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Willie Keng, CFA

Willie Keng, CFA

Chief Editor

This Singapore Dividend Grower is Set to Profit… And ‘Boring’

This Singapore dividend stock is a quiet income grower. Here's what you exactly need to know about Ascendas India Trust.
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Vaccine or not, this huge trend is not going to affect this “high-yielding” Singapore dividend stock.

According to Gartner, India IT spending — on digital transformation, cloud services and e-commerce — is projected to grow 6.8% to US$88 billion by end of 2021. 

That’s faster than then 6.2% growth expected for global IT spending.

This “under-the-radar” Singapore dividend stock is capitalizing on that huge IT trend in India. 

It’s taking advantage of India as a major IT outsourcing country.

In fact, its share price has quietly crept 60% over the past six years, not including dividends. 

And ever since its CEO, Mr. Sanjeev Dasgupta took over the helm in 2014, its distribution per unit (DPU) more than doubled from 4.72 cents per unit in 2014 to 9.56 cents unit in 2019.

What’s more interesting its parent is an industrial landlord empire — CapitaLand Group. 

The one responsible for creating Singapore’s biggest industrial REIT.

But I’m not talking about Ascendas REIT today.

The business park giant no one is talking about

Ascendas India Trust (SGX:CY6U) is the first India property trust in Asia. It’s a “pure-play” industrial trust. It owns seven huge business parks, including its Silicon Valley-like International Tech Parks. These are massive developments of office space, retail mall, and other facilities all combined in one big area. 

And companies have access to technology infrastructure, R&D facilities, storage, manufacturing facilities, living space for businesses.

Think of it like a university campus.

Now, business parks are crucial for many IT companies today. 

Ascendas India Trust is smart. 

You see, their International Tech Parks are located in the southern part of India — Bangalore, Chennai and Hyderabad. These regions are well-known for India’s software exports. 

And Ascendas India Trust today sits right at the heart of it.

Ascendas India Trust rents out its business park spaces to some of the biggest, global companies — Tata Consultancy Services, Renault & Nissan, Societe Generale, Bank of America, United Health Group. 

These companies need to have their business facilities all within a centralized location. 

Beyond business parks, Ascendas India Trust is capturing the huge demand in e-commerce. 

That’s why this major property trust is developing and buying logistics warehouses. 

This Singapore dividend grower is capturing the e-commerce wave

You see, India used to have many small, fragmented warehouses. But because of the huge e-commerce wave, that has changed. 

There’s a need for bigger size, better equipped logistic facilities to cater to the heavy demands from global retailers and product companies –Unilever, Walmart and Amazon. 

For example, Ascendas India Trust’s warehouse in Mumbai — Arshiya Panvel warehouses occupy a site area of 9.9 hectares — the size of 20 football fields. 

Imagine the sheer volume e-commerce Ascendas India Trust helps its tenants store.

Even with the COVID situation worsening in India, and work from home trends disrupting office demands. 

The interesting thing I realize is these business parks are so much cheaper to rent as compared to grade-A CBD offices. 

And because business parks provide employees all the stuff they need to live in an “ecosystem”, you don’t have to travel back and forth daily, and prevent productivity losses this way. 

That’s why many tenants continue to rent from Ascendas India Trust. In fact, Ascendas India Trust’s portfolio is 91% occupied.

There’s one thing you’ve to understand. 

Unlike Singapore REITs you own, Ascendas India Trust is a business trust. 

It works almost the same as a REIT, but it has the “flexibility” to develop some properties. 

This gives Ascendas India Trust an advantage. Because it can simply develop land beside its business parks and expand the park’s areas. 

My thoughts on Ascendas India Trust?

If you want to diversify your dividend portfolio from Singapore properties into other countries, yet still want a familiar and reputable landlord, Ascendas India Trust is a great way to invest. 

And its growth is riding on India’s massive IT outsourcing trends.

I know COVID halved some of the company’s distributions last year. 

But once this pandemic recovers, I believe Ascendas India Trust will resume its growing distribution of more than 9 cents per unit. 

That’s going to give investors 7% dividend yield (based on 2019 DPU and today’s share price). 

This makes it one of the Singapore dividend stocks paying a steadily high dividends amongst other Singapore REITs.

Sometimes, investing can be simple.

Always here for you, 
Willie Keng, CFA
Founder, Dividend Titan

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Willie Keng, CFA

Willie Keng, CFA is the founder of Dividend Titan, a financial publication for self-managed investors. A former research analyst for top private banks, Willie today runs his own consulting firm. Some of his clients include asset managers and family offices. Willie has a deep passion for helping everyday investors take control of their financial future. And has spent over 10,000 hours researching, analyzing and recommending investment ideas.

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