Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Best Dividend Stocks in Malaysia to Build Passive Income

Best Dividend Stocks in Malaysia to Build Passive Income

My Portfolio and its Dividends from 2024

I update my portfolio – the Freedom Fund on a quarterly basis and I’m always looking for the best dividend stocks in Malaysia to build my passive income.

As of 2024, the best-performing dividend stocks in my portfolio in terms of dividend yields are:
1. Maybank – 7.46%
2. IGB REIT – 6.99%
3. Matrix – 6.25%
4. Public Bank – 5.76%
5. Sun REIT – 5.62%
6. Scientex – 5.06%

Do note that the yield I’ve given above is based on my purchase price. This is how I keep track so I can easily calculate if dividends are increasing y-o-y. These have given me stellar performances year in and year out, and their dividends have increased almost every year.

Key Factors to Consider When Choosing Dividend Stocks

Selecting the best dividend stocks requires a strategic approach. One important factor to evaluate is the dividend yield, which reflects the return on your investment relative to the stock price. However, a higher yield doesn’t always mean a better investment — ensure the company has a sustainable payout ratio. Generally, a payout ratio below 70% is considered healthy, as it indicates the company retains enough earnings for growth while rewarding shareholders.

You can often find a company paying high yields ie. 10% p.a. but you’ll notice immediately it is due to a sharp drop in share prices. These are false dividend yields and you should be very careful in analysing them. A company that isn’t doing well will never be able to sustain the same dividend payments in the future.

Dividend history is another crucial aspect. Companies with a track record of consistent or growing dividends demonstrate financial stability and shareholder commitment. Look for those labelled as dividend aristocrats—stocks that have increased dividends annually for a significant period.

Additionally, pay attention to the sector and market conditions. Defensive sectors like utilities and consumer staples often provide stable dividends even during economic downturns.

Finally, don’t overlook the importance of growth potential. While high-yield stocks may be tempting, those with modest yields but strong growth prospects could provide better long-term returns.

By focusing on these factors, you can build a robust portfolio that balances income with capital appreciation. Regularly reassessing your holdings ensures alignment with your financial goals and market dynamics.

My Dividend Updates

In addition to my Malaysia portfolio, I’ve also started investing in US stocks and my US portfolio can be found here.

A list of my present and past dividend income and updates can be found below:

My Investing Method

If you’re curious as to who am I, how and why I invest, you can read more about me hERE.

As always, my goal has been to achieve a passive income of approximately RM36K per annum through dividends.

With that goal in mind, I have been holding and adding stocks that continue to increase their dividends every year. Most of the stocks in my portfolio reflect that – REITs, Maybank, Nestle etc all are there to help achieve that passive income.

That being said, I am always on the lookout for growth stocks. And I’m fine with a growing company not being able to pay dividends during the growth stage.

As of 2020, my plan is to continue looking for the best dividend stocks in Malaysia and add to my portfolio when the price is right. At the same time, I will be looking towards the US for bigger, better companies to invest in.

I am glad to have finally found a way to purchase US stocks with minimal fees and I’ve since switched brokers. A guide to investing in the US and other foreign stocks can be found hERE.

I’ve also curated a list of the top 20 most valuable companies in Malaysia by market cap.

Reports on Top Dividend Stocks

Moving on, a full collection of reports on the best dividend stocks in Malaysia can be found here.

Personally, I use MooMoo Malaysia and Rakuten Trade and Hong Leong to invest locally. I will be using their system as an example throughout my posts.

I cover most companies I invest in. The full list of the most recent analysis of the company’s finances can be found below, arranged in alphabetical order.

As always, due diligence on your own part is required when deciding to invest in a company (or in any asset for that matter). 

Analysis Reports – Best Dividend Stocks in Malaysia:

Malayan Banking Berhad (MAYBANK 1155)

Air Asia Berhad (AIRASIA 5099)

Duopharma Biotech Berhad (DPHARMA 7148)

Genting Malaysia Berhad (GENM 4715)

IGB Real Estate Investment Trust (IGBREIT 5227)

Nestle Malaysia Berhad (NESTLE 4707)

Scientex Berhad (SCIENTX 4731)

Tenaga Nasional Berhad (TENAGA 5347)

Tune Protect Group Berhad (TUNEPRO 5230)

For updated information on the dividends paid by the companies (at least for the ones I invest in), head over to the Freedom Fund for a clearer picture.

If you’ve got a specific Malaysian company in mind that pays good dividends which I’ve yet to cover, drop me a message or leave a comment here.

The above list will be updated over time.

For the next article of the Investing Series, check out article 006 – Dividend and Growth Investing and What are Dividends?

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