2Q 2022 saw many changes in my portfolio.
I nibbled at QAF Limited and if you want to know why, see:
Investment in QAF is larger now.
Next, I nibbled at an ETF and that probably surprised some long time readers of my blog.
Well, I surprise myself sometimes with the things I do.
I know I am mental as I was diagnosed as suffering from extreme anxiety and borderline depression before.
This explains why early retirement from work and investing for income is probably a good combination for me.
However, it could be I also have a Dr. Jekyll and Mr. Hyde problem.
“When did I buy this?”
“I bought this.”
“Oh, I see… Wait, who are you?”
“I am you…”
“So, you bought this when you were me?”
Anyway, if you don’t yet know, see:
Investing in Alibaba and Tencent now.
The ETF was an experiment for me and was at about 1% of my portfolio in market value at its highest.
The ETF does not pay a dividend and, so, I had to do some trading to make some pocket money.
2Q 2022 also saw me becoming a shareholder of SBS Transit.
I thought of having a larger position in SBS Transit but it wasn’t really a priority since I was already heavily invested in ComfortDelgro.
SBS Transit is almost 80% owned by ComfortDelgro, after all.
Of course, if SBS Transit should see its share price declining a lot more, all else being equal, I could buy again.
Anyway, I blogged about my purchase of SBS Transit and adding to my investment in ComfortDelgro in May and if you haven’t read the blog yet, read:
“EPS should improve as we learn to live with COVID-19 and, then, DPS should improve too.”
From: Retirement, YouTube channel and quick update.
If you are interested, also read:
Investment in ComfortDelgro is larger now.
Both SBS Transit and ComfortDelgro are also really inexpensive when we look at their enterprise value and their EBITDA.
In the REIT space, I added to my investment in CapitaLand China Trust (CLCT) when its unit price dipped below $1.10 a unit.
CLCT was just too cheap for me to ignore at that price level.
Mr. Market was feeling very bearish about everything Chinese and CLCT had to bear (pardon the pun) some collateral damage.
CLCT is a different animal compared to when it was CapitaRetail China Trust (CRCT.)
The transformation brought with it a stronger income generation ability and greater resilience.
The REIT does not have an aggressive gearing level either.
At under $1.10 a unit, it was also trading at a big discount to NAV.
I also increased my investments in Frasers Logistics Trust and talked to myself about Sabana REIT.
Although my portfolio is not as heavy in REITs as it was a few years ago, it still has a relatively big exposure to REITs.
I have to remind myself not to go back to being overly REIT heavy.
Anyway, I also expect CLCT to continue its transformation by acquiring more new economy assets.
So, I could still increase my investment in CLCT through future rights issues, if they should be offered.
Next, I decided to increase my exposure to the local banking sector to compensate for my relatively large exposure to REITs even further.
I increased my investment in OCBC which I thought offered better value for money when compared to DBS and UOB as it was trading at around book value.
OCBC also offered the highest dividend yield while not having the highest payout ratio which was attractive to me as an income investor as this could also mean higher future dividends if nothing untoward happens.
This is a possibility since OCBC also has a very high CET1 ratio, the highest amongst local banking peers.
I also did something more shocking than my foray into Chinese tech stocks in 2Q 2022.
I bought bits of Bitcoin.
Well, I thought it was rather shocking.
If you didn’t know, I hope you are not too shocked to read:
Bitcoin is currently 0.5% of my portfolio as I added to my initial less than 0.1% position when its price declined.
Not crazy about Bitcoin but having some in my portfolio makes sense because, unlike the early days or a few years ago, I can see that the coin is gaining wider acceptance and, more importantly, attracting institutional investors.
If I was a Bitcoin bull, I would put at least 20% of my portfolio in Bitcoin and I know some, mostly young people, are 100% into Bitcoin and other virtual coins.
However, I don’t think that retirees like AK should be too aggressive on Bitcoin.
I will admit that the case for Bitcoin is growing more persuasive because of the strengthening network effect.
However, Bitcoin’s notorious price volatility makes it a poor choice to form a large component of any investment portfolio other than one that is mostly speculative.
OK, lots of buying in 2Q 2022.
I did some selling as well in 2Q 2022 and blogged about it.
Although I will be receiving less passive income from Centurion Corporation in future, reallocating the funds to other income generating investments should give similar or maybe better results.
So, apart from possibly missing out on capital gains if Centurion Corporation eventually unlocks value for shareholders, I doubt that having it as a much smaller investment in my portfolio would lead to a big decline in future passive income for me.
Unlike Saizen REIT, for example, where there was a guarantee more or less that we would be paid while we waited for value to be unlocked, there isn’t such a guarantee with Centurion Corporation.
OK, now for the numbers.
In 2Q 2022, total passive income received was:
The dividends received from DBS, UOB and OCBC formed the bulk of my passive income from non-REITs in 2Q 2022.
Of course, there is the expected and not insignificant quarterly income distribution from AIMS APAC REIT as well.
2Q 2022 passive income increased by an impressive 42% compared to 2Q 2021 mostly because the banks were still paying lower dividends in 2Q 2021.
The banks normalized dividend payouts in 3Q 2021, if I remember correctly.
Compared to 1H 2021 which saw total passive income at S$81,425.35, the first 6 months of this year delivered a total of S$104,678.42 in passive income which represents an increase of some 28%, year on year.
Everything else being equal, my passive income in 3Q 2022 should not see much of a difference, year on year.
However, I am expecting a decline in passive income in 3Q 2022 due to the fact that there was a pretty significant one off final distribution from Accordia Golf Trust in 3Q 2021.
Of course, Accordia Golf Trust is no more.
Higher dividends from some investments in my portfolio should be able to cushion the expected decline in 3Q 2022 but I am hazarding a guess that they most probably would not be enough to cancel the decline.
Still, at this stage, I am making a forecast that full year passive income this year should come in higher than the year before, barring unexpected negatives.
On hindsight, I was too active as an investor for income in 2Q 2022 and just thinking about it makes me tired.
I should go back to being lazy for the rest of the year.
On a more serious note, I know that many people are worried but if we have been investing, say, for even just a decade so far, we know that Mr. Market always has mood swings.
As long as we eat crusty bread with ink slowly, we don’t really have to worry.
If you are a new reader, read this blog and all the blogs I have hyperlinked within:
If you are a long time reader of my blog and if you are on the same path to financial freedom but still need some assurance, go read the same.
This storm, however bad it gets, will end at some point.
If we are eating crusty bread with ink slowly, our life should not be affected badly.
In our case, the sky is not falling.
Stiff upper lip and soldier on!
If AK can do it, so can you!