Exploring the Best Dividend ETFs in Singapore 2025

Singaporeans chasing passive income in 2025 face a new puzzle: “risk-free” yields are melting even as everyday prices stay annoyingly sticky. The 6-month MAS T-bill that cut off at 3.7 % on 4 July 2024 now clears at just 1.85 % (auction on 3 July 2025)—a 185-basis-point slide in under a year.

Inflation hasn’t retreated as quickly. The Consumer Price Index (CPI) for general households rose 2.9 % year-on-year in 1H 2024 and still averaged 2.4 % for the full year, above the Monetary Authority of Singapore’s long-run comfort zone.

Against that backdrop, dividend ETFs offer a hands-free way to top up one’s salary, CPF interest, or rental income with globally diversified cash flows—without having to stock-pick or chase promotional fixed-deposit rates that can vanish overnight. 

What is a dividend ETF

A dividend exchange-traded fund (ETF) is an investment fund that holds a portfolio of dividend-paying stocks. It trades on a stock exchange, allowing investors to buy and sell shares throughout the trading day at market prices.

Dividend ETFs are designed to provide regular income distributions to investors. These distributions come from the dividends paid by the underlying companies in the fund. Depending on the ETF, distributions may occur quarterly, semi-annually, or annually.

Dividend ETFs can include companies across different sectors and regions. Some focus on high-yield stocks, while others emphasize dividend growth or specific markets. Investors use dividend ETFs to gain diversified exposure to income-generating equities without having to select individual stocks.

How a dividend ETF works

A dividend ETF works by pooling investors’ capital to purchase a diversified basket of dividend-paying stocks. Investors buy shares of the ETF, and the fund manager invests in stocks that meet the ETF’s defined strategy or index criteria.

The ETF collects dividends paid by its holdings. After expenses, it distributes this income to shareholders on a regular schedule. This approach allows investors to receive consistent cash flows from many companies through a single investment.

Dividend ETFs offer several advantages:

• Diversification: Exposure to many companies reduces the impact of any single stock’s dividend cut or price drop.
• Liquidity: Shares trade on major exchanges, making them easy to buy and sell during market hours.
• Professional management: Fund managers select and maintain the portfolio to meet the ETF’s investment objective.
• Cost efficiency: ETFs typically have low expense ratios compared to actively managed funds. Morningstar data (2025) shows the global average ETF expense ratio is approximately 0.19 %.

Overall, dividend ETFs provide investors with an effective way to earn regular income while maintaining diversified equity exposure with minimal ongoing management.

How to pick a dividend ETF

Choosing a dividend exchange-traded fund (ETF) involves more than just selecting the one with the highest yield. Investors should consider the quality of the income, the cost of ownership, tax implications, and the structure of the fund. These factors can significantly impact long-term returns, especially for income-focused investors.

1. Yield quality and dividend growth

Dividend yield is often the first metric investors consider, but it should not be the only one. A high yield can be attractive, but may also reflect underlying risks such as poor share price performance or unsustainable payouts.

Trailing yield represents the total dividends paid over the past 12 months divided by the current share price. It is based on historical distributions. Forward yield is based on expected future dividends and is more speculative but may reflect recent dividend announcements or forecasts.

Investors should also consider the dividend growth rate, typically measured using the compound annual growth rate (CAGR) over a 3- to 5-year period. A moderate yield that is growing consistently may be more attractive than a high but stagnant yield. Dividend growth can indicate financial strength and a commitment to returning capital to shareholders.

2. Fund costs and size

The total cost of owning an ETF includes management fees and any transaction costs incurred by the investor. These costs can reduce net returns over time.

The total expense ratio (TER) is a key metric that reflects the annual operating expenses of the fund as a percentage of assets under management. Investors should look for ETFs with a TER below 0.60%, although many large funds charge significantly less.

Assets under management (AUM) is another important consideration. ETFs with higher AUM tend to offer better liquidity, tighter bid-ask spreads, and a lower likelihood of fund closure. For dividend ETFs, an AUM of at least S$100 million is generally considered sufficient to ensure operational efficiency and investor confidence.

3. Currency exposure and domicile

Currency risk arises when an investor holds assets denominated in a foreign currency. For example, a Singapore-based investor who buys a U.S.-listed ETF denominated in USD may experience gains or losses depending on exchange rate fluctuations between SGD and USD.

While currency exposure cannot be eliminated entirely, some ETFs offer currency-hedged share classes. These are designed to reduce the impact of exchange rate volatility on returns, though they may come with additional costs.

The domicile of the ETF—its legal jurisdiction—can also influence tax treatment and reporting obligations. ETFs domiciled in countries with favorable tax treaties can result in higher net yields for foreign investors. This is particularly relevant when comparing U.S.-domiciled and Ireland-domiciled funds.

4. Tax efficiency

Singapore does not tax foreign-sourced dividends received by individual investors. However, many countries impose withholding tax on dividends before they are paid out. The ETF’s domicile determines how much tax is withheld at source.

U.S.-domiciled ETFs are subject to a 30% withholding tax on dividends for non-resident investors, including those based in Singapore. In contrast, Ireland-domiciled ETFs that hold U.S. equities benefit from a reduced withholding tax rate of 15%, due to the U.S.-Ireland tax treaty.

This difference in tax treatment can have a significant impact on net returns. Investors seeking exposure to U.S. dividend stocks may find Ireland-domiciled ETFs (typically structured under UCITS regulations) to be a more tax-efficient option.

Top dividend ETFs for Singaporeans

*Data as of 30 July 2025

Income focus ETFs: Singapore REIT ETFs (CLR, SRT, CFA)

For investors who prioritise high yields, SGD payouts, and zero tax leakage, Singapore-listed REIT ETFs remain the most efficient income tools available. These funds invest in income-producing properties such as malls, business parks, warehouses, and data centres—all backed by mandatory payout rules under S-REIT regulations.

Lion-Phillip S-REIT ETF (CLR) delivers a yield of approximately 5.83%, with a net expense ratio of 0.00% due to ongoing fee waivers. It follows a straightforward, market-cap-weighted approach and pays dividends semi-annually in SGD.

CSOP iEdge S-REIT Leaders ETF (SRT) offers a slightly higher yield of ~6.16%, using a smart-beta strategy to overweight stronger-performing REITs. It has a TER of 0.50%, and distributions are also semi-annual.

NikkoAM-StraitsTrading Asia ex Japan REIT ETF (CFA) provides regional REIT exposure across Asia (excluding Japan), with a yield of ~6.00%. While expense data is less transparent, it remains fully SGD-denominated and tax-free for Singapore investors.

Why it works:

• No withholding tax
• SGD-denominated payouts
• High REIT yields backed by legal distribution mandates

Best for: Investors seeking reliable passive income in SGD with zero cross-border tax or FX complications.

Global growth with income: Ireland-domiciled global ETFs (VHYL, ZPRG, FGQI)

To balance yield with long-term capital appreciation, Ireland-domiciled ETFs offer Singaporeans a tax-efficient path to global diversification. These UCITS ETFs benefit from a 15% US withholding tax (vs. 30% for US-domiciled funds) and cover developed and emerging markets.

Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL) holds over 1,800 global high-yield stocks and pays a yield of ~3.30%. It is well-diversified and carries a low TER of 0.29%.

SPDR S&P Global Dividend Aristocrats UCITS ETF (ZPRG) focuses on companies with long-term dividend consistency. With a yield of ~3.80% and a TER of 0.45%, it offers strong income stability across sectors.

Fidelity Global Quality Income UCITS ETF (FGQI) targets high-quality dividend-paying stocks globally, with a more modest yield of ~2.20% and a TER of 0.25%. It tilts toward companies with strong balance sheets and consistent earnings.

Why it works:

• Reduced 15% US withholding tax via Ireland
• Diversification across sectors and countries
• Broad equity exposure with sustainable yields

Best for: Investors seeking moderate yield with growth, and those looking to build globally diversified, tax-aware portfolios.

Cost-conscious investors: US-domiciled ETFs (SPYD, VYMI)

Some ETFs offer extremely low fees—but come with a trade-off. For Singaporeans, US-domiciled ETFs are generally discouraged for dividend strategies due to a 30% withholding tax on distributions. That said, they can still suit tactical investors who value cost-efficiency and US sector exposure.

SPDR S&P 500 High Dividend ETF (SPYD) yields ~4.39% and charges an ultra-low TER of 0.07%. It holds 80 high-yielding S&P 500 stocks, with exposure to defensive sectors like real estate, utilities, and financials.

Vanguard International High Dividend Yield ETF (VYMI) offers global ex-US exposure with a focus on high dividends and a low TER of 0.17%. However, its US domicile still imposes withholding tax on US-stock-derived income, reducing its net efficiency for Singapore investors.

Why it’s a mixed bag:

• Extremely low TERs
• High gross yields
• But 30% tax on dividends reduces net returns

Best for: Investors who prioritise cost over tax efficiency, and those targeting US-specific sectors not well-represented in UCITS ETFs.

The real cost of ownership: A 2025 fee breakdown

Your ETF's total expense ratio (TER) is only part of the equation. The actual cost of investing depends heavily on your choice of brokerage platform—especially if you're buying overseas-listed ETFs like VHYL or SPYD. 

Hidden fees from commissions, FX spreads, platform charges, and custody costs can quietly eat into your long-term income returns.

Here’s a comparison of the most popular platforms used by Singapore-based ETF investors in 2025:

Beyond the commission: the hidden costs

• FX spreads - When you buy an overseas-listed ETF like VHYL or SPYD, you must convert SGD to USD. Most brokers do this at a rate slightly worse than the interbank rate. This difference—known as the FX spread—can quietly cost you 0.30%–0.70% per trade.
• Custody and platform fees - Some brokers charge custody fees for holding your assets (e.g., S$2 per quarter per stock). Most modern platforms have removed these, but bank-linked brokerages (like DBS Vickers) may still charge them. 

• ETF-level TER - Don’t forget that you’re also paying the fund’s internal expense ratio, whether or not your platform charges fees. For example, SPYD charges just 0.07%, while some REIT ETFs like SRT charge up to 0.50%.

If you prefer a hands-off approach, robo-advisors like StashAway offer curated portfolios with automatic rebalancing, though you give up ETF-level control. They're great for convenience, but less suited to investors who want to select specific dividend ETFs.

Know the risks: What could kill your yield?

While dividend ETFs are widely viewed as a reliable source of passive income, no investment is without risk. Here are the key risks every dividend investor should be aware of.

Interest rate risk

Rising interest rates directly affect income-focused investments. When central banks hike rates, newly issued bonds and fixed deposits offer higher yields, drawing investors away from dividend-paying stocks. This can lead to a decline in ETF prices. Sectors like real estate investment trusts (REITs), which are highly leveraged, tend to be especially vulnerable.

Impact: Potential capital depreciation and dividend reductions in rate-sensitive sectors like REITs and utilities.

Currency risk

Investors holding ETFs denominated in foreign currencies, such as USD or GBP, are exposed to exchange rate fluctuations. A strengthening Singapore Dollar reduces the value of both your capital and dividends when converted back to SGD. While currency volatility can sometimes work in your favour, it remains a key risk when investing in overseas-listed ETFs.

Impact: Lower real returns when SGD appreciates against the ETF’s base currency.

Sector concentration risk

Many ETFs are not evenly diversified across all industries. For instance, the STI ETF (G3B) has heavy exposure to banks, while S-REIT ETFs like CLR and SRT are fully allocated to property. A sector-specific downturn—such as a banking crisis or property market correction—can significantly impact the ETF’s value and income stream.

Impact: Amplified volatility and income disruption if the concentrated sector underperforms.

The yield trap

A high headline yield can sometimes be misleading. If an ETF’s constituent stocks are facing business headwinds, their share prices may fall sharply, artificially inflating the yield. This can be a warning sign of impending dividend cuts or financial distress.

Impact: Unstable or declining income due to unsustainable dividends.

Recession and dividend cuts

Even the most stable blue-chip companies may reduce or suspend dividends during economic downturns. Although ETFs mitigate the impact by diversifying across stocks, a broad-based recession can still depress overall payouts.

Impact: Reduced income and slower compounding during market-wide downturns.

Step-by-step guide to buying your first ETF

Understanding the strategy is only the beginning. Here is a practical, four-step guide to help you move from cash in the bank to owning your first dividend ETF—using a typical digital brokerage platform.

Step 1: Choose and open your brokerage account

Select a brokerage that aligns with your investment goals. For ETF-focused investing, digital brokers such as Moomoo SG, Syfe Trade, and Tiger Brokers offer competitive fees and broad access to global markets. The onboarding process is fully online and typically completed within 15 minutes through SingPass MyInfo.

Ensure your account supports multi-currency wallets to hold foreign currencies like USD or GBP, especially if you plan to buy overseas-listed ETFs.

Step 2: Fund your account and handle currency conversion

Transfer funds via FAST from your Singapore bank account. If you're investing in foreign ETFs (e.g., VHYL or SPYD), you will need to convert SGD to the ETF's trading currency. Most brokers allow in-app conversions under a “Currency Exchange” feature. Pay attention to the foreign exchange spread, as this can be a hidden cost.

A lower spread translates to more favourable conversion rates and better net returns.

Step 3: Search for the ETF and place a limit order

Once your account is funded, use the broker’s search function to locate the ETF by its ticker symbol (e.g., VHYL). After reviewing the ETF’s profile, initiate a buy order.

Change the default order type to “Limit Order.” This allows you to specify the maximum price you are willing to pay per share, protecting you from price slippage during execution. Enter your desired price and quantity, and submit the order.

Step 4: Confirm, monitor, and automate

After confirming the trade, the order will remain pending until the market price matches your specified limit. Once filled, the ETF units will appear in your portfolio.

Frequently asked questions (FAQs)

Are ETF dividends taxed twice?

No, and this is a frequent source of confusion. For Singaporean investors, only one layer of tax applies—the withholding tax imposed by the source country of the dividend (e.g., the US withholds 30%, Ireland-domiciled ETFs with US exposure only face 15%). Once this deduction is made, the net dividend is paid into your account.

Singapore does not tax foreign dividends received by individuals. There is no need to declare these dividends in your personal tax filing.

What’s the difference between a dividend ETF and a unit trust?

Both aim to provide investment exposure and income, but they differ in structure and cost:

• Dividend ETFs trade like stocks on an exchange, with real-time pricing, low fees, and full portfolio transparency. They're ideal for DIY investors.
• Unit Trusts (also known as mutual funds) are priced once daily, can have higher sales charges, and may offer less transparency. They're often sold via traditional bank platforms and advisers.

In short, ETFs are typically more flexible and cost-efficient, especially for self-directed investors.

How do I track my dividend income?

Most broker platforms like Moomoo, Syfe Trade, and Tiger Brokers provide a dividend history tab showing payouts by ETF. For long-term tracking:

• Set up a simple Google Sheet or Excel file
• Log each payout with columns for ETF ticker, ex-dividend date, payment date, and amount received

This helps visualize your passive income over time and adds discipline to your investing process.

What happens if an ETF closes down?

ETF closures are rare, especially for large, liquid funds. But if it happens:

• The fund manager sells all underlying assets
• You receive a cash distribution equal to your pro-rata share of the fund’s net asset value (NAV)
• There is no loss of capital, unless the underlying assets declined in value

This is why selecting ETFs with large AUM and track records is important.

Should I reinvest my dividends or take cash?

It depends on your life stage and financial goals:

• During accumulation (e.g., your 30s and 40s): Reinvest. Use a Dividend Reinvestment Plan (DRIP) to compound returns passively.
• During decumulation (e.g., in retirement): Take the dividends as cash to fund living expenses, keeping your capital intact.

The key is to match your dividend strategy to your personal financial phase.