Monday, April 15, 2024

Added DBS


I FOMOed at the last chance to buy DBS (SGX:D05) to qualify for 1-10 bonus share which will XB on 22 Apr 2024.

Hence I decided to add some more shares as its share price corrected today.

There it goes. My order is filled at $35.61.

My last nibble was in Feb 2024 at $32.38

My initial purchase was in June 2023 at $30.80.

This addition will bring my holdings to 910 shares, positioning for 91 free shares and 1,001 shares in total after ex-bonus.

Technically I am averaging up because I added shares at a much higher price compared to previous purchases.

Considering the 1-10 bonus share offering, the effective cost per share is only $32.37. This is because, remember that on the ex-bonus (XB day), DBS share price will likely fall by around 10% to reflect the issuance in bonus shares amidst no change in its market capitalisation. 

Theroretically, there is no big difference if we buy DBS shares now or after XD day. Of course, if we buy before 22 Apr, we will be entitled to "free" bonus shares which are actually "losses" incurred from the fall in DBS share price on or after XD day.

DBS is the world's best bank and currently yields more than 6.5% despite at more than 50% above book value of $23.

Ideally I would like to get DBS at below $30 per share closer to its book value. However my fingers are itchy and getting impatient, coupled with the difficulty in timing the market, and the strong temptation in qualifying for "free" bonus shares spurred me to pull the trigger.

In addition, assuming DBS is able to maintain at least $2.16 annual dividend for the infinite future, it will take less than 18 years to recover back the invested capital and break even.

I believe DBS is the most enticing candidate to compete with all the top quality Reits in SGX and will be a great addition to our income portfolios for the long-term by providing consistent and stable passive income.

DBS has a great track record of rewarding shareholders consistently and steadily with growing dividends and capital gains over the past decades. It shall continue to thrive regardless of different financial environments clouded by noises and uncertainties. Even if interest rates fall, DBS will be boosted by higher volume of cheap monies lending by institutions and retail customers.

Should the share price of DBS plummet below $31 in the future, I shall add more shares to increase investment in this world's best bank.

Thank you all for reading. Stay focused and remain steadfast as always!

With love and peace, 

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