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The day REITs and Dividend Stocks get slaughtered

It is not everyday that my Dividend Stock Tracker, tracking popular Singapore High Yielding Stocks showed severe negative prices.

And that includes my experience in 2007-2008.

There would always be some stocks that are positive or no change. This is unprecedented.

While we do not know the main reason, Japan 10 year bond yields edge above 1%. That psychological point could mean that higher borrowing costs are coming in the near future.

As a result the carry trade (which I thought was pretty dead) hit a snag.

Here are some charts of drastic price drawdowns:

Aims Amp Industrial Capital

While volume is not as high as the rest, it is still startling to see a 1 day 5% drop in a long time. My recent hypothesis is that this rally have all been a case of yield compression.

Hot money search for higher yields at higher risk assets.

This movement shows how a large part of the shares look to be in speculative holdings.

Cambridge Industrial REIT

At one point it went all the way back by 20 cent which is like a 25% fall. Fat fingers? Volume is high.

CapitalMall

Even one of the largest and oldest REIT isn’t spare. More and more like a foreign fund flows out

CapitaRetailChina

I got to be honest I wanted to punt this stock. Fortunately I didn’t. Else I would have been caught in this.

One of the stocks shown here with a double top. Price target $1.44?

Frasers Commercial Trust

One of the stocks that I missed, which I really should do it at $1. Perhaps rather good management and a 6.2% yield. Gearing is high but a lot of Freehold and 999 year lease properties.

Frasers Centerpoint Trust

Another trust from Frasers. The price is 14% above my average price.  As with Frasers Commercial, these are priorities.

Mapletree Industrial

One of the last REIT to run. Recently took a liking of its management as well as their development deal for the Equinix data center.

Still the worry here is that if you read the latest quarter report for a lot of companies, they seem to be moving out of Singapore.

Sabana

One industrial REIT with a similar profile to Aims Amp but for Sabana the volume is huge!

Summary

We can’t tell if this is due to the market being temporary spooked by Fed Speak or due to what was mentioned above. If  its due to the open mouth committee, then they just need the right words to set prices back. This is a non event.

I notice many folks due to low fixed deposit rates decide to chase yield. If you think current price provides you a good required rate of return yet you are not overpaying for it (based on PTB, DCF) then this should be an issue.

You may be stuck in this, and 2 years later you may learn the lesson that even good yielding stocks are poor investment if you pay dear for it.

The important thing is to develop a much more conservative risk management and valuation determination.

At times like this, I written 2 timely articles on your game plan for it

Do read them to make sense of something like this:

To get started with dividend investing, start by bookmarking my Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.

FREE Stock Portfolio Tracker to help track your dividend stocks by transactions to show your total returns.

For my best articles on investing, growing money check out the resources section.

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Victor

Friday 24th of May 2013

I think we will see one more low, but not that low of 2009. If China cannot sell. The world is not buying, that is bad. I would sell to strength.

That is my opinion. The next crises would be well start in Asia.

Kyith

Friday 24th of May 2013

Well you can't use that metric that way. We really haven't re examine if China is the power house it once was.

The bull is strong and perhaps even after a 30% correction it will be good. Actually think this will be a non event come next week. But if your investment thesis requires information like this then you better understand it well.

I usually don't do soo much prediction. I am not good at all

Kyith

Friday 24th of May 2013

vintire21 Brian Halim MyGuest

Amongst these REITs my favorite adds are:

- First REIT @ 1.10. Forward long term DPU of 7.4 cents for 6.7% yield

- Frasers Commercial @ 1.20. Forward long term DPU of 8-9.5 cents after the redemption of CPPU

- Frasers Centerpoint @ 1.80-1.90

- Not much of industrial REITs due to the high cost problem. at most MIT at attracitve valuation.

vintire21

Friday 24th of May 2013

Haven seen anything like that since I started investing 3 years ago...everything went into red...even the defensive stocks like reits and telecoms... now torn between feeling excited that chance to buy some cheap stocks has arrived and feeling upset that my portfolio all wear Manchester united jersey colour

Kyith

Friday 24th of May 2013

i just added 2 links at the end of the post. it might be helpful for you to make a decision.

MyGuest

Thursday 23rd of May 2013

I dont really understand why FCT payout ratio is 158%, can you explain?

Kyith

Thursday 23rd of May 2013

hi there, the data for income is using annual basis while dpu is updated quarterly, so there sometimes is a mismatch.

Brian Halim

Thursday 23rd of May 2013

Hi Drizzt Care to share why are you interested in CRCT?

Kyith

Thursday 23rd of May 2013

Trading bro, pure and simple. but from an investment angle, look at thieir DPU climb. Rather good as well!

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