Sunday, 25 December 2016

Dividend Knight 2016 Portfolio Review and Projected Dividend Income 2017

First, I would like to thank all my loyal and supportive readers who have followed my investment journey thus far. The viewership of my blog finally crossed the 100k mark while I was away on vacation. Yay! :) Another milestone achieved.

A quick snapshot of my portfolio's year-on-year performance (accurate as of 30 Dec 2016)
 
- Market value of portfolio has increased almost 14.62% from S$301k to S$345k. Pure capital appreciation represents 5.32% of that increment while the remaining 9.3% represents fresh injection of funds.
 
- Total annual dividends collected has decreased 8% from S$16, 835 to S$15, 492 as I subscribed to significant amounts of SCRIPS/DRIPS offered by DBS, OCBC, MLT and RMG in 2016. If I had taken dividends instead, the total amount of dividends collected this year would have increased marginally to S$17, 270, which is still way off the target I made last year.
 
- Total Returns: $16k (capital appreciation) + $15,492 (dividends) = S$31,492
 

Walking A Thin Line in 2016
In 2016, I humbly re-learnt an important lesson from Mr Market - a stock is only as good as its fundamentals at the end of the day. The financial figures don't lie, especially over a few quarters. This prompted me to divest my Starhub, M1 and Cache positions completely. Fortunately, the dividends that I collected from these companies over the years have helped me to get out while barely in the black. My decision turned out to be right as their prices continued to tumble throughout 2016.
 
On the other side of the coin, my 'buy on dips' strategy for DBS, OCBC and UOB worked out pretty well. Their fundamentals remain robust despite the temporary weakness in the O&G, business and property loan sectors. I found myself walking a thin line when I had to make a judgement call. Questions like 'Is this a short-term scare?' 'Is a reversal of fortunes remotely possible?' 'Has the fundamentals changed permanently?' would flow into my mind. Navigating through seismic global events such as Brexit and Trump's election victory certainly did not make it any easier.
 
 
2017 Strategy - Passive Income Longevity
I would not allow the Fed rate hike cycle to derail my dividend investing style in 2017. In a world with low returns and uncertain markets, I shall maintain a sharp focus on high-quality companies with healthy balance sheets, sustainable earnings and dividend payouts in defensive sectors such as healthcare. In my opinion, global macro-economic growth will remain subdued with geo-political tensions arising from elections in France and Germany, official start of Brexit negotiations and Trump's first year in the White House. If the banking crisis currently unfolding in Italy requires a bailout package from EU a few months from now, will Germany and France (1st & 2nd largest economies in EU) have the political will to save Italy in the middle of an election campaign? Knowing that using taxpayers' money to help Italy is likely to lose them votes, the leaders of France and Germany probably would not want to put their political careers at risk. Or at the very least, they would drag their feet and delay financial assistance to Italy until their elections are concluded. By then, the problem might have deteriorated into a full-blown crisis. Remember the Greek sovereign debt crisis (Grexit) back in 2012 and 2014, anyone?



Projected Dividend Income 2017 - Planting the seeds today!
  1. Singtel: S$1, 400
  2. DBS: S$1, 254
  3. OCBC: S$1, 094
  4. SATS: S$640
  5. Raffles Medical Group: S$150
  6. Sheng Siong: S$227
  7. Ascendas REIT: S$1, 078
  8. CapitaLand Mall Trust: S$728
  9. Frasers Centrepoint Trust: S$1, 680
  10. Suntec REIT: S$600
  11. Mapletree Commercial Trust: S$320
  12. Mapletree Logistics Trust: S$2, 405
  13. Mapletree Greater China Commercial Trust: S$870
  14. AIMS AMP: S$3, 300
  15. Keppel DC REIT: S$668
  16. Parkway Life REIT: S$960
  17. Frasers Logistics & Industrial Trust: S$832
Total Projected Dividends: S$18, 206
Projected Average Monthly Dividends: S$1, 517
Projected Average Daily Dividends: S$49.88

Merry Christmas and A Happy New Year!
DK

Sunday, 11 December 2016

Dividend Knight Income Portfolio Update (Dec 2016) - Targetting Passive Income Longevity

No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
DBS
2, 073
3.
Mapletree Logistics Trust
32, 498
4.
Singtel
8, 000
5.
Frasers Centrepoint Trust
15, 000
6.
OCBC
3, 040
7.
Raffles Medical Group
15, 094
8.
SATS
4, 000
9.
ParkwayLife REIT
8, 000
10.
Ascendas REIT
7, 000
11.
Keppel DC REIT
12, 800
12.
CapitaLand Mall Trust
7, 000
13.
Frasers Logistics & Industrial Trust
13, 000
14.
MGCCT
12, 000
15.
Suntec REIT
6, 000
16.
Sheng Siong
7, 000
17.
Mapletree Commercial Trust
4, 000

Dividends received in December 2016: S$1, 537.40


Total dividends received since Jan 2016: S$15, 492.63
 
Average dividends per month: S$1, 291.05
 
Average dividends per day: S$42.45
 
Total portfolio market value: S$351, 428
 
Unrealised Profits: S$40, 690


For the month of December, I will be collecting a total of S$ 1, 537.40  in dividends and distributions from my income portfolio.
  • SATS: S$240
  • AIMS AMP: S$825
  • MLT: S$472.40
DSO National Laboratories Building (Source: Ascendas REIT)

Having performed a bottom-up approach analysis on PLife REIT in my previous portfolio update, I decided to share the one I did on a blue-chip industrial REIT which I am vested in recent months. Ascendas REIT continues to build on its market leadership position in the business parks/science parks space with the latest acquisition of 3 properties in Singapore. The manager has proven to be rather resourceful in pursuing both organic and inorganic growth. Even though the yield-accretion is very marginal, the acquisition has a few positives.....
  • Long weighted averaged lease expiry (16.5 years) from quality tenants (DSO & DNV GL Singapore)
  • Annual rental escalation of 2-2.5%
  • Long land lease tenure of 65.7 years (way above the average industrial land tenure in Singapore)
  • Offers exposure to the growing R&D sector in Singapore as we move away from low-end manufacturing towards a knowledge-based economy
  • Close proximity to the new Kent-Ridge MRT station


Ascendas REIT has prepared its balance sheet well in a climate of rising interest rates.
  • Well-staggered debt maturity profile of 3.8 years, meaning it will not face any major re-financing needs in any one particular year.
  • 78% of total debts is hedged into fixed rates
  • Reasonable all-in debt costs of 3%
  • Well-diversified asset portfolio among warehouse, logistics, business parks, science parks, data centres, high-spec industrial and manufacturing compared to other industrial S-REITs
  • The only S-REIT to enjoy 'A' credit rating besides CMT

This month's portfolio update came earlier than usual because I want to post this before flying off for a much-deserved vacation. I shall be back after Christmas to share my 2016 portfolio review plus investment strategies for 2017. Stay tuned! :)



To Sustain Longevity, You Have To Evolve
DK

(All comments made in this blog are purely my own views and analysis, they may be wrong and readers are wiser to do their own due diligence. I am not held responsible for any losses incurred, at the end of the day its your own money your own decisions.)

Monday, 5 December 2016

Dividend Knight Income Portfolio Update (Nov 2016) - All Hail President Trump!


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
DBS
2, 073
3.
Mapletree Logistics Trust
32, 498
4.
Singtel
8, 000
5.
Frasers Centrepoint Trust
15, 000
6.
OCBC
3, 040
7.
Raffles Medical Group
15, 094
8.
SATS
4, 000
9.
ParkwayLife REIT
8, 000
10.
Ascendas REIT
7, 000
11.
Keppel DC REIT
12, 800
12.
CapitaLand Mall Trust
7, 000
13.
Frasers Logistics & Industrial Trust
13, 000
14.
MGCCT
12, 000
15.
Suntec REIT
6, 000
16.
Sheng Siong
7, 000
17.
Mapletree Commercial Trust
4, 000

Dividends received in November 2016: S$1, 924.77

Total dividends received since Jan 2016: S$13, 955.23
 
Average dividends per month: S$1, 162.94
 
Average dividends per day: S$38.23
 
Total portfolio market value: S$350, 424
 
Unrealised Profits: S$39, 686


For the month of November, I have collected a total of S$1, 924.77 in dividends and distributions from my income portfolio.
  • Suntec REIT: S$152.10
  • Ascendas REIT: S$68.31
  • Frasers Centrepoint Trust: S$422.25
  • CapitaLand Mall Trust: S$194.60
  • Mapletree Commercial Trust: S$1.31
  • Parkway Life REIT: S$153
  • Mapletree Greater China Commercial Trust: S$433.20
  • Starhub: S$500

Remember I talked about being resilient in my previous portfolio update? It definitely come in handy as Donald Trump won the US presidential election. Did the global markets implode as so many experts/analysts expect? Nope! The world kept on spinning. The markets kept on rallying. I continue to collect dividends from my portfolio.

Portfolio Shuffle - Accumulating Quality Yield Assets
Divested UOB, Starhub and M1 due to a huge recent run-up in bank stocks and the near-certainty of an all-out Telco war in 2017. Holding on to my DBS and OCBC positions despite the temptation to take profits. Both banks are Asian wealth management plays with UOB lacking allure in this aspect. The private wealth business has become the jewel in DBS's crown. Despite a challenging 2016, it is the only unit to register double-digit growth in the bank. DBS is now ranked the fifth largest private bank in Asia, up from ninth spot in 2012. Furthermore, with rising interest rates moving forward, NIM should trend higher which would lead to a rise in earnings. OCBC's life insurance business should also benefit from a rising rate environment. Lastly, I am hopeful that the worst of the O&G crisis is behind us and the NPL issue will clear up next year.

Channelled the funds into PLife REIT, MLT, MCT, FLINT and Ascendas REIT as I believed the hunger for yield-play assets will stay strong next year. We just need to focus on quality REITs that have healthy gearing, long debt maturity, low all-in debt cost and a high percentage of total borrowings hedged on fixed rates. Having strong backing from sponsors is a welcome bonus. Take PLife REIT for example. Empty shops? Worried about finding tenants to fill up the retail space? No such problem for PLife REIT. The demand for healthcare and nursing services is still growing at a rapid pace.

  • 100% committed occupancy at Mount Elizabeth, Gleneagles Hospital and Parkway East Hospital with a master lease with IHH. Furthermore, this master lease is 15+15 years since 2007 with a triple net-lease and favourable CPI+1% lease structure.
  • Solid track record of growing DPU over 8 consecutive years even during the post-2008 GFC period 
  • No refinancing needs at all in 2017.
  • All-in debt cost of 1.4% (lowest in the S-REIT sector)
  • Well-staggered debt maturity profile over the next 5 years
  • High Interest Coverage of 9 times
  • 98% of total borrowings is hedged against rising interest rates
The rest of my recent additions are meant to be quality plays on the logistics (MLT & FLINT) and business parks (MCT & Ascendas) sectors.

 
 

Moving forward, I am excited about the impending launch of Changi Terminal 4. Mainland Chinese inbound tourism into Singapore is expected to grow healthily. Hoping SATS is able to win some lucrative ground-handling and in-flight meal contracts from the airlines at the new terminal next year and maintain its dominant position in Singapore's aviation and food solutions business. SATS also has a strong balance sheet - net cash position and a stable 4-5% free cash flow yield. This will enable the management to increase future dividends if they wish to.



Everything you want is on the other side of fear
DK

Wednesday, 2 November 2016

Dividend Knight Income Portfolio Update (Oct 2016) - Dark Clouds Looming? Bring An Umbrella.


No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
DBS
2, 073
5.
Frasers Centrepoint Trust
15, 000
6.
Mapletree Logistics Trust
25, 398
7.
OCBC
3, 040
8.
Raffles Medical Group
15, 094
9.
SATS
4, 000
10.
CapitaLand Mall Trust
7, 000
11.
ParkwayLife REIT
5, 000
12.
MGCCT
12, 000
13.
Keppel DC REIT
10, 000
14.
Suntec REIT
6, 000
15.
Ascendas REIT
3, 000
16.
UOB
400
17.
Sheng Siong
7, 000
18.
M1
3, 000
19.
Mapletree Commercial Trust
100


Dividends received in October 2016: NIL
 
Total dividends received since Jan 2016: S$12, 030.46
 
Average dividends per month: S$1, 002.53
 
Average dividends per day: S$32.96
 
Total portfolio market value: S$352, 884
 
Unrealised Profits: S$48, 665
 
 
Investment Actions
In October, I shifted some funds from Raffles Medical Group (RMG) to M1. In my opinion, RMG's multi-year expansion plans require a long gestation period. M1 had been sold down heavily in recent days which I think is unwarranted even considering its lacklustre quarterly result.
 
S-REITs
On the S-REITs front, I have applied for Keppel DC REIT's preferential offer (PO) although the offer price was not exactly attractive. Fair, but not overly appealing. Nevertheless, I am still cautiously optimistic on its DPU growth over the next few years. The funds raised from the PO is used for a yield-accretive acquisition in Singapore. Data centre demand is still greater than supply and the growth in data consumption is set to continue. Lastly, the freehold German data centre under construction should boost the DPU after its completion in 2018.

The other REITs (retail, commercial, logistics, healthcare) which I am vested in have produced a resilient but less than stellar quarter. Their distribution per unit (DPU) were stable but there were signs of slight weakening in occupancy rate and rental reversions. Well, I guess this set of results could be as good as it gets since dark clouds are already looming over Singapore's economy as shown by a spate of retrenchments and 'right-sizing' in certain blue-chips (Keppel Corp, SembCorp & SPH).


Banks
Thankfully, there were no nasty earnings shocks from the three local banks' latest results. It seems that the feared contagion expected after the Swiber collapse has not materialised for now. The provisions for NPLs from the O&G sector did not balloon out of control. Many O&G companies are actively engaging bondholders and re-structuring their bonds. A promising sign.

The major acquisition of ANZ bank's Asia private banking business should be a rewarding long-term move for DBS. Private wealth management still has huge room to grow since Asia is still minting millionaires & billionaires at a relatively faster pace than other regions in the world. Lots of second-generation wealth sloshing around. As one of the largest bank in Southeast Asia, it makes sense for DBS to expand into other Asian countries while carrying the reputable Singapore brand. Trust is critical in wealth management and the Singapore brand travels well among the wealthy Chinese. Most importantly, scale is crucial for private banking due to a surge in compliance costs related to stringent anti-money laundering regulations, tax regulations etc etc. The bank needs to spread this cost among more fee-generating clients. 

 

People can talk about strategy all they want, but what really matters is resilience
DK