Dividends As A Defensive Play in 2023

2022 is nearing to an end but the much anticipated Santa rally is nowhere in sight. Seems like Santa is stuck in the winter storm as the market shivers in the fears of a recession instead of busking in a year-end rally. 

2023 will not be an easy year for investing as the probability of a recession continues to mount with the rising interest rates and news of layoffs proliferate across multiple industries. While one can never time the market, one should be cognisant of the type of assets to invest in such challenging times. 

For myself, having a consistent cash flow through dividends will be one defensive play that I may adopt next year. REITS may have been badly battered in 2022, but choosing strong ones will help you tide through a potential recession. For those who are not confident in pickingtheir own REITS, $LION-PHILLIP S-REIT(CLR.SI)$ can be an excellent choice. 

It is an ETF with a basket of high quality S-REITS that pays dividends twice yearly. Furthermore, it has a very low management fee of only 0.5%. 

Among the top holdings within this ETF are some solid S-REITS which include $MAPLETREE INDUSTRIAL TRUST(ME8U.SI)$ , $ASCENDAS REAL ESTATE INV TRUST(A17U.SI)$ , $FRASERS CENTREPOINT TRUST(J69U.SI)$  etc. These REITS have proven to be highly stable with strong sponsor and quality assets. Given that each REIT is capped to about 10% in this ETF, it ensures that the overall portfolio is balanced and investors are not over exposed to any REIT. 

The Lion-Phillip S-REIT ETF currently offers adividends yield of approx. 5.6%, which is not too shabby compared to the Singapore Savings Bond (SSB) and T-Bill which are about 3.26% and 4.2% respectively. Some may argue that the premium for this ETF is marginal, however regular DCA into this EFT may provide the cash flow (for re-investment) and good potential upside when the market recovers. 

Personally, for dividend plays, I prefer S-REITS over those in US as they are not subjected to withholding tax, which can be very substantial (currently at 30%) for US dividends. 

What's your strategy for 2023? Happy to hearyour thoughts and may the market be in your favour! [Cool] 

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