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Charu Chanana
Chief Investment Strategist
In today’s uncertain market, income remains a powerful tool to smooth returns and build wealth. For investors already using margin lending—or considering it—a strategic opportunity exists to amplify dividend income without disrupting your long-term equity holdings.
For illustration purposes, let’s walk through how it works using DBS, one of Singapore’s largest and most stable dividend-paying stocks.
Imagine you have SGD 5,000 in available capital and already have an active margin lending account. You want to buy DBS, which currently offers a 12-month dividend yield of around 5.5%.
With DBS shares offering 75% collateral value, you can use SGD 5,000 to purchase up to SGD 20,000 worth of DBS stock. But let’s say you take a slightly more conservative approach and opt for 3x leverage instead – using your SGD 5,000 and borrowing SGD 10,000 via margin lending at a 3% interest rate to buy a total of SGD 15,000 worth of DBS stock.
Here’s how the math works:
This approach allows you to turn DBS’ already solid dividend into a double-digit income generator, using margin as a strategic enhancer.
While the math is compelling, margin lending is not free money. Here are a few important caveats:
This is a strategy best suited for experienced investors who monitor their portfolios and are comfortable with short-term volatility.
For income-seeking investors already using margin lending—or thinking about it—this is an opportunity to rethink your capital efficiency. Used wisely, it’s a way to supercharge your dividend strategy while staying invested in quality stocks like DBS.