Can a group of dividend paying stocks be better than investing into an index?

Looking at the US market now, i feel terrified - what with the level of manipulation being done. For someone who plans to buy and hold for 24 years (till retirement age), i worry that the s&p500 will give almost zero returns - and we have seen that decades ago over a period of 15 years.

With that in mind, would it be better to invest in a group of high dividend paying stocks - singapore market? If a bear market hits the US, perhaps i can invest there again - current levels not attractive enough

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Frankie Rappaport

16 Jun 2020

You cannot time the market.

the U.S. stock market did very well over more than 80 years, maybe better than any other.

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Elijah Lee

16 Jun 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi Tong Soon,

No one knows how the markets will move in the future, although we can continue to guess. So yes, it is possible to enter and exit at the worst possible timings over a period of 15 or 20 years and have a mediocre result to show for it.

I surmise that the reason for you wanting to buy into high dividend paying stocks is due to one reason: Income. Income determines the type of food we eat, the clothes we wear, the life we lead. It's just a matter of whether that income is from an active source such as work, or a passive source such as investments. No one can pay for chicken rice with Alibaba stock. The stall owners want cash.

I'm an income investor as well. To me, it's more of knowing that I have multiple streams of income coming in from all directions so that I am not at risk of becoming destitute if any one stream should be cut off. There's nothing wrong at looking at growth stocks or the S&P 500 as well, but I'd do that if I know my other income streams are strong enough to ride through a down turn, since I won't want to liquidate at a loss.

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