Like many of its peers, CapitaLand share price is volatile because of the cyclical nature of the real estate business. Arising from this, the 5-year beta for this counter is 1.11. In spite of this, I like this counter very much because of its unique business strategies and diversified asset portfolio. Under the founding CEO, Liew Mun Leong, CapitaLand had embarked on a “asset recycling” approach, resulting in the real estate giant deriving majority of its revenue from recurring sources like commercial, retail and serviced residence.
Indeed, CapitaLand investors may think that volatility is undesirable but I view it otherwise. You can make money out of the volatility of CapitaLand share price, provided if you used the right strategies. Looking at the past four year data, there is a clear pattern concerning the movement of CapitaLand share price.
Hit and run with CapitaLand share price
In October 2014, CapitaLand share price surged from $3.00 to reach a high of $3.75 in April 2015.Subsequently, the counter plunged to a low of $2.80 in September 2015. Following that, CapitaLand share price surge again to reach a high of $3.40 in December 2015. For most of 2016, the stock languished to a low of $3.00 in December 2016. And then following that, CapitaLand staged a might rebound to reach a high of $3.70 in March 2017.
The pattern for CapitaLand share price continued in 2018 and early 2019. Based on the data, it appears to me that the best time to enter CapitaLand is during the period September to October. This is the window whereby CapitaLand share price often starts to bottom and then likely to rally until the start of the next calendar year. The perennial bullish form during this window period may be attributed to the attraction of the annual dividends, which is typically announced in January to February period.
What sort of returns can investors expect from the volatility of CapitaLand share price? For purpose of illustration, let’s assume an investor entered at $3.30 on 1 October 2018. So if he wants to qualify for the entitlement of the $0.12 dividends for FY2018, he needs to hold the shares till at least 24 April 2019. Let’s assume he held the stock till 3 May 2019 and then sold them off for $3.60. The total returns would be $0.42, which represented a 12.7% return within a period of 7 months.
One plausible strategy of investing in this counter is to adopt a long-term view and hold the shares for the dividend accumulation. After all, the dividend track record of CapitaLand is good. Since 2011, the annual dividend had climbed from $0.06 per share to the current $0.12, representing a 100% increase.
The main reason why CapitaLand is able to reward shareholders with generous dividends is because [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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