Cory Diary : Diminishing Power of Dividend Play

Like any business, leverage allows us to increase our income provided what we earned is more than the cost we borrowed. However this is subjected to lender conditions. When the bank refused to lend you more (weakness), this tell something. If you could borrow cheaper than what the bank willingness to lend you, this says something too (strength).

For a start, for non-believable of Reits ... read  Here . Over the years, stable and strong REITS have registered significant capital gains on top of dividends. This started with multiple QEs follow by tapering and rising rates. This also resulted Reits getting more expensive. Let's take one of my favorite REIT Capitamall Tr (CMT). 

I have blogged countless time why I invested in CMT. Below 3 of my earliest articles.

Cory Diary : CAPITALAND MALL TRUST 4Q16

Cory Diary : CAPITALAND MALL TRUST 1Q17 ( CMT )

Cory Diary : CAPITALAND MALL TRUST 2Q17 ( CMT )

Each time with increasing Stock Price, the yields get lower. Now, with current 5% yield would we buy ? Before we able to answer this we need to consider a few points.

1. Singapore economy has been performing relatively well. We have strong currency and unemployment is relatively low. Cash get accumulated in saving banks.

2. Property curbs have driven away many investors

3. Interests rate despite increasing is still a low rate.

4. Singapore Saving Bond = 2.5% ( 10 yrs ) capped by recent ceiling of 200k.

5. World is on low growth path

This implied there is a large reservoir of cash seeking for opportunities that can beat SSB dividends and long term dividend returns and growth will be bonus. This money aren't expecting Best World type of stocks for those who do, many fails. Which non-REIT stocks can beat CMT on that ? 

Now to the last comment for our thought. With lowering yield in CMT. Would we buy. This is back to the fear of anchoring that one should avoid. With 5% yield, how many options out there that can give us relatively safe and constant 5% dividends with some growth ?

Final note, this need not be CMT. It can be Ascendas. It can be Maple family. But a well managed Reits take out a big chunk from public listed company mindset of owner that "This entire company is mine mentality".

So did we see a peak in Reits recently ? Your guess is as good as mine. But long term, whatever fluctuation in prices, your dividends will catch up to cover. The important point is, how long. 

Got your answer ?


Cheers

Cory
2019-0209

Cory Diary : Net Worth 20190205

Net Worth

The last time I blogged about Net Worth is in 2018 May. (see link). It  has since increased by about 5.3% to date. A hint of size, my equity net worth just crossed a hallmark with recent market run up in Jan'19. My last year dividend is roughly 47k. For definition on Net Worth to me, read #1 and read #2. Basically in essence is net present value if I am to sell off everything including my home and adding Pension/CPF to it since I could not sell them.

Saving

I thought of reducing my saving but interestingly it went up significantly to 16% which kind of a surprise me. Maybe few percentage due to recent share sales.( updated: Good bonus from last year, baby cost me probably 20k ). My goal is to reduce it as mentioned earlier (read here ) ... but ..execution is a problem as I don't go by target number forcibly. The investment injection is about 4.9% which pretty align to Net Worth 5.3% growth. Another possible reason is because of hit on ceiling in my SSB contribution, and with the increase of limits to 200k, I could do some improvement this year.

Insurance

With the amount of cash in hand, there is no strong reason to surrender Insurance policy. I would just let my endowment continue to roll. I have not think much about my Life Policy as well but I guess it will be in  procrastination mode for the better.


Why am I doing this on first day of CNY ? ... Enjoying my Babysitting experience ... ... ...
Happy Chinese New Year !

Cheers

Cory 2019-0205

Cory Diary : Liquid Asset 2019-0202

Equity takes up 50% of my liquid asset. With Bond/Pref, that will be 59%. If I am to add Gov securities, that's 68%. This group is making money to work category.

I was working on the above points and then realize is really a bad plan to lower my saving by 12 points for much higher equity allocation. Is inward looking of personal finance furthermore I am already vested with 50% Equity. Prefer good buffer for emergency, housing and family so I aren't putting them to risk.

Maybe growing the equity pie by 10% will helps. That will boost (updated for privacy) dividend after 2019 and will takes 3 years of good market to achieve. If I am to do some income injection and some modest capital adjustments of the 21% Cash saving, probably 2 years. That's sound more forward looking.

And if the market goes bad. Wait it out ...


Cory

2019-0202