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If you have not read the 3 earlier parts, read them HERE (PART 1), HERE (PART 2) and HERE (PART 3).
Although most of my investments have an emphasis on income, regular readers know that I also have some money in investments which would hopefully give me a mix of income and growth.
Such investments, some bigger and some smaller, as a whole, form a smaller proportion of my portfolio compared to my investments for income.
This is consistent with the capital allocation pyramid which I have shared many times before.
Keeping this in mind, I added to my investment in Wilmar at under $3.10 a share as Mr. Market turned pessimistic in 4Q 2017.
Buying at a discount to NAV and at a price 10% lower than what Archer Daniels Midland Co paid to increase their stake more than a year ago seems like a good idea to me.
Wilmar is a growth story and I believe that value is still being created.
More valuable than it was in the past, undervalued now, we could see Wilmar's value being unlocked in 2019 if the plan to list in China succeeds.
See related post at the end of this blog for my simple analysis on Wilmar's value.
Wilmar definitely demands quite a bit of patience from investors and with a dividend yield of about 2%, it isn't anything to shout about but it is nice that I am getting some pocket money while I wait.
In the same vein as my investment thesis for Guocoland earlier in the year, I decided to put some money in Ho Bee Land towards the end of 4Q 2017.
After a run up in its share price, I waited for a retreat to a long term support which is the rising 200 days moving average (200d MA) before nibbling.
From a fundamental perspective, with a NAV per share of $4.55, my purchase was at a 47% discount to NAV which is pretty attractive to me.
Of course, there is no point in buying at a large discount to NAV if the investment just sits in our portfolio and looks pretty.
It is only a worthwhile investment if value is unlocked or if it generates an income for us.
Ho Bee Land's major shareholder owns more than 70% of the company but this, in itself, is no guarantee that value would be unlocked. So, it is important to be paid while I wait.
Looking at the numbers, I feel that Ho Bee Land would be quite comfortable with a higher DPS but to avoid disappointment, I am going with an assumption of a rather undemanding 5c annual DPS.
Although I am quite comfortable with my entry price, I am not crazy about it and I would probably be accumulating only if Mr. Market decides to give me a better offer.
After all that has been said, I am expecting 2018 to be a year of reduced passive income as a result of having a greater proportion of investments with lower dividend yields in my portfolio.
That story to be told next year.
To conclude this final blog of 2017, FY 2017 distributions received from non-REITs:
S$ 481,902.09
So, it all works out to be approximately S$40,158.00 a month.
Without the huge distribution from Croesus Retail Trust, everything else being equal, off the top of my head, I estimate a big decline of more than 80% in my passive income from non-REITs in 2018.
Here is wishing everyone a happy, healthy and prosperous 2018!
Related post:
Accumulating Wilmar.
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