Saizen & Sabana: Initiated Long-term Holding

Saizen

I invested in this REIT for the first time. I like Saizen for its investments on rented apartments in Japan. Majority of the population in Japan lives in rented houses because housing prices are too high for the working class to afford. From the economist's point of view, Saizen does have an economic moat in this area as the market for rented apartments is relatively inelastic in demand. In addition, the REIT is also trading low to its NAV. At $0.143, I am enjoying an above-8% DPU annually.

However, there are downsides to Saizen. First of all, it is to my knowledge that the Japanese government is depreciating its currency to make its economy more competitive. As rental income generated from Saizen is in JPY (Japanese Yen) before converting to Sing dollars, I could see a drop in the DPU if there is a sharp depreciation in their currency. Secondly, tectonically speaking, Japan is sitting on top of two earthquake-prone plates. In another sense, any major earthquake that strikes Japan like the one in March 2011, could potentially damage Saizen's income and resulting in a lower DPU. And lastly, there are still unexercised warrants waiting to be used on Saizen. Should all warrants be exercised, we will see Saizen's DPU dip down to 7% or mid-6% in the worst case.

Taking all the negative points into consideration, I am keeping a small holding on Saizen. It only occupies 20% of my portfolio. Still, with an DPU of above-8% at current, very undervalued prices, it is attractive to buy and hold it for dividends in the next few years.

Sabana

I am back again on this REIT. But this time, it is not meant for quick trading. Sabana's consistent rise in its DPU has made it very attractive to hold it for a long time, purely for passive income. It has also surpassed AIMSAMPI as the highest-dividend yield REIT in the list.

I have balanced my industrial REITs with equal shares of AIMS and Sabana. With both REITs set to increase their DPUs in the next few quarters, I am excited about the rate of growth in my passive income.

What's Next?

Singpost, a blue chip stock. This will be the return to non-REIT stocks. But instead of investing in risk-filled cynical stocks, I am into blue chips which is less volatile. Currently, all of my TA indicators have confessed that Singpost is riding on a downtrend. At current prices, it gives 6% DPU to its stockholders. Not bad, considering few blue chips give more than 6%. It also pays out dividends every quarterly, like an REIT.

Currently, it is hovering somewhere between $0.995 to $1.01 which means this price range is a strong support to overcome. Falling which, I could see prices reaching somewhere at the next support of $0.985. My entry to Singpost will be at these prices.

Starhill Global: Complete Divestment @ $0.63 and $0.64

At long last, after more than a year holding on to Starhill Global's shares, I have divested remaining portion of them this morning. My journey with Starhill Global began on 8th Feb 2011 when I purchased the first lot at $0.64 (also the divested price).

I made the decision to slowly divest Starhill Global after I gained interest in AIMSAMPI for its highest DPU payout of all REITs. Furthermore, AIMSAMPI is consistent with its increase in DPU, unlike Starhill. The fate is finally sealed with Starhill displayed a more volatile nature than AIMSAMPI which is a more stable industrial REIT. My plan to divest Starhill was paused for several times due to weakening market sentiments for the past year. Thankfully, this year's bullish rally has enabled me to materialise the divestment.

4 Levels of Passive Income Generation

Level 1: Development Stage

Small capital invested in high dividend-paying stocks. This is an infant stage which depends largely on active income to fund the investment portfolio.

Level 2: Hybrid Stage

Increased amount of capital invested. This is a 50/50 or hybrid stage which is funded by a balance of both active and passive incomes.

Level 3: Take-off Stage

At this stage, the investment portfolio is "self-dependent". The amount of passive income generated annually is sufficient enough to be reinvested without the involvement of active income.

Level 4: Advance Stage

In the highest level, the investment portfolio flourishes with an ability to generate huge amounts of passive income which guarantee financial abundance to the investor. Not only can the passive income be reinvested, it is also more than enough for the investor to quit his job (active income) and live comfortably on passive income.

Starhill Global: Sell Order Fulfilled @ $0.620

Continued with my plan to completely divest Starhill Global in view of its relatively stagnant DPU, I sold another batch of lots yesterday. At $0.620, technically I was making real losses since I purchased these lots at higher prices last time. But several quarterly DPU payouts have instead turned real losses into profits. I am left with only a tiny batch of lots. Should the price moves up in the next few days or weeks, the complete divestment of Starhill Global shall be materialised.

The stock market has been in a good mood since the rally began in Jan. Stock prices are breaking resistance every week. However, the rally in March has appeared to be slower than usual. In some occasions, some stocks even experienced heavy selling (eg. SGX).

I can't tell for sure whether or not this could be a market correction. I shall continue with my waiting game for now.

With divested funds returning to my main account, in addition to money earned from temp jobs, I have a larger warchest than before and is ready to exploit another market downturn.

AIMSAMPI & Sabana Divestments

The latest rally that began in the early January, has gradually moved stocks up to another new price level. Without further delay, I divested more than half of my total holdings to lock in profits. I reduced the size of my investments from 95% to only 40%. I completely divested Sabana @ $0.915 (bought at $0.895) and a small portion of AIMSAMPI @ $1.07 (bought at $1.10 but already profited from 3 quarters of DPU payouts).

As you can see from the chart, AIMSAMPI experienced an unusual high shock from $1.03 to $1.10 before ending the trading day at $1.085. My next sell order is at $1.125, after which, I will leave the remaining small lots in my trading account to reap dividends.

I am still waiting for Starhill Global to recover from its seemingly hard-to-achieve rally. The highest it went was only $0.61. I have repeatedly laid down sell orders at $0.615 but all were unfulfilled. Quite disappointing with the performance. I bought these lots at $0.645, $0.64, $0.635 and $0.63 last year. For over 4 quarters, I have received enough dividends to cover the losses if I were to sell it at $0.615.

I am heading for an eventual 80% cash in hand. I have a feeling that this 2012 bullish rally would not last long as I was a victim of a similar rally that took place in 2010. In the 2010 bullish rally, after I moved in at a relatively high price, the market turned bearish and I incurred massive paper losses, which became real losses after I divested them. These stocks, as of today, are still below where they were in 2010. Better be safe than sorry, I divested majority of my holdings in 2012 to get ready for a possible market downturn somewhere this year (global economy is still weak, don't forget). Should that scenario be materialised, I will buy again at a much cheaper prices.

Starhill Global: Sell Order Fulfilled @ $0.605

Continued on my quest to divest Starhill Global this morning. I took the advantage of the pre-XD rally to sell more lots in this REIT.

I will pour in more funds into AIMS and Sabana, the highest two dividend-yielding REITs.

At the same time, I am also replenishing my warchest to get ready for any possible downtrend in coming months. Both AIMS and Sabana have posted excellent financial results and continued to increase their DPUs quarterly. Not only that, the fluctuating prices of these two added a lot of trading fun and opportunities to get quick bucks.

Sabana: Sell Order Fulfilled @ $0.91

Divested half of my holdings in Sabana REIT when the price reached $0.91, a very strong resistance. Like other stocks in the bullish market now, Sabana broke through all four moving averages and continued to trend upward to $0.915 before retreating back to $0.91 (thanks to my only sell order at that point of time).

Divested funds from both AIMSAMPI and Sabana will be stored in my warchest, ready for the next bearish downtrend after the buying sphere (could it be due to CNY and 4Q DPU ex-dates?) runs out of steam.

AIMSAMPI: Sell Order Fulfilled @ $1.00

Divested a small portion of shares when the market opened an hour ago and locked in decent profits, after AIMSAMPI's price rallied to $1.

Before the market turns bullish this month, I bought a few lots of AIMSAMPI at $0.945 and $0.955 respectively. I expected AIMSAMPI's price to reverse in trend and rally up to another resistance, that is, the $1 mark. Now that it has happened and I sold off those $0.945/$0.955 shares before the rally loses steam. I still have shares purchased many months ago at the same $1 mark and hope to sell them away at $1.05 and $1.075.

As I wrote in the previous post related to Sabana, I planned to have holdings in both AIMSAMPI and Sabana to be equal. The divested funds from AIMSAMPI will be channeled towards Sabana before the ex-date.

I have to thank Mr. Market for the CNY red packet from AIMSAMPI. Huat ah!!!

Sabana: Buy Order Fulfilled @ $0.895

At last, I fulfilled the remaining portion at a higher price of $0.895 before the stock market closes at 5.30pm. My buy order for yesterday was only partially-fulfilled at $0.89.

You can refer to Sabana's graph chart yesterday. Technically speaking, it is not my culture to buy shares when prices are at the upper range of the 20wk Bollinger Band. But I am primarily invested in Sabana for passive income and $0.895 is a fairly good price.

If Sabana is able to break through the $0.91 resistance (a very strong one), we could see its price rallying to the $0.95 next. By then, I will drop a couple of sell orders to lock in profits.

Let this be my CNY red packet!

Huat ah!!!

Sabana: Buy Order Partially-Fulfilled @ $0.890

I dropped a buy order last night and thought that it would be fulfilled this morning but a sudden surge in its price ended the buy order with only partially-fulfilled. Meaning, I can't get all the lots that I wanted but some.

It's my first purchase with Sabana REIT, by the way. 

From the graph chart, Sabana has been bullish for the past few days. It has broken the $0.895 resistance (I didn't draw on the graph) today and went up to $0.90, which is a strong resistance where the 200MA is located. Breaking the 200MA means the price could test another strong resistance at $0.910, which is the highest high since the US debt ceiling crisis in Aug last year.

In my previous post, I wrote that I would channel divested funds from Starhill Global to AIMSAMPI to enjoy the maximum dividend yield in the REIT market. But AIMSAMPI's price seems to be creeping up fast and is now becoming a little expensive. Furthermore, due to the construction of new warehouses, expect its dividends to slightly dip for 2012 before the increase in 1Q2013 when the warehouses are completed. Unlike AIMSAMPI, Sabana has completed its acquisitions of existing buildings and I would expect its dividends to increase for this year.

In other words, moving my funds to Sabana is a defensive move as I can rely on its expected increase in dividends to offset AIMSAMPI's expected decrease this year.

To further diversify the risk, I am planning to have Sabana's total shares held to be equal to AIMSAMPI's. In addition, First REIT is also in my radar, as its relatively low gearing and defensive healthcare nature make it an attractive buy.

Total Dividends Collected for 2011

Last year, I held shares in several holdings and received dividends from them. Most of the stocks have since been divested and I am now geared solely on the REIT market.

These are the companies that paid me dividends in 2011:

1) MACQ INT INFRA
2) Mencast
3) Breadtalk
4) Suntec REIT
5) Starhill Global REIT
6) Cambridge REIT
7) AIMSAMPI REIT

In total, for the year ended 31 Dec 2011, I received about $700 of cash dividends. A large portion of the dividends were contributed by the REITs.

I expect the total dividends received for this year to increase significantly due to the following actions:

1) Moving from high-growth stocks to high dividend-yield REITs
2) REITs distribute dividends quarterly, compared to high-growth stocks' annually (4 times vs 1 time)
3) Invest in REITs that pay more than 10% of dividends (eg. AIMSAMPI and Sabana) vs 2% - 4% of high-growth stocks

In general, REITs have lower risk factor than high-growth stocks. Apart from receiving higher dividends, I am also lowering the portfolio's risk. That clearly explains why I am geared towards REITs than anything else.

Divested Starhill Global @ $0.575

I sold off a small portion today. I dropped a sell order at $0.57 but it fulfilled at $0.575 instead. Compared to the last sell entry at $0.565, I was lucky this time round thanks to the recent rally after a lower US unemployment rate was reported.

The divested sum will be channeled towards AIMSAMPI which pays a higher DPU of 10.3% (as of today). Another factor to consider is the price trend of AIMSAMPI, when I analysed the graph chart yesterday, I realised that the rally enjoyed by it wasn't going to last. Volume is falling on the backdrop of a rallying price. This is a strong indication that the rallying price is very soon reversing into a bearish trend.