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2Q 2023 passive income: Stronger again!

Wednesday, July 5, 2023

Before I start doing other stuff today, I decided that I would quickly talk to myself about my 2Q 2023 passive income, and also what I plan on doing for the rest of the year in the investment space.

When I talked to myself about my 2Q 2022 passive income, I titled it "Stronger with changes." 

In 2Q 2022, total passive income received was about S$63,980.

It was an impressive 42% year on year increase.

Since then, I have continued to re-allocate resources although on a smaller scale.

This exercise has proven to be fruitful as 2Q 2023 passive income came in at $79,774.61.

This is an almost 25% year on year increase.

Hence, the unimaginative title for this blog.

"Stronger again!"




Higher dividends from the following entities did most of the heavy lifting:

1. DBS

2. OCBC

3. UOB

4. Wilmar

5. ComfortDelgro

6. AIMS APAC REIT

These are some of my largest investments. 

So, the higher dividends from them have an outsized impact which more than compensated for the reduced dividends from some of my smaller investments for income such as Ho Bee Land and VICOM.

To be fair, not all of my smaller investments for income reduced dividends.

Raffles Medical Group and Hock Lian Seng paid higher dividends, for examples.

Passive income in 2Q 2023 also benefitted from contributions by Singapore Savings Bonds and T-bills.

These were missing in 2Q 2022.










I will continue to re-allocate resources in my investment portfolio for the rest of the year.

This means moving funds into investments which I feel would generate meaningful income for me while maintaining relatively strong balance sheets.

I would also inject fresh funds into my portfolio whenever circumstances permit.

While re-allocation of funds is for increasing my investments in businesses like OCBC and UOB, the injection of fresh funds is probably going to the strengthening of my T-bill ladder.

This strategy will help to ensure that I maintain a more meaningful exposure to quality fixed income which is relevant to a person with circumstances like mine.

I am more interested in having a stronger base for my investment portfolio which ensures stability.










If I have should have more excess funds to deploy, I would increase exposure to Wilmar if its common stock should decline to $3.50 or even $3.00 a share.

The same goes for ComfortDelgro if it should ever decline to $1 a share or lower, all else being equal.

As I did not participate in AIMS APAC REIT's recent rights issue, I must expect a reduction of approximately 10% in my passive income from the REIT in future.

Even if I did participate in the rights issue, I would still experience a reduction in my passive income from the REIT unless I applied for more excess rights so that the total number of rights units was 3x that of my entitlement.

Of course, I would have to be successful in getting those excess rights as well.

I have instead decided to channel more funds to IREIT Global's rights issue to apply for more excess rights which would generate more passive income for me.

To be realistic, I am unlikely to get all that I have applied for.

Even if I should be unsuccessful in getting any excess rights, as IREIT Global's fund raising exercise does not have a private placement component which I am not invited to, I would not see any dilution which would lead to a lower DPU.

If I should be successful in getting even some excess rights, it would mean having a bigger share in some attractive properties which are already generating income.










Having said this, any injection of fresh funds is likely to be a slow trickle as I have limited excess funds after taking into consideration my commitments.

I think that is all for now.

Until the next time I talk to myself, remember this.

If we are interested in achieving financial freedom, investing in bona fide income producing assets can only be a good thing.

If AK can do it, so can you!

14 comments:

Joey Yong said...

Not simple to grow the dividends and keep on doing so year and year. Must learn from master ak. If i can have 1/2 ur success happy liao. PS i am also single and not very likely to get married, going to reach mid 30s.

keng said...

Hi AK,

I have applied double my entitlement of rights in IREIT though I am starting off from a low base. Hope to get them all :)

joyce said...

Hi AK,
I have been a silent reader of your blog for many years since my friend introduced it to me. Thanks for talking to yourself loud enough so that readers like me can hear you loud and clear even when we are thousands of miles away ;)

Would appreciate if you can talk to yourself about the recent news on Wilmar's possible corruption investgation by the Indonesian authority. Do you have any comcern of the news? Thanks in advance.

https://www.reuters.com/world/asia-pacific/indonesian-prosecutors-name-3-palm-oil-groups-suspects-corruption-case-2023-06-16/

AK71 said...

Hi Joey,

I have made mistakes over the years too.

The thing is not to give up.

As long as we do well on a portfolio level which means getting things right more often than wrong, we should do better than most.

Mid 30s means still young and having time on your side.

Gambatte! :)

AK71 said...

Hi keng,

Have you been playing Pokemon Go? ;)

I have a feeling that the rights issue is going to be heavily oversubscribed.

Crossing fingers!

AK71 said...

Hi joyce,

Wilmar's business is much bigger than just its Indonesian operations.

Also, I do not think it will affect fundamentals.

I would add to my investment if I can find the money. :)

Rellangis said...

Hi AK,

The latest SSB average return is 2.99%.. Do you think is worthwhile to park some monies in there still?

AK71 said...

Hi Rellangis,

I have fully allocated funds for 2023 and 2024 for CPF Voluntary Contributions into SSBs.

So, I haven't been looking at SSBs.

Still, if SSBs should offer a 10 year average interest rate of more than 3% per annum, if I could find some spare money, I might buy some.

That would mean using money which would otherwise be earmarked for 2025 CPF Voluntary Contribution.

No interest in a 2.99% per annum 10 year average return as that is lower than the average interest rate I could get from doing CPF Voluntary Contribution for my age bracket.

Reference:
CPF or SSB?

MSAPersonalFinance said...

Hi AK71,

Do you know what happen to VICOM that the stock price keeps declining? When COE price keeps increasing, I believe the number of vehicles for VICOM inspection shouldn't be reducing.

AK71 said...

Hi MSA,

I believe that it is a function of rising interest rates.

As it is widely expected for the Fed to increase interest rate another 2 times this year, bonds and anything which feels like a bond are being punished.

So, REITs and equities which pay regular dividends but without much of a growth angle could see weakness in their prices.

As an investor for income, I am not bothered by this.

I am more concerned with whether my investments will continue to pay me.

However, I am cognizant of the fact that fixed income has become an attractive alternative to investors for income which explains my activity in T-bills and Singapore Savings Bonds in the last one year or so.

cheryl2010 said...

Hi AK! thanks for your article it is so inspiring!
I almost hit buy button 1 week back when Wilmar went to $3.6 to $3.65.
Will it go to as low as $3.5 or $3?
I thought I will focus on building my OCBC and DBS portfolio to same size as Wilmar first :)
I missed buying OCBC at $12!!!!!

AK71 said...

Hi cheryl,

I don't know if it would happen but it could.

Technical analysis shows us where supports and resistance are but it can never tell us if they would ever be tested.

If you feel that the prices make sense to you, you might want to buy some first. ;)

said...

Hi AK71

Interestig to listen to the youtube with FIFTH PErson. Divindeds accumulation and mainly in SG is really surprise. I as naive to listen on growth stock (Superstock) story and signed up the course with GIM aka kelvin Seetoh and Jonanthon. U are right, GURU could be KoonDU , they selling 10x or even 100x growth and talk about it during the course and when interest rate heading up, they did not share to us on cutting loss or divert the stock to other stock.. one of the trainer Jonathon close and deleted the youtube channel which he share on his live portfolio investment and many of the friends burnt more than 80%... on the companies . The run away person, make us distrust the youtube KoonDO. nowawaday.

AK71 said...

Hi 风,

Many investment "gurus" make more money selling their courses than from their investments.

Easy risk free money for them. ;)

Very sad to hear there are so many victims. :(


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