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.

Screening For Dividend Stocks In April 2020

Screening For Dividend Stocks In April 2020

Last month, the stock market had crashed due to the impact of COVID-19. Since then, the stock market has started its recovery when news of government from different countries started to provide stimulus budget to revive the economy. During the crisis, I have picked up OCBC Bank, Singtel, US Manulife REIT and added more of CapitaMall Trust when their stock prices fell. If you didn’t know, I am a dividend investor. Thus, I usually look out for stocks with attractive dividend yield that provides me with endless dividends many years ahead. The stock market crash has provided me with such an opportunity.

I will run the Stocks Café stock screener every month 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

Below are the top dividend yielding stocks as of 10th April 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.

Name Current Yield % P/E P/B Market Cap
Mapletree NAC Trust 9.981 4.44 0.611 2.8B
OUE Commercial REIT 8.711 13.38 0.618 2B
Ascendas-iTrust 8.644 5.29 1.084 1.4B
DBS 7.837 7.65 0.998 48.7B
Frasers Logistics and Industrial Trust 7.568 9.05 0.974 2.1B
CapitaRetail China Trust 7.557 8.46 0.845 1.6B
Frasers Commercial Trust 7.385 7.91 0.794 1.2B
Suntec REIT 7.37 9.21 0.605 3.6B
CapitaMall Trust 7.125 8.89 0.798 6.2B
Ascendas REIT 7.038 17.7 1.29 10.1B
Yanlord Land 6.733 2.97 0.358 2B
ComfortDelgro 6.527 12.25 1.252 3.2B
Frasers Centrepoint Trust 6.275 9.41 0.87 2.2B
UOB 6.197 7.74 0.849 33.4B
SIA Engineering 6.18 10.44 1.29 2B
CapitaCommercial Trust 6.082 12.77 0.784 5.6B
SPH REIT 6.081 11.84 0.786 2.1B
TCIL HK$ 6.044 17.2 0.329 3.7B
SATS 5.938 15.9 2.211 3.6B
OCBC Bank 5.922 7.91 0.863 39.4B
Jardine Cycle & Carriage 5.833 6.71 0.875 8.1B
Mapletree Commercial Trust 5.595 5.45 0.955 5.6B
Yangzijiang Ship Building 5.435 5.9 0.601 3.6B
Guocoland 5.385 5.72 0.374 1.4B
Olam International 5.208 9.01 0.852 4.6B
SPH 5.195 12.19 0.72 2.5B
Frasers Property 5.128 7.32 0.453 3.4B
Lonza 5.042 5.72 0.659 5.9B

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.