Reits look good, for now

(31-12-2010, 09:58 AM)psslo Wrote: Me too. Picked up REITS agressively last year for good dividend yields & shore up a defensive portfolio for long term holding.

Div yields at my buy price for Suntec at 15%, CDL 30%, Ascott 20%. Parkway Life 13%, etc. REITS is now 30% of my portfolio.

Interestingly, I also picked up ARA in the process & it is yielding a decent 15% at my purchase price last year.

Impressive yield you've got psslo. Great thing that you managed to resist the urge to lock in the capital gains

> Great thing that you managed to resist the urge to lock in the capital gains

Psslo, u are good man. 30% on CDL REIT. Salute you.

There is a price for everything. The time to sell is when the REIT fundamentals are not so good.

I personally sold all my Suntec REIT when they bought MBFC at such high price. Li Ka Shing and ARA got the best deal. Suntec REIT carry the baby now...

I think it is more important to look at current yield and decide whether it is necessary to hold or sell.
Sometimes, looking at the yield computed using purchased price may convince a person to carry on holding the stock.
Well, for my case, the reshuffling of portfolio is a continuous process. After every financial quarter, I will pick out the weakest counter in my portfolio and look for an alternative.
It can be another stock or it can be cash.

(31-12-2010, 06:56 PM)yeokiwi Wrote: I think it is more important to look at current yield and decide whether it is necessary to hold or sell.
Sometimes, looking at the yield computed using purchased price may convince a person to carry on holding the stock.
Well, for my case, the reshuffling of portfolio is a continuous process. After every financial quarter, I will pick out the weakest counter in my portfolio and look for an alternative.
It can be another stock or it can be cash.

Shouldn't you calculate your yield based on the purchase price instead of the market price. The yield you get is based on the price you bought the stock at correct? When the DPU goes up or down then your yield goes up or down.

I don't seem to understand why the yield of the stocks you bought must be based on market price of the stock of any particular day as you didn't buy it at that price so why do based it on that price?

Yeokiwi, can you clarify for me so that I am not calculating my yields incorrectly. thank you.

(31-12-2010, 09:13 PM)flinger Wrote:

(31-12-2010, 06:56 PM)yeokiwi Wrote: I think it is more important to look at current yield and decide whether it is necessary to hold or sell.
Sometimes, looking at the yield computed using purchased price may convince a person to carry on holding the stock.
Well, for my case, the reshuffling of portfolio is a continuous process. After every financial quarter, I will pick out the weakest counter in my portfolio and look for an alternative.
It can be another stock or it can be cash.

Shouldn't you calculate your yield based on the purchase price instead of the market price. The yield you get is based on the price you bought the stock at correct? When the DPU goes up or down then your yield goes up or down.

I don't seem to understand why the yield of the stocks you bought must be based on market price of the stock of any particular day as you didn't buy it at that price so why do based it on that price?

Yeokiwi, can you clarify for me so that I am not calculating my yields incorrectly. thank you.

Unless I am mistaken, Yeowiki is using the current market yield to determine whether the market is valuing his investments correctly. If the current share price reflects too rich a valuation, its time to sell even though the purchase price do offer a good margin of safety.

(31-12-2010, 09:13 PM)flinger Wrote: Shouldn't you calculate your yield based on the purchase price instead of the market price. The yield you get is based on the price you bought the stock at correct? When the DPU goes up or down then your yield goes up or down.

I don't seem to understand why the yield of the stocks you bought must be based on market price of the stock of any particular day as you didn't buy it at that price so why do based it on that price?

Yeokiwi, can you clarify for me so that I am not calculating my yields incorrectly. thank you.

I always like to calculate my yield on the stock based on market price.
It gives me a feel of whether I have correctly assessed the opportunity cost of holding the stock.
If I am unhappy with the yield, I will sell it away, get back the money and reinvest in another stock with higher yield.
It is important since the money that is held up in the stock represents an opportunity cost and the money can be used to purchase other stock of better yields, better NAV or both.
In comparison, the yield based on purchased price does not provide this piece of information.
In some extreme cases, the historical yield can go to infinity if the collected dividend exceeds the purchased price(quite possible if the stock is held for many years).

No right no wrong leh.. but it is important to keep in mind the opportunity cost.

I still believe in calculating the yield based on purchase price, and after which, if the dpu fluctuates, you can compare it with the yield based on current price.

For dividend stocks like starhub, why sell the moment the fundamentals don't look so good? Even though they are debt laden, as long as you got it at a substantially cheaper price and they continue to give 5 cents per q, I still think it is good to keep it as long as the divy is constant.

Let's say you got it at $2 where your yield that time is probably around 10% and the divy drops by 20% to 4 cents a quarter, you're still holding onto a yield of 8% which I believe is still higher than most of the counters apart from counters like AIMS or Cambridge. Decided not to hold on anymore? Simple. You can still divest the counter at some profit with the difference in share prices.

Gd point there yeokiwi. Thanks learn something today.

(31-12-2010, 10:16 PM)yeokiwi Wrote: I always like to calculate my yield on the stock based on market price.
It gives me a feel of whether I have correctly assessed the opportunity cost of holding the stock.
If I am unhappy with the yield, I will sell it away, get back the money and reinvest in another stock with higher yield.
It is important since the money that is held up in the stock represents an opportunity cost and the money can be used to purchase other stock of better yields, better NAV or both.
In comparison, the yield based on purchased price does not provide this piece of information.
In some extreme cases, the historical yield can go to infinity if the collected dividend exceeds the purchased price(quite possible if the stock is held for many years).

No right no wrong leh.. but it is important to keep in mind the opportunity cost.

Can you help me understand where I'm not quite getting? Isn't the yield based on your purchase price? That is if you bought at $1, and the dividend is 5c, then the yield to you is 5% regardless of the market pricing.

If you mark it to market price, it only matters if you're buying more units. Even if you're concerned about opportunity costs of locking up your funds in the stock, you should also be comparing against the yield to you based on your purchase price no?

A worked example should show yeo-san's logic clearly:

1. You bought stock A with $1000 capital, It yields 10%, so div is $100 per year.
2. 1 year later, stock A doubled, and still gives a div of $100 per year. The mkt value of your investment has become $2000 (yield based on mkt val drops to 5%).
3. At the same time, there's now a stock B that has a yield of 8%.

If u stay with A, you continue to get $100 per year.
If u sell A and switch to B, you would have invested $2000 in B, and will get $160 per year. This is obviously the better choice.

If u have compared B's current yield (8%) with A's yield based on your purchase price (10%), you would think that A is the better choice, which is wrong. U need to use the same denominator (mkt val) to normalize the yield, for a correct comparison.