Happy Chinese New Year!
Chinese New Year is the most important festival in the Chinese tradition. During this period, family members will gather together for a once-in-a-year reunion dinner. For the adults, this is an excellent time to catch up with other family members to share about the latest developments in their respective lives.
As for the children, it’s a good time to meet and play with other children, especially with those who live overseas. More importantly, it’s the only time in the year for them to earn some “income”. During this time, we can see children waiting eagerly for the adults to hand over the red packets, or what’s better known as an “ang pao”.
When I was a kid, waiting for these ang paos was always the highlight for the year. Nowadays, such moment remains a highlight. The difference, however, is that instead of receiving red packets, we, as adults, need to hand out those red packets to the children. Not that fun anymore.
The great news is that we can get our ang paos from somewhere else. Yes, those ang paos are from our investments. In this article, I will look at two investments that might offer good ang paos in the current Pig year, as well as many years to come.
Banking on this bank
The first investment is none other than our biggest local bank, DBS Group Holdings Ltd (SGX: D05).
Why DBS Group? Well, there are many reasons for that.
To begin with, the industry is not in favour among investors at the moment. The negative sentiments stemming from factors such as the US-China trade war and slower economic growth have impacted DBS’ share price. These worries are not unjustifiable in my opinion. A slower economy might have an impact on the bank’s lending business. But for investors who have a longer time horizon, such events might not matter much over the long run.
Furthermore, there is plenty to like about DBS as a company. I have pointed out some of those reasons in an article here. Here’s a recap of some of those reasons: positive quarterly earnings, a good track record of profitability, a good dividend track record, conservative capital adequacy ratio and reasonable valuation. With all those reasons mentioned above, investors should definitely give DBS a closer look.
A healthy REIT
The other company is a healthcare real estate investment trust (REIT) – First Real Estate Investment Trust (SGX: AW9U).
Similar to DBS, First REIT is currently shunned by investors. I wrote an article here to summarise the situation that the company is facing. As a quick recap, Lippo Karawaci, First REIT’s sponsor and key tenant, saw its rating downgraded by a credit rating company. As such, investors are worried that there’s a chance that Lippo might not pay its rents to First REIT.
Clearly, there is a risk here. The good news, however, the negativity has resulted in a lower price for First REIT. In fact, I have pointed out (in another article here) that First REIT is currently trading at a discount to the market average.
In addition to its low valuation, there are other factors to like about First REIT.
For one, it has been growing its assets under management, as well as its distributable income over the last decade. In addition, it continued to grow in the financial year ended 31 December 2018. You can click here for more information. Most importantly, with its current dividend yield of 7.9% at the time of writing, First REIT is definitely an investment worth exploring further.
There you go, two companies that might offer significant ang paos to investors. Investors should, however, carry out their own research before investing in these companies.
Lastly, I wish investors a prosperous year investing in the Pig year!
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has recommendations for DBS Group Ltd and First Real Estate Investment Trust.