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Focus on yield in the new world order

The new Chinese premier Li Keqiang has tempered that nation’s prospects for growth and our hopes for an ongoing mining boom.

How much is enough?

“Seven per cent will be enough to achieve an affluent society by 2020,” the Financial Review reported him as telling a State Council working conference.

He may well be right but the lower growth rates continue to raise concerns in the local economy and the outlook for the Australian sharemarket is not so optimistic.

“The expectations of investors should remain tempered,” John Abernethy, chief investment officer at Clime Asset Management, told shareholders at the group’s annual general meeting on Friday.

“The [outlook] is not looking fabulous, it’s just looking OK.”

But there is some light at the end of the tunnel for investors, he says. “I think we’re in the process where the money that ran out of the market is now coming back.”

What you should do

If the massive capital gains of a few years ago are now a thing of the past, then you should be concentrating on finding investments that have sustainable yield.

Investing for yield should always be a factor when considering adding shares and other investments to your portfolio but this message got lost in the hubris that eventually caused the GFC.

As cash rates fall, shares that offer reasonable (and sustainable) dividends should be a must. Read our blogs on unsustainable dividends and be cautious when something looks too good to be true.

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Market Summary

Price % Chg
SDF STEADFAST $ 1.590 + 6.35%
ARI ARRIUM $ 0.375 - 6.25%
SFR SANDFIRE $ 6.000 + 5.82%
BDR BEADELL $ 0.475 + 5.56%
NST NTH STAR $ 1.260 - 4.91%
KMD KATHMANDU $ 2.820 + 4.83%
TPM TPGTELECOM $ 6.790 + 4.62%
LYC LYNAS $ 0.120 + 4.35%
FMG FORTESCUE $ 3.760 - 4.33%
AWC ALUMINA $ 1.750 + 4.17%

Commodities

Price Change % Chg
BRENT SPOT (USD/BBL) 96.340 0.000 0.00%
LIGHT CRUDE OCT4 (USD/BBL) 92.450 - 0.660 - 0.71%
NAT GAS OCT14 (USD/MMBTU) 3.844 - 0.073 - 1.87%
Bid Ask Bid Chg Bid % Chg
GOLD (USD/OZ) 1215.84 1216.48 - 0.35 - 0.03%
SILVER (USD/OZ) 17.81 17.90 + 0.05 + 0.28%
PLATINUM (USD/OZ) 1334.02 1344.02 + 0.77 + 0.06%
PALLADIUM (USD/OZ) 810.49 816.49 + 0.49 + 0.06%

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Currencies

AUD USD EUR JPY GBP
AUD AUD 0.8927 0.6958 97.31 0.548
USD 1.1196 USD 0.7794 109.01 0.6139
EUR 1.4362 1.2828 EUR 139.84 0.7875
JPY 0.0103 0.0092 0.0071 JPY 0.0056
GBP 1.8232 1.6285 1.2693 177.52 GBP

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