Dividend stocks and S-REITs

Learn to judge whether a dividend can last, read an S-REIT's numbers and build an income portfolio without picking holdings for yield alone.

Many people choose income stocks by picking whatever pays the most. Some end up holding a REIT whose yield doubled because its price halved, a month before the payout was cut. In this course you learn why prices drop on the ex-date, how to tell a dividend the business can cover from one funded by debt, how an S-REIT is run and paid for, and what gearing, WALE and DPU tell you about the payout. You finish with an income portfolio plan and a written reason for every line in it.

What you'll be able to do

• Explain the dividend timetable and measure any income holding by its total return
• Score dividend payers on yield, payout ratio and dividend growth
• Run a yield trap check on a high-yielding stock or REIT before you buy it
• Map an S-REIT's sponsor, manager, trustee and fees using its annual report
• Compare two S-REITs on DPU, gearing, interest coverage, WALE, occupancy and NAV
• Work out what a rights issue or placement does to your holding and decide how to respond
• Build an income portfolio plan with sector limits and written rules for reinvesting and for cuts

Syllabus

Module 1: Follow a dividend from announcement to your account

Learn where a dividend comes from, how the declaration, ex, record and payment dates work, and why the share price drops on the ex-date. You can then judge income by total return.

• 1.1 Why the share price drops on the ex-date
• 1.2 Where dividends come from and how often they are paid
• 1.3 Tax, CDP and where the cash lands
• 1.4 Track one dividend and its total return

Module 2: Read yield, payout ratio and dividend growth together

Judge how safe a company's dividend is and whether it is growing by reading dividend yield, payout ratio and dividend growth together. The STI blue chips are the worked example.

• 2.1 Dividend yield looks backward
• 2.2 Payout ratio tells you how much room is left
• 2.3 Dividend growth and what it says about the business
• 2.4 The STI blue chips: income and concentration
• 2.5 Score three dividend payers

Module 3: Spot the yield trap before it springs

Learn to tell when a high yield is a warning, spot the signs that a dividend cut is coming, and avoid buying income the business cannot keep paying.

• 3.1 How a high yield turns into a loss
• 3.2 Warning signs that a dividend is about to be cut
• 3.3 One-offs, specials and payouts that will not repeat
• 3.4 Run the yield trap check on a high yielder

Module 4: Know what you own in an S-REIT

You will learn how an S-REIT is set up, who runs it and how they are paid. You will also see how the payout rule and MAS regulation shape every number you read in later modules.

• 4.1 Sponsor, manager and trustee: who does what
• 4.2 The payout rule and tax transparency
• 4.3 How the manager is paid, and why it matters to you
• 4.4 How MAS regulates S-REITs
• 4.5 Map the structure of one S-REIT

Module 5: Read a REIT's numbers like a lender would

Learn to read the figures that show whether an S-REIT can keep paying its distribution: DPU, gearing, interest coverage, debt profile, WALE, occupancy and NAV.

• 5.1 DPU is the number that pays you
• 5.2 Gearing, interest coverage and the debt profile
• 5.3 WALE, occupancy and rent reversions
• 5.4 NAV per unit and what price to NAV tells you
• 5.5 Build a REIT scorecard

Module 6: Tell the REIT sub-sectors apart

How retail, office, industrial, data centre, healthcare and hospitality REITs earn their income, what drives each one, and what overseas assets add.

• 6.1 Retail and office: footfall, tenants and work patterns
• 6.2 Industrial and data centres: leases, land and power
• 6.3 Healthcare and hospitality: master leases and variable income
• 6.4 Overseas properties and currency risk
• 6.5 Map the sub-sectors you hold

Module 7: Handle rights issues and placements

Learn why REITs and companies raise new equity, work out what a rights issue or placement does to your holding, and decide whether to take up, sell or let your rights lapse.

• 7.1 Why REITs keep raising money
• 7.2 Rights issues, preferential offerings and TERP
• 7.3 Placements and dilution
• 7.4 Decide on a made-up rights issue

Module 8: Build an income portfolio without chasing yield

Put dividend stocks, S-REITs and other income sources together in one portfolio that pays reliable income, spreads risk across sectors and is judged on total return.

• 8.1 Start from the income you need, not the highest yield
• 8.2 Spread income across sectors, sources and countries
• 8.3 Rules for reinvesting and for dividend cuts
• 8.4 Build your income portfolio plan

Frequently asked questions

How long does the course take?

About nine hours across eight modules, including the exercises and final project. Most people finish in four weeks, spending two to three hours a week.

Will you tell me which REITs or dividend stocks to buy?

No. The course is education and does not replace financial advice. Every exercise uses stocks or REITs you choose and shows you how to judge them. For advice on your own situation, speak to a licensed financial adviser.

How is this different from Investing Like an Institution?

This course covers income: how dividends and S-REITs work and how to judge whether a payout can last. Valuation models such as discounted cash flow and multiples are taught in Investing Like an Institution.

Why does the course not give current yields or gearing limits?

Because these figures change, and an out-of-date number can mislead you. Each lesson shows where to find the current figure, from MAS, IRAS, SGX or the REIT's own reports, and the exercises ask you to note the date you checked it.

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