Retirees - what are your top 5 long term stocks?

Interesting thread, and a lot of posters seem to have similar ideas to mine.

I have been seriously investing since retiring in 1995, and like others above, basically rely on dividends for income, although after the market collapse of late 2008, I did find I was entitled to a small (repeat small), age pension.

A lot of stocks I purchased back in 1995 I still hold (CSL at an adjusted for split price of $1.17 worked out okay - now $28.98).

My top 10 holdings are

BHP (13% of portfolio - held since 1995, but early purchases since sold, and current holdings start at 2003, average ingoing price $12.48, current $38.18.

CSL, since 1995, average ingoing $2.80, now $28.98. Pity no Swine Flu vaccine as yet, I'm currently in house quarantine pending test results - that'll teach me to visit Melbourne!

STO. Held since 1995. Av. cost $6.42. Now $15. Have just taken up rights entitlement, so it will be around 9% of total portfolio. I also hold ORG (at profit), and AWE (small loss). I rather like oil producers for the long term.

WES. Since 1995. Av cost $9.15, now $22.16. Participated in recent issue, and added some on top @12.50.

LEI. A bit nervous about this one. First purchased 2000, now averaging $6.73 cost, current price $24.57. Have they bitten off more than is chewable?

WPL. Another oiler owned since 2000. Av cost $4.00, now $42.62

WBC. Got these via Advance Bank, then St George takeovers. Cost $6.43, now $19.23. I also have smaller holdings in NAB and ANZ - unlikely to add in the current bad debt climate.

WOW. Bought 2006 @ $23.02. Now $26.30. Defensive food/booze/pokies (pity about the pokies).

ASB. Our WA ferry builder. Almost worth holding for the great pictures in the annual report. Cost $1.30 (2004), now $2.54..

There are a few other smaller holdings (even some OZL - how could I?).

Reading the above, it does make a bit of a nonsense of Marcus Padley's "buy-and-hold is dead", and "trade, trade, trade" sermons

Incidentally, all holdings direct, outside Super. I came to the conclusion in March 2008 that being charged $2.5K a year to manage a small ($140K) super portfolio, which was falling rapidly in value, was a dog of an idea.

I loved the idea that I could take out every cent, tax free (thanks P. Costello), would no longer be subject to the legislative risk of future changes to the rules, and NO MORE FEES. At a rough guess, the $140K (which simply went into the bank, is now $150K. Doubt if it would be $100K if I'd left it untouched. Just love the feeling of not having my money controlled at the whim of the Government. And I no longer have to read all the learned articles about superannuation that litter the financial press!

Cheers, badger

Muschu said:

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.

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Rick - I for one would be very keen to see what others thought. Several posters have done this in the sense that they have listed their main holdings and added a comment. I found this very interesting.

A further question that I would be interested in hearing comments on relates to the proportion of stocks in the different sectors.

brianwh said:

Rick - I for one would be very keen to see what others thought. Several posters have done this in the sense that they have listed their main holdings and added a comment. I found this very interesting.

A further question that I would be interested in hearing comments on relates to the proportion of stocks in the different sectors.

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Good thought Brian - I will do this for my own portfolio later today and post it to ASF.
Cheers
Rick

brianwh said:

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?

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Doesn't this come down to what you think is the potential for that stock?
I don't know anything about IAG. Just had a glance at a chart. I've seen worse (and better).

I don't particularly subscribe to the necessity of holding across all sectors.
Some sectors perform well at one stage, and another at a different stage.
Would never buy a stock just to satisfy the 'diversification' philosophy.
Ditto being overweight something that's running up really well. Will hold it until it starts to fall.

Same philosophy is what sent me to cash 18 months or so ago. If the market in general goes down, then I'm out until it shows signs of definite recovery.

Any losing stocks are out. Never hold on to dogs.

Muschu said:

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.

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Well done, Rick. And good idea to share considerations of suitable stocks as long as no one stuffs it up by ramping their pets.

Then Joe will get cross.

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

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I agree on these two. I like your NVT. I'd have held on to AGK and let SUN go, but if there's a decent take over offer on SUN then it could take off.

All I have bought back into are WBC, MND and WOR.
Like CPB and LEI but am nervous about both.

brianwh said:

.....A further question that I would be interested in hearing comments on relates to the proportion of stocks in the different sectors.

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Hi Brian and others

Rough maths are that we are presently about 50% in cash and 50% in the market.

An approximate proportioning of our holds is:

NVT 37% [please see note in previous post]
BHP, STW, SUN, WBC, WOW all 7-8%
AXA, CBA, GOLD,IVC, QBE, TLS, WES, WPL all 2-5%.

Bear in mind that I sold out of the market [except NVT] and re-entered in March. SUN has been my most profitable share [on a pro-rata basis] in that I have bought and sold at least 4 times at a good profit in that short period.

As mentioned above I may well shed AXA and QBE. May also increase WPL, BHP and IVC. May also get back into BKL.

I consider mine a pretty conservative set-up. I'm not expecting sudden growth from any of them and hope to avoid sudden losses....

I plan to study the stocks others have mentioned to see if I am missing something of value - MTS for example.

Rick

Julia said:

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'.

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I cant understand why people are not buying bank dividends even if they are roughly 25% down at the moment,Still the four banks are great shares in any portfolio..

Muschu said:

SUN has been my most profitable share [on a pro-rata basis] in that I have bought and sold at least 4 times at a good profit in that short period.

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Given the title of the thread, Rick, I assumed your posted stock holdings were long term. On the contrary, it seems you are using SUN as a trading stock.

Are you similarly frequently trading your other stocks?

I regard long term hold stocks as quite different from those purely used for trading, so maybe if people are trading, as distinct from the title of the thread, might be good to make this clear.

makingmoney said:

I cant understand why people are not buying bank dividends even if they are roughly 25% down at the moment

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Some people are of the opinion that banks are risky, particularly now. As the commercial markets softens, and banks lower their LVRs, their exposure to the property market can tip them into trouble IF they suffer the double whammy of a fall in the residential property market, they will be in SERIOUS trouble. Witness, UK, USA etc etc for evidence of that, having the Government nationalise them will save the depositors but not the shareholders.

Not to say of course that it will happen but perceived risk seems different to many but unless your questions is rhetorical, that is one reason.

That's the reason I only have very small holding in WBC at present.

I suspect the question was rhetorical, though.

Btw, Trevor, you beat me to retirement by two years!

Julia said:

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.

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I don't know anyone that buys purely for yield, I guess there might be some ... but ... yield plays a huge part in the buying decision for me, the only way I can price a share is with the dividend, earnings are often mostly bullsh_it

Julia said:

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.

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Why sell, ? (unless you made a mistake with the buy, which happens) unless you planned to do something else with the money, I have no idea what makes a better business then the stocks I already own, so what the hell else would I buy ? I guess some subscribe that they sell at $40, watch the share tank (feel justified) and then buy again on the trend up, at say $38 2 years later after holding as cash for example.... but that doesn't make any sense to me (after tax I am betting there holding is less but they feel richer). I guess there may be people in the world that can trade successfully over several decades, I am just not one of them, I recognise that and use my other strengths, identifying good companies with reasonable dividend yields and buying them in times when they are down eg my biggest buys in the last 10 years where the world trade centre attack, the Iraq invasion and since Dec. last year

Julia said:

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

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Indeed, my dividends grow my portfolio I have never used them to do anything else (accumulate dividends as cash, research as the market grows to levels I feel uncomfortable with and buy when the prices retreat) but then I plan my portfolio to hopefully long survive me and I live a fairly frugal life. My dividend stream is more then the wage I pay myself from my business.

Julia said:

That's the reason I only have very small holding in WBC at present.

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I hold a fair bit of WBC but that's from decades of buying. I was a huge fan until Gail's arrival. A agree with ROE on this, I think Gail Kelly is not the right person for the job. I just hope WBC is bigger then Gail Kelly. I have not sold any bank shares but have not bought any either.

Julia said:

Given the title of the thread, Rick, I assumed your posted stock holdings were long term. On the contrary, it seems you are using SUN as a trading stock.

Are you similarly frequently trading your other stocks?

I regard long term hold stocks as quite different from those purely used for trading, so maybe if people are trading, as distinct from the title of the thread, might be good to make this clear.

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Julia I made a recent comment above that the thread title may no longer be appropriate. I am prepared to decrease, increase or sell out [won't hold anything that turns into a "dog" for example] of a stock if there is underlying info that points towards such a strategy.
I'll also sell the lot if a clear downtrend emerges - but probably re-enter the same stocks [or most of the same] when they turn again. ie: I am not saying I will buy and hold forever. Maybe flexible fits. Circumstances can alter intentions.
However - SUN is the only one of these stocks that I have entered - left [sold the lot] - and reentered regularly [although I have done something simliar with small parcels of NVT - and have since the float] ----However my current intention, on today's data, is to hold SUN for a longer term. I simply took what I thought were profit opportunities when I saw them. I actually haven't been SUNless for more than a few days since March.
So SUN still shines.

Good morning,
This is to me just about the most interesting read on ASF, ever.

And I now ask, why retire ?

Because if your looking to retire, it would suggest you are working or doing something you don't enjoy.

'This' is my income producer and has been for sometime and I pray I will never retire.
As I love every minute of the adventure and the never ending learning.
From this background, I feel kind of sorry, in the nicest way, for those souls that are looking to escape, retire.

I don't hold retirement stocks, I hold long term stocks.
I hold a number of stocks in my long term 'bag'.
These include NAB, first bought for ...cannot rember, honestly, held for over 20years, with a top up at every chance, including.
STO @ 3.07 or 4,, cannot remember...... and now, today the percentage div, on my 3.07 is fantastic, as are the other long term stocks.

And the Franking Credits, which really help at tax time.

And a few others

Kindest regards,
UB

Uncle Barry said:

Good morning,
...And I now ask, why retire ?...UB

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No thoughts on retiring from life UB - onless I get taken out. Too much to learn, enjoy and, hopefully, contribute. But I don't want the market or my PC to rule my day....

Good morning Rick,
"don't want the market or my PC to rule my day....'

It, the Market, doesn't rule my day, its just a great part of my day that I look forward to, each and every day.

Kind regards,
UB

Trevor_S said:

I don't know anyone that buys purely for yield, I guess there might be some ... but ... yield plays a huge part in the buying decision for me, the only way I can price a share is with the dividend, earnings are often mostly bullsh_it

Click to expand...

Perhaps I should have added in my original comment "can't understand why anyone will buy a share for yield and hold when the SP enters a sustained downtrend ."
I thought the last phrase would be implicit, but perhaps it wasn't.

Why sell, ? (unless you made a mistake with the buy, which happens) unless you planned to do something else with the money, I have no idea what makes a better business then the stocks I already own, so what the hell else would I buy ?

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OK, you have one view. I have another. I'm not talking about selling when a stock has a pullback. I'm talking about a downtrend such as we have seen since November 2007. If a stock falls 50%, I would rather sell as near the top as I can, sit out in cash until there is some sign of recovery, then be able to buy twice as many shares when I get back in.

This appears to be along the lines of what Rick has been doing.

Then not only do you have more shares to enjoy the coming growth, you get more dividend/franking income.

I guess some subscribe that they sell at $40, watch the share tank (feel justified) and then buy again on the trend up, at say $38 2 years later after holding as cash for example.... but that doesn't make any sense to me (after tax I am betting there holding is less but they feel richer).

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Perhaps you're using a pretty silly example to make your point? Quite obviously to have a differential of only $2 after staying out for two years would be pretty pointless!

I guess there may be people in the world that can trade successfully over several decades, I am just not one of them, I recognise that and use my other strengths, identifying good companies with reasonable dividend yields and buying them in times when they are down eg my biggest buys in the last 10 years where the world trade centre attack, the Iraq invasion and since Dec. last year

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OK, fine. But can you see my point above?

Indeed, my dividends grow my portfolio I have never used them to do anything else (accumulate dividends as cash, research as the market grows to levels I feel uncomfortable with and buy when the prices retreat) but then I plan my portfolio to hopefully long survive me and I live a fairly frugal life. My dividend stream is more then the wage I pay myself from my business.

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Your situation is different from mine, isn't it. I don't have a business or any other source of income (other than very small annuity) than my capital base.
Hence my determination to (a) protect the capital, and (b) grow it when that's possible.

nunthewiser said:

i cant believe no one has mentioned MTS

worth a read for all you warchest holders


i hold

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I recently replied, but my answer is gone?

did i get moderated??

Just to check, I will say the same thing again.
***********************************************

glad you mentioned Metcash,

i recently added a chunk, as they are safer than the Banks or Telsta, and pay more Div than WOW, has gone up a few % since, with room for more..goes ex-div soon.

fully franked MTS pays 8.25%

Also added RIO at $43, and have topped up BHP at below present prices.

I hold some stocks long-term, but the only one I have never traded is WOW.

Fully franked div are good for me, as I pay low tax, but Capital gains are just as good.

hold 20 stocks atm,

added FMG at open today

Muschu said:

Julia I made a recent comment above that the thread title may no longer be appropriate. I am prepared to decrease, increase or sell out [won't hold anything that turns into a "dog" for example] of a stock if there is underlying info that points towards such a strategy.
I'll also sell the lot if a clear downtrend emerges - but probably re-enter the same stocks [or most of the same] when they turn again. ie: I am not saying I will buy and hold forever. Maybe flexible fits. Circumstances can alter intentions.
However - SUN is the only one of these stocks that I have entered - left [sold the lot] - and reentered regularly [although I have done something simliar with small parcels of NVT - and have since the float] ----However my current intention, on today's data, is to hold SUN for a longer term. I simply took what I thought were profit opportunities when I saw them. I actually haven't been SUNless for more than a few days since March.
So SUN still shines.

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Thanks for explanation, Rick. You've certainly changed how you do things!
Can you say what the attraction is with SUN?

Uncle Barry said:

Good morning,
This is to me just about the most interesting read on ASF, ever.

And I now ask, why retire ?

Because if your looking to retire, it would suggest you are working or doing something you don't enjoy.

'This' is my income producer and has been for sometime and I pray I will never retire.
As I love every minute of the adventure and the never ending learning.
From this background, I feel kind of sorry, in the nicest way, for those souls that are looking to escape, retire.

Click to expand...

,
[/QUOTE]

Uncle Barry said:

Good morning Rick,
"don't want the market or my PC to rule my day....'

It, the Market, doesn't rule my day, its just a great part of my day that I look forward to, each and every day.

Kind regards,
UB

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UB, that's a really good and novel way of looking at withdrawing from the workforce. Sums up how I feel too. Thanks for such a bright suggestion.

awg said:

glad you mentioned Metcash,

i recently added a chunk, as they are safer than the Banks or Telsta, and pay more Div than WOW, has gone up a few % since, with room for more..goes ex-div soon.

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Hi awg, that's a good point about the dividend versus WOW.
But just looking at a three year chart of both of these, from $18 ish three years ago, WOW went to around $34, a 90% gain, before falling with the market in the general downturn.

This compares with a gain over a similar period with MTS of around 40%.

Would the dividend difference over that period have made up for the lower capital gain?

nunthewiser said:

i cant believe no one has mentioned MTS

worth a read for all you warchest holders


i hold

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Thanks for the lead, I can't believe I haven't looked at it yet.

awg said:

fully franked MTS pays 8.25%

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I think that is the grossed up yield, the fully franked yield is about 5.6% according to news.com.au. Still not bad though.

Edit: It is going ex dividend on 19 June with a 14c payment to come, I will be keeping an eye on this one.

Good evening Julia.
Some mistake ?
"UB, that's a really good and novel way of looking at withdrawing from the workforce"

I have no plans at withdrawing from the workforce, now or in the future as far as I know.

I enjoy what I do, this is fun, like a sport or hobby that never ends, with a new adventure every day, well for 5 out of 7, so why stop?

Thats why I kind of feel sorry for some people, as they are still looking, exploring or thinking for something, they haven't found yet, the something being what they will do in the future.

Guess a lot of people will never understand my thinking

Kindest regards,
UB

Bill M said:

Thanks for the lead, I can't believe I haven't looked at it yet.


I think that is the grossed up yield, the fully franked yield is about 5.6% according to news.com.au. Still not bad though.

Edit: It is going ex dividend on 19 June with a 14c payment to come, I will be keeping an eye on this one.

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yes, the 8.25% includes the franking credit, and as I pay no tax in pension, that is my return.

Julia said:

Hi awg, that's a good point about the dividend versus WOW.
But just looking at a three year chart of both of these, from $18 ish three years ago, WOW went to around $34, a 90% gain, before falling with the market in the general downturn.

This compares with a gain over a similar period with MTS of around 40%.

Would the dividend difference over that period have made up for the lower capital gain?

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Hi Julia, that is why I have held WOW very long term, and never sold.

Also why I have now added MTS, as I believe they have a strong prospect of growth, apart from the div

awg said:

added FMG at open today

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