The email address in "Contact AK: Ads and more" above will vanish from November 2018.

FAKE ASSI AK71 IN HWZ.

Featured blog.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.

Archives

"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

2Q 2022 passive income: Stronger with changes.

Friday, July 1, 2022

2Q 2022 saw many changes in my portfolio.

I nibbled at QAF Limited and if you want to know why, see:
Investment in QAF is larger now.

Next, I nibbled at an ETF and that probably surprised some long time readers of my blog.

Well, I surprise myself sometimes with the things I do.

I know I am mental as I was diagnosed as suffering from extreme anxiety and borderline depression before.

This explains why early retirement from work and investing for income is probably a good combination for me.

However, it could be I also have a Dr. Jekyll and Mr. Hyde problem.

"When did I buy this?"

"I bought this."

"Oh, I see... Wait, who are you?"

"I am you..."

"So, you bought this when you were me?"

"Clever boy."

Spooky!

Anyway, if you don't yet know, see:
Investing in Alibaba and Tencent now.

and
Buying more Chinese Tech stocks today.

The ETF was an experiment for me and was at about 1% of my portfolio in market value at its highest.

The ETF does not pay a dividend and, so, I had to do some trading to make some pocket money.

See:
Trading Chinese tech stocks.





2Q 2022 also saw me becoming a shareholder of SBS Transit.

I thought of having a larger position in SBS Transit but it wasn't really a priority since I was already heavily invested in ComfortDelgro.

SBS Transit is almost 80% owned by ComfortDelgro, after all.

Of course, if SBS Transit should see its share price declining a lot more, all else being equal, I could buy again.

Anyway, I blogged about my purchase of SBS Transit and adding to my investment in ComfortDelgro in May and if you haven't read the blog yet, read:

SBS Transit and ComfortDelgro.

"EPS should improve as we learn to live with COVID-19 and, then, DPS should improve too."
From: Retirement, YouTube channel and quick update.

If you are interested, also read:
Investment in ComfortDelgro is larger now.

Both SBS Transit and ComfortDelgro are also really inexpensive when we look at their enterprise value and their EBITDA.




In the REIT space, I added to my investment in CapitaLand China Trust (CLCT) when its unit price dipped below $1.10 a unit.

CLCT was just too cheap for me to ignore at that price level.

Mr. Market was feeling very bearish about everything Chinese and CLCT had to bear (pardon the pun) some collateral damage.

CLCT is a different animal compared to when it was CapitaRetail China Trust (CRCT.)

The transformation brought with it a stronger income generation ability and greater resilience.

The REIT does not have an aggressive gearing level either. 

At under $1.10 a unit, it was also trading at a big discount to NAV.

See:
Capitaland China Trust: Another largest investment.

I also increased my investments in Frasers Logistics Trust and talked to myself about Sabana REIT.

See:
Frasers Logistics Trust.

Sabana REIT.

Although my portfolio is not as heavy in REITs as it was a few years ago, it still has a relatively big exposure to REITs.

I have to remind myself not to go back to being overly REIT heavy.

Anyway, I also expect CLCT to continue its transformation by acquiring more new economy assets.

So, I could still increase my investment in CLCT through future rights issues, if they should be offered.




Next, I decided to increase my exposure to the local banking sector to compensate for my relatively large exposure to REITs even further.

I increased my investment in OCBC which I thought offered better value for money when compared to DBS and UOB as it was trading at around book value. 

OCBC also offered the highest dividend yield while not having the highest payout ratio which was attractive to me as an income investor as this could also mean higher future dividends if nothing untoward happens.

This is a possibility since OCBC also has a very high CET1 ratio, the highest amongst local banking peers.

Source: Fitch.


See:
Investment in OCBC is larger now.




I also did something more shocking than my foray into Chinese tech stocks in 2Q 2022.

I bought bits of Bitcoin.

Wink, wink.

Well, I thought it was rather shocking.

If you didn't know, I hope you are not too shocked to read:

Gold, silver and Bitcoin.

and

Buying Bitcoin at long term support.

Bitcoin is currently 0.5% of my portfolio as I added to my initial less than 0.1% position when its price declined.

Not crazy about Bitcoin but having some in my portfolio makes sense because, unlike the early days or a few years ago, I can see that the coin is gaining wider acceptance and, more importantly, attracting institutional investors.

If I was a Bitcoin bull, I would put at least 20% of my portfolio in Bitcoin and I know some, mostly young people, are 100% into Bitcoin and other virtual coins. 

However, I don't think that retirees like AK should be too aggressive on Bitcoin.

I will admit that the case for Bitcoin is growing more persuasive because of the strengthening network effect.

However, Bitcoin's notorious price volatility makes it a poor choice to form a large component of any investment portfolio other than one that is mostly speculative.




OK, lots of buying in 2Q 2022.

Any selling?

I did some selling as well in 2Q 2022 and blogged about it.

See:
Centurion Corporation: A smaller investment.

Although I will be receiving less passive income from Centurion Corporation in future, reallocating the funds to other income generating investments should give similar or maybe better results.

So, apart from possibly missing out on capital gains if Centurion Corporation eventually unlocks value for shareholders, I doubt that having it as a much smaller investment in my portfolio would lead to a big decline in future passive income for me.

Unlike Saizen REIT, for example, where there was a guarantee more or less that we would be paid while we waited for value to be unlocked, there isn't such a guarantee with Centurion Corporation. 

OK, now for the numbers.




In 2Q 2022, total passive income received was:

S$ 63,980.74

The dividends received from DBS, UOB and OCBC formed the bulk of my passive income from non-REITs in 2Q 2022.

Of course, there is the expected and not insignificant quarterly income distribution from AIMS APAC REIT as well.

2Q 2022 passive income increased by an impressive 42% compared to 2Q 2021 mostly because the banks were still paying lower dividends in 2Q 2021.

The banks normalized dividend payouts in 3Q 2021, if I remember correctly.

Compared to 1H 2021 which saw total passive income at S$81,425.35, the first 6 months of this year delivered a total of S$104,678.42 in passive income which represents an increase of some 28%, year on year.

Pretty respectable.

Everything else being equal, my passive income in 3Q 2022 should not see much of a difference, year on year.




However, I am expecting a decline in passive income in 3Q 2022 due to the fact that there was a pretty significant one off final distribution from Accordia Golf Trust in 3Q 2021.

Of course, Accordia Golf Trust is no more.

Higher dividends from some investments in my portfolio should be able to cushion the expected decline in 3Q 2022 but I am hazarding a guess that they most probably would not be enough to cancel the decline.

Still, at this stage, I am making a forecast that full year passive income this year should come in higher than the year before, barring unexpected negatives.

On hindsight, I was too active as an investor for income in 2Q 2022 and just thinking about it makes me tired.

I should go back to being lazy for the rest of the year.




On a more serious note, I know that many people are worried but if we have been investing, say, for even just a decade so far, we know that Mr. Market always has mood swings.

As long as we eat crusty bread with ink slowly, we don't really have to worry.

If you are a new reader, read this blog and all the blogs I have hyperlinked within:

Investors eat crusty bread with ink slowly.




If you are a long time reader of my blog and if you are on the same path to financial freedom but still need some assurance, go read the same.

This storm, however bad it gets, will end at some point.

If we are eating crusty bread with ink slowly, our life should not be affected badly.

In our case, the sky is not falling. 

Stiff upper lip and soldier on!

If AK can do it, so can you!

Believe it!

Related posts:

1. Largest investments 2Q 2022.
2. 2Q 2021 passive income.




15 comments:

The Dreamzola Traveller said...

LOL. It has been a long time since I see such many words in your post.
Good to be active again ah hahaha, tired yeah but can't be too complacent in this quick changing world.
I makan some CLCT as well. The banks....ah ...so expensive...I guess I ll wait, for a while.

AK71 said...

Hi TDT,

Blogging has been pretty sporadic as a hobby in recent years.

I feel that Singapore banks are trading at fair prices and it is probably not a bad thing to pay fair prices for good businesses.

However, Mr. Market could go into a depression and they could become bargains.

So, keeping some powder dry is a good idea. :)

Unknown said...

Thank you AK for your long sharing to yourself. :D

Have been your long time reader and followed your model to build a passive income portfolio for myself, till it can finance basic monthly living expenses. Still a long way to reach your huge amount of quarterly passive income, but able to see the possibility of achieving it eventually, with continuous dividend income building.

Just to let you know many of us out there have adopted your way of life, to build a sustainable income till old age. :)

AK71 said...

Hi Unknown,

Thanks for letting me know.

I am happy that talking to myself has been helpful. :)

Investing for income is not a sexy get rich quick route to financial freedom but it works.

It mostly takes discipline and time will do plenty of the heavy lifting.

How much passive income we need as individuals will vary.

So, talking to myself should provide inspiration but it shouldn't be a yardstick by any means.

Gambatte. :)

Reference:
Investment philosophy is timeless and so is ASSI.

Rellangis said...

Hi AK, Aug SSB is 3% now. Do you think it is worthwhile to get some or focus on equities instead ?

AK71 said...

Hi Rellangis,

I have a feeling that interest rate could go up another 1% or so rather quickly and the coupon for SSB should follow.

So, I am in no hurry.

Also, comparing SSB with equities isn't like for like.

I would compare it with fixed deposits or even the CPF. :)

Reference:
Lucky to have Singapore Savings Bonds.

Airman said...

Hi! AK,

What do you recommend to someone turning 60 and have yet to embark on income investing strategy?

AK71 said...

Hi Airman,

Turning 60 and thinking of investing for income?

Maybe, read this blog:
Retirement adequacy for late bloomers 101.

Gambatte! :)

SN said...

Hi AK,

I'm new to your blog :)

just curious, when planning your portfolio allocation, do you include cash/CPF when tabulating the % of portfolio?

(i.e. 0.5% in bitcoin is 0.5% of all your investments, or including cash/CPF as well?)

Thanks.

AK71 said...

Hi SN,

Welcome to ASSI. :)

Interest income from cash holdings and CPF savings is not included in my quarterly passive income updates.

So, cash and CPF savings are not considered part of my portfolio.

However, in recent years, I have included CPF savings in my largest investments updates to drive home a point on how having meaningful CPF savings should be important for regular folks.

Usually, I blog about CPF savings separately.

Gambatte. :D

SN said...

Hi AK,

Thanks for the reply :)

I have been looking at Starhub in recent months. do you think Starhub is currently undervalued?

currently dividend yield is at 5.12% based on today's closing price of $1.25.

although their dividend rose from $0.05 for FY20 to $0.064 for FY21, share price has remained roughly the same for the past two years.

compared to 5 years ago, their dividend payout ratio now seems more sustainable at 80%. do you think it's a good buy for dividend? as there seems to be potential for future dividend growth.

AK71 said...

Hi SN,

I have a tiny legacy position in Starhub which, unfortunately, was purchased at a much higher price.

I had thought that Starhub could cope with its high level of debt in the face of challenges but Mr. Market didn't think so and that was when interest rate was relatively low.

Today, Starhub still has a relatively high level of debt.

With cost of debt likely to increase as interest rate rises, I wonder if Starhub would be able to raise prices easily to cope with this?

Qiongster said...

Hi AK,
The share price of Digital Core Reit has dropped by almost 20% below IPO price due to fears of its bankrupt tenant and perhaps sizeble floating loans. Will you be able to talk to yourself on this Reit please. Appreciate it. Thanks.
Regards,
Qiongster

AK71 said...

Hi Qiongster,

I don't have any interest in Digital Core REIT just like I don't have any interest in Keppel DC REIT.

I don't think they were very attractive and I still don't think they are.

The distribution yields were too low for investments which distributed all their operating cashflow to investors.

Our local banks were offering similar dividend yields and they only paid out half of their earnings or so.

That is some food for thought.

Many people invest in data center REITs with an eye on capital appreciation and not distribution yields.

For anyone who thought that data center REITs would see their unit prices increasing, investing in them would make sense but it seems to me that is more speculating than investing.

Of course, now, a bigger worry for data center REITs is that some of their larger customers could be building their own data centers instead of staying with them.

From what I know, this is not just a possibility but it is actually happening.

Anyway, if in doubt, it is better to stay out. :)

AK71 said...

OCBC 1H 2022 results and higher dividend declared.

YouTube video:
OCBC 1H 2022 results.


Monthly Popular Blog Posts

 
 
Bloggy Award