How I got an 9% dividend every year - and why I gave it up

Updated: Oct 11, 2020

I spent a lot of money recently, when my girlfriend was here. Universal Studios Express Tickets, Holey Moley…

GIRO unfortunately, isn’t typically designed for the 1st of every month.

So even when you’re in the business of paying yourself first, you could overextend yourself a little bit in a few days before your automated investment.

In short, after some mandatory investments were deducted, I was pretty broke.

It’s not too surprising. When life springs surprise expenses on you, it becomes discipline to put aside 80% of your income.

…And when you have no discipline, GIRO does it for you. [thankfully]

SEE ALSO: Money Maverick 2019 Expenses

It was quite tempting to consider taking some money out from my various streams of income, but thankfully they were either illiquid or troublesome options.

So here I am – using my Takashimaya Shopping Vouchers till the 15th of February. Whew.

You can buy Ramen, Shabu Shabu and steaks...if you don't like Cold Storage groceries for vouchers.

At times like these, I miss my 9% dividend.

I miss receiving my letter in the mail, opening up the physical copy and looking at a declared distribution.

(Although to be fair, that feeling dies quickly.)

(Save the earth y’all.)

But there’s a good reason for everything, including not taking a 9% dividend anymore.

How You Can Get A 9% Dividend

Before that, we have to look at how one can even get their hands on a 9% dividend.

While most people look at some individual stocks or REITs, I typically love funds. Dividends from funds are typically derived from some, but not limited to, these methods:

1) Percentage of NAV

Based on the Net Asset Value, the fund commits to distributing a specific % of that fund’s NAV every year.

This is potentially modeled after REIT structures that pay out 90% of profits – some funds would opt to use the gross amount of the fund instead.

2) Percentage from bond coupons -

A percentage derived by a collective set of bonds.

3) Cents per unit owned

Similar to dividend paying stocks, a fund may opt to pay out, or distribute, a specific amount of profit per share, or unit owned, by the investor.

The last structure, Structure [3] is how a fund can give ‘9% in dividend per annum’.

Let’s look at a fund that is presently committed to paying out a distribution rate of 0.6 cents per month, or 7.2 cents per year, per unit.

This means that from every unit the client owns, the fund is obligated to pay them a fixed amount of cents according to how many they have.

To make this easier to understand, let’s pretend that Money Maverick has $10,000 and he decides to invest in this fund.

If each unit is $1, the Dividend % is as follows:

Amount of Units Purchased with $10,000: $10,000/$1 = 10,000 units.

Gross Amount of Dividend Paid out per year: 10,000 x $0.072 = $10,000 x 0.072 = $720

Annual Percentage Value of Dividend: $720/$10,000 x 100% = 7.2%.

That’s basic math. As the investor, Money Maverick would receive $720 a year, or $60 a month in dividends.

In contrast, 9% is derived comes from the fact that if you purchased a unit for LESS than $1, you would be entitled to a larger ‘%’ distribution.

If each unit is $0.80, and every unit purchase entitles you to 7.2 cents per unit, the math is as follows:

Amount of Units Purchased with $10,000: $10,000/$0.80 = 12,500 units.

Amount of dividend paid out per year: 12500 x $0.072 = $900.

Annual Percentage Value of Dividend: $900/$10,000 x 100% = 9%.

By nature, that fund will give you the exact same dividend size every month.

From the above, you can see that from having purchased the unit at a discount or a value buy, it automatically increased the percentage of your yield per annum.

So why did Money Maverick make the decision to give this up – or at least, why not offer it liberally to my clients?

As an investment specialist – it’s never a good idea to chase raw numbers.

Here’s some limitations and considerations.

Limitations and Considerations

1) Sustainability:

While this is ‘common’ across a larger context of distribution instruments - what is less common is how sustainable the instrument can be in the face of continually paying out large profits.

High dividends, like 8 or 9% – would be really hard to maintain without affecting their price.

Most aggressive instruments barely achieve this as an annualized return, let alone part of a structure that offers to pay out that much money year on year.

For example, the SNP500 has had similar historical returns, but it also has had a historical -82% loss in one bear run. You can refer to the link below for that analysis.

SEE ALSO: Why You Should Invest Aggressively Now (and how you can have peace of mind)

2) Distribution Risks:

Distribution rates are non-guaranteed. While it is not uncommon for companies or funds to raise their dividends to reward their loyal investors, it is also not uncommon for companies or funds to drop them.

If you had based your retirement around a specific dividend amount like the above, the fund reserves the right to distribute less after giving you a heads up.

Not the same fund as above - but you can see that payout/distribution is subject to change.

Without a back up plan or a good investment specialist to help you with the last minute change, your plans could be severely compromised.

3) ‘Inverse’ Risk:

There are even some ‘risks’ to the kind of dividend you planned to have. For example, if you come across a stock or fund that reflects a high 12-month historical dividend, you might decide to buy it. That seems like a reasonable action.

But when you look at the example above, what happens when the price goes up?

For the same distribution as above, the price of $2 instead of $1 means that your future distributed dividend is now 3.6% instead of 7.2%.

Final Thoughts

One of my very first (and prominent) mistakes as an investor was believing that a high dividend meant that a fund was automatically good.

It’s hard not to see it that way, logically. The literal definition of a dividend is as follows:

When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.


It would have been reasonable for anyone to choose a company based on their high dividends. After all - why would anyone pay out profits that they couldn’t afford to pay out?

As it turns out, it’s not so straight forward.

For myself, I eventually forsook my dividend income for greater opportunities where higher risk could deliver higher return.

Like so.

I also recognized that the dividend amounts might not be sustainable and could affect my capital greatly over time.

...How about you?

Perhaps you’ve already been burnt from stocks, that fell greatly in share price despite their great dividend size.

Perhaps you’ve invested in a fund that was promised to have an extremely high amount of passive income, but you didn’t understand or weren’t warned of the potential dangers.

If you’ve already lost money in this area, or if you’re lucky enough not to have done so...

...If you’re a believer of Financial Freedom like myself, or secondary streams of income, or whatever you want to call it - you know that a sustainable dividend is the forefront of this.

As an investment specialist, I will be able to guide you through:

i) How to create a regular and sustainable stream of income

ii) How to make that income convenient, sent directly to your bank account on a monthly, quarterly basis - or even multiple times in a month

iii) How to manage and control the fluctuations to your capital

As well as a greater overall understanding of dividends.

Onwards to FIRE, people.

Money Maverick

As one of the Top Financial Bloggers in Singapore (Feedspot,, I would be happy to answer any emails and questions you may have, as I have been doing for my readers over the past few years - especially about Insurance and Investing, as it is my forte of personal and professional knowledge.

If you have any such questions about the articles and how it may apply to your finances, you can feel free to leave a comment, or drop a message through any preferred medium (if you prefer privacy).


Whatsapp: 91769099

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Money Maverick is a Licensed Financial Consultant with MAS, who specializes in Investments and Critical Illness Insurance.

The views on his blog are strictly of his own opinion and have no affiliation to any of the companies he works with.

Here are some of my resources on:

1) Investing: Why you should invest aggressively NOW (and how you still can have peace of mind)

2) Insurance: The Newest, Rising Critical Illnesses in Singapore (2019)

3) Retirement and Leverage: Leveraging a Private Annuity, Pros and Cons (ft. Jamus Lim)

4) Spending and Saving: The Biggest Spending Mistakes You DIDNT Even Know you were Making (and how to avoid them)

5) Job Assessment: A Case Study on How a $6k/mth GIrl makes MUCH more money than a $10k/mth Guy

6) Financial Optimisation: How I Avoid the Largest 'Fees' of All

Investments are also available using CPF (Ordinary Account), SRS (Supplementary Retirement Scheme) and Cash.


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