Sunday, 25 December 2016

Dividend Knight 2016 Portfolio Review and Projected Dividend Income 2017

First, I would like to thank all my loyal and supportive readers who have followed my investment journey thus far. The viewership of my blog finally crossed the 100k mark while I was away on vacation. Yay! :) Another milestone achieved.

A quick snapshot of my portfolio's year-on-year performance (accurate as of 30 Dec 2016)
 
- Market value of portfolio has increased almost 14.62% from S$301k to S$345k. Pure capital appreciation represents 5.32% of that increment while the remaining 9.3% represents fresh injection of funds.
 
- Total annual dividends collected has decreased 8% from S$16, 835 to S$15, 492 as I subscribed to significant amounts of SCRIPS/DRIPS offered by DBS, OCBC, MLT and RMG in 2016. If I had taken dividends instead, the total amount of dividends collected this year would have increased marginally to S$17, 270, which is still way off the target I made last year.
 
- Total Returns: $16k (capital appreciation) + $15,492 (dividends) = S$31,492
 

Walking A Thin Line in 2016
In 2016, I humbly re-learnt an important lesson from Mr Market - a stock is only as good as its fundamentals at the end of the day. The financial figures don't lie, especially over a few quarters. This prompted me to divest my Starhub, M1 and Cache positions completely. Fortunately, the dividends that I collected from these companies over the years have helped me to get out while barely in the black. My decision turned out to be right as their prices continued to tumble throughout 2016.
 
On the other side of the coin, my 'buy on dips' strategy for DBS, OCBC and UOB worked out pretty well. Their fundamentals remain robust despite the temporary weakness in the O&G, business and property loan sectors. I found myself walking a thin line when I had to make a judgement call. Questions like 'Is this a short-term scare?' 'Is a reversal of fortunes remotely possible?' 'Has the fundamentals changed permanently?' would flow into my mind. Navigating through seismic global events such as Brexit and Trump's election victory certainly did not make it any easier.
 
 
2017 Strategy - Passive Income Longevity
I would not allow the Fed rate hike cycle to derail my dividend investing style in 2017. In a world with low returns and uncertain markets, I shall maintain a sharp focus on high-quality companies with healthy balance sheets, sustainable earnings and dividend payouts in defensive sectors such as healthcare. In my opinion, global macro-economic growth will remain subdued with geo-political tensions arising from elections in France and Germany, official start of Brexit negotiations and Trump's first year in the White House. If the banking crisis currently unfolding in Italy requires a bailout package from EU a few months from now, will Germany and France (1st & 2nd largest economies in EU) have the political will to save Italy in the middle of an election campaign? Knowing that using taxpayers' money to help Italy is likely to lose them votes, the leaders of France and Germany probably would not want to put their political careers at risk. Or at the very least, they would drag their feet and delay financial assistance to Italy until their elections are concluded. By then, the problem might have deteriorated into a full-blown crisis. Remember the Greek sovereign debt crisis (Grexit) back in 2012 and 2014, anyone?



Projected Dividend Income 2017 - Planting the seeds today!
  1. Singtel: S$1, 400
  2. DBS: S$1, 254
  3. OCBC: S$1, 094
  4. SATS: S$640
  5. Raffles Medical Group: S$150
  6. Sheng Siong: S$227
  7. Ascendas REIT: S$1, 078
  8. CapitaLand Mall Trust: S$728
  9. Frasers Centrepoint Trust: S$1, 680
  10. Suntec REIT: S$600
  11. Mapletree Commercial Trust: S$320
  12. Mapletree Logistics Trust: S$2, 405
  13. Mapletree Greater China Commercial Trust: S$870
  14. AIMS AMP: S$3, 300
  15. Keppel DC REIT: S$668
  16. Parkway Life REIT: S$960
  17. Frasers Logistics & Industrial Trust: S$832
Total Projected Dividends: S$18, 206
Projected Average Monthly Dividends: S$1, 517
Projected Average Daily Dividends: S$49.88

Merry Christmas and A Happy New Year!
DK

20 comments:

  1. with such a vast portfolio of 310k, do u have a warchest to avg down all of them in the event of another gfc?

    ReplyDelete
    Replies
    1. Hi jalan jalan,

      I usually keep around 5-10% cash as my opportunity funds. That's why I am always prepared to buy on dips. With my year-end bonus coming in, my warchest will be close to 10% of my portfolio.

      Delete
    2. thanks for your reply, DK.

      With a warchest of 10%, would that be sufficient for you to avg down on all 17 counters? or would you would avg down selectively?

      Delete
    3. Hi JJ,

      I don't think all 17 counters will become undervalued overnight at once. I have a plan for averaging down whereby the counters at the top of this list get the priority first. Right now, the top 2 priority candidates are PLife and Singtel. Secondly, I tend to avoid averaging down on a counter which I already owned a huge chunk.

      Delete
  2. Well done Dk in 2016.

    Will you be adding any new position in 2017 or mostly adding onto an existing position?

    ReplyDelete
    Replies
    1. Hi B,

      Thanks! :)

      Judging by the recent dips in S-REITs due to Fed rate hike, I will probably be taking advantage of this rate hike cycle in 2017 to nibble on my existing REITs positions, provided they enter oversold territory.

      Delete
    2. Hi DK

      Impressed with your sizeable portfolio with decent passive income. Do you mind to share how old are you now and how long do you build such portfolio? I had been following on your blog quite some times ago.

      Delete
    3. Hi ching wei,

      I am 39 this year, hitting the big 40 next year. I started my investment journey during the 2013 taper tantrum.

      Delete
  3. Is the interest rate hike a consideration for targeting reits in 2017? Most people are saying no go for reits

    ReplyDelete
    Replies
    1. Hi Sgdivvy,

      To be more exact, it is the expected slow pace of rate hikes that made me consider REITs in 2017. There should be knee-jerk reaction in the market that push REITs into 'oversold' territory. There will be pockets of opportunity to pick up some quality REITs. But of course, we should always diversify into non-REITs. Don't overindulge in one sector.

      Delete
  4. Wah, so much dividends collected. Envy!

    ReplyDelete
    Replies
    1. Hi Sweet Retirement,

      Thanks! Still some distance away from my goal of $24k dividends per year but thankfully on the right track. :)

      Delete
  5. DK
    Great work and thanks for Sharing. I happy for you and trying to achieve passive income.
    Wish you a very happy 2017

    ReplyDelete
    Replies
    1. Hi Kumar,

      Thanks for the compliment and well wishes.

      Happy New Year! :)

      Delete
  6. Congrats on a rewarding year. I have enjoyed following your blog. Good call on banks!

    What's your target for dividends next year?


    Happy New Year
    DW

    ReplyDelete
    Replies
    1. Hi DW,

      Happy New Year to you too!:)

      Thanks for following my humble blog. I guess I got a little lucky with my judgement on banks. Could have easily gone sour too.....

      My target for annual dividends next year would be around $19k. Aim for the stars!

      Delete
  7. Fantastic update. Your current dividend income is fantastic. I really like your lofty $19k goal for this year. Best of luck.

    ReplyDelete
  8. Fantastic portfolio, very impressive. Mine is only new so it is no where near the caliber of yours. But I am working on it. Well done

    ReplyDelete
  9. A small decrease in dividend income is worth it if it means an increase in total amount of shares owned. All the best for 2017

    ReplyDelete
  10. Very deceive decision. Good lesson for me too.

    "In 2016, I humbly re-learnt an important lesson from Mr Market - a stock is only as good as its fundamentals at the end of the day. The financial figures don't lie, especially over a few quarters. This prompted me to divest my Starhub, M1 and Cache positions completely. Fortunately, the dividends that I collected from these companies over the years have helped me to get out while barely in the black. My decision turned out to be right as their prices continued to tumble throughout 2016."

    ReplyDelete