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How to get $200K dividends yearly? Simpler than you think.

Friday, August 25, 2023

The sequel to the podcast I did with The Fifth Person last month is here.

I just watched it and I thought it would be good to tie up a few loose ends.

If viewers should spend some time ruminating on what I said in the follow-up podcast, they would not need to read this blog post.

So, this blog post is more for my benefit since I have a need to talk to myself all the time.

AK is mental.




1. My response to a viewer who said most regular folks would have to speculate in order to generate sufficient capital to get a $200K dividend annually from investments.

There is no need to speculate although we could certainly do it and in the podcast I shared my view on that.

There are other ways to make more money and regular readers know I did some trading and I also had side hustles to make more money.

I also blogged about how we should not wait until we have a larger amount of money before we start investing for income.

Dividends made in the early days, no matter how small, would grow our wealth, and could be used to invest for even more income.




2. Possible to make $200K dividends annually with $2M and how to get $2M in capital?

In the podcast, I said that my capital wasn't $10M, $5M, $4M or $3M.

It could have been closer to $2M.

And that is giving me $200K in yearly dividends now?

How is that possible?

Elementary, my dear Watson.

A lot of what I bought was bought during crises, when Mr. Market was suffering from severe depression.

By now, my experience with AIMS APAC REIT should be quite well-known.

It is one of my largest investments and probably my oldest one.

It generates a distribution yield of more than 10% on cost for me, year after year.

As I got into it in a big way during the Global Financial Crisis, it is a major contributor to my yearly passive income. 

Of course, my investment has been free of cost for many years too.

I have recovered my capital and I am still receiving income from my investment.

So, of the $200K in dividends received last year, a big chunk of it was actually free money.

It is money generated from nothing.

How did this happen?

Time happened.




It is possible to get higher dividend yields during crises if we invest in the right businesses that would survive the crises.

Of course, we could choose to sell these investments if their stock prices should recover later on.

I used the examples of Lippo Mall Trust and First REIT in the podcast.

Regular readers of my blog would know there were others like Saizen REIT, Croesus Retail Trust and Accordia Golf Trust as well.

Selling for significant capital gains grew my wealth.

It gave me more capital to invest with.

We could also choose to sell a portion of our investments like what I did with Old Chang Kee and Hock Lian Seng.

I sold half of my investments in them when their share prices doubled.

So, whatever I am still holding now is free of cost.

And they are still paying me dividends, year after year.

More free money.

This brings me back to the earlier point on speculation.

Why is there a need to speculate in order to grow wealth?




Simply wait for the next opportunity to make significant investments for income like what I did during the Global Financial Crisis.

Invest in good businesses which are able and willing to pay us.

That opportunity came in the form of the COVID-19 pandemic not too long ago.

Of course, regular readers would know that I emptied my war chest during the pandemic and got into UOB at $19 a share.

That is one of my largest investments today.

It is rewarding me with a dividend yield of almost 9% per annum now.

I also talked about how I started buying into DBS at $13 and $14 a share back in 2016.

At $13 a share, the dividend yield is almost 15% per annum today.

Now, coupled with free money I get from AIMS APAC REIT and some other stocks, do you see why I say the capital deployed isn't as much as what some people say it is?




What I have done over the years isn't simply putting some of my monthly salary in fixed income instruments unless we count the CPF.

If that was my method, then, yes, to generate $200K yearly in dividends now, I would need around $4 million in capital today.

I agree this would be insurmountable for most regular folks.

So, I remind myself of what I did over the years and how I made what seemed impossible happen.

This might be a lot for some people to take in.

There is also the fact that my skill as a wordsmith has regressed in recent years.

So, maybe, read this blog post a few times.

Ruminate on it.

I know I had to.

AK is talking to AK here, after all.

Please don't let people tell us what AK has achieved is not possible for regular folks because the capital required is enormous.

It is simply not true.

This blog post is the truth.

Go share this with people you care about and tell them this.

AK is a regular folk too.

If AK can do it, so can you!

37 comments:

KT said...

Thank you AK. Always looking forward to you talking yourself both here and in podcast. Thank you very much.

AK71 said...

Hi KT,

Very happy you enjoy my blogs and videos. :D

Please share with people you care about.

If we can help more people work towards financial freedom, why not? :)

pukermon said...

Thank you AK for sharing.

If you marked your investments to market, what is your dividend yield per annum?

From your comments of $4M to get $200k dividend, I would guess that it's about 5%

Patrick Maurin said...

Thanks for the update, one question AK, I am a buy and hold, but why are you interested in the % of the dividend of a stock you bought few years ago?, if price goes up and your stock Div now is 1 %, don’t you think it is time to move to a better option if you find one?instead of keeping a stock bought few years ago that gave you 9% from your purchase price?

Chenheyuan87 said...

hello ak how much warchest shall we prep as we are also buying into income producing asset from time to time

AK71 said...

Hi pukermon,

I am glad you enjoyed the blog post. :)

To be honest, I have no idea how much exactly the market value of my portfolio is right now.

When I said if we want $200K dividends at a 5% dividend yield right now, starting with nothing, we would need $4M, it was just an example. ;p

I was not thinking of my situation. ;)

AK71 said...

Hi Patrick,

Oh, yes, of course.

If that 10% dividend yield on cost has become 1% today because the share price has gone up 10x, I would most probably sell that investment and move the money elsewhere, assuming there is something more attractive.

However, that is not within the scope of this blog post which is to show how I achieved what I have today without a large capital to begin with. :)

AK71 said...

Hi Chenheyuan87,

I think even Warren Buffett won't be able to provide a specific number. ;p

He is sitting on so much cash now because he simply cannot find anything worth buying.

If there is something worth buying, there is not much reason for him to hold on to cash.

Hope that helps as I cannot give personalized advice, but I can give examples. ;)

Yv said...

Hi AK

I think it takes patience and time to build up the portfolio, and a cool head to stay the course during crises.

AK71 said...

Hi Yv,

You have cracked the code!

Gong xi gong xi! :D

AK71 said...

Hi Capricon,

Another reader asked this question in another blog post.

This was what I said:

"Hi Seb,

Watch my latest YouTube video. ;)

IREIT Global & Wilmar International.

You might want to subscribe to my YouTube channel for timely updates."

Bankai said...

Hi AK,

I am very impressed with your youtube video with fifth person. I am new to your blog but has been reading up for a week. I have been troubled between upgrading housing or focusing on passive income. I would like to the this opportunity to thank you for your view aka talking to yourself hehehe.

Eddy said...

Hi AK,
Good afternoon.
Absolutely true πŸ‘πŸΌ. I can be a testament of this dividend income investing strategy since I came across ur blog more than a decade ago.

Quite a number of my stocks have already been free of cost, but are still collecting good dividends years after years…

And with regard to Croesus Retail Trust u mentioned in this blog, i remembered that the dividend I was collecting back then was more than 9% annually. This was due to my low entry unit prices. Together with the capital gains (after CRT was taken private), the total gains was big enough to fund my child’s 3-years overseas (living expenses & tuition fees) tertiary education in U.K.


Just sharing…
The investment (amount) has to be meaningful enough at the right valuation’s prices to make an impact. So start young, start early and accumulate slowly & steadily.

Over time, long-term income investors would be able to benefit from the compounding interest effect. The passive income will definitely be of great help in the event of jobs losses, reduced in active income due to economic recession/crisis or health issues in today’s uncertain world.

Cheers “)

AK71 said...

Hi Bankai,

Bleach fan? ;p

Well, if I absolutely need a bigger space, then, I need a bigger space. ;p

If it is just a want, why bother?

I downgraded from a 2 bedroom apartment to a 1 bedroom apartment. ;p

You might be interested in this blog post from 2015:
Do I need a bigger home and what to do if I do?

AK71 said...

Hi Eddy,

Reading your comment makes me feel nostalgic. LOL.

Ah, those were good times. :)

ted said...

>> I downgraded from a 2 bedroom apartment to a 1 bedroom apartment. ;p

Do you mind sharing how big, in sqm, is your 1 bedroom apartment?

AK71 said...

Hi ted,

I blogged about this in 2014.

AK's home is a hut in the sky and it makes sense.

I shy to reveal the exact size but it is tiny. ;p

AK71 said...

Hi Mark,

If people believe they can do better speculating than they can investing, then, so be it.

I am not stopping anyone from doing it but I just don't think there is a need to do it, especially when most people or regular folks cannot stomach risk and volatility.

Just be sure to know that we are speculating when we do it as it is a different ballgame.

I have blogged about this and also mentioned this many times in my YouTube channel.

As for timing the market, I don't see how buying from Mr. Market when he is depressed and throwing out good deals is considered speculation when all we are doing is to capitalize on an opportunity to buy undervalued stocks.

Warren Buffett has said before that we do not need high IQ to do well investing in the stock market.

We might make mistakes like he does from time to time but as long as we get it right most of the time, we will do OK.

Peter Lynch would tell us that if we are right 6 times out of 10, we are good.

I maintain that what I have achieved is not beyond regular folks as long as they remember to be prudent, patient and pragmatic which I have blogged about before many times and now share in my YouTube channel.

Of course, everyone has different beliefs and I won't stop people from speculating in growth stocks with no earnings or cryptocurrencies like Luna if they wish.

It is never my way or the highway.

AK is just talking to himself.

People can choose to eavesdrop or ignore.

If you choose the former, then, if AK can do it, so can you! ;)

AK71 said...

Hi Mark,

Thank you for this follow up comment.

Please don't apologize as I am not in the least bit offended.

In fact, I said this in my YouTube video in reply to a viewer:

"@wf645
1 day ago
Reminds me of the age old adage of 不听老人言,εƒδΊεœ¨ηœΌε‰ (if you fail to listen to advice of elders, you will suffer consequences in the future. End of day, its always good to learn from those who had come before us, and become smarter from it.
To the detractor, there is no need to post snide remarks, or a case of sour grapes

@A.Singaporean.Stocks.Investor.
1 day ago
To be fair, it was a very thought provoking comment. Many paragraphs long and I appreciate the time and effort put in by the reader. 😊"

So, you see I am not such a bigot that I cannot see the valid points that you made.

YouTube videos are mostly for entertainment and I have said to treat social media influencers more as entertainers many times before. ;p

Of course, I also want to make videos which are not only thought provoking but also inspiring.

Thanks to your initial comment, I believe the video delivered.

So, I am definitely not removing your comments here in my blog.

The way forward can only become clearer through a civil exchange of thoughtful ideas.

It is fortunate that you decided to comment in my blog.

Please keep the comments coming. I appreciate them. :)

The Dreamzola Traveller said...

If ones want to compare one with another. There is no end to it, and it would just make themselves more miserable. Just because someone can achieve xxxk doesn't mean die die must also.

Different people has different needs. One path that worked for ones may not works for another. And that xxx amount is actually depend on different factors, ones may not need that much to get where they want.

And there are other several options, example you don need a huge portfolio if you intent to just ton down on works to a less stressful job. Having a portfolio whether big or small can served as a comfort factor. Got passed over for promotion? Company not doing well, no bonus for that year? Won't feel so miserable if you got a portfolio that still helping you pay some of your bills even if it just a few hundreds a month.

Ones should seek to explore and find one path that can work, and work out the details how much ones want to achieve. End of days, we should develop our own doctrines and stick to it to make it happen even if it takes 30 years to do it.

Hmm, I must be getting old. So many words. Lol.

AK71 said...

Hi TDT,

LOL. Yes, I know.

Old trees have more roots.

Old people have more words. ;p

Yes, all of us have different needs.

We should all work towards financial freedom because that gives us options.

However, we should find our own way. :)

Ed said...

Hi AK, I'm a new reader of your blog and I felt what you said made a lot of sense to me. It gave me hope that it is possible for me to retire before 65 as I'm already in my mid 30s. I just started to learn more about proper investing recently and building up my savings as I lost a lot due to poor financial decisions I made in my younger days.

I read your post about investing in banks for dividend income. I was wondering whether it would be better for me to build up my war chest first and wait for another crisis to enter the markets for banks or buy into them gradually on a monthly basis to build up the dividend income?

AK71 said...

Hi Ed,

Welcome to ASSI! :D

I am glad that you have found my blog post sensible.

I am even happier that you feel inspired and hopeful that you would be able to retire before 65. :)

When it comes to Mr. Market, he will always have mood swings.

Simply buy more when he is depressed and buy less when he is feeling stable.

Avoid buying from him when he is having a sugar high. ;p

For example:
Huat with UOB! Will I buy more OCBC now to huat again?

So, I always have a war chest ready but I am always invested.

I cannot give specific financial advice to individuals and I don't want to. ;p

ASSI is mainly here to inspire. :)

Bankai said...

Most of my portfolio are holding under city development. My average is higher than current price so only able to hold on to it and earning 2.5% based on dividend. Hope I can learn on Reit passove income from you.

AK71 said...

Hi Bankai,

My portfolio is concentrated too with several very large investments, but it is also diversified so that no one investment is more than 20% of my portfolio.

(The exception is money in my CPF account, if we were to consider that an investment.)

I also have many smaller investments which do not make it into the list of largest investments in my portfolio.

I doubt an investment portfolio that is 100% in S-REITs would have done as well.

Well, 100% of a portfolio in any investment is probably not a good idea.

Even Warren Buffett who is known for saying diversification is for the know nothing investor has a portfolio that is pretty diversified.

My decision to build a larger investment collectively in DBS, OCBC and UOB in recent years has been fortuitous.

So, take whatever you read about investing in REITs for passive income with a pinch of salt. :)

Eddy said...

Hi AK,
Good morning.
My comments here is for reference to your video released last night, regarding the negative comments on dividend investing by a popular youtuber.
Thanks for sharing my story. Hope more people will be inspired and benefit from long-term dividend’s investing in good stocks at the right valuation’s prices.

As for the youtuber you’ve mentioned, I know who he is. He has his shortcomings and he basically only invest in S&P500 index. Unfortunately his negative comments about dividend investing that influences his large group of followers, which I felt is rather misleading and irresponsible of him without total understanding of income investing.

Perhaps he should make an effort to try understand the benefits of how S’pore sovereign wealth fund, Temasek Holdings engages in dividend investing over the past few decades as part of their investment strategy. The dividends that Temasek received from their stakes in such as DBS, Singtel, Sembcorp Ind, ST Engrg, KepCorp, SIA, CapitaLand and Mapletree groups of companies and many more…

【 From ST 22/7/2022: “The state investor achieved a dividend income of $9 billion in 2021-2022, up from $8 billion in the previous financial year.” 】… this speaks volumes!

And S’poreans can be thankful for the (annual) growth in dividends Temasek received, which in turn that helped grown our reserves and also being part of the cash given out to S’poreans during the budget day by the finance minister.

AK71 said...

Hi Eddy,

Oh, you watch my YouTube videos too? ;p

I really didn't want to have to defend myself and I thought it would be better to share someone else's experience.

Then, I remember a recent comment from you. :D

I remember him when he first commented on my Facebook page, and that was when he was just starting the 1M65 thing many years ago.

I don't know if he was always like this or did he lose something else while losing his bald patch and excess weight?

Bad AK! Bad AK!

In a recent video, I said that financial YouTubers must be more careful with what they say and that some things are better kept private and not shared.

The whole thing is rather unfortunate. :(

Thank you so much for another thoughtful comment. :)

ThE AvErAgE SiNGaPoReAn MaLe said...


I don't know if he was always like this or did he lose something else while losing his bald patch and excess weight?

Bad AK! Bad AK!

In a recent video, I said that financial YouTubers must be more careful with what they say and that some things are better kept private and not shared.

The whole thing is rather unfortunate. :(


alamak! very bad leh you! but to be fair, you said he lost weight...
lol!

I think the fellow is straddling the fine line between "blind" dividend investing versus AK's "investing in stable businesses and income-generating assets", he maybe anyhow put you in the wrong category. But what do I know, I also go into REITS, not all with successful results.

Investing in index is back in vogue liao but it might not always had been 10% per annum from the start of times until now hor? I have some in index too, just to kiasu abit.

Keep it up AK please, hope to learn so much from you.
[just to check, you will transcript your Youtube videos in your blog, hor?]

AK71 said...

Hi TASM,

AK is very fair one hor.

It is a fair question to ask too. ;)

For sure, some REITs are minefields, and I have produced videos on Manulife US REIT, Dasin, EC World and Eagle Hospitality Trust, for examples.

As for transcripts for all YouTube videos, unfortunately, I don't have the time to do it.

Too many videos as I have been producing videos almost daily in recent weeks.

So many things to do and so little time. ;p

Jane said...

ak,
wondering if you can talk to yourself about lendlease reit. citi and dbs are saying different things. are the latter easily brushing aside the issue of high gearing and low ICR while the former are too pessimistic abt equity dilution?

AK71 said...

Hi Jane,

I did look at Lendlease REIT some time ago but I didn't like what I saw.

So, I avoided it.

When investing in REITs in the current environment, balance sheet strength is very important.

Candy188 said...

"Asset values supported by improving cashflows;

LREIT has BUFFER

for a further 10% DECLINE in asset value declines

BEFORE gearing hits 45%.

Overall GEARING for the REIT

has risen from an average of 32%-35%% in FY20/21

to the CURRENT c.40.6%, ♨️

which remains MANAGEABLE in our view."

- DBS

Hi AK, DBS has maintained a buy rating for Lend-lease REIT (LREIT which hold assets like JEM and 313@Somerset) on 11 SEP 2023, do you think investors should take it with a pinch of salt? 🧐

PS: Not vested in the REIT nor considering adding position.

AK71 said...

Hi Candy,

It isn't just the gearing level but the fact that only 60% of its debt is hedged.

40% of its debt is on floating rates.

This is why DPU is reducing as refinancing is hit by much higher interest rates.

I didn't want to blog about this REIT even though I have received many requests.

Now, I have said too much.

I will only say that my plate is full and I am not looking to add this REIT to it. ;p

Candy188 said...

LREIT has an interest coverage ratio of 4.2 times

and undrawn debt facilities of $583.3 million to fund its working capital.

Its debt is unsecured, with

approximately 61% of its borrowings hedged to a FIXED rate.

- The Edge, 15 Sep 2023

Hi AK, the favourable tone of the article will likely attract the attention of investors, especially those who are familiar with the heavy shopper traffic at JEM!

(According to UOB Kayhian report dated 18 May 2022,

jem attracts shopper traffic of 22m per years.)

AK71 said...

Hi Candy,

I am not sure that having only 61% of its borrowings hedged to fixed rates is favorable.

I just produced a YouTube video yesterday on Lendlease REIT.

You might be interested in it. ;)

K said...

Hello AK!

Am new to your blog and am really inspired in all things finance :)

If I may, I'd be curious to know if you've a perspective on REIT ETFs (e.g.: CLR, CFA, SRT) over picking individual REITs for a fuss-free way towards dividend investing, building up passive income in a scalable way over time for the average salaryman.

Thank you

AK71 said...

Hi K,

Welcome to ASSI! :D

I blogged about REIT ETFs before.

If you do a search in my blog, you would probably find the blog post.

I am too lazy to go dig it out now. ;p

Personally, I like to have control over what I invest in and with an ETF, I cannot pick and choose the constituents.

With REITs, there will be rights issues and ETFs won't allow us to participate if we wish to.


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