REIT Distribution Yields Now Average Higher than 7%

OREANDA-NEWS. September 30, 2015. The Real Estate Investment Trust (REIT) Sector has been consistently expanding its role in the Singapore Stock Market since the first listing in 2002. Of all of Singapore’s sectors, the REIT Sector maintains the highest average dividend yields. Average yields are now at 7.1% , up from 6.3% a year ago.  In the year thus far, the 34 trusts that make up the sector have averaged a negative dividend-boosted return of 5.0%, which has brought their average three year return to a more stable 13.4% return.

The table below details these 34 trusts and is sorted by market-capitalisation. Note that clicking a stock’s name will direct you to its page on StockFacts.

Source: SGX StockFacts  (Data as of 25 September 2015) and presentations *Note annualised indicative made up of 1.51 + 1.89 cent distributions for 31 Dec 2014 – 30 June 2015 period

Debt to Asset Ratio

One of the most commonly used leverage ratios is the debt-to-asset ratio, or debt ratio, which shows the percentage of assets funded through leverage and is a measure of the financial risk of a business. The debt ratio is calculated by dividing the sum of short-term borrowings and long-term debt by the total assets of the business. A relatively high ratio indicates that the trust has more liabilities, which can provide additional risks such as credit risk and default risk. A lower debt ratio implies equity makes up a larger portion of the capital structure. This conservative financing gives the business room to fund its operations through debt in future with minimal risk. On the other hand, a greater amount of debt compared to assets can improve business efficiency as there will be more money able to be put to work in the business. On average, these 34 trusts have a debt-to-asset ratio of 34.0%, indicating that 34.0% of their assets are financed by debt.