Friday, December 30, 2011

How did the defensive portfolio fare?

Now let's look at how the elderly couple has fared for 2011 since their investment.

I have included here a sample portfolio for the elderly. This portfolio is a real-life example that I recommeded to an old couple. The shares were bought in mid-2010 and you can take a look at the percentage dividend yield and the returns on invested capital.

A defensive portfolio for the elderly
as at 30 Dec 2011
Stock (No. of shares)Buy at2011 dividendRealised profitUnrealised profit
Cerebos Pacific (2,000) $           4.48 $               640.00 $             640.00 $                 960.00
Popular (50,000) $           0.15 $               500.00 $             500.00 $                 650.00
OCC 5.1% NCPS (200) $       105.00 $           1,000.00 $         1,000.00 $                 460.00
 $ 37,460.00 $         2,140.00 $            2,070.00
% Yield5.7%
ROIC (%)11.2%

Please note that these shares were bought in mid-2010, when the STI index was at 2987.70. The index closed at 2646.35 yesterday. This portfolio gained 11.2% (including dividends) while STI index lost (11.4%). This portfolio beat the STI index by a margin of 22.6%. I would have considered this an achievement.

Remember these points that I have mentioned in my other post.
1.  Value investing is timeless. You can buy undervalued stocks anytime.
2.  A defensive portfolio is able to let you have a good night's sleep. Even during these uncertain times in the eurozone, this portfolio is still able to give the couple a dividend of more than $2,000. 
3.  Buying and holding stocks that are not actively traded can protect your portfolio from the effects of news.
4.  Buy businesses, not stocks. Cerebos Pacific is a company that produces Brand's Essence of Chicken, Popular is a company that is known to almost everyone in Singapore.
5.  Buy a high yield preference shares can almost guarantee every dividend payout at a fixed rate.
6.  Buy at the strike price and not any other price. 

The couple will still be holding on to this portfolio for the next couple of years to enjoy the high dividend yield. Anyway, they are going to receive an interim dividend from Popular in January 2012. Will update on this portfolio at the same time next year. So do keep a lookout.

Happy investing and cheers!

Happy New Year. Let's welcome more good years ahead.

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