I attended Dividend Machines conducted by The Fifth Person on 22 February 2020. To put things into context first, the Straits Times Index (‘STI’) closed at 3181 points during that week, just before the COVID-19 spiralled into a global pandemic that sent hasty shockwaves to global equities. Just a month after the course, I utilized one of the techniques learnt (buying below historical P/B ratio for safety of margin) from the course to purchase a REIT at an attractive entry point. I subsequently sold that REIT for a profit that exceeded the cost of the Dividend Machines course. Having attended the course personally, here is my review of Dividend Machines by the Fifth Person and why you should sign up for it. (the 2023 edition is finally opened for registration!)
What Heartland Boy Likes About Dividend Machines
1. Comprehensive Content With Tremendous Value
The one-day course was broken up into 2 halves:
- 8 Steps to pick dividend stocks
- Investing in REITs
In the first half, classroom time was devoted to comprehensively explain the 8 steps to pick dividend stocks. Collectively, the Fifth Person believes that the 8 steps each act as a barrier to prevent errors (of picking poor dividend stocks) from happening like a Swiss Cheese model. Without giving too much of its content away, one of the 8 steps was to look out for company that can continuously reward its shareholders and pay dividends in both good and bad times.
The second half of the coursework was on investing in REITs- a perennial favourite among Singaporeans. It would be improbable not to cover this topic given that the main purpose of REITs is to distribute income and pay dividends to unitholders. The Fifth Person have an excellent track record of picking REITs and they were very generous in sharing their techniques with real life case studies during the course. The aim is to teach the students how to fish for good REITs and Heartland Boy shall share how he applied the technique to purchase Mapletree Commercial Trust (‘MCOT’).
When you consider the online materials, the classroom content and the after-lessons support network, the content assembled is indeed super comprehensive. Dividend Machines by The Fifth Person provides tremendous value when the cost fee is only S$588, as opposed to thousands charged by other investment courses.
2. Behind The Scenes Sharing
The Fifth Person have the habit of buying only 1 lot in order to attend an AGM to observe the Management. It could even be a notorious company that they will never be interested in but would even attend the AGM just to observe how the Management behaves. Indeed, the sharing was so generous and forthcoming that some of those anecdotes should strictly not leave the confines of the classroom. Therefore, Heartland Boy shall only share a positive example where Rusmin (one of the 2 lecturers conducting the course) felt that the Manager of MCOT was looking after the interests of unitholders.
A unitholder lamented at the AGM that the Manager have not made any acquisitions for quite some time and was concerned about the growth of the Trust. The CEO responded, “our Investment team has been looking at every possible commercial opportunity for the past years but we did not make any acquisitions because they were not yield accretive to our unitholders.”
Because of their years of meeting with Management, the Fifth Person are now better judges of Management’s character. 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.
3. Immediate Revision of Techniques Taught With Examples
We were given plenty of classroom examples to practise the techniques that have been taught. For instance, under the Valuation component of the Fifth Person’s proprietary Investment Quadrant, 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.
After attending the course, I realised that MCOT was trading way above its historical P/B ratio and above its +2 Standard Deviation (‘SD’). This implied that it is NOT a good time to buy. Likewise, when the opportunity presented itself to buy at -2SD just a month later, I did not hesitate to press the “buy” button as shown in Diagram 4.
I subsequently sold it shortly and the profit far exceeded the cost of the investment course. This investment was also documented in my annual stock performance review. With so many factors to be mindful of in each quadrant, it can indeed be overwhelming to analyse them all at once. Thankfully, the Fifth Person has compiled them into a handy Investment Checklist for REITs.
In addition, Fifth Person also offers Dividend Machines Professional for like-minded investors to build a portfolio of stable, high-yield dividend stocks and REITs.
How To Maximise Your Learning From Dividend Machines
- Login to your Dashboard and go through the webinar/ online videos before attending the class. This enables you to absorb the information better in class. My opinion is that The Fifth Person tries to cover a lot of content within the 1-day session. Once again, this is testament to the value that they are providing.
- Get equipped with basic financial knowledge before attending this workshop. You should be familiar with the financial ratios used in Fundamental Analysis such as P/B, P/E etc. A very basic understanding of accounting will be necessary since the in-class assignments involve extracting information from the financial statements.
- In addition, it may be helpful to understand how REITs work since half of the course will be devoted to that. Here’s some resources in my blog that may be helpful:
- How to Understand REIT Jargon When Investing In Singapore REITS (Beginner)
- How To Invest In the Best Singapore REITs (Beginner)
- What to Watch Out For In a REIT Manager Fee (Intermediate)
- Do not be shy to clarify your doubts. You can post your queries online and the founders will endeavor to respond to them within 48 hours!
Sign Up For Dividend Machines 2023
Good news that Dividend Machines, the 2023 edition, is finally open for registration from 6 February to 26 Feb 2023. Register using this link as an early bird to get S$100 discount off the course fee so you pay only $588. Moreover, this ticket to attend and re-attend is for lifetime and will never expire, ensuring that the techniques are re-emphasized.
The first run of Dividend Machines takes place on the weekend of 18 Feb (Saturday) and 19 Feb (Sunday) from 1pm to 7pm. Registration is on a first come first serve basis, and classes would generally take place on the weekends. If you are unable to make it for ALL the runs in Feb, the next one would unfortunately be in 2024!
Conclusion Of Dividend Machines
Investing money is hard work and there is indeed no free lunch in this world. The trainers from Fifth Person took care to ensure that this was communicated repeatedly throughout the workshop. Having been an active investor for over 8 years myself, I will be the first to agree to this stance. I can only wish that I had chanced upon such a stock investing class earlier in my investment journey. Such investment education would definitely have solidified my foundations when I was just a novice investor. I am certain that I would have saved some tuition fees along the way that would have improved my investment performance.
*Sign-up link is here (go right to the bottom of the page) to get S$100 off the course fee. Do note that Heartland Boy earns a referral fee for each sign-up.
Hi, Can you share currently what is your return from dividends in term of percentage? Whether it improve after attending and applying what was taught in the class. (I invest mainly DBS/UOB purely for their dividends) Thank you.
I disclose my portfolio returns annually. The latest is here. (https://heartlandboy.com/heartland-boy-2020-stock-performance-review/) Judging from my portfolio, you are able to infer that I do not primarily seek to invest for dividends.
What I can confirm is that my performance did improve after the course. Mapletree Com Trust was discussed during the class as an example, so when it dropped below 2SD of its P/B, I was able to buy with conviction.
Jason Chiong says
Are there any tools / apps that you are using / would recommend to use to track such indicators (e.g. price below P/B mean and -2SD)? Ideally, one would like to automate the tracking process and be able to act swiftly when the indicators are pointing to a ‘buy’.
Unfortunately, I do not use any such tools/apps. I simply refer to analyst reports which often show the various bands in standard deviation terms and make a mental note. If you manage to find any cost-effective solutions that is able to deliver such functions, let me know?
Thank you for your sharing.
Can I check if we should use the book value per share of the most recent quarter to calculate the PB ratio?
The PB ratio on fifthperson doesn’t seem to be the same as on Yahoo finance..
Yes, you may use the most recent book value per share to calculate the PB ratio.
Thank you for your reply!