Yield

As stock markets head towards a correction this May, for me this represents an opportunity to accumulate. Principally for me, I am vested in shares mainly for the dividends as an additional stream of 'passive' income for me. Once in a while though, my fingers get itchy and I attempt to do a spot of trading, but so far, have not been very successful at it =P

It has always been a dream of mine to be a 包租公. For the more ang moh pai people, it means to own properties and collect rental. Since I have just started working, this is of course not possible. So, when you have peanuts, then you play with peanuts. REITs represent a chance for me to own perhaps a single tile of huge properties like malls and hospitals and warehouses and enjoy the rental income from them.

With regards to my current portfolio, I was fortunate enough to begin my buying at a reasonable level and hence, have built up a certain margin before I begin worrying about losing my capital.

At the moment, my collection of REITs are yielding 8.2% per annum. Actually, my aim is for 8% and anything above that is a bonus. To put things into perspective, suppose you wish to generate an annual cashflow of $50k from stock dividends, you would need to invest $625k at 8% yield. This has taught me one thing: always try to buy at reasonable or even better, underpriced, levels so as to benefit from better yields (capital growth) and limited downside (capital protection).

Thus, my strategy for this correction is to keep my eye open for sustainable 8% yield stocks and continue to add to my portfolio. Wish me luck!