Cory Diary : Why Dividend Investing is so "Exciting"

Remember in my younger days, RM will furnish us with the idea that investment  today, 10 years later sure Huat with annual 10% based on past 10 years track record. And they will show you the charts on why so. What they didn't tell you is not in the contract is not guaranteed and  the other is that they won't be around few years later to service you or you are't around anymore to bother (touch-wood). The key is don't sell in short term. Probably high sales charge or they will still be around and need to answer to you. lol

Fast forward today. Is there anyone really can guarantee good returns after 10 years ? If so, Banks wouldn't need to sell to us. They will be happy to do it themselves.  I am sure institutions will be happy to invest too. Why bother to grow an army of RMs to service thousands of retailers. 

With Reits that is strong and growing, DPU management has become an expected norm. This will last as long interest rates are low or to be better said, borrowing cost is low relative to earning. Hence the term we hear about Income Ratio (ICR).  It has become a performance metric to drive managers too. That's not easy in execution. 


Why Maintain or Growing DPU is so important ?

So when someone tells me DPU YoY only up 1%, I am smiling till my teeth drop already. Why ? Ascendas Reit has run up significantly for a number of years. This year "just" 23% YTD excluding dividend. See chart below of Ascendas Reit with Dividend Effects !

To grow DPU or maintain for 10 years are not that difficult to find nowadays as long we have Good and Credible Managers however this is not given though. The thing to overcome is Price Anchoring. Will we pay for something that is 23% more expensive from a year ago  ?

Seriously, if I have spare money, I would. Reason being Retailers ask is, "Show me the Money - Sustain-ably". The logic is quite simple. Think of the investment as long term. DPU maintain or increase. This is better than bond already. The cash flow generated covers living expenses. If there is reduction in stock price, we need to look at it in context. Is there fundamental change in the business ?

Next, Trump announced Preliminary Phase 1 deal. Probably due to Biden presidential bid took a hit. The Chinese probably feels a little shaken from it. However, this is far from a complete deals. I doubt it will ever till Trump gets re-elected. What this mean is interest rate will remains low for foreseeable future.

So someone asked. Can I buy MCT today ? Very hard to answer. 7 years of dividends from this year stock price increase. One thing I feel that is never late to invest. Break up our purchases just to be vested some and then see whether we need to average down or up much later. Maybe choose other Reits ( lol ). Don't fall into yield traps. Not all Reits the same. Who knows MCT share price can take another 7 years of dividends leap again. Realistically, the key is how low a yield we are willingly to accept. SSB is like 1.7% range for 10 years. Your take ?

Cory

2019-1012

Cory Diary : Reits Investment Logics

When Recession comes, most investments will be affected. This applies to Correction as well.
Interestingly, this are one of the best time to buy. The question is what stock to buy and will we buy ?

In the last recession, Reit stocks price like many other non-reit investments are badly hit. STI Index reflects the poor situation too. If we are to use today thinking, and understand how the mechanics of how Reits work, one would wonder how can things can go so bad in stock prices.

Basically, Cash or the lack of it as everyone "Hides" them when is one of the best time to invest. Many is taught about the gearing lesson and the dilution of it. Buying during this period do goes against Human Nature of trying to run away from the problem. Trying to do the opposite differentiates the man from the boys. Cory froze in Year 2008. Not that bad. :)

In 2008, many stock prices cut into half easily. Will this happen in next recession ? Never say never. However, with ample liquidity today. And better understanding by investment communities on Reits. Chances are we won't be able to see such deep cut for the next ... next ... (never mind... Cory no crystal ball). There will always be exceptions.

In essence, the DPU of Reits or in another relative term with current price such as yield, say 5% as an example provides the cash flow to one financials as dividend. Multiply it with say 5 year periods will be 25%. That's a recession depth. To be more precise, there are compounded effect and the gearing component especially on properties. And the growth factor which cannot be ignored as it can double dividend gains over the 5 years period too if we pick our stock carefully, and safely to optimize our chance.  


Recession Survival Recipe

1. Able to Survive : Gearing, Loans, Occupancy, 
2. Able to perform "V-Shape" Recovery preferred in stock price : Stock Price
3. Continue to profit from the business during this bad days : DPU
4. Strong Sponsor

Not all Reits the same. Cory want to avoid bad surprises and knives cut. The Gem in Reits are not the Yield but the Growth and Stability that it can perform. Yield is the extras.


Cory
2019-1011

Cory Diary : All in Our Minds

There are many times I am asked to take profits. Reason being people has the conception that cash is the safe harbor. A rest point before we venture out again. This mindset is not wrong when one trades for a living especially speculative short trade.

Post today is I hope to share how Cory thinks from another perspective. Often we hear people make so and so $Xx,xxx but then lose it all or worst in negative. The angle I do is to treat profit earned as part of base capital in every new year.

Let's say I started with $500k in 2018 and ended with $580k. That's 80k profits. In Year 2019, I will treat $580k as my new cost structure (or base capital) thereby zero-out my profit. Why we do this is to overcome the human weakness of "Feeling Rich" and lose them back to the market.

When we do this long enough, for some reason cutting loss is more a mechanic nature rather than a pain-in-the-heart. Interestingly, we could also sell a stock at say $1.50 near end of Year 2018 but buy them back in Jan 2019 at much higher price sold earlier. Is like hyped on a Jan market trend trading mechanism. Fortunately, I do't this often ! Cory aren't crazy but it does happen sometimes .... ... ...

Since Cory Portfolio is ignited on every first day of new year, safe harbor has no meaning from previous year trades. Therefore, Cory result is often Year-to-date (YTD) meaning is the measure of Profit or Loss  from 1st Jan base to current date figure. This keeps Cory on toes and not feeling rich. Historical past year trades are just for "Glorification" use only, nothing else.

If Cory feels the market going to crash like 2008 GFC, he can relieve all his counters as he wanted but that's not because he has make enough profits. There is no relevancy between getting out-of-market and having make or loss enough.

Is all in our minds.


Cory

2019-1008

Cory Diary : Reits Comparison

Often we have a list of Reits in our radar. The more savvy one may probably just choose one. To mitigate risk, I tend to have them with different proportions. The question will be how do we apportion them. 

Here today I have 4 of them to think about. Namely, Ascendas Reit,  Mapletree Ind Trust, Frasers Com Trust & iReit Global.  As usual my investment decision is agar-agar. They are all quality reits in my opinion.

There are few key notes in my head. Singapore is near recession whereas US market are still relatively strong.  AR has weakening AUD earning - Australia exposure. MINT recently has rather good bargain on US Data Centers in-addition to what they have. Stronger USD helps too. Ascendas has future earning from Grab building and recent Australia acquisition. AR is largest locally. MINT may have impact from HP Inc downsizing concern as this maybe a risk depending on their BTS lease term with the company.

Overall, I would think MINT yield should be lower (correction) due to better quality earning. And I will be ok to pay more than A Reit. This thinking could change with time though.

How about Frasers Com Trust ? There is some concern in the market whether they can maintain their DPU. However their major was resolved with space able to be rented out to google. There is still risks from Microsoft. Overall the risk is reflected in their higher 6% yield compared to AR and MINT.

With recent blogged iReit in the limelight by famous blogger, the market was moved by it due to low trading volume. There are also other bloggers who are not so positive about it. Nevertheless at 7.6% yield there is some market concern. Is pure Germany play and rather concentrated in a tenant. I have 2.5% allocation currently.

Maybe ratio of AR 12%  :  MINT 9% :  FCOT 6% : iReit Global 3%. This will stagger my yields and risks in REITs.

Make sense ? Now wait for some correction to drive towards the percentage. Those that exceed probably I will put a hold instead.

Cory
2019-1006

Cory Diary: Importance of staying invested 2019-1005

Importance of staying invested to beat inflation is a psychological battle after GFC 2008. People tend to wait for the next major crisis or at least a correction. This is especially so when we have many headline news or risks and worries. 

While the concept is possible in theory, the timing or execution is not easy reason being because of the opportunity costs. Reits yield over the years have climbs down from double digits to 5% range. However, the cumulative capital gains and dividends are of considerable size. (See table)

The Gratification comes in when we go beyond inflation beating to actually profiteering from our investment. And to see our portfolio continuously growing in good years while mute in down. Overall, we just need to see more ups than downs to win the game.


Recession Fear as we are on our 11 years of economic growths since Year 2008. 2020 could be mute or small increase in profitability. What I could do is to continuously apportion my portfolio to more "Fixed returns" by percentage while in absolute number can still be larger in non-fixed investment. This could protect my down side while continuously to have larger growth in portfolio size through re-balancing. That's the strategy.

Cory

2019-1005

Cory Diary : Expenses 2019

This year is quite special .... I have a lot of one-off items ...for example baby expenses. However we know that to bring a baby to adult, there is probably a string of one-off expenses over many years. Maybe "amortization" probably is a fairer way to deal with it. We need to recognize it as regular cost of business ! 

There are many other one-off items such as Renovation, Alter, Cremation Niches, Medical Surgery, Hospitalization, Medical checks, Confinement  ... this are debatable. Nevertheless they can be big ticket items or summation in total. Ignore them at your perils.

And we have the regular ones like Taxes, Nanny, Parent Allowances, Installments, Holidays, Baby Misc ...

If one plans to retire, make sure we plan them into our annual expense plan with good buffers. Don't simply jump into FIRE through hard core saving. You will be surprise like I do this year on how bad it can goes on how expenses blow up. After totaling up major items that i could find, the expenses YTD is S$117 K... ( ouch ). 

The fortunate thing is that my Liquid asset and Net worth are still trending up. The first is due to Stock Market and Regular Job, and the later with added Property Valuation Growth (Cashless by the way).

Anyone like to retire now ?

Cheers

Cory
2019-1003

Cory Diary : Portfolio Sector Allocation Report

Has been away for a week long family holiday .... ( Fretting ). Expenses are like shooting star right now. Original plan today is to write something on expenses but 10/1 comes up and probably is more exciting to update how is Cory Portfolio so far first.

Cory Top 7 Equity Investments

1. STI ETF

2. Ascendas Reit

3. Frasers Bond

4. Frasers Com Trust

5. Ascendas-h Trust

6. VICOM

7. Mapletree Ind Trust

Cory Portfolio has Bond/Pref to calm his porcelain heart. He can't take much stress. The index do their numbers too which totaled with Fixed investment hits 33.7% allocation. To calm further, Cory has SSB outside Equity Portfolio which is use to support Housing Loan (Emergency). This damped investment returns but is done deliberately.

Telco allocation is actually Netlink BNB Trust. The position is relatively small after taking profits. Telco stocks are struggling a little so is better to avoid for now. Of similar size is the Banks which provide a little upside volatility.

Particularly excited about Ascendas Reit because as previously reported scope more on higher low.  Managed to buy some MINT back as well though is net negative. VICOM has been a cool winner considering Cory is late in the game on this one. Is better to be late than never. Key is to size our position appropriately so that we can average down nicely or enjoy the ride up.

Cheers

Cory

2019-1001