Morning Report Tuesday 18 August 2015
Patience Investors, there is No Hurry to Chase Stocks at Present
Our initial feeling at MarketMatters yesterday when Commonwealth Bank (CBA) opened at $80.50 was frustration, as we were hoping to add to our holding around the $78-$79 area (at least we are entitled to the 1:23 rights issue at $71.50 from our current holding. However, considering that institutions paid $78 for 3 million “left over” shares that were not entitled to today’s dividend, the $80 area made sense, unless the ASX200 was going to continue in its recent very negative state. Today, CBA trades ex-dividend for a very healthy $2.22 (fully franked) and after its $5bn capital raising, the bank is extremely secure, making its ~5.2%pa ( ~7.7% grossed up for 2016) dividend very attractive, compared to the RBA’s 2% cash rate.
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