# Investing for income



## MrBurns

I know you cant give any specific advice but what are the more common stocks to look at for income.


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## pixel

MrBurns said:


> I know you cant give any specific advice but what are the more common stocks to look at for income.



 I build a watchlist of as many "serious" stocks as possible; I started actually with the All Ords. Then I make sure the table contains the latest "Yield", by which I sort descending.
Now it's taking only a little "mental legwork" to eliminate any obvious "duds".

A little Excel program (see "Dividends" at http://rettmer.com.au/TrinityHome/Services/index.htm ) shows me each coy's dividend history covering the last couple of years. But if you've identified only a handful of  favourites, you can probably do that research manually too.


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## MrBurns

Thanks pixel, I have a watch list, it details all my failures
I'll rejig it and give it a go.


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## MrBurns

pixel said:


> I build a watchlist of as many "serious" stocks as possible; I started actually with the All Ords. Then I make sure the table contains the latest "Yield", by which I sort descending.
> Now it's taking only a little "mental legwork" to eliminate any obvious "duds".





You mean a watchlist on the ASX site ? Where can you include yield in the table ?


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## tech/a

Income production.

If I had to produce income 
I would* day trade* both indexes and stock.
A couple of 100 k would return plenty.
If you know what your doing.


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## MrBurns

tech/a said:


> If you know what your doing.




I don't, so plan B is ?


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## McLovin

MrBurns said:


> I don't, so plan B is ?




Bank deposit.

If you don't know what you're doing, I'm not sure I'd be getting into the market. You could easily have 20% wiped off even a stable income producing stock.


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## MrBurns

McLovin said:


> Bank deposit.
> 
> If you don't know what you're doing, I'm not sure I'd be getting into the market. You could easily have 20% wiped off even a stable income producing stock.




Thats what I was afraid of, and I dont trust "advisors"

5% here I come I guess.


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## tech/a

McLovin said:


> Bank deposit.
> 
> If you don't know what you're doing, I'm not sure I'd be getting into the market. You could easily have 20% wiped off even a stable income producing stock.




Plenty of ways to mitigate risk short term trading.
10000 $ 10 stock returns $ 100 / cent getting on an up move of 10c or more isn't hat difficult.
Indexes 5 x FTSE only requires $ 30 k
DAX a bit more.
SPI about the same.


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## MrBurns

tech/a said:


> Plenty of ways to mitigate risk short term trading.
> 10000 $ 10 stock returns $ 100 / cent getting on an up move of 10c or more isn't hat difficult.
> Indexes 5 x FTSE only requires $ 30 k
> DAX a bit more.
> SPI about the same.




Fantastic WHAT ? 

Would a broker be able to do that for me ?


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## pixel

MrBurns said:


> You mean a watchlist on the ASX site ? Where can you include yield in the table ?



 You need a good trading program.
The one I'm using is Market Analyser from MDS Financial. Watchlist example:


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## Julia

McLovin said:


> Bank deposit.
> 
> If you don't know what you're doing, I'm not sure I'd be getting into the market. You could easily have 20% wiped off even a stable income producing stock.



+1.   Choosing stocks for their yield, without regard to their potential for capital loss is something I will never understand.

Mr Burns, you can get more than 6% at call in various online accounts.

If you're unsure about your trading skills, I'm not sure that this is the market in which to try them out.


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## Boggo

Julia said:


> Choosing stocks for their yield, without regard to their potential for capital loss is something I will never understand.




Exactly Julia. Below is the monthly chart of TLS.
Since the high in 1999 it has paid 3.73 in dividends but lost close to $6.00 in value.
I haven't taken into account the franking credits as they are of no benefit anyway if you are losing money.
Naturally the yield is going to increase, only because the stock price is falling.
http://www.telstra.com.au/abouttelstra/investor/my-shareholding/dividends/

(click to expand)


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## Boggo

Example 2.
Worth having a look at the dividend yield on AJA, the first stock displayed on pixel's software pic in his post above.

Here is why the yield looks so good...

(click to expand)


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## pixel

Boggo said:


> Example 2.
> Worth having a look at the dividend yield on AJA, the first stock displayed on pixel's software pic in his post above.
> 
> Here is why the yield looks so good...
> 
> (click to expand)



 Correct, Boggo;
which is the reason I said in my very first reply 







> Now it's taking only a little "mental legwork" to eliminate any obvious "duds".



And at that time, I didn't know that Mr B had no idea what he was doing 

btw you don't *have *to hold on to any stock that depreciates beyond future dividend expectations.


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## Boggo

pixel said:


> Correct, Boggo;
> which is the reason I said in my very first reply
> And at that time, I didn't know that Mr B had no idea what he was doing




Understood pixel


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## MrBurns

Julia said:


> +1.   Choosing stocks for their yield, without regard to their potential for capital loss is something I will never understand.
> 
> Mr Burns, you can get more than 6% at call in various online accounts.
> 
> If you're unsure about your trading skills, I'm not sure that this is the market in which to try them out.




Thanks for the advice everyone and Julia , yes, I'm either very stupid or very unlucky, not once but twice I've sold spec stocks only to find , in one case it tripled in a few weeks after I sold and another I sold last week jumped 30% in the week after I sold, in both cases I'd held them for over a year only to see them languish and do nothing.

I think I will stick to TD's for now.


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## Trembling Hand

MrBurns said:


> Thanks for the advice everyone and Julia , yes, I'm either very stupid or very unlucky,




Its hardly a market that makes taxi drivers, dartboards or idiots look like stock gurus with a rising tide.

Honestly did you think it was a period, ie bullmarket, that was in your favour?


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## MrBurns

Trembling Hand said:


> Its hardly a market that makes taxi drivers, dartboards or idiots look like stock gurus with a rising tide.
> 
> Honestly did you think it was a period, ie bullmarket, that was in your favour?




They were tips I picked a year or more ago, yes one took off, but I sold it too soon.
I gave up on the rest and got out of everything in the last few weeks.
The last one went up 30% almost as I put the phone down from the sell order


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## Calliope

Over the years I have earned good income and achieved good capital return by buying equity in buildings. A good example of one of these is Cromwell.e.g.



> In a tumultuous year for property and funds management, Cromwell successfully raised $91 million for the unlisted Cromwell Riverpark Trust.
> 
> This was the largest retail fund raising in Australia in 2 years and saw the Trust acquire land and begin funding the construction of the Riverpark Building, an asset with an “as if complete” independent valuation of $173 million. Monthly distributions to investors began in July at 8.25% pa.




That was in 2009. This building is at Newstead, Brisbane and is fully leased to Energex for some years.* I am only quoting this as a example because subscription has closed. *The beauty of this type of investment is that the interest is paid monthly and is tax deferred. However your capital is not accessible usually for 5 or 7 years when the building will be sold. You will get any capital gain, which will take care of the deferred tax.

The interest on this investment is now 8.75%, and after 2 years the valuation is $186M.


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## tinhat

I used the last (current!) downturn in the second half of last year to rebalance my mother's portfolio (SMSF - pension phase) more towards income. At that time the banks were just screaming YIELD (I bought some ANZ and CBA that should yield about 10% with franking credit over the next couple of years).

Income stocks. I would still look at the banks. My opinion is that the big banks still offer the lowest risk, highest yield pay-off. CBA is currently trading (ex-dividend) at 80% of its all time high price. If we assume little earnings growth but steady dividends over the next couple of years, at current prices you are still looking at around 6.5% yield, fully franked, at current prices. Perhaps wait for an opportunity to enter at a little better price or dollar average into a couple of bank stocks (my preferred are CBA and ANZ) over time.

In fact, the family SMSF held CBA right through the GFC crash. The only damage done was a drop in dividend of about 33% for eighteen months (three halves). That was the extent of the damage done by holding on to CBA right through the crisis.

Hybrid securities. You could look at hybrid securities. There will no doubt be plenty of more offers by the banks and large companies over time. I looked hard at the WOW offer last year but in the end decided that their shares will probably yield a higher real return over five years than their hybrids. Same with the banks. I personally think the banks shares were a better deal when they were being priced by the market at 7% yield last year.

Other high income stocks worth looking at:

I just bought some Iluka (ILU) last week before it went ex-dividend. It should be a good dividend payer in the short term - the next 18 months or so, as the company is raking in the cash at the moment. The price of zircon and rudite are most likely going to fall though so this stock is not without risk and needs to be watched carefully.

You might want to do your own research into the following:

RCG - not a liquid stock though. Will need to see a turn around in their results second half for me to maintain the faith but I currently hold).

MYS - doing my homework on this one. Looks good!

WLL - very small cap, illiquid share turnover on the exchange. good yield.

HSN - outlook for slow and steady growth, good yield.

IRI - had a big run-up in price lately but still yielding well.

FWD - solid company, solid performer, perhaps over-priced at the moment though. Would be worth considering buying at sub $12. I don't know why this hasn't been on my watch list.

Not financial advice, just some personal opinions without taking anyone's personal circumstances in mind.


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## MrBurns

Anyone have any ideas on Index funds ? how have they gone over the past couple of years.
In line with the all ords I guess ?


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## ROE

It is possible to do.... in fact that all I do...I build a continuous stream of dividend and rising each year at least 5% due to the stock rising earning and increase dividend payout .... it now out strip my saving rate...

thought not easy or hard it just require time and effort over the years and you have to like this stuff you willing to go where no one goes and know enough to ignore the brokers or headlines.

this is what I do but I have the knowledge now to know what business
are liable producer of income and which one has wild fluctuation in earnings

1. I deliberate target these business and keep tab on them

2. I accept stock price can fluctuate up and down but what I concentrate most is the stock  doesn't  goes belly up... because I wont sell out any time so as long as dividend keeps up that is fine I never need to touch the capital....

3. When the market panic or stock trades what I consider cheap and can deliver sustain the yield I buy in.. I'm very active when the market panic other than that I don't spend much time looking at them.

4. I only invest maximum in 20 stocks, mostly I have holding in 15 stocks and I know
    them inside out, as price tanks or panic I buy more, because I know these stocks cant go belly up... I virtually done this for half of my stocks every time Panic kicks in.

5. I factor in dividend cuts for certain stock like TLS when I buy them at 2.87 I factor
    in I wont get 10% yield I factor in I get 7% yield going forward... but I thank you
    Thodey as long as he can continue deliver 10% yield.

6. When I think stock is unable to deliver the yield due to very strong price rise or  price gone too crazy I'm out and wait for the next panic.

7. 80% of my money is invest in these, 20% I speculate and trades 

If you can identify dog or un-love stock at the right time with reasonable knowledge the pay off could be substantial , as business will turn, earning will increase dramatically, dividend maintain or better and off goes the stock price...
TLS was unlove and a dog below $3, there is another Aussie icon business right now
I reckon un-love and a dog right now  but it will turn that I'm 99% certain...

so it's not straight forward it require a bit of work


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## Ves

ROE said:


> there is another Aussie icon business right now
> I reckon un-love and a dog right now  but it will turn that I'm 99% certain...



 Harvey Norman?


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## Boggo

MrBurns said:


> Anyone have any ideas on Index funds ? how have they gone over the past couple of years.
> In line with the all ords I guess ?




Not really Mr B 
_A Buy & Hold investor using the State Street ASX-200 ETF (STW) has a total return of -1.96% (incl. divs) since May 2006, an annualized return of -0.348%.
_Radge - Jan 2012.

Just had my SMSF accounts finalised last week, 23.4% for the 2010/11 FY. My TradeSim backtesting says that I should be getting just over 28% if I took every trade.

Hit and run and give back the minimum is the only way to get results, takes time and work but if you are not prepared for that then you may as well just hand it over to someone else to look after, its buy and hold regardless of who is doing it and in a good year you may get double digit results.

Just my


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## tinhat

ROE said:


> It is possible to do.... in fact that all I do...I build a continuous stream of dividend and rising each year at least 5% due to the stock rising earning and increase dividend payout .... it now out strip my saving rate...
> 
> ...
> 
> so it's not straight forward it require a bit of work




Do you want to share some of your favourites with us?


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## craft

Boggo said:


> Exactly Julia. Below is the monthly chart of TLS.
> Since the high in 1999 it has paid 3.73 in dividends but lost close to $6.00 in value.
> I haven't taken into account the franking credits as they are of no benefit anyway if you are losing money.
> Naturally the yield is going to increase, only because the stock price is falling.
> http://www.telstra.com.au/abouttelstra/investor/my-shareholding/dividends/
> 
> (click to expand)




Boggo

What are you trying to prove with the charts?

TLS was only yield just over 2% when it traded at $9+ hardly the sort of price that would have a yield investor interested.

If you had bought T1 and held on you would have achieved an annual compound return of over 10%.


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## craft

ROE

You and I must have gone to the same school


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## Boggo

craft said:


> Boggo
> 
> What are you trying to prove with the charts?
> 
> TLS was only yield just over 2% when it traded at $9+ hardly the sort of price that would have a yield investor interested.
> 
> If you had bought T1 and held on you would have achieved an annual compound return of over 10%.




What return would have had if you had sold when it started falling from $9+, losing $6 per share is an expensive way to get an increased yield.
What is the formula for yield ?


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## Garpal Gumnut

Gearing is a good way to invest for income. Many years ago I bought warrants in RIO for about $11, and they on a par basis they pay a decent dividend now even after conversion.

gg


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## tinhat

Boggo said:


> Exactly Julia. Below is the monthly chart of TLS.
> Since the high in 1999 it has paid 3.73 in dividends but lost close to $6.00 in value.
> I haven't taken into account the franking credits as they are of no benefit anyway if you are losing money.
> Naturally the yield is going to increase, only because the stock price is falling.)




Indeed. However, some may believe that there has been a fundamental shift in the industry and a catalyst that changes the game.

TLS were first to market with a solid G3 network while others (Vodafone/Hutchison) stumbled. If TLS can stay ahead of the pack in investing in the quality of their mobile network they can maintain market leadership and their high margins on mobile.

TLS have a lot of opportunity to turn around their weakness in customer service and seem to be making solid gains in this direction.

The previous management (the Three Amigos) were a disaster that destroyed shareholder value, but the company has the ability to turn around under its current management. Which leads to the last point...

Under the previous management, the government rejected Telstra's tender for the NBN. Under the new management, Telstra negotiated a very sweet deal to sell their monopoly copper network back to the government. This is not without risk. NBN rollout delays can impact this revenue stream. There is the risk of a change of government unwinding the NBN rollout.

TLS appear to have enough free cash flow in the medium term to cover their dividend. The NBN buy-out of their copper network is a windfall for shareholders which hopefully will come to fruition and will be used sensibly so that it benefits shareholders.


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## craft

Boggo said:


> What return would have had if you had sold when it started falling from $9+, losing $6 per share is an expensive way to get an increased yield.
> What is the formula for yield ?




Selling it is exactly what you would have done if you were interested in yield - there were plenty of better yielding stocks around at the time. Your chart doesn't represent what somebody following a yield approach would be locked into.

My own experience with TLS was buying in T1 and selling not long after T2 and I have recently brought again under $3 bucks - buying it at $9 was unimaginable for my approach.

That said - their a couple of points about investing for Income – any investing really. 

There is no difference between income generated from capital gains and income paid out as dividends – actually the capital gains are taxed more lightly if you hold for over 12 months.

Backing businesses, rather than trading the share price can and does work, but you need to know how to analyse businesses and estimate their worth and it takes time to see off the randomness and fads of the market, the longer you’re holding period the lumpier your equity curve – end of story.

If you want income AND a smooth equity curve, selecting businesses for the yield they can produce is probably not your best bet.   The smoothest equity curves come from the shortest holding period strategies.


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## Trembling Hand

craft said:


> If you want income AND a smooth equity curve, selecting businesses for the yield they can produce is probably not your best bet.   The smoothest equity curves come from the shortest holding period strategies.




 I never thought I would see the day that such words would came out of a value investor. 
:bier:


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## Boggo

craft said:


> Backing businesses, rather than trading the share price can and does work, but you need to know how to analyse businesses and estimate their worth and it takes time to see off the randomness and fads of the market, the longer you’re holding period the lumpier your equity curve – end of story.
> 
> If you want income AND a smooth equity curve, selecting businesses for the yield they can produce is probably not your best bet.   The smoothest equity curves come from the shortest holding period strategies.




How many "investors" have even heard of this stock, would you rather be holding this with a low yield or TLS with a high yield ?

Chart below covers the same period as TLS fall from $9+.

http://www.sharedividends.com.au/mnd

(click to expand)


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## Boggo

Garpal Gumnut said:


> Gearing is a good way to invest for income. Many years ago I bought warrants in RIO for about $11, and they on a par basis they pay a decent dividend now even after conversion.
> 
> gg




TLSIOI  ??


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## wayneL

tech/a said:


> Plenty of ways to mitigate risk short term trading.
> 10000 $ 10 stock returns $ 100 / cent getting on an up move of 10c or more isn't hat difficult.
> Indexes 5 x FTSE only requires $ 30 k
> DAX a bit more.
> SPI about the same.




Perhaps Mr Burns should define what he means by 'Investing' for income.

'Investing' implies a relatively low activity strategy. Basically setup and leave alone, perhaps with a bit of infrequent tweeking.

Short term trading requires daily activity with perhaps some hours in front of the screen every day. Nothing wrong with that, but it's not 'investing' IMO.


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## craft

Boggo said:


> How many "investors" have even heard of this stock, would you rather be holding this with a low yield or TLS with a high yield ?
> 
> Chart below covers the same period as TLS fall from $9+.
> 
> http://www.sharedividends.com.au/mnd
> 
> (click to expand)




I’m an ‘investor’ and I have heard of it (can’t pronounce it thought) 
Actually I held it from 2003 until November 2007 (In hindsight I probably should still hold it)

It was brought on the basis of Business yield compared to market price.  (Not to be confused with current cash yield).

If you are going to be any good at investing properly for yield you need to learn pretty quickly how to identify where yields are currently high because a company is liquefying their economic position – they are in effect in runoff and the cash yield will inevitably fall. You also need to be able to identify growing business before they start throwing off the excess capital.

High future business yields in relation to the current share price often get translated into capital gains – but not always, sometimes you just have to settle for an ongoing cash yield - thats the markets call.


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## tinhat

wayneL said:


> Perhaps Mr Burns should define what he means by 'Investing' for income.
> 
> 'Investing' implies a relatively low activity strategy. Basically setup and leave alone, perhaps with a bit of infrequent tweeking.
> 
> Short term trading requires daily activity with perhaps some hours in front of the screen every day. Nothing wrong with that, but it's not 'investing' IMO.




Or one can be an active investor. Reviewing stocks and prices weekly. Adjusting trailing stop losses weekly but keeping an ear on the market during the week. This reporting season is the first time I've made any trades and done some profit taking in three months (exception was taking up the DCG share placement offer in late December).


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## craft

Boggo said:


> How many "investors" have even heard of this stock, would you rather be holding this with a low yield or TLS with a high yield ?
> 
> Chart below covers the same period as TLS fall from $9+.
> 
> http://www.sharedividends.com.au/mnd
> 
> (click to expand)




Again just for your interest Boggo

Did you know that in 1999 whilst TLS was paying a partly franked dividend of 43 cents (which included a special dividend?) giving a 4% franked up yield and had a prospective yield of around 2.5% without the special dividend, 

that 

MND was paying a 27 cent 100% franked dividend on an unadjusted price of around $3 that’s a franked up yield of over 12% - the prospective yield was even greater.

So your selection of charts was correct but your commentary was back to front.


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## tinhat

Boggo said:


> How many "investors" have even heard of this stock, would you rather be holding this with a low yield or TLS with a high yield ?
> 
> Chart below covers the same period as TLS fall from $9+.




My good fellow, what is the point of your argument? You seem to be engaging in a bit of recreational _Ignoratio elenchi_. If the point you are making is to beware the trap of high yields as a result of falling market capitalisation using Telstra as a prime example then fine. I think your point is well made. Once could use many big cap companies to illustrate this same point; eg, AMP.

There are several fundamental analysis that can be used to help identify good income stocks. Perhaps we should discuss them? Talking about Monodelphus has nothing to do with that conversation though. Yep, great company who's share price has reflected a stellar growth story and strong management. So what does that have to do with income? Furthermore, did you buy MND in 1999? If you did, what analysis lead you to buy at that time and at that price (circa $0.92)? Otherwise, what is the point of your argument? Telling us that selling TLS at $9 and buying MND at $0.92 at the end of November 1999 would have been a good play is a little facetious. What does it have to do with choosing stocks to invest in for income right now?

If you are running a SMSF with an account in pension mode you need to generate income whether it is from dividends or realising capital gains. It is mandatory that the fund be drawn down by a minimum each year. I can assure you that fully franked dividends can be a very attractive proposition when you get the full franking credits as a tax return from the ATO.

As far as I can understand your arguments so far, in terms of answering the question of which stocks to look at for income is to look at MND but not TLS. I'm missing the relevance of your posts to this topic.


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## MrBurns

wayneL said:


> Perhaps Mr Burns should define what he means by 'Investing' for income.




Yes should have beem nore precise, what I meant was the highest yielding stocks that could be considered blue chip or relatively safe.

Was thinking of Telstra then read about their exposure in the business world and it didnt look good, the banks ? insulated for now but the world scene doesnt look too good, if there's a housing crash it would effect them badly and RIO and BHP rely on China and frankly I like their food but I wouldnt trust them with my money,

So there I am like a deer in the headlights I guess I just dont know enough to be able to make sound judgements in the share market but I was looking for something better then bank interest.


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## Garpal Gumnut

MrBurns said:


> Yes should have beem nore precise, what I meant was the highest yielding stocks that could be considered blue chip or relatively safe.
> 
> Was thinking of Telstra then read about their exposure in the business world and it didnt look good, the banks ? insulated for now but the world scene doesnt look too good, if there's a housing crash it would effect them badly and RIO and BHP rely on China and frankly I like their food but I wouldnt trust them with my money,
> 
> So there I am like a deer in the headlights I guess I just dont know enough to be able to make sound judgements in the share market but I was looking for something better then bank interest.




Burnsie, You could always follow Malcolm Fraser's advice when he warned of the effect on income and savings of Hawke getting elected.

" Under the mattress "

gg


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## Boggo

tinhat said:


> As far as I can understand your arguments so far, in terms of answering the question of which stocks to look at for income is to look at MND but not TLS. I'm missing the relevance of your posts to this topic.




Its quite simple actually, you are fooling yourself if you are looking at yield only.
It is better to have a rising share price and a low yield than a falling share price and a high yield.

Collecting $3.73 in dividends on TLS while losing $6 on the stock is not investing, that is my only point


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## So_Cynical

MrBurns said:


> Yes should have beem nore precise, what I meant was the highest yielding stocks that could be considered blue chip or relatively safe.




Blue chip is a term that's reasonable easy for everyone to understand ASX20/50, relatively safe is something else all together...see for me relatively safe means very low or no debt, a business that's firewalled and a proven record of profitability and yield.

My 5 highest yielding portfolio stocks all have market caps under 120 million so are certainly not "blue chip" yet i consider them to be more than relatively safe....i consider them to be very safe businesses. 


 GLB - Globe (current gross yield @ Friday close = 16.3%)
 ALF - Aust Leaders fund (current gross yield @ Friday close = 12.3%) and its CD
 SND - Saunders international (current gross yield @ Friday close = 10.4%)
 CLV - Clover Corp (current gross yield @ Friday close  = 10.3%)
 KSC - K & S Corporation  (current gross yield @ Friday close = 10%)


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## MrBurns

So_Cynical said:


> Blue chip is a term that's reasonable easy for everyone to understand ASX20/50, relatively safe is something else all together...see for me relatively safe means very low or no debt, a business that's firewalled and a proven record of profitability and yield.
> 
> My 5 highest yielding portfolio stocks all have market caps under 120 million so are certainly not "blue chip" yet i consider them to be more than relatively safe....i consider them to be very safe businesses.
> 
> 
> GLB - Globe (current gross yield @ Friday close = 16.3%)
> ALF - Aust Leaders fund (current gross yield @ Friday close = 12.3%) and its CD
> SND - Saunders international (current gross yield @ Friday close = 10.4%)
> CLV - Clover Corp (current gross yield @ Friday close  = 10.3%)
> KSC - K & S Corporation  (current gross yield @ Friday close = 10%)




Thanks cynical, I'll do you the favour of not jumping in , for now, as that would be the end of them


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## MrBurns

Garpal Gumnut said:


> Burnsie, You could always follow Malcolm Fraser's advice when he warned of the effect on income and savings of Hawke getting elected.
> 
> " Under the mattress "
> 
> gg




Damn good idea untill the bed wetting came back


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## SuperGlue

Here is a link to someone who is doing it for his SMSF - investing for income.

http://www.superguide.com.au/compar...ibutor-how-1-million-can-last-longer-than-you


"sit out any downturn, so falling share prices have no effect on my investment strategy and anyway my income depends on company profits......"

Hmmmm, don't lke this bit.


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## ROE

tinhat said:


> Do you want to share some of your favourites with us?




some of my Favorites and I' mainly in Midcap and small caps as these guys has much more potential to deliver better dividend as they get bigger.

CAB
RFG
CCP
HVN  under $2.0
NVT
CPU
TGA
QBE
TLS  under $3.00
CUP
WDC around 7.50
CCV

Speculative JIN XRF 

thought specs they paid good dividend and deliver me very good capital gain
a bit late now but I got them when no one know them
JIN around 31c-40c ... XRF 11-15c


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## Boggo

SuperGlue said:


> Here is a link to someone who is doing it for his SMSF - investing for income.
> 
> http://www.superguide.com.au/compar...ibutor-how-1-million-can-last-longer-than-you
> 
> 
> "sit out any downturn, so falling share prices have no effect on my investment strategy and anyway my income depends on company profits......"
> 
> Hmmmm, don't lke this bit.




That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
Once you get there then yes, no drama living off it.

How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.


----------



## ROE

Boggo said:


> Its quite simple actually, you are fooling yourself if you are looking at yield only.
> It is better to have a rising share price and a low yield than a falling share price and a high yield.
> 
> Collecting $3.73 in dividends on TLS while losing $6 on the stock is not investing, that is my only point




You not going to be able to pick winners all the time, TLS could be one of those stock if bought at the wrong price, but other can double the dividend and double the share price as long as you don't make too many disaster mistake you should come out ok.

you know why most people failed? they are not consistent, as soon as they pick a failed investment they scare the next one is another disaster so they change tactics
or stay out of the market when they should be keep doing it ....

they should stick to them be brave and do it for the next stock and repeat exactly 10-15 times and you see you will have more winners than losers....

The same techniques I use in the Bull market I also in the bear market....
no cheap stock ...no purchase.. dont care if I missed the boat...dont care if that stock gone up 200% ...

that is one good thing about stock market, there is always something, some where in the future that trigger fear and that is my opportunity


----------



## waimate01

Boggo said:


> It is better to have a rising share price and a low yield than a falling share price and a high yield.




Spot on. It's the difference between an "arithmetic progression" and a "geometric progression", and the degree to which a company pays out its profits determines to what extent it is one or the other. 

It's such a simple concept, yet the book-writers of the world seem to go to such lengths to avoid explaining it simply.

The one caveat is that eventually a company has to make surplus income, because if all it ever does is reinvest its profits for growth, then it will be born, grow, expand, dominate, sustain, shrink, collapse and die without ever having done anything useful other than support speculators (and provide employment). 

Eventually a company must provide income to investors, otherwise it serves as nothing but a vehicle with which to play musical chairs.

But until such time as the music stops, yep, go geometric rather than arithmetic.


----------



## SuperGlue

Boggo said:


> That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
> Once you get there then yes, no drama living off it.
> 
> How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.




Have to start somewhere & get it in motion ( for me )

From another thread Re: What savings plan do you like to follow?

ROE:  "so Einstein is absolutely right when he said “The most powerful force in the universe is compound interest” .. nothing beat this when you use it correctly...and the person....."


----------



## Ves

ROE said:


> You not going to be able to pick winners all the time, TLS could be one of those stock if bought at the wrong price, but other can double the dividend and double the share price as long as you don't make too many disaster mistake you should come out ok.



How many have you got wrong out of curiousity? Sounds to me like you've used the lessons from the ones you did get wrong to improve your overall results. Well done.


----------



## pixel

Additional income can be derived by including some options play into the strategy mix.
It depends obviously on the size of your portfolio and the number of shares that form a block of your dividend-paying investment.
Say you hold 25,000 TLS from $3 or below and you don't believe they will rise above $3.50 by June. Sell 25 June Calls at $3.51 and pocket the premium in addition to the dividend and franking credits. Writing those Calls (European style) will net about $1,000; should, on June 28, TLS close at or above strike, you will have to sell at $3.51, making a decent profit on your sub-$3 holding. If your hunch comes true and TLS stays below that strike price, you keep your shares and the premium; then re-assess the next level and write some more calls.


----------



## Trembling Hand

SuperGlue said:


> Here is a link to someone who is doing it for his SMSF - investing for income.
> 
> http://www.superguide.com.au/compar...ibutor-how-1-million-can-last-longer-than-you
> 
> 
> "sit out any downturn, so falling share prices have no effect on my investment strategy and anyway my income depends on company profits......"
> 
> Hmmmm, don't lke this bit.



Yeah he has a massive problem with his thinking.



> Volatility is not a risk I need to manage and therefore I can afford to hold a less conservative portfolio than would be required if I was in a retail super fund that depends on the sale price of assets for each pension payment.



Sounds like a company going broke will not happen yet they ALL do sooner or later.


----------



## So_Cynical

Trembling Hand said:


> Yeah he has a massive problem with his thinking.
> 
> Sounds like a company going broke will not happen yet they ALL do sooner or later.




I thought it was a great article and hard to fault the authors logic and numbers... there is clearly a divide between the market participants who are comfortable with holding shares thru price gyrations in both directions and those who are not.

I liked this bit particularly


			
				Jon Kalkman said:
			
		

> The point is that this share trading is based on the company fundamentals, not in response to changes in share price. Falling share prices increase the temptation to add more good dividend-paying shares to the portfolio at a lower price.
> 
> With this portfolio we have bought is a life-long income stream, just like an annuity that grows faster than inflation.
> 
> We call it our orchard. As long as we do not chop the trees down (and consume the capital) we can live off the fruit in perpetuity.


----------



## McLovin

MrBurns said:


> Thats what I was afraid of, and I dont trust "advisors"
> 
> 5% here I come I guess.




There are plenty of companies out there with stable businesses that are growing their profits and dividends. The fact that you are hunting for income stocks would lead me to believe you don't want volatility. In the current environment that's pretty hard to avoid.

The list ROE provided is pretty good, although I disagree with a couple of them. I'm a big fan of IMF the litigation funder, very simple business, excellent track record but the accounting can be hard to understand, similar to CCP in that regard.


----------



## ROE

Ves said:


> How many have you got wrong out of curiousity? Sounds to me like you've used the lessons from the ones you did get wrong to improve your overall results. Well done.




In early days I loss money on Commanders...This is the only stock I ever loss money on (as in collapse).....and that pretty much trigger me to reflect on how I invest in the stock market...

I then embark on a very intense journey on learning about investing in the stock market, practice independent thinking, learn about behavior finance, read countless of books, practice money concepts and advices that Warren Buffett throw at you for free...thousands of hours later I'm well prepared for the market 

I speculate on Lynas and BAU and lost but that is to be expected as it doesn't yet
have any cash flow  but overall I'm doing well since the day I loss money on Commanders...

I always try to learn from my past mistakes and improve on my process I don't blame anyone for a stock collapse....whether it's fraud, crazy CEO, regulations...that is a risk I am willing to accept as a market participant.

No failed pick stock or market collapse will deter me from invest my money in the market...I spent less than I earned so I never run out of money 
but life was never like that until I discover that dead simple secrets 

Going forward I expect to make more mistakes but I expect it to be reasonably low because my process already rules out many stocks that I never ever put money toward such as airlines, steel makers or capital intensive business, low margin commodity business...Complex web of financial stocks I don't understand like Macquarie Bank,  I also pick some good stocks and that  should even thing out and deliver reasonable returns.

These are my stats and majority of my money are in these

These stocks delivered me real yield increase, or stay the same or decline at the time I buy them up to now

CAB (same dividend)
RFG (increase dividend)
CCP (increase dividend)
HVN  under $2.0 (this half decrease dividend)
NVT (Increase dividend)
CPU (same dividend)
TGA (increase dividend)
QBE (decrease dividend)
TLS  under $3.00 (same dividend)
CUP (increase dividend)
WDC around 7.50 (about the same)
CCV (Increase dividend)

Speculative JIN (increase dividend) XRF (same dividend) 

I expect the following will continue to perform well into future years with rising earnings and dividend in future years....

CAB,NVT,CPU,TGA,CCP,CCV,RFG.

spec like JIN earning and dividend should be extra-ordinary higher should
things fall into place like a US contract selling lottery.

Over the years stock I hold got take over that give awesome yield like Centrebet, Wridges way etc... I also sold out stock like DMP, FLT and I made some bad choices obviously...I got into QBE when they are $15 or $16, I got some more recently..

I dont buy many stocks and I dont trades many stocks... I buy and sell based on performance, yield and share price...

I don't think I ever bought, sell or trades more than 30-40 stocks in my life out of some 3000 stocks on the market  

I like stocks like WOW, IVC, IRE etc... but it trades outside the price I'm willing to pay so I stay put and that goes on my list to check out when panic set in ....during market collapse should these stocks trade at price I'm willing to pay I'm in

I'm currently chasing CKF at this price ... a bit high risk but I reckon the pay off should be better than sweat ..stock like these I keep a hawk eye on performance...
I have some figure and ideas in my head, once these things don't work out in 2-3 years then I'm out at a loss otherwise It be will another stock bought cheap


----------



## tinhat

Boggo said:


> That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
> Once you get there then yes, no drama living off it.
> 
> How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.




Honestly, I'm beginning to question the value of these fora. Sorry if i seem to be picking on your but be sensible, the original poster did not post "How can I make $250,000 into $1,000,000 in a few years without taking too much risk" did they? They asked for any pointers from members as to solid income stocks.

If you wanted to turn $250,000 into $1,000,000 twenty years ago you bought water view property in Sydney and held onto it. But that has nothing to do with the question. I'm sure there are a few people posting here who have already done just that.

Some people have provided some interesting tips. Others have engaged in rhetoric that has nothing to do with the topic. If you want to turn your $250,000 into $1,000,000 over the next ten years good luck to you. If you want to discuss it, start a thread. That's not what this thread is about. Maybe the original poster has already done that. I don't know, its not really relevant to the original post in this thread.

Be sure that if I want to start a thread on these fora I will PM you first to make sure it sits OK with your personal situation first.


----------



## tinhat

Boggo said:


> That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
> Once you get there then yes, no drama living off it.
> 
> How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.




Well, this strategy wouldn't meet your criteria, but just to demonstrate that it has some merit...

I calculated the compounded return of CBA since December 2001. I've used the CBA's dividend reinvestment plan prices and assumed that the first dividend received was the June 2002 dividend. All my data is from the CBA's investor pages on their website.

If you started with $250,000 ten years ago and invested it in CBA shares, without taking into account any franking credits, but reinvesting through the DRP the value of that investment today would be $676,600.

If you were to receive 100% of the franking credits (this is academic to you because you wouldn't, but someone who is in a super fund and is in pension phase would) and reinvested them in CBA stock then your investment would be worth somewhere around $850,000.

Now of course, this doesn't meet your investment criteria so this may not be the right strategy for you, and I don't know your tax situation. But, you might concede that this  hypothetical scenario may be suitable for some investors.


----------



## craft

Boggo said:


> Not really Mr B
> _A Buy & Hold investor using the State Street ASX-200 ETF (STW) has a total return of -1.96% (incl. divs) since May 2006, an annualized return of -0.348%.
> _Radge - Jan 2012.V





What makes you assume a buy and hold investor would want to just mimic the index? If they did they could just buy an ETF and never look at this or any other investing site again.

Most investors who are looking at things from an income investing approach would be discerning on what stock they bought and at what price they paid.



Boggo said:


> Just had my SMSF accounts finalised last week, 23.4% for the 2010/11 FY. My TradeSim backtesting says that I should be getting just over 28% if I took every trade.
> 
> Hit and run and give back the minimum is the only way to get results, takes time and work but if you are not prepared for that then you may as well just hand it over to someone else to look after, its buy and hold regardless of who is doing it and in a good year you may get double digit results.
> 
> Just my




Wrong! That is *NOT* the only way to approach the market – it may be a legitimate way but it is not the ONLY WAY. I prefer stock selection based on a value investing approach and it also works just fine. I have also had my SMSF accounts finalised – this year’s return was 64.48%, last year was 44.06%.  (Happy to submit the accounts to a moderator for verification)

I have found in the market its best not to dismiss anything out of hand and it is of little use to go looking for confirming evidence of pre-conceived ideas, which is what your  post in this thread seemed to be doing.

Learning from each other rather than proclaiming our approach as the ONLY way and everything else as misguided seems a more productive approach.

I think that what those who do invest for income would like to Mr Burns to know, is NOT that it doesn't work as you have been implying. but that it can't be achieved without research, skill and market volatility(which has size of capital implications)


----------



## McLovin

tinhat said:


> Honestly, I'm beginning to question the value of these fora. Sorry if i seem to be picking on your but be sensible, the original poster did not post "How can I make $250,000 into $1,000,000 in a few years without taking too much risk" did they? They asked for any pointers from members as to solid income stocks.




It's actually possible to have income generating stocks that display strong capital growth. Low CAPEX intensity companies generally spin off large amounts of cash even as they grow. 

You just need to be prepared that in some years you could see the value of your portfolio shrink and have the stomach to ride it out. Good companies don't generally go bad overnight. If you bought in at a fair price then you should come out ahead.


----------



## tinhat

McLovin said:


> It's actually possible to have income generating stocks that display strong capital growth. Low CAPEX intensity companies generally spin off large amounts of cash even as they grow.
> 
> You just need to be prepared that in some years you could see the value of your portfolio shrink and have the stomach to ride it out. Good companies don't generally go bad overnight. If you bought in at a fair price then you should come out ahead.




I'm not disputing that. Perhaps you should tell that to those who have posted here arguing the opposite.


----------



## tinhat

Boggo said:


> That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
> Once you get there then yes, no drama living off it.
> 
> How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.




OK, well I just read the article linked to in the post you replied to in your quote above. You claim that "you would never go from say $250000 to $1 million with that strategy". Well, taking the author at face value (that they earn a 15% return made up of 7% dividend with franking credits and 8% capital growth). If we take this rate of return and apply it to a starting investment of $250,000 and compound annually it over ten years we get a final value of ... wait for it ...  $1,011,388.43 

That sort of maths is pretty easy. Any serious investor should be capable of that. Can we have some sensible conversation on this forum?


----------



## McLovin

tinhat said:


> I'm not disputing that. Perhaps you should tell that to those who have posted here arguing the opposite.




Sorry, it wasn't directed specifically at you. More of a general statement.

The other nice thing about holding for long periods is not having to pay tax on unrealised capital gains.


----------



## tinhat

ROE said:


> ...
> 
> These are my stats and majority of my money are in these
> 
> These stocks delivered me real yield increase, or stay the same or decline at the time I buy them up to now
> 
> CAB (same dividend)
> RFG (increase dividend)
> CCP (increase dividend)
> HVN  under $2.0 (this half decrease dividend)
> NVT (Increase dividend)
> CPU (same dividend)
> TGA (increase dividend)
> QBE (decrease dividend)
> TLS  under $3.00 (same dividend)
> CUP (increase dividend)
> WDC around 7.50 (about the same)
> CCV (Increase dividend)
> 
> Speculative JIN (increase dividend) XRF (same dividend)
> 
> I expect the following will continue to perform well into future years with rising earnings and dividend in future years....
> 
> CAB,NVT,CPU,TGA,CCP,CCV,RFG.
> 
> spec like JIN earning and dividend should be extra-ordinary higher should
> things fall into place like a US contract selling lottery.
> 
> ...




Thank you for being so frank in explaining your income portfolio. The following stocks are those which I consider to be inside my "income portfolio" in that these are the stocks I am looking at holding for income over capital gain.

ANZ
BHP
CBA
CSL
GUD
ILU
MGX
OZL
RCG
TGA
TLS
TSM
WBC
WES
WOW

Looking at your portfolio, I did hold NVT at one stage and am happy with the price I sold at last year.

 I also held CCA up until last year and am not so sure I did the right thing in selling them in hindsight. I also sold MTU last year and wish I held on to them.

MGX - I made a mistake holding onto this one. I would be happy to be out of this stock. 

OZL despite all the dramas has been a good dividend payer although I should have got out of this when it was around $16 ($1.60 pre-consolidation) in hindsight. Long term prospects don't look great for OZL - will try and exit if copper prices recover. I'm more bullish about PNA (no dividend though).

GUD - I'm a bit worried about the growth prospects for this company too.

I'll look into some of the other stocks people have mentioned here too.


----------



## Bill M

MrBurns said:


> Anyone have any ideas on Index funds ? how have they gone over the past couple of years.
> In line with the all ords I guess ?




Hello MrBurns, I invest in index funds. They are not for everyone but for me it is an easy way to get exposure to a broad range of stocks at very low cost. The main ones are STW and VAS, they simply track the ASX 200 or the ASX 300. Their gross dividends are around that 5% mark and have been pretty much the same over the last few years. I don't invest much in these two as I need a bit more income than that. I started a thread a couple of Months ago about the All Ords going no where for 7 years, basically if you invested in these 2 the result would have been similar.

My favourite ETF is SYI and I have a reasonable holding in it and I add to it whenever the market take a bit of a dive. SYI is State Street Global Advisors high dividend yield fund. I have held these over a year. My capital is down 6% at this time, sounds bad I know but it has produced 8% gross income returns for me. They claim on their website that at 31/12/2011 that their indicative dividend yield - gross is 9.35%. I don't know how they come to that figure but when I work it out for myself it comes to 8% gross at just over the $22 mark.

I Like the way it invests in dividend paying stocks only. There is a strict selection criteria and set of rules and those that don't make the grade don't get in. As a long term dividend income investor I like this ETF and will continue to hold it and buy more on any dips. The fund pays dividends quarterly and 8% gross in a down turn isn't to be sneezed at.

Buying this ETF is only one of the ways I get the income I need and when everything is crashing and cheap like when the All Ords hit 3800 recently then I find buying this ETF very effective. Here is a link to the facts sheet and there is much more on their website. In particular click on the broker basket and see what stocks are in this ETF, cheers. Link:http://www.spdr.com.au/etf/fund/ref_doc/Factsheet_SYI.pdf


----------



## Trembling Hand

So_Cynical said:


> I thought it was a great article and hard to fault the authors logic and numbers... there is clearly a divide between the market participants who are comfortable with holding shares thru price gyrations in both directions and those who are not.



Yeah the numbers looked good, logic looks OK. But do value investors never get it wrong? How do they deal with it when they do?

Just wondering about the risk side of it. Like a frequent trader stating they made 50% last year doing XYZ. What happens when XYZ stops working? will they survive?


----------



## Muschu

I like the way most posters to this forum apppreciate the fact that investment strategy is very much an individual strategy based upon a range of factors.  Some posters may perhaps be a little less tolerant of others' views.  Surely there is no one "right" way.
I see no problem in "controlled" (choose your own definition of that) income investing.  
For example, in terms of some stocks mentioned above, I bought into TLS when the uptrend began.  I also sold all my NVT when visa and exchange rates made it clear that the company has some issues at this time.  I have also displayed some poor judgement of course. 
I read, with interest, the stocks that some posters have been good enough to nominate.
SC: Your approach is interesting and clearly works for you.  Yet the stocks you mention appear to be of very low liquidity and I wonder whether you see that as an issue?
My own approach is that we are presently 55% in cash; 35% in ff high dividend stocks and the rest in lower cap uptrending stocks.
Regards
Rick (SMSF retiree)


----------



## tinhat

Another one to add to the list is AAD - Ardent Leisure Group.


----------



## waimate01

SuperGlue said:


> Here is a link to someone who is doing it for his SMSF - investing for income.
> 
> http://www.superguide.com.au/compar...ibutor-how-1-million-can-last-longer-than-you
> 
> 
> "sit out any downturn, so falling share prices have no effect on my investment strategy and anyway my income depends on company profits......"
> 
> Hmmmm, don't lke this bit.




Great link. The interesting bit is that both opposing points of view can simultaneously be correct.

If you have a small asset base and wish to get ahead, then by all means trade your socks off. If you're good at it, you'll buy and sell exactly the right thing at exactly the right time and you'll make lots of money.

But if you've already made lots of money (more probably by working hard and living sensibly, or by running your own small business (not saying you can't do it through trading, just that vastly more people do it through these two techniques)), the the "orchard" approach works great.

What this author is pointing out is that it's entirely possible to build a Financial Perpetual Motion machine. Every million dollars you put to one side and invest in your "orchard" of income stocks will generate $50,000 per year FOR EVER. Inflation immune. For ever. For the whole of your like, and the whole of your kids lives, and their kids beyond them, until one of them manages to stuff it up by cutting down the trees, or until our financial system unravels.

So just figure out how much spending power per year (in today's dollars) you want for yourself and all of your descendants, divide by 50000, and that's how many millions of dollars you need in your orchard. 

Where do the millions come from?  That's left as an exercise for the reader


----------



## blue0810

Some info for  dividend:
http://www.sharedividends.com.au
http://www.dividend.com


----------



## MrBurns

Some great links and info here, thanks to everyone, I wont keep thanking all of you as it becomes boring, I'll just keep trying to learn something.
What I guess I really need is a good honest broker, I knew of a guy who had a seat on the Exchange once who gave it away because he couldn't stand lying to his clients any more, I know they have to get you into something to make their fees but I'm at the stage where I cant afford to lose any more so whoever I use needs to be damn good, or I'll just leave it in TD's.


----------



## craft

Trembling Hand said:


> Yeah the numbers looked good, logic looks OK. But do value investors never get it wrong? How do they deal with it when they do?
> 
> Just wondering about the risk side of it. Like a frequent trader stating they made 50% last year doing XYZ. What happens when XYZ stops working? will they survive?




Hi Trembling Hand. You ask a very important question. So you will have to excuse the length of this post as I try to answer it as risk management is intergrated into the whole of the approach.

Of course Value Investors get it wrong. It is impossible to know the future, you can make reasonable assumptions but perfection is impossible. Good research can improve your accuracy but you will never be infallible, so managing when you are wrong is core to success.

The first protection I have in place is some level of diversification – fixed between a minimum of 12 and a maximum of 18 stocks to help with the specific risk of being wrong about a business.

The next protection is in the fact that the most I can lose is 100% of my allocation to any 1 stock, however holding excellent businesses (that remain excellent) for long periods results in Multi-baggers.  That’s asymmetrical risk to reward.

The research effort feeds both into the accuracy and my average win to average loss ratio producing a high expectancy and its associated benefits to risk of ruin.

I ignore market risk. To do that requires a temperament and a capital base to ignore whatever the market wants to do to the price of business that I am invested in.  All the market is to me is an opportunity. If I think a business has a discounted cash flow of say $50 and I can buy it for $25 then I may take that opportunity. If I hold accompany that I think has a discounted cash flow of $50 dollars and I can sell it for $100 then I may take that opportunity. The gain from exploiting mispricing – over the long term tends to be swamped by the actual performance of the company for this reason the quality of a company is the most important thing to me. 

There is ramification in ignoring market prices (beyond being opportunistic) in my decision process, that is that when I’m wrong the market can be way in front of me and marked the price way down in anticipation of something that I didn’t factor in. Then it’s just a case of – cut the loss as soon as I know the business is not of the quality I thought (I do this without fail no matter the size of the loss. I don’t have a bottom draw).  Incidentally this can go both ways – sometimes I’m out of a deteriorating business whilst the share price is still rising.  At any rate my maximum loss is 100% my average win to average loss is underpinned on asymmetrical risk/reward.  I phase into new businesses getting to know them as I go and have never got anywhere near loosing 100% despite investing in some retrospective shockers.

How do I know that excellent business will have their performance rewarded over the long term – I don’t but I bank, what will be an excellent yield if the market price is not bid up.

How do I know my business analyses remains adequate – I track my yield on allocated capital – I have a system stop at this level to stop what I’m doing if the yield (defined as EPS not DPS) trajectory deviates to far from historical performance? Whilst yield to market is volatile, yield to allocated capital is much smoother.

The biggest advantage to me of investing is how much capital I am comfortable applying to it and its low transactional cost.  The biggest drag on performance is the limit to opportunities – because the holding period is long you don’t get many opportunities, as I have said I think the performance arising from excellent companies dwarfs mispricing opportunism – I am more tilted towards business quality then some who seem to concentrate on buying anything so long as it is cheap, unless there is a catalyst for repricing I only want the best companies. If I’m in investing predominantly on mispricing I will exit as soon as the catalyst idea has failed regardless of the outcome. 

If you see ways of improving my risk management from your trader’s perspective (keeping in mind I don’t want to trade as a way of reducing risk – I want passive income) I would love to hear your ideas.

Cheers


----------



## Ves

ROE said:


> I always try to learn from my past mistakes and improve on my process I don't blame anyone for a stock collapse....whether it's fraud, crazy CEO, regulations...that is a risk I am willing to accept as a market participant.
> 
> No failed pick stock or market collapse will deter me from invest my money in the market...I spent less than I earned so I never run out of money
> but life was never like that until I discover that dead simple secrets
> 
> Going forward I expect to make more mistakes but I expect it to be reasonably low because my process already rules out many stocks that I never ever put money toward such as airlines, steel makers or capital intensive business, low margin commodity business...Complex web of financial stocks I don't understand like Macquarie Bank,  I also pick some good stocks and that  should even thing out and deliver reasonable returns.



Hi ROE,

Thanks for your thoughts. Like craft, I too use a similar approach to you. Although, I am much more a beginner. Trying to learn from reading Buffet's letters, will read Lynch soon. I have read Greenwald and a few other value investing books (and competitive advantage analysis).




> I like stocks like WOW, IVC, IRE etc... but it trades outside the price I'm willing to pay so I stay put and that goes on my list to check out when panic set in ....during market collapse should these stocks trade at price I'm willing to pay I'm in



I have all of these on my list too. Agree that they are not "cheap" enough yet. IRE may get much cheaper in the next few years if the financial industry keeps coming under reform, and more planners are made redundant due to lack of market interest. and their earnings take a temporary hit.

Also looking at CSL, COH (still think it is too expensive) and maybe something like MMS.

Have positions in TGA and NVT which you seem to follow. Also DTL and ASZ.

I hold the big banks (except NAB), which is probably a bit of a contrarian play compared to most value investors on this site.



> I'm currently chasing CKF at this price ... a bit high risk but I reckon the pay off should be better than sweat ..stock like these I keep a hawk eye on performance...
> I have some figure and ideas in my head, once these things don't work out in 2-3 years then I'm out at a loss otherwise It be will another stock bought cheap



 I have followed your posts on this with interest. I helped your cause on Friday night when we bought some KFC from one of their Brisbane franchises. This business, providing that it doesn't go on a debt fuelled acquisition binge and get into cash flow difficulties has a fairly good chance of achieving at least growth in-line with inflation over the long-term I believe. Although, I am always wary that the franchisor, not the franchisee seems to have the better returns.

Thanks again


----------



## McLovin

Ves said:


> I have followed your posts on this with interest. I helped your cause on Friday night when we bought some KFC from one of their Brisbane franchises. This business, providing that it doesn't go on a debt fuelled acquisition binge and get into cash flow difficulties has a fairly good chance of achieving at least growth in-line with inflation over the long-term I believe. Although, I am always wary that the franchisor, not the franchisee seems to have the better returns.
> 
> Thanks again




I had an interesting chat on Friday afternoon with a franchise business broker. He told me that there are only three franchises that make money, KFC, Macca's and Subway the rest you are just buying yourself a job (his words not mine). Gloria Jeans are apparently bombs (most of the leases are way to expensive) and can be bought in the secondary market for 25-30% of their new franchise value. He also thought RFG had paid too much for Michel's and were struggling to find people willing to pay the franchise fees. That could mean a writedown on goodwill coming up. You can't beat good scuttlebutt.

The problem with CKF is that management have shot their own credibility, badly.


----------



## pixel

blue0810 said:


> Some info for  dividend:
> http://www.sharedividends.com.au
> http://www.dividend.com



 Good sites, Blue; thanks for sharing.
But before you rush and buy the history spreadsheets, see if 2 years AllOrds history might be enough for you: the text file below is current as of today and has been saved as a tab-delimited spreadsheet.
Excel will open it OK. (I tried)

View attachment DivHist.txt


----------



## So_Cynical

Trembling Hand said:


> Do value investors never get it wrong? How do they deal with it when they do?



 I'm not a "value" investor but i would imagine that they would be in a very similar situation to me, as in they are faced with a decision to buy more or take a substantial loss or do nothing...personally, about 80% of the time i buy more if funds are available to do so.

I have a mantra of:

"Don't enter a stock unless you are prepared to buy more if it falls for no good reason"



Trembling Hand said:


> Just wondering about the risk side of it. Like a frequent trader stating they made 50% last year doing XYZ. What happens when XYZ stops working? will they survive?




I am surviving because i have no debt and i am not dependant on my trading/dividend income...currently my strategy has stalled, this time last year i was completing a trade every 3 weeks or so now its more like 3 months or so. 

------------------------------



Muschu said:


> I like the way most posters to this forum apppreciate the fact that investment strategy is very much an individual strategy based upon a range of factors.  Some posters may perhaps be a little less tolerant of others' views.  Surely there is no one "right" way.
> I read, with interest, the stocks that some posters have been good enough to nominate.
> SC: Your approach is interesting and clearly works for you.  Yet the stocks you mention appear to be of very low liquidity and I wonder whether you see that as an issue?




Hey Rick

Low liquidity would only be an issue if i was a forced or desperate seller, which i am not...the low liquidity stocks can be frustrating but because yield is one of the key ingredients of my strategy i figured i had to get involved with a select few of these micro cap, high yield, low liquidity stocks.

GLB - Globe ~  has been fun recently...there has been a cheeky buyer that usually has the bid (first in the buy queue) with a very cheap offer, ill bid a half a cent above him (still cheap as) and my order will sit there for weeks unfilled, then he (assuming its him) will go a half cent above me and his order will sit there for a week unfilled and then ill trump him again by a half cent...and so on and so on. 

-----------------------------



waimate01 said:


> What this author is pointing out is that it's entirely possible to build a Financial Perpetual Motion machine. Every million dollars you put to one side and invest in your "orchard" of income stocks will generate $50,000 per year FOR EVER. Inflation immune. For ever. For the whole of your like, and the whole of your kids lives, and their kids beyond them.




Your Financial Perpetual Motion machine will need maintenance... I've had a bit to do with growth things over the years and can tell you any Orchard or Crop will need attention and good decision making to give ongoing excellent yields...but yeah i really liked the orchard bit too.


----------



## blue0810

pixel said:


> Good sites, Blue; thanks for sharing.
> But before you rush and buy the history spreadsheets, see if 2 years AllOrds history might be enough for you: the text file below is current as of today and has been saved as a tab-delimited spreadsheet.
> Excel will open it OK. (I tried)
> 
> View attachment 46296




Thanks for the file, BTW with market stuff I never rush


----------



## Garpal Gumnut

I've been loading up on WOW. It is always a yin and yang between Woolies and Coles. 

My tuckermeter, as evidenced by Mrs Gumnut's shopping dockets have been swinging back to Woolies, after some 9 months being Coles. 

WOW has a respectable divi and if the XAO moves up this year there may be capital appreciation.

gg


----------



## So_Cynical

Garpal Gumnut said:


> I've been loading up on WOW. It is always a yin and yang between Woolies and Coles.
> 
> My tuckermeter, as evidenced by Mrs Gumnut's shopping dockets have been swinging back to Woolies, after some 9 months being Coles.
> 
> WOW has a respectable divi and if the XAO moves up this year there may be capital appreciation.
> 
> gg




There was some interesting WOW analysis on inside business this morning...some opinion that the good times are over and that according to the figures organic profit growth has stalled.


----------



## Garpal Gumnut

So_Cynical said:


> There was some interesting WOW analysis on inside business this morning...some opinion that the good times are over and that according to the figures organic profit growth has stalled.




Thanks S_C , I'll check it out.

gg


----------



## McLovin

So_Cynical said:


> I'm not a "value" investor but i would imagine that they would be in a very similar situation to me, as in they are faced with a decision to buy more or take a substantial loss or do nothing...personally, about 80% of the time i buy more if funds are available to do so.




I am a value investor and if the SP falls then I buy more, unless the reason for the investment has changed. On the flipside, if the price increases beyond my valuation then I will sell.

I tend to see value investing as the rally driving of the stock market. Whereas charting is more like the Forumla 1.


----------



## ROE

Boggo said:


> That's fine if you have $1 million, you would never go from say $250000 to $1 million with that strategy.
> Once you get there then yes, no drama living off it.
> 
> How to build it up to there is the issue that I am sure most of us are concerned with at the moment, I am anyway.




Sometimes it is about the journey but not the destination..
A lot of people concentrate on how do I turn XXX into YYY and financial advisers are feed on this stuff and maybe that where things gone haywire.

Maybe they should concentrate on first saving as the first priority, stack away 10-20% each pay cheque  religiously and from there work out how to deploy the cash for adequate return rather than concentrate on capital appreciation which most fund managers and advisers seem to fail on epic scale.

I'm all about the journey, I stack away so much each month...without doing anything at all  my cash holding will be higher next month than this month due this process..

I then look for a safe place to put the cash that deliver reasonable yield...anything else is a bonus....When will I get to a million isn't too much of a concern because this will
be a by product soon enough when you save, invest and get reasonable yield.


----------



## ROE

So_Cynical said:


> There was some interesting WOW analysis on inside business this morning...some opinion that the good times are over and that according to the figures organic profit growth has stalled.




Interesting, I dont like the new CEO already, he seem to say everything is rosy
We done well with everything, we don't know Coles market share but we doing well 

Man what short of manager are you if you don't know what your rival is doing?
even if Coles don't release figure, you got an army of people out there they should be
able to figure that out...

and he said Dickie isn't a failure? man is this guy joking or what? margin of 2.7% on
Dickie isn't a failure?  

http://www.theaustralian.com.au/bus...smith-no-failure/story-e6frg90f-1226288603598

Beware when managers think like he does


----------



## pixel

Given that DS is up for sale, what would you expect Woolies' ceo to say? "Don't touch it. It's cr@p" ?
No, of course he has to try and talk it up.
Big Biz is in a similar situation as Governments around the world: You know they're telling fibs because their lips are moving...


----------



## tinhat

blue0810 said:


> Some info for  dividend:
> http://www.sharedividends.com.au
> http://www.dividend.com




Thanks for those links, but buyer beware regarding sharedividends.com.au there is some dodgy data in there. I wonder if it gets entered by hand. I found some errors with a couple of stocks - misplaced decimal points. Example: http://www.sharedividends.com.au/dtl


----------



## wayneL

Here is another idea for 'income investing'.

Notwithstanding the selection of stocks on the basis of fundamental soundness and yield, or whatever parameters FAs want to use, if the stocks are optionable, one could sell calls at appropriate times to juice up returns.

Now folks here will probably recall that I have been highly critical of covered calls on these boards, but only in so much as how they have been promoted as a wealth building panacea, a get rich quick scheme and the nonsense of '4-8% per month' type marketing. 

Used properly, they can be an excellent means of increasing cash returns from a long term holding.

I am not talking about systematically writing calls every month like the seminar simpletons teach you and charge you $3k for their crap, I'm talking about periodically and strategically writing calls at moments when it is statistically advantageous to do so.

One may also, depending on ones confidence, write them somewhat out of the money to mitigate the risk of being called out and precipitating a CGT event (which can be avoided anyway).

Using covered calls in this way (and acquiring the requisite knowledge) you can increase you annual cash returns safely by maybe 3%, maybe 5%, maybe 10% or more on your long term holdings, depending on a number of factors.

The idea is to write calls at strikes where technically and statistically the price is not likely to go. This means waiting for the right times to do so, rather than slavishly writing calls every month because some hyped up cretin on a stage says you'll get rich by doing so.

This could mean writing calls only a handful of times during the year, but an extra 3 - 5% per year could mean all the difference for those relying on income from a share portfolio.

I stress to avoid '4 - 8% per month' tw@ttery you see all over the net... it's bullshyte, Don't anybody give them your money.

DYOR


----------



## dutchie

wayneL said:


> Here is another idea for 'income investing'.
> 
> Notwithstanding the selection of stocks on the basis of fundamental soundness and yield, or whatever parameters FAs want to use, if the stocks are optionable, one could sell calls at appropriate times to juice up returns.
> 
> Now folks here will probably recall that I have been highly critical of covered calls on these boards, but only in so much as how they have been promoted as a wealth building panacea, a get rich quick scheme and the nonsense of '4-8% per month' type marketing.
> 
> Used properly, they can be an excellent means of increasing cash returns from a long term holding.
> 
> I am not talking about systematically writing calls every month like the seminar simpletons teach you and charge you $3k for their crap, I'm talking about periodically and strategically writing calls at moments when it is statistically advantageous to do so.
> 
> One may also, depending on ones confidence, write them somewhat out of the money to mitigate the risk of being called out and precipitating a CGT event (which can be avoided anyway).
> 
> Using covered calls in this way (and acquiring the requisite knowledge) you can increase you annual cash returns safely by maybe 3%, maybe 5%, maybe 10% or more on your long term holdings, depending on a number of factors.
> 
> The idea is to write calls at strikes where technically and statistically the price is not likely to go. This means waiting for the right times to do so, rather than slavishly writing calls every month because some hyped up cretin on a stage says you'll get rich by doing so.
> 
> This could mean writing calls only a handful of times during the year, but an extra 3 - 5% per year could mean all the difference for those relying on income from a share portfolio.
> 
> I stress to avoid '4 - 8% per month' tw@ttery you see all over the net... it's bullshyte, Don't anybody give them your money.
> 
> DYOR




Good post Wayne

If you followed Elliot Wave theory you could sell a covered call at the end of a wave 1, wave 3 and wave 5.


----------



## tech/a

dutchie said:


> Good post Wayne
> 
> If you followed Elliot Wave theory you could sell a covered call at the end of a wave 1, wave 3 and wave 5.




Or a whole portfolio at 5 of 5 of 5.
Personally wouldnt be concerned with covering a position unless its at the end of a completed wave count.

Wayne being af fan(Elliot)would of course be right on this!


----------



## pixel

dutchie said:


> Good post Wayne
> 
> If you followed Elliot Wave theory you could sell a covered call at the end of a wave 1, wave 3 and wave 5.



 +2
While I didn't have specifically EW's in mind, I agree with "what Wayne said."
... including his caution about seminar hype and unkept promises.


----------



## skc

craft said:


> Backing businesses, rather than trading the share price can and does work, but you need to know how to analyse businesses and estimate their worth and it takes time to see off the randomness and fads of the market, the longer you’re holding period the lumpier your equity curve – end of story.
> 
> If you want income AND a smooth equity curve, selecting businesses for the yield they can produce is probably not your best bet.   The smoothest equity curves come from the shortest holding period strategies.






Trembling Hand said:


> I never thought I would see the day that such words would came out of a value investor.
> :bier:




Yes remarkable insight from a value investor and something that all market participants who aspire to generate income from the market should understand. 

On the other hand, there are 2 things that one should assess when it comes to picking their approach (regardless of the above).

1. What is your objective? If you can't sit in front of the screen all day then hyperactivem, TH style day trading probably isn't for you.

2. Where is your skill? Do you really know you are good at picking stocks or short term trading? Don't do something you are not good at just because it has the potential to make more income.

And let's face it, most people fail because they don't have the skill, not because they chose one approach over the other.


----------



## odds-on

skc said:


> Yes remarkable insight from a value investor and something that all market participants who aspire to generate income from the market should understand.
> 
> On the other hand, there are 2 things that one should assess when it comes to picking their approach (regardless of the above).
> 
> 1. What is your objective? If you can't sit in front of the screen all day then hyperactivem, TH style day trading probably isn't for you.
> 
> 2. Where is your skill? Do you really know you are good at picking stocks or short term trading? Don't do something you are not good at just because it has the potential to make more income.
> 
> And let's face it, most people fail because they don't have the skill, not because they chose one approach over the other.




Good points skc!

To any investor I would recommend reading Free Capital by Guy Thomas. He profiles a dozen successful investors and quite rightly identifies that the 12 successful investors as “extraordinary” not just some average Joe off the street. They all seem to have an investment “edge” be it laziness, holding periods, networking, strategies, investment tools, business analysis and so on. The key learning point for me from the book is “edge” and how you apply it. I know that I have a lot to learn and accept that I have yet to gain an edge and may have to accept that one may not be there – if I cannot make a CAGR > 15% over a three year period then I am going to spend my spare time doing other stuff and stick my money in an index tracker as John Bogle/Warren Buffett advise. My performance to date highlights 4 things for me to improve on – 

1.	Poor decision making – do I remove the decision making process completely and just buy a dozen stocks which meet some proven market beating strategy and accept statistically I will probably come out all right. This is very tempting.
2.	Diworsification. If I continue to select my portfolio at this stage I should be holding a maximum of 3 core stocks. Anymore is foolish as the risk of me not properly analysing them is highly likely.
3.	Money management. Improve my position sizing and SELL rules. This is important if I only hold three stocks.
4.	Focus. How much do I spend searching for ideas? If I hold 3 stocks maximum and holding period between 1 to 2 years then 1 good idea a year is all I really need - I reckon an hour a week research is enough to generate 1 idea a year.

Cheers

Oddson


----------



## ROE

pixel said:


> Given that DS is up for sale, what would you expect Woolies' ceo to say? "Don't touch it. It's cr@p" ?
> No, of course he has to try and talk it up.
> Big Biz is in a similar situation as Governments around the world: You know they're telling fibs because their lips are moving...





So you think the buyer of Dickies just walk in and buy with a positive comments from
former owner?

they would look through the books and at that sort of margin most of them would walk..that why there aren't many buyers jump up and down buying Dickies...
That why they have to close so many stores to make the number look presentable

people may buy just for the inventory but you not going to get much good will out
of it and woolies may end up has to close the whole thing down and write it off...

there is nothing wrong with Woolie came out and say we didn't run Dickies well
I think it's a failure on our part, the new owner maybe able to do a better job

and I reckon that wouldn't make any difference to the sale price...

If I was a WOW investors I would feel much more comfortable with that comments
than talk up something you know in your blood is BAD.

What stopping them from doing the same thing for other business like hardware
when they start losing money and hmm everything is cool just start up cost etc...

Good honest management counts and the one that tell bull**** usually dont run the shop well..
too proud, too afraid to admit mistakes...without admitting mistakes you cant fix the problem

Failing Dickies tell me WOW cant handle competition, only with their dominant 
market share they doing well when things get touch and the market is crowded watch out.

No wonder when Coles running by Wesfarmers step up with competition, they falling behind
I was WES skeptic but they proved me wrong, Goyder is a very good and able manager 

anyway I think I went off topic, no more posting for a while back to next stock research


----------



## McLovin

ROE said:


> So you think the buyer of Dickies just walk in and buy with a positive comments from
> former owner?
> 
> they would look through the books and at that sort of margin most of them would walk..that why there aren't many buyers jump up and down buying Dickies...
> That why they have to close so many stores to make the number look presentable




I have some close friends who run a few websites, one of which competes very closely with DSE. They actually think that DSE's online strategy is excellent (and these guys have gone from selling zero to selling ~$100m/year in 7 years albeit coming from a fairly large, ie they are still not the biggest part of the group, established family company). Considering they are carrying a huge store network, their prices are actually quite reasonable. I'm not saying I'd buy DSE but I wouldn't write it off completely.

You close down 70% of the stores and you have a pretty good online business supplemented by showrooms that is profitable.


----------



## village idiot

TLS is oft quoted to illustrate why not to buy income stocks. but at the start of the downslide referred to if I am reading the charts correctly it was paying a dividend of 18c on a 9.00 stock price, around 2% yield. at that point it was priced more as a speculative stock than income, and it wouldnt have appeared on an income investors radar till long after that

its div wouldnt have become an 'income' target till it got to somewhere around $3.80 when it hit a 6% yield. And if you had bought it around 3.80 it has probably done its job compared to non income stuff


----------



## tinhat

Yesterday would have been a good day to top up on CBA @ $47.66 albeit ex-dividend. Yield 6.82% (9.74% grossed up with franking credits).


----------



## MrBurns

tinhat said:


> Yesterday would have been a good day to top up on CBA @ $47.66 albeit ex-dividend. Yield 6.82% (9.74% grossed up with franking credits).




That's interesting. I'm thinking hard of going in deep around April depending on where the market is, the more battered it is the better I guess.


----------



## Julia

MrBurns said:


> That's interesting. I'm thinking hard of going in deep around April depending on where the market is, the more battered it is the better I guess.



 Why April?


----------



## MrBurns

Julia said:


> Why April?




Thats when my cash rolls out of the TD.


----------



## Ves

ROE said:


> some of my Favorites and I' mainly in Midcap and small caps as these guys has much more potential to deliver better dividend as they get bigger.
> CUP




ROE,

I actually had a look at this over the weekend, since accounting is close to my heart (I work as an SMSF accountant).

Just looking at the CUP thread and realised that you sold this at one point because your fundamental reason for purchasing changed (ie. FOFA legislation).

Did you re-assess this and buy back in? Any reason for changing your mind? Feel free to PM me if you want to discuss in private.

Outside of any legislation risk, I think the biggest challenge of their business is making acquisitions at the right prices (like our investing journey!) and making sure they can tie them all into their business model seamlessly going forward.  They seem to want focus more on "Franchising" going forward, which, seems to be what helped Count Financial (before CBA bought them out) become successful.


----------



## Muschu

I am wondering what the views are on holding [in the circumstances of a SMSF retiree] very low liquidity stocks with little or no debt, little growth, but with FF dividends of 
8+%.

I am also assuming the capacity to hold such stocks.  The returns exceeds any bank /cash arrangement that I know of.  Examples might be [more research needed] SND and KSC.

Thanks 

Rick


----------



## skc

Muschu said:


> I am wondering what the views are on holding [in the circumstances of a SMSF retiree] very low liquidity stocks with little or no debt, little growth, but with FF dividends of
> 8+%.
> 
> I am also assuming the capacity to hold such stocks.  The returns exceeds any bank /cash arrangement that I know of.  Examples might be [more research needed] SND and KSC.
> 
> Thanks
> 
> Rick




You always need a bid in order to exit. You may not have any reasons to exit now, but with an illiquid stock, the added risk is that a bid won't be there when you want to exit. Worse still, if the company release some bad news out of the blue, you can bet that you won't have a bid to exit unless you really reach downwards.

So one needs to be mindful whether the return you are getting is worth the additional risk. I didn't mind the financials of SND but the lack of liquidity has deterred me.
Having said that, some companies do gain significant liquidity over time through their success. IRI is a good example.


----------



## McLovin

Muschu said:


> Examples might be [more research needed] SND and KSC.
> 
> Thanks
> 
> Rick




I don't know SND but KSC, from what I have seen, looks like a pretty low grade company (low margins/low return on assets/roe). Got to be careful if you go hunting dividends in stocks like that, often there is a reason the divvy is so high.


----------



## ROE

Ves said:


> ROE,
> 
> I actually had a look at this over the weekend, since accounting is close to my heart (I work as an SMSF accountant).
> 
> Just looking at the CUP thread and realised that you sold this at one point because your fundamental reason for purchasing changed (ie. FOFA legislation).
> 
> Did you re-assess this and buy back in? Any reason for changing your mind? Feel free to PM me if you want to discuss in private.
> 
> Outside of any legislation risk, I think the biggest challenge of their business is making acquisitions at the right prices (like our investing journey!) and making sure they can tie them all into their business model seamlessly going forward.  They seem to want focus more on "Franchising" going forward, which, seems to be what helped Count Financial (before CBA bought them out) become successful.




No I sold out Count (COU), because count are around fees and wrap platforms..CBA subsequently took them over and the founder agree for the take over...
He probably know the wrap platform fees good day are over so may as well let CBA have it...

where  Count Plus (CUP) are more to do with accountant work, payroll process, more to do with ****ty paper works  than the easy wrap platform fees... 

CBA still has a big chunk of CUP by default of taking over COU, so they either sold out
or take over CUP at some stage...

CUP pay dividend 4 times a years....


----------



## tinhat

Muschu said:


> I am wondering what the views are on holding [in the circumstances of a SMSF retiree] very low liquidity stocks with little or no debt, little growth, but with FF dividends of
> 8+%.
> 
> I am also assuming the capacity to hold such stocks.  The returns exceeds any bank /cash arrangement that I know of.  Examples might be [more research needed] SND and KSC.
> 
> Thanks
> 
> Rick




I've heard it suggested that you should not own more than five times the average daily traded. For example, SND has an average daily traded (22 days) of just $5,576 (11,476 shares), so that is very illiquid.

That said, I own twice the average daily traded (in my SMSF) of GZL.

SND went ex-dividend on the 27/2 so no rush to buy it. You would really need to know about the company and its markets and have faith in its management and its story to buy. Its looks like a lumpy business (so far at least) with EPS growth swinging around a lot year to year and negative in many years. Profits also very lumpy year to year.

KSC average daily traded is $41,913 (33,804 shares). In terms of the fundamentals, everything has been heading south for this company for some time. EPS growth has been mainly negative, profits have been flat to falling, dividend has been falling, share price in long term decline. I can't see any reason to want to own this stock.

I'd suggest looking at AAD and ASZ. I don't own either but they are both on my watch list. 

AAD - no growth in the business, near 100% payout ratio, no franking credit, yielding a touch over 10%. 

ASZ - more growth oriented, just built a data centre and made a large acquisition in 2010 that has dinted EPS growth and return on equity. Dividend payout ratio of 77% but is a low capital intensive business. The business has a good story in my opinion. Current yield a touch over 9% fully franked. Will need to see the price turn around though. Will need to break out of its down channel. Ex-div date is 27/03 so I can't see myself picking it up before then unless I take a small punt and buy at around $0.80 as it should be worth over $1 IMO. Risk here though is that the federal budget is going to be tight for some years which might limit the government sector opportunities.


----------



## skc

Compared to highly illiquid / high yield stocks, I think A-REIT and utilities offer similar yields at much more volume and arguably better risk profile imo.

The IT sector is also yielding well at the moment.


----------



## Muschu

skc said:


> Compared to highly illiquid / high yield stocks, I think A-REIT and utilities offer similar yields at much more volume and arguably better risk profile imo.
> 
> The IT sector is also yielding well at the moment.




No idea what A-REIT is skc..... Displaying my ignorance.

Thanks everyone for the comments offered.

Rick


----------



## Bill M

Muschu said:


> No idea what A-REIT is skc..... Displaying my ignorance.
> 
> Thanks everyone for the comments offered.
> 
> Rick




It's the new name for Property Trusts, stands for Real Estate Investment Trust. Westfields, Stockland, Goodman group etc.


----------



## Bill M

Today I put in an application for the AGL Subordinated Notes. As an income investor I think that the return on these at current rates are good. The 90 day BBSW rate was 4.5% today + 3.8% spread = 8.3% return on cash invested. It will be part of my diversified income portfolio. This is one of many ways one can maximise their income.

More info here if anyone is interested:

http://www.agl.com.au/about/InvestorToolkit/Pages/AGLEnergySubordinatedNotes.aspx


----------



## Ves

tinhat said:


> ASZ - more growth oriented, just built a data centre and made a large acquisition in 2010 that has dinted EPS growth and return on equity. Dividend payout ratio of 77% but is a low capital intensive business. The business has a good story in my opinion. Current yield a touch over 9% fully franked. Will need to see the price turn around though. Will need to break out of its down channel. Ex-div date is 27/03 so I can't see myself picking it up before then unless I take a small punt and buy at around $0.80 as it should be worth over $1 IMO. Risk here though is that the federal budget is going to be tight for some years which might limit the government sector opportunities.



 Disclosure: I own ASZ.

A few further risks that a perspective investor may want to be aware of:

1.   The company really needs to win a $100 million+ IT contract to convince the market to re-rate it and allow for capital growth in its share price.  They shared their intentions with the market quite some time ago now and have been unsuccessful with tenders to date.

2.  The data center needs to start being utilised and create cash flow, as far as I can tell it is dragging on profit at its current usage levels.

3.  The acquisitions that you mentioned need to be paid out in 2013.  They have secured a $21 million loan facility, and also have an equity option. But either way, without some growth in earnings share holder returns will be diluted with an equity issue or interest coverage ratios will go up and may be uncomfortable for some holders.

Certainly not a stock that you can just put in the bottom draw IMO, especially with headwinds for the IT sector in general.

The plus side is that the above points could be looked up as positives; they also provide opportunity and catalysts for earnings growth if they tick all the boxes.


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## Ves

ROE said:


> No I sold out Count (COU), because count are around fees and wrap platforms..CBA subsequently took them over and the founder agree for the take over...
> He probably know the wrap platform fees good day are over so may as well let CBA have it...
> 
> where  Count Plus (CUP) are more to do with accountant work, payroll process, more to do with ****ty paper works  than the easy wrap platform fees...
> 
> CBA still has a big chunk of CUP by default of taking over COU, so they either sold out
> or take over CUP at some stage...
> 
> CUP pay dividend 4 times a years....



 Thanks for clarifying!

The part about the quarterly dividend payments did excite me when I first looked at this stock. Has an American vibe to it, except with franking credits!

It is on my list for the time being; I need to do some more research before I can make a decision. But it does look solid on first glance.


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## So_Cynical

Muschu said:


> No idea what A-REIT is skc..... Displaying my ignorance.
> 
> Thanks everyone for the comments offered.
> 
> Rick




skc is right in that the A-REIT yields are around 8 - 9% and they do in general have high liquidity, but no franking credits to gross up the yield and in general high debt or at least significant debt..with the income (rent yields) to back up that debt.

I own a couple of these (DXS, ALZ) that i brought during the GFC revival and again on the next dip, buying the low points in the share price cycle seems to help with ROIC yield, you certainly wouldnt want to be buying willy nilly at any old price because the SP of the A-REIT's can move around in a 10 to 15% cycle.

Sometimes a short cycle sometimes long...buy the bottoms and you cant go wrong...see the success myself and Nulla nulla have had in the DXS thread over the last 2 years.

https://www.aussiestockforums.com/forums/showthread.php?t=15351&p=553530&viewfull=1#post553530


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## tinhat

tinhat said:


> I've heard it suggested that you should not own more than five times the average daily traded. For example, SND has an average daily traded (22 days) of just $5,576 (11,476 shares), so that is very illiquid.




Correction. I meant to say that the rule I have heard is that you should not own more than one fifth (20%) of the average daily traded. For SND that would work out to about $1,110.


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## tinhat

Ves said:


> Disclosure: I own ASZ.
> 
> A few further risks that a perspective investor may want to be aware of:
> 
> 1.   The company really needs to win a $100 million+ IT contract to convince the market to re-rate it and allow for capital growth in its share price.  They shared their intentions with the market quite some time ago now and have been unsuccessful with tenders to date.
> 
> 2.  The data center needs to start being utilised and create cash flow, as far as I can tell it is dragging on profit at its current usage levels.
> 
> 3.  The acquisitions that you mentioned need to be paid out in 2013.  They have secured a $21 million loan facility, and also have an equity option. But either way, without some growth in earnings share holder returns will be diluted with an equity issue or interest coverage ratios will go up and may be uncomfortable for some holders.
> 
> Certainly not a stock that you can just put in the bottom draw IMO, especially with headwinds for the IT sector in general.
> 
> The plus side is that the above points could be looked up as positives; they also provide opportunity and catalysts for earnings growth if they tick all the boxes.




Thank you Ves for sharing your opinions. This thread has been quite informative for me. I hope that it will keep going for some time as people identify and evaluate potential income stock for medium/long term holding.


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## MrBurns

Someone pointed me in the direction of FIIG Securities Limited.

As a general query, how do you feel about handing over hundreds of thousands of dollars to people you've never heard of ?

The banks are one thing but what about the rest?


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## skc

MrBurns said:


> Someone pointed me in the direction of FIIG Securities Limited.
> 
> As a general query, how do you feel about handing over hundreds of thousands of dollars to people you've never heard of ?
> 
> The banks are one thing but what about the rest?




FIIG does research on hybrid securities - research that you probably have to pay for.

But you don't need to give them money to invest in the hybrids. Many of these are traded on the ASX via your usual broker.


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## MrBurns

skc said:


> FIIG does research on hybrid securities - research that you probably have to pay for.
> 
> But you don't need to give them money to invest in the hybrids. Many of these are traded on the ASX via your usual broker.




Ok so you dont send them a cheque, they tell you what to do and you do it yourself.
We seem to have the same amount of posts


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## skc

BTW, your general rule question about giving money to organisations you've never heard of...

Of course you know what the answer is but it also depends on how knowledgable you actaully are. You can alsways do more research to complement things you haven't heard of (which may be completely legit, as I believe FIIG is). 



MrBurns said:


> Ok so you dont send them a cheque, they tell you what to do and you do it yourself.
> We seem to have the same amount of posts




Lol. Now we do. You and I must have plenty of spare time


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## MrBurns

skc said:


> BTW, your general rule question about giving money to organisations you've never heard of...
> 
> Of course you know what the answer is but it also depends on how knowledgable you actaully are. You can alsways do more research to complement things you haven't heard of (which may be completely legit, as I believe FIIG is).
> 
> 
> 
> Lol. Now we do. You and I must have plenty of spare time




Yep, thanks


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## So_Cynical

tinhat said:


> Correction. I meant to say that the rule I have heard is that you should not own more than one fifth (20%) of the average daily traded. For SND that would work out to about $1,110.




Thinking about this today.

As of the last SND annual report there are approximately 490 SND share holders that couldn't give a rats ass about what amount of shares they should or shouldn't hold..and if we combined all the share holders, of all the low liquidity stocks we could have maybe 12000 to 15000 people who couldn't give a rats. 

There's a 100 reasons to buy or sell or hold any stock....its all up to the individual.


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## robusta

So_Cynical said:


> Thinking about this today.
> 
> As of the last SND annual report there are approximately 490 SND share holders that couldn't give a rats ass about what amount of shares they should or shouldn't hold..and if we combined all the share holders, of all the low liquidity stocks we could have maybe 12000 to 15000 people who couldn't give a rats.
> 
> There's a 100 reasons to buy or sell or hold any stock....its all up to the individual.




Could not agree more, there is a lot of opportunity in unloved low liquidity stocks IMO precisely because many investor's avoid them


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## Bill M

MrBurns said:


> Someone pointed me in the direction of FIIG Securities Limited.
> 
> As a general query, how do you feel about handing over hundreds of thousands of dollars to people you've never heard of ?
> 
> The banks are one thing but what about the rest?




I wouldn't give them anything. I signed up with them a couple of years ago, within a couple of days a female broker with an American accent called me regarding what was available. I wasn't interested, then a couple of weeks later they called me again to get me into the CBA PERLS V issue via their broker firm allocations. I told them that I had a firm allocation with CBA anyway as I was a shareholder. About 3 Months later they cut off my access to their website. In my opinion, why pay a broker for something you can totally buy yourself through your online broker for $20? I didn't like the hard sell and subsequent quick boot of their website for not buying.


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## MrBurns

Bill M said:


> I wouldn't give them anything. I signed up with them a couple of years ago, within a couple of days a female broker with an American accent called me regarding what was available. I wasn't interested, then a couple of weeks later they called me again to get me into the CBA PERLS V issue via their broker firm allocations. I told them that I had a firm allocation with CBA anyway as I was a shareholder. About 3 Months later they cut off my access to their website. In my opinion, why pay a broker for something you can totally buy yourself through your online broker for $20? I didn't like the hard sell and subsequent quick boot of their website for not buying.




Thanks Bill, much appreciated


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## Sir Burr

I've been thinking about this for my SMSF and diversify a bit.

Anyone invest or thoughts about using a fund such as this:
http://investments.pimco.com/Products/pages/607.aspx


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## So_Cynical

Sir Burr said:


> I've been thinking about this for my SMSF and diversify a bit.
> 
> Anyone invest or thoughts about using a fund such as this:
> http://investments.pimco.com/Products/pages/607.aspx




I'm assuming its an American fund so will use USD, would that be an issue for your SMSF?
would it be an issue for an Aussie super fund to own units in a US based fund..tax and admin wise?


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## Julia

MrBurns said:


> We seem to have the same amount of posts



Probably the only thing you have in common.



Sir Burr said:


> I've been thinking about this for my SMSF and diversify a bit.
> 
> Anyone invest or thoughts about using a fund such as this:
> http://investments.pimco.com/Products/pages/607.aspx



Why would you hand over your money for anyone else to manage?  Read the Storm Financial thread.


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## SuperGlue

For long term investors that bought shares when share prices were low, here is a good way of earning income from your long term investments.

Dividend plus franking credit plus share lending income.

Please DYOR

http://www.interactivebrokers.com/e...tockYieldEnhancementProgram.php?ib_entity=llc


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## tinhat

Sir Burr said:


> I've been thinking about this for my SMSF and diversify a bit.
> 
> Anyone invest or thoughts about using a fund such as this:
> http://investments.pimco.com/Products/pages/607.aspx




You might be interested in the Lincoln Indicators new (ASX shares) income fund. It's not on their website yet but they are launching it in the next couple of weeks - targeting the income oriented self financed superannuant type clients. There are some webinars coming up soon about it. Perhaps give them a ring if you are interested in attending a webinar. They've run more of a growth oriented ASX shares portfolio for years with decent returns. It might be of interest to you. I subscribe to their "Stock Doctor" market stats and analysis platform.

http://www.lincolnindicators.com.au/


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## MrBurns

I'm think of putting a truckload of cash in Telstra and Tab Holdings, seems they have excellent returns regardless of the share price ups and downs, remember I'm investing for income, any comments ?


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## tinhat

MrBurns said:


> I'm think of putting a truckload of cash in Telstra and Tab Holdings, seems they have excellent returns regardless of the share price ups and downs, remember I'm investing for income, any comments ?




I don't follow TAH or the industry, but looking at the Reuters Thompson data, the analyst consensus forecast is for a drop in earnings of 50% for FY13. Is this something to do with the casino spin-off? So if you are looking at the current yield, it is expected to come back to 7% (at current prices). If you like the stock and if, like me, you believe the Austalian market is at the beginning of a cyclical bull market, you could perhaps dollar average into it over the next couple of months.

I own TLS. It's on a down trend since going ex-div. Yielding 8.7% on yesterday's close. You might be able to pick it up under $3.20 (3.15-3.20) - depending on how much it corrects in the short term.

With regard to TLS, Thodey said the dividend was good for the next two years so I'll take that at face value. There is enough free cash flow to cover it. The market is expecting them to do some capital management with the NBN windfall - we will have to wait and see what they plan to do with the money. The market also believe the management is turning the ship around. Let's hope so. Personally, I don't see any strategic advantage for Telstra in going from copper to the NBN fibre except for the buy-out money. The NBN will make its competitors more competitive in regional and rural areas. Telstra's strenghts are in the wireless network as long as it maintains first mover advantage, and in bundling content (fox) and delivering multi-stream (wireless, pay-tv).

Last year Charlie Aitken said buying TLS was "a no brainer" and I loaded up in October and topped up in December. I don't think TLS is one you can put away in the bottom draw though. You still have to preserve capital and there is still a lot of uncertainty and major structural change happening in the telecommunications sector. There is the risk of change of federal government and changes to the NBN rollout. Even if it's business as usual for the NBN there is risk of delays to the rollout. I'm certainly going to be keeping my eye on the industry over the next year or two because regardless of the return, no one wants to lose capital.

I've stated my opinion many times in this thread and on these forums (over the past six months), the one no-brainer, leave in the bottom draw, buy on the market is CBA. I reckon it is the one stock I can buy and never want to look at the share price again. at $48 a week or so ago it was compelling. At $50 it's still a buy I reckon. You will still be looking at almost 7% return next financial year based on consensus forecast dividends of 346c. According to my calculations the maxim that it is better to have your money in shares in the bank rather than in the bank still seems to be true.

Good luck.


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## MrBurns

tinhat said:


> Good luck.




Thanks for your input

added - Ive lost money listening to Aitken before.


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## Boggo

For me 'investing' is not really my approach, depending on how you define "investing".

Investment stocks do have a more stable or less erratic behaviour even when applying tech analysis.

I am back in TLS again (TLSIOI) as of this morning because it meets a set of criteria but normally I only trade it twice a year a couple of months out from it going ex div and capitalise on the run up or the div or both.

There are a number of other stocks that fit the tech analysis/income/investment criteria outside of the 'Mum and Dad' type stocks.
An example of those is SKI (I currently hold in my SMSF), pays a reasonable dividend and recovers quickly from going ex and can be traded to advantage as well.

It does make paying the power bill a bit more acceptable too if you are in SA or Vic. 

(click to expand)


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## McLovin

MrBurns said:


> added - Ive lost money listening to Aitken before.




I've never heard Charlie Aitken talk down the market.

Here's what he was saying just before the GFC...


			
				14 March said:
			
		

> Raging share market bull Charlie Aitken, head of institutional dealing at Southern Cross Equities, isn’t backward in coming forward.
> 
> Aitken made the front page of The Australian’s business section on Wednesday accusing various brokers of shorting Fortescue Metals Group whilst predicting the stock could hit $15 within 12 months. It rose 26c to $7.65 yesterday and was steady in morning trade.
> 
> Consider this passionate advice given to subscribers of The Eureka Report on November 2 last year [2009], one day after the All Ords peaked: “I urge investors to use any weakness in domestic banks due to US investment bank sub-prime issues as a buying opportunity.”
> 
> Hmmm, at one point the Big Four banks had collectively tanked by almost 40% as $100 billion of capitalisation disappeared. Let’s hope Charlie’s Fortescue prediction is more accurate than his advice on bank stocks.
> 
> On September 19 last year [2007] Aitken told Eureka subscribers that “the whole sub-prime issue is over-stated and losses/defaults will be nowhere near where the armageddonists believe.”
> 
> He even became something of a media critic with the following:
> 
> Over the past two months all the financial market armageddonists and super-bears have been dusted off and wheeled out of the closet. For some unknown reason in financial markets if you are bearish you are seen as smart. The financial press also loves running a super-bear story, and it is amazing how few truly optimistic or even realistic people get an outing in the press. I suppose good news doesn’t sell newspapers.​
> It is true that the media is largely driven by negativity, but journalists also love colourful descriptions of the prevailing consensus, which is what made Aitken a media star during the bull market.



http://www.crikey.com.au/2008/03/14/raging-bull-charlie-aitken-not-tamed-by-bad-bank-call/

In fairness we all make mistakes, although this one seems to have been a howler.


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## MrBurns

McLovin said:


> I've never heard Charlie Aitken talk down the market.
> .




If you ever see him on Lateline Business or The Business as it's been ridiculously renamed you could overlay his comments from one year to the next, they never change, he really seems as if he hasn't a clue.


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## Bill M

Hey Burnsy, I just thought of this thread when I saw the following video. "Constructing an income portfolio". General stuff but interesting, I own a few of the stocks mentioned. You might need to join up if you are not a member already.

Link: http://www.finnewsnetwork.com.au/archives/finance_news_network20371.html


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## MrBurns

Bill M said:


> Hey Burnsy, I just thought of this thread when I saw the following video. "Constructing an income portfolio". General stuff but interesting, I own a few of the stocks mentioned. You might need to join up if you are not a member already.
> 
> Link: http://www.finnewsnetwork.com.au/archives/finance_news_network20371.html




Thanks I'll have a look


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