It’s Star Awards period again.
I would like to share the latest top 10 stocks in my portfolio. They currently take up 64% of my portfolio and definitely are the ones that will move the performance needle more.
While most are familiar names in the top 10, there are some notable changes too. The mix is not too bad, with four REITs counters, three banks counters, two growth counters and one non-REIT/bank income counter. It’s income heavy in the top 10, as I typically invest less per counter for growth stocks.
This post is longer than the usual. You can click on the following links to jump to the section that you are more interested.
I divested AEM completely last November as the recovery was expected to take a longer time. I am fortunate that this happened before the inventory saga, else I would have taken a much bigger loss. I am not in the hurry to pick it up again. Let see how things turn out in the next few quarters.
I sold half of my holding in Micro-Mechanics last May for similar reason. The current downturn is taking longer than expected, resulting in much lower revenue and earnings. Given that the group paid out all its earning in the past, the dividend dropped accordingly. Keeping my current stake and await for its recovery.
I sold 40% of my holding in MPACT last August after deciding to look at it as a new REIT. I like its Singapore properties, and think Festive Walk can recover, but do not like its exposure to China office properties. Hence, the reduced stake is a better reflection of my conviction of the counter.
New entrants to Top 10
Two out of three new entries are banks. The purchases of DBS were very recent, so I have nothing to add to the latest posts, Took the bait and I am a DBS shareholder again and Triple down on DBS.
I first bought UOB in Sep 2022 as I liked their acquisition of Citigroup’s Indonesia, Malaysia, Thailand and Vietnam. A strategic move that has helped them to increase their non-interest income. Its exclusive pre-sale for Taylor Swift and Ed Sheeran shows with UOB cards was another good move.
As I know the group better, I grew more confident that they can sustain their dividends in the near term. Hence, the accumulation last year at around $28. Thus far, they have not disappoint, with their dividend growing from $1.20 in FY2021 to $1.70 for this year! And it is likely to stay at least at this level for FY2024.
As for NikkoAM-StraitsTrading Asia ex Japan REIT ETF, the main reason I bought it was because I have hit my stock limit for CPFIS! My preference, especially for Singapore market is still to invest in individual counter.
Having said that, I do think this REIT ETF provides a reasonably good yield. It just announced last week that it will be paying out $0.0115 for the latest quarter. That’s 9% lower that previous year’s $0.0123, but only less than 2% lower than previous quarter’s $0.0117.
For this year, it should stay around this level and annualised yield at my average price is around 5.6%. Even if dividend would to drop to $0.04 for the full year, I will still be getting near to 5% yield. My take is further downside for dividend should be limited and there is a good chance of higher dividend from 2026 onwards. Over a 5-year period, I should be getting a better return than CPF-OA and even T-bill interest.
The big movers
With the headwind faced by REITs over the past year, it is no surprise that Parkway Life REIT and Mapletree Industrial Trust have moved down the ranking. For the other direction, Arista Networks (ANET) and Venture have moved up the ranking but for different reasons.
The gain in ranking for Venture basically is due to my accumulation last year. I believe it could sustain their dividends, so the drop in price last year provided me an opportunity to buy more and brings my average price to around $15. I am glad my conviction in them pays off as amid the headwind, they declared the same amount of dividends for the latest financial year.
FY2023 has been a very strong year for ANET as it benefitted from the growth of its two main clients Microsoft and META. The market recognised its growth and its price has appreciated around 80% over the past year! That has allowed them to leapfrog from #6 last year to the top position this year!
Over the period that I have owned them, their price have corrected or crashed on numerous occasions. Some of the drop might look small now, but they could be a 20-30% drop with the price then! Hence, anything goes in the short term. But long term, I think they still have a large addressable market to grow into. Just don’t expect linear growth.
Has it been a profitable journey?
I have ANET, iFAST, FCT, MIT, OCBC, PLife and Venture since the inception of this portfolio in 2020. On the other hand, CFA, DBS and UOB are recent additions. So I will only be sharing the performance of the seven pioneering members of this portfolio.
As seen from the above table, the two growth counters are supercharging the portfolio! While the return looks juicy, one needs to get use the the volatility of the counters in the short term. Especially when things did not turn out as expected, price could plunge by more than 50%, as what iFAST experienced in 2022.
Interestingly, despite the recent plunge in iFAST’s price, its price is still higher than the corresponding period last year.
Looking at the return of the income counters, one might argue that it is a waste of time. With the exception of OCBC, the other four counters only gave single digit to lower double digits return over four years!
However, if we view it that despite the current headwinds, these counters are still in the green due to the consistent dividends, then it will feel very different. Assuming that things do not worsen at the macro level, then the return should become better in the coming years.
Income investors should always focus on sustained dividends. The main reason in investing in income counters is to get regular cash flow. This can be achieved by companies declaring more dividends or by investing more in the companies.
And if we are still investing more in these companies, then we should not feel bad about the lower share price, as we will be getting a higher yield for our investment. Of course, the premise here is that the fundamentals of the companies are still sound.
I am definitely happy with the performance of these seven pioneers! I am getting good capital gain from the two growth counters and increasing dividends from the five income counters.
Looking forward to more good years with them!
Referral
These are the referral links for the services and platforms I used. If you would like to use any of them, do sign up my referral links.
Trust Bank (code: 1X9DDP1V, additional $10 Fairprice voucher)
Keppel Electric
FSMOne (code: P0003528)
StocksCafe (code: TFI)