3Q 2021 passive income: Better days ahead?

Time flies and it is time for another quarterly passive income update.

Usually, I publish a quarterly update on the last day of the quarter or within the first couple of days of the new quarter.

However, this quarterly update took a bit longer than usual to produce because I was caught up in some stuff happening in Black Desert Online and Neverwinter. 

In case some think that I was joking, I really wasn't.

See:
Divdends and virtual worlds.

However, this blog also took a few more days to publish because there were quite a few things I would like to talk to myself about.

So, I took some time off from adventuring in the virtual worlds to blog in the real world.

Anyway, this is going to be a slightly longer blog by ASSI's standards.

For readers who are used to my shorter (and maybe sweeter) blogs especially the more recent ones, you have been warned.

OK, I think we shall start with Tuan Sing Holdings.

I invested in Tuan Sing Holdings about 4 years ago at 33 cents a share because, after doing some research, I believed that it was very undervalued. 

As I like being paid while I wait for value to be unlocked, being rewarded with a dividend yield of about 1.5% while waiting wasn't too bad a deal.

In 3Q 2021, Tuan Sing Holding's share price shot up and the hefty discount to NAV vanished.

Together with this, the chart showed a very overbought picture and the upward movement in price was losing strength.

So, I decided it was time to enjoy the harvest and sold my smallish investment in Tuan Sing Holdings.

The substantial capital gains together with dividends received over the years made this a very good investment.

The money received mostly went to filling my war chest which was drained significantly by IREIT Global's most recent rights issue.

Readers who are interested in why I invested in Tuan Sing Holdings four years ago might want to read this blog:
Invested in Tuan Sing Holdings.

What surprised me in 3Q 2021 was Keppel Corp's move to take over SPH.

Totally unexpected.

Each share of SPH would receive $0.668 cash, 0.596 unit of Keppel REIT and 0.782 unit of SPH REIT.

It looked rather messy to me and I would have preferred an all cash deal.

As I already have a relatively large exposure to REITs in my portfolio, I am not too enthusiastic about this unsolicited increase in exposure to REITs.

Anyway, after so many years, it seems that my storied journey with SPH has come to an end.

See:
Investment in SPH is larger now.

I also added to my investment in Wilmar as its share price softened in 3Q 2021.

As Wilmar's share price formed lower lows, the MACD, a momentum oscillator formed higher lows which gave us a positive divergence which is forward looking.

It suggested that smart money was accumulating on price weakness.

I also reminded myself that earlier in the year, Mr. Kuok paid $4.33 a share and increased exposure by some $10 million.

Of course, in any case, a positive divergence in the chart does not tell us that a strengthening of share price is imminent.

Indeed, we could see a positive divergence dragging out with lower lows in share price and higher lows in the momentum oscillator.

What the positive divergence told us was that shares were changing hands from weaker to stronger holders and that downside risk was reducing as selling pressure was probably easing.

If the positive divergence continues, I would likely add to my investment in Wilmar if its stock should see further weakness in price.

See:
Wilmar was $7.11 a share.

Passive income in 3Q 2021 also benefitted from Accordia Golf Trust's final distribution.

It was the distribution of residual funds in the Trust before it headed for delisting.

The distribution was relatively small compared to what was distributed after the sale of its assets, of course, but as a proportion of my passive income in 3Q 2021, it was pretty significant.

This is a one off event and 3Q 2022's passive income will be relatively lower, all else being equal.

Feeling a little nostalgic as Accordia Golf Trust is removed from my portfolio.

See: Accordia Golf Trust: 73.2c offer.

In 3Q 2021, King Wan Corp. announced a 1 for 1 rights issue at 2c per rights share.

In reply to a reader's comment on the rights issue, I said that King Wan Corp. increasingly looked like a lemon to me as it had not been able do better after so many years.

The rights issue was proposed to strengthen the company's balance sheet and regular readers would know that I generally do not like such rights issues.

I have written off my smallish investment in King Wan Corp. and, therefore, did not participate in the rights issue.

Of course, this is not the first time I have done something like this.

This is another reminder that, as investors, we make some and we lose some.

As long as we make more than we lose over time, we should do well enough.

See: 

Have a plan, your own plan. 

and 

Getting it right 6x out of 10.

How much did I receive in passive income from my investments in the stock market in 3Q 2021?

$69,145.13

The largest passive income contributor for me in 3Q 2021 was IREIT Global which is, of course, the largest investment in my portfolio as I increased exposure to the REIT during the most recent bear market and participated in its recent rights issues.

Other relatively significant contributors to my passive income in 3Q 2021 were Accordia Golf Trust, AIMS APAC REIT, Sabana REIT, CRCT, Starhill Global REIT, ComfortDelgro, VICOM, OCBC, UOB, DBS and Wilmar.

You might find these blogs interesting:

1. AA REIT and Woolworths' HQ.

2. Investing with common sense. 

3. Sabana REIT and Wilmar. 

4. DBS, OCBC and UOB.

5. Should we invest in AA REIT? 

Finally, for those who might have missed it, I said this with regards to SembMarine's latest round of fund raising back in July:

"I am less inclined to pump in my own money at this point into SembCorp Marine as it is anyone's guess how many years it is going to take for them to generate an income for me. 

"In my retirement, I cannot afford to be too adventurous with my money and I decided to let go of my free shares in SembCorp Marine."

See:
2Q 2021 passive income.

This article in The Business Times might also be of interest to some readers as it once again reminds us that no one cares more about our money than we do and we should never ask barbers if we need a haircut:

Sembmarine revised statement on directors' intent to subscribe for rights issue after EGM. Shifting disclosure of directors is a bigger issue than some directors not fully taking up their rights shares.

Until my next blog, stay safe and do the right things to help keep all of us safe from COVID-19.

Reference:
No one cares more about our money...

Recently published:
HDB BTO projects delayed...

HDB BTO projects delayed: What to do?

I know many readers are waiting for my blog on passive income received in 3Q 2021 but it is going to take a bit more time as there are quite a few things I would like to talk to myself about.

In the meantime, I am publishing a relatively short blog on delays in HDB BTO projects which might be of interest to some readers.

The COVID-19 pandemic and the subsequent Delta variant made life really difficult in more ways than one for many people. 

One of the consequences is the longer time it takes for construction work to be completed and this has, of course, affected the completion of HDB BTO projects as well.

Some people need their flats urgently and have decided to buy resale HDB flats instead of waiting for the completion of their HDB BTO flats. 

However, for those who are in less of a hurry, the wiser thing to do is probably to wait. 

The two big considerations would be 

1. financial cost 

and 

2. the leasehold nature of HDB flats. 

Readers who have been following my blog for a long time would know that this is a topic I have blogged about pretty frequently before.


BTO HDB flats, everything else being equal, are the most affordable form of housing in Singapore. 

I would have bought one myself if I could but I did not qualify for one. 

There are plenty of conspiracy theories out there about how the PAP government is out to rob us of our CPF savings by selling us 99 years leasehold HDB flats. 

It always amuses me to read or to hear stuff like that. 

These people are either misled or out to mislead. 

They are either misinformed or malicious.

A 99 years leasehold HDB BTO flat is a good quality housing option in Singapore if we are looking for a home to call our own till the day we die. 

Unless we have very strong reasons for buying a resale HDB flat, wait for a HDB BTO flat. 

Like many things in life, patience will be rewarded. 

If you are new to my blog, you might want to read the following blog which I shared with a reader who contacted me recently: 

When the lease on HDB flats end.

Related posts:

1. Why do I stay in a condo?

2. Not successful in SG unless...

"You mustn't tell people that. 

They will look down on you." 

AIMS APAC REIT to buy Woolworths' HQ.

It is confirmed. 

AIMS APAC REIT is going to buy Woolworths' HQ in Sydney. 

The price tag? 

Around S$454 million. 

This is going to increase the REIT's portfolio value by more than 26%.


As a long time investor of AIMS APAC REIT, I like the purchase for the following reasons: 

1. The asset will increase the number of freehold assets held by the REIT. 

2. The purchase will increase income visibility as there is a 10 years lease to Woolworths with annual rental escalation of 2.75%. 

3. There is room to build more rentable space as the asset's plot ratio has yet to be maxed out which will allow for more organic growth in the future (and this is probably a big push for the REIT to make the purchase if we look at their commendable record in maxing out plot ratios of some of their assets in Singapore.) 

4. The purchase is likely to be DPU accretive because it is going to be 60% financed by debt (which is likely to be competitively priced given the current low interest rate environment) and net proceeds raised from the recent S$250 million in perpetual bond issue will also be utilized.


A question on many unit holders' minds is probably will there be a rights issue? 

The REIT manager has said that they could issue new equity. 

Personally, I think that it is a forgone conclusion because when we compare the price tag of S$454 million and what we know in point number 4 above, there is a shortfall of some tens of millions of dollars. 

Equity issuance could take the form of private share placements or a rights issue, of course.


As a long time unit holder, I hope that any equity fund raising is going to be a rights issue. 

This is so that I can increase my investment in the REIT probably at a discounted price. 

After all, I never get invited to take part in private placements. 

I suppose I will just have to wait and see. 

Woolworths’ Full Year Result 26 Aug 21: Woolworths’ earnings led higher by Australian Food business.


References: 

1. AIMS APAC REIT and perpetuals. 

2. AA REIT: A private tour.

Investing with some common sense for peace of mind.

This blog is in reply to a comment by a reader who wants to know my opinion on what he thinks are "poor governance and regulatory oversight by MAS, DBS (its sole bookrunner) and SGX" in the case Eagle Hospitality Trust. 

Read his full comment: HERE.

Hi HH Low, 

Unfortunately, we cannot always be right and I have been wrong more than a few times myself. 

With Eagle Hospitality Trust (EHT), I was probably in the minority in sounding the alarm as many investment bloggers and analysts were saying the Trust was severely undervalued as its unit price declined. 

Many bought into the Trust and many more followed. 

The importance of not riding on coattails and to do our own due diligence really cannot be overemphasized.


Also, it pays to remember that: 

"We might have different requirements and certainly different circumstances. 

"So, it is probably not a good idea to ride on someone else's coattails, no matter how famous that someone is." 

See: Good time to buy now or should I wait?

For example, many have been buying into Alibaba since its stock price went into a tailspin and this has lasted many months.

There is a saying that stock prices flow down a river of hope and it certainly has been the case for Alibaba.

Low can go lower and if we do not have deep pockets like Charlie Munger and have to borrow money to invest in Alibaba, we might be in for many sleepless nights. 

Regular readers know where I stand on such matters. 

See: Investing and peace of mind. 

Not many have the stomach for volatility and fewer still have the stomach for constantly declining stock prices with no bottom in sight. 

It might be a better idea to wait for prices to bottom before buying and that was what I did in the bear market last year. 

I might miss out on some gains but I would have spared myself quite a bit of mental agony.

For example, see: 

Buying DBS, OCBC, UOB and cheering for IREIT Global.

Anyway, I digress. 

In the case of Eagle Hospitality Trust, for better or for worse, like always, I stuck to my views and it turned out I was right about EHT. 

The lesson? 

We have to remember that there is no free lunch in this world and nobody cares more about our money than we do.

Although I think that people who have done wrong should be punished, in the real world, evil is not always punished while the good and the innocent often pay heavy prices. 

So, instead of depending on regulators and experts to do a good job, it is probably a good idea for us to be a bit cynical and if something is too good to be true, take a closer look because it could indeed be so.


I am not the smartest person around but I like to think that I have some common sense which I believe is common enough that most people have it. 

I just happen to use my common sense a bit more, maybe. 

For anyone who might be interested, these are some of my past blogs on Eagle Hospitality Trust: 

1. Is Eagle Hospitality Trust worth it? 

2. Eagle Hospitality Trust: Financial engineering. 

3. Eagle Hospitality Trust: My philosophy. 

4. Eagle Hospitality Trust: Extinction?

AIMS APAC REIT and perpetual bonds.

This very short blog is in reply to a reader's comment on a topic which other readers might find interesting. 

AIMS APAC REIT is well run and it has been very rewarding as an investment for income. 

A perpetual bond is a good thing for the REIT because it does not add to the REIT's gearing while giving it more funds. 

A coupon of above 5% is also pretty attractive to anyone interested in lending money which is what we are doing when we buy bonds. 

Personally, I rather be invested in AIMS APAC REIT than to lend money to them because I think it is more rewarding to invest in the REIT. 

I would suggest that readers interested in the perpetual bonds read these blogs: 

1. Why have bonds in our portfolio and which ones? 

2. Bonds, REITs and the instant gratification of yield.

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."

No more 'shielding' of CPF soon?

I found out that people were exploiting a loophole in the CPF system back in 2017 and at the time, some people told me it wasn't a loophole and that it was working as intended. 

I am referring to what is popularly known as "CPF Shielding" where members who have ample funds in their CPF OA drain their CPF SA funds just before turning 55 years old so that their CPF RA will be made up of money from their CPF OA instead. 

Shortly after turning 55, they will refund money to their CPF SA so that they will enjoy higher interest income from their CPF savings overall. 

This to me has always sounded like a loophole as the CPF is meant to help the masses and in particular poorer CPF members. 

See: 

The purpose of the CPF is to make the rich richer? 

This is why there is a limit on CPF annual contribution. 

This is why we cannot do CPF SA top ups once the prevailing FRS is hit. 

This is why upon turning 55 years old, the first 30K of our CPF savings enjoys additional 2% interest and the next 30K of our CPF savings enjoys additional 1% interest. 

This is to help members who have lower CPF savings with retirement funding.

The CPF system is not meant to make the rich richer. 

CPF members who are able to do "CPF Shielding" are those who are better off financially and they should not be overly reliant on the CPF to fund their retirement. 

I know many rich people who would like to park more money in their CPF accounts but they are not allowed to. 

Rightly so. 

Let the CPF system help those who need the help most. 

See: 

Unfair FRS and ERS' payouts compared to BRS. 

Unfortunately, very often, people who need the help most are the most stubborn.

They would resist the CPF system instead of making use of the system to help themselves. 

See: 

A river called "CPF" and the stubborn horses. 

I said this in 2018 in reply to a reader's comment on "CPF Shielding" here: 

"The more people talk about this, the more people do this, the more this loophole could be plugged." 

AUGUST 17, 2018 AT 5:44 PM 

Source: Exploit the CPF... 

It seems that this is finally happening. 

"The days of exploiting loopholes in the national retirement scheme could be over soon, after the Central Provident Fund (CPF) Board posted a warning on its website. 

"In particular, it is taking aim at the act of "shielding", which is promoted by some financial advisers to circumvent the transfer of funds from members' Special Account (SA) to their Retirement Account when they hit 55." 

See: 

No more 'shielding' of CPF soon? 

The last time I blogged about "CPF Shielding" was in December 2019. 

See: 

Maximising CPF savings. 

I still think that the CPF can be our best friend in our golden years but our best friend does not appreciate being exploited. ;) 

References: 

1. CPF can be our best friend.

2. How to grow our CPF savings?

3. 4 ways to boost our CPF savings.

"Good time to buy now or should I wait?"

This blog is a reply to a reader's comment: HERE. 

Whenever readers ask me if it is a good time to buy something, I get the shivers. -.-" 

I don't know what Mr. Market might do tomorrow and, so, I don't know if the price will go up or down. 

I do not have a working crystal ball.

However, I have a very dusty bowling ball that sometimes thinks it is a crystal ball.

You want? ;p

As long as I am satisfied that something is an investment that will generate a fairly attractive and reliable income for me, I buy some. 

Past rights issue shouldn't matter to an investor today.

He should look at today's numbers and decide whether it is an investment that will deliver what he is looking for or not?

We might have different requirements and certainly different circumstances. 

So, it is probably not a good idea to ride on someone else's coattails, no matter how famous that someone is.

We can always wait for prices to plunge before buying but prices could appreciate instead. 

It might also be many years before Mr. Market goes into another depression and we would have lost many years of income.

This is why some say time in the market is more important than timing the market.

To buy now or to wait, it depends on whether you feel IREIT Global fits your plan and whether it meets your minimum requirement from an investment. 

If you are interested to get a glimpse of my investment philosophy, read this blog: 

Investment philosophy... 

"I emphasize that I will not tell anyone if they should or should not buy anything. 

"I am only sharing my philosophy and experience in my blog. 

"I am not here to make a decision for you." 

There are also some relevant ideas in these blogs: 

1. An exchange with AK on REITs. 

2. Undervalued but is it a BUY? 

3. Sell now and wait to buy lower? 

4. When to BUY, HOLD or SELL? 

5. Eagle Hospitality Trust: Extinction?

Beware of scams!

Do not make difficult times more difficult for ourselves.

When I was blogging more actively, advocating prudence and reminding readers to be careful of overleveraging financially was something I did on a pretty regular basis.

I also said that we should always have an adequate emergency fund and do not think that we can always depend on lenders to extend a helping hand.

We should develop a crisis mentality and do not think that we are invincible.

Remember that bad things do happen and when they happen, it is often without warning.

See this blog and the related posts:
Husband lost his job and my savings is zero!

The COVID-19 crisis is not just a bad thing happening as it is probably the worst thing to happen in many decades.

We are probably familiar with the saying "spare the cane and spoil the child."

Sounds heartless but it works.

I am one such beneficiary or victim. ;)

I believe that people do learn better after a painful lesson or a few and the COVID-19 crisis has probably left some cane marks on most of us.

Unless we are very rich, we cannot afford to feel invincible.

Just because some people we know are buying a second home or an investment property, it does not mean we should too, especially if it means having to borrow large sums of money and having a harder time to make ends meet.

Why risk so much for something we don't really need but maybe want?

So, when do we know we are overleveraged?

Do some stress testing and imagine losing our jobs or our business doing badly resulting in income going to zero.

How long would we be able to last financially in such a situation?

Ah, I have passive income!

Some wonder why I have such a big emergency fund even though my passive income seems more than adequate. 

The COVID-19 crisis is probably eloquent enough to provide the answer.

Dividends can be suspended or reduced and that's what happened during this crisis.

See this blog: An unbeatable level of certainty...

So, what triggered this blog?

An article on investing in properties in Iskandar, Johor and how difficult things are for some.

This is a topic I blogged about before as well.

"The Johor skyline is now dotted with empty condominium units, due to an oversupply in the market and lack of foreign buyers.

"When Singapore business owner Jonathan Gan purchased a four-room condominium at Lovell Country Garden in 2018, he thought he had clinched his dream retirement home.

"The freehold apartment located near Johor Bahru’s city centre was twice the size of his three-room HDB flat in Singapore, but the cost was only half of the latter when he bought it directly from the developers.

"Just three years after he purchased it, Gan, who bought the unit at around RM1 million (US$242,000), is having a hard time trying to sell it, even though the asking price is a fraction of what he paid for it.

"Property analyst Debbie Choy, who is director of Knight Frank Malaysia’s Johor branch, said the situation is particularly bad for condominiums and serviced apartments, of which there is an oversupply in the Iskandar region.

"Even owners of the more premium, newer developments in Johor Bahru are having problems trying to attract tenants.

"In its report, Henry Butcher Malaysia highlighted that Johor was the state with the highest proportion of unsold residential properties in the country, even before COVID-19."

Source:
CNA, 12 June 2021. 

Remember not to ask barbers if we need a haircut.

When the tide goes out, we will find out who have been swimming naked.

In a more recent blog, I said that some people have nothing to risk but everything to gain when asking us to part with our money.

Even people we think of as friends who are not property agents might be getting a commission when they recommend that we buy a property.

Remember to be careful with our money as nobody cares more about our money than we do.

For sure, external factors are making things financially more difficult for many of us. 

If we have made the situation worse because of bad decisions we have made in the past, learn the lesson and avoid making similar decisions again in the future.

Do not make financially difficult times more difficult for ourselves. 

References:

1. Buying property in Iskandar, Johor.

2. Two questions to ask when buying a property.

3. Use CPF savings for homes and investments.

2Q 2021 passive income: COVID 19 endemic and rights issues.

One of Gurmit Singh's songs on the COVID 19 situation has a line that goes, "Things different already."

That was when the COVID 19 pandemic was relatively new and we had to implement a circuit breaker in Singapore which was more or less a lockdown for two months.

Lives and livelihoods were all badly affected and after more than a year, are things still different?

Well, this is the new normal and if we think that this normal is going to be the one that lasts, then, things are going to be the same but not the same as before the pandemic.

So, COVID 19 has become endemic just like the seasonal flu which we have been living with forever.

COVID 19 is just more infectious and, in some cases, deadlier.

I know some people who get themselves vaccinated yearly against the seasonal flu but I am not one of them.

However, I might be getting vaccinated against the COVID 19 on a yearly basis.

All of us probably would have to do this to help ensure that we do not give the virus room to mutate and become harder to deal with.

This is a major worry as so many countries in the world are not vaccinating their population fast enough.

Anyway, as Singapore recovers from the pandemic and learns to live with the higher probability of COVID 19 becoming endemic, I expect my investments to continue to bring home the bacon although smaller in size for now.

So, what did I do in 2Q 2021?

I thought it would be absolutely nothing until SMM or SembCorp Marine announced that they would be having a 3 for 2 rights issue at 8c per rights share to raise $1.5 billion to strengthen their balance sheet.

Didn't they just have a rights issue a year ago for the same reason?

Regular readers know that I rather like rights issues when the money is used to generate even more income.

However, I don't like rights issues when the money is used to strengthen balance sheets as it does nothing for income investors like me.

So, shareholders of SembCorp Marine who supported the 5 for 1 rights issue at an issue price of 20c per rights share a year ago just got bamboozled in the backside again.

Last year, when the demerger of SembCorp Industries and SembCorp Marine was announced, I bought more shares of the former and was consequently given many free shares in the latter.

I don't mind holding on to the free shares as I wait for SembCorp Marine to transform and maybe do better in time to come.

Of course, there is also the possibility of a merger with KepCorp's O&M business which seems set to happen and if that should happen, SembCorp Marine will need more money.

However, I am less inclined to pump in my own money at this point into SembCorp Marine as it is anyone's guess how many years it is going to take for them to generate an income for me.

In my retirement, I cannot afford to be too adventurous with my money and I decided to let go of my free shares in SembCorp Marine.

I also have another rights issue on my plate and that is a 214 for 1000 rights issue at an issue price of 59.5c per unit by IREIT Global.

For sure, I like this rights issue a lot more than SembCorp Marine's.

The money will go towards the purchase of 27 freehold assets in France to be leased to a global sporting goods company.

By supporting this rights issue, I will be expecting more passive income in future and as an income investor, this makes me happy.

Anyway, how did 2Q 2021 fare for me on the passive income front?

Some of my businesses like ComfortDelgro are still having a hard time and paying less or no dividends while some like the local banks are capable of paying more dividends but have yet to do so for various reasons.

Although faced with challenges, my portfolio generated a decent amount of passive income in 2Q 2021:

S$ 44,874.21

This is much lower than the $57,395.95 received last year in 2Q 2020.

However, last year saw contributions by Centurion Corporation and also Accordia Golf Trust and they were both large positions.

Those contributions are missing this time.

Centurion Corporation is paying down debt instead of distributing income to shareholders which is probably a good thing in the longer run as the business is still generating good cashflow.

I expect Centurion Corporation to emerge from the pandemic stronger than before and I hope they remember to reward their loyal shareholders like me then.

Last year also saw much bigger contribution made by ComfortDelgro, of course.

Increasing exposure to the local banks last year has helped to mitigate the expected reduction to my passive income in 2Q 2021.

Together the local banks accounted for about a quarter of the passive income received and I expect this to rise once they increase their dividend payouts as the Singapore government expects COVID 19 to become endemic and things go back to normal.

This is important for me because 2Q 2021 passive income was helped by Wilmar's higher dividend to reward shareholders after the listing of its business in China and also a higher distribution by AIMS APAC REIT (AA REIT) as they released some distributable income they held back before.

These bigger distributions provided a boost to my 2Q 2021 passive income but I probably should not expect them to be repeated.

Other investments which are significant contributors to my passive income in 2Q 2021were VICOM, Ho Bee Land, ST Engineering and Frasers Logistics and Commercial Trust.

Hmm, I guess that's all for now. 

Everybody, till the next blog, please stay safe to keep everybody safe.

No one is safe till all of us are safe.

References:

1. SembCorp Industries investment is larger now.

2. IREIT Global: 214 for 1000 rights issue.

3. 2Q 2020 passive income: COVID 19 crisis.