Invest Overseas For Higher Yield and its REITs

This is a strategy I am executing so I am putting my actions where my mouth is.

Dividend Yield of Local REITs

Singapore REITs are currently valued at 4-8% dividend yields. It is indeed one of the highest in investment recent times due to the hike in interest rates. However, on the SGX, there are a group of overseas REITs which presumably have a stronger balance sheet and are near double digit yields. Just look at Keppel Pacificoak US REIT, Utd Hampshire REIT US, Elite UK, Cromwell Europe REIT. In terms of dividend yield, they are at an expected forward yield of 12.5%, 11%, 9.5%, 9% respectively. 

Stronger Balance Sheet and Lower Tenancy Risk

While they are in the weak commercial and retail spaces, their occupancy rate has not been that adversely affected. In addition, their leverage ratio are now far from MAS's regulatory ratio (even Suntec REIT at 7% yield is closer to breaching MAS's regulatory limit).

Earn 3-5% more Per Year, while taking on Exchange Rate Risk 

These REITs carry the risk of currency exchange because they are in USD, UK Pounds or Euro. No doubt the Sing Dollar has been appreciating but if we look over the long term, the Sing dollar has been appreciating at about 1.5% annually to these currencies (USD is only about 1%).

With the dividend rate differential so high as compared to our local REITs, I do feel these 4 reits makes sense enabling me to earn above average dividends.

I have been accumulating Elite Commercial REIT and soon, my entire portfolio will become a high dividend REIT yielder with the exception of Alibaba. Even my holdings in Ping An Insurance is granting about 8% yield which is triple that of Great Eastern Life. Ping An is much larger than Great Eastern and one of the important companies to China.