Largest investments updated (3Q 2019).

It has been almost a year since my last blog on the largest investments in my portfolio.

Since then, in the following months, I added to some of my investments such as 

1. OCBC at under $11.00 a share, 

2. ComfortDelgro at under $2.20 a share 

and 

3. SingTel at under $3.00 a share.





Not much activity on my part, really.

Most of the time, I was just collecting dividends while waiting for Mr. Market to recover from his depression.

When Mr. Market did recover, I waited to see how euphoric he could get.

(To be totally honest, mostly, I was adventuring in Neverwinter but you know that, of course.)

After my recent blog on selling into the rally while staying invested, a reader asked if I could do an update on my largest investments.

I suppose I could.





$500,000 or more:
CPF.

Do I hear laughter?

While the CPF is not an equity and isn't a bond in the purest form, I do consider it an essential part of my portfolio.

I consider it essential as it is the risk free and volatility free component of my investment portfolio which pays a relatively attractive coupon.

I decided to include my CPF savings to remind readers that I am able to take a bit of risk in the way I invest because my CPF savings is a very significant safety net.

Well, for me, it is very significant.

When we invest, remember, we have to take into consideration our personal financial circumstances and not simply ride on other's coattails.

I hope that you had a good laugh.

More importantly, I hope you are also aware that this isn't all a joke.







From $350,000 to $499,999:
AIMS APAC REIT
(formerly 
AIMS AMP Cap. Ind. REIT)

This should not come as a surprise, of course.

My investment in this REIT is already free of cost and there is no compelling reason for me to fiddle with something that has worked so well for so many years.

There has been talk of a takeover of this REIT and, to be honest, I hope it never happens.

Many good income producing investments in my portfolio have been taken away from me and it is difficult to find equivalent replacements.





From $200,000 to $349,999:
ComfortDelgro
Centurion Corporation Ltd.

From being unloved, ComfortDelgro has become much desired by Mr. Market.

I like ComfortDelgro too. 

Even after trimming my investment in this rally by more than 20%, ComfortDegro still stays in the same bracket because the market value of my investment has gone up by more than 30%.

As an investment for income, ComfortDelgro is probably more reliable than Wilmar and its dividend is probably more sustainable than SingTel's.

Having said this, if Mr. Market should have a feverish desire to pay a much higher price for ComfortDelgro, everything else remaining equal, I would probably accept the offer.





Centurion Corporation Ltd. moved into the same bracket as ComfortDelgro because I added to my investment as its share price languished at about 40c a share.

Centurion Corporation Ltd. is undervalued and there continues to be persistent insider buying.

Peter Lynch said that there are many reasons why insiders sell but there is only one reason why they buy.

I like being paid while I wait and a dividend yield of almost 5% is not too shabby.





From $100,000 to $199,000:
Ascendas H-Trust
Accordia Golf Trust
Development Bank of Singapore
OCBC Bank

Ascendas H-Trust will probably be replaced by a new entity and I shared my view about the proposed combination with Ascott Residence Trust in two separate blog posts earlier this month.

As for Accordia Golf Trust, it still has the potential to increase DPU significantly in the next few years and I blogged about this before. 

I am quite happy to be paid while I wait, as usual.

Development Bank of Singapore is doing well and I would like to build a larger position if there is a meaningful correction in its share price.

New addition to the list is OCBC Bank.

This is the result of several rounds of accumulation at under $11.00 a share as I felt it offered relatively good value for money.





As for SingTel and Wilmar, after reducing my exposure significantly, my positions in SingTel and Wilmar are now worth less than $100,000 each.

Not part of my largest investments now, SingTel and Wilmar have been removed from the list here.

If Mr. Market should tempt me with better offers, I am likely to give in to temptation and sell what remains.

Remember, I am just doing what makes sense to me.

Remember, you have to do what makes sense to you.

Have a plan, your own plan.

"We must understand our motivations for investing in the stocks we are invested in.

"The tools we employ and the attitude we have must be appropriate to our motivations.

"That way, we will stand a good chance of doing better with a consistent strategy and this is so both financially and emotionally!"
From: 
Rules for investing in difficult times.




Recently published:
Sell into the rally and stay invested.

Related post:
Largest investments in 2018 (Part 2).

Sell into the rally and stay invested.

A reader left me a comment recently:

"Many AK shares like CDG and APTT have gone up. I hope AK didn't dispose them."

Why would I sell them before?

I like being paid while I wait.

This is something I have said many times before.

Therefore, regular readers would find this quite familiar.






We buy undervalued income producing assets, receive dividends while waiting for Mr. Market to turn realistic.

We could even buy good income producing assets at fairer values, receive dividends while waiting for Mr. Market to turn optimistic.

When Mr. Market is greedy, the wait is over.






Having said this, regular readers would also be familiar with the phrase "trading around a core position".

Although I will sometimes sell into a market rally to lock in some gains, I always stay invested for income, retaining a core position.

I am an income investor at heart and more so now as a retiree but there is also no accounting for Mr. Market's moods which means staying invested is probably sensible.






Despite the fact that there are negative divergences aplenty, the bull might have legs and market euphoria could last longer.

Some readers who attended "Evening with AK and friends" might remember the way I explained what a negative divergence was.

An example is as the share price goes higher, trading volume dwindles.

Volume is the fuel that drives rallies.

If volume dwindles, the rally could be ending.






There are potential double tops as well.

We see this when the share price, having retreated from a high, tries to go higher but fails.

As prices retest recent highs, we want to see higher highs forming on the momentum oscillators such as the MACD.

If we see lower highs in such instances, we have a negative divergence.





Mr. Market's euphoria could be sputtering.

I have trimmed my investment portfolio by some 25% to 30% since my last blog post.

So, as you can see, it is not an overly big reduction.

I have sold into the rally but I am staying invested.






The rally is also a good opportunity to sell stocks which are more speculative like APTT.

APTT was really too cheap to ignore and regular readers know I was gobbling as its unit price plunged.

At one stage, it went under 13c a unit and, of course, I bought more.

The market rally has allowed me to book a gain on my investment in APTT which, I won't deny, is a pretty speculative position, whichever way we cut it.






A couple of stocks which received greater attention were SingTel and Wilmar, which I bought more of as their share prices plunged in the last one year or more.

Like APTT, they have paid me dividends while I waited.

I decided to reduce my positions in SingTel and Wilmar heavily because, to me, their charts show obvious negative divergences.

Could we see $3.00 to $3.10 a share for SingTel and Wilmar again in the next few months?

It is a rhetorical question, of course.






Certainly, we cannot predict but we can prepare.

There is no better way to be prepared than to have a full war chest.

AK's war chest says:

"Burp. Pardon me."

So, what do I do now?

I go back to being paid while waiting (and playing Neverwinter).

I am just talking to myself, of course.




Related posts:
1. Wilmar.
2. SingTel and CDG.
3. 2018 passive income and APTT.
4. Make investing easy with 3 things.

Recently published:
Ascendas Hospitality Trust.

In conversation with AK 2019 (Part 1).

As I cannot post stuff in Facebook anymore, periodically, I will share some of the more interesting conversations I have from time to time with readers as blogs in ASSI instead.

If you don't know what I am talking about, you must have missed my last blog post.

See:
Financially free and Facebook free.

Seriously?

Reader #1 says...
I have a friend, she is reaching 55 this year, she is wondering if she should go for enhanced CPF life.
May you share your thoughts? Thank you


AK says...
If your friend is not a savvy investor, having a larger monthly payout from CPF LIFE is a good choice. 🙂


Related post:
FRS and ERS CPF LIFE payouts.

Reader #2 says...
I done some market study with frens in telco n IT biz as well.

I got a feeling singtel will recover sooner than we expected.

Pricing has stabilised at the moment for them in india n oz

I was told to avoid the starhub totally because this coy doesnt has any more drivers fwrd

Airtel ceo has also said that recovery in 2020.

The ambani case of being used by ericcson will see anil coy to be bot over by his brother mukesh jio reliance soon.

Therefore it will reduced another big player in india.

Ak can u write something abt ocbc?
After recent result?
My feel is coy is too giam siap w dividends

AK says...
I still like SingTel.
Nothing to say about OCBC really except that I agree they are giam siap... 😛

Related post:
FY 2018 passive income.






Reader #3 says...
Sell part of ComfortDelgro & buy Soilbuild lor.
R u still holding on to your Soilbuild?

AK says...
No Soilbuild liao.
I blogged about this before.

Related post:
Was Soilbuild REIT shabby?





Reader #4 says...
I had to saved, scrimp and also "avoid" big weddings haha

AK says...
Many people I know, including readers of ASSI, earn more money than I did (as a worker).

It is easier for them to achieve financial freedom (than for many average workers).

Just have to keep our needs simple and our wants few (for a start). 🙂

Related post:
More passive income than richer folks.

4Q 2018 and FY 2018 passive income.

It has been a pretty long break since my last blog.

I have also been spending a lot less time engaging readers both in my blog and on Facebook.

I know that many readers are not used to this.

However, this will continue to be the case as I devote a lot more time to other activities.

This was something I talked about before and it is the new normal.

So, please don't be surprised if you do not hear from me for weeks (or months) at a stretch in 2019.

Now, with that out of the way, I shall wrap up 2018 with a blog on my full year passive income.







Mr. Market went into a depression in 4Q 2018 and made me too many tempting offers.

Spoilt for choice, with my limited resources, I added to my investments in several stocks in 4Q 2018 even as I sold my entire investment in First REIT.

To understand why I sold my investment in First REIT, please refer to related post at the end of this blog.




Stocks (with hyperlinks to my earlier blogs where available) which I added in 4Q 2018:

1. Accordia Golf Trust.

2. Centurion.

3. ComfortDelgro and SingTel.

4. OCBC.

5. APTT






Due to the fact that I sold my investment in First REIT as its unit price bounced up when it went CD, my 4Q 2018 passive income from REITs reduced.

Readers who have been following my blog for many years might remember that I didn't share details of my passive income from non-REITs until it became a more significant percentage of my total passive income a few years ago.




As my passive income from REITs have steadily declined in recent years as a percentage of my total passive income, I will consolidate the numbers for both REITs and non-REITs, henceforth.

4Q 2018 passive income (REITs and non-REITs):

S$ 38,884.64






As I have blogged about the reasons why I added to my investments in Accordia Golf Trust, Centurion and ComfortDelgro in 3Q 2018, I will not repeat myself.

I also did an update on APTT as its unit price plunged and also explained more in detail during "Evening with AK and friends 2018" the rationale for buying at what I thought was a distressed price.

In the list of stocks above, I have hyperlinked those blogs for anyone who might be interested in reading or re-reading.






As APTT's unit price plunged under 13 cents a unit after it went XD, I took another bite.

Accepting an offer from what I believe was an overly pessimistic Mr. Market, it was quite simply a price I would not have sold at.

Readers who have been following my blog for many years would know how I size my more speculative positions.

With this last purchase, I would stop increasing my position in APTT as I keep it at a size that my passive income could cover within a year or less.

If you do not know what I am talking about, please read this blog from 2014:

How to size our more speculative positions?




Now, I will briefly explain my decision to add significantly to my investment in OCBC.

With interest rates rising, logically, banks will do better.

Already invested in DBS and OCBC at lower prices two years ago, I have been waiting for another opportunity to increase my investments.

In 4Q 2018, I increased my investment in OCBC significantly.

Why OCBC?







OCBC's stock experienced stronger selling compared to DBS and UOBs'.

A back of the envelope calculation indicated that OCBC was trading at a much smaller premium to NAV while DBS and UOB were trading at a richer premium to NAV.

The same back of the envelope calculation indicated that OCBC's dividend payout ratio is about 40% which is very undemanding and is the lowest of the 3 banks.




OCBC also had the lowest PE ratio.

So, I took several bites of OCBC as its share price plunged in 4Q 2018.

The funds from the sale of my investment in First REIT certainly came in handy.

Of the three banks, OCBC just seemed to be a better value for money offer at the time.






Some people asked me for a forecast of what 2019 has in store for the stock market.

Honestly, I don't know.

I cannot predict.

I can only prepare.

Remember?

However, what I can say is that, a bit more or a bit less, I will probably be receiving a meaningful amount of passive income from my investment portfolio.




Regular readers know I really am more concerned with receiving a meaningful stream of passive income from my investments than whether stock prices are moving up or down.

As long as my investments continue to pay me, I am usually quite happy with holding on to them.

The best investments could be those that I don't ever want to sell because they are able to pay me year after year.

Peace of mind is priceless.







How much did I receive in FY 2018?

FY 2018 passive income (REITs and non-REITs):

S$ 188,735.86

On average, about $ 15,727.00 per month.

I was also fortunate to have more capital gains than losses in 2018.


So, 2018 has been a pretty good year for me and I hope 2019 will be kind to me too.





Remember this if you choose this path.

I do not know if stock prices are going up.

I do not know if stock prices are going down.

However, I do know that I am collecting more dividends and the total amount has increased year after year.






Finally, remember that the best time to start is always now.

It is never too late to start walking the path to financial freedom.

If AK can do it, so can you!

Watch this video on what Gurmit Singh has to say about his income and what he would have done differently:





Related posts:
1. 3Q 2018 income from non-REITs.
2. Sold First REIT.

3Q 2018 passive income (non-REITs): SingTel and CDG.

Deciding that Mr. Market was probably overly pessimistic, I added to my already very significant investment in SingTel as its share price sank below $3.10 again sometime in 3Q 2018.

The business environment has become more challenging for telcos, no doubt.

However, we have to remind ourselves that telecommunications companies are not all equally vulnerable.






Experience tells me that in any sector that is facing challenging conditions, 

1. entities which are sectoral leaders 

and 

2. entities which have strong balance sheets 

will most likely prevail and SingTel is that entity here.

SingTel's dividend yield expanded as its share price declined.







With a strong balance sheet, SingTel is committed to paying a meaningful dividend.

SingTel is very much aware of the challenges to its businesses and is very much in the process of transformation to stay relevant.

To be quite realistic, however, if the transformation takes longer than two years to make a more significant contribution to earnings, we could see DPS being reduced to 15c.

Whether this makes sense to the income investor in us would depend on the dividend yield we demand from an entity like SingTel.






Of course, this would help us to determine our desired entry prices.

When to buy?

You decide.

Regular readers know that I like being paid while I wait.

While waiting for improvement, I am quite happy to receive a near 5% dividend yield or more.

So, I would be quite happy to accumulate SingTel if Mr. Market should go into another depression.







Next, Mr. Market's pessimism also gave me the opportunity to add to my investment in ComfortDelgro as its share price fell closer to $2.20 again in 3Q 2018.

Regular readers would remember $2.20 as the support I identified in the event of a decline in CDG's share price and how I bought some at that price in 2Q 2018 too.

On the chart, the rising 200 days moving average was also approximating $2.20 and I thought it should strengthen the support I identified.





I like to think that I know ComfortDelgro a bit better than before and simply bought more at a price I would not sell at.

Buy at prices we would not sell at.

Sell at prices we would not buy at.

I believe although we might not get it right all the time, we should get it right most of the time if we bear this in mind.

2Q 2018 passive income from non-REITs.

2Q 2018 saw the first income contribution from my investment in ComfortDelgro, the majority of which was made late last year.

Regular readers would remember that my investment in ComfortDelgro was a relatively large one.

So, the dividend received from ComfortDelgro was a pretty significant contribution to my total passive income for the quarter.







Of course, as ComfortDelgro's share price rose in 2Q 2018, I was sitting on some rather nice gains.


After doing some back of the envelope calculations and looking at the chart, I decided to lock in some gains. 

I blogged about the decision to reduce my investment in ComfortDelgro last month.

Read it: HERE.










With a much smaller investment in ComfortDelgro now, its future contribution to my passive income is going to be correspondingly smaller, unless there is a significant special dividend, however unlikely.

It seems that Mr. Market is feeling much better about ComfortDelgro now but if there should be another bout of depression, all else remaining equal, I would be quite happy to take up Mr. Market's special offer again then.






More recently, however, I did nibble at ComfortDelgro after its share price retraced to $2.20. 

This is consistent with what I shared in both the comments section here in ASSI as well as on my Facebook page that any price decline should find some support at $2.20.

Technically, it seems like ComfortDelgro's share price bottomed at $1.90 to $2.00 and that should provide some guidance for those who are interested in price action.

In 2Q 2018, I added to my investment in SingTel which regular readers would remember as another relatively large investment I made late last year and added in 1Q 2018 on price weakness.

SingTel's price moved in the opposite direction of ComfortDelgro's and this has given me the opportunity to add to my investment in SingTel again and again in 2Q 2018.

For sure, all telcos are facing a more challenging environment but SingTel is not Starhub nor M1 and should not be tarred with the same brush.

You might be interested in my recent blog on Starhub: HERE.






I will talk more about SingTel as I received messages and emails from readers who seemed to be in distress after investing in SingTel coincidentally at the same time I did.

When I bought into SingTel late last year, it was obvious from the charts that the share price could see some weakness and I said as much here in ASSI.

I really hope that people did not bite off more than they could chew.

Even so, I can understand that it could be more than unsettling for some people as they see the share price declining.






Why did I go ahead and buy although the chart suggested more weakness was likely?

Well, one could also ask why did I go and buy ComfortDelgro when the chart was bearish too?

I always say that TA is about probability and not certainty.

I knew what I was getting myself into.

I had a plan and I stuck to it.








Our decision should also be informed by FA.

SingTel had bearish charts but from a FA perspective, I thought I was paying a fair price for SingTel but what about ComfortDelgro?

ComfortDelgro was rather undervalued. 

Yes, I paid an unfair price for ComfortDelgro that was to my advantage.








Now, as SingTel's share price plunged, it has also become unfairly priced and to my advantage as a buyer.

Is SingTel undervalued now? 

I think so.

Like how I was accumulating ComfortDelgro, it is only natural that I would be accumulating SingTel now.

Of course, we have to be aware that cheap could get cheaper.






Treating my investment in SingTel as an equity bond (especially after the management's commitment to an annual DPS of 17.5c for the next 2 years), I am quite happy to add to my investment as its share price plunged. 

Basically, dividend yield has expanded which makes it all the more attractive to the income investor in me.

Unless we have good reason to believe that SingTel is going the way of the Dodo, there is really no need to panic and sell if we are investing for income.







OK, I guess some might have reason to panic.

Who? 

For those who used money which they really should not be using to invest with, they might panic.

If it is money we need for other purposes in the near future, we should not be investing with it and, definitely, I would not use borrowings in one form or another to invest with.






Now, treating ComfortDelgro also as an equity bond, with a surge in share price to a high of $2.50 in 2Q 2018, its dividend yield compressed and rather significantly too which made it immediately less attractive as an investment for income when compared to SingTel.


Both SingTel and ComfortDelgro have strong balance sheets and also strong cash flow.

I believe that they will continue to pay meaningful dividends and I will continue to accumulate on any further price weakness.

Mr. Market is probably overly pessimistic about SingTel but, of course, only time will tell (pun unintended).






To cap it off, I have to say that getting a dividend yield of around 5% from entities like ComfortDelgro and SingTel is probably more attractive than getting a 6% or 7% dividend yield from an S-REIT with a gearing level of 35% to 45%.

There is a reason why SingTel has a credit rating of "A" while AIMS AMP Capital Industrial REIT has a credit rating of "BBB-" both from S&P, for example.







S-REITs pay out 100% of their operational cash flow (not earnings) and have no retained earnings while SingTel has retained earnings, not paying all its earnings as dividends.

If there should be another financial crisis, all else remaining equal, SingTel is likely to weather it better than most S-REITs which partly explains the difference in credit ratings.






I should quickly mention that I also made a small investment in Raffles Medical Group in 2Q 2018.

Please refer to the blog if you are interested in this: HERE.

2Q 2018 passive income from non-REITs:
S$ 47,043.92







Overall, 2Q 2018 has turned out pretty well for me with the receipt of passive income, capital gain and also opportunities to buy more good stuff on the cheap.

Related post:
1Q 2018 passive income from non-REITs.

Investing in Starhub at the right price?

My investment in Starhub has turned out to be a bad one.

However, I am not losing sleep over this.

Why? Is it because I am on anti-depressants?

Hey, don't be so like that lah.

I stop taking those pills a long time ago.






I am quite ZEN about the paper loss really because my investment in Starhub is very small especially in comparison to my investment in SingTel which has been, of course, my preferred local Telco to invest in for quite a while now.

To give you a rough idea, the market value of my investment in Starhub is less than 2% the market value of my investment in SingTel.

Although I have been adding to my investment in SingTel as its share price declined in recent months, I have not added to my investment in Starhub even as its share price plunged.

Why is this so?

SingTel has a stronger balance sheet, stronger free cash flow and it pays out a fraction of its earnings as dividends to shareholders.

Starhub, on the other hand, has seen its free cash flow declining in recent years and it pays out much more than its free cash flow as dividends to shareholders.

Although Starhub has cut DPS from 20c to 16c, I think, if the management is financially prudent or unless business improves dramatically however unlikely, DPS should be cut again.




I did the numbers some time back and again more recently. I now feel that a more sustainable DPS could be 10c, assuming things do not get much worse.

So, if we choose to invest in Starhub today for income, we should ask ourselves if a DPS of 10c would make us happy?

I received quite a few messages from readers regarding Starhub recently. Examples:

Assuming that Starhub pays all of its cash flow to shareholders as dividends, I feel that it behaves very much like S-REITs.

Hanging on to that idea, if we can get a dividend yield of 7% or more from Starhub which is probably comparable to what we can get from industrial S-REITs, it is not too bad a deal.

Assuming a lower 10c DPS, even at $1.70 a share, we are looking at a dividend yield of 5.88% which doesn't quite cut it for me even with this new perspective.




Investing in Starhub for income?

Closer to $1.40 a share could be a more reasonable price to pay, I feel.

At $1.40 a share and assuming a more sustainable DPS of 10c, dividend yield would be 7.14%.

What if $1.40 does not happen?

No problem because I would rather invest in SingTel at the current price than to invest in Starhub at the current price, everything taken into consideration.





Looking at the chart, the RSI shows that Starhub is very oversold but like the MACD, the momentum oscillator does not show any sign of a trend reversal.

Although Starhub's share price plunged 5% (- 9c) today to $1.67, we could see it going lower if Mr. Market shares my sentiments.

Things could get worse before they get better.

So, why have I not been adding to my investment in Starhub?

Alamak. I anyhow talk to myself only lah.

You blur? I also blur.

ComfortDelgro HUAT and is SingTel next?

Reader says...
Wa!!! Your CDG HUAT AH!!!

Blog more about it lah and we can HUAT more!!!

Many thanks!!!

AK says...
I am sure I do not have any influence over prices.

Have you looked at SingTel's share price, to be fair?

As investors for income, our job is to decide if an equity is right for our purpose and if its price is attractive enough for us buy in.





For examples, in 1Q 2018, I added to my investment in ComfortDelgro at under $2.00 a share and SingTel at under $3.40 a share.

I had no idea how the prices would move.

After buying, most of the time, we simply wait while we get paid.





We only act if Mr. Market decides to continue selling cheap (i.e. at prices we would not sell at) or if Mr. Market decides to buy from us at prices we would not buy at.

Well, if you are right, now that I have mentioned SingTel in this blog, maybe, SingTel will HUAT next week. ;p






Bad AK! Bad AK!

Related post:
AHT and CDG (SBS).