SingTel and Netlink NBN Trust.

Some people keep asking me what have I bought recently. 

Hmm. Let me see.

Eggs, extra virgin olive oil, butter, dark chocolate, matcha ice cream and some other stuff.

What? Wrong answer?

Jokes aside, to those who like asking me what did I buy or if XXX stock can buy or not, you should know you would be disappointed most of the time with my answers.

You have been warned. ;)

Anyway, in an interview a few years back, when asked what was the first company I ever invested in, my answer was SingTel. 





Like many Singaporeans then, we were given a chance to buy discounted SingTel shares by Mr. Goh Chok Tong who wished for Singaporeans to think about investing in stocks to help grow our wealth. People my age or older would probably remember this.

I am still holding on to those shares and collecting dividends, year after year. 

Is that the best way to achieve greater returns? 

I don't know but I know it generated pretty decent and safe returns.

Since then, over the years, I went on an adventure as an investor, trader and speculator in the stock market. 

I made some money and lost some money. 

I think I must have made more money than I lost or else I would probably be in IMH by now.

In my retirement, I tell myself that I must not be too adventurous with money. So, I bought more SingTel shares in 2015. 

Informed by charts, I added to my investment in SingTel as its share price retraced to what I thought were supports and I did that again recently.




My decision is now partly emboldened by the listing of Netlink NBN Trust which effectively strengthens SingTel's coffers by some $2 billion. 

So, SingTel has become a more valuable company after the sale, more valuable than it was in 2015.

When asked whether I was interested in Netlink NBN Trust at its IPO, the answer was in the negative. A 5% yield just didn't cut it for me.

With relatively high depreciation and replacement costs to be considered as well, a structure that pays out most of its cash flow to shareholders probably means much higher debt in time to come. 

I wonder about the sustainability of its dividends in the longer run. 

To invest in Netlink NBN Trust, therefore, I would demand a much higher yield than 5% as a compensation. 

This could be achieved through a higher DPU which is unlikely or a lower unit price which is probably more likely to happen.

In comparison, I believe that SingTel's dividends are more sustainable. 





There is talk of a special dividend but whether there is going to be a special dividend from SingTel or not does not matter to me. 

With a payout ratio of 60% to 75% of net profits, I will be quite happy with a 3.5% to 4.5% regular dividend yield. Lower than Netlink NBN Trust's 5% but it gives me peace of mind.

Looking at the chart, it looks like there is a chance that SingTel's share price could weaken again in future but it could bounce up first. This is the trader in me talking. 

Don't ask me what could cause this because I don't know.

However, I do know I would like to buy more if SingTel's share price should go much lower, all else remaining equal.

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