Personally, I'm more of a long term investor that prefers low risk stocks.
Hence, dividend yielding stocks and blue chip stocks are my favourite. So, if you are more of a low risk long term investor, what I'll be sharing next might be of interest to you.
$Lendlease Global Commercial REIT(JYEU.SI)$is an office and retail REIT with a total market cap of 941m. It has the following properties in its portfolio:-
- 100% ownership in 313@Somerset (Retail)
- 100% ownership in Sky Complex, Milan (Office)
- 31.8% indirect interest in JEM (Office & Retail)
- Awarded tender to redevelop the 48,200 sq ft car park at Grange Road into a multifunctional event space
Reasons for buying Lendlease REIT
- REITs usually give stable dividends
- LREIT gives around 5.4% which is quite a good rate
- Recent drop in price makes the price attractive as it is quite oversold and below book value, even lower than the average for retail REITs
- DPU growth y-o-y of 3.8%
- High occupancy rate of 99.8%
- Low gearing of 34.3%
- LREIT has an indirect interest of 31.8% in JEM and has made a proposal to fully acquire JEM, the deal is ongoing
- Valuation and lease rentals of JEM is expected to go up over the years as government is planning to make Jurong East the second CBD, which could have a positive impact on both the share price and dividends
- The most badly hit REITs due to covid are hospitality REITs followed by retail REITs. It is anticipated that REITs which will grow the fastest for the next two years will be hospitality and retail REITs after the easing of covid restrictions over time
- Although not well covered by stock analysts, the overall consensus is a buy at the current price, with an average TP of $0.99
Negative points to note:-
- Stock is not well covered by analysts. Sometimes investors prefer stocks that are well covered by several analysts so that they'll have regular updates from various sources.
- It is a very new company which is incorporated in Jan'19 and listed in Oct'19. Hence, there is not much track record of the company's performance over time for comparison.
- Smaller market cap of less than a billion (currently $941m) and sometimes investors prefer companies with more than a billion or even more than two billion in market cap.
- Temasek Holdings is not a shareholder. That could be a deal breaker for some investors who would prefer investing in companies which TH is vested in.
After taking in all the considerations, it is to my personal opinion that LREIT is a good buy that can be held for years.
At around 5.4% dividend yield at current share price of $0.80, this rate easily beats the inflation rate. If the dividend yield remains the same or increases over the years, the actual dividend yield will be a lot higher when the share price goes up.
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