archive-au.com » AU » M » MOTIVATEDMONEY.COM.AU

Total: 94

Choose link from "Titles, links and description words view":

Or switch to "Titles and links view".
  • Welcome - Motivated Money
    18 or so listed investment companies more than 70 per cent of them produced positive returns for the year to June with the big LICs strongly outperforming the index not to mention the leading managed fund products Australian Foundation returned 13 35 per cent Argo Investments and Milton Corporation 9 5 per cent while several smaller operators managed returns up in double figures The question which investors should be asking is put by Peter Thornhill of Motivated Money are the poorly performing fund managers fishing in the same pond as other investors Thornhill contrasts a range of increased dividends from well known companies with the performance of three managed funds he is holding Against increases in dividend ranging from 5 per cent to 250 per cent he says of the three funds one increased income by 1 per cent another by 7 per cent and the third had a 15 per cent fall in income Even worse none of the three funds achieved any realised share gains to distribute to investors for 2002 03 As Thornhill notes if these funds invest in the same pond as other investors surely their dividend experience should broadly mirror the market In fact they should be better as they hold fewer duff shares because they are great stockpickers aren t they he asks To confirm Thornhill s dividend numbers a sample of mostly blue chip companies which have reported in the past week or so have produced an average increase in dividend of more than 13 per cent and this excludes an abnormal rise in Lend Lease payments As examples Foster s lifted annual payout by more than 10 per cent Brickworks by 29 per cent TAB by 15 per cent Woolworths by 18 per cent IAG by 9 5 per cent Amcor by 7 per cent and AGL by almost 6 per cent Some smaller stocks such as Billabong Sonic Health Care Ridley and RG Capital Radio produced increases in dividend payments averaging more than 20 per cent over the year But to avoid any bias in selecting stocks in this sample or in Thornhill s own portfolio investors need only look at the performance of the listed investment companies as an example of what can be achieved by buying and holding a widespread portfolio of shares Perhaps the stark contrast between the results achieved by the larger LICs compared with virtually most of the managed fund equity trusts is part of the explanation for the continued phenomenon of LIC shares selling at premiums to their net asset backing figures The five biggest LICs Australian Foundation Argo AUI Djerriwarrh and Milton mid week were selling at an average premium to their net assets of more than 13 per cent That is a substantial premium to pay for a portfolio of shares in the distant past the theory was that there should be something of a discount Presumably investors must have some reason to pay more than the underlying share portfolio is worth Perhaps

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=4qh2muzf36 (2014-07-08)
    Open archived version from archive


  • Welcome - Motivated Money
    exchange was closed down and only allowed to open one day each year when everyone could buy and sell what they wanted You d immediately eliminate all those knee jerk reactions to minor bits of news and gossip Odds are that while prices might still vary a lot from year to year the movements could be simply explained Also imagine that all the impediments to trading property were removed You could buy and sell houses within minutes and each night your home would be auctioned and its current value flashed across the evening news Now which investment would seem safer Every asset is affected by movements in the global economy but the lead time is different says Cavil Singh the head of broking investment services with Godfrey Pembroke The effect on the sharemarket is immediate but there is a lag before something affects property prices because property is not traded frequently This means the property investment cycle is often out of sync with the cycle in share prices In different periods each can be seen to be doing better than the other It also means property prices are less volatile from day to day than share prices though in the longer term prices of both assets will reflect what s happening in the broader economy Abey says many investors make the mistake of thinking the greater volatility of shares means they are also riskier But the greatest source of long term return in the sharemarket is taking on that volatility he says Your aim shouldn t be to avoid volatility but to ensure you can ride it out And that means making sure you have a well diversified portfolio of quality shares Thornhill says the enormous liquidity of the sharemarket exacerbates price movements as people who are nervous can bail out quickly whether that is justified or not He says this leads to an almost blind focus on the current value of your holdings and a lack of attention to the income stream being generated The last two years have been a wonderful period for dividends even though share prices have been tanking he says Australians tend to undervalue income But ultimately it is the income stream that determines the value of an investment over the long term No one would invest in a term deposit that paid no interest nor will they invest in a company that remains unprofitable or a rental property that you couldn t rent Thornhill says it s also incongruous that investors who would think it risky to punt more than 5000 or 10 000 on a particular share but have no qualms borrowing 200 000 or more to buy an individual property Shares are difficult to understand and add value to property is not Brian Thomas the head of retail funds with Credit Suisse Asset Management says property often seems easy because we learn about it from friends and family who own their own homes When we do decide to experiment with shares most

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=srdhwtx77c (2014-07-08)
    Open archived version from archive

  • Welcome - Motivated Money
    Grand Hotel Group have dropped their forecasts for the current year In the case of Grand the final payout has been cut altogether At the same time other trust stocks particularly those with retail holdings or residential development earnings or a takeover premium have been surging well beyond asset backing Two weeks ago Andrew Parsons the head of Lend Lease s real estate securities warned that property trusts had never been riskier Risk says Bob Kelly the head of funds management at Colonial First State Property is the key issue for the listed property trusts The LPT market was founded to provide investors with a conservative property lease backed income stream which was a defensive stock The market is now departing significantly from these traditional roots and the risk profile of the market has increased in all kinds of ways through development driven stocks increased gearing and offshore investments as well as some more exotic structures Elements of risk in some cases are not properly disclosed and are certainly in many cases not well understood or analysed by the market Kelly says the trust stocks with the greatest risk typically those with returns enhanced by development or other business income are now trading on the lowest yield This is the inverse of what we intuitively know to be true that there must be an appropriate premium for the risks taken he said It happens because investors start assuming that development profits can be projected long term which according to Kelly is just as unsustainable now as it was in the late 1980s Takeover mania then transfers that premium across the sector to create a pricing bubble Mispricing of risk and movements towards increased gearing and risk taking activity in the LPT sector is sowing the seeds of a potentially large

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=tdx16k9f2d (2014-07-08)
    Open archived version from archive

  • Welcome - Motivated Money

    (No additional info available in detailed archive for this subpage)
    Original URL path: /pressclippings.php?iid=aa25975f5w (2014-07-08)


  • Welcome - Motivated Money

    (No additional info available in detailed archive for this subpage)
    Original URL path: /pressclippings.php?iid=ywhm61e7br (2014-07-08)


  • Welcome - Motivated Money
    have all the information they need to make a fool proof decision Circumstances can change and the unexpected can happen What smart investors do is to try to reduce the risks of investing while accepting they can t eliminate them Peter Thornhill of Motivated Money believes many investors have been caught by chasing yields rather than investing for income While the two sound the same he says astute investors realise that it s often better to invest in a company with a modest yield at the outset but the potential to grow its earnings than in a company with a high yield and limited or no profit growth potential That means looking at the company s management and business as well as the industry and general economic environment it s operating in and assessing whether it s likely to come under pressure in the medium to longer term Signs that a company might not be able to sustain its dividends include a high level of competition and or oversupply in its industry emergence of new technologies that will replace what it s selling a trail of poor management decisions and or unstable management and economic trends with a negative impact on the business There are more There are also some financial ratios that can help Cavil Singh the head of broking investment services with Godfrey Pembroke says the two most important are the level of dividend cover and the dividend payout ratio Dividend cover is basically calculated by dividing earnings per share into the dividend per share Let s take one company that is under pressure from tough times in its industry Qantas Singh says that barring an oil price shock or a worse than expected fallout from SARS Qantas is expected to earn 36c a share next year and pay 21c in dividends So its level of dividend cover is 1 7 times In other words it is expected to earn 1 7 times its dividend For investors this means a bit of a safety net in the Qantas dividend Earnings per share would have to fall short by more than 40 per cent before it earned less than it was expected to pay out On that basis you d expect Qantas to be able to meet its dividend forecast if its profits came in a bit lower than expected though a big profit fall would jeopardise the dividend But that s only half the story The dividend payout ratio calculates how much of its profits a company is paying out as dividends Obviously a lower payout ratio is better than a high one as the company may be able to lift its payout ratio in bad times to avoid reducing its dividends You calculate the payout ratio by dividing the dividend into earnings per share That gives Qantas a payout ratio of a bit less than 60 per cent Again there s a bit of a buffer for the company to sustain the dividend if things are worse

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=zqgcrasp58 (2014-07-08)
    Open archived version from archive

  • Welcome - Motivated Money
    not a lot but 2 percent in an 8 percent return is substantial said Tom Huber portfolio manager for the T Rowe Price Dividend Growth Fund Dividends are often a better vehicle for returning excess cash to shareholders than share buybacks Huber said because buybacks tend to occur at poor prices or simply offset option dilution which does not benefit shareholders In the event the tax break passes no question dividends will get a whole lot more attention from shareholders and management teams and you ll see more companies paying dividends There s a nice list of high quality business that will start Huber said PLAYING POLITICS The U S Senate facing record deficits and a costly war in Iraq last Wednesday passed a budget for next year that includes less than half of the 726 billion in new tax cuts sought by President Bush and leaves little room for eliminating taxes on dividends the centerpiece of Bush s economic plan Currently dividends are taxed on both the corporate and investor level Some analysts still believe the double taxation will eventually be eliminated It s just a matter of time because it makes sense from a corporate governance standpoint You want to keep the transparency up by making companies give you cash You can t manipulate cash like options said James McGlynn who runs a large cap value portfolio for Summit Investment Partners There have been scattered trading rallies on news about the tax law changes that have subsequently been sold off but nothing meaningful yet fund managers said Clearly there are businesses with strong long term outlooks and that could pay substantially more dividends in the future that have not yet rallied Microsoft is a poster example said Chris Bonavico manager of the Transamerica Premier Aggressive Growth Fund Microsoft

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=bwk34gy9mj (2014-07-08)
    Open archived version from archive

  • Welcome - Motivated Money
    were taxed at 20 per cent rather than not at all Dr Goodman predicted their return would become a major theme on Wall Street He said this would in turn drive demand for stock as more mutual funds were able to invest particularly as redemptions were already stabilising Investors have pulled US2 8 billion 4 6 billion from Putnam this year after taking out US15 7 billion in 2002 the most of any mutual fund company according to the Financial Research Corp Dr Goodman said that half of the US2 7 trillion sitting in money market funds was earmarked to return to the equity market However a lot was dependent on whether the war in Iraq finished in a satisfactory manner improving President George Bush s hand with Congress and leaving the US and its currency well regarded Dr Goodman warned that if the US wins badly with more casualties and the Iraqi oil fields destroyed the administration would be vilified abroad and domestic calls for President Bush s impeachment would emerge leading to concerns about gridlock and recession Dr Goodman said market psychology was now worse than in 1973 74 but argued that at least then it was warranted

    Original URL path: http://www.motivatedmoney.com.au/pressclippings.php?iid=f725nsc905 (2014-07-08)
    Open archived version from archive