Hi folks, first, let me apologise for not writing any articles for the last few weeks. Work has picked up post MCO (surprisingly).
I am also trying to get more feedback on the possible theme and future direction of the blog. This blog will remain a work in progress until end of the year. The plan was to start in 2021.
A number of my ex students are more interested with the investment side of things, and they want me to go deep into my share selection criteria.
Many students have asked me to write more “opinionated” articles, instead of “how to” or “factual” pieces, based on my own experiences for the last 15 years. (Experience is the best teacher, they say)
Opinionated articles can somewhat be controversial but I will try to strike a balance when I write in the future.
Please be patient with me as I am contemplating and deciding on a proper sense of direction for this blog. I hope to finalize many things before the end of 2020.
In the mean time, I will continue to share 2 of my selected investment portfolios.
One of which is the Dividend 2030 portfolio and the other will be set up towards the end of the year.
The other portfolio will have a combination of few tools and that includes Unit trusts, Robo advisors and Cryptocurrency. This will hopefully be ready before 2021. I am currently working on this.
Update as at 1st July
I have decided that this portfolio will have a capital of RM 250k. As at today , the amount has been fully funded into my trading account.
My current cash balance in the trading account is RM 37,222.
With further cuts in interest rates (in July), I may reduce my dividend yield target to 4%. At the moment I am still hoping for 5%. (Which means by 31/12/2020, I hope to collect at least RM 12,500 in dividends, although I started the portfolio only in March).
I have done a lot of trades over the last 30 days. I have disposed a lot of shares and acquired a lot of new shares as well. (Will update below)
I did some trading (buying and selling some shares) in the last month and my net capital gain is standing at RM 4,260.
Total dividend collected to date is around Rm 3,000, and my portfolio is at an unrealized loss of RM8,700. I will be holding the stocks for quite a long time, so the unrealized losses is not something that will bother me much.
I collected a dividend of RM 1,320 for my holdings in CSC steel. This is my biggest dividend amount collected to-date. The dividend was announced on 22nd May 2020. The ex date was 25th Jun and the payment is supposed to be received on 10th July 2020.
It translates to a healthy 6.6% yield. This is way above fixed deposit rates.
A note on Dividends
Note to readers:
The ex–date or ex-dividend date is the trading date on (and after) which the dividend is not owed to a new buyer of the stock.
Buying the shares on or after the “ex date” means that you will not be entitled to the dividend.
In contrast, if you bought and held on to a share before the ex date and decide to sell them on or immediately after the ex date, it means that you will still get the dividends on 10th July 2020.
In other words, if I had held on to my CSC Steel shares until 25th June, and sold it on or after 26th June, I will still be getting the dividend payment on 10th July 2020.
However, there is a catch …
On the the ex date, the share price will be reduced by the dividend amount (per share), because technically, a company is paying out dividends from its reserves, so the value of the business will reduce when distributions happen.
And in this case, If you refer to my summary above, the share price of CSC Steel has fallen to RM 0.81 per after the ex date. (This is not only due to the dividend adjustments. There could be other factors as well)
The drop actually begun at a much earlier stage before the ex date, perhaps due to other factors.
My average purchase price was RM 0.995 per share. This explains why there is a huge capital loss in CSC steel.
Its an unusually high fall, but as long as the fundamentals of the shares are strong, the share price will rise up again in the future.
Some shares will rise up very fast after the ex date and some will take time before it rises.
The key is to ensure that the fundamentals are good, hold it for the long term and enjoy the long term dividends, year after year.
My Top ups
I bought another 10,000 units of Kip Reits as based on my analysis. They seem to be the least affected by the MCO because majority of their portfolios include family marts rather than high profile shopping malls. They also have a history of paying high yielding dividends.
Another 400 units of Panasonic shares were also added. A fundamentally strong manufacturing company that just declared a dividend of RM 1.83 dividend per share on 29th Jun 2020. This will translate to a 6.4% yield in the future. The ex date is 9th September 2020. Payment will be received on 25th Sept 2020.
13,000 units of Mah Sing were purchased too, to make it a total of 43,000 shares. Another strong property player which has declared a dividend per share of RM 0.0335 cents per share. At my average purchase price of RM 0.565 per share, it translates to a 5.9% yield. Dividend was declared on 28th May, will ex on 15th Sept and payment will be received on 29th Sept 2020.
(I am happy to hold all 3 companies in my portfolio as long as they remain fundamentally strong and don’t get too overvalued. If they get too overvalued. I may lock in some capital gains in the future)
My New additions
I added a number of new companies in my portfolio, namely, CIMB, Favelle Favco, Matrix, MBMR, Pecca, UOA Development, and Wellcall.
I will not be doing a detailed analysis of the company in this blog. At the moment, I am still finalising my selection criterias.
These companies, as usual, are slightly undervalued (in my opnion), and they have consistent performance in terms of revenue and profits.
They have a very low debt level, a healthy cash flow and are defensive by nature.
In case if you are wondering,
- Favelle Favco is a crane manufacturer.
- Pecca is involved in Leather business,
- Wellcall is a rubber hose manufacturer and,
- MBMR is an automative group (Perodua).
(So, the theme of the month is manufacturing)
A good proportion of my portfolio is made up of Property companies.
They are Matrix holdings berhad, Mahsing and UOA development.
I find them to be fundamentally strong. Personally, I believe there will be a propery bullrun in the next 5 years, which will have a positive impact in their performance.
This is due to the government’s decision to reduce interest rates and other favorable policies to make property ownership more affordable to the general public.
They are also among the best dividend paymasters in the property industry.
You may have noticed that I have cleared a number of reits from my portfolio. They are Pavillion Reits, Sunreits, IGB reits and Amanahraya reits.
This is because I believe there will be some short term impact on their rental income due to covid 19 and lesser traffic in the malls and office buildings. So will rental rates reduce in the future? It remains to be seen.
I will revisit Reits before the end of the year. (A note to readers, REITs are relatively defensive, and if I had invested heavily in reits, perhaps my portfolio will have low unrealised capital losses.)
In addition, there so many other good companies available for me to grab dividends until end of 2020. So I can always consider reits during a bull run when the stock market is overvalued.
I have also disposed my investments in RHB, YTL Power, Oriental holdings, and Takaful.
I don’t have any specific reasons for disposing them apart from realising some capital gains and collecting some capital for other investments.
As mentioned earlier, I am still at experimenting stage and I am studying and comparing many other companies.
There too many opportunities in the market for me to write any specific missed opportunities.
But I wish to highlight there seemed to be a banking rally in the stock market in the last week.
The shares of Public bank has soared from 16.52 per share to 18.50 as at July 10th. That’s a capital gain of around 12% within a week. I sold the shares much earlier and was waiting for the prices to drop lower before investing.
No regrets though.
So, for the second half of the year. I will still be doing a lot of adjustments to my portfolio as and when I find new shares.
More stocks will be purchased, since I have another RM 30k cash balance in my trading account.
I am hoping to collect at least another RM 9.5k dividend before 31st December 2020, so that I can buy my first “free” share before 2021.
This will give me a total dividend collected of RM 12,500 and achieve a yield of 5%. (RM 12,500/RM 250,000*100).
I have decided that all my dividends collected will be reinvested into new companies so that I can keep track of my “free” shares for the next 10 years.
Again, I wish to apologies for the late update. Things are getting busier now. I will try to be on time for the next update..
In the mean time, I have opened a new trading account with Hong Leong brokerage. This is for me to invest in growth stocks, where capital gain is my first priority. (I am using CIMB I-trade for my dividend 2030 portfolio)
I will not be sharing the Hong Leong portfolio in this blog because its for my random growth investing with no clear goals.
Furthermore I am still very new to investing in growth stocks, so the elements of uncertainty will be very strong. I don’t want to set the wrong example to my readers.
Occasionally I will use the transactions there to share more experiences with you.
For now, something “very interesting” is happening in that portfolio and I will definitely be giving you some updates before the end of the year.
(Disclaimer: I am not a personal finance expert and I am still a beginner, I am just here to share my experiences to fellow newbies so that they learn from my right and wrong moves. Please refrain from buying and selling shares based on my portfolio. Strongly not recommended !!!!.)
Thank you so much for reading and please stay tuned.