I track, I watch, I move on SGR

A warm welcome to 4 new subscribers who joined us since the last blog post. Thank you!

For regular readers of this blog, you would know that I believe in using “reversion to mean approach” to determine my buy price for Reits. And Reits is a major component of my portfolio since I am an income investor.

I TRACK:

To explain it further, I basically track the dividend yields of Reits for the past years and then use the data to determine the historical yields of the Reit. By lining them up from lowest to the highest yields, I distributed them on a scale of 0-100%. 50% point is the mean. I designated 33% point as my “solid sell” trigger and 67% as my “solid buy” trigger.

The percentage of the scale will be higher if the yield is higher, created either by a depressed share price or a higher dividend distribution. Since share price fluctuates more frequently than dividend distribution, it is more likely that the window will open up because of depressed share price. Thus, by buying at “67%” point, I am buying at low share price for the same dividend yield and therefore, I feel more assured of getting the dividend yield return that I wanted. I must admit sometimes I am impatient, so I have bought the shares at 50% point too.

I WATCH:

I will watch the yields of the Reit on this scale of 0-100% regularly. I update the share price of the Reits weekly. Furthermore, whenever, a Reit announced its results, I will update its dividends declared. I keep a rolling last 4 quarters dividend distribution to determine the yields.

I MOVE:

Once, the yields reach my target of “67%”, I will move in to accumulate. I must admit that I am less disciplined at the sell trigger. But it is just me being greedy, hoping for an even higher share price.

Move on SGR

Recently, I moved to accumulate more Starhill Global Reit (SGR) shares.

Following the latest results announcement, SGR share price has been battled down with a bleaker outlook and a lower dividend distribution. The share price finally hit my “67%” point at 69 cents.

I have increased weightage of SGR in my portfolio from 5.1% to 5.6%.

So far, the decline has stopped and I hope things will improve from here, fingers crossed.

What else moved:

The other MOVE that I made happened today – on Netlink Trust. I accumulated more shares at 78.5 cents, when its share price dropped after ex-div. I don’t think anything major has changed to warrant this drastic drop. The weightage of Netlink Trust in my portfolio has since risen from 2.0% to 3.0%. I am fairly certain that it can continue to provide the 5+% yield to its shareholders. 5% yield from my portfolio is my target.

Exuberance

Have you made any changes to your portfolio? Look forward to hearing from you on the latest moves that you have made.

Enjoy the rest of the week.

Regards,

Warriortan

Related References:

  1. Dividend Play: Asian Pay TV & Netlink Trust
  2. Alternate REITs Buy Trigger = Reversion to Mean Dividend Yield
  3. Cracks appearing in Starhill Global Reit
Advertisements

16 thoughts on “I track, I watch, I move on SGR

  1. Hi Warrior Tan,

    Just a curious question. I read that YTL shares were affected because they had links to the country’s previous PM. Any thoughts on how this will affect the reit? Since it’s main sponsor is YTL.

    Liked by 1 person

    1. Ya, YTL got hit quite badly following the Malaysia GE. It dropped from RM1.4 to 1.0 almost overnight. However, I think it got to do more with their expected involvement in the High Speed Train. My view is that the direct impact on SGR is minimal. It is afterall a Singapore listed company with the “heavy weight” assets in Singapore. If you feel that the current decline of SGR is linked to YTL, then maybe it is an opportunity to take the opposite position and wait for the market to change their views when the results are out. 🙂

      Like

  2. Hi warriortan,

    Like you, I am also an income investor.

    Would you mind explaining the scale of 0-100%? Isnt dividend yield typically between 4-9%? How do you derive 50%, 33% and 67%. Perhaps using a table or illustration would help me and the rest of the readers understand better.

    Thank you!

    Regards

    Liked by 1 person

  3. Hi warriortan,

    Like you, I am also an income investor.

    Would you mind explaining the scale of 0-100%? Isnt dividend yield typically between 4-9%? How do you derive 50%, 33% and 67%. Perhaps using a table or illustration would help me and the rest of the readers understand better.

    Thank you!

    Regards

    Liked by 1 person

    1. Hi, sure. So 4% yield is 0% on the scale and 9% yield is 100% on the scale. Depending on how the rest of the data points are scattered between 4% and 9%, the mean (50%), 33% point and 67% point will be different. If we assume that the distribution is normal (equally spaced out), then the mean will be 6.5% yield. I feed the yield data into an excel speadsheet and they will produce the 33%, 50% and 67% point for me. I hope this explain. If not, if you are comfortable to share your email address with me, I can send you a chart.

      Like

      1. Use Excel function “Percentile” to calculate the desire 33 or 67 percentile yield.

        Last time you use 5yr Low/High, but now you use last 4 quarter dividend yield for range data. Can you explain why you change that?

        Appreciate if you could send me a copy of your chart. Thanks.

        Liked by 1 person

      2. Hey, maybe I wasn’t very clear. I use the 5 year low/high to determine the historical yield. But on a ongoing basis, I use the current 4 quarters dividend to determine the current yield. I compare the current to the historical yield. Sure, i can send you a chart … how do I do that?

        Like

  4. Hi Warriortan,

    Do you consider other factors besides your reversion to mean method in selecting REITs? Or is it that the movement of the yield reflects all other fundamentals of the REIT in question?

    Cheers!

    Bedokian

    Liked by 1 person

    1. Yes, I do – the sponsors, the quality of the their assets, their gearing ratio, their investment approach (and use of investors’ money) are things that i look out for. But since Reits is about yield and since they are normally given a certain mandate to invest (like retail or logistics assets or geographical spread), their risk profile is quite well define. So, investors’ demand on their yields generally do not too far away from the mean. For example, we do not see ParkwayLife Reit, CapitaMall Trust at 10% unless there is a major disruption. But even then it will come back to the mean.

      Like

    2. But I don’t use this approach for other companies because companies are more flexible in their management decision and investment choices and even financing approaches (they can be zero debt or extremely high geared).

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s