July 1 - October 7 | |
ASX 200 | (down) 9.73% |
Dow Jones | |
German Dax | |
Greece | (down) 41.80% |
AUD/USD | (down) 8.64% |
The best word to describe the recent share market action is VOLATILE!. This reflects developments both globally and domestically; particularly the US recovery stuttering, the European Sovereign debt resolution being drawn out and the two speed economy.
Whilst volatility can be off putting, the focus must be on the longer term value. The worlds greatest investor, Warren Buffet, puts it admirably. "I buy on the assumption that they could close the market the next day and not reopen it for five years". This quote is telling you to ignore trading, because trading is for gamblers. Investing involves buying quality companies and holding them for the long run.
Despite the recent volatile period on the Australian market, we have seen the recent profit reporting season feature reasonably solid dividend growth. This reflected improved profits but also strong corporate balance sheets. Companies not paying much in interest leaves more for shareholders!
We expect that dividends will be a significant proportion of investors return on shares as the world economy experiences lower growth as both household and government sectors deleverage.
Here are the estimated dividend yields on 10 of the biggest Australian companies for 2011/12:
BHP | 4.85% |
ANZ | 9.57% |
CBA | 10.00% |
NAB | 10.00% |
WBC | 10.00% |
RIO | 2.57% |
WPL | 4.57% |
WOW | 7.28% |
TLS | 13.00% |
WES | 9.00% |
In Australia, three of the big four banks will report their earnings and pay their dividends this quarter. This will provide a friendly reminder to 'investors' of the value of income in their portfolios.
In other areas of the Australian economy, house prices continue to fall across the nation, driven by fresh ten and a half year lows on home sales in July. The weakness in the housing sectors added to a continuing weak situation in retail. This has lead to most believing that the next move from the Reserve Bank will be a rate cut. Many economists are predicting 0.25% rate cuts in both November and December to provide maximum impact to the Christmas retail period.
If you would like to discuss how these issues will impact on you, please do not hesitate to call HKS Financial Planning on 07 33977315.
Information contained in this blog is of general nature only. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you always obtain professional insurance, investment and taxation advice specific to your objectives, needs and financial situation before making any investment decisions or acting on any information contained in this article or on this blog.
HKS Financial Planning as an Authorised Representative of Guardianfp Ltd trading as Guardian Financial Planning. ABN 40 003 677 334 AFSL 237641. Guardian Financial Planning is a part of the Suncorp Group.
