Dividend Play: Asian Pay TV & Netlink Trust

Wow, I have another 6 subscribers in the last 2 days. Thanks for your support! It is already motivating me to pen this blog in the midst of an extremely crowded MRT train rather than watch my movie on Netflix … LOL

Yesterday was another great day for my dividend purse. Both Asian Pay TV and Netlink Trust declared dividends – 1.625 and 3.24 cents per share respectively . They represent dividend yields of 13.7% and 5.6% on an annualised basis. Including these dividends, my Q2 yield will be pushed up to 2.0% of my portfolio and Q1+Q2 to 3.2%.

I am as happy as a lark now.

I am sure many of the SG investors are familiar with both companies. Asian Pay TV has its business in Taiwan and is like our “Starhub” minus the mobile. Netlink Trust is the infrastructural backbone of our high speed broadband network in SG. So, a bit same same but different.

Both are business trusts, which mean they will distribute their dividends out of cash flow rather than profits. And that explains the high dividend yields that both companies offer.

But I am sure the question in everyone’s mind is whether their dividend distributions (yields) are sustainable.

In this aspect, I have more confident in Netlink Trust than Asian Pay TV. And I think most market players feel the same and thus the large disparity in the yields between the two.

I will definitely keep Netlink Trust in my portfolio for the foreseeable future. It should be a steady dividend provider. The only misgiving is that it probably won’t grow its topline and bottomline a lot. But for an income investor, I am not too concerned. I may even want to add more if I can afford. It’s 5.6% yield already beats my 5% annual target yield.

Asian Pay TV is more vulnerable. It’s growth is also limited and Taiwan is a highly competitive market. I have not done enough research to establish if it has a competitive edge over others. In the last quarter, the revenue and income for their TV and cable are both coming down. Only their broadband seems to be holding. So it’s a legitimate worry that the revenue and income may continue to decline … sounds like Starhub right???

But in terms of dividend distributions, the management is still guiding 6.5 cents a year or 1.625 cents per quarter for 2018. I took a glimpse at their free cash flow – ie operating cash flow minus capex and that appears to be still sufficient to pay for dividend. So I think it is still relatively safe at least for the moment. But I don’t think I will add more to what I have currently. I will just stay put and enjoy the dividend – at 13.7%, you will get your capital back within 6 years.

Have a great investment week, folks.


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