Sabana REIT's lesson and Wilmar's interim dividend.

A few years ago, I blogged about lessons from my journey as an investor with Sabana REIT.

One of the things I said was:

"I remember UOB KayHian was particularly bullish in 2013 and had a target price of $1.30 for Sabana REIT. By that time, I had turned cautious although I was enjoying a distribution yield on cost of between 10.3% to 11.1%..."

See: 

History with Sabana REIT.

In a nutshell, no one cares more about our money than we do and we must always do our due diligence.

Sabana REIT is pretty generous in dishing out lessons and last year saw ESR-REIT making a low ball offer for Sabana REIT which resulted in a fight led by activist investors to scuttle the proposed deal.

I wrote a piece on why the proposed deal was a bad one for Sabana REIT.

Not only did it grossly undervalued Sabana REIT, "Sabana REIT's investors would eventually have to help bear the cost of the mistake that was the merger of ESR-REIT and VIT." 

See: 

4Q 2020 passive income.

Anyone who said anything to the contrary was either misinformed or malicious.

In a recent article in The Business Times, the writer's one liner summed it up well.

"If the proposed merger of Sabana Reit and ESR-Reit last year demonstrated anything, it is that IDs cannot always be relied upon to act in the interest of unitholders."

Source: 

The Business Times.

I am sure Sabana REIT is worth more today and will probably be worth more in the future as it continues to unlock value in its portfolio.

Of course, a rising tide will lift all boats too and Sabana REIT will be a beneficiary.

Recently, I also replied to comments from some readers on Wilmar's declining share price.

I actually increased exposure to Wilmar, adding on weakness in its share price, averaging up.

I believe that Mr. Market is undervaluing Wilmar even at today's price.

"Wilmar reports higher 1HFY2021 earnings on better selling prices and volumes; to pay interim dividend of 5 cents." 

Source: 

The EDGE.

The cyclical component of Wilmar's business will do well just like other cyclical businesses as the economy recovers.

However, Wilmar is much more than that.

I said this in a blog about Wilmar before:

"There are not many companies in the world like Wilmar when it comes to agricultural products and their distribution. 

"Wilmar has amazing breadth and depth of operations. 

"Its distribution network is extensive, established and still growing."

See:
Accumulating Wilmar on price weakness.

I said that investors in Wilmar must be of the patient variety and I still feel that way.

While I wait for Mr. Market to pay what is Wilmar's true value, I am happy to be paid while waiting.

Will Mr. Market pay Wilmar's true value and if it does happen, when?

Your guess is as good as mine, of course.

Related posts:
1. Wilmar was $7.11 a share.

2. Little book of value investing.

"It may move up toward its real worth today, next week, or next year. It may trade sideways for five years and then quadruple in price. There is simply no way to know when a particular stock will appreciate, or if, in fact, it will."

Higher dividends from DBS, OCBC and UOB.

I was already invested in DBS and OCBC before the last bear market triggered by the COVID-19 pandemic and fully expected them to be important income generators in my portfolio.

Although the local banks are well capitalized and have the ability to maintain their dividends, the Monetary Authority of Singapore (MAS) told them to cap dividends last year at 60% of what they were before.

See:

As the dust started to settle in the last bear market, I added UOB to my investment portfolio, gradually increasing my investments in all three banks.

The buying went on for a few months, started in April and went on till October last year.

I was prepared for a year or two of lower dividends from the local banks and, in fact, in my last two passive income updates, I said that my larger investments in the local banks should deliver decent dividends this year but nothing spectacular.

I had very modest expectations.

Well, good news as this is going to change in the future because the MAS has lifted dividend restrictions.

See:
MAS Lifts Dividend Restrictions

This will have a big impact on my passive income going forward as going back to 100% of what they paid out in the past means a 66% increase in dividends from the local banks.

Since I increased my exposure to the local banks rather substantially in 2020, there should be an even bigger jump in their contribution to my passive income compared to 2019.

Things are looking up.

Hopefully, this is also a sign that the worst is behind us and that the broader economy will do better in the future.

“While some uncertainties remain, Singapore’s economy is expected to continue on its recovery path, given strengthening global demand and progress in our vaccination program...” - MAS

Congratulations to fellow shareholders and good luck to all of us.

Related posts:
1. Buying DBS, OCBC and UOB.

2. 1Q 2021 passive income.

3. 2Q 2021 passive income.

Reference:
Shares of Singapore banks jump after regulator lifts cap on dividend payouts.

"Moody's had changed its outlook on the Singapore banking system from negative to stable in March, in recognition of the improving economy, potential for bank earnings to grow and broadly stable asset quality."

Added on 7 August 2021: "...higher payouts of about 15 cents per share on average."