Now here is a great research article that dives into clear Dividend Aristocrat selection and how you can form one with lower volatility.
The article eventually selected the high quality Dividend Aristocrats. They are
A lot of people are unfamiliar with Rights Issues for the company they invest in. This is because it is seldom discussed.
Rights Issues is a method for the company to get additional funding for business.
The business is essentially make up of Assets = Debt + Equity.
There are 2 ways a listed company can seek large funding. One is by issuing more debts, the other is more equity.
Rights issue is to issue more equity.
A company will typically declare a 2 for 1 rights issue or another ratio meaning for how many existing shares you can apply for another number. In the case of recent First REITs rights issue, it is 5 shares for 4.
Not all existing share holders can apply for rights issues.
As long as you become share holders you can apply for these rights and excess rights.
Applying for rights provides no kicker. It is just to prevent dilution of your existing shares.
The kicker is the excess rights. It is basically like IPO jackpot. These rights is normally at a huge discount from current traded price.
In the case of first reit it is trading at eventual 70 cents but your cost of acquiring these rights is at 50 cents.
Take a look at this example here to understand why getting 2000 excess rights can mean a small win: First REIT Excess Rights Results: I got 2750 excess rights!
I talked a fair bit about investing in US Stocks, specifically Dividend Aristocrats, Champions and Achievers.
Now these are made up of really great dividend companies and highly stable ones, but to other investors a yield of 3% BEFORE withholding taxes cannot be called high yield investing.
If you would like to move out of a certain proximity bias and touched emerging market stocks, there are many value buys presenting 4%-10% dividend yield yet enables you to invest in a country stalwart with a wide economic moat.
REITs, Shipping Trusts are some of the good types of investments that you should add to your portfolio. Or is it? Many do not know that ultimately the owners that sells the properties to the REITs are the overall winners and investors are only taking much of the burdens.
Generally, no business trust will pay down its debts, because it is not in the interest of the trust manager to do so. The trust manager is paid as a percentage of assets, not equity. Therefore, the incentive is to borrow as much money as possible to raise the assets under management, thus raising fees, and never pay down the debt except under duress from banks.
An investor in a business trust has to understand that the trust structure is basically a packaging gimmick. It is given tax incentives by the authorities to encourage a more “sophisticated” capital market. Essentially, the original owner of the assets can enjoy tax savings if he owns the assets through a trust instead of within a normal corporate structure. With an IPO his ownership decreases, but he then enjoys the management fees. As a result he gains several advantages:
1. The management fees are economically an inflation-indexed annuity;
2. Partial asset divestment through the IPO raises cash for other higher-return projects;
3. Reduced ownership reduces the amount needed to fund a future rights issue; and
4. Trust distributions are taxed at a reduced rate (normally 10%)Net-net, the overall income decreases slightly as the reduced share of trust income is partly offset by the management fees, but the potential liability decreases greatly. It is a huge risk-reward improvement.
Investors should not harbour any delusions that REITs are created primarily for their benefit. REITs are created first and foremost to help owners dispose of unwanted assets.
Some of you have asked for what are the important dates for rights issue. Here it is
Full coverage can be found here http://www.investmentmoats.com/money-management/reit/first-reit-announces-acquisition-and-rights-issue/
If you want to invest in a healthcare REIT, you wanna know a lot of the demographics and future trends for that area of investment.
First REIT, a Singapore REIT recently did a rights issue to buy 2 indonesian hospitals.
But what astounds investors is that the information provided in the circular is comprehensive enough for you to learn more about Indonesia Healthcare industry.
Investment Moats.com have full coverage on this rights issue and if you want to read the circular online you can read it at
I written an article over at Investment Moats indicating my purchase of K-Green Trust. From the looks of it, it doesn't look very appealing.
