My dividend income will take a hit this year as hupsteel cuts this year dividend to 0.1c from the previous years' 1c.
- steel business is making a loss. Asia enterprise n cosmosteel which are similar are all reporting losses too. So its not the company's weak but the O&G n shipbuilding industry is weak beyond terms.
- 0.1c dividend i believe its just to reward loyal shareholders even though company making loss
BUT:
- its sitting pretty on more than half a million square feet of space:
freehold around 140,000sf (add up kim chuan, genting lane, jalan besar, hoe nam),
Leasehold around 400,000sf in jurong and tuas.
- net cash nil debt position.
☆☆ possibility of real estate transformation???
With lim boh chuan previously handling the ppty segment now taking on MD n co-ceo role, things might get more interesting.
I am staying vested.
- steel business is making a loss. Asia enterprise n cosmosteel which are similar are all reporting losses too. So its not the company's weak but the O&G n shipbuilding industry is weak beyond terms.
- 0.1c dividend i believe its just to reward loyal shareholders even though company making loss
BUT:
- its sitting pretty on more than half a million square feet of space:
freehold around 140,000sf (add up kim chuan, genting lane, jalan besar, hoe nam),
Leasehold around 400,000sf in jurong and tuas.
- net cash nil debt position.
☆☆ possibility of real estate transformation???
With lim boh chuan previously handling the ppty segment now taking on MD n co-ceo role, things might get more interesting.
I am staying vested.
Hi Paul
ReplyDeleteThanks for sharing your thought. Your decision to staying vested seems to run contrary to your fundamental yardstick of assured dividend income (same if not increasing). It is not like Hupsteel will revert to its usual dividend rate anything soon. Think out loud.
You have offered a refreshing investing approach, and I am learning the slippery rope of investing.
Fellow VB - Yoyo
vested in Hupsteel
Yes, this case i stay vested contrary to my dividend ideation, because i think the downside remains much guarded n the upside in terms of capital gains are quite immense..and imo will more than make up for this decreased dividend.
ReplyDeleteIt doesnt make sense to exit since as what i deem downside to be very minimal.
With net cash and a significant real estate portfolio n a terrible steel cycle, the only sensible option i see is cash flow through RE. Though ppty market is weak, there will be takers so long as price is right. In its steel biz, no demand simply means no demand.
And i guess in investing, so long as u dont lose money its gd enough. I have 1/2 of my portfolio increasing dividends, i think i cannot expect every stock to do likewise.
But yes i take skipped dividend quite strongly.
It pays to look at history. Till today this company has an unblemished 20 year history of paying dividends.
ReplyDeleteWhen it earns more it pays more. when it earns less, it pays less. when it loses money, it still pays a token.
Investing is like taking a bus journey with the company.
Its also like a relationship.
Ups n downs. High n lows. But somehow, most of the time, we will get to our destination.
..hmm..time to create a new post as this gets too lengthy.
May I just add:
ReplyDeleteDividends should be an important benchmark, but never the benchmark, as things can change (business performance rise and fall). At the end of the day we are still minority shareholders, so its important to diversify.
Owners sometimes have different time horizons (and rightly so), and we always take this into account.
Hi. Thanks for your comment.
DeleteDiversification is an impt point i agree, in case of unknown unknowns. The point abt dividends is actually debateable as some prefer the company to reinvest them. Eg berkshire doesnt pays a dime yet keep growing.
Cheers!