High Yielding Shares Again

Shaken up by a 3% drop? Come on son! Don't be a weak hand :)

Thornhill has a classic newsletter from the depths of the GFC. I remember the closing line "buy with your ears pinned back" ha.

Yes Thornhills book is one of about twenty that I think worthwhile for those interested in stock investing. The more you can read the better.
 
Shaken up by a 3% drop? Come on son! Don't be a weak hand :)

Thornhill has a classic newsletter from the depths of the GFC. I remember the closing line "buy with your ears pinned back" ha.

Yes Thornhills book is one of about twenty that I think worthwhile for those interested in stock investing. The more you can read the better.

Thanks. I've almost filled an entire shelf with property investing books but I currently possess zero stock investing books.

Not shaken up to the point of selling; but hating on myself for pouring so much into the market over the past couple of months when I could've DCA'd it over many months or purchased more on dips like the one we just experienced. I've pretty much invested all spare funds now with zero spare powder.
 
Why individual stocks

A post from last year (there will have been some changes to the percentages below).

Here's a couple of shares that enjoyed some nice growth over the last decade

Fortescue Metals Group Limited
13,735%
Aurora Oil & Gas Ltd.
7,024%
REA Group Limited
6,332%
CTI Logistics Limited
3,052%
Tox Free Solutions Ltd.
2,718%
Steamships Trading Company Limited
2,225%
Monadelphous Group Limited
2,106%
Cromwell Property Group
2,017%
Sandfire Resources NL
1,970%
McMillan Shakespeare Ltd
1,767%
Webjet Ltd.
1,754%

The ASX Accumulation Index probably did around 704% over the same period

Hence the allure of individual stocks to many (including myself), though it's worth remembering not all individual stocks stand the test of time, as a case in point Atlas Iron , BC Iron , Beadell Resources , Horizon Oil , Lynas Corporation and Mount Gibson all recently dropped out of the S&P/ASX 200 and were replaced by other companies. Others yet are de-listed each month for one reason or another
 
MND is currently undervalued and providing good dividend (>10%).

outlook is negative though, so as soon as some news break about their future prospects, i'll get in for the hold.

hence why i'm watching it.
 
Any existing NAB shareholders looking to take up their entitlement offer at $28.50 per share? Its limited to 2 new shares for every 25 held as it will probably be oversubscribed. Looks like an easy gain depending on where you think bank shares are going.
 
Any existing NAB shareholders looking to take up their entitlement offer at $28.50 per share? Its limited to 2 new shares for every 25 held as it will probably be oversubscribed. Looks like an easy gain depending on where you think bank shares are going.

As the offer is currently under my collective purchase price, I will take up the offer in its entirety.

I would also look to increase my holding if the SP dips as a result as well.


pinkboy
 
Any existing NAB shareholders looking to take up their entitlement offer at $28.50 per share? Its limited to 2 new shares for every 25 held as it will probably be oversubscribed. Looks like an easy gain depending on where you think bank shares are going.

The rights (NABR) are currently trading for $6.25 so if you take up the offer you're essentially paying $28.50+$6.25 = $34.75. And NAB is trading at that price this morning.

I'm bearish on the banks so I just offloaded the rights.
 
The rights (NABR) are currently trading for $6.25 so if you take up the offer you're essentially paying $28.50+$6.25 = $34.75. And NAB is trading at that price this morning.

I'm bearish on the banks so I just offloaded the rights.

Hi Poordeveloper
For existing shareholders the offer paperwork is $28.50 per share, are you talking about buying someone elses entitlement?
 
Existing shareholders get 2 rights per 25 shares that they hold. These are tradable under the ticker 'NABR'.

So existing shareholders have two realistic options:

1. Fork out $28.50 to buy additional shares.
2. Sell the rights for around $5.85 each (gone down today)

I chose the latter.
 
28.50 is a gift... be suprised if it gets that low whilst deposit rates are so low. Tho I hope it does so that I can buy more
 
NAB is trading in the mid-$34 area, and NABR in the high $5 area. The DY is in the high fives fully franked. There appears to be some price support due to the DY. There's price support at $32, and this did not break in 2014. Worst case, buy the entitlement at $28.50, and there's a paper profit of $3.50/share for a share price $32. At present the paper profit is about $6/share.

If the entitlement is 100 shares then this costs $2850. At 5% IO this is $140/year. Dividends are $1.98 so the FF income is $198/year CF positive. Works for me. It helps that I bought all my NAB shares many years ago.
 
Hi Redwing,

It is a very important question. I myself have thought about it on several occasions and have yet to come to some conclusion.

So far the bare minimum I think I need before I even consider pulling the plug from day time job is to make sure income from index/ETF funds are atleast 25% higher than my target retirement income goal. So for eg. if my target is $100K I would aim to have atleast $125K coming from dividends. Each year the additional $25K keeps getting re-invested unless ofcourse dividends are cut.

Secondly, as a more solid buffer I would have atleast 2 years worth of living expenses in cash in a bank offset account.

Based on the above you could handle a 50% reduction in dividends for 5 years without affecting your $100K income you need ( I haven't factored in CPI but would be worthwhile to do so). See calculations below

Initial income: $125K

Cash buffers: $200K (2 years @ $100K / year)

Stock market crash happens and dividends are reduced by 50%.

New dividend: $62.5K
Shortfall: $37.5K

$200K cash buffer can fund the shortfall for approx 5 years before you are forced to sell any assets/shares.

The only issue I see that you need to be worried about is as soon as dividends recover you need to re-build that cash buffer for future stockmarket crashes.

Again, I stress this strategy is still not final and I may change as I see fit. Most likely will make it even more conservative. The bottom line is if and when I pull the plug from full time work going back to work is not an option. So things have to be rock solid.

Hope that helps.

Cheers,
Oracle.

Great post Oracle
 
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