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Real Estate Investment Trusts (REITs) are a type of unit trust, in which the underlying asset is property. REITs manage and rent out various properties, and income from the rental is paid to its shareholders as dividends. A REIT purchases its properties from developers, through equity raised by shareholders. REITs do not pay for this property in full; they borrow money to purchase it.
There are different ways of calculating a REIT’s yield. The standard method is to take the latest DPU for one year, and divide it by the share price. For example, say my REIT’s latest DPU was $0.0361. I receive a payout every six months, so over one year, I would get an annualized DPU of ($0.0361 x 2) = $0.0722. I see that the latest share price is $1.02 per share. So my yield would be ($0.0722 / $1.02) = Approx. 7.07%.
|REIT||Listed price (as of 26 May 2020)||Dividend Yield|
|Mapletree Commercial Trust||$1.95||1.91%|
|Mapletree Industrial Trust||$2.63||4.45%|
|CapitaLand Mall Trust||$1.89||1.84%|
|Keppel DC REIT||$2.45||3.18%|
|Frasers Centrepoint Trust||$2.25||3.82%|
|CapitaLand Commercial Trust||$1.63||5.48%|
You don’t always have to use cash for these investments. If you are 18 or above, and not an undischarged bankrupt, you might be able to use the CPF Investment Scheme (CPFIS) instead.
There are standard fees to be paid for CPF investments. These are mostly the same fees you pay when investing with cash. On the upside, you do not have to top up your CPF if the investments fall in value. So if you buy shares with your CPF, and those shares plummet, you are not required to replace the difference. However, investments made under CPFIS are in no way safer or guaranteed. Losses incurred by your CPF investments will not be replaced for you.
If you are using your OA funds, you will need to open a CPF investment account with one of the three agent banks: DBS / POSB, OCBC or UOB. You don’t need a CPF investment account if you are using your SA funds. To purchase or sell products under CPFIS, approach your broker or the organizations offering the products.