Why invest in the U.S Market?
Most investors understand the merits of asset diversification, but did you know keeping your investments limited to one market could be detrimental to long-term performance?
Australia is a relatively small, highly concentrated market when you compare it to the global stage. It only takes setbacks in two sectors, banks and resources, for investors to feel the squeeze on their income and capital growth. Case in point, the recent COVID-19 correction, which saw a vast number of high yielding stocks, primarily the banks, slash or defer dividend payments.
Currently, the ‘big 4’ banks make up ~20% of the market capitalisation of the ASX 200 and combined with resources, this increases to ~40%*. So, whilst you might feel you have ticked the boxes in terms of sector diversification, spreading your investment wings into new geographies can reduce your overall risk. *As at 15 June 2020
When considering overseas investment markets, the U.S. market is like no other in terms of scale and diversity. It provides the opportunity to invest in companies that are at the cutting edge of technology, manufacturing and science, many of which are not represented in Australia.
Here are 5 key reasons why you should consider allocating a portion of your investment portfolio to U.S. equities.
1. Global Exposure
The performance of U.S. companies isn’t just limited to the health and growth of the U.S. economy. The S&P 500 index is much more global with many U.S. corporations having an international presence, deriving assets and revenue from foreign markets.
At a country level, nearly 61% of S&P 500 revenue comes from the U.S., with the remaining coming from foreign markets. Internationally, the largest individual countries by total revenue include China (5.9%), Japan (3.1%), and the UK (2.5%).
Source: FactSet. Data as at 18 June 2020
2. Access to the world’s largest economy
Whether you are looking for fast-moving and rapid-rising technology companies or steady-growth players, the U.S. market has a deep pool of companies and industries that can enhance your investment portfolio.
As the world’s largest economy, the United States is home to the biggest stock exchanges in terms of the number of listed companies and market capitalisation.
Did you know over 50% of the world’s stock market capitalisation comes from the U.S.? The chart below illustrates just how large the market is in comparison to the rest of the world.
3. Deep market liquidity and trading volume
The fact that the U.S. hosts many of the world’s largest companies, also means its stock markets have deep liquidity, resulting in opportunities to invest in a wide range of industries. With the significant number of new products and services to market generated in the US, it attracts a constant flow of investment money from across the globe.
According to the latest statistics from the World Bank, nearly U.S.$23 trillion worth of trades went through the U.S. stock exchange in 2019.
Source: World Bank.
Put simply, the acronym FAANG represents five stocks which are Facebook, Amazon, Apple, Netflix and Google. Traded on the NASDAQ, investors turn to technology companies when they are looking to invest in growth stocks and a large number of investors’ portfolios are concentrated in the FAANG’s.
These companies have changed the way we live and have reshaped the world whether it comes to how we purchase goods and services, how we watch movies and play video games and even communicate with our family and friends.
The members of FAANG are so massive and profitable that they generate a significant amount of the Gross Domestic Product (GDP) in the U.S. They currently have a market capitalization of around U.S.$ 3.9 trillion and they make up ~15%^ of the total value of the S&P 500.
Investing in the U.S. market puts you in pole position to take advantage of not only the revenue derived from the FAANGs but also upcoming leaders in technology and innovation.
^Source: IRESS. Data as at 15 June 2020.
Over the past 10 years to 30 May 2020, the average annual return from the U.S. market (Hedged) was 13.15% p.a. and U.S. market (Unhedged) was 15.88% p.a. versus 7.25% p.a. from the Australian market. On an annualised basis, this difference when compounding over several years makes the U.S. market an attractive option for Australian investors.
Source: IRESS. All returns shown assumes net dividends are reinvested. Returns are average annual per annum returns over the periods shown. Indices used are: Australian shares: S&P/ASX 200 Accumulation Index, U.S. Hedged: S&P500 Total Return Index, U.S Unhedged: S&P500 Total Return Index. Index performance does not take account of management costs, operational and transactional costs or tax. Index performance does not reflect the performance of any individual portfolio of stocks. Please remember past performance is not a guide to the future. Investments in overseas markets can be affected by currency exchange and this may affect the value of your investment.
Buying into a company’s growth story can be financially rewarding. Here’s what to look for.
In this article, Lincoln Indicators discusses:
- The strategy behind investing in shares on the ASX that have a growth bias
- Why fundamental analysis is key for DIY share investing generally, including when seeking out growth stocks on the Australian stock exchange
- The different approaches to identifying growth stocks
- How stock research tools and good share market research are critical to overall share market success
Whether you’re a DIY share investor with direct shares in your own name, through a self-managed super fund (SMSF) or via a professionally managed fund, investing in shares on the Australian stock exchange is almost always about buying into a company’s growth story
After all, the effective aim of the game as an Australian share market investor is to buy into a stock that will increase its share price over time, hopefully significantly. That’s often the case even if part of your broader investment motivation is also around longer-term income generation.
Generally speaking, there are two broad categories of shares for investors to consider on the Australian Securities Exchange (ASX). These are the growth stocks (those companies that investors expect will increase in capital value over time) and income stocks (those that are more likely to generate a reliable and tax-effective income stream through fully franked dividends. Sometimes a company will fit into both categories, but growth stocks often pay a lower-than-average dividend, preferring to reinvest their profits. Sometimes growth stocks trade on a higher price earnings ratio (PE), as investors pay a little more today for the expected profits of tomorrow.
Of course, all investors need to avoid the stocks that are financially unhealthy and will neither grow nor generate dividend income. These stocks, many of which are small caps and micro caps, are usually a recipe for financial disaster.
Why fundamental analysis is key
Whether your focus is on growth or income, finding the best quality shares to buy is always key. And that can only really be done through detailed fundamental analysis, using stock market research tools such as Stock Doctor. It is only through fundamental analysis that investors can determine the true quality of the company they are investing in.
There have been many examples of companies on the ASX that have achieved enormous share price growth over time, some doubling, quadrupling or going up tenfold or more. Think of blood products group CSL Limited, which listed in 1994 on a post-dilution basis at $0.76 a share and now trades above $240 a share, or Commonwealth Bank, which listed in 1993 first at $9.35 a share and now trades close to $80.
Equally, there are countless examples of companies that have risen meteorically, only to come crashing back to Earth in spectacular fashion. Probably the most famous Australian example of this was nickel miner Poseidon NL in the late 1960s, whose share price soared from 80 cents to $280 in less than six months, and subsequently collapsed as nickel prices fell and the company ran into operational problems. The Poseidon story was a painful lesson that a company’s underlying growth story must match up with reality. Fundamental analysis, using financial ratios to filter the good stocks from the bad, is key.
While some investors can achieve great returns along the way, others can lose miserably. In our view, the best quality growth stocks are the ones that keep rising sustainably based on strong fundamentals. If a share price disconnects from the quality of the underlying business, this may result in short-term gains. However, in the long run, the price will eventually revert to the fundamentals.
So what should you really be looking for in identifying a quality growth stock that should deliver sold price appreciation over time?
Generally speaking, growth companies are characterised by strong earnings forecasts that are above-average relative to the broader market. Investors target these companies because they expect them to be bigger tomorrow than they are today.
At Lincoln, we define a quality growth stock using three very important rules. The very best stocks become our Star Growth Stocks, which have consistently outperformed the market over time.
The three Golden Rules for growth stock selection
Financial Health: is the company exposed to manageable risks? To meet these criteria, a stock must exhibit Strong or Satisfactory Financial Health. A company must be healthy for at least two consecutive periods or more. It is not enough for a stock to be healthy for solely one period.
Past Financial Performance: For growth stocks, Lincoln uses a range of different factors to identify companies that meet key underlying quality growth factors. Put simply, to suit the needs of a growth investor, a company must possess a consistent history of generating efficient profits with strong cash flow generation.
Outlook and active risks: To determine whether a company’s fundamental performance is sustainable, investors must analyse the company’s outlook and active risks. For growth opportunities, we want to gauge whether a company is likely to remain as a Star Growth Stock in the future, which includes an assessment of a company’s active risks to help ascertain the likelihood that it will retain its quality elements.
Different approaches to achieve capital growth
Though investors seeking capital growth are after the same outcome, there are some distinct approaches to portfolio construction and optimisation that we educate our members on. At Stock Doctor we provide four defined strategies, utilising our Star Growth Stocks, which ensures the portfolio is managed using quality companies who as a collective have yielded strong returns for investors historically.
Which specific strategy you wish to employ will be the one that you feel most comfortable implementing. The four strategies around holding Star Growth Stocks are:
- Ongoing rebalance of the Star Stock portfolio
- No rebalance of the Star Stock portfolio
- Holding Star Growth Stocks that pass SD30TSR
- Holding Star Growth Stocks that pass SDMAX
First, an ongoing total rebalance of the Star Stock portfolio is where an investor holds all the Star Growth Stocks and rebalances the portfolio on an event such as a stock entering or exiting the Star Growth Stock portfolio.
Next is to hold the Star Growth Stocks, however, without the need to rebalance, letting your profits run and the occasional stock fall, with decisions to be made only when a Star Stock rating is changed.
The next two strategies utilise two technical indicators identified by Lincoln Indicators through rigorous backtesting as working on a base of quality Star Growth Stocks.
Holding the Star Growth Stocks that pass the SD30TSR indicator which is a 30% stop loss level is strategy three and holding Star Growth Stocks that pass our SDMAX moving crossover indicators is strategy four.
They are to be employed by investors who are sensitive to price drawdowns and wish to avoid catastrophic declines without needlessly being stopped out of a quality business when normal price volatility occurs.
Why stock research tools are important
Investing for growth can be rewarding, and a lot comes down to individual risk appetite. Those willing and able to do proper fundamental company analysis and can make decisions with discipline stand a much higher chance of making it all pay off. On the other hand, those who invest blindly – whether they’re looking for growth or income – are destined for failure.
Sophisticated stock research tools such as Stock Doctor, which accurately measures financial health and provides quantitative and qualitative research on every ASX-listed company, takes the hard work out of fundamental analysis.
With Stock Doctor, you can:
- Through our Star Growth Stocks, identify the best-performing growth companies on the ASX with outstanding proven performance
- Access easily the Financial Health and the other two Golden Rules for growth stock selection of every company
- Have an investing framework to make confident and informed investment decisions with discipline based on your investment objective and tolerance to risk
Our team is always here to help you identify the best Growth Stocks on the exchange. If you would like to discuss this article in more detail or would like more information on Stock Doctor or our Managed Funds, please contact us on 1300 676 333.
There’s a long standing debate among Australian investors on whether property makes a better investment proposition than investing in stocks.
These are the two most popular asset classes and you’ll always find strong opinions about which option provides the best bang for your investment buck.
Which do you think delivers the higher return?
Analysing purely on a short-term basis, will naturally favour one option over another, depending which time period you choose. However, looking over the long-term, removes the volatility argument that pro-property investors often throw up as a reason to avoid investing in stocks.
On the face of it, investing in stocks can appear more volatile than property, a point that stock market believers have to concede. But, is this really the knockout blow for equities in this great debate? We don’t believe so.
If you subjected the property market to daily trading, like stocks, it too, would appear very volatile. So, let’s start comparing apples with apples. As there is no modelling tool to see property being traded like stocks, let’s look at stocks being treated like property over the long-term.
Lets look at the last 20 years for a fairer comparison
Looking at the last 20 years, enables a fairer representation of the results, and a more realistic comparison. According to ABS data, the median house price in Australia in 1996 was $143,921. In 2016 the median house price is now $623,000. An overall gain of 332% or $479,079. Not too shabby. I wonder what you’ve spent to maintain the property over that time? Let’s not complicate things for now, but that is definitely something to consider for the final figure.
Comparatively, if you had a portfolio made up of an average mix of ASX200 stocks, and it was worth $143,921 in 1996, today it’d be worth $822,000. Now that’s pretty good, a clear profit of $678,079, or 471%. And, I might add, the cost of maintaining this asset is virtually zero. Compared to typical costs of owning property, like stamp duty, council rates, body corporate fees, general maintenance and insurance, which are ongoing, and can run into the tens of thousands.
But, if you really want to be knocked for six, look at these figures:
Let’s say in 1996, you invested $143,921 in a portfolio, made up purely of Stock Doctor Star Growth Stocks. Factoring in the GFC and other downward pressures, you’d still have a portfolio worth $4.7 million today.
Comparing right down to the minute detail of expenses like; rates and water charges, does seem a little petty now. Stock Doctor Star Growth Stocks performed 654.4% better than our hypothetical property investment, which in dollar terms, delivered $4,077,000 more than property over 20 years.
While every effort has been made to use real figures, this should not be interpreted as financial advice, and should be used for comparative purposes only. It’s intended to give a like-for-like comparison between the two investment choices that have historically dominated the Australian market.
And the proof…
Yes, there are many things to like about property investments. However, one that strikes me as particularly strange, is the obsession in having a tangible asset. The attraction to bricks and mortar is completely irrational, yet people often let it influence financial choices.
The fact remains, bricks and mortar are no more secure than stocks. The difference is, investing in stocks has a number of rational advantages over property. Particularly if you are just starting out on the investment path and have relatively modest capital at your disposal.
To wrap up the debate, the key points are:
1. Simple to invest: Investing in stocks is simple if you have the right tools to guide you. With the help of an investment platform like Stock Doctor, you can easily research, select and invest in a wide range of stocks that align with your objectives. Your returns will be governed by the fundamental quality to the companies you hold and your ability to remain disciplined in the management of your portfolio.
2. Your holding is liquid: You can sell the shares you want, when you want, without having to wait for long periods of time. If you need to sell your property, you need to outlay money to cash-in the asset, paying thousands to real estate agents just to manage the sale. Also, long sale processes, cooling off periods, settlement periods, result in your money being tied up for months at a time. With the stock market, you get your cash in a few days of selling your investment, and there’s no large sum due in order to cash-in your investment.
3. Easy access: To buy shares in any stock you simply need an online account and can trade from as little as $14.95 per trade. Property requires you to engage agents, conveyances and lawyers to make a transaction go through – and that means very steep transaction costs!
4. The ability to diversify: The stock market offers you the ability to diversify across sectors such as mining, health and even property through a real estate investment trust (REIT). With direct property you could invest across a range of sectors such as residential, commercial or industrial property. However, the cost of diversification would be exorbitant.
5. You don’t need debt to invest: Often the only way an investor can buy a property is if they take on a large amount of bank debt via a mortgage. This can put enormous strain on investors if they borrow outside their means. Investing in stocks requires a much lower outlay. A few hundred dollars will get you started.
6. Lower capital and cost requirements: As with any business, the owner will benefit when a company grows and increases its profits, making their investment more valuable. By investing in stocks, you can buy part of a business, or several businesses with a much smaller initial investment amount compared to purchasing an entire company. This gives you more flexibility to spread your investments across a range of companies.
With property, this is usually a very large, single investment. Meaning you’re putting all your eggs into one basket and the initial hurdle to get into the market is locking many Australians out.
7. Volatility is your friend. Remember this argument that’s often cited by property investors? Any seasoned share investor will tell you that volatility is indeed your friend. It is the vehicle that drives growth, through all the buying and selling and changing demand throughout all market conditions.
In turn, this fuels longer-term share market growth and puts money in your pocket. If you look at the long-term ASX performance you’ll notice, despite shorter-term blips, it’s always trending upwards. And, if you have a great tool like Stock Doctor, you’ll always be able to spot a bargain and boost your portfolio with good quality companies at a great price. Even during those blips!
We aren’t saying you should avoid property. But, we believe that if you only invest in one asset class, stocks are the standout choice. In our experience, investing in stocks provides the best opportunity for wealth accumulation over the long-term, with fewer risks, and stronger returns. I don’t know how a sound argument could be made in favour of property investing over stocks. By all means, try if you like.
^Disclosure – Star Growth Stock Past performance:
Star Growth Stock returns were calculated by Lincoln as a measure of the historical performance of the strategy reflecting the changes in recommendation and the performance of them over time and does not represent an actual investment. Investments go up and down. Past performance is not a reliable indicator of future performance and should not be relied upon.
The performance over the stated time period/s reflects the capital return and dividend income paid on a notional portfolio of $100,000 that is equally invested in each Star Growth Stock at the commencement of the relevant performance period quoted. The portfolio is rebalanced to equal weight exposure when the composition of the Star Growth Stocks changes.
For all transactions, closing prices for the next trading day are assumed. Transaction costs of 0.5% on each purchase and sale have been incorporated into the performance figure. Returns are expressed in a per-annum basis. The calculation makes no allowance for other distributions, government charges or tax, or annual subscription fees payable to Lincoln.
All performance figures are calculated as a per annum percentage and reflect the overall capital return and dividend income paid of the strategy highlighted above for the stated time period presented. It is important to note that for returns on periods longer than 12 months, actual annual returns achieved during the time period would have varied, both positively and negatively, from the stated overall performance figure. For returns of 12 months, the per annum performance varies positively and negatively month to month reflecting the volatility of the equities asset class. Therefore no performance figure should be taken as a reliable indicator of future performance.
The Star Growth Stock criterion has not remained constant but has been revised and updated over time. The quoted performance reflects actual Star Growth Stock recommendations as they have been published to the public over time and have not been retrospectively implemented.
performance period quoted.
^Disclosure – Star Stock Past performance: Star Stock (encompassing Star Growth, Star Income and Borderline Star Growth) returns were calculated by Lincoln as a measure of the historical performance of the strategy, reflecting the changes in recommendation and the performance of them over time and do not represent an actual investment. Investments go up and down. Past performance is not a reliable indicator of future performance and should not be relied upon.
The performance over the stated time period/s reflects the capital return and dividend income paid on a notional portfolio of $100,000 that is equally invested in each Star Stock category at the commencement of the relevant performance period quoted. The portfolio is rebalanced to equal weight exposure when the composition of the Star Stocks changes. Dividend distributions are reinvested in the specific investments which generate the distribution on the appropriate ex entitlement dates.
For all transactions, closing prices for the next trading day are assumed. Transaction costs of 0.5% on each purchase and sale have been incorporated into the performance figure. Returns are expressed on a per-annum basis, with the exception of time periods of less than 12 months where they are quoted as actual for the relevant period. The calculation makes no allowance for other distributions, government charges or tax, or annual subscription fees payable to Lincoln.
All performance figures are calculated as a per annum percentage and reflect the overall capital return and actual dividend income paid of the strategy highlighted above for the stated time period presented. It is important to note that for returns on periods longer than 12 months, actual annual returns achieved during the time period would have varied, both positively and negatively, from the stated overall performance figure. For returns of 12 months, the per annum performance varies positively and negatively month to month reflecting the volatility of the equities asset class. Therefore no performance figure should be taken as a reliable indicator of future performance.
The Star Stock criteria have not remained constant but have been revised and updated over time. The quoted performance reflects actual Star Stock recommendations as they have been published to the public over time and have not been retrospectively implemented.
Where we refer to the Lincoln Australian Growth Fund or Lincoln Australian Income Fund (the ‘Fund’), information and advice provided should be considered in conjunction with the Product Disclosure Statement (PDS) together with the Reference Guide of the Fund, which is available on request and from our website. This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Past performance should not be taken as an indicator of future performance. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. You should read and consider the PDS and the Reference Guide before making any decision about whether to acquire or continue to hold the product. Responsible Entity/ Issuer of the Fund is Equity Trustees Limited ABN 46 004 031 298 AFSL 240975. Lincoln and its Authorised Representatives will be remunerated on the basis of monies invested in the Fund. You should read and consider our Financial Services Guide (FSG) provided to you, which sets out key information about the services we provide. The FSG is also available at www.lincolnindicators.com.au
Five common reasons investors hold when they should sell their shares
It’s easy to start online trading. Simply open an account with a broker and buy some shares. But, investors find that selling a stock is one of the hardest things to do, whether it’s selling to crystalise a profit or a loss.
This may sound illogical to many but this phenomenon provides an interesting insight to investor psychology. Selling at a loss is like admitting you’ve made a mistake, and no one likes to be in that position. Collecting a profit can also be hard as investors wonder if they will miss out on further gains in the future.
For these reasons, selling certainly feels much harder than buying a stock, and this means investors are predisposed to holding on to a stock for all the wrong reasons. In our experience, there are five bad reasons investors use as an excuse not to exit a position. You need to be aware of them to avoid this dangerous pitfall.
1. Holding an inappropriate stock
It’s easy to get bombarded with ‘buy”’ or ‘sell’ recommendations from TV, newspapers or email. Before you get started with any online trading, ask yourself if the investment meets your objectives and strategy.
Often, the legacy of a poor performer in the portfolio is not because you didn’t sell it but rather you should never have bought it in the first place.
2. Holding on for too long
Another common mistake many investors make is once they’ve acquired a stock, is that they fail to monitor the performance of the company to ensure it continues to meet original expectations.
‘Stock neglect’ is common in the world of online trading, but it can be disastrous for your portfolio. You need to get into the practice of monitoring your stocks regularly – ideally once a week.
You should also ensure that when the fundamentals of a stock change for the worse, or if it no longer meets your investment objective, you need to act quickly to sell it. There may be a few dogs that recover but, in most cases, you will be glad you closed that position.
3. Tax reasons
Don’t get too bogged down in the nitty gritty when it comes to generating a tax event. Many investors make the mistake of focusing too much on this, and often question if they are sitting on a large capital gain or whether they’ve held the stock for a full 12 months.
Not selling when you know you should, will end up costing you. Acting at the appropriate time, irrespective of the tax consequences, is essential to building a successful portfolio.
Instead of focusing on taxes when online trading, you should look to employ a good accountant and/or financial planner who can set up the appropriate tax structure for you. This will give you greater peace of mind and be one less issue for you to worry about.
4. “It’ll come back” mentality
Some investors go through what we term as ‘rear view investing’ which can bite you twice on the posterior.
Just because a stock may have previously traded at a higher price, the failure to exit at its previous peak can stop many investors from getting out altogether.
There are no guarantees that a stock will return to its former glory days, and failing to let go of it when it’s underperforming due to a weak outlook and poor fundamentals will often cost you more in terms of a capital loss.
Novice online traders often overlook the fundamental drivers of the price decline. Always remember that there is usually a justifiable reason as to why the stock has fallen 80%, and therefore while it had once traded higher, its current predicament means it’s unlikely to regain its losses anytime soon. What’s worse, an underperforming asset will tie up your cash and this means you won’t have the opportunity to invest in a better business. This is known as the ‘opportunity cost.’
Online trading platforms often have alerts that you can set up to help you monitor price trends.
5. The shame of being wrong
Lastly, many investors decide to hold on to a stock because of pride. They simply find it hard to accept that they’ve made the wrong decision regarding a stock’s prospects or its appropriateness.
Investing is an emotional endeavour but investing on emotions can be detrimental to the health of your portfolio. To be a successful investor, you need to remove emotions from the process so you can make rational and logical decisions in the best interests of your portfolio over the long-term.
There’s nothing wrong with making mistakes. The crime is not having the courage to correct it.
There are no short-cuts to being a successful investor. The good news is that the Internet has made finding information and researching stocks so much easier – but that’s only if you know where to look.
The problem is the Internet is a double-edged sword as there’s just too much information out there. What’s worse is there’s a lot of misinformation and it’s easy to make disastrous decisions if you are not careful.
But there are a number of third-party online sharemarket tools that can help you get the most out of your investing experience and increase your chances of success.
Here are five of our favourites.
The ASX website
More than just stock and company information
The ASX website is a wealth of information on listed investment options. You can have free access to information on any listed company, such as share price charts and announcements.
But it’s not only stocks that are covered. The ASX website has information on hybrid securities, warrants, and stock options.
You’ll be able to access excellent articles written by journalists and ASX listed CEOs covering a wide range of different topics. The ASX also hosts regular events with high profile guest speakers, which are beneficial to any keen investor.
For the beginner or knowledge-hungry investor, asx.com.au has a number of free interactive courses from beginner through to advanced on a range of different topics such as shares, bonds, options, and hybrids.
Last but not least, one of asx.com.au’s most popular features is the Sharemarket Game which is extremely popular with everyone from students through to everyday traders. Contestants are given a virtual $50,000 to invest and are pitted against each other. If you want to enter, make you sure you get in fast because there is a cut off date on registrations.
Although here at Lincoln, we encourage our followers to block out the noise from media and focus on the health of individual companies when assessing their investments, we understand that it is still important to have your finger on the pulse when it comes to business news.
In days long gone, you were required to carry around an arm full of newspapers, dedicating your morning, lunch and evening towards flipping through pages to stay on top of what is happening on the share market. These days thanks to technology, accessing news has become much easier.
One particular application and website making life easier is Flipboard. It’s incredibly simple to use and it’s free.
Flipboard allows its users to pull news articles from a number of different publishers into an easy to read ‘flip board’ style page. In essence, Flipboard allows you to get all your business news in one place. To access your business articles for the day you simply open the App or visit the website, select the business category and there you will have an almost endless feed of articles to choose from.
You aren’t just limited to business news either. If you want to spend some time catching up on travel, sport or anything that comes to mind, there is bound to be a unique Flipboard category for whatever is on your mind.
One of the great features of Flipboard is that it will only display articles from publishers which you have approved to appear in your news feed. Any of those pesky news sources that may have a reputation for having you unnecessarily reaching for the ‘sell’ button, you can choose to omit for from your feed.
Flipboard allows you to save articles for later reading and will even suggest different articles based on your usage.
Just some publishers that you can have on your feed include:
- Australian Financial Review
- ABC Business
- Financial Times
- Harvard Business Review
- The Guardian
- New York Times
- Wall Street Journal
Flipboard is available on mobile (iPhone and Android) or your standard web browser. On an iPad or a tablet device is where it really shines, thanks to a beautifully designed app that does its best at mimicking the experience of flicking through a magazine.
After flipping your way through a few articles and experiencing how simple it is to use, you will instantly see how it can replace your newspaper.
ASX research and management software to invest with control and confidence
No one has time to research all 2000 stocks listed on the ASX, let alone separate the good ones from the bad.
Stock Doctor’s share market research software does this for you by constantly scanning all 2000 small and large cap ASX listed stocks and identifying the most fundamentally healthy companies in the form of Star Stocks.
If Stock Doctor identifies one of the stocks held in your portfolio has become unhealthy or has deemed to be misaligned with your investing strategy, you will be alerted and provided with a list of alternative Star Income or Star Growth stocks to restructure or rebalance your portfolio.
The portfolio tools can help you manage risk and analysts are also on call to answer member queries.
Stock Doctor has a track record of delivering long-term returns, giving investors the ability to confidently manage their portfolios while providing them with valuable information at their fingertips.
Check out Stock Doctor’s Star Stock performance over the last 20 years.
^ Click the bold link to see how we calculate our Star Stock returns Disclosure – Star Stock Past performance
Award-winning online trading platform
There are a number of great online trading platforms out there and Bell Direct is one at the top of our list. Bell Direct offers competitive fees, broker research, a tax reporting tool and investment ideas on an easy to use platform.
One of the main reasons we love Bell Direct is because it integrates directly with Stock Doctor, allowing users to do their research and trades in the one place, without having to switch between two separate platforms. In effect, this creates a fully integrated online investing tool, where you can construct and optimise your portfolio based on your objectives.
If you don’t have a Stock Doctor membership, the Bell Direct platform also has a host of great built-in features such as ‘BuySellSignals’, daily trading ideas, mobile trading and a host of stock filter tools to help you get the most out of their trading platform.
The service has taken out the Smart Investor ‘Blue Ribbon Award’ for the best online broker for the last three years, so don’t just take our word for it!
Sharemarket digital media resource
Boardroom Media is a good resource for the latest news on stocks. The service is part of a media company that publishes broadcasts, podcasts, webcasts and announcements for listed companies.
One of the great features of boardroom media is it allows you to find a wealth of information about an ASX listed company in one place. By opening a company profile, you can access broadcasts, company information, a calendar of important dates, and a live news feed.
They also conduct Question & Answer sessions with the CEOs of a number of ASX-listed companies.
In this article, Lincoln Indicators discusses:
- Why generating an income stream is often important for DIY investors, especially retirees and those with self-managed super funds (SMSFs)
- How the hunt for investment yield has turned many away from cash and bonds to the Australian Securities Exchange (ASX)
- The window of opportunity in the current low-interest rate environment, and the high-yield free kick on offer to all investors
- Why fundamental analysis is paramount in finding quality income stocks
For investors needing a reliable income stream, a portfolio of top ASX dividend stocks makes perfect sense.
For Australia’s growing number of retirees, and those nearing retirement, creating a reliable income stream that can last for many years, if not indefinitely, is imperative. As well as being able to meet one’s living expenses and keep ahead of inflation, a good income stream translates to a better quality of life.
For those with a self managed super fund, or any DIY investor really, the Australian share market is a perfect place to achieve that goal.
That’s certainly come into sharper focus in recent years, especially following the Global Financial Crisis, because the dismal interest rate returns on offer from bank accounts and fixed interest products such as investment bonds have been no match for the strong dividend returns from stocks listed on the Australian Securities Exchange (ASX).
As such investors relying on yield have tended to focus on the share market, particularly companies paying high, fully franked dividend yields such as the big banks – ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac – Telstra, and others paying out high income returns. And the hunt for yield has had an added benefit. Because of the strong investor demand for certain income stocks, those holding them have enjoyed good capital gains in the process. The best income stocks have, in effect, become strong quasi growth stocks as well.
But, while high yield returns and growth are always great, the artificial hunt for yield created by low official interest rates won’t last forever. Some stocks may not be able to stay the dividend distance and become what are known as ‘dividend traps’, and as the saying goes, if a dividend yield sounds too good to be true it probably is.
What to look for?
So what companies should you be looking for? How do you as a dividend maximiser investor know whether you are buying into a quality stock or multiple stocks that will be able to maintain a reliable income stream for you over the longer term?
The answer, as always, is about doing fundamental analysis, assessing key financial ratios, to identify the best investments – that is, the best shares to buy.
The three Golden Rules for income stock selection:
At Lincoln Indicators, we define a quality income stock using three very important rules:
Golden Rule #1 – Financial Health: is the company exposed to manageable levels of financial risk? Strong and Satisfactory Financial Health is a must!
Golden Rule #2 – Management assessment: Is there a consistent history of paying dividends per share (DPS) and increasing them? Has this been supported by stable earnings per share (EPS)? If so one can safely conclude the stock is reliable from an income perspective.
Golden Rule #3 – Outlook and forecasts: Will expected stable earnings result in the future dividend continuing to be higher than the market’s yield moving forward?
Outstanding returns for Income focused investors
In Stock Doctor we regard Star Income Stocks as the best place to start in order to achieve a rock solid income portfolio. A Star Income Stock is a financially healthy company that currently pays an annual grossed-up (including franking credits) dividend yield above the market average grossed-up dividend yield and that has been analysed by Lincoln’s in house research team to ensure the likelihood of dividend payments continuing into the future due to its stable earnings (EPS) and consistent dividend distribution policy (DPS).
The performance of Star Income Stocks has been very pleasing for investors since their inclusion in August 2012 proving that healthy quality businesses are best positioned to meet the needs of income seeking investors.
Can they continue to deliver?
As an ASX investor, it’s worth remembering that buying into a company should not be about picking the highest short-term yield. As yield is a function of price, often the historic yield cannot accurately reflect dividend expectations moving forward. Particularly if there have been big swings in share price to the down and upside.
To understand whether an above market yield is sustainable into the future, studying the company’s longer-term form is essential, in particular their ability to generate stable earnings to support the current dividend policy. This is what Stock Doctor does within our list of Star Income Stocks. The end objective is to ascertain whether a company is likely to be able to sustain a strong yield over time.
We will inform our members of any future risk to earnings which may impact dividends by removing it as a Star Income Stock, ensuring that investors are not disappointed with a smaller pay check from their SMSF, and often accompanied by capital decline.
A membership to Stock Doctor will give you:
- The ability to find the healthiest businesses currently paying dividends
- Access to our Star Income Stocks, which including dividends have consistently outperformed the market
- Dividend yields quoted on both a pre- and post-franking basis
- Detailed historic and forecast dividend information on all stocks on the ASX
- Or should you want your funds professionally managed with a specific focus on generating an above-market yield with reduced market volatility and the potential for capital growth over the long term, then consider the Lincoln Australian Income Fund
^Disclosure – Star Stock Past performance:
Disclosure – Star Income Stock Past performance: Star Income Stock Past performance: Star Income Stock past performance is calculated by Lincoln by applying the same performance calculation process as the Star Growth Stocks described above with the following exception.
Dividend distributions are incorporated in the calculations. These are reinvested in the specific investments which generate the distribution on the appropriate ex entitlement dates.