Sunday, 4 December 2016

Portfolio Update - November 2016

*As of 30 November 2016

Counter Average Price Yield on cost(%) Weightage
UOB Bank
17.8600
4.00
11.88%
OCBC Bank
8.6000
4.00
11.22%
Starhub
3.4700
5.70
10.19%
Singtel
3.6700
4.00
9.58%
M1
2.3600
5.50
6.93%
SembCorp Industries
2.4500
3.00
6.39%
Capitaland Mall Trust
1.9050
5.80
5.59%
Fraser Logistics & Industrial Trust
0.9200
7.00
5.40%
First REIT
1.2500
6.75
3.67%
Keppel Corp
5.3700
5.00
5.25%
SPH
3.7500
5.00
3.67%
Keppel DC REIT
1.0822
6.17
2.82%
Capitaland Commercial
1.3523
6.15
2.21%
SPHREIT
0.9293
5.80
2.12%
Ascendas Hospitality
0.6991
8.03
1.14%
Mapletree Logistics
0.9800
7.40
0.96%
STI ETF
2.8058
3.50
10.98%
Total

4.84
100.00%


Legend
CDP
SCB

Total Invested Capital = $30,660.37

Total Expected Dividends/month = $123.66

Average Dividend Yield = 4.84%

Now, we have yet another surprise in the markets this month, when the US elected the wildcard in all these time, now we have 2 surprises this year, Brexit and now a Trump victory.

The reaction of the markets was deja vu to Brexit, falling initially and quickly rallying afterwards. This is surprising to many, including me. I had believed that a Trump victory would destroy existing trade relations with the world, negatively affecting the corporate profits of companies depending on this. But the markets chose to focus on Trump's potentially fiscally stimulating policies, and his growth focused policies to drive inflation higher.



As a result, we see the usual beneficiaries like defence companies surging as a result, as well as financial stocks like banks who would benefit from higher interest rates as a result of higher inflation.

And just recently, oil and gas related stocks got a boost from the OPEC decision to cut production. Although we know of the tendency of OPEC members to cheat on this agreement, this is a first step in the process of cutting production since 2008. It shows commitment to control prices, though it will take years for current demand to consume the existing supply. In the longer term, it is positive to oil stocks as it provides a floor to prices for oil.



As a result, I have seen my portfolio rise in tandem as it has been heavy on banking and oil and gas stocks despite the drag from the telcom segment.

As the threat from yet another hike in the interest rate approaches, I have been busy snapping up REIT counters. Now, it has boosted my portfolio invested amount to $30k, a rise of $6k in a month, mainly from purchases of REIT counters. Should REIT counters continue to decline further, I may consider to load up further.

Some notable REIT counters purchases include Capitaland Mall Trust and Fraser Logistic Trust.



I like Capitaland Mall Trust because of the management effectiveness from managing over a decade and provided investors with a steady and sustainable stream of income. It is also the largest in terms of capitalisation for the retail REITs. I believe that the dividends paid are sustainable for many years to come, and patient investors will be rewarded. However, should it retest the $2.20 resistance again, I will not rule out offloading and trading off the price movement. Historically, Capitaland Mall Trust has always been a BB plaything, so it has been consistently trading around a price range.

In addition, I have initiated a position with Fraser Logistics and Industrial Trust (FLT). My main reason for entering would be the fundamentals of the REIT. It has a low gearing, currently less than 30% even after recently exercising the 3rd call option, reasonable all-in average interest rate, fair interest coverage ratio and a long WALE. The biggest advantage it has over the local industrial REITs is the presence of the significant freehold properties it holds. Theoretically, it would mean being able to generate income perpetually, but that is based on the assumption that there are tenants leasing out in the first place. Nevertheless, with reasonable rental escalation of 2-3%, I would bet on the fundamentals of this REIT. However, it is likely the pace of increase in its distributions would be slow and gradual, but still better off than having negative trending distributions.



And there we have it, I have reached the highest portfolio value I have invested. At around $30k, and an average yield of 4.84%, it means I get to receive $123 a month. My target of 1k per month is still a while off, but this is a step in the right direction. Positively thinking, to achieve $1k per month of distributions, it would mean around 10 times of the current vested amount, a whooping $300k. Well, seems far, but I will push on and hopefully achieve this by my 35th birthday, just in time to buy a flat if I'm still single then!

Till next time!

13 comments:

  1. Hi DS

    Congrats on your achievement there.

    Im a bit surprised that your portfolio yield at 4.84% a bit low there. One look and i thought it will yield a lot higher there. Hmm maybe im wrong.

    ReplyDelete
    Replies
    1. Hi B,

      Welcome to my blog! Well, it may seem that way, but the main culprits for bring the yield lower is the heavy weightage of my portfolio on the banks and stocks. Most of the REITs I hold are in the Standard Chartered platform, which were bought during the good times of no min commission, therefore low portfolio weightage.

      DS

      Delete
  2. Hi DS,

    Keep up the good work and you will get to and pass the 1K milestone on your journey.

    Cheers.

    ReplyDelete
    Replies
    1. Hi Farmer,

      Thanks for the encouragement! Same to you too!

      DS

      Delete
  3. 3 years ago, i was like you aiming for $1k dividend per month. 3 years later, i have hit the target. Press on and you will achieve it. Btw, i have picked up some lots for FLT as i liked the long wale, low gearing and strong management. will wait for opportunity to buy more.

    ReplyDelete
    Replies
    1. Hi Investminds,

      Thanks for the encouragement, I will press on! Lets do better each time!

      DS

      Delete
  4. Warm greetings =) Totally love your site! I was wondering if you would be keen to repurpose blog articles about all things and tips about personal finance from SingSaver.com.sg? If so, I will include you in my twice weekly distribution. Thanks a bunch and yours sincerely, Kat =)


    KATRINA KARIM
    VICE PRESIDENT, COMMUNICATIONS
    SingSaver.com.sg Ι Singapore’s #1 financial comparison platform
    A part of the CompareAsiaGroup Ι Asia’s #1 financial comparison platform
    Mobile +65 9844 6618 Ι Email katrina.karim@singsaver.com.sg Ι Skype katrinakarim1 Ι LinkedIn http://bit.ly/1nJ2Nxg

    ReplyDelete
    Replies
    1. Hi Katrina,

      Feel free to drop me an email.

      Thanks for dropping by!

      DS

      Delete
  5. Hi DS,

    I'm an engineer just like u and just stepped into the industry. I am very interested in learning from u which is to build up passive income through dividend. I have a few questions. Pardon me if they are very noob questions..

    1. I see that u bought sti etf and some top 30 sg companies which can be found in the sti etf. Won't both of them weigh down one another in terms of yielding?

    2. I am trying to choose a brokerage firm. Scb is in my top choice now, but since it charges min fees now, would u recommend me to use it? Can u share with us which cdp broker firm u are using.

    I hope these questions won't give u much problems. If u want to reply me through email, u can contact me at kahzhunove89@gmail.com. thank you!

    ReplyDelete
    Replies
    1. Hi Louis,

      Well, we all got to start somewhere, and that is when we are noobs, even now I still consider myself a noob haha

      1. It won't necessary bring down the yield unless you buy a counter that yields lower than the yield of STI ETF. So as long you buy counters yielding higher than your portfolio yield, then theoretically, it should increase overall yield of your portfolio.

      2. I don't use SCB now, but using more of Lim and Tan. They allow me to put shares into CDP and still retain the $10 commission small lots promotion as long as you buy < 1000 shares. In terms of just dollars and cents, then SCB is still the cheapest in the market.

      I wish you the best in your financial journey, don't give up!

      DS

      Delete
    2. Dear DS,

      Thanks for your reply! Ya, agree, everyone has to start someone. well, at least we started. haha.

      Just checked Lim and Tan website.Their low commission promotions only till end of this Dec? :/
      I am thinking that since we are doing more to dividend investment, i guess any bank will do, since their rate are almost the same. For me, what matter the most is the online trading platform and mobile apps.

      I wish you all the best in your financial journey too!!

      Delete
    3. Hi Louis,

      For Lim and Tan they have been consistently extending the small lot promotion ever since sgx started the 100 shares system. So i suppose they will continue on as brokerage business is reallt cut throat now.

      DS

      Delete
  6. eToro is the #1 forex broker for new and established traders.

    ReplyDelete