4 REITs with Dividend Yields Better Than Your CPF

·5-min read
Warehouse 5
Warehouse 5

The government’s CPF scheme has been instrumental in helping people to save for their retirement.

Comprising three components, namely the Ordinary, Medisave and Special accounts, each serves a specific purpose in helping build sufficient funds for various purposes.

CPF accounts provide as close to a sure thing when it comes to returns, as they are guaranteed by the Singapore government, which is a triple-A credit-rated government.

Of the three CPF accounts, the Ordinary Account (OA) is by far the most popular as it allows flexibility in using the funds for either education, housing, or investments.

With an interest rate of 2.5% per annum, the OA is offering a return that’s higher than what most banks offer.

However, with core inflation hitting multi-year highs of 2.9% in March, it’s time for investors to seek out higher yields.

REITs offer a consistent dividend payment and hold portfolios of properties that can hold their value through good times and bad.

Here are four that provide a distribution yield higher than the CPF OA.

Mapletree Logistics Trust (SGX: M44U)

Mapletree Logistics Trust, or MLT, owns a portfolio of 183 properties in eight countries with assets under management (AUM) of S$13.1 billion as of 31 March 2021.

For the fiscal year 2022 (FY2022) ended 31 March 2022, MLT saw gross revenue rise by 20.9% year on year to S$678.6 million.

Net property income increased 18.6% year on year to S$592.1 million and distribution per unit (DPU) inched up 5.5% year on year to S$0.08787.

At MLT’s unit price of S$1.62, the logistics REIT provides a trailing distribution yield of 5.4%.

MLT’s portfolio occupancy remained healthy at 96.7% and the properties also enjoyed an average rental reversion of 2.9% for the three months ended 31 March 2022.

Aggregate leverage stood at 36.8% with a low average cost of debt of 2.2%, opening the REIT to more accretive acquisitions that can boost DPU further.

CapitaLand Integrated Commercial Trust (SGX: C38U)

CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT that owns a portfolio of 20 properties in Singapore, two in Germany, and two in Australia, with an AUM of S$22.9 billion as of 31 March 2022.

For its fiscal 2021 (FY2021), CICT reported a jump in gross revenue from S$745.2 million to S$1.3 billion.

NPI surged by 85.5% year on year to S$951.1 million while DPU climbed by 19.7% year on year to S$0.104.

CICT’s units yielded 4.6% at a unit price of S$2.27.

Committed portfolio occupancy remained healthy at 93.6%.

Meanwhile, the REIT had just completed its acquisition of 79 Robinson Road, now renamed CapitaSky.

CICT’s aggregate leverage will rise to around 41% after the completion of pending acquisitions, but its average cost of debt remained low at 2.3%.

Frasers Logistics & Commercial Trust (SGX: BUOU)

Frasers Logistics & Commercial Trust, or FLCT, is a logistics and commercial REIT with a portfolio of 101 properties worth around S$6.7 billion as of 31 March 2022.

These properties are spread out over five countries — Singapore, Australia, Germany, the UK and the Netherlands.

For its fiscal 2022’s first half (1H2022) ended 31 March 2022, revenue inched up 1.7% year on year to S$235.7 million.

Adjusted NPI rose 3.6% year on year to S$180.1 million and DPU edged up 1.3% year on year to S$0.0385.

Based on an annualised DPU of S$0.077, FLCT’s units provide a forward distribution yield of around 5.7%.

The occupancy rate stood at 96.1% with just 3.3% of leases (based on gross rental income) expiring in the current fiscal year.

After paying off some borrowings, the REIT’s aggregate leverage will fall to 29.5%, allowing FLCT to have a debt headroom of S$3 billion for further acquisitions.

The cost of borrowing is low at 1.6% with high interest coverage of 12.5 times.

Elite Commercial REIT (SGX: MXNU)

Elite Commercial REIT owns a portfolio of 155 predominantly freehold commercial buildings in the UK with a total value of around £500.1 million.

The REIT reported a 39.4% year on year jump in revenue to £9.2 million for its fiscal 2022’s first quarter (1Q2022).

DPU increased by 4.9% year on year to £0.0128.

Elite’s units offer a forward distribution yield of 8% based on its annualised DPU of £0.0512.

The lease break option was removed for 109 assets within the portfolio, providing lease stability and income visibility until March 2028 for around 85% of the REIT’s gross rental income.

Elite’s gearing ratio stood at 42.8% with a low borrowing cost of 2.1%.

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Disclaimer: Royston Yang owns shares of Frasers Logistics & Commercial Trust.

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