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FY2017 passive income from non-REITs (Part 2).

Wednesday, December 27, 2017

If you have not read Part 1, read it: HERE.

To continue, as things turned out, I grew my relatively small initial investment in ComfortDelgro rather significantly.

For weeks following the time I first invested in the business, ComfortDelgro's share price did a rather placid see-saw movement.

Whenever the share price retreated to around $2.00 per share, I nibbled, as I decided after doing more research that $2.00 was a fairly good price and I believe it still is.






Then, informed by the technical analysis which I did a few months ago, I increased my investment again when its stock declined closer to $1.90 a share prior to the proposed deal with Uber to purchase a 51% stake in LCR.

There was a rebound in its share price after the announcement but in the following sessions, it drifted lower to test support found at $1.90 a share.


What to do?

Panic and sell?

No, I pounced on the opportunity to add again to my investment.


See:
ComfortDelgro's 51% stake in LCR.


In a downtrend, supports are more likely to break but, together with the fundamental analysis I did, they gave me an idea of where I might want to add to my investment.






Could the stock decline even more in price? 

I don't know if it would but it could.

In the face of massive disruption by Grab, I decided that ComfortDelgro could continue with a 10c DPS comfortably (pun intended) even without its Singapore taxi business.

In my first blog on ComfortDelgro, if you remember, I assumed what I felt was a very realistic 7c DPS and, so, a
nything higher than that is a bonus to me.

As long as this remains true, all else remaining equal, I would very likely add to my investment on any future price weakness which coincides with the supports which I have identified.


See technical analysis: HERE.






From an investing for income angle, I am comfortable with ComfortDelgro. 

With rather strong cash flow, the investment risk is very low although its share price could continue to experience volatility.

For income investors, it should be about getting in at a price which makes sense to us and price volatility really should not bother us unless we are investing by using money which we really shouldn't be using.


It is worth being reminded that ComfortDelgro is not just about taxis in Singapore.






Having said this, the fear that ComfortDelgro could see its stock sinking in price is not unreasonable, of course.

Someone asked if ComfortDelgro's share price has bottomed?

I would be very wary of anyone who tells me he knows the answer, either way.


Although I did a bit of technical analysis on ComfortDelgro, I do not know if the stock price has bottomed but it looks like it has at least found a floor and the momentum oscillators are supportive of this.





Everybody fears the unknown.


Now, fear can be a good thing because it stops us from acting recklessly but irrational fear might hold us back from making sensible decisions.

I always tell myself that to fear is human but it is never a good excuse for inaction.


I also remind myself that I probably would not be able to buy at the lowest possible price.

If I did, I was lucky.






In summary, as an investor and not a trader, I decided that since a sustainable and meaningful dividend from a company like ComfortDelgro was attractive for me, the rational thing for me to do was to make it a bigger investment in my portfolio.

So, I did exactly that and it helps to reduce my investment portfolio's at one time heavy reliance on S-REITs for passive income.

At lower prices, all else being equal, dividend yield would expand and make investing in ComfortDelgro for income even more compelling.


Now, you know why I am ready to buy much more if there should be more blood letting in the market.

Roll out the war chests?

That could happen.


See related posts at the end of this blog on why I decided to invest in ComfortDelgro as its share price plunged.










Some might remember why I added substantially to my investment in SingTel earlier in the year.

I will talk about this in Part 3: HERE.

Related posts:
1. Massive short interest.

2 comments:

redponza said...

Hmm, for myself, 5% yield is nothing to be too excited about when the DPS is not increasing at an attractive rate...

Maybe you can buy and hope for a rebound...
These transport biz seems not a very defensive business either, hence I will probably sit out until a 7% yield...

AK71 said...

Hi redponza,

I am familiar with your emphasis on dividend yield by now. ;)

I think of CDG as an equity bond.

So, it isn't about growing DPS.

I would be unlocking my CPF money if CDG offered a 7% dividend yield, all else being equal.

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