Friday, 26 December 2014

2014 Portfolio Review (Part 2): Foundation Stocks

My portfolio was set up using SGX, Starhub and SPH as foundation stocks, while Reits and other dividend stocks are supporting casts.



For the purpose of diversification and not to tie down the well being of my portfolio to the fortune of any single company, my three foundation stocks should not exceed 20% of the overall portfolio.  On the other hand, the supporting casts should not exceed 10% of the overall portfolio.

Now, as all dividends are collected and all tradings done for 2014, it is time to review the 3 foundation stocks:

1. SGX

there was a rare massive system failure that
there was a rare massive system failure that paralysed trading on the local bourse for over three hours. - See more at: http://www.straitstimes.com/news/business/markets/story/traders-and-investors-bemoan-yet-another-disruption-singapore-stock-mark#sthash.AG2cxYa3.dpuf
First, there was a rare massive system fault that paralyzed trading for over 3 hours, then the opening of the market was delayed to 12.30 pm because of a system problem caused by a software defect.  These incidents had tarnished the reputation of SGX as a top trading exchange.

Next, trading activities and volumes continue to languish after the infamous penny stocks crash of 2013. And we do not see mega IPO listings to SGX. When will we see an IPO blockbuster?
Trading activity fell in the first six months of the year - See more at: http://www.straitstimes.com/news/opinion/eye-the-economy/story/time-sgx-shake-the-blues-20141204#sthash.3TFV2Nhv.dpuf

Despite these failings, recently SGX share prices continue to trend upwards possibly because of the anticipation or expectation of the lot size reduction in Jan 2015.

I have added one lot of SGX when it was traded near to $7.  I was impatient then, else I could have gotten it below $7.

Chance of SGX failing as a company is minimal and together with the quarterly dividend payouts (almost like a REIT), SGX stays as my foundation stock.

2. Starhub

Several system failures too.  Seems like Singapore's infrastructures are falling apart?

The company also facing stiff direct streaming competition on cable TV and mobile phone operations.

A bit disappointed about the dividends payouts. $200 a year for one lot was great for a $2+ stock just a few years back, but not so fantastic when it is now a $4+ stock.

As Starhub has long history in consistent dividend payments, even during the financial crisis, it stays as my foundation stock for another year.

I have added one lot of Starhub, when it was near its 52 weeks low.

3. SPH

Everybody says it is a company in a sunset industry and a dying business, but the share price of SPH stays strong and not even affected much by the recent stock market dip.  The other non-core business are helping and compensating for the poor performance of the newspaper business.

There is also a psychological barrier for me on SPH.  As my average price for SPH is $3.99, I am hesitant to make a $3+ stock into a $4+ stock.

SPH dipped below $4 in February.  Then, I was too patient or hesitant and missed the chance to add SPH.  SPH never again dip below $4 for the rest of 2014.  Look like the old stalwart is not about to die yet.  

As mentioned in my previous post, SPH is my top dividend contributor, then perhaps I should forget my average price and collect some more SPH in 2015.

So, in conclusion, no change to my foundation stocks in 2015.

14 comments:

  1. Hello PIF

    Looking at it, maybe i should start building the pillar of foundation as well. as mine is almost all reits which is rojak already

    ReplyDelete
    Replies
    1. Hi jfree,

      Thanks for your visit. No right no wrong. Everyone has own style and different risk appetite. Just be comfortable with your own.

      Cheers,
      Farmer.

      Delete
  2. yeah good to have foundation stocks to build a solid base
    I had challenger and starhub as my 2 main pillar, been holding them for over 5 years already

    this year I added semb corp and st engineering, do hope that I can hold these 4 for long term as supporting pillars

    cheers

    ReplyDelete
    Replies
    1. Hi Felix,

      Yes. Cheers to the good support of foundation.

      Farmer.

      Delete
  3. PIF : Looks like you have a very strong foundation ;-)

    ReplyDelete
    Replies
    1. Hi Richard,

      Thanks. Actually there are many roads to Rome.

      Cheers,
      Farmer.

      Delete
  4. Hi PIF

    Great pillar there.

    With those pillar and average cost, you are abound set with them for the rest of your life. Whether or not you will be adding to them at current market price is another question altogether.

    A great stocks and blue chip nevertheless. Cheers :)

    ReplyDelete
    Replies
    1. Hi B,

      Your portfolio is a great inspiration. Thanks for your sharing.

      Cheers,
      Farmer.

      Delete
  5. Hope it works for you well. I'm surprised you haven't gone for at least 1 bank stock. I suppose they are still a bit out of reach given the cost for 1 lot.

    On SembCorp, I think it has suffered quite a bit since. Perhaps the current situation offers a better entry point? But the near future can look pretty scary though.

    ReplyDelete
    Replies
    1. Hi Lizardo,

      Adding bank stock is one of my 2015 targets. SCI is for long term, short term fluctuations are high, but also may offer good entry points.

      Cheers,
      Farmer.

      Delete
  6. Passive Income Farmer,

    Interesting.

    I see you are into concentration; a good counter-balance to those diversification financial bloggers who own a string of pearls ;)

    勢分三足鼎 ;)

    ReplyDelete
    Replies
    1. Hi SMOL,

      Thanks for your comment. Your blog posts inspired me to add some Chinese words to my post too. Haha.

      Cheers,
      Farmer.

      Delete
  7. Hi PIF,

    Its wise of you to have 3 foundation stocks providing 4-5% dividends. These 3S are solid even during crisis as we already seen.
    Last year I also had the 3S, but I let go SPH this year.

    Hope your 3S continue to be super, stable and successful.

    Rolf

    ReplyDelete
    Replies
    1. Hi Rolf,

      Yes. The power of the 3S!

      Cheers,
      Farmer.

      Delete