NTUC Capital Plus Versus Singapore Savings Bonds Versus SPH REIT

You probably would have read about the latest Endowment Plan offered by NTUC Income. The latest tranche NTUC Capital Plus (CSN2) offers you 2.3% guaranteed yield per annum. The endowment is a 3 year single premium endowment plan which you can purchase via cash or using your Supplementary Retirement Scheme (SRS) fund. There is a minimum premium of S$20,000. When the policy matures 3 years later, you get a guaranteed maturity benefit. This means that if you place S$20,000, at the end of 3 years, the maturity value will be S$21,412 inclusive of your principal amount and thus a profit of 7.06%.

NTUC Capital Plus (CSN2) Versus Singapore Savings Bonds

How does this compare to latest issue of the Singapore Savings Bonds? Let say if you have purchased S$20,000 of the latest issue of Singapore Savings Bonds (September 2019 GX19090H), you will get a total return of S$990 if you redeem it in September 2022. NTUC Capital Plus (CSN2) wins!

NTUC Capital Plus (CSN2) Versus SPH REIT

How does NTUC Capital Plus (CSN2) fare against REITs? In my opinion, REITs are low risk investment instruments. For comparison, I will use SPH REIT which I felt that the share price has been relatively stable over the years. Based on a distribution of 5.54 cents in FY2018 and the current price of S$1.10 (as of 27 August 2019), this translates to a dividend yield of 5.04%.

If we have bought SPH REIT today, 3 years later, we should collect an estimated total dividends of 5.04% x S$20,000 x 3 years = S$3,024. SPH REIT wins! The risk here is that there is no guarantee you can get your principal amount of S$20,000 back 3 years later as this is subjected to the stock market conditions at that point in time.

Conclusion

NTUC Capital Plus (CSN2) Singapore Savings Bonds (GX19090H) SPH REIT
Total (S$) collected based on investment amount of S$20,000 for 3 years S$1,412 S$990 S$3,024

This is not a recommendation to buy or sell the above products but for illustration purposes only. If you can stomach the volatility of the stock market, then consider REITs for higher returns. Otherwise, NTUC Capital Plus may be a better choice if you have spare cash to lock down for 3 years. On the other hand, it does make sense to use your SRS to purchase NTUC Capital Plus (CSN2) for the higher yield since SRS can only be withdrawn after your retirement age. For those who foresee you need cash on hand in the near future, the Singapore Savings Bonds is almost risk free and safe haven.

SPH REIT 3QFY19 DPU is 1.39 Cents

I have recently added SPH REIT into my stock portfolio. SPH REIT has announced their 3QFY19 financial results on 11th July 2019 which kind of surprised me as their 3QFY19 financial results were pretty good and better as compared to the same quarter in FY18. Distribution Per Unit (DPU) increased  by 1.5%. Gross Revenue increased by 12.7% and Net Property Income increased by 14.2%.

Below are the 3QFY19 financial results.

3QFY19 Financial Results

3QFY19
(S$’000)
3QFY18
(S$’000)
Change
Gross Revenue 58,333 51,769 12.7%
Net Property Income 46,328 40,559 14.2%
Distributable Income 35,953 35,205 2.1%
Distribution Per Unit (“DPU”) (cents) 1.39 1.37 1.5%

YTD 3QFY19 Financial Results

YTD3QFY19
(S$’000)
YTD3QFY18
(S$’000)
Change
Gross Revenue 170,261 158,840 7.2%
Net Property Income 133,969 125,017 7.2%
Distributable Income 106,995 105,532 1.4%
Distribution Per Unit (“DPU”) (cents) 4.14 4.11 0.7%

Occupancy

Occupancy stood at a high of 99%.

We all know that rental reversions show whether new leases signed in the quarter have higher rental rates or lower rental rates. Investors should look out for positive rental reversion.

The Clementi Mall and The Rail Mall recorded positive rental reversion of 5.8% and 9.1% respectively for YTD FY19. This means that the new leases signed in the quarter for The Clementi Mall and The Rail Mall were 5.8% and 9.1% higher respectively in terms of rental rates as compared to previous tenants on average.

The overall portfolio registered a positive rental reversion of 8.4%.

Gearing Ratio

Currently, gearing stood at 30.1% and thus there is still a lot of room for further debt to fund future acquisitions.

The Weight Average Debt Maturity is 1.8 years. I consider this as short and this is something investors should monitor and keep a watch out for in an unfavourable economy. However, if you look at the below Debt Maturity Profile, S$280 million of debt in 2020 have fixed interest rate which means the interest expense is pretty much stable which means no surprises till then.

Summary

The current dividend yield for SPH REIT is 5.04% based on 5.54 cents paid out in FY18 and the current share price of S$1.10.

In the presentation slides, it mentioned about Right of First Refusal (ROFR) about The Seletar Mall which has maintained high occupancy since its opening in November 2014. This has been a hot speculation topic for decades among investors of SPH REIT. We shall see whether if there are acquisition plans by SPH REIT in FY19 which will further add value to this gem.

Screening For Dividend Stocks In July 2019

How do you find stocks to buy on the stock market? One of the way is to use a stock screener. There are several websites that offer such a tool to screen for stocks using conditions that you can set such as dividend yield, P/E ratio, P/B ratio and Market Capitalization etc. Some website that offers such a tool are Singapore Exchange, FSMOne and StocksCafe.

For myself, I prefer to run my dividend stocks screening using StocksCafe as it allows me to save the conditions that I can pre-set. You can check out my review here on the StocksCafe Dividend Stocks Screener (Read more: Screening For Dividend Stocks Using Stocks Cafe Stock Screener).

Here are the results generated on 2nd July 2019 ordered from the highest current dividend yield to the lowest. Read More