Executive Summary
Singapore’s dividend stock market enters 2026 at a critical juncture. While the economy achieved robust 4.8% GDP growth in 2025, significantly exceeding initial forecasts, headwinds from global trade tensions and moderating growth expectations present both challenges and opportunities for income investors. This case study examines three undervalued alternatives to DBS Group—HRnetGroup, Kimly Limited, and NetLink NBN Trust—offering yields between 5.1% and 5.8%, compared to DBS’s 4.8% yield.
1. Case Study: Three Dividend Alternatives to DBS
Market Context
DBS Group has long been the benchmark for Singapore dividend investors, offering stability and consistent returns. However, with DBS trading near record highs and offering a trailing dividend yield of approximately 4.8%, income-focused investors are seeking alternatives that provide better value propositions without sacrificing quality.
The Three Alternatives
1.1 HRnetGroup Limited (SGX: CHZ)
Dividend Yield: 5.8%
Business Model: Asian recruitment powerhouse operating across 18 cities with over 1,000 consultants, managing 20 brands including HRNetOne, Recruit Express, and RecruitFirst.
Key Strengths:
• Revenue growth of 3.4% YoY to S$295.5 million (1H 2025)
• Net profit jumped 27% YoY to S$29 million
• Strong cash position: S$311.7 million with zero debt
• Generated free cash flow of S$26.8 million in 1H 2025
1.2 Kimly Limited (SGX: 1D0)
Dividend Yield: 5.1%
Business Model: One of Singapore’s largest traditional coffee shop operators with 89 food outlets and 195 food stalls, plus kiosks and restaurants.
Key Strengths:
• Revenue of S$322 million in FY2025, up 0.9% YoY
• Net profit of S$33.3 million, up 0.4% YoY
• Payout ratio of 74.8%
• Strong operating cash flow: S$38.8-50.9 million annually (FY2021-FY2025)
• Defensive business model in essential food retail sector
1.3 NetLink NBN Trust (SGX: CJLU)
Dividend Yield: 5.7%
Business Model: Monopoly operator of Singapore’s fibre network infrastructure delivering high-speed internet to homes and businesses.
Key Strengths:
• Revenue of S$207 million in 1H FY2026, up 1.1% YoY
• 100% distribution policy of cash available for distribution
• Healthy net gearing of 18.8%
• Robust EBITDA interest coverage ratio of 13.2x
• 100% debt hedged at fixed interest rate with average cost of 2.37%
• Predictable revenue from monopolistic position in defensive infrastructure sector
Comparative Analysis
| Metric | HRnetGroup | Kimly | NetLink | DBS |
| Dividend Yield | 5.8% | 5.1% | 5.7% | 4.8% |
| Debt Level | Zero | Low | 18.8% gearing | Moderate |
| Sector | Recruitment | F&B/Retail | Infrastructure | Banking |
| Defensiveness | Moderate | High | Very High | High |
| Payout Frequency | Semi-annual | Annual | Semi-annual | Quarterly |
2. Market Outlook for 2026
Macroeconomic Environment
2.1 GDP Growth Trajectory
Singapore’s Ministry of Trade and Industry (MTI) projects GDP growth of 1.0-3.0% for 2026, a significant moderation from the robust 4.8% achieved in 2025. This slowdown reflects global headwinds, particularly US trade tariffs and moderating demand from key trading partners. However, the economy demonstrates underlying resilience through several factors: AI-related semiconductor demand continues to support electronics manufacturing, strong backlog in aerospace and marine engineering provides revenue visibility, and domestic consumption remains stable despite external challenges.
2.2 Inflation and Interest Rate Environment
Core inflation is projected to remain contained within the 0.5-1.5% range for 2026, well below regional peers. The Monetary Authority of Singapore (MAS) has already implemented two easing measures in 2025, and further monetary accommodation may be limited as inflation begins to bottom out. For dividend investors, this creates a favorable environment where real yields remain attractive and the cost of capital for quality companies remains manageable.
Dividend Stock Market Dynamics
2.3 Sector Performance Outlook
Banking Sector: While DBS, UOB, and OCBC maintain strong fundamentals, dividend yields of 4-5% face compression as share prices remain elevated. Net interest margins may moderate as interest rates decline, though diversified revenue streams and robust balance sheets support continued dividend sustainability.
REITs: Singapore REITs continue to offer attractive distribution yields of 5-7%, particularly in suburban retail and data center segments. With 100% mandatory payout rules and exposure to secular growth trends like digitalization, REITs remain core holdings for income investors.
Infrastructure: Companies like NetLink NBN Trust benefit from monopolistic positions and predictable cash flows. The defensive nature of critical infrastructure ensures stable dividends regardless of economic cycles.
Cyclical Sectors: Recruitment and consumer-facing businesses like HRnetGroup and Kimly face moderate headwinds from slower employment growth and cautious consumer spending. However, essential services positioning provides downside protection.
2.4 Key Trends Shaping 2026
•
Flight to Quality: Investors increasingly prioritize companies with strong balance sheets, consistent cash generation, and proven dividend track records over pure yield chasing.
•
Special Dividends: Companies like Singapore Airlines and ST Engineering announced special dividends in 2025, reflecting strong balance sheets and management confidence. This trend may continue for well-capitalized firms.
•
Regional Diversification: The Johor-Singapore Special Economic Zone creates opportunities for cross-border business expansion, benefiting logistics, real estate, and services sectors.
•
ETF Capital Flows: Singapore-listed ETF assets reached S$13.3 billion by January 2025, with increasing allocation to dividend-focused strategies providing steady support for quality dividend stocks.
Risk Factors
Global Trade Tensions: With trade-to-GDP ratio exceeding 320%, Singapore remains vulnerable to escalating protectionism. The 10% baseline US tariff affects export competitiveness.
Labour Market Softening: 58% of employers plan to freeze headcount in 2026, up from 50% in 2024. This could impact consumer spending and recruitment demand.
Valuation Concerns: Many blue-chip dividend stocks trade at or near historical highs, limiting capital appreciation potential and creating vulnerability to corrections.
3. Investment Solutions and Strategies
Portfolio Construction Framework
3.1 Core-Satellite Approach
Core Holdings (60-70%): Establish foundation with established dividend aristocrats like DBS, UOB, OCBC, and blue-chip REITs (CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust). These provide stability, liquidity, and proven dividend sustainability.
Satellite Holdings (30-40%): Enhance yield through quality alternatives like HRnetGroup, Kimly, and NetLink. These offer higher yields while maintaining acceptable risk profiles and strong fundamentals.
3.2 Sector Diversification Matrix
| Sector | Target Allocation | Rationale |
| Banking & Finance | 30-35% | Strong fundamentals, regional exposure, defensive characteristics |
| REITs & Infrastructure | 25-30% | High yields, mandatory distributions, inflation protection |
| Consumer Staples | 15-20% | Recession-resistant, essential services, stable cash flows |
| Industrial/Services | 10-15% | Growth potential, higher yields, moderate cyclicality |
| Telecommunications | 5-10% | Stable revenues, infrastructure assets, moderate growth |
3.3 Quality Screening Criteria
When evaluating dividend alternatives to established benchmarks, investors should apply rigorous screening criteria:
1.
Dividend Sustainability: Payout ratio below 80%, strong free cash flow generation, consistent dividend history over 5+ years
2.
Financial Health: Net gearing below 50%, interest coverage above 5x, positive operating cash flow
3.
Business Quality: Competitive moat, predictable revenues, pricing power, low customer concentration
4.
Valuation Discipline: P/E ratio reasonable relative to sector peers, dividend yield compensates for risk, positive total return outlook
3.4 Implementation Tactics
Dollar-Cost Averaging: Build positions gradually over 6-12 months to reduce timing risk and take advantage of volatility. Particularly effective for smaller-cap alternatives with wider bid-ask spreads.
Ex-Dividend Timing: For liquid stocks, consider buying on weakness following ex-dividend dates when temporary selling pressure creates opportunities.
Rebalancing Discipline: Review portfolio quarterly, trim positions that exceed target weights or approach full valuation, reinvest in underweight positions offering better value.
Tax Optimization: Singapore does not tax capital gains or foreign-sourced dividends for individuals. Maximize this advantage by holding positions in taxable accounts rather than retirement vehicles.
Alternative Investment Vehicles
3.5 Dividend-Focused ETFs
For investors seeking instant diversification with lower research requirements, Singapore-listed dividend ETFs provide efficient access:
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Lion-Phillip S-REIT ETF (CLR): Yield ~4.9%, market-cap weighted, semi-annual SGD distributions
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CSOP iEdge S-REIT Leaders ETF (SRT): Yield ~5.8%, smart-beta strategy, overweights stronger performers
•
Amova AM-StraitsTrading Asia ex Japan REIT ETF (CFA): Yield ~5.5%, regional REIT exposure for geographic diversification
4. Expected Impact and Outcomes
Portfolio Performance Projections
4.1 Income Generation Analysis
Consider a S$100,000 dividend portfolio allocated according to the core-satellite framework. A traditional DBS-heavy portfolio (60% DBS at 4.8% yield, 40% mixed REITs at 5.5% yield) would generate approximately S$5,080 in annual dividend income. By incorporating quality alternatives, a rebalanced portfolio (30% DBS at 4.8%, 30% mixed REITs at 5.5%, 15% HRnetGroup at 5.8%, 15% NetLink at 5.7%, 10% Kimly at 5.1%) would generate approximately S$5,380 in annual income—a 5.9% enhancement while maintaining comparable risk profile through diversification across sectors and business models.
4.2 Risk-Adjusted Returns
Downside Protection: The diversified approach reduces single-stock risk while maintaining quality. NetLink’s infrastructure monopoly provides stability during downturns, Kimly’s essential services model offers recession resistance, and HRnetGroup’s zero debt eliminates financial distress risk.
Volatility Management: Smaller-cap alternatives exhibit higher daily price fluctuations but compensate through superior yields. For long-term income investors with 5+ year horizons, short-term volatility is acceptable provided fundamental quality and dividend sustainability remain intact.
Broader Market Implications
4.3 Capital Allocation Efficiency
As investors increasingly recognize value in quality mid-cap dividend stocks, capital flows away from overvalued large-caps toward fundamentally sound alternatives. This market mechanism improves capital allocation efficiency, rewards companies with strong cash generation and shareholder-friendly policies, and narrows valuation gaps between mega-caps and mid-caps over time.
4.4 Corporate Governance Enhancement
Increased investor scrutiny on dividend sustainability drives management teams to focus on cash flow generation, maintain prudent leverage levels, and communicate dividend policies transparently. Companies responding to this pressure demonstrate commitment to shareholder value creation and build trust with the investment community.
Long-Term Wealth Building
4.5 Compounding Through Dividend Reinvestment
A critical advantage of dividend investing lies in the power of reinvestment. Assuming average annual dividend growth of 3% and full dividend reinvestment, a S$100,000 portfolio yielding 5.4% today could grow to approximately S$179,000 over 10 years through dividends alone, excluding any capital appreciation. Adding conservative 3% annual capital appreciation brings total portfolio value to approximately S$242,000—representing 142% total return.
4.6 Inflation Protection
With Singapore core inflation projected at 1.0-1.5% for 2026, real dividend yields of 4-6% provide substantial purchasing power protection. Companies with pricing power—such as NetLink’s regulated infrastructure tariffs, Kimly’s essential food services, and HRnetGroup’s professional placement fees—can grow dividends ahead of inflation over economic cycles.
Social and Economic Impact
4.7 Retirement Adequacy
As Singapore’s population ages, dividend stocks provide retirees with reliable income streams to supplement CPF withdrawals and other pension benefits. A well-constructed dividend portfolio generating S$30,000-50,000 annually can significantly enhance retirement financial security without depleting principal.
4.8 Financial Market Stability
Dividend-oriented investors typically exhibit longer holding periods and lower portfolio turnover compared to growth-focused speculators. This patient capital provides stability during market volatility, reduces excessive price swings, and supports rational price discovery. During the 2020 COVID crisis, Singapore dividend stocks demonstrated resilience, with many companies maintaining or only moderately cutting dividends despite severe revenue disruptions.
5. Conclusion and Recommendations
Singapore’s dividend stock landscape in 2026 presents a nuanced opportunity set. While traditional benchmarks like DBS maintain their positions as portfolio cornerstones, quality alternatives such as HRnetGroup, Kimly, and NetLink NBN Trust offer compelling value propositions for yield-seeking investors willing to conduct thorough due diligence.
Key Takeaways
1.
Diversification Matters: No single stock should dominate dividend portfolios, regardless of quality. Spread exposure across sectors, market caps, and business models.
2.
Quality Over Yield: A 5.5% sustainable yield from a company with strong fundamentals surpasses an 8% yield from a financially stretched business with uncertain dividend continuity.
3.
Long-Term Perspective: Dividend investing rewards patience. Focus on total return (income plus capital appreciation) over 5-10 year horizons rather than quarterly results.
4.
Active Monitoring: While dividend stocks require less attention than growth stocks, annual reviews of financial health, dividend coverage, and competitive positioning remain essential.
Actionable Recommendations
For Conservative Investors: Maintain 60-70% in established dividend aristocrats (DBS, UOB, OCBC, major REITs), allocate 20-30% to NetLink and other infrastructure plays, reserve 10% for selective opportunities in quality mid-caps during market weakness.
For Balanced Investors: Implement core-satellite approach with 50% in blue-chips, 30% in higher-yielding alternatives like HRnetGroup and NetLink, 20% in sector-specific opportunities or dividend ETFs for instant diversification.
For Income-Focused Retirees: Prioritize stability and cash flow visibility. Favor infrastructure, utilities, and consumer staples. Consider monthly dividend REITs for cash flow management. Maintain 12-18 months of expenses in cash equivalents regardless of equity allocation.
Final Thoughts
The dividend investing landscape extends far beyond Singapore’s banking triumvirate. By combining rigorous fundamental analysis, disciplined portfolio construction, and patient capital deployment, investors can build diversified income portfolios positioned to navigate 2026’s challenges while capturing attractive risk-adjusted returns. The three alternatives examined—HRnetGroup, Kimly, and NetLink—demonstrate that quality dividend opportunities exist across market caps for those willing to look beyond the obvious choices.
As John D. Rockefeller famously stated, “The only thing that gives me pleasure is to see my dividends coming in.” In 2026 and beyond, Singapore investors have ample reason to share that sentiment.
Disclaimer: This case study is for educational and informational purposes only and should not be considered as investment advice. Past performance does not guarantee future results. Investors should conduct their own research and consult licensed financial advisors before making investment decisions. The author may hold positions in securities discussed.