1Q 2022 passive income: Bad news galore.

Quite a few things happened in 1Q 2022.

As the world continues to grapple with variants of COVID-19 with the latest being the Deltacron or the offspring of the Delta and Omicron variants, Russia decided to start a war.

Inflation which was already gaining steam was pushed higher.

The Fed increased interest rate and there will be more to come.

In an inflationary environment, we will see rising prices in commodities and we could see companies like Wilmar doing better.

In an environment of rising interest rates, we could see banks doing better.

Even REITs could do better and for those who missed my latest blogs on REITs, see:

Why AK invests in REITs?

and 

How to invest in REITs?

For those who are well read, guess where this passage came from?

Anyway, regular readers know that I didn't do much in the stock market last year.

I feel that, overall, my investment portfolio is in pretty good shape.

None of my investments which matters to me is keeping me up at night.

(Only Genshin Impact keeps me up at night now.)

Last year, I added to my investment in Sabana REIT in early 2021 and then added to my investment in Wilmar as its stock price sank in 3Q 2021.

Nothing else.

So, I didn't do much last year but what about this year so far?

Well, I thought I wouldn't be doing anything in 1Q 2022 because I rather liked how my investment portfolio looked.

As I did not buy much of anything in the stock market in more than a year, my cash pile has been growing at a steady pace which really isn't a bad thing. 

However, towards the end of 1Q 2022, I decided to add to my investment in Centurion Corp.

My investment in Centurion Corp. was already very substantial and I really shouldn't be adding but I just couldn't resist it.

So, I guess AK doesn't have as much character as he thought he had. (TmT)

There is only a small handful of people who each has 1 million or more shares of Centurion Corp. and if I am not careful, I might join their ranks.

Prior to 1Q 2022, the last time I added to my investment in Centurion Corp. was in 2020.

I should say "the last few times" because looking at my records, there were multiple entries made at 32c a share in 2020.

Why couldn't I resist adding to my investment?

OK, I had a chat with my bowling ball and it had a few things to tell me.

Centurion Corp. has weathered the pandemic well and has stayed profitable despite the challenges.

This speaks volumes.

Well managed and resilient, Centurion Corp. is paying dividend again.

Although it is just 0.5 cent per share, my bowling ball told me that they could have easily paid 2 cents per share.

Really?

See:

If we look at the numbers, net operating cash not only recovered but exceeded pre-pandemic level.

Centurion Corp. was paying 2 cents dividend per share prior to the pandemic.

Then, why only 0.5 cent dividend per share now?

My bowling ball was silent on this.

If I were to make a guess, they are probably being cautious which isn't a bad thing, especially if they plan on paying down debt in the face of rising interest rates.

Looking at their financial statement, Centurion Corp. reduced borrowings last year when dividends were suspended.

Of course, if they have identified new businesses which would generate more income but would like to draw on internal resources instead of debt, it isn't a bad idea either.

Centurion Corp. should pay a larger dividend to shareholders if they have no better use for the money on hand.

Centurion Corp. has recovered well and seems to be as valuable a company today as it was pre-pandemic.

In fact, if we look at the NAV/share, it is much higher than it was pre-pandemic which suggests that Centurion Corp. is even more valuable today.

For the rest of the year, we could see Centurion Corp. doing better as Singapore eases border restrictions and more foreign workers return.

Source: Bloomberg.

We can expect the occupancy of their dormitories for students in the UK, Australia and USA to do better for the rest of the year too.

Their student accommodation assets in the UK have already seen a big improvement in occupancy.

Source: Presentation dated 24 Feb 22.

While the price of its stock languishes even as things improve, it seems like a good opportunity to increase my investment in Centurion Corp. and at a bigger discount to NAV too.

Centurion Corp. is undervalued but it could stay undervalued for a long time.

It might take a while but I like to think that patience will be rewarded.

"UOB Kay Hian analyst Adrian Loh has kept "buy" on Centurion with a higher target price of 45 cents from 43 cents previously."  Source: The EDGE.

Now, time for my passive income numbers.

In 1Q 2022, the three largest income generators for me were:

1. IREIT Global

2. AIMS APAC REIT

3. Sabana REIT

Total passive income received in 1Q 2022:

S$ 40,697.68

In 1Q 2021, my passive income was $36,551.14 and that was some 48% higher than it was in 1Q 2020 due to larger investments made in Sabana REIT and IREIT Global.

So, the fact that 1Q 2022 passive income was some 11% higher than it was in 1Q 2021 makes me very happy and the bigger number is thanks to IREIT Global's stellar performance.

I like investing in good income generating assets.

I like investing in them especially if they are undervalued.

IREIT Global not only generates good income for me, the REIT is also financially strong which gives me peace of mind:

From the numbers, to me, IREIT Global is clearly undervalued.

I have many blogs on IREIT Global and if you are interested, use the Search function at the top of the web version of my blog to find them.

There won't be any income distribution from IREIT Global and Sabana REIT in 2Q 2022 but DBS, OCBC and UOB should be paying dividends then.

It will be interesting to see if my passive income improves year on year in 2Q 2022 as the banks were still paying lower dividends in 2Q 2021.

1Q 2022 was filled with bad news and, for me, passive income was a bright spark amidst all the doom and gloom.

If we hold a relatively diversified investment portfolio of bona fide income producing assets, we should enjoy some peace of mind even as the world seems more than a bit messed up.

Hold some investment grade bonds too and regular readers know that the CPF does that for me.

See:
Unless we are very rich...

I remind myself that I can only do what I feel is right as I keep my feet firmly on the ground and not chase the latest get rich quick ideas.

If I am able to grow my wealth slowly as a retiree who depends solely on passive income to meet all my financial obligations, I am happy.

Invest more.

Speculate less.

For sure, I do not have all the answers and I can only hope for the best.

That's all for now.

Till the next blog, stay safe.

References:
1. Russia invades Ukraine...

2. 4Q 2021 passive income.

3. 1Q 2021 passive income.