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Smart Investing: What clever investors are doing right now Posted on October 9, 2018
The PIIGS (Portugal, Ireland, Italy, Greece & Spain) are primarily the main concern in the current market and the circumstances continue to change on a daily basis. This is driving the market and it will take months to play out and when this is finished there will be another concern which will fill media headlines.
This is why investors shouldn’t just sit on the sidelines waiting for the fear to go away, but rather establish a diversified portfolio that is prepared to weather any market concerns.
One of the key investment philosophies that are shown to be successful in most types of markets, is investing with the focus on income. As we work through the post GFC environment, many investors are coming to the realisation that they can’t live off the high capital gain growth that delivered most of their return for the previous decade, but rather the focus is swinging back to investing for dividends.
Dividend income is eclipsing capital gains as a contributor to total returns, and now that the leverage boom is over dividend income from investing is going to be a bigger contributor to total investment returns.
Paul Taylor, the Portfolio Manager for Fidelity Australian Equities Fund says “while investors can expect global uncertainty to weigh on the stock market for some time, the dividend yield offered on Australian stocks is enough reason to invest”.
“The Australian Market, because of the recent volatility, is now sitting on a very attractive valuation of around 10 times earnings (compared to long term of 13-14) and about a 5% dividend yield. That’s a really sustainable yield, a real fundamental valuation underpinning the market. Even if we stay at this low valuation level, investors are going to get pretty good returns from earnings growth as well as that dividend yield”.
To find out more about the current state of the Australian Share Market, current opportunities and how to successfully invest for dividend income, click here to contact our office to arrange a complimentary appointment.