PAUL LOW: My (boring) portfolio for 2015

The following content was recently published on Paul Low's blog and is republished with permission. Paul says he is in his late 30s, and divides his time running his own business and running family errands. He is an accredited investor and likes to buy and hold good stocks for dividends. Recently, he was delighted that his son gained entry into the Gifted Education Programme in Nanyang Primary School.

armouring2.14 Cable manufacturing operations at Tai Sin Electric's factory in Gul Crescent, Singapore. NextInsight file photo.Stocks in my 2015 portfolio:

1) ST Engineering

2) SingReinsurance

3) TCIL

4) Lee Metal

5) Hupsteel

6) Noel Gifts

7) Nam Lee

8) Stamford Land

9) Tai Sin Electric

Features of this portfolio:

1) Dividends every month, except Feb, April and July. Four quadrants of the year are fixed up with dividends.

2) No need to wait till end of calender year to reinvest dividends.

3) Except for ST Engineering, all are bought below book value. Only ST Engineering is a blue chip.

4) All have been paying dividends faithfully in the past decade without fail. Most pay dividends with a discernible trend.

5) Some counters have hidden value to be unlocked, but that is a bonus to holding them, not the main deciding factor.

6) This portfolio works in a market uptrend as well as downtrend. No need to time market. Dividends are there when the time comes and even if Lehman repeats itself.

7) REITS and Trusts are not included as high gearing and rights issue are associated with them.

8) However, if a counter runs up too much such that the yield goes down significantly, I will consider cashing out to add my holding of other counters, or a new counter where possible.

9) No need to closely monitor this portfolio. Once a month look is more than enough. Financial reporting can be viewed every 6-monthly. To me, a decade of discernible trend in dividend payout tells a lot more than those financials. The important part is mainly deciding on the entry price of the stock as my holding period is mid to long term.

10) Boring strategy...don't you think so?

Have a workable plan and stick to it.

On a blog I came across recently, I saw that some people buy shares based on recommendations on other people's blogs.

Now, the reasons for the blog owner's buying might be different from that of the readers. Or worse still, the reasons might NOT be sound at all.

So it's far more important to develop a strategy based on one's own unique situation and circumstances and buy/sell/hold based on the latter.

I feel it's important to question the purpose of buying an equity. Is it for long term capital gain or short term flipping (the latter I do not practise and I do not recommend)? Is it for dividend income? What is the downside of the equity? What are the safeguards?

In addition, for myself, I ask the following questions:

a) How does one know and have a conviction that a price increase will happen in the next few years?

b) How does one know and have a conviction that a dividend increase will happen in the next few years?

c) What then is the appropriate entry price, with respect to a long term investing horizon?

The answer to b) is actually sufficient to answer a), as a dividend increase will invariably be accompanied by a share price increase.

PAUL LOW: My (boring) portfolio for 2015

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