Screenshot from EC World REIT homepage
EC World REIT and BHG Retail REIT are going Ex-Date next week
The indicative yields are 7.2% and 9% for BHG and EC World respectively
Does Corporate Action Play make sense for these two REITs?
EC World REIT is going Ex-date on 2nd Sep with a dividend per share of S$0.01547. This amount will translate to 2.12% of dividend return based on the current price of S$0.73. You can refer here for the key financial ratios.
Does corporate action play make sense for EC World REIT?
Corporate Action Play
A strategy to buy the stock before Ex-date, collect the dividends and sell off the shares after the Ex-date. The main objective is to capture the dividend returns, hoping that the price remains the same. However, in most of the time, the price will drop to a price, which is equivalent to the dividend amount on the Ex-date.
Let's look at the historical performance of trading EC World REITs using a simple corporate action strategy
Buy the shares one day before Ex-date
Try to close the trade at entry price after Ex-date
Close the trade before the next dividend payout
With the assumptions stated above, below is the historical performance.