Reit

Article from Star. Fine way to protect retirement capital.

What is REITS and how to get monthly dividend payments from it
Personal Investing - By Ooi Kok Hwa

A LOT of investors, especially senior citizens, are hoping to get consistent and regular dividend payments from stocks.
In this article, we will look into constructing an investment portfolio, which consists of real estate investment trusts (REITs), to get monthly dividend payments.
A REIT is a real estate company that pool investor funds to purchase a portfolio of properties. Normally, it has two unique characteristics: investment in income-producing properties, with almost all of its profits distributed to investors as dividends.
From the table, based on the latest stock price (as at Oct 18) and on assumption that the same dividend payments will be paid over the next 12-month period, almost all REITs will provide about 7%-8% dividend yields. Based on our observations, most of the REITs will try to pay higher dividends over the years. Hence, if the overall economy continues to recover, some REITs may pay even higher dividends for the coming few years.
Due to them only listing at the middle of this year, we have excluded CMMT and Sunreit.
As mentioned earlier, a lot of retirees would like to invest in investment assets that can provide a consistent and regular dividend income. Therefore, we think that REITs can provide a good alternative to the retirees. From the table, except for Arreit, Atrium, Axreit and Hektar, all other REITs will make dividend payments twice per year. Most of them will pay their dividends in the month of February and August. Hence, if an investor would like to receive his dividends other than the above two months, he may need to diversify their REITs into holding many types of REITs.
Based on the list of REITs in the table, we can see that, except for the month of January and April, dividend payments were being made at different months throughout the year, thus investors can receive a stream of dividend income by buying into different types of REITs.
Investors can build a REIT portfolio consisting of a few REITs which make dividend payments at different months of the year. The following is just one of selection options available for consideration.
Based on the current price dated on Oct 18, assuming that the same dividends will be paid in the next 12 months, a portfolio with AMfirst, Arreit, Atrium and Hektar can generate a dividend yield of more than 8% (see table). Besides, by buying with equal amount into these four REITs, investors can get dividend payments for almost every month, except for the month of January, April, July and October.
Nevertheless, investors need to understand that the above selections are solely based on the assumption that these REITs will reward investors with the same dividends and pay during the same month as shown in the table above.
We also understand that apart from the above four REITs, some other REITs may reward investors with even higher dividend payments.
· OoiKokHwa is an investment adviser and managing partner of MRR Consulting.

2010 investment challenge

The stock portfolio should grow by 15% at least to match the performance of PIOF under public mutual. The roller coaster ride in the last five years basically burned my earning and does not increase my holding value at all. A few bad decisions like VSI, SCICOM, MULPHA, AIRASIA and EKOWOOD has wiped out my good calls! Its a hard lesson, but a valuable lesson. Non-quality stock like Mulpha and Ekowood should be trading buy only. The time frame should be only a year and any upside or downside of certain percentage should have trigger a buy or sell call. Looking at the history of the share prices in Bursa in the pass 5 years, it is clear that only institutional stock like PBBANK, YTL, Genting and other blue chips with very strong cashflow and stable business is able to ride out recessions relatively unscathe. Their share prices will not drop too drastically, and will recover quite strongly when economy is performing reasonably well. Beware of business that has highly volatile cash flow. VSI is such an example. While it is generally a welll run company, its business nature is such that its destiny is linked to the customer's technology strength and business acumen. It is also highly affected by world economic events such as the great recession. It is also worth noting that despite some analyst brand Ekowood highly, it is such a small brand that the value is small. Its brand value does not attract buy automatically. Rather, it still probably compete on cost as its quality if exist, is virtually unknown to potential customers.

2010 is expected to be highly volatile, especially in the 2H 2010. With stimulus ending in China and US, cheap monetary flow to stimulate employment and economy will stop. With it, it is possible demand for Chinese good will drop and spawn off massive unemployment in China. That itself will jolk the world, who has came to expect China will save the world. Even more damaging, US economy will still be in an anaemic state. Lost of jobs will be closely monitored and pessimism will spread to the world. The sentiment is strong enough to push down the stock market. In fact, it is probably a good time to exit non-institutional quality of a few related companies.

Continue to build on Public Bank's share. TDM and UTDPlant will be trading buy.

2010 challenge

i have lots to blog but never really found the words for it. However, with 2010 coming, i think i will just do what most people do. Set a artificial goal for 2010. What i see for 2010 is the fact that this year will be very defining for my career. First of all, i am at a crossroad. With the current position, i feel that i am no longer building myself up technically. I need to look for a direction where i will learn new things. That is why, i think i need to be championing a roadmap for module engineering. Right now, there just isn't anyone in ATDM with this role. The absense of a champion in that sense is really handicapping ATDM as a robust organisation. We are reacting to every generation of change adhoc. I feel its a real road there. 2010, will be started with a challenge to myself to try to work into this area.

Mentoring

1. Understanding big picture
2. Align to decision to be made.
3. Align objective to decision to be made.
4. Plan activities to support the objectives.
5. Think of lateral constraint to understand how current scheme fit into the organizational need.
6. Make sure support is available.

Ning Ning can starts to point her fingers on things she likes. She also learned to go around obtacles. I can feel that her voice cord is getting some muscles and she is clearly articulating different sounds to make her point. This is exciting time for her. Her mobility is also improving with much faster crawling and walking while holding on to support. I think she is trilled with her ability. Great.

Tomorrow is the start of my one week holiday. Thrilling. Its also thrilling that this quarter i have managed to get a GT up to speed. She still needs help to think about her approach to engineering problem. But she is getting there. Great.

public bank, ytl, airasia

Today, public bank is about 10.40 per share. It is interesting to note in this economic condition public bank has already announced a dividen payment of 30cents per share. If the company announced a 25cents dividen per share as of last year, the bank will have a very interesting dividen yield of 5.3%. This is attractive as it means that it is higher that fix deposit by about 2% point while maintaining good loan growth locally. If interest is to rise in the next two years, it means that public bank will enjoy the loan that it has captured today and turn them into significantly higher profits. I think public bank at this price is a great toll road to be capture.

On YTL, interesting to note that this company has grow its earning by 5x in the last seven years. While this is not as interesting as highly innovative companies, the growth rate is phenomenal and represents a very very interesting growth company with interest all over the world. However, this fact is not appreciated by local investor due to the low profile business YTL is in. For a P/E ratio of 12, this is a bargain for a company that grows five X in seven years. A buy. Continue to accumulate to RM 10000.

Airasia is a stock that ask questions on the investor's skill. The stock is growing great both on the high line and bottom line. The business strategy to grow anxiliarry earning to overcome high fuel cost seems to be working where this earning doubles in the last 12 months. It contributed to 29ringgit per passenger. Considering that air asia's average ticket price is 189 ringgit, this represents about 16% of the ticket revenue. With the management focus to grow this earning to 60ringgit pax, if successful airasia will have a highly innovative low cost model. This stock is dragged down by the high level of dept due to aggressive purchase of aircraft. However, looking at the recent cash flow, the company suffers a deficit of about 20millions. However, this is the slow quarter and also not all the flight to singapore has been introduced. Going forward, there will be a increase in route quality due to increase flight to Singapore. The 20millions deficit should be narrowing or eliminated. I will say a buy at 1.40.

just a thought about share market

What a 'celaka' business! I admit of being a chicken. In five years of investing, i have missed a few golden opportunities. The most recent crisis is an example. Back in December when the market was at its bottomless pit, I did not took the opportunity to buy anything, although the valuation for some companies like Top Glove, IOI Corp, Public Bank were at absurd low. Knowing that these companies had strong track record during good and bad times, it was a golden opportunity to own them. Also knowing the history of the Great Depression, where shares appreciated 30% before any sign of recovery in the general economy, i should have been prepared to make the swoop. But alas, fear of a deeper recession and the market hit even greater low freeze me in my step. Great mistake! The market has recovered almost 25% from December low. What add salt to the wound was i have amass plenty of cash for just this sort of scenario. Moral of the story, have an idea of what stocks you want to buy, at what value and when the storms hit hardest, go for them.