annum by 45

SGD 2,000,000 in cryptocurrency

Owning, affording and living in a landed property in Singapore (or relocated to another country without worry of money) by 40

Publish at least one book by 40 years old

Online businesses serve readers and clients well (ie readers make more money, have happier/freer life etc), and website makes SGD 10,000 per month

Ongoing: spend more quality time with children, wife, family, bible, God.