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At some price these dividend stocks will get attractive

A scan of the Dividend Stock Tracker would show that dividend yields have come up from the frustrating low level.

But the situations have changed somewhat. We may be in a situation most investors today have not seen before: a persistently higher interest rate.

Aims Amp Industrial REIT

Ascendas India Trust

First REIT

Religare Health Trust


When stocks fall, it could be due to systematic or non-systematic factors, that is an overall market correction, or factors that affect future profitability in the long run or making the company a going concern.

Assessing risk and finding value

The job of the investor is to access risk always. Why? because for most part, there might still be a reward at the end of the tunnel.

At the worse case in the 2009 financial  crisis, you have hedge fund managers buying mortgage backed securities, and so called insolvent banks.

when it looks like the municipal bonds were having an issue, there are guys that are buying municipal bonds

Those to the lay man are toxic!

But this world pays those who have built up knowledge and can form a model of the asset and the known and unknown risks of assets.

When you are able to create that box, you can find a better value for it.

At certain point the price provided gives you a good margin of safety and a good risk reward.

The difficulty is finding the value.

If you say heck care and buy, then I hope you have all the luck on your side.

Many took the easy route and just look at the yield and don’t want to learn this second job.

In this case Aims Amp at 1.60 or First REIT at 1.2 dollar may be the right price to buy since they “formed a base there for some time”.

The deeper thought process

The general consensus is that such a high interest rate scenario is bad for interest rate sensitive stocks.

The deep thinkers would have develop a second level of thoughts:

  • Historically how has REITs and Utilities performed in a high interest environment?
  • Is this an overreaction from the market? What if it is?
  • Does interest rate just go straight up in the straight line?
  • Would better managers be able to operate in this more challenging environment? Who are the better managers?
  • Which REIT reacts better to this scenario, are there historical evidence of it?
  • What is the worst case scenario of the 10 year SGS bond yield based on available data. what would operating conditions look in that case
  • Can a REIT realistically grow if the economy is better? Does the Singapore economics conducive for such a case to happen?
  • Would a strong sponsor mitigate borrowing challenges as they can obtain the cheapest rates due to their scale?
  • Are certain stocks spread wide enough that historically interest rate is a non factor?
  • Could certain REITs be affected because its not JUST the rates but geo-political and currency factor?

Having a systematic risk identification process will enable you to funnel these into your valuation model.

Good luck in your bargain hunting. Lets hope it doesn’t blow up in your face.

I run a free Singapore Dividend Stock Tracker available for everyone’s perusal. It  contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly  here.


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Friday 23rd of August 2013

In 2009 low, the average div yield was something like 19% for reit. Will we see this again? Even when there, we will be still "scare" to make a move. But stock already move down big before tapering begin, a long way ahead, and I think there is a long way down too for all reit. I will wait it out patiently, a 15% correction will show maybe an average div yield of some 10%, my guess, will be a good time to start to buy.

Thank Drizzt and God blessed you.


Saturday 24th of August 2013

the problem with most is that anchoring at a previous price and when it doesnt get there, there is inaction.

thus the importance of learning to value to find out what is consider cheap to buy. the question then is having a system to force you into action.

without that yard stick, everything becomes difficult.


Wednesday 21st of August 2013

A good and timely post, thanks! When one assesses their required margin of safety, the basic question to ask is - have all the negatives been priced in? Some may use the headline yield as a deciding factor, but it's never that simple. Just make sure that when one assesses these REITs, they ensure that they have the requisite margin of safety. It's not about making money, it's about NOT losing money!


Wednesday 21st of August 2013

ah yes, the age old margin of safety. something i am trying to learn as well

chun siang

Wednesday 21st of August 2013

In fact not just dividend stocks. All companies as well. This is when value will emerge, with Value defined differently to each Individual, depending on his risk tolerance, objectives, time frame.

All sound companies will be a good buy at a low enough price :)


Wednesday 21st of August 2013

yes thats right. but what we are talking about is so called unsound companies. there may be a value point as well. and perhaps there is a reward for those who worked hard

Edward Koh

Wednesday 21st of August 2013

A timely post indeed to remind us of the danger of not just blindly buying because of the attractive dividend returns. It could even go lower if we just "heck care and buy". Thanks :)


Wednesday 21st of August 2013

well that wasn't my aim but more if you wanna buy without knowing a good reference price, then all the best to you.

if you have a good brain and put in work, perhaps you can grew to understand and see the value in distressed assets.

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