I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!

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Monday, 31 July 2017

Yield Comparison???


Walau! Can like that compare meh!

 Comparing dividend yield among stocks and S-REITs is dumb without comparing dividend yield and dividend payout ratio as a PAIR!
Posted by Createwealth8888 at 21:28
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3 comments:

  1. Spur1 August 2017 at 01:36:00 GMT+8

    Not too long ago insurance salesman could go around saying Ehhh, this 5-yr endowment very good ... 3.8%p.a. .... capital guaranteed!! .... Better than the bank!!! Hohoho!!!!

    Now people say Ehhh, this REIT very good .... give 8% DPU!!! .... Better than DBS or OCBC stock!!! Kekekekeke!!!

    Did they also mention that chances of REIT shareholders getting slapped with rights issues left, right, centre are almost sure thing during recessions when credit facilities suddenly becomes tight, bond yields spike, and REITs start using shareholders as "banks"??

    ReplyDelete
  2. Spur2 August 2017 at 17:18:00 GMT+8

    You're right ... Rights issue can be good if it's for yield accretive purposes i.e. at end of day contributes to higher DPU.

    However it can be dilutive if it doesn't lead to increasing income. E.g. merely to pay off existing debts is usually dilutive coz the increase in shares is often higher than the interest savings.

    During recessions when banks are more stingy & rentals go down & vacancy rates go up, very high chance for REITs to do rights issues just to clear their debts to banks and/or bondholders. If long recession, there will be multiple rights issues.

    Unlike "normal" companies, REITs don't have much cash buffer as 90+% earnings are distributed. Hence during bad times with cash crunch, they have no option but to do rights issues, as borrowing from banks or issuing bonds will require paying high interest rates.

    During 2008/2009 even though the FED & other central banks "saved" the world through QE and resulted in a VERY short & MILD recession for S'pore, many local REITs still had to do big rights issues to raise money quickly. And many retail investors were KPKB-ing even though just 1 or at most 2 rights issues. Imagine a long-drawn recession and 5-10 rights issues AND DPU still going down by -20%, -30%...

    Of course during non-recession times, things are usually OK. Only a bad manager or really arse luck (e.g. retail property REITs in US) will cause things to go bad in good times.

    ReplyDelete
  3. Spur2 August 2017 at 19:52:00 GMT+8

    At least for Ah Kong-related or sponsored entities ... Ah Kong won't just let them collapse.

    If collapse, then S'pore probably already gone case liao ... and we will have bigger problems than investments or even retirement funds.

    But that doesn't mean Ah Kong don't expect you to pay when times are tough ... Pay And Pay!!! Kekekeke!!!

    Yeah ... our Sinkie banks are usually better capitalized than those big MNC investment banks and less exotic "financialisation" ... But also means our banks not so profitable during good times.

    I think the next big risk is all those trillions in junk and not-so-junk corporate debts in both US & China. Combined with the Great Unwind of QE and risk of bond yield increase .... will be explosive combination. Hohohoho!!!!

    ReplyDelete

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