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I have yet to participate in any distribution reinvestment plans. I like to buy more units or shares at prices I deem fair or undervalued. Now, this is probably a subjective exercise but I like the fact that I have control over the purchase prices.
When AIMS AMP Capital Industrial REIT announced that it would be offering a distribution reinvestment plan in April, I said that I would not be taking up the offer for two reasons:
1. I am investing for regular income and would like to have the quarterly distribution in cash.
2. I was not keen on increasing my exposure to the REIT at the prices then.
The REIT's unit price has taken a dive and the selling momentum could bring it closer to $1.00 a unit in time.
Those who accepted the distribution reinvestment plan would be getting new units issued at $1.1622 per unit which is closer to historical highs.
They would, of course, be saving on brokerage and other fees but I would rather buy more units from Mr. Market. Good luck to all of us.
Related post:
AIMS AMP Capital Industrial REIT: 4Q FY2012.
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17 comments:
Ak
May i have your opinion ,let say if industrial property bust, what will happen to those industrial reit? Can i have your opinion. Thanks
victor
Hi AK,
So if we have bought the AIM share after they asked about SCRIP or cash then what will be the default option?
Or rather will this be applied uniformly to all shareholders?
Hi AK,
If we still want our distribution in cash, we dun need to send back the letter right?
Hi Ak71,
Not buying into the reinvestment plan. I need the cash distribution to foot my daily expenses. :)
Hi AK
The risk is dividend,they can be cut without notice and.The reward is if the dividend yields don't get cut and actually go higher if stock prices go down.
So, the questions are: 1) who (investor) can stand the pain of principle drop reaching for yield; and 2) whose dividends (companies) will actually increase as stock price drops?
These are good question to ponder.
So i think we may wonder why ppl go for a 1.7% yield which are gurantee like treasury, which is still better than seeing your stock dropping day to day.
I have 2 stock in mind, one is Singpost, and the other is SPH,both are good 6% div, and safe.
what do you think?
victor
Hi Victor,
Reply to comment 1:
If industrial properties in Singapore suffer a crash in value, it has to be due to a very bad recession or a depression even. In such an instance, all assets would take a hit.
Reply to comment 2:
In a recessionary environment, no stock is safe. I actually bought more of SPH shares at $2.80+ during the global financial crisis, for example.
Hi The Dreamer,
If you bought units of the REIT when it went XD, you would not be entitled to the quarter's income distribution. So, they would not ask you if you want to receive the distribution in cash or scrip.
Hi DW,
Yes, if you want the distribution in cash, you don't have to take any action. :)
Hi INVS 2.0,
I don't need the income distribution for daily expenses now but this would change in the future when I finally retire from active employment. ;p
Whatever the case, I am sticking to my reasons for not taking part in the reinvestment plan.
They wanna SGD30 for fees....:(
Hi JCK,
What fees?
I wanted to increase my stake in AIMSAMP so I participated in the scrip dividend scheme. Probably acted too fast this time.
Sanye
Hi Sanye,
It could have gone the other way too. Anyway, you are investing for income, I suppose. So, just hold on for the quarterly distributions. :)
Methinks its the broker asking for script fees at SGD30
Hi JCK,
Get a new broker. ;)
Hi AK
What will be a good price to look at for Aims?
I m investing for dividends.
Do you see price dropping further ?
GN
Hi Grace,
Buying now in the open market would be better than subscribing to the scrip dividend that was recently offered.
As for price movement, the only person who can tell which direction it would go is Mr. Market...
If we are investing for income, the more important question to ask is whether we are getting in at a fair price which means a price giving us a yield which is considered attractive to us. If price should decline in time, everything else remaining equal, it would become even more attractive and I would buy more then. ;)
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