How to get $200K dividends yearly? Simpler than you think.

The sequel to the podcast I did with The Fifth Person last month is here.

I just watched it and I thought it would be good to tie up a few loose ends.

If viewers should spend some time ruminating on what I said in the follow-up podcast, they would not need to read this blog post.

So, this blog post is more for my benefit since I have a need to talk to myself all the time.

AK is mental.

1. My response to a viewer who said most regular folks would have to speculate in order to generate sufficient capital to get a $200K dividend annually from investments.

There is no need to speculate although we could certainly do it and in the podcast I shared my view on that.

There are other ways to make more money and regular readers know I did some trading and I also had side hustles to make more money.

I also blogged about how we should not wait until we have a larger amount of money before we start investing for income.

Dividends made in the early days, no matter how small, would grow our wealth, and could be used to invest for even more income.

2. Possible to make $200K dividends annually with $2M and how to get $2M in capital?

In the podcast, I said that my capital wasn't $10M, $5M, $4M or $3M.

It could have been closer to $2M.

And that is giving me $200K in yearly dividends now?

How is that possible?

Elementary, my dear Watson.

A lot of what I bought was bought during crises, when Mr. Market was suffering from severe depression.

By now, my experience with AIMS APAC REIT should be quite well-known.

It is one of my largest investments and probably my oldest one.

It generates a distribution yield of more than 10% on cost for me, year after year.

As I got into it in a big way during the Global Financial Crisis, it is a major contributor to my yearly passive income. 

Of course, my investment has been free of cost for many years too.

I have recovered my capital and I am still receiving income from my investment.

So, of the $200K in dividends received last year, a big chunk of it was actually free money.

It is money generated from nothing.

How did this happen?

Time happened.

It is possible to get higher dividend yields during crises if we invest in the right businesses that would survive the crises.

Of course, we could choose to sell these investments if their stock prices should recover later on.

I used the examples of Lippo Mall Trust and First REIT in the podcast.

Regular readers of my blog would know there were others like Saizen REIT, Croesus Retail Trust and Accordia Golf Trust as well.

Selling for significant capital gains grew my wealth.

It gave me more capital to invest with.

We could also choose to sell a portion of our investments like what I did with Old Chang Kee and Hock Lian Seng.

I sold half of my investments in them when their share prices doubled.

So, whatever I am still holding now is free of cost.

And they are still paying me dividends, year after year.

More free money.

This brings me back to the earlier point on speculation.

Why is there a need to speculate in order to grow wealth?

Simply wait for the next opportunity to make significant investments for income like what I did during the Global Financial Crisis.

Invest in good businesses which are able and willing to pay us.

That opportunity came in the form of the COVID-19 pandemic not too long ago.

Of course, regular readers would know that I emptied my war chest during the pandemic and got into UOB at $19 a share.

That is one of my largest investments today.

It is rewarding me with a dividend yield of almost 9% per annum now.

I also talked about how I started buying into DBS at $13 and $14 a share back in 2016.

At $13 a share, the dividend yield is almost 15% per annum today.

Now, coupled with free money I get from AIMS APAC REIT and some other stocks, do you see why I say the capital deployed isn't as much as what some people say it is?

What I have done over the years isn't simply putting some of my monthly salary in fixed income instruments unless we count the CPF.

If that was my method, then, yes, to generate $200K yearly in dividends now, I would need around $4 million in capital today.

I agree this would be insurmountable for most regular folks.

So, I remind myself of what I did over the years and how I made what seemed impossible happen.

This might be a lot for some people to take in.

There is also the fact that my skill as a wordsmith has regressed in recent years.

So, maybe, read this blog post a few times.

Ruminate on it.

I know I had to.

AK is talking to AK here, after all.

Please don't let people tell us what AK has achieved is not possible for regular folks because the capital required is enormous.

It is simply not true.

This blog post is the truth.

Go share this with people you care about and tell them this.

AK is a regular folk too.

If AK can do it, so can you!

68% expects downturn! CPF POFMA! Distressed REITs!

I have three things to say.

Since I am lazy, might as well put them all in one blog post.

1. Two thirds of Singaporean consumers expect an economic downturn.

There is plenty that is not well in the world and this is probably not unexpected.

However, if we end up just feeling worried about how life could get tougher, then, that is a waste of energy.

I would shore up my cash position even more aggressively.

Make sure I have an adequate emergency fund.

Fill up my war chest and be prepared to buy from Mr. Market when he feels depressed.

I have blogged about such topics many times before and many blog posts are consolidated in this one blog post:

Survivability and opportunity in times of distress.

2. Fake news on CPF!

A Tik Toker has been spreading fake news about the Singapore election system and the CPF system.

POFMA has been served to him twice.

Yet, he is stubbornly sticking to his views.

If he is looking for fame, this isn't the way not only because he harms himself and possibly his family.

He is also harming ignorant Singaporeans who watch his clips and believe what he says.

I like to help people but some people are beyond help.

Like what I said before in this blog post:

A river called CPF and stubborn horses.

3. I made a lot of money buying distressed REITs before.

I recently published a new video on how Manulife US REIT could possibly be an opportunity to make a lot of money.

It reminds me of the time when I bought Saizen REIT and AIMS APAC REIT when they were in distress donkey years ago.

If you are not subscribed to my YouTube channel, here is the link to the video.

How to make money buying distressed REITs?

Be prudent, patient and pragmatic!

If AK can do it, so can you!

$200K in dividends podcast. To inspire and encourage.

Everyone should probably know by now that I did a podcast with my friends at Fifth Person two weeks ago.

Apparently, it has turned out to be a blockbuster!

I so stunned like vegetable!

If you have not seen the podcast yet, here it is.

For readers who have been to "Evening with AK and friends" or who have been listening to me talking to myself for years, the stuff I said in the podcast wouldn't be anything new.

I have said many times before that I am not allowed to give financial advice.

I am just sharing my story and what has worked for me.

It is also important to remember that I have not always been right.

However, like Peter Lynch said, we cannot be right all the time.

In this business, if we are right 6 times out of 10, we are doing OK.

Not in those exact words but you get the idea.

It is OK to have a couple of investments in our portfolio which are not doing as well sometimes but as long as they are fundamentally sound investments, the day will come when they shine.

I remind myself from time to time that in the short run, the market is a voting machine.

There are many people who are more interested in prices and they make money trading in the market which gives rise to volatility.

Nothing wrong with that especially if they are good at it.

When we are investing, we are weighing machines as we are more interested in valuations.

We want to buy stocks of businesses when they are undervalued or at least fairly valued.

Depending on what kind of investor we are, we would look at different things.

However, in the end, it is all about searching for value.

As an investor for income, I am more concerned with whether my investments are able and willing to pay me as expected.

So, during market meltdowns, I am usually pretty calm because I am not using borrowed money to invest with.

There is no need for me to sell at depressed prices to meet obligations as I am not using money meant for something else in life.

What I have achieved as an investor for income took many, many years of time and effort.

Totally worthwhile as I mostly do nothing most of the time unlike the days when I was more active as a trader.

I always say "If AK can do it, so can you".

I really believe this.

As an average income earner, if we are prudent financially and patiently invest for income, we can become a millionaire too.

To invest, we need capital.

It is all going to come from our earned income in the early days, unless we have been lucky.

So, I talked to myself about how to save 100% of our take home pay.

It sounded funny but it wasn't a joke.

If you search my blog or my YouTube channel, which is still a baby, you would find the content.

My YouTube channel: AK71SG.

When the dividends we receive are able to pay for our lifestyle, we can save 100% of our take home pay.

Simple.

Of course, we shouldn't be saving for the sake of saving.

The money saved can be used to invest for more income when the time is right.

So, wealth creation continues.

When people see "$200K in annual dividends", some think maybe AK had a $4 million inheritance or maybe he struck TOTO or something.

A 5% dividend yield on a $4 million investment would give $200K in annual dividends, after all.

When I started my journey, I only had a few thousand dollars and my monthly salary was only $3,000 a month.

Those were hard times.

Long time readers might remember my blog on how I bought my first lot or 1000 shares of ST Engineering at $1.55 a share.

That was more than half of my monthly salary.

I still have those shares today.

What is my dividend yield on those shares today?

Of course, a more recent example would be my investment in AIMS APAC REIT which I bought mostly during the Global Financial Crisis.

At a post consolidation price of less than $1 per unit and a distribution yield of more than 10% per annum on cost, my investment has been free of cost for many years.

Even more recently in 2016, I started investing in DBS at $13 to $14 a share.

Some readers might remember this.

What is my dividend yield on those shares today?

Of course, it would be a mistake to think that it is all just buying and holding as long time readers of my blog would know that I have sold many of my investments over the years too.

Some like Old Chang Kee and Hock Lian Seng, I sold half when their stock prices doubled which means that what I have today is free of cost.

I kept 50% of my original investment as I continued to like them and the dividends they paid.

Who doesn't like free money?

Some of my investments like Lippo Mall Trust and First REIT, I reduced exposure significantly or sold completely for some hefty gains after some years of extraordinarily high distribution yields.

Why did I sell?

Bad vibes.

The same could be said for my investment in Sabana REIT many years ago and also Soilbuild REIT.

Then, there was a string of divestments after many years of receiving good income like Saizen REIT, Croesus Retail Trust, Accordia Golf Trust etc.

In all cases, I had good outcomes not only because of the dividends received but also because I invested in them when they were undervalued.

We cannot always count on a good selling price, after all.

Buying undervalued stocks gives us a better chance of having a good result.

Of course, the capital gains help to give me more ammo to fire when Mr. Market went into a depression again.

I bought about $200K worth of UOB's common stock during the COVID-19 pandemic.

Where did a retiree like AK who depended on passive income for a living get the money from?

AK is so very long winded and almost lost his train of thought.

This is why I prefer blogging to talking because I can see what I was talking to myself about and how to continue.

Very good especially when my brain power is not what it used to be.

Anyway, what I want to say is some of what I have achieved is from "buy and hold" but if I was just purely buying and holding, I would not have what I have today.

Not when I started with only a few thousand dollars and a monthly salary of $3,000 a month.

Yes, I had a couple of side hustles and I was also fortunate enough to make some money as a trader for a few years.

These helped to give me more capital to invest with.

However, they are not the main reasons why I have what I have today.

All of us have different circumstances but we can all have the same philosophy.

If we stay true to that philosophy, we can all achieve success although in varying degrees.

There will always be naysayers out there.

"Alamak! $200K dividend income needs a few million dollars in capital lah! Walao! Where to find that kind of money?"

Well, if they keep thinking like this, they will never find the money.

Don't let negative people tell us that we cannot achieve financial freedom.

We have to believe that we can and I believe that is half the battle won!

I truly believe it when I say if AK can do it, so can you!

Have a good weekend!

References:
1. Passive income as much as earned income.
2. Peace of mind as investors.

3. Three words starting with "P".

Buy CLCT? AA REIT and IREITs' rights issues OTW.

For readers who who are not subscribed to my YouTube channel or who simply prefer reading blogs to watching videos, I produced 2 videos recently and these are the transcripts.
------------

This was a comment from a reader yesterday.

1. For Capitaland China Trust, do you think sentiments towards China are overly pessimistic?

Hence, could the Trust be trading at a fair price 

now?

2. I am sure you saw the right issue on AIMS APAC Real Estate Investment Trust.

Any comment on that?

AK had this to say about China.

For CapitaLand China Trust, I am just holding on to what I have now.

After seeing how China handled the COVID-19 pandemic and also what they did to their biggest tech companies, I don't really know how to read investments in China now.

Another reader said this about Capitaland China Trust.

Hard to wait for the banks when REITs like Capitaland China Trust kept enticing me with lower and lower prices. How like that?



AK said to the reader.

I have been holding on to my position in Capitaland China Trust and not done any buying or selling.

I am not sure as I am more wary of policy risks in China than anything else right now.

Jamie Dimon, CEO of JP Morgan, said this in a recent interview.

China is a far more complex situation now.

He was mostly referring to policy risks, but he was also concerned about geopolitical risks.

Too much uncertainty caused by the Chinese government.

We can also see that Chinese economic recovery has been weak and, to be honest, I agree that much of it has been self-inflicted.

It is not hard to understand that I would rather put more money into investments I have less to worry about.

AK is becoming timid with age.



I had this to say about AIMS APAC real estate investment trust.

The proposed rights issue is relatively small, but it is necessary so that the REIT does not take on more debt to grow organically.

The sponsor has also thrown its weight behind the exercise.

The sponsor, which holds about 75 million units, or about 10% of the total units in the real estate investment trust, has provided an irrevocable undertaking to the manager and the joint bookrunners and underwriters, which include DBS Bank.

The sponsor will accept, subscribe and pay in full for its total provisional allotment of the new units under the preferential offering.

They will also make applications for the number of excess new units under the preferential offering which are not taken up by other unitholders.

Hence, demonstrating their confidence in the real estate investment trust.



The exercise will raise around $100 million through the private placement and preferential offering.

Private placement is to place about 56 million to 58 million units at an issue price of about $1.21 to $1.25 per unit to raise proceeds of $70 million.

The non-renounceable preferential offering or rights issue will raise another $30 million.

This is through the issuance of about 25 million new units to existing eligible unitholders at about $1.19 to $1.23 per new unit.

Existing unitholders will be eligible to an advanced distribution of between 1.7 cents to 1.9 cents per unit.

This would be for the months of April and May.

The record date to be entitled to the advanced distribution and the eligibility to participate in the preferential offering is at 5pm on June 9.



The funds raised will help unlock greater value organically through active enhancement and re-development strategy.

It will also help to secure growth opportunities through targeted acquisitions.

I rather like rights issues which raise money in order to generate more income for the investors.

This is a relatively small rights issue and, therefore, not too demanding.

If AK can talk to himself, so can you!

(Continue scrolling down to read about IREIT Global and its rights issue.)

Reference:
REITs and rights issues.



I have said before that I rather like rights issues if the money raised is used to generate more income for investors.

In the latest fund raising exercise by IREIT Global, this seems to be the case.

They are proposing to acquire 17 retail parks in France.

A strong reason to invest in these assets is that this retail format will continue to outperform in the context of global inflation partly caused by the COVID-19 pandemic.

"The popularity of hard discounters, discounters and outlet stores in France has risen exponentially in recent years.

"Retail Parks, an Out-of-Town asset class, have been resilient through the COVID-19 pandemic due to their accessibility, open-air format, wide range of available spaces, parking facilities, manageable operational cost, value-for-money brands and for some retailers, omni-channel experiences."

These 17 retail parks are leased to B and M Group, a European discount retailer listed on the London Stock Exchange with a market cap of about 4.7 billion Sterling Pounds.

They have been occupying these assets since 2005 on average.

There is a Weighted Average Lease Expiry of 6.8 years but there is an option for lease break 4.6 years from now.

A combination of competitive rents due to out-of-town locations and a resilient retail model which is discount retailing suggests to me that this is a good investment.

Of course, all investments are good investments at the right price.

The asking price is approximately $112 million.

This gives approximately 1.7% discount to the average of the two independent valuations of approximately $114.1 million.

The price is very close to valuation.

Although this might suggest that we are not getting a fantastic deal, it also suggests that this kind of properties is probably in high demand.

The seller isn't desperate to sell.



However, similar to the purchase of Woolworth's HQ in Australia by AIMS APAC real estate investment trust, I like that these 17 properties in France have excess plot ratios which could be developed for more rental income in future.

I would take this potential into consideration since we should always have a long term perspective when investing in good income producing properties.

So, apart from rental escalation being pegged to inflation, this could be another way to extract more income from the assets.

When we take into consideration that new developments of such assets are being restricted in future due to new French regulations, these assets will become even more valuable in future.



This reminds me of Saizen REIT when its properties were valued at under replacement cost.

No one in his right mind would construct a new building when buying an old one would be much cheaper, and would give similar or higher rental yields.

So, the assets Saizen REIT was holding were undervalued.

In the case of out-of-town assets in France, new ones are apparently not allowed by law.

With the future in mind, we could make the case that these assets could be undervalued.

Of course, having these properties in the portfolio would reduce concentration risk which has been a major pain point for many investors forever.

I don't really care for the other advantages put forth by the management.

The next thing I want to know is how the acquisition is going to be funded and whether it is going to be yield accretive.

Apparently, it is going to be yield accretive.

Pro forma adjusted FY2022 accretion of 2.0% was computed based on audited FY2022.

This is with the assumption that Darmstadt Campus is 100% vacant for FY2022 from 1 January 2022 with nil revenue but with operating expenses.

OK, how much do investors have to pay?

Cost of properties = $112 million.

Expenses related to purchase = $20 million.

Now, I know how people paying ABSD in Singapore feel.

The deal will be funded by the following.

1. A non-renounceable underwritten preferential offering of new Units to existing Unitholders on a pro rata basis or a rights issue.

2. External bank borrowings.

3. Borrowings from Tikehau Capital.



Both Tikehau Capital and City Developments Limited, the joint sponsors, and the manager, will subscribe in full their allotment in the rights issue.

They will also subscribe to excess units which other investors do not take up, such that their aggregate subscriptions would amount to a maximum of $40 million.

IREIT Global has a market capitalization of around $550 million.

As the sponsors jointly hold about 50% of the total units issued, without further information, I can only hazard a guess that we would see around 10% increase in the number of units issued.

We could assume that approximately 168 million new Preferential Offering Units might be issued at an illustrative issue price of 45 cents per Preferential Offering Unit.

This could raise gross proceeds of approximately $75 million.

So, if we like this proposed investment in French retail parks, we have to be ready to increase our investment in the real estate investment trust by about 10% through the rights issue.

If AK can talk to himself, so can you.

Reference:
IREIT Global presentation.

Offer of 46.5c per unit for Sabana REIT by Volare Group.

This blog is in response to a reader's comment on Sabana REIT being taken over by a substantial shareholder.

I was replying to the reader's comment but it got pretty long.

So, I am publishing the reply as a blog instead and more people can eavesdrop as I talk to myself.

AK talks to himself:

It seems that Volare Group isn't buying the entire REIT.

Just a partial offer for 10% of the REIT at 46.5c a unit.

It is at a rather big discount to Sabana REIT's NAV but, given the much higher risk free rate today, it is probably not too bad a price.

I remember blogging about what I thought a fair price might be for a buyer to offer for Sabana REIT.

That was in relation to the low ball offer made by ESR REIT at the time.

I suggested a price of 48c a unit.

46.5c isn't too far off and back when I suggested 48c a unit, interest rate was way lower too.

For anyone who is interested, you will find my take on the matter in the following blog:

4Q 2020 passive income.

The fact that Volare Group is going to pay 46.5c per unit in today's high interest rate environment for Sabana REIT supports the argument that ESR was really trying get Sabana REIT for a song back in 2020.

Shame on ESR.

Shame on all the people who said it was a good deal and that Sabana REIT's minority shareholders should accept the scheme.

Yes, that's what they called it.

A scheme.

So scheming.

This offer by Volare Group is an affirmation of Sabana REIT's attractiveness as an investment for income even in today's environment.

Most of my investment in Sabana REIT, around 80%, was made at 35c a unit with the balance made up of a small legacy position and also around 15% added more recently.

So, if the REIT should be 100% taken over at an offer price of 46.5c a unit, I suppose it would not be a bad outcome for me.

To be quite honest, however, I wouldn't be celebrating.

It would most likely be a bitter sweet moment as it would remind me of Saizen REIT, Croesus Retail Trust, Accordia Golf Trust and Religare Health Trust.

All of them were pretty good investments for income with my entry prices but I was forced to take the capital gains as they were all delisted at one point or another.

I am still keen on keeping Sabana REIT as an investment for income.

I don't want to have to look for replacement investments for income. 

After having spent too much time in 2022 reallocating resources, I am looking forward to being lazier in 2023.

Reference:
Largest investments updated.

$2 million in passive income. If AK can do it, so can you!

This blog was inspired by a conversation I had with my father recently.

He asked if I had enough money because I have been quite ill in recent weeks and he wondered if I lacked money to see a doctor.

As we grow older, we will find ourselves falling sick to the strangest things sometimes.

Anyway, I had a very bad eczema flare up which affected my arms, legs and torso.

I thought I was very careful with the steroid cream but I still suffered withdrawal symptoms.

Anyway, with the weather warming now, I hope to get better soon.

Anyway, I told my dad how much money I am making although I am unemployed.

OK, more accurately, I am economically inactive since I am not seeking employment.

To the old man, unemployed and economically inactive mean the same thing.

AK is jobless.

Anyway, he found it unbelievable his jobless son had the kind of income that he said he had.

That conversation plus my recent blog on having too little passive income got me wondering how much money have I made from dividends and distributions alone thus far as an investor for income?

Of course, it won't be the first time I am doing this.

Back in January 2020, I had a blog which revealed I made $1.5 million in 10 plus years of investing for income.

That $1.5 million did not take into account any capital gains or losses.

That also did not include outsized distributions from Saizen REIT, Croesus Retail Trust and Religare Health Trust which, to be fair, were more like capital gains which I account for separately.

For sure, that $1.5 million did not include interest income received from my CPF account.

That $1.5 million made from investing for income for about 10 years was just from adding all the regular dividends and distributions.

Now, it has been 3 years since that blog was published.

What is the updated number?

Without including the outsized distribution from Accordia Golf Trust in 2020, how much passive income have I received as an investor for income in a bit more than 13 years?

About $2 million.

So, in the last 3 years, despite the COVID-19 pandemic and despite not having an earned income, my passive income has held up quite well, by my own assessment.

I remind myself that my investment portfolio has morphed from being very concentrated in higher yielding REITs to being less so. 

This has resulted in a lower average dividend and distribution yield at the portfolio level.

Without an earned income, I consume most of my passive income and I did buy a car a few years ago.

I must also remember that a not insignificant part of my passive income is funneled into my CPF account annually, hitting the annual contribution limit without mandatory contributions.

I won't go into that as this blog is about passive income received as an investor for income.

It isn't a blog about my net worth, which long time readers of ASSI know isn't something I have ever talked to myself about.

It is unlikely I would ever talk about my net worth because ASSI is about generating passive income and achieving financial freedom.

Talking about my net worth is not going to inspire anyone to achieve financial freedom.

Staying invested in bona fide income generating assets has, in a bit more than 13 years, generated $2 million for me in passive income.

Want to achieve financial freedom but still doubtful you can do it?

Unless we are severely disadvantaged, most of us can achieve financial freedom in Singapore.

If AK can do it, so can you!

(As usual, I have included links to references which might be enlightening at the end of the blog.)

References:
1. Made $1.5m investing for income.
2. Too little passive income.
3. When can I quit my full time job?
4. Inflation and passive income.
5. 4Q 2022 passive income.
6. $1.1m in CPF savings.
7. Growing passive income.

Flashback to 2016:
AK's passive income strategy.

Flashback to 2015:
How did AK achieve financial freedom?

Daiwa House Logistics Trust: FX and TA.

The unit price of Daiwa House Logistics Trust has declined 32c or almost 40% in the last 6 months.

This is pretty dramatic.

Although I was unimpressed by Daiwa House Logistics Trust at its IPO and had some concerns, I did not expect its unit price to crash so hard.

At the end of June this year, when a reader asked if I was interested in Daiwa House Logistics Trust as its unit price had declined, I raised a new concern which was the persistent weakness in the Japanese Yen.

Unlike the ECB which is raising interest rate, the Japanese central bank seems determined to keep interest rate low which is depressing the value of the Japanese Yen.

In reply to the reader who asked if the lower unit price made Daiwa House Logistics Trust a BUY back in July, I said that if the Yen was stronger, then, the REIT would be undervalued.

Unfortunately, it wasn't.

I said:

"Since the Yen declined so much, then, a similar decline in unit price doesn't make it (i.e. the REIT) undervalued."

More recently, just a few days ago, the Yen hit a historic low against the U.S. Dollar.

With this recent development, Daiwa House Logistics Trust's unit price has sunk even lower.

I said in my last blog that China was getting very hard to read.

Japan isn't much easier either.

Why is the Japanese central bank so stubborn?

All investments are good investment at the right price.

Unfortunately, at the moment, I do not know if it is the right price but as long as the Japanese central bank is bent on their current course, Mr. Market doesn't know either.

I do not see any positive divergence in the chart as MACD and RSI decline in tandem with the unit price.

I don't have an interest in Daiwa House Logistics Trust.

Just a quick blog sharing my response to a query from someone I know.

Daiwa House Logistics Trust was priced too dearly at IPO and we now have a persistently weakening Yen thrown into the mix.

On hindsight, it might have been a blessing in disguise that Saizen REIT, Croesus Retail Trust and Accordia Golf Trust were forcibly removed from my portfolio.

Recently published:
CLCT: Staying defensive and Chinese banks?

Reference:
Daiwa House Logistics Trust: Good or not?

2Q 2022 passive income: Stronger with changes.

2Q 2022 saw many changes in my portfolio.

I nibbled at QAF Limited and if you want to know why, see:
Investment in QAF is larger now.

Next, I nibbled at an ETF and that probably surprised some long time readers of my blog.

Well, I surprise myself sometimes with the things I do.

I know I am mental as I was diagnosed as suffering from extreme anxiety and borderline depression before.

This explains why early retirement from work and investing for income is probably a good combination for me.

However, it could be I also have a Dr. Jekyll and Mr. Hyde problem.

"When did I buy this?"

"I bought this."

"Oh, I see... Wait, who are you?"

"I am you..."

"So, you bought this when you were me?"

"Clever boy."

Spooky!

Anyway, if you don't yet know, see:
Investing in Alibaba and Tencent now.

and
Buying more Chinese Tech stocks today.

The ETF was an experiment for me and was at about 1% of my portfolio in market value at its highest.

The ETF does not pay a dividend and, so, I had to do some trading to make some pocket money.

See:
Trading Chinese tech stocks.

2Q 2022 also saw me becoming a shareholder of SBS Transit.

I thought of having a larger position in SBS Transit but it wasn't really a priority since I was already heavily invested in ComfortDelgro.

SBS Transit is almost 80% owned by ComfortDelgro, after all.

Of course, if SBS Transit should see its share price declining a lot more, all else being equal, I could buy again.

Anyway, I blogged about my purchase of SBS Transit and adding to my investment in ComfortDelgro in May and if you haven't read the blog yet, read:

SBS Transit and ComfortDelgro.

"EPS should improve as we learn to live with COVID-19 and, then, DPS should improve too."
From: Retirement, YouTube channel and quick update.

If you are interested, also read:
Investment in ComfortDelgro is larger now.

Both SBS Transit and ComfortDelgro are also really inexpensive when we look at their enterprise value and their EBITDA.

In the REIT space, I added to my investment in CapitaLand China Trust (CLCT) when its unit price dipped below $1.10 a unit.

CLCT was just too cheap for me to ignore at that price level.

Mr. Market was feeling very bearish about everything Chinese and CLCT had to bear (pardon the pun) some collateral damage.

CLCT is a different animal compared to when it was CapitaRetail China Trust (CRCT.)

The transformation brought with it a stronger income generation ability and greater resilience.

The REIT does not have an aggressive gearing level either. 

At under $1.10 a unit, it was also trading at a big discount to NAV.

See:
Capitaland China Trust: Another largest investment.

I also increased my investments in Frasers Logistics Trust and talked to myself about Sabana REIT.

See:
Frasers Logistics Trust.

Sabana REIT.

Although my portfolio is not as heavy in REITs as it was a few years ago, it still has a relatively big exposure to REITs.

I have to remind myself not to go back to being overly REIT heavy.

Anyway, I also expect CLCT to continue its transformation by acquiring more new economy assets.

So, I could still increase my investment in CLCT through future rights issues, if they should be offered.

Next, I decided to increase my exposure to the local banking sector to compensate for my relatively large exposure to REITs even further.

I increased my investment in OCBC which I thought offered better value for money when compared to DBS and UOB as it was trading at around book value. 

OCBC also offered the highest dividend yield while not having the highest payout ratio which was attractive to me as an income investor as this could also mean higher future dividends if nothing untoward happens.

This is a possibility since OCBC also has a very high CET1 ratio, the highest amongst local banking peers.

Source: Fitch.

See:
Investment in OCBC is larger now.

I also did something more shocking than my foray into Chinese tech stocks in 2Q 2022.

I bought bits of Bitcoin.

Wink, wink.

Well, I thought it was rather shocking.

If you didn't know, I hope you are not too shocked to read:

Gold, silver and Bitcoin.

and

Buying Bitcoin at long term support.

Bitcoin is currently 0.5% of my portfolio as I added to my initial less than 0.1% position when its price declined.

Not crazy about Bitcoin but having some in my portfolio makes sense because, unlike the early days or a few years ago, I can see that the coin is gaining wider acceptance and, more importantly, attracting institutional investors.

If I was a Bitcoin bull, I would put at least 20% of my portfolio in Bitcoin and I know some, mostly young people, are 100% into Bitcoin and other virtual coins. 

However, I don't think that retirees like AK should be too aggressive on Bitcoin.

I will admit that the case for Bitcoin is growing more persuasive because of the strengthening network effect.

However, Bitcoin's notorious price volatility makes it a poor choice to form a large component of any investment portfolio other than one that is mostly speculative.

OK, lots of buying in 2Q 2022.

Any selling?

I did some selling as well in 2Q 2022 and blogged about it.

See:
Centurion Corporation: A smaller investment.

Although I will be receiving less passive income from Centurion Corporation in future, reallocating the funds to other income generating investments should give similar or maybe better results.

So, apart from possibly missing out on capital gains if Centurion Corporation eventually unlocks value for shareholders, I doubt that having it as a much smaller investment in my portfolio would lead to a big decline in future passive income for me.

Unlike Saizen REIT, for example, where there was a guarantee more or less that we would be paid while we waited for value to be unlocked, there isn't such a guarantee with Centurion Corporation. 

OK, now for the numbers.

In 2Q 2022, total passive income received was:

S$ 63,980.74

The dividends received from DBS, UOB and OCBC formed the bulk of my passive income from non-REITs in 2Q 2022.

Of course, there is the expected and not insignificant quarterly income distribution from AIMS APAC REIT as well.

2Q 2022 passive income increased by an impressive 42% compared to 2Q 2021 mostly because the banks were still paying lower dividends in 2Q 2021.

The banks normalized dividend payouts in 3Q 2021, if I remember correctly.

Compared to 1H 2021 which saw total passive income at S$81,425.35, the first 6 months of this year delivered a total of S$104,678.42 in passive income which represents an increase of some 28%, year on year.

Pretty respectable.

Everything else being equal, my passive income in 3Q 2022 should not see much of a difference, year on year.

However, I am expecting a decline in passive income in 3Q 2022 due to the fact that there was a pretty significant one off final distribution from Accordia Golf Trust in 3Q 2021.

Of course, Accordia Golf Trust is no more.

Higher dividends from some investments in my portfolio should be able to cushion the expected decline in 3Q 2022 but I am hazarding a guess that they most probably would not be enough to cancel the decline.

Still, at this stage, I am making a forecast that full year passive income this year should come in higher than the year before, barring unexpected negatives.

On hindsight, I was too active as an investor for income in 2Q 2022 and just thinking about it makes me tired.

I should go back to being lazy for the rest of the year.

On a more serious note, I know that many people are worried but if we have been investing, say, for even just a decade so far, we know that Mr. Market always has mood swings.

As long as we eat crusty bread with ink slowly, we don't really have to worry.

If you are a new reader, read this blog and all the blogs I have hyperlinked within:

Investors eat crusty bread with ink slowly.

If you are a long time reader of my blog and if you are on the same path to financial freedom but still need some assurance, go read the same.

This storm, however bad it gets, will end at some point.

If we are eating crusty bread with ink slowly, our life should not be affected badly.

In our case, the sky is not falling. 

Stiff upper lip and soldier on!

If AK can do it, so can you!

Believe it!

Related posts:

1. Largest investments 2Q 2022.
2. 2Q 2021 passive income.