1st Half 2026 Portfolio Update
Time really flies. It feels like just yesterday we were welcoming the new year, and now we are already crossing the midway mark of 2026. It is that time of the year again when I sit down, look through the numbers, and do my routine portfolio review. Keeping track of where things stand helps me maintain an honest view of my investment journey, especially now that I am living off this nest egg in retirement.
Mid-Year Performance Reflection
For the first half of 2026, my (YTD) XIRR stands at 5.28%. Looking at this figure, I can say I am genuinely happy with the results. Let’s be realistic, not every year is going to hand us double-digit gains on a silver platter. Every year behaves differently, and a positive return of over 5% in six months is a steady, respectable outcome that keeps the portfolio moving forward.
Watching portfolio returns can sometimes feel exactly like playing with a yo-yo , they just love to swing wildly up and down based on whatever mood the market wakes up in. Early on in the year, things were looking absolutely bullish & brilliant, with the portfolio marching upward and hitting all-time highs to touch a very satisfying 10+% return. It felt like everything we touched was turning to gold. 😁
But as any seasoned investor knows, the market has a funny way of keeping us humble. Fast forward to today, and that double-digit high has been shaved down to our current +5.28% YTD XIRR. The main culprit behind this sudden drop is our heavy exposure to the Hong Kong market, which took a sharp turn and dragged our overall capital appreciation down with it.
It is a classic reminder of how quickly paper profits can evaporate in the short term. One moment you are riding high on the peak, and the next, a single underperforming market pulls you back down to earth. But as an income investor, you learn to treat these wild capital swings as pure noise. The portfolio value might behave like a volatile yo-yo, but as long as the underlying businesses keep pumping out steady dividends, our real-world cash flow stays firmly on track.
I want to congratulate those who have secured spectacular returns so far this year. If your portfolio is heavily weighted toward AI, global technology giants/chip makers, or our stellar local Big 3 Singapore banks, you are likely laughing all the way to the bank right now. They have put up a massive performance. In contrast, my own portfolio had to trudge through some mud, dragged down significantly by my exposure to the Hong Kong market. The Hang Seng Index (HSI) has had a rough ride, dropping about -5.68% YTD. Since a large portion of my holdings is tied up there ( 59.4%), it naturally acted as a heavy anchor on my overall capital appreciation.
Looking ahead into the remaining six months, my simple hope is that the year might wrap up somewhere around an 8% to 9% return. If I manage to achieve that, it would complement the last two years beautifully. Back in 2024, the portfolio brought in a very satisfying 14.91%, and 2025 was an absolute blockbuster year at 28.1%. Combining those with a modest high-single-digit return this year would bring my three-year annualised average to a fantastic 17.3%. For an income-focused investor, that is an outcome I would accept any day of the week without a second thought.
Navigating Market Noise and Finding Your Strategy
One of the most important lessons I have gathered over my decades in the market and one that becomes even clearer during periods of wild sector runs, is the absolute necessity of tuning out the noise. You must protect yourself against FOMO (Fear Of Missing Out). When you log onto social media or chat groups and see people bragging about making 50% or 100% on the latest hot trend, it is incredibly easy to feel inadequate or anxious. But comparing your middle chapter to someone else’s highlight reel is a recipe for emotional, impulsive investing.
You need to have your own system and stick to it. Everyone plays their own game based on their unique life circumstances, age, risk tolerance, and capital size. A young professional in their 20s can afford to take massive bets on high-growth, volatile tech stocks because they have a multi-decade runway of wage income ahead of them. As a retiree, my game is entirely different. My priority is capital preservation and steady, unshakeable cash flow.
The golden rule remains: invest for the long term and cherry-pick companies with rock-solid fundamentals. If the business health is robust, the balance sheet is clean, and management is prudent, things will turn out fine in the long run. There is an old saying that every dog has its day. The market rotates constantly. Sectors move in cycles; nothing stays at the top forever, and no high-quality sector stays depressed permanently. What we see today is just a temporary trend, not a permanent law of physics. Patience pays the bills.
The Reality of Retirement Cash Flow
Let's talk about the lifeblood of my retirement: dividends. For the first half of 2026, the YTD dividend collected stands at a substantial $168,014.01. I should note that this figure includes a few early Q3 dividend payments that made their way into my accounts just in time for this write-up.
Compared to the same period in 2025, this represents a very hearty +18% increase. I am incredibly pleased with this growth. The boost did not come from me injecting large amounts of fresh capital (+$94K) ; rather, it was driven primarily by several core corporate holdings deciding to reward shareholders with special dividends this year. When a company clears out excess cash and shares it with retail investors, it acts as a phenomenal validation of their underlying business strength.
When you enter retirement, your entire relationship with money changes. Portfolio valuation fluctuations in the short term don't bother me the way they used to. Asset prices bounce up and down daily based on fickle market sentiment, global news headlines, and macro anxieties. But as long as the underlying companies continue to run efficient operations, defend their market share, and generate strong free cash flow to sustain their payouts, the short-term paper value of the portfolio is mostly just academic. Cash flow is reality; market value is just an opinion.
Debunking the Dividend Illusion Debate
Every time I talk about the joy of collecting dividends, someone will invariably point out the theoretical critique: "Dividends are just an illusion". The company is simply moving money from its right pocket to your left pocket. It's nothing more than mental accounting." To be fair, from a purely strict mathematical standpoint, they are absolutely right. The moment a stock goes ex-dividend, its Net Asset Value (NAV) drops by the exact amount of the payout. The total value of your wealth remains identical at that split second.
But investing is not performed by emotionless supercomputers; it is done by human beings with real psychological needs. As a retiree engaged in income investing, it feels exceptionally good to see consistent cash flowing into the bank account, even if purists want to label it as a mental bias or accounting trick. When market crashes happen, and stock prices tumble, a growth investor watches their portfolio shrink and feels the painful sting of capital destruction. For an income investor, as long as the businesses keep generating cash flow and distributing dividends, your daily life remains completely unaffected. You don’t have to stress over liquidating shares at the absolute bottom of a bear market just to buy groceries.
That steady inflow gives me total financial freedom. I can take those dividends and spend them completely guilt-free. They pay for daily living expenses, fund travel adventures around the world with family, or provide a cash buffer. Alternatively, if I find attractive opportunities elsewhere, I can take that cold, hard cash and reinvest it into entirely different companies that are trading at a discount. Dividends afford options, and in retirement, options are everything.
Portfolio Composition and Recent Adjustments
Looking at how the portfolio is distributed right now, my portfolio asset allocation remains highly deliberate. Geographically, the Hong Kong Market (HKEX) represents our largest single exposure at 59.41%, followed closely by our home turf in Singapore (SGX) at 25.85%. The London Stock Exchange (LSE) makes up 13.81%, while the New York Stock Exchange (NYSE) sits at a tiny fraction of 0.93%.
In terms of sector breakdown, Financials take the biggest slice at 29.1%. This is followed by Conglomerates and Energy / Commodities, which are tied at 17.7% each. REITs comprise 8.2%, Technology is at 7.5%, and Consumer Discretionary holds a 5.1% share. The remainder is distributed across Industrial & Electronic Manufacturing (3.5%), Property Development & Management (3.0%), Transportation & Logistics (3.3%), Healthcare (2.7%), Utilities / Infrastructure (1.2%), and Telecom companies (1.0%).
Our top ten dividend engine contributors reflect this layout clearly. Leading the pack is OCBC with a major $11,546.60 contribution, followed by Ping An Insurance at $8,540.10 and BOC HK at $5,407.90. Shell PLC brings in $4,675.54, Oriental Watch adds $4,079.50, and Cosco Shipping contributes $3,391.20. Rounding out the top ten are AIMS APAC REIT ($3,334.50), CICT ($3,038.00), BHP ($2,906.40), and King Fook Holdings ($2,852.80), bringing the total from just these top ten stalwarts to $49,772.54.
I also did some housecleaning since the last update. On the divestment front, I completely parted ways with DBS, capitalising on its recent strength to lock in value and reallocate resources. Selling DBS doesn't mean the bank's fundamentals have changed. I believe DBS is still the best bank in SG or even in Asia; hence, I'm still holding on to OCBC as one of my top holdings and increased my stake in UOB ( to no. 6 in my portfolio vs no. 33 in 2025). On the buying side, I have been busy accumulating quality assets where we see long-term fundamental support. Newly added names to the portfolio include AIA, Cosco Shipping, BestStudy Education, Record PLC, PICC (People's Insurance Company of China), CGS International, China HongQiao, Xtep, China Jinmao, VTech, Pax Global, HKEX (Hong Kong Exchanges and Clearing), and Zhou Liu Fu. These additions fit nicely into our objective of owning robust, cash-generating businesses at reasonable valuations.
Final Thoughts on the Journey Ahead
As I wrap up this mid-year review, my final thoughts keep circling back to one foundational pillar: asset allocation. Having a well-diversified portfolio across geographies, business models, and asset classes is what allows me to sleep peacefully at night. Different assets go through entirely different market cycles. When Singapore banks are hovering at all-time highs, Hong Kong might be deeply discounted. When commodities are booming, tech might consolidate. By spreading our bets, we smooth out the bumps and ensure that the dividend machine never grinds to a halt.
People sometimes ask me why I bother to keep investing at all. Why not just put everything into safe, fixed deposits or short-term government bonds and call it a day? The answer is simple: inflation. The silent killer of purchasing power never takes a holiday. If you park all your wealth in static cash instruments, you are guaranteed to lose ground over a 10- 20-year retirement horizon. We must keep our capital working productively in businesses that possess the pricing power to outpace rising costs.
The first-half 2026 corporate reporting season is just around the corner, bringing a highly anticipated wave of interim dividend announcements
So, my plan remains completely unchanged. I will tune out the daily market hype, ignore the competitive comparisons, and stay the course.
Let’s see what the second half of 2026 brings our way.
Happy investing, till next update.
Cheers! 😊
STE
PS.
Top 50 Holdings :
YTD Return For Top 50 :
51-129 Holdings :
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