Are you looking for the best REITs to invest in August 2024? REITs stand for Real Estate Investment Trusts and investing in REITs is a good way to build up your passive income. The dividend yield for most Singapore REITs is between 5 to 7 percent. At a glance, you can already tell the returns are higher than fixed deposits, Singapore Savings Bond and even Treasury Bills (T-Bills). Of course, investing in REITs comes with slightly higher risk but if you understand them, the risk can be manageable.
I collected a total passive income of more than $16K in the year 2023 and I am currently on track to increase my passive income through my purchases in 2024. Besides REITs, I also invest in Singapore Savings Bond and Treasury Bills (T-Bills) but the majority of my passive income comes from the dividends paid out by REITs in my stock portfolio. The important thing is to be able to identify high quality REITs are those that constantly pay you dividends and are able to grow their Distribution Per Unit (DPU) year-on-year.
With the US inflation under control, the chances of the Fed reducing interest rates in upcoming September is very high. The annual inflation rate in the US fell for a third straight month to 3% in June 2024, the lowest since June 2023.
How will the Fed cutting US interest rates benefit Singapore REITs?
If you understand how REITs work, Singapore REITs rely on borrowings to finance their property acquisitions and operations. The high interest rates environment had driven up finance costs, impacting the financial performance of REITs. Lower US interest rates can lead to reduced borrowing costs, improving their profitability.
Lower interest rates can also lead to lower capitalization rates, which in turn can increase property valuations. This will help to boost the net asset value (NAV) of REITs.
Historically, REITs tend to perform well at the end of Fed tightening cycles. The anticipation of lower interest rates can boost investor confidence. As investors start to buy, this will drive up the prices of Singapore REITs which you may have observed recently.
With just 1 month away to September, this may be the best time to start investing in REITs if you have not started!
How Do I Find High Dividend Yielding REITs in Singapore?
There are many stock screening tools out there. As such, it is not difficult to obtain an initial list of REITs and their metrics such as current dividend yield for further analyse and decision making. Stock Screening tools allow you to screen REITs based on specific factors like P/E ratio, dividend yield, and other financial metrics.
For myself, I use Stocks Café Stock Screener to screen for a list of REITs that meet my predefined criteria so that I have a shorter list of REITs to analyse. Below are the criteria that I used to screen for dividend stocks. You can adjust them to fit your risk appetite.
- Market Capitalization >= 1B
- Current Yield (%) >= 5 and <= 10
- Price / Book <= 3
As part of the screening results, I included the Net Asset Value (NAV) and closing price as I used them to compare whether the current share price of the REIT is undervalued or overvalued.
Best REITs To Invest In August 2024
CapitaLand China Trust (SGX:AU8U)
Market Capitalization: SGD 1.2B
Current Dividend Yield: 8.65%
Price to Equity: 31.341
Price to Book: 0.549
Net Asset Value (NAV): SGD 1.267
Closing Price (2-Aug-24): SGD 0.695
Starhill Global Reit (SGX:P40U)
Market Capitalization: SGD 1.1B
Current Dividend Yield: 7.33%
Price to Equity: 42.199
Price to Book: 0.646
Net Asset Value (NAV): SGD 0.766
Closing Price (2-Aug-24): SGD 0.495
Lendlease Reit (SGX:JYEU)
Market Capitalization: SGD 1.4B
Current Dividend Yield: 7.23%
Price to Equity: 19.627
Price to Book: 0.639
Net Asset Value (NAV): SGD 0.94
Closing Price (2-Aug-24): SGD 0.6
AIMS APAC Reit (SGX:O5RU)
Market Capitalization: SGD 1.1B
Current Dividend Yield: 7.17%
Price to Equity: 24.882
Price to Book: 0.735
Net Asset Value (NAV): SGD 1.769
Closing Price (2-Aug-24): SGD 1.3
OUE REIT (SGX:TS0U)
Market Capitalization: SGD 1.5B
Current Dividend Yield: 7.04%
Price to Equity: 7.66
Price to Book: 0.466
Net Asset Value (NAV): SGD 0.6
Closing Price (2-Aug-24): SGD 0.28
Mapletree PanAsia Commercial Trust (SGX:N2IU)
Market Capitalization: SGD 6.8B
Current Dividend Yield: 6.78%
Price to Equity: 11.816
Price to Book: 0.722
Net Asset Value (NAV): SGD 1.801
Closing Price (2-Aug-24): SGD 1.3
Mapletree Logistics Trust (SGX:M44U)
Market Capitalization: SGD 6.6B
Current Dividend Yield: 6.62%
Price to Equity: 22.799
Price to Book: 0.893
Net Asset Value (NAV): SGD 1.49
Closing Price (2-Aug-24): SGD 1.33
Far East Hospitality Trust (SGX:Q5T)
Market Capitalization: SGD 1.3B
Current Dividend Yield: 6.56%
Price to Equity: 9.682
Price to Book: 0.676
Net Asset Value (NAV): SGD 0.932
Closing Price (2-Aug-24): SGD 0.63
Keppel Reit (SGX:K71U)
Market Capitalization: SGD 3.4B
Current Dividend Yield: 6.48%
Price to Equity: 19.745
Price to Book: 0.627
Net Asset Value (NAV): SGD 1.403
Closing Price (2-Aug-24): SGD 0.88
CapitaLand Ascott Trust (SGX:HMN)
Market Capitalization: SGD 3.4B
Current Dividend Yield: 6.34%
Price to Equity: 14.201
Price to Book: 0.711
Net Asset Value (NAV): SGD 1.252
Closing Price (2-Aug-24): SGD 0.89
CDL Hospitality Trust (SGX:J85)
Market Capitalization: SGD 1.2B
Current Dividend Yield: 6.06%
Price to Equity: 9.505
Price to Book: 0.623
Net Asset Value (NAV): SGD 1.508
Closing Price (2-Aug-24): SGD 0.94
Mapletree Industrial Trust (SGX:ME8U)
Market Capitalization: SGD 6.5B
Current Dividend Yield: 5.91%
Price to Equity: 56.235
Price to Book: 1.226
Net Asset Value (NAV): SGD 1.86
Closing Price (2-Aug-24): SGD 2.28
PARAGON REIT (SGX:SK6U)
Market Capitalization: SGD 2.5B
Current Dividend Yield: 5.77%
Price to Equity: 18.125
Price to Book: 0.856
Net Asset Value (NAV): SGD 1.016
Closing Price (2-Aug-24): SGD 0.87
Suntec Reit (SGX:T82U)
Market Capitalization: SGD 3.5B
Current Dividend Yield: 5.54%
Price to Equity: 18.803
Price to Book: 0.545
Net Asset Value (NAV): SGD 2.219
Closing Price (2-Aug-24): SGD 1.21
Frasers Centrepoint Trust (SGX:J69U)
Market Capitalization: SGD 4.1B
Current Dividend Yield: 5.38%
Price to Equity: 21.871
Price to Book: 0.985
Net Asset Value (NAV): SGD 2.273
Closing Price (2-Aug-24): SGD 2.24
CapitaLand Ascendas REIT (SGX:A17U)
Market Capitalization: SGD 12.2B
Current Dividend Yield: 5.38%
Price to Equity: 72.07
Price to Book: 1.195
Net Asset Value (NAV): SGD 2.326
Closing Price (2-Aug-24): SGD 2.78
CapitaLand Integrated Commercial Trust (SGX:C38U)
Market Capitalization: SGD 14.3B
Current Dividend Yield: 5.05%
Price to Equity: 16.44
Price to Book: 0.999
Net Asset Value (NAV): SGD 2.133
Closing Price (2-Aug-24): SGD 2.13
Retiring Early in Singapore Using REITs
As shared in my previous post on how to plan for early retirement in Singapore, we need to build multiple streams of passive income that will last during our retirement years. One of the ways to still have cash flowing into your bank account after retirement (stop working) is to invest in dividend paying stocks.
As you can see above, this is not difficult in Singapore as there are many quality REITs listed above on the Singapore Stock Exchange (SGX). Please take a look at my stock portfolio if you are interested in which of the above REITs I have.