Chinese New Year is just around the corner.
For many, this represents a time to gather together and enjoy the fruits of our labour.
And as we toss the traditional Yu Sheng to celebrate good luck and prosperity, I am reminded of a popular Chinese phrase uttered to usher in riches.
The phrase “Pian Di Huang Jin” can be loosely translated to “streets filled with gold”, and is spoken when we toss a bunch of flour chips to represent the “riches” that will befall us.
But for the smart investor, the prospect of a path paved with gold isn’t all too far-fetched.
It may be even more achievable than you can imagine.
Adding the glitter
If you seek consistent income from your investments, then you’ll need to ensure your portfolio has the required “glitter”.
One source of glitter can come from stable and resilient dividend-paying investment vehicles known as REITs.
Many REITs have had a long track record of paying out regular distributions to unitholders.
The ones with strong sponsors and a portfolio of high-quality assets have been able to grow their distributions every single year without fail.
Even through crises such as the Global Financial Crisis and the current COVID-19 pandemic.
Parkway Life REIT (SGX: C2PU) is one such example.
The REIT, which owns a well-diversified portfolio of 54 properties in Singapore and Japan, has an unbroken record of increasing its dividends through various crises and economic cycles.
Not losing its lustre
Even if a REIT hasn’t managed to sustain a consecutive track record of increasing dividends, it may still deserve a place in your portfolio if it owns quality assets.
Take Suntec REIT (SGX: T82U) for example.
I bought some shares in this REIT way back in 2005 when it first IPO-ed, at around S$1.11.
16 years later, the cumulative amount I have received from just dividends alone has more than exceeded my initial investment amount.
And that’s after Suntec City suffered blow after blow by the pandemic as demand dried up for its convention centre, while its retail portfolio took a hit from the circuit breaker measures last year.
The example above shows that holding on to a REIT with prime assets over the long-term still enables you to do well.
It also ties in with the Chinese New Year saying “Nian Nian You Yu” — there is excess every year, signifying the receipt of annual dividends.
Get Smart: Paving your own golden path
We think that REITs can be a way to add glitter to a golden path.
A successful REIT owns assets that are as precious as gold as these assets are not easily replicable.
Over time, these REITs will generate even more prosperity for you as they grow both their asset base and distributions.
Start now by paving your golden path, laying it brick by brick as you construct a solid portfolio consisting of reputable REITs.
Many years down the road, the bright glitter emitting from your investment portfolio will come from a handful of quality REITs and the steady income they pay.
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Disclaimer: Royston Yang owns shares in Suntec REIT.
