Maximum Net Yield from a diversified portfolio of NZ Stocks.

[couta1]

They have SKC for the tourism sector in their top ten picks. Maybe an alternative to THL Roger? Bigger moat, do better than THL from increased Chinese tourism, more recession proof?

I think you'll find that SKC is off limits for Roger as it is for me, on moral grounds.

[Beagle]

They have SKC for the tourism sector in their top ten picks. Maybe an alternative to THL Roger? Bigger moat, do better than THL from increased Chinese tourism, more recession proof?

Thanks for your suggestion Biscuit and its not without merits but its a SIN stock, my late father, (formerly a minister of religion), used to say those places are nothing but a den of iniquity...I can still hear his voice ringing in my ears years after he passed away so I couldn't live with myself investing Mum's money in there. Thanks for your post Couta1, yes its off limits for my personal portfolio too for the same reason.

[Snoopy]

If your task was to invest $100K for an elderly person aged 88 and the sole purpose of the investment was to generate the maximum net yield in a reasonably diversified portfolio of N.Z. stocks what would you do ?

My initial thoughts in no particular order and indicative yield based on current SP's noted are
Spark $3.41 7.3%
HLG $3.36 9.0%
AIR $2.375 8.5%
THL $3.80 5.0%
PGW $0.54 6.8%
HBL $1.64 5.2%
GEN $$2.065 7.9%

Average net yield 7.1%

Assume for the sake of this exercise that the elderly person already has some REIT's (Kiwi, Goodman and Argosey).

What would you do ? (For the sake of this exercise pretend its your own elderly mother you are investing this for)

I would throw in my own entry to the Stocktastic competition. The basis for my entry was looking for income. But at the same time if you look for just income when at the bottom of the interest rate cycle, the capital value is likely to be hit as interest rates rise. So as a defence against this happening, I look for 'income shares'' with a bit of a growth plan behind them. I looked up the price of the varous components of my entry mid morning and my yield calculations are based on the last twelve months of historical dividend yield. The yield I quote is a gross yield, because CEN and SKC have not been paying fully imputed divdends over the last twelve months. So a gross yield comparison seemed fairer.

Company	Quoted Share Price	Gross Dividend per Share	Gross Yield	Growth Plan
Contact Energy	$4.97	14.1c + 16.0c	6.1%	Recovery to fully imputed dividend paying status
Restaurant Brands	$5.40	17.4c + 13.2c	5.7%	Development of KFC in Australia and Carl's Junior in NZ
Skellerup	$1.49	7.6c + 4.9c	8.4%	Recovery of dairy consumables, Driveshaft couplings in China (Mercedes)
Sky City	$3.95	12.5c + 10.0c	5.7%	Recovery to fully imputed dividend paying status, Lions tour
Spark	$3.41	17.4c + 17.4c	10.2%	Cost cutting
Average			7.2%

All are the kind of shares that should do well in good times and bad. A similar kind of industry spread to what you are proposing Roger. However although I hold it myself, I believe that Skellerup is a lower risk bet on supporting the rural sector: lower debt than PGW and has a growth plan where PGW is all about doing the same but doing it better. Also I have gone cold on GNE at current prices, becasue it is turning into a bet on the direction of oil prices that are notoriously hard to predict. I think CEN offers better long term value in the energy sector.

I note your comment on 'sin stocks'. But SKC hosts the only gambling areas available with an active plan to monitor problem gamblers. Best to have them in there rather than down at the pub pokies, or even down at the TAB. And of course with the hotels and conference venues SKC is so much more than 'just gambling'.

SNOOPY

[RTM]

LOL I shall put everything into Pushpay then

Don't be silly Roger. Go for PEB.

[Joshuatree]

Vector is also a go to yield play re 6.8% and the s/p is the same as it was 2 years ago; a bit bond like.

[Beagle]

Thanks Snoopy I appreciate your input. I really have to chase a net yield of 5% as a minimum unless I'm doing a SUM and taking a small bet on their growth. SKL meets that criteria although I have had serious issues with their previous forecasting I take your point about PGW...might split the $10K between them.

Thanks Joshuatree, CEN meets the 5% minimum net yield criteria, just. GNE is a superior yield but its not a personal conviction stock I hold for the reasons Snoopy pointed out so maybe a 15K allocation to the gentailer sector between CEN, GNE and VCT makes sense. Their might be ~ $110K to invest, need to talk to my Mum soon about how much she feels she needs to hold back in a general slush (savings) fund for everyday type emergencies.

Thanks RTM - I enjoyed the humor

[ziggy415]

go figure.....i,m getting made redundant this monday (for the second time in 14 years) and each time they throw money at me then rehire me back and i was just thinking what would constitute a good income portfolio and lo and behold Roger helps me out...thanks guys...will look and learn

[Beagle]

Really pleased this thread and the contributions of many has helped you out mate. All the best and I hope they hire you back yet again

[traineeinvestor]

This thread was very timely for me because I am going through a similar exercise for an elderly family member and came up with many of the same names which have been mentioned on this thread already. The slight twist is that the portfolio has to generate a reasonably high level of sustainable income not the maximum possible yield.

Some additional companies on my list are:

1. ANZ or WBC - these are listed in NZ and pay decent dividends, although only carrying partial imputation credits. Depending on the marginal tax bracket partial imputation may not be that big an issue;

2. NZX – the company gets slammed (rightly IMHO) for various and extensive management failings, but still manages to churn out a steady 6cps fully imputed dividend every year;

3. CMO – the dividend has risen steadily over the last few years. I expect a degree of volatility given the nature of the industry and note the relative illiquidity of the shares, but it's been a nice dividend stream;

4. FBU – a serial disappointment but, at around the $8.00 level, offers a decent and, hopefully, safe dividend yield.

Disclosure: I hold all of the above (either directly or indirectly)

There are a couple of industry groups I am (probably too) cautious about putting much into at the moment – retailers (given the disruptive effect of internet businesses etc), electricity companies (potential over supply) and CNU (government interference). Depending on poll numbers as the election gets closer, there may be some better buying opportunities on some of these stocks.

[Subway]

Is the family member relying on divvie income to pay the bills?