After some market gyrations, a lot of great companies are looking cheap. We look forward to dividend season and re-deploying more funds into the market at these prices - and may look to sell any stock we are losing faith in to beat the market in the long term.
We remain a strong margin ahead of the All Ords return after the recent market falls, and are on the lookout for more bargains.
Watchlist
CCL
BWP
S32
Latest Update 17/2/2015: Business is Good
Some interesting stats emerged today from AMP Capital; of the companies to report results so far this period, 76% have seen profits rise from a year ago and 73% have increased their dividends.
It's important to recognize when times are good, and right now is a great time to be in the market.
It's important to recognize when times are good, and right now is a great time to be in the market.
Latest Update 16/2/2015: Has shit hit the fan at Patties Foods?
No.
Well, probably not.
News broke over the weekend An isolated number of Hepatitis A cases in Victoria and NSW that had been linked to frozen berry products imported and distributed by Patties under it's Nanna's brand. Of course some reaction to this sort of news is to be expected, and the stock was hit hard early, down as much as 17% on last Friday's price in trading today.
It has rebounded to $1.27 at close of trade today, about 7% below it's Friday price (Interestingly enough right about what we paid for it.) Including the dividend paid last year, we're still slightly ahead on our Patties investment since purchasing last year, though we'll certainly be keeping a close eye on this news as it develops.
Nanna's represents a small, but not meaningless aspect of the Patties Foods business. The company has released a statement, saying earlier today:
"It is too early at this stage to ascertain whether the product recalls will have any financial impact on the company"
We're not going to panic and sell, and in fact it's hard to see a situation where a problem isolated to a small corner of the business would change our thesis. But we're certainly going to be keeping a close eye in the weeks to come.
Well, probably not.
News broke over the weekend An isolated number of Hepatitis A cases in Victoria and NSW that had been linked to frozen berry products imported and distributed by Patties under it's Nanna's brand. Of course some reaction to this sort of news is to be expected, and the stock was hit hard early, down as much as 17% on last Friday's price in trading today.
It has rebounded to $1.27 at close of trade today, about 7% below it's Friday price (Interestingly enough right about what we paid for it.) Including the dividend paid last year, we're still slightly ahead on our Patties investment since purchasing last year, though we'll certainly be keeping a close eye on this news as it develops.
Nanna's represents a small, but not meaningless aspect of the Patties Foods business. The company has released a statement, saying earlier today:
"It is too early at this stage to ascertain whether the product recalls will have any financial impact on the company"
We're not going to panic and sell, and in fact it's hard to see a situation where a problem isolated to a small corner of the business would change our thesis. But we're certainly going to be keeping a close eye in the weeks to come.
Latest Update 11/2/2015: "Dividend Day" & CBA Reports
With the Cash Rate at a new all-time low of 2.25%, mortgage lenders slashing longer-term fixed rates (5 Year Fixed Rates have been slashed by up to 1% in 2015 alone) and the 10-year Australian Government Bond rate at just 2.55% (!!), much of the talk surrounding the ASX in recent days has been focused on dividends. We have a portfolio heavy on dividend-paying stocks, and it would be great to catch some of this momentum in the coming months.
If I had to back a single stock today, I'd be looking at Woolworths (ASX: WOW). After a stumble allowed me to buy in around $30 for the Rule 76 portfolio, a rally since has the stock back up over $32. However based on historical dividend levels, $32 will look cheap to many looking for a reliable dividend from one of Australia's most successful companies. I can see the Woolies share price pushing towards all-time highs in 2015 in the current interest rate environment.
Are the banks too expensive?
I made my first investment into the stock market (excluding my managed Super fund) in September, 2012, buying into KFC and Sizzler franchisor Collins Foods (ASX: CKF). Long before I made that purchase, conventional valuation methods and measures had rated the Big 4 Australian banks as too expensive, a . Since then, however, the CBA has returned over 70%, plus dividends. If you have sat on the sidelines and avoided the banks over the last few years (as I have), you've missed out on some serious returns.
CBA today announced a $1.98 interim dividend, good for an annual dividend yield of about 4.5%. With savings account and term deposit rates destined to hover well below this for the foreseeable future, there should be no shortage of demand for the juicy CBA dividend from investors.
Still, I am sticking to the script I have maintained through the rise and rise of the banks, and agree with Bruce Jackson of The Motley Fool who says, "At those levels, there simply can’t be too much fuel left in the CBA share price tank. It’s a massive company, trading on a premium valuation, and only growing fairly modestly. Sit back, enjoy the CBA dividends, and forget about any meaningful share price appreciation from here."
I have a large holding of the Australian Foundation Investment Company (ASX: AFI) in my personal portfolio, which gives me some exposure to the banks. That's all I want for the time being.
If I had to back a single stock today, I'd be looking at Woolworths (ASX: WOW). After a stumble allowed me to buy in around $30 for the Rule 76 portfolio, a rally since has the stock back up over $32. However based on historical dividend levels, $32 will look cheap to many looking for a reliable dividend from one of Australia's most successful companies. I can see the Woolies share price pushing towards all-time highs in 2015 in the current interest rate environment.
Are the banks too expensive?
I made my first investment into the stock market (excluding my managed Super fund) in September, 2012, buying into KFC and Sizzler franchisor Collins Foods (ASX: CKF). Long before I made that purchase, conventional valuation methods and measures had rated the Big 4 Australian banks as too expensive, a . Since then, however, the CBA has returned over 70%, plus dividends. If you have sat on the sidelines and avoided the banks over the last few years (as I have), you've missed out on some serious returns.
CBA today announced a $1.98 interim dividend, good for an annual dividend yield of about 4.5%. With savings account and term deposit rates destined to hover well below this for the foreseeable future, there should be no shortage of demand for the juicy CBA dividend from investors.
Still, I am sticking to the script I have maintained through the rise and rise of the banks, and agree with Bruce Jackson of The Motley Fool who says, "At those levels, there simply can’t be too much fuel left in the CBA share price tank. It’s a massive company, trading on a premium valuation, and only growing fairly modestly. Sit back, enjoy the CBA dividends, and forget about any meaningful share price appreciation from here."
I have a large holding of the Australian Foundation Investment Company (ASX: AFI) in my personal portfolio, which gives me some exposure to the banks. That's all I want for the time being.
Latest Update 3/2/2015: RBA Cuts Interest Rates
The Reserve Bank of Australia (RBA) has decreased the official cash rate by 25 basis points to 2.25 per cent at this afternoon’s monthly Board meeting.
While a cut (or two) was expected at some stage this year, I for one am a little surprised it was announced today at the RBA's first meeting of 2015. We'll take another look at the portfolio once the market has had a chance to react to the news.
While a cut (or two) was expected at some stage this year, I for one am a little surprised it was announced today at the RBA's first meeting of 2015. We'll take another look at the portfolio once the market has had a chance to react to the news.
Latest Update 3/12/2014: General Review, Buy WOW
The portfolio has stumbled a little through the end of November, with Orica leading the charge in the worng direction, now down about 11% since I bought it. There's been some so-so news (axing employees to cut costs, sale of it's non-mining chemicals division) and some commodities noise in recent weeks. I still back Orica as a company that will continue to be a market-leader regardless of wider mining conditions.
While the portfolio has lost a little value, we have had the 2nd-largest single-day ASX200 fall of 2014, the largest two-day drop since Aug 3, 2011 and the worst start to December in history on the wider market, so everyone is hurting. We don't measure our success or failure in such short time-frames, but I share just to keep a little perspective. The All Ords has tumbled more than twice as far as the portfolio since inception.
HFA Holdings lost some of the momentum it had given our portfolio at last review, but measuring the price at such short intervals will give results that sway like that from time to time. I'm stoked to have HFA providing some exposure to the financial industry at the current price.
New Purchase:
Woolworths Limited's share price has taken a stumble in the last few weeks, and I have decided to jump in with all of the remaining cash in the portfolio (~$2,700). Woolworths first quarter earnings report had some lagging results in petrol and Big W, which seems to have spooked investors and brought the share price down. Total sales excluding Petrol were up 4.1% - Woolies is going to be ok.
It means Woolworths becomes our smallest holding, and also removes the flexibility for another move like this in the short term as all remaining cash is being invested. This is a pretty risky strategy, but with a long-term outlook and a strong dividend paying portfolio I'm confident in the overall risk profile. Woolworths is a proven performer with a strong dividend history, and we're stoked to jump in at this price. Whether I have picked the bottom remains to be seen, but I'm not fussed because this is a great company with a share price reacting strongly to a results from a single quarter! This will be a blip on the radar one day.
While the portfolio has lost a little value, we have had the 2nd-largest single-day ASX200 fall of 2014, the largest two-day drop since Aug 3, 2011 and the worst start to December in history on the wider market, so everyone is hurting. We don't measure our success or failure in such short time-frames, but I share just to keep a little perspective. The All Ords has tumbled more than twice as far as the portfolio since inception.
HFA Holdings lost some of the momentum it had given our portfolio at last review, but measuring the price at such short intervals will give results that sway like that from time to time. I'm stoked to have HFA providing some exposure to the financial industry at the current price.
New Purchase:
Woolworths Limited's share price has taken a stumble in the last few weeks, and I have decided to jump in with all of the remaining cash in the portfolio (~$2,700). Woolworths first quarter earnings report had some lagging results in petrol and Big W, which seems to have spooked investors and brought the share price down. Total sales excluding Petrol were up 4.1% - Woolies is going to be ok.
It means Woolworths becomes our smallest holding, and also removes the flexibility for another move like this in the short term as all remaining cash is being invested. This is a pretty risky strategy, but with a long-term outlook and a strong dividend paying portfolio I'm confident in the overall risk profile. Woolworths is a proven performer with a strong dividend history, and we're stoked to jump in at this price. Whether I have picked the bottom remains to be seen, but I'm not fussed because this is a great company with a share price reacting strongly to a results from a single quarter! This will be a blip on the radar one day.
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