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2014 full year income from non-REITs.

Sunday, December 7, 2014

This is the first time I am blogging about my full year income from investments in non-REITs. As my passive income generated from investments in S-REITs has for many years overshadowed income received from non-REITs, it wasn't very meaningful to blog about the latter.



Now that passive income received from S-REITs took a plunge, it has become more essential to talk to myself about what I have done in the non-REIT space which has shored up dividends received this year, making income contributions by non-REITs a more significant part of my total annual income from the stock market.


Before I continue, readers might want to bear in mind that a few of my investments in the non-REIT space have been with me for many years. They are not all new investments, therefore.

Anyway, non-REITs which have contributed to my passive income in 2014 are:



1. Croesus Retail Trust
2. Hock Lian Seng
3. Perennial China Retail Trust *
4. CapitaMalls Asia *
5. NeraTel
6. Wilmar
7. Yongnam
8. APTT
9. ST Engineering
10. SPH
11. QAF
12. Old Chang Kee
13. K-Green Trust *
14. SATS
15. Ascendas Hospitality Trust
16. Singapura Finance

* Sold and will not contribute any income in 2015.

New or old, I have blogged about all the above stocks before. So, if you should be interested in understanding why and when I invested in these stocks, just do a search for them in my blog and you will find the relevant blog posts.


Of these 16 stocks, I increased my long positions or initiated long positions in the last 12 to 15 months in Croesus Retail Trust, Hock Lian Seng, NeraTel, ST Engineering, SPH, SATS, Ascendas Hospitality Trust and Singapura Finance

Apart from Singapura Finance, it is quite obvious that I increased or initiated exposure to these stocks because of their relatively attractive dividend yields. I am still an income investor at heart.

I wouldn't say that all the stocks are of the "good to hold forever" variety but it should be obvious to regular readers that I am not averse to selling a stock if I am no longer impressed by its prospects. 

There are many examples which I have blogged about in the past and examples from this year are Perennial China Retail Trust and K-Green Trust in the list shared earlier.

Anyway, the total amount of dividends from non-REITs in 2014 is beefed up mostly by my rather big investment in Croesus Retail Trust which happened when its unit price took a severe beating shortly after its IPO. 

The relatively large increases to my investments in SPH and NeraTel also helped.


Income from non-REITs in 2014:
S$ 61,752.66

This figure could increase in 2015 despite losing the contributions from Perennial China Retail Trust, CapitaMalls Asia and K-Green Trust. This is because Ascendas Hospitality Trust will make a full year income contribution in 2015.

Of course, it is hard to say at this point in time if I could divest partially or fully some of the investments mentioned here in 2015. 

Indeed, I could also put more money to work in the stock market. So, nothing is set in stone. However, I do know that if valuations should go closer to crisis levels, I will be buying more.

I understand that the stock market could get a bit bumpy but my investments for income should provide me with much comfort and also help to fill my war chest in the meantime.

Related posts:
1. 2014 full year income from S-REITs.
2. AK went shopping in the (stock) market.
3. Be comfortable with being invested.
4. Mystical art of wealth accumulation.
5. Portfolio review: Unexpectedly eventful.
"... my decision to increase my level of investment in SPH and NeraTel last year so that my overall portfolio is less reliant on S-REITs for passive income was pre-emptive. Enlarging investments in Hock Lian Seng and Croesus Retail Trust earlier this year has also helped to reduce reliance on S-REITs for passive income."

36 comments:

Stoical Keynes said...

Hi AK,

Congrats. Overall should be an increase compared to the previous year?

Very impressive investment income!

B said...

Hi AK

That's a strong income distribution from non S reits.counters. The fact that they are mostly dividend counters means that they are contributing a great deal worth of income. Total income is almost at $150K.

Pei fu pei fu :) All the best in 2015.

AK71 said...

Hi 15HWW,

Thank you. :)

I think there might not be any meaningful increase, overall. This is because, apart from Croesus Retail Trust, the yields of stocks like SPH and NeraTels' were somewhat lower than Sabana REIT, for examples. ;p

AK71 said...

Hi B,

Thank you. I have been mostly lucky, I am sure. I hope that Lady Luck will continue to smile on me in 2015. :)

Adarina Robin Foo said...

Hi AK,

Thank you for sharing your post. It is selfless of you to share your experience without any returns & yet sometimes being 'accused' for misinformation, which I had found rather unjustified.

Moving on, you have been posting your investment experience. I am wondering if you are generous enough to share your experience in obtaining your 1st pot of gold?

The pot of gold i am referring is an amount of about S$1M to S$1.2M. Based on that amount, with my 5%-6% yield in share investment for the past 3 years, I believe I can achieve my 1st milestone of financial independence :-)

Appreciate your sharing and look forward to your favorable reply.

AK71 said...

Hi Adarina,

Thank you for your kind words of encouragement. :)

First pot of gold? Hmmm... To be quite honest, I have never quite bothered to keep track.

I know some track their net worth very closely but, for me, it was just a matter of making more money, constantly saving money and investing when I thought prices were good.

I was careful to keep close to 50% of my portfolio in cash, more if good investment opportunities were hard to find or if I was not sure.

It was because I had a substantial amount of cash stashed away that I was able to buy my first private property during SARS and also to buy REITs on the cheap years later during the GFC.

I sold that private property 3 years or so ago and most of the money made from that sale is still sitting in fixed deposits today. -.-"

It really doesn't matter when I achieved $1m or $1.2m in net asset value, right? Each of us should set our own targets. Gambatte! ;)

yeh said...

Ak
I hope I can like you. But i not sure whether I am lousy investor or not. Initially wanted to buy good shares for dividend . But ended up losing more.

Eg FNN, st engineering,

Ended up, i am sitting in 5 digit paper losses now:(

dunno when I can be like you.

curious said...

have been a silent reader of your blog for months. thanks for being an inspiration for many of us. i will be joining the workforce soon and hope to invest my money and savings.

i used to spend so much of my money on makeups, clothes an all those junks. i blame my girlfriends and advertisements for making us women to fall on those gimmicks and traps ;p

now after reading so many of your blog posts, i have sat down to think about my future and how i am going to invest. NO SHOPPING FOR ME IN 2015!! honestly, i feel lonely when most of my gfs are not into investment.

also, it is really humbling that you eat cheap food and tapao from home.i hope you eat more veges like brocolli. also for oats, i find it is delicious if you put nuts and frozen fruits. :) try it!

i wish you well and please continue blogging even after you retire.
(i think my previous comment didnt get through)

Chun Jie Ewe said...

Hi Ak, you are truly inspiring to all the newbie investors like me.
Your analysis of stock and sharing of your own portfolio is very impressive! all the best to you AK.

Maximillian said...

Hi AK,

Congratulations on achieving financial independent. I just find it amazing that one could manage a portfolio of more than 20 counters, and have a full time job at the same time!

AK71 said...

Hi yeh,

I got some stocks of SCI and SMMs' at higher prices in recent weeks. I am sitting on paper losses. However, the losses don't bother me because I am not a short term trader. :)

I know that I got in at fair prices. I didn't overpay. However, that does not mean that prices won't go lower. I bought more at lower prices because the stocks are cheaper now.

I know that SCI and SMM have the ability to continue paying good dividends. I know that the world still needs oil.

The weakness will reverse eventually and when that happens, SCI and SMM will recover quickly but what is more important for me is knowing that I invest for income and the lower prices don't bother me. :)

AK71 said...

Hi curious,

Don't read HER WORLD, CLEO and FEMALE magazines. Too many ads and temptations to spend money. ;p

I am happy to see that you are inspired to lead a frugal lifestyle. Unless we are born with spoons made of some precious metal in our mouths, we need to save as much money as we can in order to have the capital to invest.

Invest for income or capital gains or both, it is our choice but without money, we cannot take advantage of opportunities. :)

Thanks for the suggestions regarding my diet. I do appreciate the concern. I just made some tuna and cucumber sandwiches to bring to work tomorrow actually. ;p

I was transitioning to part time work. Now, I work only 5 hours a day. Of course, I took a pay cut. The days when I held two jobs and worked 7 days a week are over. So, I guess I am semi-retired. I hope to spend more time doing things I enjoy. :)

AK71 said...

Hi Chun,

If you feel inspired by me talking to myself to make more money, save more money and invest for a financially secure future, then, I am glad. :)

There are many examples of people like AK in Singapore. The difference is that most of them are not bloggers. So, AK is not that special, really. If AK can do it, so can you. ;)

AK71 said...

Hi Max,

Thank you. Well, I don't spend that much time managing my portfolio, really. I am a lazy guy. -.-"

Chua Poh Huat said...

AK,

Great achievement, $150k passive income in 2014... Hope to be like you in 5 years times.
Thanks for sharing your pyramid investment theory.
So far my stock investment is ok but property investment did quite bad.

PH

Chun Jie Ewe said...

Hi Ak, thanks for reply.

Yes i am saving a large chunk of my pay as iam tying to invest for a financially secure future and looking long term.

Vested in SCI as well. Got in when it is 4.88 ( i thought it was low enough) and average it down at 4.56.

A question AK, why don't you worry about buying more when it is looking grim for the oil industries? I am worried that the low prices in oil will bring an another global financial crisis.
How do you maintain your calmness and buy more and more at a lower price?

AK71 said...

Hi PH,

Thank you but I am sure I have been lucky too. :)

I reduced my direct exposure to property 3 years ago. I am lucky that whatever new direct exposure I have now is doing quite well with a gross yield on cost of more than 5%.

However, my overall direct exposure to property is down about 40% from what it was 3 years ago as things could continue to be challenging for the sector.

The pyramid you referred to is a useful framework for investors who primarily invest for income but who also want to have a portion of their holdings in growth stocks. It gives us a sense of proportion. :)

AK71 said...

Hi Chun,

I am happy that you are doing the right things. :)

How do I remain calm in the face of falling prices?

1. I nibbled. I didn't gobble. Why? The stocks were priced fairly but they were not undervalued. The size of my position does not cause me any discomfort.

2. Lower prices present better value as long as the company's fundamentals remain intact. SCI and SMM have relatively strong balance sheets and are likely to continue paying dividends. SMM's order books show enough work to keep them busy till 2019.

As for the price of oil, although supply is more than demand at the moment, I am quite sure that it is easily manipulated. Much cheaper oil will be damaging for many oil producing economies.

From my limited knowledge of economics, unless there is a worldwide reduction in demand, the price of oil will recover sooner or later. It is a matter of time. Current price weakness is due to the increase in oil production in the USA. Overall, the global demand for oil is still growing but very slowly.

So, the weak sentiments now which have translated into selling down of SCI and SMM by Mr. Market give me the opportunity to accumulate cheaply at lows not seen in many years.

However, weak sentiments could persist and, technically, I have not seen any sign of a positive divergence. SCI and SMMs' stocks are, at best, going through a basing process now. So, although valuations look more attractive now, I nibble, not gobble. :)

OK, I think I am a bit long winded. Here are a couple of older blog posts from 2011 which you might be interested in reading:

STI down on heavy selling! Get ready and be greedy.

Why do I not panic? Added Sabana REIT.

Gambatte! :)

blazingruby60 said...

Hi AK I have been reading yr blog for a couple of years .. Enjoyed reading it v much .. Honest read ,witty . :)
After reading your blog on Saizen reit I m in the q to buy in some .. Then the bad news on Japan economy came in ... Falling Japanese yen etc so my question is .. Is Saizen reit still a buy at 0.88 curently listed in sgx ?

yeh said...

Hi curious. Anything I can share with you too.
I am 32 married lady. Well, both me and my hubby started our saving n investment journey since mid 20.

Well, we are not rich. But we have achieved debt free at age early 30( a high 6 digit saving) . Now we just wish to save n invest as much as possible

Chun Jie Ewe said...

A BIG THANK YOU TO AK for your prompt and patient reply!

All the best once again :)

Chan jian wen said...

Hi AK,


First of all CONGRATS, very impressive achievement.

Quick question, why do you classify Trust as non-REITS? Croesus for example is Japan retail malls i.e. a commercial REIT but in the form of a Trust, no?

Just genuinely curious.


Cheers,
JW

jojo said...

Hi AK,
Thanks so much for blogging about your non-reit investment. See, I told you, it's better than a riveting bestseller going by readers' comments! :)

You mentioned "SMM's order books show enough work to keep them busy till 2019."
I have been searching everywhere for an individual company's order book. Even looking up in the coy's website. But to no avail. So far, all I could find are piecemeal one-off information in analysts' reports. But this isn't cumulative info and thus inadequate for my analysis.
Could you please tell me where you look up SMM's order books (cumulative & not piecemeal)? Thank you.

AK71 said...

Hi blazingruby,

Happy to hear that you enjoy my blog. :)

Saizen REIT is still very much undervalued. Even with the weaker JPY, it is still trading at a big discount to NAV in S$ terms.

Mr. Market is worried about the cheaper JPY and how it could affect Saizen REIT's DPU in S$ terms. It is a valid concern and we can see that worry translating into lower unit price for the REIT in recent weeks.

A weak JPY is good for corporate Japan. So, I do expect it to stay weak for a while. However, if we believe that Japan's economy will improve because of this, then, buying Japanese assets is the way to go.

Don't ask me whether the REIT's unit price might weaken further though. I have no idea but it will not surprise me if it does.

AK71 said...

Hi JW,

Croesus Retail Trust is a business trust. It doesn't have to conform to the rules that govern S-REITs. So, simple minded me didn't group it with the S-REITs in my portfolio. ;)

Ascendas HT is another example. It is a stapled security. It is actually a REIT stapled to a business trust. I had a harder time deciding where to put this. In the end, because it isn't purely an S-REIT, I grouped it with the non-REITs. :)

AK71 said...

Hi jojo,

If you were a publisher, I would look for you to publish my (imaginary) book. ;p

As for SMM's order book, I don't know what you meant by piecemeal or cumulative but I got the information from reading SMM's press release dated 5 Nov 14.

Sorry but I cannot find the link to it now but I actually have it in my PC's harddisk:

The Group has a net order book of $12.6 billion with completion and deliveries stretching into 2019. This includes a total of $4.2 billion in new rig and offshore conversion contracts secured since the start of 2014, but excludes repair and upgrade
contracts.

Despite the current low oil price environment, the Group believes long term fundamentals driving the offshore exploration and production (E&P) market remain stable. The Group continues to receive enquiries for high specification, harsh
environment jack-up drilling units and next generation deepwater and ultra-deepwater floaters. However reduction in capex spending could impact new orders and keen
competition continues to exert pressure on margins.

The Group remains well positioned - having built a broad product offering, a strong execution track record and state-of-the-art facilities at its Sembmarine Integrated Yard @ Tuas (SIY@Tuas). The four new dry docks continue to see high utilisation for vessels undergoing repair, conversion and new buildings. With its broad range of
capabilities and leading edge technology, the SIY@Tuas yard has positioned the Group for long term sustainable growth.

Sembcorp Marine’s wholly owned shipyard in Brazil, Estaleiro Jurong Aracruz, commenced initial operations in 2H 2014, with construction completion scheduled for 2015.


Hope this helps. :)

qook said...

Hi AK, could you share what % of your income did you start off saving in order to build your war chest? I'm currently saving 12% but it's so slow, doesn't feel like I'm getting anywhere

AK71 said...

Hi qook,

Well, it was a long time ago but I remember saving most of my take home pay.

I had some routine expenses. About $700 a month. I gave myself $300 in pocket money a month. I saved the rest.

As my salary increased, my expenses stayed more or less the same. It wasn't until a few years later that my expenses increased.

Maybe, this is more useful than telling you how many % I saved. :)

Cory said...

AK, total 150K Annual Passive..That's quite hard to beat. Even for 6.5% returns, you need at least S$2M in the market. I should plan my goal around half of yours passive next year. LOL

AK71 said...

Hi Cory,

Well, you know I got into many of my investments at prices much lower. So, I always tell people I have been mostly lucky. :)

qook said...

Eeks. I think I need to overhaul my saving habits. I am saving whatever I have left after my expenditure, whereas I think you did the opposite :(

AK71 said...

Hi qook,

I don't know if I did the opposite but it made sense to give myself a budget to stick to. $300 a month was what I gave myself in pocket money back then. I managed somehow although some thought I was living in abject poverty. ;p

Toma said...

Hi AK,

I am in my early 20s and would like to build a dividend portfolio as well! As I was reading your blog post, I am curious as to why Starbub is not part of your portfolio since it is a strong dividend stock. Can you kindly shed light to my curiosity? :)

AK71 said...

Hi Toma,

Back then when I looked at Starhub, its very high gearing level made me uncomfortable. So, I gave it a miss. :)

giraffevalue said...

Hi Ak

Can share a bit what do you eat for your office lunch? I have packed my breakfast from home and that easy saved me $40-50 per month.

I'm thinking for preparing my lunch box, just that i have no ideal how to.

AK71 said...

Hi giraffevalue,

Saving $40 to $50 a month is a great start! That is about $600 a year! A tidy sum of money. :)

If we replicate that for lunch, then, the savings will double. I like that. ;)

I have blogged about some of my packed lunches before. Here are a few:

Yummy $1.10 lunch.

Yummy 30c lunch.

75% discount on smoked turkey sandwich.

Home made sandwich.

Have fun and save money! :)

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