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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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Price % Chg
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LNG LNG LTD $ 2.400 + 8.11%
SFR SANDFIRE $ 4.680 + 7.59%
BDR BEADELL $ 0.207 + 6.15%
MIN MINERALRES $ 7.120 + 5.48%
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ILU ILUKA RES $ 6.300 + 5.35%
PNA PANAUST $ 1.485 + 5.32%
EVN EVOLUTION $ 0.600 + 5.26%
DOW DOWNER EDI $ 4.450 + 4.95%

Commodities

Price Change % Chg
BRENT SPOT (USD/BBL) 59.000 0.000 0.00%
LIGHT CRUDE JAN5 (USD/BBL) 54.950 + 0.840 + 1.55%
NAT GAS JAN15 (USD/MMBTU) 3.658 + 0.016 + 0.44%
Bid Ask Bid Chg Bid % Chg
GOLD (USD/OZ) 1197.88 1198.88 + 0.23 + 0.02%
SILVER (USD/OZ) 15.92 16.00 + 0.07 + 0.44%
PLATINUM (USD/OZ) 1198.65 1201.65 + 4.05 + 0.34%
PALLADIUM (USD/OZ) 788.20 795.20 - 0.30 - 0.04%

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AUD USD EUR JPY GBP
AUD AUD 0.8164 0.6648 97.1 0.5214
USD 1.2241 USD 0.8143 118.94 0.6387
EUR 1.5029 1.2276 EUR 146.05 0.7841
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GBP 1.9165 1.5655 1.2748 186.19 GBP

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