Wilmar Int'l: Record dividend! VICOM steady pom pi pi!

2023 started out well for my investment portfolio with Volare Group offering to buy units in one of my largest investments, Sabana REIT, for 46.5c a unit in January.

As my investment in Sabana REIT is made up mostly of units bought in December 2020 and January 2021 at around 35c a unit, the offer was good news to me.

I last blogged about this just a few days ago:

Sabana REIT: Sell at 46.5c a unit to Volare Group?

Then, earlier this month in February, DBS announced stellar results and higher dividend.

A special dividend of 50c a share was also declared and because DBS is one of my largest investments, larger, in fact, than my investment in Sabana REIT by a good measure, it was fantastic news to me.

It will have a relatively significant impact on my quarterly passive income.

That led me to wonder if OCBC and UOB might do the same as their results are expected to be relatively robust too.

See:
OCBC and UOB to follow DBS with special dividends?

Still luxuriating in the news of a rather generous special dividend from DBS, I read that Wilmar International has declared a final DPS or dividend per share of 11c.

Together with the 6c interim dividend paid earlier, total dividend is 17c per share which is a record for Wilmar International!

As one of my largest investments, Wilmar International is in the same bracket as DBS and UOB in my investment portfolio.

See:
Largest investments updated (4Q 2022.)

Good news all around!

Although I am telling myself don't let it go to my head, I am feeling a little giddy, to be quite honest.

I have to be careful because I tend to make mistakes when I am feeling high.

I know this for a fact because it has happened a few times before.

Making mistakes when I am on medication is unfortunate but making mistake when I am feeling high is shameful.

I already gave myself a little treat when DBS announced its special dividend.

I think it is OK to give myself another little treat.

Must be nicer to myself.

Wilmar International and our local lenders are all cyclical businesses and the weather isn't always going to be sunny.

I am not being a wet blanket.

It is just the hard truth.

So, socking away a big chunk of the bumper dividends in preparation for rainy days is the sensible thing to do.

I alluded to this when I shared my 2022 full year passive income at the beginning of this year.

This is not being pessimistic.

It is just being pragmatic.

See:
Passive income: More resilience.

Still, rain or shine, I expect Wilmar International and our local lenders to continue to bring home the bacon for many more years to come.

I also remind myself that I have not always been right and that I have been wrong too.

I have also said many times that as long as I am right more often than I am wrong, I should do well enough.

Peter Lynch famously said that if we can be right 6 times out of 10 when investing our money, we are not doing too badly.

However, I should also say that unlike Warren Buffett who has money pouring in constantly so that he can invest and compensate for mistakes, we don't have that luxury.

So, by socking away cash whenever we get a boost in passive income allows us to do a mini mimicry of Warren Buffett's cashflow which will allow us to compensate for mistakes more easily.

Of course, if you are someone who is able to mimic Warren Buffett's cashflow without having to do what I do, then, good on you!

If you are a new reader or cannot remember, I blogged about this in 2014:

How to make recovering from investment losses easier?

Moving on to VICOM which reported higher earnings and declared a final DPS of 3.32c, long time regular readers know that this is one of my larger smaller investments.

This means that the position is larger than $50,000 but smaller than $100,000 in market value.

Unlike its parent, ComfortDelgro, the price of VICOM's common stock is very much above my buy price since I added it to my investment portfolio in 2015.

I would say that VICOM is similar to ST Engineering, another one of my larger smaller investments, in the way that a big portion of its income is assured because of our government.

Just like ST Engineering, VICOM also pays out 90% of its earnings as dividends.

Not an exciting investment but a steady one for income, I expect it to continue paying for my car inspections (and more, of course.)

VICOM steady pom pi pi!

Very apt Singlish phrase if we were to imagine cars honking.

I think I have rambled long enough in this blog.

To all fellow Wilmar International, DBS and VICOM shareholders, congratulations and huat ah!

References:
1. Accumulating Wilmar.
2. Wilmar: Free stuff...

Special dividend from VICOM and financial freedom.

I just received a letter from LTA that my car is due for an inspection.

Wow!

Has it really been three years?

Time really flies.

This is something older people feel more keenly than the younger ones.





The younger ones think that they still have time to plan for retirement and they are probably right.

However, if they think that they can kick the can down the road, this could result in them regretting when they are older.

Many older people do regret not planning earlier for retirement.

Time and tide wait for no man. 

Before we know it, we are 55 years old.





We have but one life to live.

Take ownership.

Don't blame the system.

Don't blame fate.

Don't blame anyone else.

We should only blame ourselves if we cannot retire well in Singapore.





Anyway, when I was making payment to have my car inspected in VICOM, I noticed that the price has gone up but I was quite ZEN about it.

Why?

VICOM is paying for my inspection, after all.

I know.

Bad AK! Bad AK!





Regular readers know that I have a larger smaller investment in VICOM ($50,000 to $100,000) and receive regular dividends.

The fact that VICOM declared a final dividend of 23.17 cents and a special dividend of 8.62 cents means more passive income for me.

However, it is also good on another level as the largest shareholder of VICOM is ComfortDelgro and I have a relatively large investment in ComfortDelgro which also pays me dividends.





VICOM and ComfortDelgro together are probably bigger than my investment in AIMS AMP Capital Industrial REIT or similar in size.

They are all important passive income generators in my investment portfolio and they are pretty predictable ones too.

To all my readers on the investing for income path, keep at it because financial freedom is not a dream.

If AK can do it, so can you!

However, only Mr. Bean can do this.






Related posts:
1. Invested in ComfortDelgro.
2. Invested in VICOM.
3. Passive income all gone!

BREXIT and 1H 2016 income from non-REITs.

Were there any major development in the non-REIT space for me in 2Q 2016? 

Selling most of my investment in NeraTel probably qualifies. I sold about 90% of my investment in NeraTel. 

Being a relatively substantial part of my investment portfolio, the sale, as you might have guessed, bumped up the cash level in my portfolio by quite a bit.

A happy problem?

In the short term, with the divestment gains, it is probably a happy problem but if I do not put the money to more productive work, we would have to remove "happy" from the phrase. So, I put some of the money to work.

In the non-REIT space, in 1Q 2016, some readers might remember that I bought DBS, DBS and more DBS. Even now, DBS is trading at a discount to NAV and a relatively low PE ratio of about 8x. Paying out about a third of its earnings as dividends, the yield is almost 4%. 

Thanks to BREXIT, I was able to add to my investment in DBS as its share price declined, breaking a technical support. I would like to collect more on any further weakness.

In 2Q 2016, I also added to my investments in Starhub, VICOM, QAF Limited and Croesus Retail Trust on lower prices offered by Mr. Market.

Investing for income, I am interested in entities which have strong income generating abilities. Of course, they must pay meaningful dividends.


A handful of readers asked me for my thoughts on Croesus Retail Trust's proposal to be internally managed. It is quite interesting since it would be the first investment trust to be internally managed in Singapore if the deal is accepted by its unitholders.

All else remaining equal, internal management is a good thing for Croesus Retail Trust as it would mean that profits which would have gone to the external manager could be distributed to unitholders instead. The probability of conflict of interest between an internal manager and the unitholders will also be lower.

Of course, an external manager of any investment trust is a profitable enterprise, earning regular fees. No external manager in his right mind would give this up for a song. The price to internalise Croesus Retail Trust's manager is set at a princely sum of S$50 million.

For FY2015, the external manager recorded earnings of about S$500,000. Paying S$50 million to internalise the management would mean paying a PE ratio of 100x. Comparatively, ARA which manages a portfolio of REITs like Suntec REIT is trading at a PE ratio of about 15x. Go figure.

Although I like the idea of an internal manager for Croesus Retail Trust, I think paying S$50 million for this would be a price too high.

Post BREXIT, I also added to my investment in OUE Limited which I first blogged about in 2014 as a possible asset play. I basically paid 50c for what was worth $1.00. It was a smallish position as I was wary of the situation with Twin Peaks condominium. See my past analysis: here.

I decided to add to my investment because the situation with Twin Peaks has improved with many more units sold but the stock traded at an even bigger discount to NAV. While waiting for value to be unlocked, I will get some pocket money from the regular dividends OUE Limited declares.

Very much along the same line of thought, I decided to also increase my investment in Wing Tai Holdings. Although they have much more exposure to development properties compared to OUE, they have a stronger balance sheet. Mr. Market could be overly pessimistic. See my past analysis: here.

In 2Q 2016, I received income from:

1. APTT
2. ST Engineering
3. SPH 
4. PREH
5. QAF Limited
6. Wilmar
7. ARA
8. Hock Lian Seng
9. SCI
10. SMM
11. OUE Ltd
12. Hong Leong Finance
13. DBS
14. NeraTel
15. Accordia Golf Trust
16. Croesus Retail Trust
17. Starhub
18. Ascendas H-Trust


I hope I have not missed out anyone.

Total income received from non-REITs in 1H 2016:

S$ 58,545.01

That is about S$ 9,757.00 a month.

I will continue to nibble at stocks and if a correction in the magnitude of 10% or more should happen, I am prepared to buy much more.


Related posts:
1Q 2016 income from non-REITs.

9M 2015 passive income from non-REITs.

Some wonder if Mr. Market could go into a depression? I don't know but I do know that many stocks became much more attractively priced in the last three months.

Consistent with my strategy to diversify my portfolio to reduce reliance on S-REITs for income, I added to my long positions in the following as their stock prices declined more significantly recently:

1. Accordia Golf Trust

2. Ascendas Hospitality Trust

3. ST Engineering

4. Starhub

5. SembCorp Industries

In the last three months, I also initiated long positions in the following as investments for income:

5. VICOM
"A 15x PE ratio would give us a fair value of $5.36 or so per share."

6. Religare Health Trust
"Trust has demonstrated its ability to improve its revenue organically quite strongly which makes up for the expiration of the sponsor's waiver to their share of the distributable income."

7. King Wan
"King Wan is in a net cash position and it also has an order book that would provide earnings visibility until 2018."

Finally, I accumulated the following stocks which have a bit of an income investing angle but the main reason is because I think they are worth much more and at lower prices, they became even more attractive:

8. Wilmar

9. OUE Limited

If you should be interested, you could search ASSI for more of my blog posts on these stocks and why I decided to add them to my portfolio when I did.

Of course, stocks could stay undervalued for a long time but regularly receiving some dividend in the meantime makes the waiting more palatable. I like to be paid while I wait.

If you suspect that I have dipped into my war chest in the last three months, you are right. 

Could we see another big decline in the stock market? We could and we should be ready. So, being cautious, I have not exhausted my war chest.

I have a couple of fixed deposits maturing next month in October and I will probably be keeping the money close at hand instead of putting it in another fixed deposit or two.

In Q3 2015, the following non-REITs paid dividends:

1. SATS

2. Old Chang Kee

3. APTT

4. SingTel

5. SCI

6. SMM

7. Wilmar

8. NeraTel

9. ST Engineering

10. QAF Ltd.

11. Starhub

12. HongLeong Finance

13. Croesus Retail Trust

For the first 9 months of 2015, total passive income received from non-REITs: S$ 57,747.59. 

This works out to be S$ 6,416.40 per month.

Have a shopping list and be ready to pounce if Mr. Market becomes depressed.

Related post:

6M 2015 passive income from non-REITs.

VICOM: Initiated long position at $5.71.

I drive and I own a car. So, I should be interested in VICOM. Sounds straightforward enough.

I have been looking at it for a year or so but found that the valuation was a bit rich.





During one of the evenings with AK and friends, we had a lively discussion regarding VICOM's future too.

As is the case with any asset, when everybody wants a piece of it, price goes up. VICOM's price skyrocketed not too long ago. 

At those prices, its PE ratio was closer to 20x. I wasn't prepared to pay that high a PE ratio for the stock. 





It wasn't too long ago that the PE ratio was closer to 15x, I observed.

2014's EPS was 34c. Assuming 5% growth in 2015, EPS could be 35.7c this year. 

A 15x PE ratio would give us a fair value of $5.36 or so per share.




Assuming a 50% pay out ratio, we could see a DPS of 18c which would give a dividend yield of 3.35% in the year 2015. 

It isn't a sexy proposition, admittedly, especially when we expect risk free rates to rise in future.



Based on technical analysis, during an "Evening with AK and friends", I mentioned that VICOM could retreat to $5.50 a share which is where the share price might find support from a golden ratio (161.8%) if we believe in Fibo lines.




In the meantime, looking at the charts, we see possible supports at $5.82, $5.70 and $5.61. These are possible nibbling points.

This morning, my smallish overnight BUY order was filled.

Related post:
Have a plan, your own plan.