Screening For Dividend Stocks In May 2019

I have recently added SPH Reit to my wife’s stock portfolio which has been on my watch list for quite some time. It is time to hunt for dividend yielding stocks to add to my watch list so that I can add them to either my or my wife’s stock portfolio when the opportunity arises.

One of the ways to hunt for dividend yielding stocks is to ran a stocks screener. I am currently using Stocks Cafe Stocks Screener as it allows me to save the conditions I have set to screen for dividend yielding stocks.

Here are the results ordered from the highest current dividend yield to the lowest.

Name Current Yield % P/E P/B Market Cap
Manulife Reit USD 8.736 15.7 1.047 1.1B
Haw Par 8.406 17.99 1.101 3.2B
Cromwell Reit EUR 8.367 10.36 0.956 1.1B
OUE Commercial Reit 6.891 10.02 0.701 1.4B
OUE Hospitality Trust 6.772 17.91 0.955 1.3B
Capita Retail China Trust 6.768 10.99 0.949 1.5B
Frasers Commercial Trust 6.531 9 0.938 1.3B
Far East Hospitality Trust 6.061 14.16 0.755 1.2B
Mapletree Industrial Trust 5.818 12.65 1.399 3.9B
CDL Hospitality Trust 5.752 17.58 1.05 1.9B
Oxley 5.688 5.82 0.937 1.3B
Ascendas-iTrust 5.682 6.56 1.471 1.3B
SingTel 5.521 16.68 1.785 51.6B
Suntec Reit 5.429 17.13 0.874 4.9B
DBS 5.409 12.34 1.472 70.6B
Hong Leong Finance 5.376 10.48 0.655 1.2B
SPH REIT 5.337 19.44 1.108 2.7B
Ascendas Reit 5.292 18.56 1.44 9.4B
Frasers Logistics and Industrial Trust AUD 5.116 12.58 1.327 2.5B
Mapletree NAC Trust 5.093 6.87 0.955 4.4B
Frasers Logistics and Industrial Trust 5.092 12.27 1.294 2.4B
SPH 5.081 14.97 1.151 4B
Frasers Centrepoint Trust 5.051 13.21 1.142 2.2B
Fortune Reit HKD 5.037 3.27 0.614 19.7B

Manulife Reit that appears in the top of the list looks interesting. Honestly, I have not done any research or read up on Manulife Reit yet but I do know a few financial bloggers holding the Reit. At 8.736% current dividend yield, this deem attractive to me but of course we all know that the higher the dividend yield, the higher the risk.

I do not know every stocks that appear in the above list but it serves as a good base to start researching deeper into them.

Please take note that the above is not a recommendation to buy or sell.

Happy hunting for dividend stocks!

OUE Hospitality Trust and Commercial REIT Merger

There was a trading halt for OUE Hospitality Trust on 8th April 2019 and investors like me who are vested in OUE Hospitality Trust smell something fishy. The announcement came shortly. The respective managers of OUE Commercial REIT (“OUE C-REIT”) and OUE Hospitality Trust (“OUE H-Trust”) jointly announced the proposed merger of OUE C-REIT and OUE H-Trust (the “Proposed Merger”).

With the merger, the total assets will increase to approximately S$6.8 billion, making it one of the largest diversified S-REITs (Office and Hospitality).

The managers cited the following reasons for the proposed merger:

  1. Creation of one of the largest diversified S-REITs
  2. Larger capital base and broadened investment mandate provide flexibility and capability to drive long-term growth
  3. Enhanced portfolio diversification and resilience
  4. DPU accretive transaction

New Structure

With the merger, OUE Hospitality Trust investors get to own OUE Bayfront, One Raffles Place, OUE Downtown Office and Lippo Plaza which I deemed are quality assets to me.

OUE Hospitality Trust Security Holders

Currently, OUE Hospitality Trust makes up 4% of my stock portfolio.

Based on the announcement, stapled security holders of OUE Hospitality Trust (the “Stapled Security holders”) will receive the following under the scheme consideration:

  • S$0.04075 in cash per Stapled Security (“Cash Consideration”); and
  • 1.3583 new OUE C-REIT units per Stapled Security (the “Consideration Units”).

Distribution Per Unit

The total DPU paid out by OUE Hospitality Trust in FY18 was 4.99 cents.

The Proposed Merger will be distribution per unit (“DPU”) accretive on a historical pro forma basis for both OUE C-REIT unitholders and OUE H-Trust Stapled Securityholders by 2.1% and 1.4% respectively, for the 12-month period ended 31 December 2018.

If the DPU for the new combined REIT is 5 cents, this is only 1 cent more than the current 4.99 cents paid out by OUE Hospitality Trust. I can be wrong but the accretion is actually 0.2%.

Debt

Based on the presentation slides, the enlarged REIT’s larger capital base will also enhance its funding capacity and flexibility, with (i) debt headroom increasing from approximately S$254 million (for H-Trust) to approximately S$551 million as at 31 December 2018.

The gearing for OUE Hospitality Trust and OUE Commercial Trust is 38.8% and 39.3% respectively. Gearing is expected to increase to 40.3% after the merger. This is currently very near the cap of 45%.

My Thoughts

As a dividend investor, I am very concern on the DPU accretion which after the merger does not seem so fantastic and in fact the post merger DPU seems flat to me. However, the cash consideration of S$0.04075 in cash per stapled security does appeal to me.

Gearing ratio has increased to 40.3% which I deemed as high and leaves little headroom for further acquisition.

As you can see below, the stock market also does not support this merger. Share price declines slightly from S$0.735 to S$0.72.

Here is the share price of OUE Commercial REIT which declines from S$0.53 to S$0.51.

As an existing OUE Hospitality Trust investor, I probably will hold on for the cash per stapled security and continued flat DPU. If I am not yet vested, I will try to avoid OUE Hospitality Trust and OUE Commercial REIT in view of the high gearing after the merger.

No Recovery In Sight Yet Based On OUE Hospitality 3Q2018 Financial Results

OUE Hospitality Trust Logo

It was another quarter of disappointing financial results for OUE Hospitality Trust. On 7th November 2018, OUE Hospitality Trust announced their 3Q2018 financial results. Despite claims of increasing tourists arrival to Singapore, the financial results was a sea of red.

Net Property Income (“NPI”) for 3Q2018 was $0.4 million lower than 3Q2017 due to lower gross revenue from the properties. Distributable income in 3Q2018 was S$1.3 million lower than in 3Q2017, and Distribution Per Share (“DPS”) for 3Q2018 was 1.28 cents, 5.9% lower than 3Q2017. The manager attributed the lower distribution to mainly the absence of income support for Crowne Plaza Changi
Airport (“CPCA”). Read More