Looking for the best fixed deposits in July 2020 in Singapore? There are varying fixed deposit promotions in terms of interest rates, tenure period offered by the banks in July 2020.
The 1 year interest rate for August 2020 Singapore Savings Bonds has fallen as low as 0.27%, thus any of the fixed deposits promotion below will beat the Singapore Savings Bonds.
I have shared many other financial instruments that is similar to what fixed deposits can offer. One good alternative is buying an endowment plan. The latest one is NTUC Income Gro Capital Ease which offers you a guaranteed return of 1.85% per annum over 2 years. Read More
SPH REIT has announced a distribution per unit (“DPU”) of 0.50 cents for 3QFY20. This is a modest increase as compared to 0.30 cents paid in 2QFY20. If you are not aware, the DPU payout was reduced since 2QFY20 in anticipation of COVID-19 challenges.
Occupancy
Despite the current challenging retail environment, SPH REIT’s portfolio occupancy rate stood healthy at 98.8%. The Weight Average Lease Expiry (“WALE”) stood at 4.1 years.
Lease Expiry
In the last quarter, Clementi Mall and The Rail Mall have 17% and 26% lease expiry by Net Lettable Area. I am glad that this has been reduced to 0% which means investors do not have to worry about lease expiry for its Singapore portfolio in FY20.
There is still much to be done for SPH REIT’s Australian portfolio. 28% of leases are expiring in FY20 which can impact the gross rental income.
Shopper Traffic
As you can see below, this is how bad the damage that the COVID-19 pandemic has done to the shopping malls. Visitor traffic fell from 4.6 million in 3QFY19 to 1.9 million in 3QFY20 for Paragon Shopping Centre. We can imagine Orchard road like a “ghost town”.
Suburban malls such as The Clementi Mall was not spared either. Visitor traffic fell from 8.0 million in 3QFY19 to 3.8 million in 3QFY20.
Dividend Yield
1.38 cents and 0.30 cents were already paid out in 1QFY20 and 2QFY20 respectively. Based on 0.50 cents paid in the current quarter and next quarter, the estimated total dividend paid out by SPH REIT in FY20 will be 2.68 cents.
Based on an estimated payout of 2.68 cents and current share price of S$0.88, this translates to an estimated dividend yield of 3.1%.
If you are confident SPH REIT will regain its high DPU payout of 5.60 cents in FY21 (similar to FY19), this translates to an estimated dividend yield of 6.36% based on the current price.
Summary
As Singapore and Australia starts to recover from the COVID-19 pandemic, shoppers are starting to come back to the malls. As other retail REITs have yet to release their latest financial results or updates, I am unable to determine whether the malls under SPH REIT are recovering faster than the others such as CapitaMall Trust.
One thing for sure is that the DPU for retail REITs will remain depressed below 5% in FY20.
The effective interest rate for August 2020 Singapore Savings Bonds (SBAUG20 GX20080E) is 0.93% if you held it for 10 years. As you can see from the chart above, the interest rate has been on the decline but recovered slightly this month. The COVID-19 pandemic that started in March 2020 had caused the interest rates to fall dramatically across fixed deposits and savings accounts.
The minimum amount you can purchase is S$500. If you decide to hold and sell the current issue (SBAUG20 GX20080E) after 1 year, the effective interest rate is 0.27%.
Unhappy with the interest rates offered by Singapore Savings Bonds? There are alternative financial instruments out there that offer higher interest rates. They are short term endowment plans such as NTUC Income Gro Capital Ease, Tiq 3 Year Endowment Plan and China Taiping i-Save Plan which offers an interest rate of 1.85%, 2.10% p.a. and 2.13% p.a. respectively.
The latest attractive financial instrument that I have signed up for is Singlife Account that offers you an attractive interest rate of 2.5% p.a. Singlife Account is an insurance savings plan. There is no lock in period, no monthly fees and you can withdraw your money anytime.
Tracking Singapore Savings Bonds via Stocks Café
My favorite website, Stocks Café has allows adding of Singapore Savings Bonds into your portfolio. If you didn’t know, I signed up as a Friend of Stocks Café as my most favorite feature of Stocks Café is the automated tracking of dividends payout.
This is the third year that I continue to use Stocks Café to track my dividends.
Tracking Singapore Savings Bonds via My Savings Bonds Portal
MAS has launched My Savings Bonds Portal where you can track your Singapore Savings Bonds purchases separately from your stock purchases. I have done up a simple guide here. (Read more: Guide to My Savings Bonds Portal)
