Singapore Post and Micro Mech added to Dividend Stock Tracker
Lots of big movement in the market these days. Just things that needs to get used to. We have seen alot of companies reaching really cheap levels.
This could both mean good or bad, as liquidity and credit concerns might be looming over them.
I have added 2 stocks to my dividend stock tracker this morning. They are Singapore Post and Micro Mech. Singapore Post’s share price have been pretty stable, up until the last month,where it followed the broad market into a quick drop. However, I believe fundamentally, it holds a pretty strong balance sheet and the economics of the business should see it sail through the rough waters.
Micro-Mech is one of the stocks that i want to get a hold of, but found that perhaps i should have gotten it much more cheaper. It too have been pretty resilient this year however, this thinly traded stock is now at 42 cts. A dividend yield of 11% indicates value for a company with no debts and very strong free cashflow. If there is any indication that this semi conductor stock will fare badly in this recession, it is how they operate throught the nasty 2001-2003 recession, which they did with flying colors.
Dividend and Cashflow Yield will drop
One thing about dividend yields or cashflow yield is that they are usually based on historical cashflow and earnings. Investors should always evaluate what are the kind of earnings going forward for the next 5 years.
Take the example of Courage Marine, the Baltic Dry Shipping Index fell from > 12000 to <1000. Thats a humongous drop and it impacts the shipping industry. Courage Marine for the previous year had enjoyed a bumper year in earnings and this could very well reverse this year due to a global oversupply of shipping vessels.
However, i believe its cash and debt position is still one of the best in the industry. Using 2.2 cts as a dividend payout is a very conservative estimates, since this years payout is nearly 10 times of that. Thus 18% is a pretty good yield from a valuation perspective.
Based on last years ebitda, its EV/EBITDA is 0.4 times which means it takes less than half a year to get your money back! That is if earnings stays the same, which is very unlikely.
PTB at 0.8 times and cash is 73% of market cap indicates that you aren’t paying too high a price� for this.
Asset Value will fall as well
I believe some of these stocks will see net asset values declining, especially the REITs and property stocks.
Taking a look at MacArthurcook Industrial REIT, its PTB is 0.2 times. You either think that this REIT overpaid its properties by 80 times or that it is really undervalued here.
Dividend yield is among the highest among REITs at 19%. So is this a steal?
Not quite. Interested dividend investors and REIT investors should also look at
- Theme of REIT and the prospects/risks going forward (Hospitality, commercial, industrial,healthcare,retail)
- The quality of assets that the REIT owns
- The gearing, tenure and renewal of debts. money is getting scarce, which creates a big problem for REITs, since most of them are finance by debts. MacArthurcook REIT has a gearing of 39%, which is almost the same as AREIT and Cambridge industrial REIT.
More risks than opportunity
Right now, the problem for dividend investors, whether to add or cut or enter new opporunities is which of these stocks have worms in them. My advice is to wait to see next quarters earnings results and commentary to make your decision.
Markets are very oversold, but they can always go lower. Your risk is higher than the reward, so although you think the bottom is here, you might just invest in a can of worms. It might be safer to wait for a week to make your decision
Related posts:
- Yield Watch: REITs added to Dividend Stock tracker
- Sabana, Mapletree Industrial and Ascendas India added to Dividend Stock Tracker
- Introducing my Dividend Stock Tracker
- Micro Mech as an investment idea
- Singapore Dividend Stock Tracker Revamp
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Leave a comment