Almost 60% of the year is gone now. Looking back at the last few months, wow, what can I say except to exclaim that it has been an unusual year so far!
I don’t expect things to improve much in the remaining few months – in fact, I see more downsides than upsides.
Year to date, STI has declined 22%. With the bulk of my equity investment in the local stock market, my equity portfolio is deeply in the red, not different from STI.
I hate to contrast it with S&P500, which is almost back to the level where it started 2020. Somehow our STI did not enjoy any spillover effect from the US markets. It is probably a reflection of the severe impact that COVID-19 has on countries like Singapore which relies heavily on tourism and trade dollars.
Taking advantage of the sharp fall in the US and other global markets in March/April period, I managed to build a small portfolio of US stocks and HK stocks, which is almost 30% of my equity holding now. This helps to offset a bit the losses suffered from the local equities. I am glad that I have that opportunity to diversify and build up a credible overseas portfolio.
On the dividend front, I can’t really complain. Many of the companies in my equity portfolio continues to declare dividends despite the challenges of COVID.
But many had declared smaller dividend than before. Some out of prudence, but some are really struggling, like SATS and SIA Engineering which declared no dividends. Who can blame them? It is tough enough for them to just survive actually.
As of today, and counting those dividends that were declared in the last 2-3 weeks, I am getting a dividend yield of 3.7% on my equity portfolio.
As many regular readers would know, my target for the year is 5% yield. Some says it is modest. In fact, one of my good friends once told me, if I were only targeting 5% yield, I might as well put all my money into DBS. Well, he is technically right but that is too risky. It’s like putting all my eggs into one basket. I don’t dare to do that.
Anyway, by end of Q3, I expect my dividend yield to edge up to 4.0%. Q4 typically provides the least dividend among all the quarter … only about 50% of Q3 based on historical experience. Know what, Q3 has traditionally been the best quarter for dividend. But this year, Q2 would have this title – the current gap is too big even though we have 2 more months to go.
Based on my calculation, I think a 0.5% yield in Q4, i.e adding up to 4.5% yield is the best I can get by end of the year.
It looks like I would miss my 5% target this year, the first time in recent years. Well, what to do, like many said, it is an unprecedented year.
So, I would be contented with 4.5% IF it comes true. Not wanting to count the chickens before the eggs hatch, Finger crossed.
2 thoughts on “5% yield looks unattainable this year, I am contended with 4.5%”
Tough year for income. But I expect the dividend to be back in 2-3 yrs time. So maybe your 5% goal can still be achieved but it’s average if 5% over a 3-yr period.
Thanks for the encouragement. Indeed, we are in here for the long haul.