Retirees - what are your top 5 long term stocks?

[nulla nulla]

I will never understand the people who buy purely for yield, especially given the recent cutting of dividends by even the so called oh so stable big four banks.

That anyone will happily accept a loss of capital as the SP falls just because they're getting around 7% or 8% in yield is beyond me.

Nathan has very well described the need for continuing growth shares in any portfolio, even retirees'.

Anyone doing their homework atm would realise the the much maligned REIT sector shares are paying in excess of 10% yield on current price levels. This is after the dividend cuts and capital raisings. Go figure

 

[Bill M]

I will never understand the people who buy purely for yield, especially given the recent cutting of dividends by even the so called oh so stable big four banks.

It isn't rocket science Julia. Case study now. ANZ bank are now $16.30. ANZ Shareholders have now been offered new ANZ shares through the share purchase plan at $14.50, this represents a fully franked yield of 7%, grossed up 10%. (and that is after the dividend cuts)

So if you can buy 15K worth of ANZ and pull a 10% grossed up yield plus pick up $1 or $2 capital gain in the mean time then don't you think that's a good idea? I will certainly be taking up my share purchase plan offer, it sure beats getting 4% in a bank deposit. Also I have an ultra long term view, all the banks will prosper again in the future just like they have always in the past, the capital gains will eventually come.

 

[Iggy_Pop]

CBA

BHP

WOW

TLS

WDC

and just bought some ANZ to be part of the capital raising

Not a retiree yet though planning for it

 

[Julia]

It isn't rocket science Julia. Case study now. ANZ bank are now $16.30. ANZ Shareholders have now been offered new ANZ shares through the share purchase plan at $14.50, this represents a fully franked yield of 7%, grossed up 10%. (and that is after the dividend cuts)

So if you can buy 15K worth of ANZ and pull a 10% grossed up yield plus pick up $1 or $2 capital gain in the mean time then don't you think that's a good idea? I will certainly be taking up my share purchase plan offer, it sure beats getting 4% in a bank deposit. Also I have an ultra long term view, all the banks will prosper again in the future just like they have always in the past, the capital gains will eventually come.

I wasn't aware we were discussing share purchase plans, Bill. Thought the comparison was between buying for yield versus buying for capital growth.

And just looking at ANZ during the peak of the bull market, i.e. beginning of 2006 to end 2007 it only went from around $24 to about $30.

But each to his own. Good luck with it.

 

[Muschu]

It's a hazardous market isn't it? I have made a cautious, measured re-entry since the uptrend was reasonably clear. However I am sticking with major and/or very defensive stocks and an index [STW] for the moment - but the investment level is not huge. Most are 100% FF and pay reasonable dividends.
Of course the market could turn sour at any time. At that point I could hold and weather the storm [which is probably what I would do at this stage] - but I could also sell and, unless a downturn is exceptionally rapid, come out OK in most instances.
There are bound to be better "retirement strategies" than mine but the balance I have at the moment has me sleeping well.
I'd forgotten about this thread and the title is probably questionable now.
Regards to all
Rick

 

[So_Cynical]

It's a hazardous market isn't it? I have made a cautious, measured re-entry since the uptrend was reasonably clear.

Since October ive brought and sold

• SUN
• ENE
• MDL
• TRY
• VRL
• ALL
• ILU

Made money on all of them....100% winning ratio, hazardous market....no not really.

 

[nunthewiser]

i cant believe no one has mentioned MTS

worth a read for all you warchest holders


i hold

 

[RayG]

I will never understand the people who buy purely for yield, especially given the recent cutting of dividends by even the so called oh so stable big four banks.

That anyone will happily accept a loss of capital as the SP falls just because they're getting around 7% or 8% in yield is beyond me.

Nathan has very well described the need for continuing growth shares in any portfolio, even retirees'.

Julia, it's just a different mindset... the time for accumulation and saving has past, it's time to enjoy life, grandkids, hobbies, travel... now are you going to buy TLS (with 8% dividend) or something else with 2% dividend....

Nathan pointed out the need to take inflation into account, that isn't always going to be compensated for by capital growth, take the last 12 months as proof of this.

My point, in it's simplest form is, you can't eat increases in SP without selling!

Dividends will pay for the plane tickets. (and put food on the table)

Regards
Ray

 

[Julia]

Julia, it's just a different mindset... the time for accumulation and saving has past, it's time to enjoy life, grandkids, hobbies, travel... now are you going to buy TLS (with 8% dividend) or something else with 2% dividend....

Hello Ray: yes, I get the different mindset thing. Presumably you consider you have more than enough capital and it doesn't matter if it's eroded somewhat.

TLS - am I going to buy that? No. Because the 8% dividend doesn't equate to the loss in capital. I regard capital preservation as the first focus.

Back to ANZ as discussed with Bill: if you sold this at or around $30 when the market started to fall away, you could re-enter with twice as many shares, therefore double the dividend income now.
To me this makes more sense over both the short and longer term.

As you say, it's all about different mindsets and we all do what is most comfortable.

 

[Bill M]

Back to ANZ as discussed with Bill: if you sold this at or around $30 when the market started to fall away, you could re-enter with twice as many shares, therefore double the dividend income now.
To me this makes more sense over both the short and longer term.

I know from other posts that you got out of the market at pretty much the top, that is truly an outstanding effort, well done. Were you equally as astute to get back in when the market hit 3111 when it was down some 55%? Unfortunately I am neither good at picking tops or bottoms so tend to buy when stocks are beaten down, I managed to slip in a small buy on March 9th but that was just pure luck. Since hitting that low point the market has already jumped 30%. CBA hit $24 2 Months ago, it has jumped a whopping 50% since then. Accumulating good stocks that pay good divies for the long term when prices are really beaten down is my real game. This strategy has worked quite well for me over the years and still funds my current retirement.

 

[kincella]

this sounds like a 'must have' for some of you to consider in the future

GPS shoes for Alzheimer's patientsJune 6, 2009 - 9:50AM
A shoe-maker and a technology company are teaming up to develop footwear with a built-in GPS device that could help track down "wandering" seniors suffering from Alzheimer's Disease.

"The technology will provide the location of the individual wearing the shoes within 30 feet, anywhere on the planet," said Andrew Carle, an assistant professor at George Mason University who served as an advisor on the project.

"Sixty percent of individuals afflicted with Alzheimer's Disease will be involved in a 'critical wandering incident' at least once during the progression of the disease -- many more than once," he said Friday.

The shoes are being developed by GTX Corp., which makes miniaturized
Global Positioning Satellite tracking and location-transmitting technology, and Aetrex Worldwide, a footwear manufacturer.

Carle said embedding a GPS device in a shoe was important because Alzheimer's victims tend to remove unfamiliar objects placed on them but getting dressed is one of the last types of memory they retain.
ps thank goodness for that....

He said a "geo-fence" could be placed around a person's home and a "Google Map" alert sent to a mobile phone, home or office computer when a programmed boundary is crossed.

"The shoe we intend on developing with Aetrex should help authorized family members, friends, or caretakers reduce their stress and anguish by enabling them to locate their loved ones instantly with the click of a mouse," said Chris Walsh, chief operating officer of GTX Corp.

The companies said they plan to begin testing the product by the fourth quarter of the year.

 

[Ferret]

A lot has been said about protecting your capital and I wouldn't argue that that its not worthwhile to sacrifice some yield to maintain capital. But achieving the most out of a capital protection/growth strategy requires greater skill and time than many of us have.

I think what Bill is saying is that he doesn't have the skill to time movements in and out of stocks, so he is willing to chase a little more yield and loose a little on long term capital gain.

That's my thinking too. I've held my portfolio right through this current mess because, having sold shares before only to see them higher a little later on, I realise I'm not good at judging what the market is going to do. I certainly didn't expect the market to drop 50%, so at 20%, 30%, 40% & 50% I just held on not wanting to sell out at the bottom.

The other thing is that I don't have the time or inclination to be constantly checking on the performance of my individual stocks. I like to be invested in stocks that don't need constantall watching. I keep a few stocks in the portfolio that are aimed at capital growth, and those are the ones I keep a closer watch on. I don't get the total returns of some others, but I'm happy with what I get for the time and skill I put in.

For what its worth, the main stocks in my portfolio are:
AFI 23%
WPL 10%
NAB 8%
BHP 8%
SLX 7%
AWE 7%
WOW 4%
TLS 4%

Surprised LICs haven't had a mention in this thread yet. I think they are a great investment for retirees or anyone willing to sit it out for the long term.

 

[Julia]

I know from other posts that you got out of the market at pretty much the top, that is truly an outstanding effort, well done.

Hi Bill, No my timing wasn't that good at all. I didn't sell until beginning of 2008 (peak of market was November) so gave back some profits by January.
I could still have been wrong and the loss to that date could have been reversed in a further upswing.

But I guess we all make what we consider are the best decisions at the time.
In the past I have watched a stock fall in the hope (yes, hope!) that it would reverse, and lost money.

I don't want to have to work again. I've established a level of capital where even if interest rates fall further I can still live on the interest.
If I'd let that invested capital fall 50% that wouldn't have been the case and I simply didn't have complete confidence dividends would not be cut anyway.
Many of my stocks were bought for growth rather than yield.
I would have been very unhappy to have watched my p/f lose 50%.

Were you equally as astute to get back in when the market hit 3111 when it was down some 55%?

No. When I reinvested the capital I did so in the knowledge that I would almost certainly miss the bottom. Well, that is if we have indeed seen the bottom. Again I'm not necessarily sure that's the case.

I've bought three stocks so far and am content to sit aside from anything else for now.

Unfortunately I am neither good at picking tops or bottoms so tend to buy when stocks are beaten down, I managed to slip in a small buy on March 9th but that was just pure luck. Since hitting that low point the market has already jumped 30%. CBA hit $24 2 Months ago, it has jumped a whopping 50% since then. Accumulating good stocks that pay good divies for the long term when prices are really beaten down is my real game. This strategy has worked quite well for me over the years and still funds my current retirement.

And that makes a lot of sense.
So it sounds as though you always have cash reserves with which to buy the beaten down bargains?

 

[Bill M]

Surprised LICs haven't had a mention in this thread yet. I think they are a great investment for retirees or anyone willing to sit it out for the long term.

Hello Ferret, I watch AFI, ARG and MLT quite often but I have a slight problem with them. Their basket of shares are calculated only once a Month, usually at the end of the Month. From that point you got to make rough calculations yourself to try value the stock. Most of the time these 3 are trading at a premium, people are willing to pay more for the stock than it's NTA. That is why I haven't taken on a LIC, they nearly always trade at a premium so you are actually paying more than what it's worth. In the case of an index fund, they are valued everyday, you know exactly what the basket is worth. STW for example gives a daily fund update to the market.

LIC's seem ok, I am very keen on them but right now I am building up my 2 index funds. I don't like throwing too much capital towards one fund manager or stock so eventually I might end up investing in a LIC anyway. Out of the 3 mentioned I like MILTON (MLT) and monitor all 3.

I don't want to have to work again. I've established a level of capital where even if interest rates fall further I can still live on the interest.

This is very important and you have done well to be in this situation. Personally I think that position is the end game. In other words nothing to worry about anymore. No one can knock this position, it is healthy and safe and most of all it pays all your bills.

So it sounds as though you always have cash reserves with which to buy the beaten down bargains?

Throughout this whole market collapse I always had some cash on the sidelines, not much though. I have an emergency reserve that I do not touch but on March 9th. that small entry I did was my last 2K before hitting the emergency reserve. Since then some divies have come in and have built up my cash again. I used this last run up to cut a dog stock so I have a bit more cash than I want right now. I have been hoping for a correction to deploy this lot. Whenever I have have excess cash to my requirements I look for an investment opportunities and stocks still look pretty reasonably priced at the 4,000 mark on the all ords.

Once again Julia, thanks for sharing your thoughts, good luck to you too.

 

[Muschu]

I don't want to have to work again. I've established a level of capital where even if interest rates fall further I can still live on the interest....

I've bought three stocks so far and am content to sit aside from anything else for now.

Seems a pretty sound strategy to me Julia. And the comments made by others also make sense. I guess it is a case of each of us finding the best balance for our circumstances. We'd struggle to cope on bank interest alone - but that will go up in time, unless history decides never to repeat itself.

Rick

 

[Julia]

Just want to say how good it is that we can have different approaches, discuss the advantages and disadvantages of these with one another, and do it in an atmosphere of respect for different points of view.

Thanks, fellas. Much appreciated.

 

[brianwh]

Have enjoyed reading your posts and relate very much a number of them - I could almost have written your post myself Ferret except for a few different stocks and I hold all 3 LIC's mentioned by Bill

Here's an issue that I'm guessing applies to many who have posted on this thread.

When you are considering investing in a stock you are like to do considerable homework and spend considerable time trying to get it at a good price based on the parameters you set. For example I don't currently hold a stock in the Health sector and am trying to buy SHL. But if I have a stock which is not performing, I tend to avoid thinking too much about it - just leave it in the "too hard basket". In my case I hold IAG which may be an example.

Maybe this doesn't matter much? Thoughts?

 

[nathanblack]

if you read articles about the average return of the share market, they often have a comparison with the average return of an investor. an investors return over time is usually considerable less than the overall market. obviously one reason is because your portfolio doesnt track the SP50/200 and doesnt have exposure to all areas that may average out the gain.

but the primary reason for descrepancy is timing and time in the market. people by nature tend to buy in a rising market(influenced by media and confidence). some people sell out way too early, missing further gains. others hold, then panic as the market falls. basically buying high and selling low.

time is your friend. but perform regular assessment of your portfolio, is the reason you originally bought the stock still valid? is your money better off elsewhere(oportunity/risk).

its similar to averaging down, if used correct i like the idea myself. but you need to review the reason for the fall, is it stock specific or general bear market.

eg. averaging down on babcock and brown. by the time it went into administratiion your average price was low but you still lost everything; OR

RIO. if you averaged down from $100+ to $30+, you would maybe have an average of $50 and be in profit now, BUT how much money did it consume? how overweight in RIO is your portfolio now? were your pockets deep enough?

in summary, eveluate underperformers, if the reason you bought them still applies perhaps use averaging down to your advantage. if the fundamentals has changed consider selling and finding an alternate investment.

 

[Trevor_S]

Anyone else? We can all learn from this sort of exchange of views.

I am semi retired, at 42, I sold 1/2 my business last year, the other 1/2 runs with about 5 hours a week input from me (on a busy week, 10 hours) I will sell the other 1/2 when I get around to it. I love the outdoors, (and why I want to move to Tas. or NZ) so I am often hiking, mountain biking, snorkelling and about to buy a sea kayak, so I understand not wanting to be consumed by investments.

I have been scrip since 1989 or there abouts.

If I was to hold a top 5 now, it would be:

WBC - I am well over weight WBC but mainly because I was a big fan of the CEO before Kelly, she makes me nervous and I have stopped buying WBC.

ANZ - because they are the biggest risk taker, expansion into Asia etc. I agree with the risks, eg Asia expansion so I am happy to hopefully ride on their hope tails.

I don't like NAB, those bastards simply lumbered from one **** up to another for years. ie fourex trader scandals, homeside mortgage debacle etc, they have suffered for it, going from the pre-eminent bank in Aus to an also ran, it's the only big 4 bank I don't own.

WES - for the reasons espoused by Bill

BHP- diversified miner with oil gas (why I preferred them over RIO from the get go)

WPL- oil 'n gas, though I wax and wane on these guys, they don't really meet my criteria on payout ratios etc


Others I like (and hold) are WDC, (for many the same reason as Bill), ASX, CBA, WOW & ARG.

Shares I have been buying since December include LEI (though there debt level is a worry), GPT (at 31c and then the rights at 35c), BHP (in large amounts below $28), WES rights and STW.

I haven't bought any banks for some time (I know Bill has) but I think they hold a little too much risk to accumulate, I just hold)

I trust nothing except dividend payouts, the rest of it is suspect.

As to the OP, maybe something like STW might be of interest ? as you get Index exposure and no need to re weight your portfolio from time to time

Some I look at and scratch my head are eg CSL (PE of nearly 30 ! not for me) though other are obviously big fans and I have a moral objection to gambling, so I don't invest there.

As to dividends, many scoff at them, to me they are why I invest:

“Earnings are only a means to an end, and the means should not be mistaken for the end. Therefore we must say that a stock derives its value from its dividends, not its earnings. In short, a stock is only worth what you can get out of it."

John Burr Williams' - The Theory of Investment Value

I don't have an SMSF as there is only a few $100K in it, my shares are held/managed outside.

70% of my portfolio (outside of my business's) is in cash.

My goals are probably different to most though. I live quite frugally and hope to have amassed enough of a investment portfolio that I can pass it to a trustee when I die and have it managed , using the income to grow the portfolio at CPI and divest the rest of the income to worthwhile charities.

 

[Muschu]

Is there any merit in extending this "conversation" into sharing thoughts on stocks that may be worthy of a longer term hold for retirees who wish to be in the market? [Given that "holding", for me anyway, is now a more flexible term -- in that some level of ongoing review is required]. My point in suggesting this sharing is that someone may suggest stocks that others of us may care to look into.
Three months ago I had only one stock so all bar one of these have been entered since March. Most of them I had back in 2008 and have bought back in at lower prices than I previously paid.

Present holds [none speculative in my view but then nothing comes with a definite guarantee does it...?]

BHP
WPL
QBE [will probably let go]
AXA [almost certain to let go]
TLS [as with AXA - not happy but not losing - yet - probably on its way soon]
SUN
IVC
WOW
WES
WBC
CBA
NVT [I disclose a family association here but definitely no inappropriate knowledge (most of my career has been in the education field)].
STW
GOLD

I also had, but sold, BKL and AGK - and now [hindsight is wonderful] feel I would have been better off to have kept them.

Rick