Talking about "Evening with AK and friends" (15 July 2016).

The first "Evening with AK and friends" was, hopefully, fun and educational, for everyone. I picked up some pointers from my guest panelists, Victor Chng and Rusmin Ang from The Fifth Person too. For sure, AK doesn't know everything and has lots of room for improvement as an investor.

Of course, being financially secure is not just about being a good investor in equities. So, I briefly talked about insurance, bonds and real estate too. Most of the evening was devoted to answering questions regarding some stocks and REITs.

I understand that some readers are more seasoned investors and some are newer investors and here are links to books which were mentioned for the newer investors at the event:

1. Recommended books for FA and TA. (Book no. 1 for FA is recommended and the one that Rusmin said to read first.)

2. 5 rules for successful stock investing. (This is the book recommended by Rusmin to read later.)

There was a good discussion on Telcos as well and Victor pointed to various articles he wrote on SingTel, Starhub and M1. I found the link to the list of articles: here. Good stuff!

Whatever we want to invest in, question our motivations. Be clear about what we want. Then, we know what to do and whether that investment is for us.

Make sure that it is a bona fide investment that is sound. Get in with a margin of safety or, at least, don't overpay. There are ways to do this and I mentioned using PE ratio and NAV as two possible metrics in the example of DBS and why I thought it was undervalued.

As investors for income, always look out for financial engineering. Find out what is the real income generated by an investment and what they can actually pay in dividends based on their operations. That is being realistic. 

Assuming anything higher introduces an element of speculation and it could go either way. It is OK to speculate a little, I always say, but if we want to reduce downside surprises to the minimum, then, it is best not to.

We could also invest in something as a possible asset play and I used the examples of OUE and WingTai. It would be good if such investments pay us while we wait (don't know for how long).

It is good to be cautious but don't be overly cautious that we end up leaving most of our money in our war chests waiting for a war (and getting increasingly frustrated as the war seems to be overdue). 

There is still lots of liquidity out there and with BREXIT, it does not seem like liquidity is going to reduce. Instead, we won't be wrong to expect looser monetary policy as central bankers around the world are scared stiff of another credit crisis. 

So, another bout of liquidity driven rally in the stock market is definitely possible. Money will go to where it is treated best and good income generating stocks in Singapore will likely benefit.

I try not to be overly pessimistic. I try not to be overly optimistic. I try to be pragmatic.

Finally, for those who missed out on this session and requested that I organise another one, good news! 

There will be a second session and it will definitely be the last one for 2016. (Really, AK is very lazy this year.) Details will be released when available. So, look out for it.

Related post:
1. Track the companies we are "Vezted" in.
2. "Evening with AK and friends" in 2016.

Track the companies we are "Vezted" in.

Ever wondered how to keep track of all the news regarding our companies?

Hey AK, would like to seek your advice on a question I've been pondering: how do you recommend keeping track of press releases regarding the companies in your portfolio? For instance, dividend info, quarterly earnings report, etc. I currently manually google them now and then, but I find that I tend to miss some of them until it appears on blogs like yours or thefinance.sg. it must get especially tougher to stay on top of things when the portfolio gets larger

thanks in advance! bought your tickets again to your upcoming tea session too

Here is the answer.

Kenji Tay: 
"Its a new service call Vezted that helps readers get all the investing news of the company they invest."

At the first "Evening with AK and friends" of 2016, Rusmin Ang introduced the app to an appreciative audience.

Choose the companies we want to follow and all the news related to those companies will appear in chronological order. 

As investors for income, we will know when our companies are going to pay dividends and how much they are going to pay (including CD and XD dates). 

Go on and try it: here.

This service is FREE. AK likes!

Note: This is not a paid advertorial.

Another special dividend from SPH in future.

One of the larger investments in my non-REIT investment portfolio is in SPH. Actually, SPH is also one of my oldest investments for income. 

Most of my investment in SPH is priced between $2.86 to $3.55 a share with a more recent tranche at $4.20 a share purchased in 2013 when SPH REIT was created. 

Wah! $4.20 a share? Then, lost money already lah. Well, some might look at it that way. 

For me, as an investor for income, assuming a DPS of 21c at the time, I was looking at a 5% dividend yield. With a much stronger balance sheet than SPH REIT, SPH made more sense to me as an investment for only a slightly lower dividend yield.

When SPH REIT was created, SPH declared a special dividend of 18c a share while retaining major ownership of both Paragon and Clementi Mall. In fact, when the counter went XD back then, I added to my investment again at $4.03 a share. (See: The mystery of the extra money in my account.)

Will SPH declare another special dividend when it sells a percentage of its stake in Seletar Mall to SPH REIT? Very likely.

Seletar Mall is 70% owned by SPH and the other 30% is owned by UE. It would probably be cleaner for SPH to take 100% ownership of Seletar Mall before injecting the asset into SPH REIT. 

Of course, only time will tell how things progress but we know for a fact that SPH REIT has been granted right of first refusal on Seletar Mall by SPH.

Visiting Seletar Mall has been on my to do list for a while and, recently, I did. 

I didn't see any vacant shop space and I saw a pretty good crowd on a weekday evening.

I am sure it will be a matter of time before SPH REIT is offered Seletar Mall and, as a SPH shareholder, I am looking forward to that day. 

Patience will surely be rewarded.

Related post:
SPH or SPH REIT?

SPH Reit Management CEO Susan Leng said that SPH has granted a right of first refusal to the Reit, but it is only when the sponsor has decided to divest the property that the Reit can evaluate the opportunity... - Source: AsiaOne

Get dividends while preserving or growing capital.

Hi AK,

I'm new to your blog.

In searching for passive income in the past it was all about property and I never really considered REITS, stocks or funds in general. However I'm slowing accumulating these instruments in recent years to both diversify and bolster my passive income stream.

Too many investment and UT performance reports assume you will keep reinvesting dividends to take advantage of compounding and show wonderful returns. Unfortunately for retirees who cannot afford to roll their dividends back to their investments these numbers do not hold true.

REITS often make cash calls and one can see even the holdings that you've mention like AIMS, LMIR, Cache, Sebana over the past 3 years have lost capital for their investors (assuming you don't reinvest).

If you look at income-focused UT reports purely on a NAV basis most head south. I've seen advice by other investors that say we should look for even higher returns, spend a portion of that and reinvest the rest (eg, get a 10% dividend, spend 8% and reinvest the rest) but that also usually entails taking on much higher risk. Another talks about a hybrid between income and value & growth investing.

So if you're an investor starting out today that needs dividends as income but wants to preserve or grow his capital you're really in a hard place.

How would you advice someone in this situation?

Regards

V

Hi V,

Welcome to ASSI. :)

If we entered at a high price, it is unlikely that we are going to do well. It is not just REITs but the same with everything else, including ETFs.

If we want to invest in REITs, for example, it would be more meaningful to compare within the REITs sector to see which ones have performed better. Why did I choose to stay significantly invested in AIMS AMP Capital Industrial REITs instead of Sabana REIT, for example?

In the current day environment, if we want to preserve our capital (i.e. zero risk and volatility) and yet want to receive income, investment grade bonds or fixed deposits are the best bets. Even so, the risk is not zero.

Grow our capital (and I take this to mean appreciating prices) and yet want some income? I am sure there isn't anything that can provide such certainty although if we have a very long term investment horizon, the chances will improve if we invest in a basket of well run companies that pay dividends.

Best wishes,
AK

Related posts:
1. 3 points in stock investing.

2. Be cautious climbing the S-REITs tree.

How high a dividend yield is worthwhile etc.?

Hi AK!

Reading your recent post on your 1H 2016 income is very inspiring and I hope one day to be able to reach your level. I have a few questions that I hope you can help me with in planing my portfolio

1) How much of your portfolio do you allocate to growth stocks and how much for income stocks?

2) If looking at income stocks aka dividend yield, what % and above do you deem it worth your while to invest in?

3) Whats your average yield for your whole portfolio currently?

Thanks!

Cheers,

Lewis

Remember the pyramid?

Hi Lewis,

Such blog posts are meant to inspire readers to embark on their own journeys towards financial independence. They are not meant to instruct. I am glad you are inspired. ;)

Allocation would depend on a person's motivation. Since I am more interested in income, I allocate more resources towards investing for income, for example.

When investing for income, a higher yield is always attractive but we have to bear in mind that other factors must be considered too. Always ask how is that income generated and also if it is sustainable (for how long)? We might not always get it right but if we ask these two questions, we should get it right most of the time.

One objective of investing for income is to beat inflation. If a stock is able to generate a yield that beats inflation rate or at least equals it, I might consider.

I never tell people what is my portfolio's average yield since I have revealed my annual passive income in absolute dollar value. However, this does not stop some readers from doing some CSI in my blog to get an estimate. ;p

Gambatte!

Best wishes,
AK

Related posts:

1. 1H 2016 income from S-REITs.

2. 1H 2016 income from non-REITs.