Not surprisingly, the My Passive Income page is by far the most popular page in my blog. Understandably so, since everybody loves taking a peek or two at each other’s assets to better benchmark themselves with others. That’s what we all did back in army. Remember those times when we were showering? 😉
On hindsight, I also realised I did quite a shoddy job for that page. There wasn’t any explanations or rationale of why I bought into specific companies and I also did not divulge the entry prices of these investments. It was especially dangerous, since there are many people out there who buys what financial bloggers buy. (I know, because I was one of them.) So since this is my first monthly passive income update, I shall use this opportunity to correct this oversight.
Stocks (As at 4th September 2013)
|Stock||Share Amt||Share Price||Valuation||Dividend||Est. Income|
Others (As at 4th September 2013)
|CIMB Star Saver||$10,000||$80|
Total Valuation = $146,325
Total Est. Income = $5,526.45
Firstly, some general explanation of the tables. The share prices are based on the closing price of the “As at” date, whereas the dividends are based on the latest annual report (I will only check for new reports and update those numbers once every quarter). These information are also easily available from the internet.
And unlike other financial bloggers, I am actually not too interested in calculating the exact annualised returns from my portfolio or investment. It seems too complicated and I don’t really need to know if I have actually beaten the market. Except for maybe some ego boost, it doesn’t yield any material benefits for me. Instead, my core interest is the amount and sustainability of the passive income that I receive from these investments. You can find the entire list of investment records here.
Below is a brief description of my holdings:
Vicom (2 lots @$3.35 in Sep 11; 2 lots @$4.8 in May 13)
This is my largest holding and its core business is probably the easiest to understand. If you own a car, you know what I am talking about. Every few years, you have to send your vehicle to Vicom for inspection in order to drive it on the road.
Due to the nature of its business (low capex, economic moat due to govt regulations), its revenue, profits and dividends have increased steadily over the years. It’s true that growth is slowing but there’s no doubting this looks like a sustainable cash cow. If you’re ready for some intense Vicom analysis, you can proceed to sgyounginvestor.blogspot.sg
SIA Eng (2 lots @$3.38 in Dec 11)
If you’re interested in the SIA brand, SIA Eng does seem to be a better proposition than SIA itself. Buffet famously declared that airlines make poor business sense and it’s true, given that SIA, one of the most profitable airlines in the world, is churning out mediocre results consistently. While more and more customers are switching to budget airlines (i.e. tougher price competition), it is unlikely that many premium airlines like SIA would cut cost on aircraft maintenance.
SIA Eng offers quality MRO service, is a net cash company with decent and stable earnings and pays a good dividend of around 5%. There is a very recent analysis over at InvestmentMoats.
Boustead (3 lots @$1.13 in Nov 10; 6 lots @$0.84 in Sep 11)
This is a chapalang engineering business with many sections. Since I am not an engineer, I confess that I do not understand the value of its business well. It seems that Chairman F.F. Wong’s management is key to the company’s success and it helps that he still owns 1/3 of the company.
I admit that I bought it largely based on my understanding of Musicwhiz’s analysis and extensive recommendations on Valuebuddies. The good dividend yield is also a big plus currently.
Challenger (11 lots @$0.43 [$0.287 after stock split 1-for-2 in Mar 11] in Jan 11)
Simple business selling IT products and services. The moment I started receiving thumb drives and a wireless mouse for X’mas presents, I knew they should be making decent money in a growing retail sector. The financial numbers have improved steadily and it’s already almost a 2-bagger in my portfolio.
Kingsmen (10 lots @$0.62 in Nov 10)
Wife had some interactions with them in her previous company when she was organising an exhibition. They can be considered a big player in an expanding MICE industry. Steadily improving numbers although I feel they do not have much of an economic moat except for guanxi and reputation.
First Reit (8 lots @$1.035 in Aug 13)
Felt it was oversold 2 weeks back and nibbled at it. It’s backed by a big player (Lippo Group). The healthcare sector is also pretty defensive, even if they are mostly based in Indonesia. A 7% yield seems quite satisfactory to me at this point in time.
Low Keng Huat (10 lots @$0.69 in June 13)
Another recent property play. A relatively conservative building and construction company, its crown jewel is Paya Lebar Square. I am predicting that Paya Lebar Square would become a big hit in mall-crazy Singapore (no big malls in that region) with its superb location. With the government developing the area into a business hub, the office spaces have sold well too.
MTQ (4 lots @$0.925 [$0.74 after stock split 1-for-4 in Jul 13] in Nov 10)
Another engineering business which I am not familiar with. Similar to Boustead, the likely problem is that I could hold them for a very long time since I have no idea of a good selling price other than relying on basic financial ratios like P/E.
SembCorp (2 lots @$4.85 in Aug 13)
Owns 60% of Semb Marine and half of its shares are held by our Temasek. A typical government-backed blue-chip. If you believe in Peter Lynch that the average investor who buys stocks based on his everyday observation or consumption can beat wall street, this could be a good stock to hold. Afterall, you must have seen those Semb Corp trucks stopping by our HDB flats, right? Otherwise, you should be able to smell them easily. Can we do without them? Hmm…
Singtel (2 lots @$3.04 in Jan 11)
You are only going to get an average of 6-8% returns from this company. By buying during dips (like now?), you could achieve the higher range. Really defensive business considering they can easily amend contract terms (remember the reduction from 12gb to 2gb for your data plan?) to generate revenue. Singtel has a much more significant overseas exposure as compared to smaller players like StarHub and M1.
Spindex (14 lots @$0.35 in Dec 10; 10 lots @$0.30 in Feb 11)
A company involved in precision engineering, it’s a small fry in an industry without much of an economic moat. However, it is generally well managed and is profitable over a long period even though earnings and dividends are quite volatile (largely dependent on economic climate). A yield of between 4-6% can be expected. Gives me comfort that they maintain a high cash reserve although a good reason is due to its considerable capex requirements.
Wilmar (2 lots @$4.03 in May 12; 2 lots @$3.22 in Aug 12)
I got in without understanding or even knowing any of its numbers. From a high of $6 in Feb 12, it fell to $4 within 3 short months. “It’s a blue chip and it will rebound!” was ringing in my amatuerish head.
Unfortunately, cheap became cheaper and I even averaged down in Aug 12. Afterall, I was pretty long on resources like land and oil and Wilmar had plenty of that. Even though I like its agribusinesses, its high debt levels are really a concern and I am looking at an exit when the bull returns (STI closer to 4,000?).
Philip Capital Sharebuilder ($600/month since Nov 10)
Invested in 2 counters, DBS ($100) & STI ETF ($500). $600 ensures the expense fee of $6 is a more comfortable 1%. There seems to be better products out there nowadays.
People should really start opening accounts with them. 0.8% interest for a Sing Dollar savings deposit! It’s many times the interest one will be getting from our local banks.
Additional Disclaimer: The above is just a simple description and explanation of why I bought into certain shares and is by no means a recommendation.