SPH REIT 3QFY20 DPU Remain Depressed

SPH REIT Portfolio

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.

SPH REIT Lease Expiry 3QFY20 Singapore

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.

SPH REIT 3QFY20 DPU Remain Depressed

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.

SPH REIT 3QFY20 Shopper Traffic

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.

SPH REIT Share Price 3 Jul 2020

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.

SBAUG20 GX20080E is 0.93%

Singapore Savings Bonds

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)

Screen For Dividend Stocks In June 2020

The Best Fixed Deposits of May 2020

Do you know how to screen for dividend stocks in the stock market? One of the ways I use to find dividend stocks is to use a tool called a stock screener. Most stock screeners are available for free. A few websites that I know of that offers free stock screeners are FSMOne, Yahoo and Singapore Exchange.

My favorite stock screener is from Stocks Café. With a paid subscription, I can save my preferred stock screening criteria and not having to enter them every time. Stocks Café is also where I managed my stock portfolio.

Every end of the month, I will run the Stocks Café stock screener which gives me a list of stocks that fulfill my dividend criteria. I fall into the medium risk type of investor and thus I never looked at stocks with dividend yield more than 10%. Below are the criteria that I used to identify dividend stocks.

  • Current Yield (%) >= 5 and <= 10
  • Price / Earnings <=20
  • Price / Book <= 3
  • Market Capitalization >= 1B

Dividend Yield

As a dividend investor, one criteria that I will definitely like to have is the dividend yield. I usually screen for stocks that gives a dividend yield of between 5% to 10%. We need to be careful with stocks that provides extremely high dividend yield and do our due diligence to further investigate the company that it is not borrowing money to pay out dividends.

P/E Ratio (Price to Earnings Ratio)

We also refer P/E ratio as Price to Earnings ratio. It is calculated by dividing the current market price of the stock by its earning per share (EPS). It also means how much investors are willing to pay per share of the company. My preferred settings are stocks less than 20x earnings.

P/B Ratio (Price to Book Ratio)

We refer P/B ratio as Price to Book ratio. P/B ratio is calculated by dividing the price per share by book value per share. A value lower than 1 is considered as a good P/B ratio and could mean that the stock is undervalued. My preferred P/B Ratio is below 3.

Market Capitalization USD (in millions)

If you have followed my previous stock analysis of companies, one of the criteria I often looked at is the market capitalization of the company. Market capitalization refers to the total value of all a company’s shares of stock. I currently look at companies with market capitalization above one billion.

Top Dividend Yielding Stocks

As retail malls and shops start to open up after circuit breaker, the stock market has started its recovery. This can be seen from the Straits Times Index stock chart below.

Straits Times Index 28 Jun 2020

Below are the top dividend yielding stocks as of 28th June 2020. I believe you will see some REITs that you have been eyeing for before the stock market had crashed. Even though the stock prices have started the recovery, the current yield is still attractive.

NameCurrent Yield %P/EP/BMarket Cap
CromwellReit EUR9.7149.050.8141.1B
CromwellReit SGD9.519.320.8481.7B
CDL Hospitality Trust8.75711.080.6741.3B
OUE Commercial Reit8.3814.960.6472.1B
CapitaR China Trust7.7348.260.8261.6B
Starhill Global Reit6.52419.730.5941.1B
ComfortDelGro6.44114.271.233.3B
UOB6.3888.190.85733.7B
SATS6.37614.812.0593.3B
SPH6.15410.290.6082.1B
Frasers Logistics & Industrial Trust6.09311.481.2954B
DBS6.0525.71.08652.9B
Hong Leong Finance6.04810.750.581.1B
Jardine Cycle & Carriage66.630.8648B
OCBC Bank5.8636.190.87139.8B
Yanlord Land5.8623.410.4112.2B
TCIL HK$5.8217.860.3363.8B
Olam Intl5.6748.510.8344.5B
Bukit Sembawang5.64113.270.7631B
Suntec Reit5.58110.280.6754.1B
Genting Singapore5.26313.311.1379.2B
CapitaCom Trust5.13315.180.9396.7B
SPH REIT5.11914.070.9342.4B

Last, I just want to mention again that the above list is for reference only and we should do our homework before buying into the stock simply for the dividend yield.