Dividend stocks and S-REITs

Judge whether a dividend can last, read an S-REIT's numbers and build an income portfolio that does not chase yield.

Income investing looks simple: buy what pays the most. That is how people end up holding a REIT whose yield doubled because its price halved, a month before the payout was cut. This course teaches you to look past the yield. You learn why prices drop on the ex-date, how to tell a covered dividend from one funded by debt, how an S-REIT is run and paid for, and what gearing, WALE and DPU say about the payout. It ends with an income portfolio plan you can defend line by line.

What you'll be able to do

• Explain the dividend timetable and measure any income holding by 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 buying
• Map an S-REIT's sponsor, manager, trustee and fees from 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 cuts

Syllabus

Module 1: Follow a dividend from announcement to your account

Understand where a dividend comes from, how the declaration, ex, record and payment dates work, and why the share price drops on the ex-date, so you 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

Use dividend yield, payout ratio and dividend growth as a set to judge how safe and how growing a company's dividend is, with the STI blue chips as the worked case.

• 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

Recognise when a high yield is a warning, read the signs of a coming dividend cut, and avoid buying income that 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

Understand how an S-REIT is put together, who runs it and how they are paid, and why the payout rule and MAS regulation shape every number you read later.

• 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

Read the metrics that tell you whether an S-REIT's distribution can last: 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

Understand how retail, office, industrial, data centre, healthcare and hospitality REITs earn 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

Understand 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 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

Combine dividend stocks, S-REITs and other income sources into a 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 at 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 teaches 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 is about 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 they change, and an old figure is worse than none. Each lesson shows where to find the current number, from MAS, IRAS, SGX or the REIT's own reports, and the exercises have you record the date you checked it.

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