Hey everyone,

Trying something different this week. Instead of the usual format, this is just my actual thinking on a few things right now.

DBS just posted a record quarter, and I've actually got a mixed take on it. There's one risk I keep seeing in people's portfolios, two dividend names beyond the obvious, and why Singapore's "boring" reputation just became its biggest asset.

Let's get into it.

DBS just posted its best quarter ever, and the stock hit a record high on Thursday. Net profit came in at $3.08 billion for Q2, up 9% year-on-year, a record for the bank. Return on equity, basically how much profit DBS generates per dollar of shareholder money, was 17.9%. Most banks are happy with anything above 15%.

The real driver, though, is wealth management. Fee income from that business jumped 42% year-on-year to a record $919 million for the quarter. That fee income is what all banks want to see in a revenue stream; it’s recurring.

In other words, it doesn't disappear when markets fall (although it will shrink proportionally) and that's exactly why the market keeps rewarding it.

The Fed turning more hawkish this year has lent a helping hand too, as fewer expected rate cuts means less pressure on the margins banks earn on lending.

Everything else in the results points in the same direction. Cost discipline held steady, trading and treasury income both had a strong quarter, and the dividend annualises to roughly a 4.3% yield. It’s an execution story and I’ve got to hand it to DBS, they are pulling it off very well.

Here's where I'll say something a bit less popular, though. I'm not against DBS as a stock. Record wealth management fees are genuinely a good outcome for shareholders, and buy the shares if you want to. But I'd be a shareholder here, not a private wealth customer.

Private banks are fee machines. The bigger your asset base gets, the more incentive there is to sell you something complicated and expensive. Low-cost UCITS ETFs are genuinely the best option for most investors.

The problem is that ETFs don't make much money for the industry - unless you're a giant like iShares or Vanguard with enormous scale. That's exactly why nobody's first instinct is to recommend you one, even thoiugh they’re the instruments that deliver the best outcomes.

As the late, great Charlie Munger put it, “Show me the incentive and I'll show you the outcome.”

The client and the shareholder aren't on the same side of that trade. Record fees are a great outcome for the bank. They're not automatically a great outcome for the person whose asset base generated them.

Numbers like these are exactly why banks keep pulling in a bigger share of people's portfolios. Which brings me to something that's been on my mind.

But here's what I keep seeing, and it does worry me. People with 30%, 40%, sometimes 60% of their entire net worth sitting in one or two bank stocks.

Not because they researched it and decided to concentrate. Because it felt like picking a winner (banks are infallible, right?), and it kept winning.

The actual rule and what a lot of asset allocation advice is: no single stock should be more than 5% of your net worth. Maybe 10% if you deliberately want to let a winner run. And that doesn't matter how good the company is.

The risk you take on is manifold. It's not just company-specific risk but it's that stacked on top of sector risk (specifically for financials here in Singapore).

All the Singapore banks move together through the same rate cycles and the same wealth-management growth story, so holding two or three of them isn't diversified at all. If the tide turns or if wealth management growth slows, that risk hits you twice. Once as a single stock and again as the whole sector.

People love to say the US is too concentrated, 30% in tech, so they'd rather be "diversified" in Singapore. But we tend to conveniently gloss over the fact that Singapore's index is over 50% in financials.

That's not less concentrated and I'm not saying don't hold individual stocks, I do too. But just know what you're actually holding and be aware of the risks behind it.

Someone asked me directly: if you had to pick a Singapore stock beyond the obvious, what would it be? Honestly, my first instinct is always banks, but everyone's already there, so that's not a particularly useful answer.

One I already like: Singapore Exchange (SGX) itself. Its shares are up 43% year-to-date and have delivered total returns (so including dividends) of 134% over five years, a strong run for what people assume is just "the exchange."

The business has actually shifted more toward derivatives and FX than pure equity listings, so even with the local listings market being quiet, the exchange operator has other levers to pull.

SGX’s latest earnings saw record revenue and profit for its FY2026 and it announced an additional dividend of 12.5 cents on top of its ordinary dividend of 11.5 cents.

Beyond that, there are two other blue-chip names I’m watching.

Sembcorp Industries has had a rough patch recently but it's paying out a 4% to 4.5% dividend and the company has been consistently raising it. It's trading at a discount to regional utilities peers, and there's a real growth pipeline in renewables behind it. There's likely to be a bit of a revenue dip this year but the setup looks better heading into next year. Sembcorp’s interim earnings report lands on Thursday 13 August.

ST Engineering yields far less, around 1.8% to 2% but it pays quarterly, and the policy is to raise it in line with profit growth. The case here isn't the yield but the structural demand (think of it as dividend growth). Defense and engineering spending isn't going anywhere while global uncertainty stays elevated.

If names like these have you thinking more seriously about dividend investing, not just picking one stock at a time, that's exactly what this week's video walks through.

This week's video is sponsored by moomoo.

Speaking of dividend names, most dividend investing content out there tells you to buy Coca-Cola or Johnson & Johnson stock. This week I'm making the case for building that out passive income stream closer to home instead.

Singapore dividend stocks come with four structural advantages most people never think about: income that lands in the currency you actually spend, zero withholding tax on dividends, zero personal income tax on them too, and a market that's built around returning capital to shareholders.

I walk through where this fits in a portfolio, as a satellite, not a replacement for your global core.

And I also go through the actual workflow for building it out, screening for sustainable payouts instead of chasing headline yield, buying in smaller sizes if a share price is too steep, and not letting the cash sit idle once the dividend lands.

This week's video got me thinking about something I haven't touched in a while.

A few years ago I wrote Sleep & Earn, a guide on building passive income through dividend growth investing: dividend yield vs. dividend growth, how to spot a yield trap, payout ratios worth watching, the whole framework.

I'm considering bringing it back and updating it. Before I do, I want to know if it's actually useful to you.

If enough of you are interested, I'll get it updated and out properly.

There's a real signal underneath July's rally worth naming. Money rotated out of semiconductor stocks into banks, REITs, property, and transport.

SK Hynix and Samsung have had massive swings both ways this year, people plowing their life savings into leveraged AI semiconductor ETFs, and a lot of those bets are going wrong. That nervous energy is pushing money toward safety and Singapore's the beneficiary.

For most of the 2010s, "Singapore is boring" was a knock. Fair enough because there was a massive bull market raging in tech (specifically SaaS) stocks and global stability was the default backdrop everyone was investing in.

That backdrop is gone. The US is unpredictable and transactional right now. Europe and NATO are strained in their relationship with the US. Asia is watching the US disengage with the region. Against all of that, predictability is scarce, and scarce things get a premium.

Singapore hasn’t changed all that much but the rest of the world did. I think that makes the stock market here more appealing over the next five to 10 years than it was in the entire 2010s.

This edition was a bit different, my actual thinking on a few things right now instead of the usual format. Hit reply and tell me what you thought or if it’s easier, just tap the poll below. Either way, I want to know if you liked this.

Until next week,

— Tim

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