Investing for income

wayneL said:

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

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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.

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.

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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

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.

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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

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.

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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%)

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%)

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

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

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Damn good idea untill the bed wetting came back

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.

tinhat said:

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

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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

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.

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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.

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

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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

Boggo said:

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

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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.

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.

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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....."

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.

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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.

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.

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.

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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.

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

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.

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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.

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MrBurns said:

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

5% here I come I guess.

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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.

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.

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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

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.

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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.

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.

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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.