3Q 2018 passive income (non-REITs): QAF.

In 3Q 2018, I also received questions from readers on QAF and they were similar to this comment from 9 August 2018:

Reader said...

at the current price weakness and offering a dividend yield of almost 6%, will u still considering nibbling??


AK said...

QAF is now trading at a discount to NAV and there is also some insider buying activity.

I would buy some if I weren't already invested and if I didn't have other investments that are tempting me to buy more as well. ;)







Revenue and earnings have been declining at QAF as they face rather challenging conditions.

They are spending more on advertising to defend their bakery business while their pork business in Australia continues to face oversupply pressure.

Having said this, QAF is rather conservative and has a pretty strong balance sheet.

Although I feel that QAF is still able to sustain a DPS of 4c or even 5c based on the strength of their balance sheet while waiting for improvement, I am prepared for a lower DPS which is probably a prudent thing to have.





Although tempted to add to my investment in QAF, with limited resources, I decided that other investment opportunities in many ways were more attractive in 3Q 2018.

For example, both from an earnings and relative dividend sustainability perspective, Centurion is more attractive.

Another example, from a discount to NAV and prospective dividend yield perspective, Accordia Golf Trust is much more attractive.

However, if Mr. Market is to become even more pessimistic about QAF, all else being equal, I might buy some.