Did you buy Frasers Centrepoint Trust (SGX: J69U) on Friday? Currently, Frasers Centrepoint Trust (SGX: J69U) makes up 3.84% of my stock portfolio.
On Friday, 7th July 2023, the stock market poses an opportunity. I noticed that majority of stock prices declined. This may be because of the market reaction towards fear that the Federal Reserve may start hiking rates again later this month.
Taking opportunity of the decline in share price, I accumulated more of Frasers Centrepoint Trust in my stock portfolio. My wife bought some too. If you have read my previous post on Singapore REITs To Buy in July 2023, Frasers Centrepoint Trust (SGX: J69U) was one of the REITs in the list.
Based on the current share price of S$2.14 and FY22 full year distribution of 12.227 cents, the current dividend yield for Frasers Centrepoint Trust is 5.71%.
I would not call this dividend yield excellent but the dividend yield is rather decent at above 5%. I consider any dividend yield above 6% as excellent.
Similar to CapitaLand Integrated Commercial Trust, my consideration for Frasers Centrepoint Trust would be its high gearing at 39.6%. The gearing is expected to rise if the Federal Reserve starts hiking rates again.
The Monetary Authority of Singapore (MAS) sets a maximum 50% gearing ratio cap for any Singapore REIT. Thus, there is still a safety margin of 10% for CapitaLand Integrated Commercial Trust and Frasers Centrepoint Trust since their gearing is still below 40%.
Why did I buy Frasers Centrepoint Trust? Based on Frasers Centrepoint Trust’s 1HFY23 financial results, I have considered the positives which are:
- Gross Revenue and Net Property Income (NPI) increased by 6.5% and 5.7% respectively, driven by higher atrium income and rent growth.
- Committed occupancy hit a high of 99.2%.
- Satisfactory current dividend yield of 5.53%.
- Positive rental reversions.
- Strong recovery in shopper traffic and robust tenants’ sales growth.
When opportunity arises, I am simply executing my strategy of accumulating Frasers Centrepoint Trust in tranches.
I do hope the share price of Frasers Centrepoint Trust can fall further so that I can accumulate it at cheaper prices!