From an investors perspective we believe accumulation of quality companies into moves that are currently unfolding in global equities makes sense but as we’ve said a few times of late the S&P500 has already fallen 25% but an ultimate 40-50% pullbacks cannot be ruled out hence the term “accumulation”.
We like the banks for income, particularly into this pullback, however most Australians are overweight banks so it makes sense to look elsewhere from a diversification perspective.
The miners are screening well for income, however their earnings are very cyclical and we are reticent to think of them as consistent income payers – they simply ebb and flow with the economic cycles. The Market Matters Income portfolio holds our best income ideas, and the recent weakness see’s a number of quality companies back at attractive levels. Our best 4 pics at current prices are:
Metcash (MTS) paying ~5% fully franked
Stockland (SGP) paying ~7% however we see a lot of value in property stocks after recent weakness. We also like CNI, NSR to name a few.
Telstra (TLS) below $4 paying 4% fully franked
Wesfarmers (WES) paying nearly 4%
Importantly, look for companies with some growth over time so that dividends will increase at a greater clip than inflation.