Strategy Report: Feb-March 2017

Interest Hike Fully Priced in?

The interest rate hike on 15 March did not do anything significant to the market suggesting that it had been fully priced in.

Adding to Existing Positions

With the uncertainty out of the way:

• I used my SRS funds to purchase CCT. 
• Added to my GSK holdings, this time, buying the LSE listed GBP shares instead of the ADRs.
• I also subscribed to the Ascott Residence Trust rights issue. I have a fair amount of ART so I have to come up with a fair amount of cash for the rights.

New positions

In late February, I initiated a position in S&P UK Dividend Aristocrats UKDV. While I like the WisdomTree offering more, the AUM for WUKD is a bit too small and the ETF is in danger of closing.

In March, I initiated a position in Telstra as it continued to drop and I felt that there was a sufficient margin of safety vis-a-viz its dividend yield. Previously I had a small position in Telstra which I bought using SCB at about $4.9x which I had to sell at about $5.05 because SCB was removing its minimum commission (at that time I did not have PB yet).

Of course, IB is a much better place to hold AU shares. Hopefully the withholding is at the treaty rate of 15% and not 30% (My Westpac ADR dividends were withheld at the treaty rate of 15%).

I also initiated a position in the iShares ASX200 ETF IOZ which also has a favourable dividend yield.

Dividend Report: Jan-Feb 2017

Average dividends per month: Jan- Feb 2017

S$4625.47  +
£176.10        -
US$432.80    -

Notes:

Average dividend per month = total dividend collected / number of months in the year so far.+ and - are used to indicate whether the average monthly dividend has gone up or gone down.Vanguard quarterly dividends reported on Jan/April/Jul/Oct

Dividend Report: January 2017

Average dividends per month: Jan 2017

S$408
£352.21
US$627.24


Vanguard quarterly dividends reported on Jan/April/Jul/Oct

Strategy Jan-Feb 2017

As I am receiving about $3,500 dividends per month, this means that even if I feel that the market is on the high side, I should still have the discipline to reinvest my dividends plus a little bit of my savings.

I save most of my income and the rest of my savings go to my investing "warchest." If there are no buying opportunities by March, I will probably use part of the warchest to pay back my car loan in full.

Jan-Feb were  top-ups to my portfolio

• CPXJ (iShares Asia Pacific ETF)
• NORW (GlobalX Norway ETF)
• CapitaCommercial Trust
• Comfort Delgro (the last time I added was 10 years ago) added at $2.39 / $2.43
• Frasers Hospitality Trust
• Vodafone
• British Telecom (yes got hit by Italian accounting scandal, that's why I diversify)

And also initiated 2 small positions

• Telefonica - to diversify my telecoms holdings.
• WisdomTree - because I like their Smart Beta ETFs and the price dropped after earnings miss which seemed like an ok entry point

STI 3,000: What's the plan?

I have always said in the forums that STI will eventually go back to 3,000. So if you buy STI ETF below $3.00, it is highly unlikely that you will lose money. You can also collect dividends while waiting for it to go back.

Now that STI has hit 3,000, we get the usual "will it go up or will it go down" debate with bulls and bears on either side. My strategy, as always, is just to hold on to my shares and collect dividends.

I have only bought STI ETF once when it was above $3.00. Most likely, I will adopt the same strategy this year. The fundamentals won't support STI going to 3,500. It could be a 'hot money' driven rally, but I want to see earnings growth as earnings pays for the dividends I collect.

At the same time, I am collecting monthly dividends of $3k+ and also need to park my income somewhere. If I don't reinvest, what am I going to do with the money?

Most likely, I will still do small regular purchases of regional (multi-country) ETFs to reduce risk instead of single country ETFs like STI ETF.  I can still get Singapore exposure by doing so as CPJ1 and VDPX both hold Singapore stocks and their expense ratio is lower than STI ETF.

Fortunately or unfortunately, I also have debt to pay off in the form of a car loan I took in 2015. The short story is that many car dealers offer packages where you have to take a car loan, so I took it. The silver lining is that because I had taken a loan, I had extra cash on hand when BREXIT arrived. This year, I will repay the car loan early instead of buying STI ETF. I did the same thing with my housing loan. Whenever STI was above 3,000, I did partial repayments of housing loan instead of buying STI ETF.

Finally, I have already said that I am not very good in investing in rising markets. I very much prefer buying after a crash. So I expect that this year will be a quieter investing year for me. In which case, I am not sure whether I can hit my target of increasing dividends from $3,500 to $4,200. Will have to see.

Portfolio Performance 2016

I am happy with the dividends collected and hope to continue to grow them by reinvesting dividends plus adding a large part of my monthly income. If I were to set a dividend target then maybe $5,000 in 2019 (3-year plan to grow dividends).

Foreign Stocks/ETFs

The return on my IBKR foreign stocks is easily calculated since there is a report function. I also have some foreign ETFs in SCB and if I have the time I will probably look at it. At least I am holding IWDA which benefited from the rise in US markets.




SGX-Listed Stocks/ETFs

As for SGX-listed stocks, I am holding quite a few counters and instead of calculating everything, I will look at my top holdings. I see that Comfort Delgro has been hit hard. My average entry price is around $1.60 (guesstimate) accumulated during the GFC and I have not added anything. Maybe next year I will do some DCA as I believe S$ will weaken meaning CDG will benefit as it receives income in other currencies as well.

Any loss in CDG should have been more than offset by gains in other shares as well as purchases through 2016 (GLP was my biggest local winner - all bought under $1.80, now $2.20). Therefore, I will take the STI ETF return as the return for my portfolio, i.e. about 3% due to dividends.

STI ETF ES3

30 Dec 16: $2.94

4 Jan 16: $2.90

30 Dec 15: $2.95

Dividend: $0.13

CDL HT    J85

30 Dec 16: $1.34  

4 Jan 16: $1.32

30 Dec 15: $1.32

Dividend: $0.1018

CDG C52

30 Dec 16: $2.47

4 Jan 16 : $3.00

30 Dec 15: $3.02

Dividend $0.0925

OCBC O39

30 Dec 16: 8.92

4 Jan 16: 8.64

30 Dec 15: 8.85

Dividend: $0.36

UOB U11

30 Dec 16: $20.40

4 Jan 16: $19.09

30 Dec 15: 19.55

Dividend $0.70

FCT J69U

30 Dec 16: $1.90

4 Jan 16: $1.85

30 Dec 15: $1.86

Dividend $0.118

Dividend Report: Jan-Dec

As 2016 draws to the close, I finally have a clearer idea of how much dividends my portfolio generates. This is the first time I'm actually counting the amount.

Not all my ETFs declare dividends. For example, IWDA, XESC, CPJ1 reinvest dividends. So the reinvested dividends do not count towards the dividend total. 

I invested in foreign markets in a major way after BREXIT, so I expect to start collecting the dividends for those purchases next year.  Hopefully my US$ dividend will start growing.

A safe target should be to grow the total dividend from $3,500 to $4,200 in 2017. If there is an inflation-fuelled rally, the dividend might well be higher, but that is just inflation rather than real growth.




Average dividends per month: Jan-Dec 2016:
S$3,185.86
US$67.74  (=$97.55)
£143.06    (=$254.65)

Average dividend all currencies converted to S$  (US1.44 / £1.78)

$3,538.06




Average dividend = Total dividend collected ÷ number of months in the year so far
Different from DK style of total dividend ÷ 12 months  (updated 7 Jan - 30 Dec FHT payment updated)



Previous monthly average:
S$3,254.66    -
US$219.02     -
£156.06        -