Last Updated on June 6, 2025 by Chin Yi Xuan
“I want to build my Freedom Fund (dividend portfolio), where do I start?”
I often receive questions like this from friends & readers.
In this newsletter, I’d like to cover my top 5 tools to build dividend income – from the least to the most passive investments:
Table of Contents
#1 Dividend-Paying Stocks (Low-Maintenance Score: ⭐)
- Example: Maybank, Tenaga Nasional, DBS Bank (and many more)
- Dividend Yield: 2% – 7% on average
Pros:
- Availability: The MY and SG stock markets offer plentiful quality stocks that pay competitive dividends ranging from 4% to 7%.
- Voting rights: Direct ownership of stocks means you can participate and vote in AGM.
- Concentrated bet: By picking the right stock, you have the potential to outperform the overall stock market.
Cons:
- Individual stock risk: A company can screw up and never recover.
- Frequent monitoring is required for earning reports and industry news.
#2 REIT (Low-Maintenance Score: ⭐)
- Example: IGB REIT, Sunway REIT, CapitaLand Ascendas REIT
- Dividend Yield: 4% – 7% on average
- Guide: How to find quality REITs in Malaysia
Pros:
- Collect rent (dividend) from quality real estates: From malls like Mid Valley, Sunway Pyramid, to office buildings from UOA.
- Stable dividends: REITs generally have multi-year leases = A stable baseline for dividends.
- Professional management: No need to manage the properties yourself. REIT managers will handle everything from tenant management to maintenance.
Cons:
- Lower growth potential: REITs are required to pay at least 90% of their income to shareholders = Less capital to grow the biz.
- Individual REIT risk: Like stocks, a REIT can screw up and never recover.
- Hands-on required: Frequent research & monitoring are required.
#3 Dividend ETF (Low-Maintenance Score: ⭐⭐⭐)
- Example: SCHD, FUSD, USCC.U
- Dividend Yield: 2% – 12% on average (depending on the type of ETF)
- Guides:
Pros:
- No need to pick stocks: Most ETFs have a rule-based strategy to screen for stocks.
- Instant Diversification: ETFs hold a basket of stocks instead of individual stocks.
- Different dividend ETFs available: REIT ETFs, US ETFs, Covered Call ETFs, etc
Cons:
- Fewer ETF choices in MY and SG: Have to explore the ones listed in the US, London, and Canada instead.
- No say over which individual stocks to buy
- No direct Voting Rights
- Still requires due diligence: You must research previous yield, underlying ETF methodology, and whether the ETF’s sector exposure fits your risk profile.
#4 EPF (Low-Maintenance Score: ⭐⭐⭐⭐⭐)
- Dividend Yield: 4% – 6% on average
- p.s. Only available in Malaysia
Pros:
- Ultra-Passive: EPF fund managers handle investment decisions on your behalf
- Relatively Stable Returns
Cons:
- Yearly dividend payout instead of monthly/quarterly.
- Not flexible (except for Account 3): Most of your money is locked in until retirement.
- No say over what to invest in.
#5 Amanah Saham Fixed-Price Funds (Low-Maintenance Score: ⭐⭐⭐⭐⭐)
- Example: ASB, ASM (Only available for Malaysians)
- Dividend Yield: 4% – 5% on average
- Guide: Intro & guide to ASNB
Pros:
- Ultra-Passive: Fund managers handle investment decisions on your behalf.
- Relatively Stable Returns: Earn a respectable and reliable yield
Cons:
- Yearly dividend payout instead of monthly/quarterly.
- Limited availability for non-Bumiputera eligible funds.
- Lower return vs the stock market in the long run.
Which one is for you?
- You like to be more hands-on in investing: Individual stocks and REITs might be for you.
- You like to be more passive & diversified, yet still enjoy the growth & dividends from the market: ETFs might suit you.
- You want something that is truly ‘set-and-forget’: EPF and ASNB Fixed Price Funds are the way to go.
Also, there is no fixed rule that you can only go for one.
For instance, I build my Freedom Fund mainly around ETFs, with REITs and stocks as a complement.
Disclaimer: Not buy/sell advice – please do your due diligence before investing!
Reminder: Building Freedom Fund takes time
Regardless of the tool, it is important to know that building a Freedom Fund from scratch takes time.
The key here is consistency: Every contribution to your Freedom Fund is one step towards building a life where you get to live on your own terms.
Slowly, but surely.
p.s. Are there any other dividend tools that I missed out on in this newsletter? Share them with me by sharing in the comment section below!
Disclaimer:
None of the information contained herein constitutes a recommendation, promotion, offer, or solicitation of an offer to buy, sell or hold any security, financial product or instrument or to engage in any specific investment strategy. Investment involves risks. Investors should obtain their own independent financial advice and understand the risks associated with investment products and services before making investment decisions.
Any discussion or mention of an stocks or ETF is not to be construed as a recommendation, promotion or solicitation. All investors should review and consider associated investment risks, charges and expenses of the investment company or fund prior to investing. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
