In an earlier post, I had briefly talked about REIT’s management fees, but chancing upon this quote made me want to quickly touch on yield, which is increasingly looking attractive for many stocks as prices keep plummeting.

Jared over at Singapore Man of Leisure shared what he fears the most in a blog post. Right at the bottom is this quote by Mark Twain –

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

So true! Many of us find it very easy to find out the yield of a particular stock or counter – just punch in the code or symbol and the yield is immediately calculated for you, right?

Example – Parkway Life REIT Dividend

Let’s take the example of Parkway Life REIT.

plife_logo

Based on SGX data, their dividend payouts in 2015 are as follows –

Paid out in Feb 2015 – $0.0290
Paid out in May 2015 – $0.0321
Paid out in Aug 2015 – $0.0335
Paid out in Dec 2015 – $0.0336

This gives a total of $0.1282 per share which, at last done price $2.12 on date 22/01/2016 gives a yield of 6.0472%.

Granted, historical distributions definitely cannot be taken for granted to be maintained in the future. However, to an average investor who is making the decision to buy or sell based on yield (e.g. oh yes finally 6% I shall buy), there is a greater trap in waiting.

On the surface, the data looks fine, isn’t it? The source of information is SGX, which is the highest authority, plus we manually calculated the yield which eliminated any dependency on external parties.

Well, you could be your worst enemy. Remember the quote earlier?

If one had bothered to look through their quarterly reports, you would have noticed that they have drastically increased dividends due to divestment gains to be paid out over 4 quarters.

Plife-divestment-distribution

Tranche 1 of 4 (1Q 2015) – $0.037 : Paid out in May 2015
Tranche 2 of 4 (2Q 2015) – $0.037 : Paid out in Aug 2015
Tranche 3 of 4 (3Q 2015) – $0.038 : Paid out in Dec 2015

If we exclude the 3 tranches already paid out, the “real” distribution for 2015 is in fact $0.1170 per share which, at last done price $2.12 on date 22/01/2016 gives a yield of 5.5188%.

Oops, lost 0.5% yield right there. It’s what you know for sure that just ain’t so that gets you in trouble.

John Bogle on Current Market Turmoil

The index investing guru seemingly semi-quoted Macbeth in a recent interview by CNBC. A case of deja vu when I happened to write on the exact same quote a few days back.

In the short run, listen to the economy; don’t listen to the stock market. These moves in the market are like a tale told by an idiot: full of sound and fury, signalling nothing.

With the mainstream media extremely generous with their use of vocabulary these days to describe the Singapore stock markets (e.g. sink, rout, slump, plummet, crash), many stocks are also starting to look incredibly attractive.

Telcos are having REIT level yields – Singtel exceeded 5%; Starhub exceeded 6%; all 3 Singapore banks traded below book value for the first time ever.

banks-pe-ratio-below-1

I shared this image on my Facebook page and Facebook group a while back – article by Chong Ser Jing and chart by Teh Hooi Ling. Nothing is cast in iron yet, but it pays to be aware of historical data.  We’re nearly falling off the charts on the left side based on SPDR STI ETF current P/E ratio – 10.54 from the official website with a price/book ratio of 1.01.

sti-pe-ratio

I’m not saying that things will improve any time soon. Maybe it will? No one can ever predict what will happen. Stay the course. Just. Stay. The. Course.

More Than Index Investing

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