top of page

Corporate Action Strategy For REITs

Screenshot from EC World REIT homepage

Key Highlights:

  • 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.

There were a total of 12 trades since the IPO, and the total dividend returns were 23.53%. 9 out of the 12 trades were closed at the entry points (neither profit nor losses) and an average holding period of 1.5 months. Three trades were closed at a loss before the next dividend payout with a total loss of 8.5%.

Thus, the net returns are 14.9%! Not a bad strategy with little effort of 4 trades a year on the counter.

Note: Brokerage fees and other trade-related charges are not taken into consideration.

Using our proprietary Corporate Action Strategy

The number of corporate action trades reduced to five trades (original was twelve trades). 4 out of 5 trades were profitable with both dividends and capital gains.

Total net returns were 18.9%!

Or 5% more profits, with fewer trades, less brokerage fees and a shorter holding period of less than one month on average!

Note: with the current volatility of EC World REIT, we will not take this upcoming corporate action trade.

BHG Retail REIT does not meet our requirements for the corporate action strategy.

Looking for a portfolio of ideas like this one? Members of the Premium Plan get exclusive access to our model portfolio. Get started today.

#reits #ECWorld #BHG #dividend #corporate

95 views0 comments