Saturday, May 4, 2019

Q1 2019 Portfolio Update

It has been quite some time since I've last blogged. I've been allocating my energy into developing Enreitch, my REIT web application. For those who are interested, it is complimentary. Drop me an email and I'll manually create an account for you (yes, registration has not been automated.......yet).

Dividend Income

Q1 2019 SGD Dividend Income

Regular readers might be aware that my SGD-denominated portfolio's dividend income has been declining for the past few quarters through the sales of fundamentally-weaker income stocks. After doing some overhaul of my portfolio, I have somewhat managed to mitigate the decreasing dividend income. Y-o-y, dividend income is still flat, but it beats a declining trend. The next step is to turn that flatline into an upward trend through organic growth.

Q1 2019 USD Dividend Income

In contrast, the income from my USD-denominated portfolio has been increasing due to small nibbles here and there in US stocks. In absolute terms, the amount is still minuscule. Increasing the dividend income here is much harder than I initially thought. The adage that picking a diversified list of dividend growth stocks and letting the growth in dividends compound is not as straightforward as it seems. In my much shorter journey in the US stock market thus far, 3 out of my current 8 supposed "dividend growth stocks" either froze the increase in dividends or cut their dividends. That's roughly 37% of my US stock holdings! There's nothing fancy in my US stock holdings too. They are your typical boring stocks from boring but consistent industries. More work is needed in this area too.


In this quarter, I initiated a new position in Capitaland following the announcement of the potential merger with Ascendas-Singbridge. The purchase was funded by leverage (see my year 2018 portfolio update post) and was done at a Price/NAV of 0.72, based on the most recent quarterly earnings at the point of purchase. The rationale for the purchase is to participate in the recurring cashflow of the REITs that Capitaland holds. If the Ascendas-Singbridge acquisition goes through, the recurring income sources will be diversified to include exposure to the hospitality and industrial REIT sub-sectors as well. Even if the deal does not go through, I am fine with holding Capitaland. Over the years, Capitaland has transitioned from a developer to a developer and asset manager, with the latter being of particular relevance to my income investing style.

The second transaction I made this quarter is to add to my position in OCBC. The purchase was done at a Price/NAV of 1.15 using leverage. The move was to increase my exposure to the Singapore banking sector, which I am currently underexposed to. Furthermore, OCBC presents itself as a more compelling choice in terms of valuation relative to its peers.

The third transaction I did was to take partial profits in Japan Foods Holding. I sold off a third of my stake at a TTM PE of 21.30. I have been holding on to Japan Foods Holding for almost 3 years and I have received a decent amount of capital gains and dividends during this period. As it is a small-cap stock and may be susceptible to large drawdowns in a market crash, I decided that a more prudent move would be to take some profits off the table (unrealized gains are, after all, unrealized) and to hold on to the remaining 2/3 for dividend income and further capital gains, if any.

The fourth transaction I did was to sell a third of my stake in SGX at a TTM PE of 21.53. The rationale is to lock in some gains since SGX has ran up quite a fair bit and to hold the remaining for dividend income.

Finally, I initiated a small nibble in Medtronic at a TTM PE of ~24. Medtronic is a healthcare dividend aristocrat with a dividend growth streak of 41 years currently. They operate in the medical devices segment of healthcare and organized their business into four operating segments: (a) Cardiac and Vascular, (b) Minimally Invasive Therapies, (c) Diabetes, and (d) Restorative Therapies. As they are still growing, valuation is still on the richer side. Looking to scale in further if valuation declines or to hold on if there are no opportunities to add to it.

I've also added to my silver position during my visit to the Singapore International Coin Fair (see post here).

Net Worth breakdown
Compared to Q4 2018, my cash allocation increased from 37% to 41% mainly due to the bonus received from employment. Precious metals (both gold and silver), in SGD terms, have declined since the writing of my Q4 2018 post.

Net Worth Breakdown

As per before, "the pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."

Current Holdings
After converting all my USD holdings to SGD, the following table shows the percentage of each stock from only the equities allocation of my net worth (arranged in descending order). The information contained will not be the most up-to-date as I've already made some transactions in Q2 2019.

Stock Name Percentage
Hongkong Land 8.09
Parkway Life REIT 5.95
DBS Group Holdings Ltd 5.73
Singtel 5.24
OCBC Bank 4.94
Fraser Centrepoint Trust 4.94
First REIT 4.1
BlackRock Inc 4.07
Mapletree Industrial Trust 3.88
Thai Beverage 3.43
SATS Ltd 3.3
SGX 3.06
Capitaland Mall Trust 2.52
ST Engineering 2.47
Capitaland Limited 2.24
Dairy Farm International Holdings 2.21
Raffles Medical Group 2.17
Japan Foods Holding Ltd 2.11
JM Smucker Co 2.08
Mapletree Commercial Trust 2.01
Frasers Property Limited 1.95
Frasers Commercial Trust 1.52
ISEC Healthcare Ltd 1.26
Frasers Logistics & Industrial Trust 1.24
Sheng Siong Group Ltd 1.07
Welltower Inc 1.07
Kraft Heinz Company 0.92
QAF Limited 0.87
Medtronic PLC 0.75
General Mills Inc 0.72
Hormel Foods Corporation 0.56
Kimberly Clark Corp 0.36
Abbott Laboratories 0.22

Similar to what I've shared previously, I have capped the position size of Singtel in my portfolio. Increasing competition in the Telco space and commoditization of their services are not encouraging signs for investors like myself who are income-oriented.

Property stocks and REITs are over-represented in my portfolio. I will still be holding on to my REITs for income. Neither do I want to take profit nor do I want to add to them.

US consumer staples have rebounded since their lows in January 2019, with the only exception being Kraft Heinz which was hit by a whammy of bad news. This was really a bad call on my part. I had some qualms with Kraft Heinz (see my Q4 2018 post) but I still foolishly went ahead with it. Their dividend cut will hurt my USD dividend growth rate to some extent. Meanwhile, Singapore consumer staples seem like BAU (business-as-usual); some positive points and some negative points.

Debt Levels
Since I've started dabbling in leverage, I have been paying closer attention to my debt levels. Currently, my modified "interest coverage ratio" and "debt-to-equity ratio" is as follows:

Interest Coverage Ratio: 30.35
Debt-to-Equity Ratio: 0.01

With the modified "Interest Coverage Ratio" representing the total amount of cash on hand (excluding emergency funds, interest income, and dividend income) divided by the total debt payable and "Debt-to-Equity Ratio" representing total debt payable divided by equity (what I own outright).

I am still trying to get used to leverage. Hence, my low debt levels. I intend to maintain a manageable debt level and to pare down debt responsibly. The rationale for using leverage is to build assets that provide cash flow at a much faster pace.

Emergency Fund and Meta-Emergency Fund
Besides regularly contributing to our (my mum and I) shared emergency fund, I have started and began contributing to a meta-emergency for my mum. The idea is to add another layer of defence in the event our emergency fund fails in a recession.

The primary role of the meta-emergency fund is to provide some income (no matter how negligible) to help my mum pay down our housing debt, with the financial instrument of choice being the SSB. To this end, I have been contributing a moderate amount to SBBs each month since the start of this year. This is on top of helping my mum out with the housing debt every alternate month. I foresee I'll stop with the monetary help every alternate month once the stock market crash since I need all the cash I could get to go all-in! Hence, the meta-emergency fund.

Capital Allocation Thoughts
I will be prioritizing defence (emergency fund/meta-emergency fund/cash). As and when there are any investment opportunities, I will keep my purchases small. If no such opportunities present itself, I will be using cash to pare down my debt further.

With the way things are, I have been looking into sectors that I normally don't look into (e.g. industrials) for investment. Looking for fairly valued opportunities in a bull market has been tough and my itchy fingers have not been helpful as well. Perhaps some opportunities could appear in the US healthcare sector now that it is getting hammered?

I don't know.

I'll only know after the fact.

Thanks for reading!


  1. Hi unN,

    Great portfolio you have there. A lot of your picks are the same in my personal watchlist.

    Are you concerned about the rich valuations of Us stocks in general? I noted your sizable cash position as well as the focus on defensive industries. Not sure if it is a delibrate decision or is it the way your investment methodology works.

    1. Hi INTJ,

      Yup. I am concerned about the rich valuations of US stocks. Hence, purchases, if any, will be kept small as part of my risk management process.

      Yeah. I have a preference towards defensive industries. That's deliberate.

      As for cash, its role is to enable me to pick up bargains in a stock market crash. Having said that, I'll still be making small purchases on-and-off.


    2. Hope all is good UN. The only unlucky thing now is that you follow my footsteps on G/S. haha

    3. Yeah, all's good. Mix of Offense and Defense

  2. Hi UN,

    Just a random question, how much credit limit do you have?

    I tried it and realised that eventually, the portfolio would be too large for the balance transfer to affect much.

    I was thinking instead of using it as a final volley during a crisis when I have run out of cash (assuming my job is intact).

    I'm thinking to do partial divestment too much some positions are rather small and there's nothing I'm looking to purchase at the moment.

    Warmest regards

    1. Hi Azrael,


      Agree with you; there will be a time when balance transfer does not move the needle of our networth at all.

      At that point, it's only good for liquidity.

      I haven't reached that point. Are you reaching it soon/have reached it??