Singapore’s Central Provident Fund (CPF) system is arguably one of the best in the world at helping residents to build their retirement funds.
Not only can the CPF Ordinary Account (OA) be used for purchasing property, but it can also be used for education and investments as well.
In addition, voluntary contributions to the CPF OA enable you to enjoy income tax savings.
However, at a maximum interest rate of 3.5%, you may feel that the account is yielding returns that are too low.
If this is the case, you can turn your attention to REITs as a dependable asset class that can pay a reliable stream of dividends over the long term.
Here are three blue-chip REITs that are paying a dividend yield that exceeds the CPF OA.
Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust, or MLT, is an industrial REIT that owns a portfolio of 163 logistics assets as of 31 March 2021.
These properties are spread out across Singapore, Hong Kong, Japan, China, Australia, South Korea, Vietnam and India with assets under management of S$10.8 billion.
MLT has a strong sponsor in Mapletree Investments Pte Ltd, a unit of Temasek Holdings.
As of 31 March 2021, the REIT’s portfolio remained resilient with a high occupancy rate of 97.5%.
The REIT is also well-diversified, with its top 10 tenants accounting for around a quarter of total gross revenue.
For its fiscal year 2021 (FY2021), MLT reported a 14.3% year on year jump in gross revenue to S$561.1 million.
Net property income (NPI) rose 13.8% year on year to S$499.1 million while distribution per unit (DPU) inched up 2.3% year on year to S$0.08326.
At the last traded price of S$2.01, MLT’s units provide a trailing dividend yield of around 4.1%.
Frasers Logistics & Commercial Trust (SGX: BUOU)
Frasers Logistics & Commercial Trust, or FLCT, owns a portfolio of 97 industrial and commercial properties as of 31 March 2021.
These properties are located across five developed markets — Singapore, Australia, Germany, the UK and the Netherlands.
The REIT has maintained a high occupancy rate of 96.8% for its portfolio and has Frasers Property Limited (SGX: TQ5) as a strong sponsor.
For its fiscal 2021 half-year ended 31 March 2021 (1H2021), FLCT reported a 95.1% year on year surge in revenue.
The large increase was mainly due to the REIT’s merger with Frasers Commercial Trust that was completed in April 2020, and acquisitions made since then.
Adjusted NPI improved by 79.3% year on year to S$173.9 million and DPU increased by 9.5% year on year to S$0.038.
Annualised DPU stands at S$0.076, providing investors who buy FLCT’s units a forward dividend yield of around 5.4% at the last traded price of S$1.42.
The REIT’s aggregate leverage stands at 35.3% as of 31 March 2021, allowing it close to S$2 billion in debt headroom to conduct yield-accretive acquisitions.
The cost of debt, at 1.9%, is also low, while interest coverage remains healthy at 6.8 times.
In late May, FLCT announced the acquisition of six freehold properties in Germany, the Netherlands and the UK for around S$469.7 million.
Both NPI and DPU are expected to rise post-transaction, increasing by 6.6% and 1.8%, respectively.
Gearing will inch up to 36.2% after the purchase but remains comfortably below the statutory threshold of 50%.
Ascendas REIT (SGX: A17U)
Ascendas REIT is Singapore’s oldest industrial REIT.
Its portfolio comprises 212 properties across Singapore, Australia, the US and the UK/Europe with assets under management of around S$15.1 billion as of 31 March 2021.
For the fiscal year 2020 (FY2020), Ascendas REIT reported a 13.6% year on year increase in gross revenue to S$1.05 billion.
NPI rose by 9.4% year on year to S$776.2 million.
DPU, however, declined by 6.1% year on year to S$0.14688 due to rental reliefs doled out to clients due to the pandemic.
Units of the REIT provide a trailing dividend yield of around 5% at a share price of S$2.91.
The REIT manager has been actively recycling the REIT’s capital.
Last week, Ascendas REIT announced the divestment of three logistic properties in Australia for S$128.7 million.
In its place, the REIT has three acquisitions in progress worth a total of S$251.2 million.
Two of these involve logistics properties and will be completed in the third and fourth quarters of this year.
The third is for a suburban office in Sydney, Australia that should conclude by mid-2022.
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Disclaimer: Royston Yang owns shares of Frasers Logistics & Commercial Trust.