2021 was a significant year in my investment journey because I achieved a new milestone income from my dividend stocks. For the first time ever, my dividend income breached the magical 5-figure mark. If you have asked the 26-year-old me back when I first started investing in 2014, this would have been quite an unimaginable feat. I believe this is brought possible by a strong discipline in gradually building up my investment funds as well as the hunger to acquire new investment knowledge. Let’s find out which stocks contributed to this achievement in 2021.
Heartland Boy’s Dividend Stocks Portfolio
Diagram 1 shows the dividend stocks in my portfolio in 2021. I have omitted other stocks/ETF from my portfolio that were focused on growth investing and index investing.
Riverstone is sitting on a tremendous amount of net cash that easily makes up more than 50% of its current market capitalisation. My interactions with its Management provide me sufficient comfort that a large chunk of this cash will be paid out to shareholders at the upcoming full-year result. It has benefitted tremendously from the pandemic and the time has come to reward its shareholders handsomely.
On the other hand, the likes of Wilmar, Bumitama, Yangzijiang, Sinopec Kantons, Uni-Asia and Geo Energy might just be entering the start of a multi-year commodities boom. I am sure that we have all come across a report or article that food, palm oil, crude oil, coal, soft and hard commodities etc are each experiencing its record highs respectively. These stocks in my portfolio are direct beneficiaries/proxies of these macro trends. In particular, Geo Energy could potentially pay out a 5-6 cents final year dividend which would give it an incredible 26-30% dividend yield. If this turns out to be a multi-year commodities boom indeed, the dividends would compound to great effect. I am looking forward to better and higher dividends from these cyclical stocks to help me offset the painful increase in the cost of living expected in 2022.
Another constituent of my dividend portfolio is inevitably REITs, an asset class beloved by most retail investors and retirees in Singapore. United Hampshire US REIT is a REIT that I invested in when it was absolutely unloved. Current dividend on my cost is already in the mid-teens. With soaring inflation, American consumers will be flocking more to discount stores to get greater bang for their bucks.
Another REIT that I recently invested in is SF REIT which is listed on the HK stock exchange. This is a new logistics REIT with assets in Greater China that only IPO-ed in 2021. It potentially provides more than 8% dividend yield based on my entry price. 8+% is a great yield to snatch up a prime logistic asset in Hong Kong when one considers the asset class and location. Nevertheless, I recognise that there are considerable risks involved and hence I only initiate a small position for a start.
This is a quick summary of the dividend stocks in my portfolio and why I still have great conviction in them (at least valid as at 14 Feb 2022 when this article is published).
How I Picked Dividend Stocks
How I pick each of my dividend stock definitely did not happen by chance. A large part of it was based on the knowledge that I have acquired over the course of my investment journey. I constantly learn investing techniques and lessons from books, blogs and investment courses. One course that I attended in early 2020 was Dividend Machines conducted by The Fifth Person.
Dividend Machines by The Fifth Person
Just a month after the course, I utilized one of the techniques learnt (historical P/B ratio) from the course to purchase Mapletree Commercial REIT at an attractive entry point. I subsequently sold it for a profit that exceeded the cost of the Dividend Machines course. Having attended the course personally, I would recommend it for the following reasons:
- Comprehensive content such as 8 steps to pick dividend stocks and how to invest in the best REITs (includes a handy Investment Checklist for REITs to ensure that you stick to the basics and don’t go off tangent from the strategy).
- Behind the scenes sharing (interesting and exciting anecdotes of Management based on attending over hundreds of AGMs) This is critical as the importance of a good sponsor and REIT manager are factors to look out for under its proprietary Investment Quadrant framework.
- Immediate revision of techniques taught with classroom examples. For instance, students were taught to use Price to Book ratio graphs to determine the right price to buy/sell a REIT as shown in Diagram 3.
- As a general rule of thumb, a good entry point for Suntec REIT would be below the mean of 0.77x P/B ratio. Studying the historical P/B ratio is valuable as some stocks could be value traps, i.e. perpetually undervalued by the market. Conversely, if you are a unitholder who wants to sell Suntec REIT, a good time to sell would be above its historical P/B mean.
- Package includes classroom content + online materials (webinar/videos) + after-lessons support from the community (don’t be shy to clarify your doubts as you can post your queries online and the founders will endeavor to respond to them within 48 hours!) This is tremendous value for money considering it costs only S$588 as opposed to thousands charged by other investment courses! This explains why the investment courses by The Fifth Person are the only courses that I have promoted on my blog so far.
Sign Up For Dividend Machines 2022
Good news as the 2022 edition of Dividend Machines is finally opened for registration from 14 February to 6 March. Register using this link (scroll to the middle of the page to click enroll now) as an early bird to get S$100 discount off the usual course fee of S$688.
The first run of Dividend Machines takes place on the weekend of 5 Mar (Saturday) and 6 Mar 2022 (Sunday) from 1pm to 7pm. Registration is on a first come first serve basis, so you might want to act fast. But if you are unable to make it for ALL the runs in March, the next one would unfortunately be in 2023!
Conclusion of my Dividend Investing Journey
Investing money is hard work and there is indeed no free lunch in this world. The trainers took care to ensure that this was communicated repeatedly throughout the workshop. Yet, I believe that Dividend Machines has made dividend investing much easier. I can only wish wistfully that I had chanced upon such a stock investing class when I was just a beginner investor. Such investment education would definitely have solidified my foundations and pay dividends (pun intended) in the long run. Who knows it might have even helped me breach the magical 5-digit passive income threshold earlier and bring me one stope closer to FIRE?
*Do note that Heartland Boy earns a referral fee for each sign-up to Dividend Machines by the Fifth Person.