Long-term social demographic
shift favours healthcare stocks. A silver tsunami is coming over the next few
decades. Due to the rapidly aging population in Singapore, hospitals and
nursing homes will be in greater demand. By 2030, around 27% of Singapore’s
population will be over 65 years old.
Secondly, the demand for better
healthcare is increasing due to the emergence of the middle-class population in
countries such as China, Indonesia and India. The rich patients from China,
India and Indonesia want the best medical treatment money can buy. High-end
private hospitals such as Mount Elizabeth and Gleneagles Hospital stand to
benefit from this trend.
1. First REIT
Positives/ catalysts:
·
Acquired 2 new yield-accretive properties in
2012. These new properties are starting to contribute rental income.
·
Gearing is still at a low level of 27%. Room for
future growth.
·
Increase in distributable income.
Negatives/ catalysts
·
Forex risk. Weakening Indonesian rupiah against
the Sing dollar.
·
Trading above NAV.
·
Risk of earthquakes in Indonesia. Covered by
insurance though.
·
Pipeline of possible future acquisitions from
its sponsor.
2. PLife REIT
Positives/ Catalysts:
·
Increase in distributable income
·
Gearing remains healthy at 32.9%
·
Rental rate is pegged to the CPI (inflation
rate). Therefore, it will benefit from Singapore’s high inflation rate.
Negatives/ catalysts
·
Forex risk. Weakening Japanese Yen against the
Sing dollar (Plife REIT has some properties in Japan)
·
Trading way above NAV.
·
Risk of earthquakes in Japan. Covered by
insurance though.
Rock on,
Dividend Warrior
8 comments:
Hi DW,
You mentioned healthcare will be favorable in future. What are the stocks for healthcare with good dividend yield?
Sabana reits is still going strong to as high as 1.225. I am quite surprised but regretted selling at 1.185 before XD. I am still tempted to buy sabana but felt the price is a bit too high. Do you think the price is too high? The target price seems to be 1.19.
SMRT has declared cutting down its dividends. Do you think it is worthwhile to long this stock. Our population is expected to grow to 6.9 million in 2030, so do you think this stock will also grow back to above 1.80 in near future?
What do you think of Cambridge reits? Is it a good buy at 0.72?
Hope to hear from you.
Enjoy your CNY!
It’s not advisable to long SMRT stock at this point of time.
The investment theme is there thus however, the operating cost is increasing. This will put stress to SMRT dividend payout.
Place it under review till end of this year for further observation and wait for the right price to get in.
Daniel
www.passivedividendinvestor.com
Hi Karen,
IHH is not likely to give dividends anytime soon. The dividend yield of Raffles Medical is also rather low. I would recommend First REIT as PLife REIT is rather high now. First REIT still has a yield of more than 6%.
Yup. Sabana is rather expensive now. Remember, the payout ratio will drop to 90% this year. Besides, it still has 40% of leases to be renewed.
Yes. SMRT will probably continue to cut dividends in the short-term. In the long-term, we still need this essential service. But 1.80 in the near future will be difficult, I am afraid.
I prefer AIMS AMP to Cambridge. The price has dropped to around 1.54, getting attractive. :)
HI Daniel,
Yes, SMRT will be facing increases in operational and maintenance costs.
I dun think future fare hikes will help much.
Hi DW,
Thanks for your reply. Aims at 1.54 is still attractive. What is the yield like? 6%? Do you think the price will go up much higher? Comparing Sabana and Aims, which do you think it is better?
Hope to hear from you soon...
AIM is better, cose they still have more asset to revamp to increase revenue, as for SABANA thou the management performances had been rather good for the past few years, DPU will be cut to 90%, lease is expiring and their asset grade personally i feel is not as good as AIM. Comparing both, AIM had more upside going forward.
just my 2cent worth.
Indeed DW, increasing the top line for SMRT is unlikely.
Since, it's an infrastructure stock, it's still worth to go in for long term.
Patience is the key.
Daniel
www.passivedividendinvestor.com
Hi Karen,
The yield for AIMS at a price of 1.54 is around 6.5%. Personally, I think the price has a good chance of going higher. Phase 2 at 20 Gul Way will be completed by year end. DPU will increase.
AIMS also has other properties which can be redeveloped to improve the plot ratio. So, it does have future upside catalysts.
Even though I have both AIMS and Sabana, I think AIMS is a better buy now.
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