Sustainability of dividends- Investment mistakes

Some are common sense mistakes, but here goes.

1) Not taking into account minority's interest. HPHT has Yantian that is not wholly owned. I did not discount that in my cash flow calculation.

2) Blind by occupancy rate. Sabana used to have all its tenant in triple or master leases. Hence, it's occupancy rate is 100%. It's tenants no. increased so I assumed occupancy rate will hold even when it become multi-tenanted. I was wrong. AReit has many multi-tenant leases too, it is not a problem per se, but it highlight the risk when such 100% occupancy leases are up for renewal. You won't know if there is a nasty surprise coming your way especially if that building form a significant part of revenue.

3) Underestimating the impact of currency. When vested in LMIR, I simply look at the footnote of the AR and conclude the impact of devaluation of rupiah can be offset by growth. 

The devaluation of rupiah hit not only loans to be repayed in sing dollars but also dividends to be paid in Sing dollars. Operation revenue all took a hit too. 

4) Not following the market cycle rule. I looked at Oand G sector, including the charter rate and utilitisation of rigs and conclude that we are nearer at the peak than bottom. But when sembcorp Singapore utilities business fall and resulted in a sharp drop in share price, I started my first shot. I fell into the trap of anchor effect of recent share price.

5) Rights and placement are all bad? It is not true. Almost all reits do fund raising in one way or another. But the discount when it happens and the deal the raised fund fianced is important. Reputation once stinks stick with the company. Look at LMIR, after Alvin Cheng takes over, the acquisition is yield accretive, yet share price continue to be sluggish even when dividends grow and rupiah stabilizes. I would have bought more, but given there is another acquisition coming, I will wait for it to announce a rights/placement and for the market to over-react before I add more. 

6) Buying for a short term spike in dividends. I knew Lee metal will give a bumper crop of dividends in 2014 due to Austville profits recognition. Subtract that away, my yield is still close to 6%, which is what I am comfortable with. But I should be trading rather than holding. When that dividends materialize it share price did improve for a short while. And now the subsequently fall is rather dramatic although 2 cents dividends is still maintained. But including dividends, I just break even or win lose a bit? Didn't really count. (SMOL, can laugh ... I buy to make money not break even LoL) 

What lemons you had?