Thursday, 24 March 2016

Singapore has run out of low-hanging fruits

The economic success of modern Singapore is largely built on cheap land, immigrant labour, rapid adoption of powerful technologies and highly-educated/skilled workforce. However, during the past 30 years, these low-hanging fruits have started to disappear. Now, we are plagued with dangerously-low birth rate, an aging & shrinking workforce, escalating business costs and a lack of economic growth drivers.

Fortunately, the Budget 2016 did address some of these problems by offering short and medium-term solutions. However, in terms of a more deep-rooted, comprehensive and long-term framework, we still need to wait for the newly-formed 'Committee on Future Economy' (CFE) to release their work by the end of 2016. The areas they will be working on are:
- corporate capabilities and innovation
- future growth industries and markets
- connectivity
- urban development and infrastructure
- jobs and skills

Thursday, 3 March 2016

Dividend Knight Portfolio Update (Mar 2016)

 
No.
Company
No. of Shares
1.
AIMS AMP Capital REIT
30, 000
2.
Starhub
10, 000
3.
Singtel
8, 000
4.
CACHE Logistics Trust
29, 000
5.
Mapletree Logistics Trust
25, 000
6.
Frasers CentrePoint Trust
12, 000
7.
SATS
4, 000
8.
Capitaland Mall Trust
7, 000
9.
Raffles Medical Group
3, 000
10.
ParkwayLife REIT
5, 000
11.
MGCCT
18, 000
12.
Keppel Data Centre REIT
10, 000
13.
Suntec REIT
6, 000
14.
OCBC Bank
900
15.
DBS
500
16.
UOB
400
17.
Sheng Siong
7, 000
18.
VICOM
500
19.
Mapletree Commercial Trust
2, 000

 Dividends received in March 2016: S$896.60

Total dividends received since Jan 2016: S$3,219.50

Average dividends per month: S$268.29

Average dividends per day: S$8.82

Total portfolio market value: S$300, 900


For the month of March, I will be receiving a total of S$896.60 from AIMS AMP and MCT.

-AIMS AMP: S$855
-MCT: S$41.60


I divested all my remaining holdings of M1 and ST Engineering by taking advantage of their recent price strength. The funds were then re-invested into DBS, UOB, OCBC, MGCCT and MLT. Reasons behind this major portfolio rebalance move:

-In my opinion, price of M1 is now supported by its CD, so I think it is better to divest now while the price is still strong. After considering all the dividends received from M1, I only suffered a small loss. Since I already have significant vested interest in Starhub and Singtel, cutting my exposure to the telco sector is a prudent move. My portfolio has very little exposure to the banking sector, so 2016 is my bank-nibbling year as the banks present a better risk-reward ratio than M1.

-I believe the banks are oversold now. Their overall yield is decent at more than 4%. It is better than my bear case scenario for M1. So, I am willing to take a little loss on M1 in order to bet on the future long-term growth of DBS, UOB and OCBC.
10 years from now, I am not certain how the telco sector will evolve. But I am absolutely certain the three banks will still be around and probably doing better than now. The 4th telco is no longer just a rumour, it is becoming a real thing now.

-Even if the prices of banks continue to dip (which I dun think will be much from here on), I can also choose to participate in DRIP, thus increasing the compounding effect over the long-term.


-Lastly and most importantly, there were so many people who bought DBS above $15, UOB above $18 and OCBC above $8. So, if they are still holding on, that means I am now buying with an even larger margin of safety! Even the CEO of DBS has bought DBS shares recently.


Sometimes, investing is about sheer, dumb luck! >___< A few days after I completed the rebalancing, the prices of the banks recovered drastically!

Moving forward, my objective is to shape my portfolio in a way that solid companies like Singtel, Starhub, banks, Raffles Medical, SATS, Sheng Siong and VICOM form the core. The REITs will give the portfolio a nice yield boost as well as providing me with regular cashflow to re-invest in blue chips or growth stocks.



Strive for Financial Peace
DK