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3Q 2018 passive income (non-REITs): SingTel and CDG.

Saturday, September 29, 2018

Deciding that Mr. Market was probably overly pessimistic, I added to my already very significant investment in SingTel as its share price sank below $3.10 again sometime in 3Q 2018.

The business environment has become more challenging for telcos, no doubt.

However, we have to remind ourselves that telecommunications companies are not all equally vulnerable.

Experience tells me that in any sector that is facing challenging conditions, 

1. entities which are sectoral leaders 


2. entities which have strong balance sheets 

will most likely prevail and SingTel is that entity here.

SingTel's dividend yield expanded as its share price declined.

With a strong balance sheet, SingTel is committed to paying a meaningful dividend.

SingTel is very much aware of the challenges to its businesses and is very much in the process of transformation to stay relevant.

To be quite realistic, however, if the transformation takes longer than two years to make a more significant contribution to earnings, we could see DPS being reduced to 15c.

Whether this makes sense to the income investor in us would depend on the dividend yield we demand from an entity like SingTel.

Of course, this would help us to determine our desired entry prices.

When to buy?

You decide.

Regular readers know that I like being paid while I wait.

While waiting for improvement, I am quite happy to receive a near 5% dividend yield or more.

So, I would be quite happy to accumulate SingTel if Mr. Market should go into another depression.

Next, Mr. Market's pessimism also gave me the opportunity to add to my investment in ComfortDelgro as its share price fell closer to $2.20 again in 3Q 2018.

Regular readers would remember $2.20 as the support I identified in the event of a decline in CDG's share price and how I bought some at that price in 2Q 2018 too.

On the chart, the rising 200 days moving average was also approximating $2.20 and I thought it should strengthen the support I identified.

I like to think that I know ComfortDelgro a bit better than before and simply bought more at a price I would not sell at.

Buy at prices we would not sell at.

Sell at prices we would not buy at.

I believe although we might not get it right all the time, we should get it right most of the time if we bear this in mind.


Laurence said...

AK is a shrewd buyer when there are lelong sales. :)

AK71 said...

Hi Laurence,

To be honest, I don't always do a good job. :)

Only Mr. Market is always right. ;)

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