Monday, August 10, 2015

Journey To Retirement Part 9.1 -- MapletreeInd

With effect from the recent corporate earning on July 2015, I have decided to opt for scrip dividend instead of the usual cash dividend scheme.  Initially, my intention was to collect dividend until the amount of dividend is 100% return of the capital injected before turning into collecting scrip as dividend.  However, based on the following reasons and carefully thinking about it strategically, I decided to abandon the original plan and immediately jump into the scrip dividend bandwagon.

1. With a possible of US interest rate hike this year which most believe will affect S-Reits, S-Reits in general going forwards will be starting to announce scrip based dividend option one by one in order to preserve cash to repay loan or for future asset acquisitions.

2. The scrip dividend option as I have experienced (from Cambridge Industrial Trust) after prolong periods will somehow dilute the absolute amount of cash dividend despite the revenue growth.  Hence, continue to collect cash dividend will be eventually be at a disadvantage as compared with collecting scrip.

3. The global economy still fragile and face uncertainty given the totally out of sync monetary policy globally (US Fed poses to hike rate while rest of the Central Bankers are still on loose or even might further loosen monetary policy), the prospect of using cash to purchase stock might not be a good option as compared with collecting scrip.

4. Strategically, am just applying Sun Tzu Art of War Chapter 2 — Preparation (第二篇,作战篇), the concept of compounding investing.

As of latest, the dividend return I collected since 2010 stands at +39.78% of the original capital injected.  That is not considered a small sum and with this amount, I have headroom to try on Sun Tzu Art of War Chapter 3 — Strategic Attack (第三篇,谋攻篇), so that I could increase the scrip at a faster pace.  The +39.78% cash dividend collected so far can use to offset any potential realized loss when executing the strategy.

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