Recently I have been paying attention to Singapore REITs because i am invested in some of them for over a year. Having also taken profit too early on Suntec REIT, i wonder if I should have adjusted my exit strategy.
Fellow blogger KFC1973-Stock wrote an article today: "REIT Sector Still outperform the benchmark"
If you read the article, S-REITs have beaten the broader market YTD and i believe it has been outperforming the benchmark for a couple of years now. This makes me worried, because i look at valuations, for me it is starting to get overvalued. One has to remember that during the 2008 crash, almost all REITs got slashed pretty badly (almost 60-80% for some). So definitely REITs are vulnerable to market crashes...no doubt!
I suppose when looking at REITS, we value it based on dividend returns above price. Isnt that why people are still buying overvalued REITS because it still pays out more than 5% dividends?
REITs start to get unattractive as their dividend rate drops and this is inversely proportional to its market price. I would still HOLD onto several REITs because of their potential but I'll be out as soon as dividend rate drops below 4%. One more thing, very important... As soon as interest rates go up, its game over! Cost of borrowing goes up, dividend yields will drop. REITs will be in trouble.
Of course i regret selling First REIT and Suntec REIT too early. They are trading much higher then my profit taking target. Sigh*
In my portfolio, I consider Hospitality REITs one of the strongest in Singapore and i would hold on to them. Industrial REITs would be the first to go as soon as their dividend rate drops! Remember they were the worst affected during a market crash. Look at graph below from FSM; Pick up REITs when price is low, dividends are high. In 2009 average dividend yield from S REITs was super high!
Disclaimer: I have long positions in Far East Hospitality, Ascott Residence Trust, Cache Logistics, Sabana Shari'ah REIT. Please do your own due diligence before investing.
Fellow blogger KFC1973-Stock wrote an article today: "REIT Sector Still outperform the benchmark"
If you read the article, S-REITs have beaten the broader market YTD and i believe it has been outperforming the benchmark for a couple of years now. This makes me worried, because i look at valuations, for me it is starting to get overvalued. One has to remember that during the 2008 crash, almost all REITs got slashed pretty badly (almost 60-80% for some). So definitely REITs are vulnerable to market crashes...no doubt!
I suppose when looking at REITS, we value it based on dividend returns above price. Isnt that why people are still buying overvalued REITS because it still pays out more than 5% dividends?
REITs start to get unattractive as their dividend rate drops and this is inversely proportional to its market price. I would still HOLD onto several REITs because of their potential but I'll be out as soon as dividend rate drops below 4%. One more thing, very important... As soon as interest rates go up, its game over! Cost of borrowing goes up, dividend yields will drop. REITs will be in trouble.
Of course i regret selling First REIT and Suntec REIT too early. They are trading much higher then my profit taking target. Sigh*
In my portfolio, I consider Hospitality REITs one of the strongest in Singapore and i would hold on to them. Industrial REITs would be the first to go as soon as their dividend rate drops! Remember they were the worst affected during a market crash. Look at graph below from FSM; Pick up REITs when price is low, dividends are high. In 2009 average dividend yield from S REITs was super high!
Disclaimer: I have long positions in Far East Hospitality, Ascott Residence Trust, Cache Logistics, Sabana Shari'ah REIT. Please do your own due diligence before investing.
Hi,
ReplyDeletei learn long ago stock investment is a business where either you B/S too early or too late. As long as i make some money, no matter what i learn not to regret. There is no end to regret in stock investment. Therefore, i believe in our life also.
Who can really live a life without regrets? we only learn not to. So that we can move on and on.
Cheers.
I agree with what you said- "There is no end to regret in stock investment". We can only try to minimise regrets by sticking to our targets/goals.
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