I have been asked how I select Reits to invest. It also works on dividend stocks. Here are my checklist. It is ranked in order of importance.
- Rising DPU or Dividend per unit. This is the most important.
- I must expect the company to growth stronger in 5 years time. Companies that I think will stay the same or stagnant will be rejected, even if it pays high dividends.
- Strong management track record
- alignment of shareholder interest
- during corporate action such as issueing rights with minimum discount
- DPU accretive acquisitions and sales
- Market cap > S$1B
- Avoid hospitality, airlines, tourism, commodities, and even cyclical stocks.
- Preference for Reits focussed on land scarce Singapore.
As retail investors, its important to invest with discipline, just like professional fund managers who manages millions. The starting point to make sure I invest in stocks that can withstand any crisis, and to prune them as the market changes.
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