Those who do well have a strong balance sheet to withstand the growth downturn while maintaining cash flow and keeping dividends stable.īecause they do not need to borrow more, they are less affected by rising interest rates.Īgain, being selective in this environment is key to securing steady passive income.Īs an example, both Singapore real estate investment trusts (S-Reits) and global Reits have been sold down amid inflationary pressures, rising interest rates and growth concerns. Large companies dominating with pricing power or the ones that are able to grow in an inflationary or slower growth environment stand out. Investors have continued to pour money into dividend-linked funds because companies with a consistent dividend payout are meant to have defensive qualities. IHS Markit data shows a projected 6.5 per cent growth in global dividend payouts this year. The other popular form of passive income is from dividends. Investment amounts in such unit trusts tend to be small enough to lower the hurdle for all retail investors, whereas a single corporate bond in Singapore is typically priced in a large denomination of at least $200,000 with costly transaction fees. Bond funds also allow for greater diversification benefits by giving investors exposure to hundreds of bonds from different countries and sectors, while managers are able to reinvest the proceeds from redeeming older bonds into new instruments with higher coupon rates or better prices.

Passive income stocks