Another milestone achieved, more than 100% return on dividend !!!
Vested in First REIT in 2009 at average price of $0.5096 using CPF (this is NOT the one on my long-term investing portfolio). Since it is using CPF money the intention is pretty clear -- just put aside and collect dividend until retire. I only update the performance of it every quarter during dividend collection time and surprisingly, just found out during this recent update that the dividend return has already hit 173.58% with respect to the initial invested capital (should have hit 100% mark a few quarters back just that I overlooked it). What's the significant of it ?
Mathematically, it is impossible to lose money in this investment as the dividend itself already recoup all the initial investment capital. As such, whatever I am holding is purely floating profit.
Am able to achieve this within a period of 5 years is rather surprising and the main reason for so should be due to :-
1. Able to purchase at a low price, probably near the bottom of if I am not wrong
2. First REIT since the global recovery of 2008 financial crisis is able to continuously generate increasing revenue and hence distribution. As of latest according to its FY2014 earning dated 15th Jan 2015, it is distributing 8.05 cents per annual back to unitholders and that translate to 15.8% (with reference to my holding price) return pa in term of dividend.
3. In 2010 it did a right issue but I did not subscribe to it and hence after I sold the entitled rights, the sale proceed was credited as dividend and that helped to boost up the dividend return.
Given the fact that I already got back all my initial invested capital through dividend return, the next step towards investment is to aim for capital return. In order to do so, I have decided from the latest distribution I will convert all the cash distribution to scrip distribution. In another word, I am increasing the quantity of my holding without putting in any single money. Why scrip dividend ? Reason is clear -- Compound investing !
Every quarter my holding will just keep multiplying up regardless of how the stock price will change. Since my initial invested capital is already guaranteed back, I will have nothing to loose regardless how many quantity I will be holding. By compounding investing, it is also the fastest way to get that capital gain within shortest period of time.
Through dividend I recoup all my invested capital and through compound investing I will be going for capital gain, this is what I called investment in both horizontal and vertical domain !
