Yes ! I finally sold off bulk of my Starhub stock and I am heart broken.
Starhub has been one of my favourite stock that I have kept close to my heart for more than 10 years (since 2005 where I first started my investment journey). Total gains from Starhub todate is $ 383,340 (+95%). (Dividends : $272,666; Capital gain : $97,658; Unrealised Profit : $13,016 ).
When the management announced that Starhub was going to cut dividend Q1 2017 this year, I decided to trim a significant % of the stock.
Why did I fall in love with Starhub
Solid history of paying and increasing dividends.
Yearly dividend distribution commitment and forecast by management.
Loved their Hubbing Strategy.
Telecom sectors are typically deemed defensive sectors during market corrections.
The Art of Selling
Although I have made seemingly good profits from Starhub, I felt that I could have done better in terms of the timing of the sale.
Looking at the chart, if I had sold at it’s peak at $4.73 in year 2013, I would be looking at a profit of 581,767 (+144 % Capital Gain : $454,133 Dividend : $127,634). Although I was aware of these signs of trouble, I only decided to take action when the dividend cut was confirmed as I was hoping that the management will still try to keep it’s 20 cents dividend commitment for 2017. Even if there was a dividend cut, I wasn’t expecting the price to fluctuate so badly. The share buyback and CEO Tan Tong Hai acquisition of 100K stocks at $2.795 in Nov 2016 also gave me the false assumptions that maybe the dividend cut wouldn’t happen.
Signs of Trouble
Uprising of Over-The-Top Players resulting in declines in value-added services revenues and lack of transformation strategy.
Year 2008 – Launch of iPhone with Appstore.
Year 2013 – Facebook mobile growth.
Year 2016 – Netflix launch in Singapore.
2. Dividend-to-Free-Cash-Flow Ratio > 100%
If a company has a dividend-to-free-cash-flow-ratio over 100% then that means that the company is paying out more to its shareholders than it’s free cash flow. This is typically not a good recipe for the company’s financial health; it can be a sign that the dividend payment will be cut in the future. Sure enough, Starhub experienced dividend-to-free-cash-flow-ratio > 100% in 2013. It managed to hang on to 5 years before it eventually surrenders and cut it’s dividend in 2017.
Hubbing strategy didn’t managed to keep them from losing customers to competition.
4. Shareholder Exit & Sell Off – Q4 2016
17 Aug 2016 Robert JaySachs dispose 100K at $3.90.
30 Dec 2016 Robert JaySachs Resigns
5. Dividend Cut – Q1 2017
Moving forward, I probably need to set some rules to protect capital gains in my dividend stocks. Thinking back, if I had sold it off at it’s peak, would I have picked it up later at a higher price and is now suffering from a capital loss ?
Do you have an exit strategy / checklist for your dividend stocks or similar experience to share? I would love to hear from you !
Total Dividend Collected from Jan – Sep 2017 : SGD $ 21,720.24.
Profits gained from Starhub and OCBC sale : SGD 96,785.58.
Sorry to have disappeared for so long, decided to take a digital break. Between Jan – Sep, I have since sold off Starhub and OCBC. I have added Microsoft, Tencent, Tesla, Frasers HTrust, Nikko-AM STC Asia REIT. My US portfolio has been fantastic but my Singapore portfolio has been lackluster. The signs of the Singapore economy and the performance of many of the Singapore companies have been worrying, they don’t seemed to be able to transform themselves fast enough to the disruption that is happening across the industries. Moving forward, I will probably be more prudent in my investment in the local markets and maybe increase my cash reserves.
Total Dividend Collected from Jan – May 2016 : SGD $ 31,528.11
Income distribution in Apr and May came from Apple, Citibank, IBM, Bank Of America, Keppel Corp, SGX, Starhub, UOB, SPH, Suntec Reit, Capitamall trust, Keppel Reit, Sabana Reit and M1.
OMG ! Microsoft bought Linkedin. I wished I bought Linkedin ;-). Someone please buy Twitter !
Last year, in my Stay Hungry, Stay Foolish series, I shared a story about this guy, Hendric who QUIT to travel the world with only $16K savings !!! Since my blog is within the financial community, many people fell off the chair and there was a huge debate over whether he should or shouldn’t follow his passion.
Over the past 1 year, he has demonstrated that when you follow your passion, you achieve amazing stuff. Within a year, he won the OMY Best Travel Blog Award, got featured on Nuyou Singapore Magazine and Arirang TV, scored a scoot stint to go Queensland, went for a yoga retreat and had a blast in Iceland catching the Auroras with his new found partner ;-).
One of the most interesting initiative he started was The Travel Intern. YES, you hear it right. Hendric is offering to pay YOU to travel for FREE ! On top of that, this generous guy is going to coach you personally and impart you skills if you dreamed of living his life.
I was approached by Eminence to try out their Cufflinks. Since I don’t wear Cufflinks. I have asked them for 2 Eminence Cufflinks to give away to you instead ! To win them, go to my Facebook, tag a friend and leave a comment there to tell me why you deserve an Eminence CuffLink. I will pick 2 winners with the most creative comments.
Boys, this accessory would lift your image and would be a great conversational starter for business or personal.
Girls, great gift for valentines. They even allow you to personalize the cufflinks. You can put your photo or your kids photo there and make him wear it everyday :). hahaha so evil …(Updates from Eminence, personalization with photos is currently not available, thus the alternative is to use initials)
Note : This is not a sponsored ad or product endorsement. Any commercial arrangements between the merchant and the consumer is not the responsibility of this site.
Playful Captain America
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