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UOB and OCBC hike final dividends! Huat ah!

Saturday, February 25, 2023

Good news from UOB and OCBC!

When DBS declared a special dividend, I wondered if UOB and OCBC would do the same.

Unfortunately, there is no special dividend from UOB and OCBC.

However, they did declare higher final dividends!

Source: UOB.


UOB increased their final dividend by 15c or 25%.

This isn't too shabby since it is very close to a 50% payout ratio.

We can probably expect this to be the norm in future as it isn't a special dividend and, thus, unlikely to be a one off event.



As for OCBC, they hiked their final dividend by 12c!

While it is lower than UOB's 15c hike in absolute terms, it is much higher in percentage terms.

An increase of 12c from 28c to 40c is an almost 43% hike!

I am so stunned like vegetable!






OCBC is not only one of my largest investments.

OCBC is my largest investment in equities. 

My investment in OCBC is much larger than my investment in UOB.

So, my passive income in the form of a final dividend from OCBC is going to be very much larger this year compared to last year.

This is especially when I increased the size of my investment in OCBC many times in 2H 2022.

Although my war chest was rather depleted, I was able to do this by reducing my investments in Centurion Corp. and ComfortDelgro which were both underperforming.

In my blog on Wilmar's record dividend, I said I was feeling a little giddy.

I think it just got worse.

Want evidence?

See the new photo of AK below.

Alamak!






I slapped myself hard and reminded myself that the higher dividends from our local lenders will go some way to filling shortfalls from Sabana REIT, CapitaLand China Trust and IREIT Global this year.

Still early days, to avoid possible disappointment, I am keeping expectations low with regards to full year passive income for 2023.

After all, I cannot dictate how much my investments should pay me.

I will continue to exercise prudence when it comes to expenses as, generally, this is something I have considerable control over.

However, to be honest, I am feeling more sanguine about this year's passive income now.




Whether the year would end on a high note for me as an investor for income should become clearer in another 6 months or so from now.

Till then, I just have to be patient and wait.

"Wall Street makes its money on activity. You make your money on inactivity." 
- Warren Buffett

To fellow UOB and OCBC shareholders, congratulations! Huat ah!

References:
1. Reallocation of resources.
2. DBS, OCBC and UOB.
3. DBS: Special dividend.
4. 4Q 2022 passive income.
5. Largest investments (4Q 2022.)




IREIT Global: EUR 1.28c DPU meets expectation.

Friday, February 24, 2023

Some readers might remember that I said IREIT Global was a bargain in September last year in a blog.

In that blog, I took into consideration a vacant asset in Darmstadt and how that would impact IREIT Global's distribution per unit (DPU.)

I said that we could see a reduced annualized DPU of 3.5c or 3.4c.

IREIT Global declared a half year DPU of Euro 1.28c and if we were to annualize this, we get Euro 2.56c.

Income will be distributed on 23 March and assuming an exchange rate of 1 Euro to 1.42 S$, we get a DPU of around 1.82c.

Annualizing 1.82c gives us 3.64c which is at the upper end of my estimate.

So, IREIT Global met my expectation and did not disappoint.




Assuming a unit price of 52c, a DPU of 3.64c gives us a distribution yield of 7%.

A 7% distribution yield is higher than the 6.5% to 6.7% I was expecting and it is not bad at all.

We have to remember that IREIT Global retains 10% of distributable income or else distribution yield would have been higher.

Retaining 10% of distributable income is why the REIT has a very strong balance sheet by S-REITs' standards.

Also, a 7% distribution yield from a REIT with a relatively low gearing ratio of 32% is really quite good because there is no risk of dilution through equity fund raising.

A highly geared REIT offering a 7% distribution yield might have to raise funds through a private placement or rights issue which makes that 7% a lot less attractive.

If we are looking for a relatively rewarding REIT which gives us peace of mind in the current high interest rate environment, IREIT Global is a good fit in more ways than one.

Source: IREIT Global




If you want a refresher on why I thought IREIT Global was a bargain, read this blog:

IREIT Global is a bargain.

Don't want to rehash (too much.)

Income will most probably improve as the asset in Darmstadt will be progressively filled in the coming months.

Rental escalation will continue as rents are linked to CPI which is rising due to a strong inflationary environment in Europe.

Short term pain for long term gain.

Still, my investment in IREIT Global is an important passive income generator for me as it is now an even larger investment than before.

In fact, it is larger than my investment in AIMS APAC REIT.

To all fellow IREIT Global investors, stiff upper lip and soldier on.

Recently published:
Wilmar: Record dividend! VICOM steady pom pi pi!

Reference:
Largest investments (4Q 2022.)





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