Champion Reit and Kerry Properties – Dividen Matters

Q&ACategory: QuestionsChampion Reit and Kerry Properties – Dividen Matters
Peng Yeow Loh asked 7 years ago

Dear PC,
We read that Champion and Kerry Properties is doing so well, but why the dividen is only 4% which is below our KPI of 7.5%? I thought under REIT they are bound by the laws that 90% of the earning has to be distributed to the shareholders as the dividen?
And if Kerry Properties a REIT?
Thanks and best regards, Loh

1 Answers
pcwong Staff answered 7 years ago

Kerry Properties is not a REIT. It is a property developer cum property manager. For its growth and financial strength it is trading at a very low SP/NAVPS, hence it potential.
Champion REIT’s dividend yield is in the 4% region mainly because of the relative strength of its price. In Champion REIT its price is growing at a much faster pace than the dividend growth. 
The 7.5% KPI is a gauge with which to measure the gap and provide guidance on whether a particular stock or REIT could narrow the gap in the future. It does not necessarily mean that a stock or a REIT must fulfill the 7.5% rule as first consideration in order to invest. Our first consideration has always been financial strength.
In Champion REIT’s case, it is breaking on an upward trajectory, hence the current focus is more on capital gain rather than of the dividend yield. 
To qualify as a REIT, HK SC’s policy dictates that the REIT must deliver 90% of its net income.
For high dividend yield, look up China Metal International (HK 0319) and Hopewell Infrastructure (HK 0737), both of which have yields above 10% based on 2016 payout.
You can also look at CapitatRetail China (SGX AU8U), Ascendas H-Trust (SGX Q1P), Mapletree Industrial Trust (SGX ME8U) and Croesus Retail trust (SGX S6NU) all of which we had covered previously which have yield closer to 6% – 8% based on previous payouts.
Hope this helps.

Peng Yeow Loh replied 7 years ago

Thanks PC.
On other matter, after hearing your comment on the need of some insurance by investing in Inverse ETF, I bought online the SDS at 12.33, but it is too bad as it takes 24 hours only go through and before it does, the price overnight shoot up to 49.20…. just luck I guess.