The price of AEM continues to drop and it’s now 23% below my average purchased price.
The thought of averaging down did flash across my mind for a while, but I decided against it. While I am excited about its possible growth prospect, execution risk remains. Hence, I will just limit to my exposure to AEM with what I have now.
With that decision, I decided to invest whatever remains in my CPF-OA stock limit in The Hour Glass. I also decided to add more NikkoAM-STC Asia ex Japan REIT ETF (CFA).
These additions will provide another $850 annual recurring income.
The Hour Glass should be able to sustain its dividends
The company does not provide quarterly update.
In fact, you hardly hear from them!
The most common announcement from them is “Share Buy-Back Notice”. For this year alone, there were a total of 14 occasions in which they bought back shares from the market.
The last update from them was 1H 2024 results released in November last year.
The short-term outlook has dimmed, but I am confident that the future will remain dynamic and prosperous.”
– The Hour Glass Annual Report 2023
As guided last year, the boom of the luxury watch market over the past few years fuelled by pandemic is over.
1H 2024’s results reflected that but the drop wasn’t that drastic. Hence, it it maintains similar performance in the second half, then declaring a 6-cent final dividend is well within its mean.
Lower distribution from CFA but there should not be a shocker
Given that the rate remains high and REITs will be refinancing their expired loans/hedges at a higher rate, it is expected that there will be continued pressure on their distribution.
CFA being a REITs ETF would then face the same pressure and lower distribution should be expected.
However, these quality REITs have shown that they were able to weather the pressure, so any further drop should not be too drastic.
Interestingly, there are two changes in the top 10 holdings, compared to half a year ago when I first bought CFA. Frasers Centrepoint Trust and Capitaland Ascott Trust have replaced Keppel DC REIT and Suntec REIT.
Assuming distribution per unit dropped to $0.044, then I would be getting a yield of about 5.7% for my current purchase.