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Investment Moats Portfolio Update July 2012

Market have been choppy for the past two months but merciful to the portfolio. One keynote is that many yield stocks have moved up much that uncovering good yields for their perceived risks becomes difficult.

Low savings rate make keeping cash difficult. While it enables an investor to take advantage of mispriced opportunities in market downturns, a non direction market and 5% inflation per year essentially results in 50% of the money losing purchasing power.

I made the decision to shift some cash into M1 and SPH. I took profit on LMIR, Keppel Corp and Yangzijiang. Hindsight I should have collected more of M1 and SPH.

I set a few criteria for lower risk yield instruments:

  • historically lower volatility. This enables the investor to shift to cash during initial phase of big drawdowns
  • a yield of 6%
  • stable, predictable cash flow with business defensive in downturns
  • not at excessive valuations

I probably hit SIA Engineering, Singtel, Starhub, CM Pacific, M1 and SPH in the screen but eliminate Singtel for its lower 5% yield.

Although M1 is yielding 5.8%, its close to my target and the fact that it meets the other criteria.

SPH at 15 times earnings look pricey. However, its price have reached close to the bottom of its 2 year price movement.

I wasn’t able to get more of CM Pacific but we will see.

Top balance off the low growth, I added some STI ETF.

Current List of SGX Listed Stocks

Current List of International Stocks

Singapore Dividend Portfolio Yield on Cost: 7.43%
Singapore Growth Portfolio Yield on Cost:  4.06%
International Dividend Portfolio Yield on Cost: 5.42%

You can always follow my portfolio over here at my Stock Portfolio Tracker. Its pretty neat to track stocks based on transactions that you intend to hold for long time. And its free.

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Gregg

Sunday 8th of July 2012

HI Drizzt,

I spotted SeaDrill, current price is US$35, quarterly dividend US$0.80..

habsb

Tuesday 3rd of July 2012

Hello Drizzt

thanks for the update on your portfolio. As an investor in Lippo Malls Indonesia Retail, I'm challenged by your choice to sell. According to your screener, it looks like LMIR dividend is well covered by both free cashflow and earning yield. Ratio look good too. Can you please share what you don't like ?

Sincerely -- Habsb

Drizzt

Saturday 7th of July 2012

Hi habsb, don't worry i decide to minimize the exchange rate risk for this one as well as consolidating my purchases.

G

Tuesday 3rd of July 2012

One thing I tell myself (with limited success) to stay out of markets is:

Inflation eats away at X% a year. But a wrongly judged investment will make you lose much, much more. So when presented with an iffy opportunity, I'd rather err on the side of inflation than larger capital losses.

;)

SmartPassiveCashFlow

Tuesday 3rd of July 2012

Wow!! I can see that you have lots ouf stocks from different sectors working for you. Great work on the capital and dividend play!!

Dividends Warrior

Monday 2nd of July 2012

Way to go Drizzt. M1 and SPH are good and safe choices.

Drizzt

Saturday 7th of July 2012

hi DW, i hope i am right. long term wise SPH is still very cloudy and M1 hope i get the valuation correct.

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