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ComfortDelgro: Special dividend! Earnings jump!

Monday, February 27, 2023

In my blog detailing changes made to my investment portfolio in January 2023, I said that I increased my exposure to ComfortDelgro.

In that blog, I said that ComfortDelgro's fundamentals looked to be stabilizing and, technically, it looked like ComfortDelgro's stock price was bottoming too.

If you missed that blog or need a refresher, see:
Changes to portfolio in Jan 23.

ComfortDelgro has just reported an increase of 63% in 2H earnings, year on year.

Operating costs for the full year increased 6.3% while operating profit increased 35.1% which is pretty impressive, given the many challenges ComfortDelgro is facing.

Higher dividend income from ComfortDelgro is going to be pretty impactful as it is still one of my largest investments.

ComfortDelgro has declared a final dividend of 1.76c per share and a special dividend of 2.46c per share.




ComfortDelgro has a huge cash pile and, if they do not have better use for the money, paying more generous dividends to shareholders cannot be a bad idea.

Technically, ComfortDelgro is now testing immediate resistance at $1.20 which is provided by a declining 50 days moving average.

If this resistance should be broken, there is a chance that the declining 200 days exponential moving average which is currently at $1.30 could be tested next.

There are multiple resistance levels and although analysts covering ComfortDelgro seem to believe that the worst is over with most having mouth watering target prices for ComfortDelgro's common stock, it could take quite a while before we see those levels.

That is from a technical analysis perspective, of course.

Fundamentally, ComfortDelgro should see a gradual improvement in earnings as we continue to see a return to pre COVID-19 pandemic norms.




So, from this perspective, to expect a mean reversion to happen sometime in the future isn't unreasonable.

Still, we want to stay grounded in our expectations.

If we are investing for growth, at this point, it seems that ComfortDelgro is probably a poor choice but as an investment for income, ComfortDelgro is probably still able to pull its own weight in any investment portfolio.

I am not going to hold my breath if I am looking for massive capital gains here, for sure.

Instead, I will celebrate the higher than expected dividend for now.

Reference:
Add CDG or the banks?




T-bills with CPF and SRS in March 2023.

Sunday, February 26, 2023

So far, I have applied for T-bills mostly with cash, using mostly money from maturing fixed deposits.

As more and more money got locked up in T-bills as well as fresh fixed deposits with higher interest rates, I  reached a stage where I didn't have anymore cash to apply for T-bills.

Then, I found some money playing truant at home which I quickly put to work in T-bills in February.

Unfortunately, unless I had a money tree at home, it would be impossible to find more money playing truant at home.

I still want to continue getting T-bills in order to maintain a meaningful exposure to fixed income especially during this period of much higher yields.

Of course, until a few months ago, for many years, even as a retiree, I was doing voluntary contributions and top-ups to my CPF account to achieve this goal.

I have always thought of the CPF as an investment grade government bond which offered relatively attractive yields while having an annuity angle.

So, although it might seem like I have recently developed a fascination for fixed income, I really haven't.

It has always been an important part of my investment portfolio.




Anyway, I looked at how much money I might have left in my SRS account and CPF-OA as we can buy T-bills using money in these accounts.

My SRS account recently got a leg up as I sold my investment in SATS, booking a modest capital gain in the process.

My CPF-OA still has some $52K available for professionally managed products.

I will split the $18K available in my SRS account into 3 equal parts and apply for the 3 T-bills on offer in the month of March.

These would be non-competitive bids as I suspect that the cut-off yields for all the T-bills to be auctioned in the month of March would be much better than the SRS interest rate.

This is one prediction my bowling ball which thinks it is a magical crystal ball is going to get right, I feel.

Yes, I said to my bowling ball, "You win liao lor!"




The $52K available for investment in my CPF-OA, I will make a competitive bid for the T-bill closing on 1 March.

I am bidding very close to a 4% p.a. yield this round as I see inflation data coming in strong and also a strengthening US$ against the S$.

As the application is being made online, the cost really isn't that high like before.

Online application saves me a trip to the bank and, quite possibly, a long time in a queue.

It is very fortunate that DBS has made online application for T-bills using CPF-OA money available.

If successful, I would lose only an extra month's worth of interest income (i.e. for the month of March) from CPF-OA as the T-bill will mature in early September. 

This would give me ample time in the month of September to transfer the money from the CPF-IA back to the CPF-OA so that I would not lose another month's worth of interest income for the month of October.

In total, I would lose 7 months' worth of CPF-OA interest from March to September.




This is unlike the 1 year T-bill which I applied for in January using CPF-OA money.

For that T-bill auction, my bid yield was just a bit more than 3.4% p.a. as that was the interest rate OCBC offered for fixed deposits placed using CPF-OA money.

The cut-off yield for that T-bill was 3.87% p.a. which wasn't a bad outcome.

That 1 year T-bill started at the end of January 2023 and matures at the end of January 2024.

So, for that T-bill, unfortunately, I would lose 2 more months' of CPF-OA interest income for the months of January 2023 and February 2024.

Total of 14 months of CPF-OA interest income lost.

Just talking to myself about T-bills.

If you are new to eavesdropping on AK, please do not jump to the conclusion that this is all that we have to do to achieve a significant level of financial security and, ultimately, financial freedom.

For the vast majority of us, fixed income alone is not going to get us to financial freedom.





References:

1. CPF or SSB?
2. Have $10K? Invest or save?
3. Changes to portfolio (Feb 23.)


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