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Monday, 20 September 2021
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The long current positive run for the Australian stock market is unusual but not a warning of imminent demise. Previous long positive runs were not all followed by corrections but this one may end this month.
There is a small universe of companies on the ASX which are reliable dividend payers over five years, are fairly valued and are classified as ‘negligible’ or ‘low’ on both ESG risk and carbon risk.
Some LICs have recently paid out more in dividends than their net profit as they have the ability to tap their retained profits and reserves. Others reduced dividends to ease the burden on cashflow and balance sheets.
A long-time advocate of the merits of generating income by investing in industrial companies rather than bonds or deposits checks his 'mothership' chart for the latest results, and continues to feel vindicated.
Sixty per cent of the ASX200 total return is due to dividends, and for Financials, it rises to more than 70%. Moves to limit dividends could both reduce investor incomes and affect valuations.
The net tangible assets of a LIC should show its real value and sounds simple to calculate. So why is there a great disparity in the methods, and what does tax have to do with it?
As companies 'do their bit' to fight coronavirus, company executives and boards have amended stakeholder priorities. The rules of investing have changed, but it's only appropriate for the short term.
Peter Fitzsimons calls franking 'ridiculous' and Dick Smith calls it 'outrageous', but Dick Smith probably receives a significant refund because his Australian share investments are held in a very large SMSF.
Check the cash flow characteristics and sustainability in any company before investing, as various ratios can be an early sign that the business is churning through rather than generating cash.
Almost 2,000 people completed the franking credits survey, with 84% opposing the Labor proposal. Surprisingly, over half intend taking some action to mitigate the consequences.
While hot stocks generate media coverage and attention from investors, for the overall health of the market, they are irrelevant. A few big companies drive the Australian market.
Investors whose income may be hit by Labor's franking credits proposal can reallocate away from fully franked dividends to other investments to maintain their income, but it will involve different risks.
Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.
The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?
It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.
Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.
Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.
Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.