Dividend Investing to $1 Million #6: Is a Rate Cut Finally Happening?
The Feds finally hinted at a rate cut in September in view of the weakening labor market. Here’s how my dividend portfolio performed during this period.
Table of Content
Hey guys, welcome back to another dividend portfolio update for my Dividend Investing to $1 Million series.
The theme continues. Despite more and more warnings of a deteriorating economy and labor market, the stock market continues to climb towards new highs, buoyed by ever-steady corporate earnings and some other crucial events.
Here’s a summary of what transpired in September.
September’s Market News
1. Fed Cuts Interest Rates by 0.25% for the First Time Since December 2024
What Happened: The Federal Reserve lowered its benchmark interest rate by a quarter of a percentage point to a new range of 4.0% to 4.25%, marking the first rate cut in nine months. Fed Chair Jerome Powell described this move as a necessary one for “risk management”, aiming to support the slowing U.S. labor market amidst growing uncertainty.
Simple Explanation: Jay Powell basically kept his word and made it slightly cheaper for banks and businesses to borrow money. He’s doing this because the US job market is showing clear signs of slowing down and unemployment is rising. While consumer spending hasn’t necessarily slowed down and the market still looks on paper to be in decent shape, Powell said the Fed doesn’t want to wait until things get even worse before acting. This cut is more like an insurance policy to prevent a possible recession before it happens.
Potential Impact on Markets:
- Tailwind for markets: Markets could react positively to the rate cut since lower borrowing costs usually boost consumer spending and corporate investments.
- Future cuts expected: The Fed signaled more reductions may come in October and December, which could continue to support equities and growth sectors.
How This Could Affect Us: As the world’s financial hub, the monetary policy in the US sets the tone globally as well. Lower rates in the US could result in the strengthening of the Singapore Dollar (yay) and slightly reduce lending rates such as fixed deposits (nay) and SORA-linked loans (yay). I wouldn’t bet on the two latter points though since we are already pretty much at 5-year lows. There’s still room to drop further, but not too much.
2. Nvidia Takes a $5 Billion Stake in Intel
What Happened: On Thursday, 18th of September, Nvidia announced it will purchase $5 billion worth of Intel stock at $23.28 per share, giving it roughly a 4% stake in the company. The move comes just weeks after the U.S. government invested $8.9 billion in Intel to revive America’s chipmaking dominance. Following the announcement, Intel shares skyrocketed nearly 23%, marking their largest single-day gain since 1987.
Simple Explanation: Nvidia needs no introduction. As the biggest AI chipmaker in the world benefiting hugely from the AI boom, it recently overtook Microsoft to take the crown as the most valuable company in the world. And it just bought a huge slice of Intel, one of America’s most iconic but struggling tech giants. Together, they plan to combine forces to further improve the scale of their manufacturing capabilities and reduce dependence on foreign manufacturers such as TSMC.
Potential Impact on Markets:
- Intel revival hopes: The investment acts as a big vote of confidence, greatly boosting Intel’s recovery plan and growth trajectory.
- US tech sector optimism: Strengthens America’s position in the global semiconductor race, leading to more market optimism about the possibility of a long-term AI boom.
How This Could Affect Us: Honestly, I think this is a fantastic play by Intel and Nvidia. Nvidia has the most in-demand AI chip designs, but heavily relies on TSMC to manufacture their AI chips as they do not have the required facilities. Intel, on the other hand, is still playing catch-up in the R&D department, leading to poor chip performance. But they do have some of the most advanced chip fabrication facilities in the US.
It’s a match made in heaven.
I don’t know how much of this acquisition is politically-driven, but it aligns perfectly with Trump’s goal of keeping manufacturing within America while reducing dependence on foreign countries.
3. Trump Appoints Trusted Adviser Stephen Miran to Federal Reserve Board
Source: Business Insider
What Happened: The U.S. Senate narrowly voted 48–47 to confirm Stephen Miran, one of President Donald Trump’s top economic advisers, to the Federal Reserve’s Board of Governors. Miran will fill the remainder of former Governor Adriana Kugler’s term, which expires in January 2026. In an unprecedented move, he will remain on unpaid leave from his White House post, meaning he’s still technically part of Trump’s administration while serving as a Fed governor — the first time in the Fed’s 111-year history that such an overlap has occurred.
Simple Explanation: Trump finally managed to insert an ally into the US central bank’s board of governors, strengthening his influence on economic decisions. To say this is controversial is an understatement. The Feds are supposed to stay independent from the White House to keep politics out of monetary policy. That has held true for 111 years since its inception.
For football fans, this is like playing a game with seven referees voting on all on-pitch calls, of which 1 has clear allegiances to one of the two teams.
Potential Impact on Markets:
- Fed independence in question: Investors will be concerned that future rate decisions are swayed by politics, rather than economic fundamentals.
- Erosion of confidence: Any perception that the Fed is losing its neutrality could weaken trust in U.S. policymaking and reduce its attractiveness for investments
How This Could Affect Us: There are only a total of seven seats on the Federal Reserve’s board of governors. Having even just one vote constantly in your favor is a big deal considering the small number of seats. Personally, I don’t think it’s anything to worry about just yet. The board seems relatively aligned still as seen by how there was no real dissent in votes in September’s FOMC with the exception of Miran (surprise, surprise) who wanted a bigger rate cut. Also, this is but a temporary arrangement till January 2026 – I doubt any real damage can be done in such a short time.
Fingers crossed, huh?
4. Global Consumer Confidence Remains Flat in September as Sentiment Weakens in the US
What Happened: The Ipsos Global Consumer Confidence Index for September 2025 remained largely unchanged for a third straight month, slipping just 0.1 point to 48.0. Beneath the surface, though, sentiment is softening as both the Expectations and Jobs sub-indices fell, showing that consumers are becoming more cautious about their outlook.
In the U.S., confidence dropped notably, with the University of Michigan’s index sliding from 58.2 in August to 55.1 in September, as worries over inflation and slower job growth weighed on household sentiment.
Simple Explanation: The Ipsos Global Consumer Confidence Index is a reliable, monthly survey-based index that tracks how 21,000+ consumers across around 30 markets feel about the economy. And the survey essentially shows that these consumers are cautious in general about the situation right now with the overall index flatlining for 3 months, but are losing confidence specifically in job security and the how things will be like in the future.
In the US though, it’s a slightly different story. The Michigan Consumer Sentiment Index dropped 3.1 points in a month. This is a clearer signal of distress as the surveyed households are genuinely worried about inflation, job security and cost of living.
Potential Impact on Markets:
- Slowing revenue growth for companies: With declining consumer sentiment and a weaker outlook, households could pull back on discretionary spending. This will impact revenue growth of all companies, but mainly those selling non-essentials.
- Investors could turn more defensive: Instead of keeping their money in high-risk assets, they could start shifting toward bonds or gold
How This Could Affect Us: We are starting to see telltale signs of stress in the economy. It was only a matter of time. In fact, I’m surprised that it took this long for these data points to see the light of day.
Anyway, Singapore’s open economy is heavily tied to the US market. We will naturally be affected if American consumers do end up tightening their purse strings in preparation for tougher times ahead. We can expect slower growth locally. We could see a correction in the Singapore stock market as well if sentiment continues to weaken since we have made substantial gains in a very short time that doesn’t seem to be backed by a proportionate increase in earnings or growth potential. We might even see more lay-offs as corporate revenue drops, but hopefully things don’t get to that point. The job market is slow enough as it is right now.
Market Performance
September, despite reports of stagnating consumer spending and declining confidence in the economy, turned out ultimately to be yet another decent month for the S&P500.
He can’t keep getting away with it meme
In fact, decent might be an understatement since we notched ANOTHER all-time high.
The S&P500 closed above the 6,688 mark for the first time on Tuesday, the 30th of September, confirming 5 consecutive months of growth.
S&P500 Global reported that the S&P500 index was up 3.53% in September for a total of 13.72% YTD.
My Stock Purchases
As with previous months, I only carried out my monthly DCA into CSPX and VWRA. I kept everything else in cash as I continue saving towards another lot of DBS.
And actually, I’m second guessing myself right now. As of time of writing, DBS has risen another 10% in valuation. In last month’s DIT1M post, a share was worth around $50. Now it’s $54.
As the Brits put it oh so elegantly…
This spurred me to do a quick analysis on whether or not DBS is potentially overpriced at current valuations. It’s live on my Instagram, so you can check it out here if you’re interested to find out what the numbers show and my thought process.
More on this in the closing thoughts section!
My Portfolio Performance
Overall Performance
My portfolio grew 1.26% in September. It’s a lot lower than what the S&P500 did (3.72%) but it’s down to how my holdings within my dividend portfolio differ vastly from the companies and their respective weightage in the S&P500.
Last month, I managed to beat out the S&P500 in monthly gains. This month, I lagged behind. It all balances out.
My overall portfolio return is now at 20% for this year. In absolute dollars, that’s $9,300 of capital gains. My returns have increased around $4,000 since the start of the year.
Year to date, net of contributions, my portfolio is up 15.52%.
In comparison, year to date, the S&P500 did 13.72% in returns.
And as the chart above shows, my returns (the areas in green) have been growing in proportion to my invested amount (the areas in blue). It has come a long way with a slow start in 2025.
Performance by Stock
Yeah, I forgot to take a snapshot of my portfolio performance on the 1st of October… so I’ll just have to make do with one on the 9th of October.
So… in September:
The biggest losers are consumer defensive stocks with Altria Group (-3pp) and Coca-Cola (-5pp).
The biggest winners are unsurprisingly tech companies tied closely to AI innovation… and a humble local Singapore bank that earned its moniker of Best Bank in the World. Google (+10 pp), Apple (+12 pp), DBS (+8 pp) and Microsoft (+6 pp).
It’s so weird to see a SGX listed company up there with the juggernauts of the global economy. Hopefully it’s a sign of good things to come for Singapore’s stock market?
Dividend Payouts
I received S$107 in dividends in September from XOM, MSFT, SCHD and GOOGL.
This brings the total dividends I have received year to date up to S$742.
That S$1,000 mark by the end of the year is looking more and more likely.
Closing Thoughts
The state of the US economy and stock market
I think nobody could have expected the market to be this resilient.
In the face of strong headwinds from tariffs, declining consumer confidence, rising unemployment rates, a growing debt pile (1.8 trillion is the latest number as of October) that’s only getting harder to finance, several states within the US showing early signs of recession and a government shutdown with threats of further federal layoffs as the cherry on top, the US stock market continues to defy all expectations.
Phew, that was a long sentence. But that’s the point. There are so many cracks showing, and yet the market is chugging along seemingly without a care in the world.
The bottom line is that the stock market seems to have detached itself from reality, getting drunk off of the AI boom which is also the main driver of ever-growing corporate earnings that beat expectations quarter after quarter.
What I’m worried about
Personally, I’m wary that a big market correction could very well be just around the corner. History could repeat itself once again as exuberance with AI is reaching a fever pitch, much like with the dot com bubble.
But then again, just like how there are sound theories as to why a huge market correction is imminent, there are also grounded arguments against the narrative that doomsday is near. I attempt to break them down with total neutrality in another social post here.
My plan of action
For me, I’m erring on the side of caution. I’m already in the midst of shifting money to safer financial instruments while keeping more cash on hand.
And no, just in case you were wondering, I’m not going to sell any of my holdings. I’m going to keep them as they are and continue DCA’ing into them whenever I can. I only haven’t been doing so in recent months because I wanted to save up for DBS.
Which brings me to my next point!
Am I going to continue buying DBS shares?
With the help of trusty ChatGPT to crunch some numbers from DBS’ financial reports in 2024 and the first half of 2025, I came to the conclusion that while it might not be overpriced (this ultimately depends on how you expect DBS to perform in the future and I don’t have a crystal ball), one thing is for certain – it’s no longer as good of a value buy as it was before.
For the long term, it’s absolutely fine to continue buying DBS. I’m confident that DBS will remain the cornerstone of Singapore’s banking industry for decades to come. I simply find it hard to justify saving 6-7 months to buy one lot of it at current valuation.
I have decided that I will look to invest into other SG stocks at more reasonable valuations. I will leave the excess cash just sitting in my brokerage while I do some research – not ideal as it’s not earning any interest, but I much prefer to have more cash on hand at the moment.
Hopefully I’ll have an alternative ready by the next DIT1M update!
Progress Summary
My portfolio continued growing in September, though at a visibly slower pace than previous months.
I am now 55% of the way to my first big milestone.
And that about does it for this month’s update!
If you want to follow my journey towards financial freedom in more detail, you can also read My Financial Breakdown series where on a quarterly basis, I dive deep into every aspect of my finances (fully revealing my net worth, salary, expenses and other juicy stuff) and what I intend to do to reach my finance goal.
Until next time.
Stay safe, stay financially savvy, and most importantly, stay invested. 💵
Cheers!
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