TTI’s Multi Year Record Of Dividends

This post was republished on NextInsight:

https://www.nextinsight.net/story-archive-mainmenu-60/939-2017/11224-thumbtackinvestor-my-dividends-in-2016-and-past-years

407) dividends.jpg

With the end of 2016, I can now update my long term record of dividends:

2012
23/5/2012 Asia Enterprise Holdings $945.00
11/6/2012 Wells Fargo $195.70
16/7/2012 Tesco $1,771.64
17/8/2012 Metro Holdings $6,000.00
22/8/2012 Boustead $1,800.00
12/12/2012 Boustead $2,000.00
28/12/2012 Tesco $1,799.93
$14,512.27
2013
20/5/2013 Apple $528.00
20/5/2013 Hock Lian Seng $1,800.00
28/5/2013 Sing Tao $1,257.46
24/6/2013 Flyke International $415.00
1/8/2013 Metro Holdings $8,000.00
20/9/2013 Sing Tao $1,515.00
20/11/2013 Lion Teck Chiang $1,300.00
12/12/2013 Boustead $1,039.60
$15,855.06
2014
19/02/2014 Hopewell Holdings $393.00
22/05/2014 Hock Lian Seng $10,610.00
10/6/2014 Lion Teck Chiang $2,376.00
18/7/2014 ICBC $14,034.00
12/08/2014 Metro Holdings $20,900.00
18/08/2014 King Wan $14,900.00
09/12/2014 King Wan $6,930.00
23/12/2014 Tesco $471.56
$70,614.56
2015
28/01/2015 Boustead scrip dividend (15,189 shares)
21/05/2015 BBR Holdings $13,568.00
21/05/2015 Hock Lian Seng $39,880.00
22/05/2015 CDW Holdings $3,661.81
12/06/2015 LTC Corporation $2,376.00
26/06/2015 Dutech Holdings $2,509.65
11/08/2015 Metro Holdings $20,880.00
18/08/2015 King Wan $9,900.00
20/08/2015 Boustead Singapore $1,012.64
15/09/2015 Libra Group $454.00
18/09/2015 CDW Holdings $2,811.60
02/10/2015 Restaurant Brands International $292.00
$97,345.70
2016
05/01/2016 Restaurant Brands International $177.12
27/01/2016 Boustead Singapore dividend in specie (BP) NA
20/05/2016 BBR Holdings $6,930.00
20/05/2016 Hock Lian Seng $18,630.00
30/05/2016 CDW Holdings $3,787.94
24/06/2016 Dutech Holdings $5,643.00
17/07/2016 Libra Group $635.60
19/08/2016 Boustead Singapore $1,025.52
23/09/2016 CDW Holdings $489.41
22/11/2016 LTC Corporation $2,176.02
09/12/2016 King Wan $4,950.00
09/12/2016 Boustead Singapore $256.38
$44,700.99

2016’s total dividends received in reality, should be somewhat higher as I did not include the Boustead Project shares received as dividend in specie. That works out to be a few grand.

For 2016, approximately $4,000/mth in dividends is reasonable. Not fantastic, but not too bad either. Can’t complain too much about it.

2014 and 2015 had unusually high dividends (as a proportion of the total portfolio value) due to the use of leverage. The leveraged amounts are obviously backed out from the total portfolio value for it to be an accurate representation, but this leverage does still generate dividends, which explains for the unusually high amount of dividends.

Going forward for 2017, without leverage, I’d expect the total portfolio dividend amount to stabilize around the $55-60k+ mark, based on a portfolio amount of just over $1mil, which works out to be a yield of approximately 5%+.

This is pretty ok considering that I do not particularly seek out high yielding counters like REITs, instead, preferring to focus on value situations.

I’m expecting the total portfolio value to grow more rapidly in 2017, probably around the $1.3mil – $1.5mil mark by this time next year.

Largely because I’m optimistic about my performance in 2017. But then again, I’m optimistic every year anyway. :)

The general market is expecting 2017 to be a year of increasing interest rates worldwide. I don’t think there is much opinion that strays from this theme. There is some debate though, regarding the pace of such interest rate increases.

My own opinion is that it’d be similar to 2016: We’d see 1 or 2 rate increases for 2017 but no more. And that’s lesser than the consensus currently. The markets are expecting much more rapid rate increases for 2017.

My other general opinion (that’s not really substantiated or researched!) is that the rate rises means that going forward, it’d be an increasingly tough environment for REITs as an asset class. 

In fact, any asset class that behaves like fixed income (bonds) will not do so well in such an environment. That’s an opinion that Bill Miller has as well:

http://www.marketwatch.com/story/the-decades-long-bond-bull-market-is-done-says-bill-miller-2016-11-15

Anecdotally, it seems to me that in the local context, REITs are over-invested as an asset class. Again, I’d emphasize this is just an unsubstantiated vibe without any of the extensive research SG TTI has come to be known for.

It’s just that when talking to anyone who has any form of investments in the equity markets, I’ve not come across anyone WITHOUT any exposure to REITs at all, and in fact, several have almost exclusively invested in REITs.

I’d be a bit more cautious in this regard. But then again, I haven’t had much any experience with REITs, aside from my brief research when I was comparing Centurion Corp’s potential divesting into a REIT, compared to other REITs (Centurion Corporation Investing Thesis Part III)

Also, I’m talking about general themes here, not specific companies. Of course, even within a sector that is facing a tough environment in any 1 year, one would still be able to find a few companies/REITs that still perform very well.

With rising interest rates, I’m expecting mortgage rates to rise as well. Coupled with a tough employment scene locally, this is the perfect toxic environment for the property sector in 2017.

It’s weird to use “perfect” together with “toxic”, but that’s exactly what it is for someone hunting for another property. Like most people, I am servicing a mortgage currently, so I am affected as well by rising rates. Yet, like all potential buyers, I’m cheering each time the quarterly real estate index shows a new drop.

Talk about mixed emotions.

Singapore’s unemployment rate has steadily rose and it’s now at 2.1%, the highest since the 1st quarter of 2014. It’s hard to find positives in this regard for 2017. I don’t think it’s going to improve.

I’m sure many business owners and/or management would agree with me. Most of us have a front row seat to the general singapore economy. When economic conditions deteriorate, the business owners are the 1st to notice it, way before the actual economic data confirms it.

So that means there’d be more defaults, more firesales, more negative sentiment. When your job and the resulting cashflow is threatened, the very last thing you’d have on your mind is committing to big money liabilities like property.

I think I’d be able to find some deals in this regard.

49) skyline-1402050__180

I’ve always said that property buying is like big game hunting with a single bullet. You got only 1 shot at any 1 time, so you’ve to make that count.

It’s no good having 10 “not too bad” or “almost firesale” options. It’s much better to have 9 “non firesale, poor” options and just 1 excellent option which is a deep firesale, and fulfills all your needs.

From the recent emails I’ve received, some of you have also indicated that you’re looking out for deals in the property sector, so I guess I’m not alone.

Quick tip if you don’t already know this: For couples who intend to own an investment property, put 1 of the property solely under your own name and the other solely under your spouse’s name. Not Joint owners.

This allows you to avoid paying for ABSD as each property is then considered as the “1st property”. If both of you are joint owners of the 1st property (as is normally the case), then the 2nd is considered as the 2nd property for both of you and thus is liable to all the related additional taxes.

Of course, this means that your eligible loan quantum is much lower as only the earning power of the single owner is considered by the bank. I think it’s a good exercise to help you not over stretch anyway. So it’s not a bad thing.

If for whatever reason, you do still need to have both spouses named as owners of the 1st property, you can also proportion it such that 1 spouse owns 99% of the property, while the other own 1%.

If you need to convert to sole ownership in future, the 1% spouse just has to sell his/her 1% to the other spouse based on the valuation sum. The related taxes are all based on the sale quantum, so at only 1%, the costs will be very reasonable.

Although perfectly legal, I think this is somewhat frowned upon though as a way to get around the rules, so I shan’t espouse too much about it here.

Also, TTI accepts no responsibility if your spouse decides to run away with the 100% ownership of the property in future… (hahaha. Always consider black swan events…)

In my next post, I’d probably go back to doing another deep value analysis so stay tuned…

Here’s wishing all readers of SG TTI a fruitful start to 2017.

May we all trash the markets in 2017.

18 comments

  1. Hi TTI, REITs will have it tough, but there is always a value to things.REITs started off in the 1960s and 70s in USA and Australia, in the traditionally high rate environment. What is not conducive is the poor economic outlook. think about it,if you can get a property that yields for 7% but next year the rent can go up by 20% lock in for the next 3 years, would you complain that your cost of debt rose by 1%? On a fully leverage 100 mil property you earn 7 mil and if you leverage 50%, a 3.5% interest to 4.5% interest increases your cost from 1.5 mil to 2.25 mil (an increase of 0.75mil).A 20% increase in NPI results in a 1.4 mil increase. you still net a good gain. What happens in Singapore is that its the worse situation, poor economic outlook as you alude with a interest increase that we have no control.

    It is not overowned but its because its a lot of business are taken private.

    As for putting property under one person’s name, i thought there is a change in rules to that:

    In an email response to a query from Channel NewsAsia, the HDB confirmed that changes in flat ownership will now only be allowed under six circumstances including marriage, divorce, death of an owner, financial hardship, renunciation of citizenship and medical reasons.

    These new regulations took effect on Apr 1, according to the HDB spokesman, adding that HDB will assess on a case by case basis if the request to change flat ownership does not fall under the above circumstances.

    This means that transfers in flat ownership between spouses or immediate family members will no longer be readily approved.

    According to industry watchers that Channel NewsAsia spoke to, the practice of “decoupling” – a shift from co-ownership to sole ownership of an HDB – gained popularity among local home owners, particularly since the upward revision of the ABSD in Jan 2013.

    I guess this applies more if the person only have non HDB flats

    Like

    1. Hi Kyith
      Thanks for your comments.
      Boy, you’re fast. You’re always one of the 1st to read, practically right after I post.
      Regarding the REITs, yep like what I said, I don’t have much to add on for REITs, but it does seem to be a very tough environment. Retail REITs in particular, seem to have it worst.

      I don’t quite get what you mean by this statement
      “It is not overowned but its because its a lot of business are taken private.”
      Just from my superficial experience with friends and fellow investors, seems like everyone has a ton of REITs, even those who have no idea what exactly does the REIT do. Everyone just likes to receive dividends, and the fact that dividends are seen as the way to achieve regular CFs and hence, is a logical step towards financial independence.

      As for the property part, I shoud’ve qualified in the post, but everything that I wrote, was in regard to private property, NOT HDB.
      I didn’t even know you can actually have sole ownership for HDB?
      Isn’t HDB only for married couples…

      HDB is going to be very different and it is hard to use it as an investment asset with all the restrictions. Even renting it out would be difficult.
      My only advice for HDB is for a new couple to buy one direct from HDB and use it as a base to start upgrading. With all the grants and stuff, it’s a no brainer to grow your assets quickly in a few years.

      Like

      1. I was pointed to your article by my buddy, and I think some of us have the habit of reading these stuff before we brush our teeth hahaha.

        I think if its private property its on the point. HDB in the past, what people do is that the wife will take over the whole property ownership (the wife will have to pay the husband his CPF back as well) then this would mean they are not subjected to ABSD. Apparently they patched up this loop hole.

        So there were many who earned that 7% in stamp duty.

        The REIT one is surprising. Not many asked me about it, other than blog readers (which by default should mentioned it consider how much i wrote about it) i said its overowned because had there be many growth companies like Super, Raffles Medical or say a Milk business that is expanding overseas, or a Tesco, people would have selected them.

        One other thing is that it is not easy to discren whether its a good idea to buy them. Prospecting is not an easy skill to grasp

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        1. The closing of this loophole for HDB, would also indirectly impact on private property as less people would be eligible to buy without ABSD.
          Ah, now I see what you mean by that statement. You’re comparing the REITs in general to other growth companies.

          Liked by 1 person

  2. Hi TTI,
    Nice dividend and the overall update ! hope you will have more income or growth in 2017 … Ops !! I will be in trouble since I am having more than 60% ( REIT ) and 15% ( Utilities / telco) which will have much impact once interest rate increase ! Well ,, since this is my “bread and butter ” ,, I mean dividend income … as I am depending on it to survive .
    I hope the impact will not be that severe and will take advantage if price drop to crisis level..
    Some investors invest for income , some for growth and some on tactical or cyclical strategies … each one may have their days ,, depending on when ,, hahaha :-)
    Cheers !!

    Like

    1. Hi STE
      I guess you’ve reached the stage where in the short-mid term (few years), you don’t really care too much about the capital values of the REITs because the dividends (even if they are cut) are still able to sustain your lifestyle easily?
      If so then your portfolio is really kinda on “auto pilot”
      And you’ve “holding power” to ride out all the volatilities through the years.

      Like

      1. Hi TTI ,
        Yup … ” auto pilot ” , ” holding power ” and “mean reverting ” in the key words !!! also the ” crisis investing = investing in crisis ” !
        Cheers !! :-)

        Like

        1. Yup, so what you’re doing, is actually kinda like dollar cost averaging into a yield instrument. Similar to DCA into STI ETF.
          As long as you’ve holding power, and of course let’s not forget the “emotional strength” as well, you can ride through the various good and bad periods, with the bad periods giving you a chance to DCA aka lower your net entry price.

          That’s actually the approach of some respected funds like Oaktree Management.
          If I’m not mistaken, locally, the very respected Yeoman Capital deploys a similar strategy as well.

          Like

  3. Just like to correct you that I don’t own any REITs and my portfolio is bigger than yours. I avoid it as an asset class. REITs has a habit of taking back all your past div with rights issue after each crisis. Although I don’t specifically go for div income stocks, div is still impt to me as a metric to invest. I need to be double sure of the growth prospect & mgt’s willingness to share profits if there is no/very low div stock. A good eg is HMI. When I 1st invested div was 0. Now that price has doubled in 2016, div is only 0.4%. With restructuring and expansion in place, div is secondary.

    Notice that you started investing in HK and seems to be out of it now. HK now is cheap & this guy from Yeoman also said so. Looking to buy more in early 2017 before the S$ weakens further vs HKD/USD…ride the tail wind.

    Used to own Kingwan but has since been out of it couple of yrs ago at a profit. Not impressed with their investment skills and M&E is a tough biz. Went in for a short term trade.

    all the best to your 2017 investments

    Like

    1. Hi Jacmar
      “Just like to correct you that I don’t own any REITs and my portfolio is bigger than yours.”

      Hmm, I’m not very sure what you mean by that cos I don’t know you, neither did I mention you in the post?
      If you mean that there are people (like yourself) who don’t own any REITs, well sure. Of course. I was just stating that amongst all the friends and acquaintances whose portfolio I am familiar with, almost all have sizable exposure to REITs. Some even invest solely in REITs. In fact, if one does a quick search, amongst all the financial bloggers who do reveal in detail their portfolio, I think the vast majority own a substantial amount of REITs.

      Thanks for sharing your opinion about REITs, as I’ve said several times in the post, I’m not familiar enough to share any insight regarding REITs in detail. (I’ve never owned a REIT before actually)
      Good point about REITs doing capital raises during crises. I can’t quote any specific instances off the top of my mind right now, but I do rem many REITs having to raise capital not so long ago during the GFC. And of course, since crises affect them equally, they usually are forced to raise capital at the same time, which is exactly the wrong time to do so.

      For sure, dividends are important to me. Otherwise I wouldn’t be tracking them isn’t it?
      But I’m generally ok with NOT receiving dividends if the management proves to be excellent capital allocators.

      Regarding HK, yes I don’t own any HK stocks currently.
      “this guy from Yeoman”, I guess you’re referring to Yeo Seng Choon. Yes, I’m familiar with his work. Yeoman Capital is one of those that I privately track as a benchmark. (Aside from STI ETF)
      The reason for not owning HK stocks is actually very simple. I can find enough places to allocate capital currently. If SG becomes grossly over valued, then I’d have to start looking elsewhere. There’s always a cheap market somewhere at any 1 point in time, since price is relative to what you can get elsewhere. The question is which one specifically has the largest price – intrinsic value gap, and to identify that, even in a “cheap market”, one needs a lot of work and judgement. If there’s enough opportunities to do so locally, I don’t have to look elsewhere. There are significant geographic advantages to focusing locally too. I can do site visits, for certain companies, if I take up a sizable stake, and if management is shareholder friendly, I can get my questions answered. Not so for foreign markets.
      It’s kinda similar to what Bill Ackman said when he was asked why he’s focused only on US, and not Europe. His simply reply is that he has enough material to work on in US.

      I’m not sure what SGD would do in relation to HKD, but it’s safe to say that SGD would very likely weaken vs USD, so in terms of forex, I’ve exposure to USD via US listed equities.

      Regarding KW, I’ve written extensively about my experience with KW, particularly with their CFO Francis Chew. I know that KW’s management is also aware of what I’ve written. As always, what I’ve written is brutally honest, and a large portion of it is highly critical of KW’s management. As written, I’m also not impressed with their investing capabilities either, but IMO, the bad news is priced in. Selling out of KW now would be akin to selling out at the bottom. The simple fact is that the write offs are all accounted for, I’m expecting minimal or zero skeletons in the closet, and the only way from here is up. (well maybe sideways too, but a high probability of 2 of the better scenarios out of 3, isn’t too bad an investment to make)

      Cheers
      TTI

      Like

  4. Hi TTTI

    Good summary in your overall 2012 to 2016 dividend journey. Just curious on the aspects of using leverage for your 2014 to 2015 years. Was that a period where you see some very good opportunities there?

    I have no doubt given your ability to knick pick stocks with solid valuations you will have good returns in 2017. Looking forward to reading your invaluable posts more in future.

    Like

    1. Hi bhalimking
      Thanks once again, for your comment.

      In 2014, 2015, (particularly so for 2014), leverage was really cheap. Like disgustingly dirt cheap. My cost of capital was around 2.75% per annum, it was time weighted (you only pay interest on whatever you borrowed on a daily basis), and you didn’t have to commit to any minimum amount.
      In short, this means that as long as I can squeeze a ROI of >2.75% in a year from any investment that I undertake using “borrowed capital”, I’d get free money so to speak.
      So if I buy company ABC on say 12th March 2014, and by 12th March 2015 as long as the net summation of the capital gains/losses + dividends received exceeds 2.75%, whatever is left over is for me to keep.
      And well, I just figured that it wasn’t really that tough to earn >2.75% isn’t it?
      That’s literally called using OPM, if you follow Robert Kiyosaki’s book…

      Fast forward to 2016/2017 and now the cost of capital is around 4.5% (thereabouts).I don’t think it’s that easy to use leverage anymore, which is why I’ve started cutting it off since the start of 2016.

      Like

    1. Hi Victor
      VRX single handedly decimated my overall portfolio returns in 2015 and 2016.
      I currently own 5,200 VRX shares (yes it’s not updated), and have more exposure in terms of options that I didn’t mention.
      I still think my investing thesis holds true, but I was 1 – 1.5 years too early.
      2017 will be a landmark year for the company’s turnaround. I’ve had quite a bit of success reducing my ave price via options.
      At USD 14++, I think you’ve huge upside, with minimal downside.
      The market cap is ard 5bil, the company owes ard 30bil in debt, but the assets are worth a lot a lot more. B&L alone would be worth easily 18bil.
      IMO though, in the short term, you’d need to have the stomach for volatility. There are many BBs looking at VRX.
      I think the lows are in, and at USD 14++, that’s pretty much it. I’m expect strong performance in 2017.

      Like

  5. Hi ThumbTackInvestor,

    I noticed that you don’t have any healthcare stocks in your portfolio despite your expertise in this sector. Is it because healthcare stocks are trading way above book value, thus making them overvalued thus you are not buying?

    thanks and regards

    Like

    1. Hi leechongmeng,
      I actually do own equity in private, unlisted healthcare providers. I didnt include them in this portfolio because they’re unlisted….as yet.
      There are a few reasons why I don’t have listed healthcare stocks.
      1 reason is like what you said, valuation. Healthcare trades at rich valuation, the richest when viewed from an industry perspective, because the market believes they have stable earnings and will not be hit badly if the economy turns bad. In my experience, that’s not entirely true. If you are a basic healthcare provider, yes, your earnings will be LESS affected (Still affected, just less). If your business is mostly say.. lasik eye surgeries, you’d be just as badly affected as anyone else.
      Also, SG’s healthcare has seen large inflows of foreign capital in recent prior years. With all this liquidity coming into private healthcare, I am now seeing (Esp in the past 2 years) many of these companies listing. Of course they tell nice stories, but I believe a large part of listing is an exit. I’d prefer not to be playing in a playground of high valuations hoping they get yet even higher.
      2ndly, I personally know the management of some of these companies. Quite a few actually. I avoid buying or making any comments on these healthcare companies. Otherwise, it can get awkward for me.
      3rdly, it’s just boring for me to look at more healthcare related stuff. Come on, I need a break. It’s much more interesting for me to try to understand the different types of coal or what the newest ATMs can do, rather than more healthcare related news.
      Cheers
      TTI

      Like

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