Ken, not talking about AEW specifically and definitely not opining that one must sell here, just talking in general terms about sunk cost / sunk benefit fallacy. Obviously it’s totally ok for one to like AEW here and also fine to adopt a long term buy / hold mindset; overtrading demonstrably hurts returns for most over time. But; if you are evaluating the best opportunities at the present moment and comparing them, then IMO best to cast your entry price out of the analysis; it has zero influence on the future returns you will enjoy from an investment. |
@Skyship - the way I read kenmitch's post, he's saying he was farsighted enough to buy in 2020 when the price crashed below 70p, so on that basis, an 8p dividend for him equates to a 13% yield. |
Ken - AEWU is not paying 13%. It is yielding an uncovered 8.6% @ 93p. |
Just adding a brief bit to my previous post. These days (and I wish I had done it years ago) I use methods favoured by brilliant investors like John Lee and Warren Buffett. I.e look to hold our quality holdings long term. That way John Lee is now getting dividends of 100% and more a year from some of his holdings and the dividend yield every year is massive. I trade too, but buying the big dips and then holding works! |
Fair points but I also have to decide is it a sell now?
And with a 13% dividend it certainly isn’t, at least until the news changes for the worse or if there’s a dividend cut.
So it makes no sense at all anyone else who took advantage of those great buy opportunities in 2020 selling now on another big sector dip. After all SKYSHIP we have both bought EBOX recently. So you ARE buying the sector.
So can you really convince me or anyone that selling a REIT paying a 13% dividend during the current downturn AND still up 50% on my buy price is a definite sell? It’s been the best performer in the sector and could well be again when the sector turns up again.
I do agree though that for new buyers there are better choices now. E.g SREI, EBOX and API and I hold all 3. |
Sorry Ken - but IMO you should never view your investment from the perspective and parameters at the time of purchase. You have to assess the position as it is now - not 3yrs ago. |
Ken, if you wish to hold what you buy rather than trade, then that objective is going to override everything else, and you are simply going to hold what you buy. But if you invert the logic of everything else you wrote, you will see it does not a provide a logical basis to hold now: had you bought at a higher price, say a 4% yield, and the price had now fallen to offer you a juicy 10% yield, would that poor entry price be a good reason to sell at a 10% yield? |
 SKYSHIP.
I usually agree with you (except on buybacks where nearly everyone disagrees with me) but are you really telling me I should sell AEWU?
I bought at 63p and at that price I’ve been getting 13% a year just in dividends. There has always been a risk of a dividend cut but shrewd Management decisions mean that AEWU was the only Commercial Property Trust not to cut the dividend during the covid sector bear market.
Even a cut to 6p would still give a yield of over 9% at my buy price, AND with every chance when the sector recovery comes eventually of the dividend being increased along with share price gains as well.
I’m not claiming it’s the best one to buy now as the discount is (deservedly) much narrower than the others, and the likes of EBOX and SREI look better choices for new buyers. But if there’s anyone else reading these threads who also buys these Trusts on the big dips and then looks to hold them for years in preference to trading them, and who also bought AEWU or others at lower prices than now, the case for holding is strong. |
But you've been saying that for a while now...
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SKYSHIP - 22 Oct 2020 - 07:41:47 - 1013 of 1457
AEWU NAV Q3 update - down just 0.7% from 93.37p to 92.73p.
Dividend again at 2.0p, but EPS at just 1.6p.
Dividend unsustainable surely.
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Since when they've held the 2p quarterly dividend 10x... |
SERE said the same....then cut yesterday!
"Reflecting the potential impact of higher interest costs on the Company's earnings and more patient capital deployment strategy, the quarterly target minimum dividend will be rebased to 1.48 euro cps per quarter (80% of the previous level), commencing with the third interim dividend payable in October 2023. This will allow management to be more patient deploying cash reserves into attractive investment opportunities that are likely to arise, as well as enabling the immediate payment of a fully covered dividend." |
You obviously don't follow AEWU closely otherwise you would know that they stated when all the cash is invested in new properties the dividend will be fully covered.
So talk of cutting the dividend is utter rubbish. |
A very risky hold as the share price likely to drop to c85p when they eventually bite the bullet and cut to 7p pa. 6p would take them lower than that of course.
Upside - well, has to be seriously limited as far better buys across the board.
API, EBOX, SREI - discounts 32%-42% and yields 8.1%-8.4%.
Why would you hold AEWU on a mere 12% discount and a dubious 8.6% yield?
SELL! |
Much of the lack of cover is due to AEWU trading properties rather than holding them for their rentals. The recent sale of the two industrial assets generated a profit of £3.8m on purchase price, which equates to 2.4p/share. Don't se them cutting the dividend. |
@aeonflux i came to that conclusion several years ago and never bought them believing they would have to rebase they never have. Laura has the knack of buying low selling high and generating enough surplus capital to keep the show on the road. I guess when that strategy no longer has legs we may get a reset. Divi good but trading too close to NAV currently compared to others. |
Could be a read across from SERE who yesterday cut their uncovered dividend. |
Aeon, the dividend has not been fully covered for 3 years, so, whilst your explanation is generally true it doesn't explain why today the share price drops 4.5%. THoughts about the timing? |
New major risk - Dividend sustainabilityThe dividend is not well covered by earnings and cash flows.Payout ratio: 132%Cash payout ratio: 129%Dividend yield: 8.4%This is considered a major risk. Companies that pay out too much of their earnings and cash flows are at risk of having to reduce or cut their dividend in future. If earnings or cash flows stagnate or fall, then there may not be enough to maintain the same dividend. Or in extreme cases, companies may opt to dig into capital reserves or take on debt to maintain the dividend. For dividend paying companies, any reduction in the dividend can significantly impact the share price.This is currently the only risk that has been identified for the company. |
Any idea why AEWU has dropped 4% this morning. Yes FTSE is down but AEWU seems particularly, badly affected. |
Indeed; they're one of the better management teams |
But they seem quite effective at engineering value in their assets and realising the profits, rather than just collecting rents, and the market clearly attributs value to that... |
Sure - 8p per annum - but uncovered. LTV quite high at 36%; but debt good - 4yrs still to run at 2.96%
Tipped again yesterday by Simon Thompson of the IC. |
Not a holder, but they knock spots off any other REIT in that regard, all the while churning out 8p pa.
Maybe helps being less "legacy" than many of them.
Opportunity Cost going into a recession mind - UKCM, BCPT, API, SHED all lower again this morning. |
Buy low Sell high buy low again they certainly have become very adept at it |
Hats off to AEWU, have no idea who's still buying at those yields but once again AEWU prove their success in churning. |
To be fair - it is very unusual - dividends are normally there by noon (ish) on the payment day. |
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