Last week I walked through how to invest in the Saudi market for the first time.
This week: what you are building toward. The income targets. The capital required. And how the five positions I hold fit into a progression from first investment to meaningful passive income.
THE FIVE POSITIONS AND WHAT EACH ONE DOES
Before the ladder, the building blocks. Here is each position I hold that generates income, with current verified data:
Aramco (2222) — the backbone
Current yield: 5.0% | Your yield on my cost: 5.2%
5-year dividend growth: 2.9% per year
Frequency: Quarterly
Stability rating: Very High
What it does: Reliability above all else. The government has publicly committed to the dividend policy regardless of oil price. This is the position you buy first and never question.
Jarir Marketing (4190) — the highest yielder
Current yield: 5.2% | Yield on my cost: 5.8%
5-year dividend growth: 3.1% per year
Frequency: Quarterly
Stability rating: High — 19 consecutive years
What it does: Maximum income per SAR deployed. If your only goal is dividend income, Jarir is where the capital goes first. The lower growth rate is the tradeoff.
Al Rajhi Bank (1120) — the growth position
Current yield: 3.75% | Yield on my cost: 3.74%
5-year dividend growth: 32% per year
Frequency: Semi-annual
Stability rating: High
What it does: Future income. The lowest yield today becomes the highest yield in five years if the 32% CAGR even partially continues. Buy it now while the current yield looks modest.
Saudi National Bank (1180) — the value opportunity
Current yield: 5.87% | Yield on my cost: 5.52%
5-year dividend growth: ~8.5% per year
Frequency: Semi-annual
Stability rating: High
What it does: Highest current market yield in the group. Currently trading at a discount following geopolitical repricing. Earnings are growing. The business has not changed. The price has.
Saudi Telecom STC (7010) — the certainty play
Current yield: 5.0% | Yield on my cost: 5.0%
5-year dividend growth: ~5% per year
Frequency: Quarterly (fixed SAR 0.55 through Q3 2027)
Stability rating: Very High
What it does: Predictability. The next eight dividend payments are already publicly committed. You know exactly what arrives and when.
Blended portfolio yield across all five income positions: approximately 5.0% on current market prices.
THE THREE RUNGS
Using a blended yield of 4.5% across a diversified four-position portfolio including the Albilad US ETF, here is what each income target requires.
RUNG 1 — SAR2,000 per month
Annual target: SAR24,000
Capital required: approximately SAR533,000
Monthly contribution to get there: SAR12,000 per month at 10% CAGR takes approximately 17 years from zero, or 12 years from a SAR 50,000 starting base.
What SAR2,000/month covers: utilities, groceries, transport in most GCC cities. Not independence but meaningful cushion.
RUNG 2 — SAR5,000 per month
Annual target: SAR60,000
Capital required: approximately SAR1,333,000
This is the level where dividend income starts to have a meaningful impact on optionality, covering rent in most Saudi cities, or freeing a salary to be deployed entirely into the portfolio.
RUNG 3 — SAR10,000 per month
Annual target: SAR120,000
Capital required: approximately SAR2,667,000
This is salary replacement territory for most GCC professional roles. The portfolio alone could sustain a lean-to-moderate lifestyle in the Kingdom or most of the GCC.
WHERE I AM IN THIS PROGRESSION
Current portfolio: SAR33,463 deployed, generating approximately SAR873 per year from five income positions.
That is SAR72.75 per month.
I am at Rung 0. Not Rung 1. The ladder has not started yet in any meaningful income sense.
But the structure is in place. The positions are established. The reinvestment cycle is running. The standing order is funded every month.
The gap between SAR73/month and SAR2,000/month is closed by three things: time, consistent monthly deployment, and dividend reinvestment that compounds. Not by a different strategy or a different set of positions.
THE SEQUENCING THAT MATTERS
Most people try to hold every position in equal amounts and grow everything simultaneously. That is the slow path.
The faster path: concentrate reinvestment into the highest-yielding positions first. Build the income base aggressively before adding the growth and diversification positions.
In my portfolio that means Jarir (5.8% YOC) gets the next reinvestment tranche. Then SNB. Then Aramco. Then STC. Al Rajhi and the ETFs are funded through the monthly standing order, they serve a different purpose.
The sequence does not change the destination. It changes how fast you get there.
WHERE TO START
If you have not started: the four-position beginner's guide in last week's issue is the entry point. SAR10,000 to SAR25,000 across Aramco, Jarir, Al Rajhi, and the US ETF.
If you have already started: calculate your yield on cost for each income position and redirect reinvestment to the highest one. Stop distributing reinvestment evenly.
If you are already on Rung 1: the same logic continues to Rung 2. Capital concentration into the highest yielders. Consistent monthly surplus. Patience.
The ladder does not require a different strategy at each rung. It requires the same strategy, consistently, for longer.
Next issue: Vision 2030 — which sectors are actually winning for investors, and what the next five years of capital deployment in Saudi Arabia means for the ordinary Tadawul portfolio.
— The Quiet Compounder