tinhat
Pocket Calculator Operator
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- 1 May 2009
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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.
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.