Best Dividend Stocks to Watch in 2026

2026-08-21 · By Editorial team

Dividend investing remains popular among investors looking for a combination of potential capital growth and regular income. But the stock offering the highest dividend yield is not necessarily the best dividend investment.

What Makes a Good Dividend Stock?

Investors should consider five factors:

Dividend yield – annual dividends relative to the share price.
Payout ratio – how much of company earnings are being distributed.
Cash flow – whether the business generates sufficient cash to maintain payments.
Dividend history – whether payments have historically been stable or growing.
Balance sheet – excessive debt can put future dividends under pressure.

Singapore Dividend Investing

Singapore investors frequently associate dividend strategies with established companies and REITs. There is also a significant local tax consideration: IRAS says dividends from Singapore-resident companies under the one-tier corporate tax system are generally not taxable to shareholders. Foreign dividends received in Singapore by resident individuals are also generally not taxable, subject to exceptions such as certain partnership situations.

UK Dividend Investing

Tax structure is different in Britain. For 2026/27, the UK dividend allowance is £500. Dividends from shares held within an ISA are not subject to UK dividend tax. That makes account structure an important consideration alongside stock selection.

Malaysia

Malaysian investors can research both domestic dividend-paying companies and international equities. When comparing them, consider dividend sustainability, currency exposure, withholding taxes and applicable Malaysian tax treatment rather than comparing headline yields alone.

Don’t Chase Yield

A stock yielding 10% is not automatically better than one yielding 3%. Sometimes the yield becomes unusually high because the share price has collapsed and investors expect the dividend to be cut.

The better question is: can this company continue generating enough cash to maintain and potentially increase its dividend?

Tax treatment depends on individual circumstances and can change. This article does not constitute tax or investment advice.

Frequently asked questions

What makes a good dividend stock?

Look beyond headline yield at the payout ratio, cash flow, dividend history and balance sheet. A sustainable, well-covered dividend from a healthy business is generally preferable to the highest advertised yield.

Is a 10% dividend yield better than 3%?

Not necessarily. A very high yield can result from a collapsing share price where investors expect the dividend to be cut. The better question is whether the company can keep generating enough cash to maintain and potentially grow its dividend.

How are dividends taxed in the UK and Singapore?

For 2026/27 the UK dividend allowance is £500, and dividends held within an ISA are not subject to UK dividend tax. In Singapore, dividends from resident companies under the one-tier system are generally not taxable to shareholders. Tax depends on individual circumstances.