Your best “safe” high dividend yield shares ?

[Bumkin]

I’m looking for shares that pay 5% plus and are safe/gold. Capital gain not essential but welcome ! Possibly 5/6 different shares. Your opinions welcomed. cheers

[huxley]

https://www.interest.co.nz/saving/term-deposits-1-to-5-years

[hogie]

I’m looking for shares that pay 5% plus and are safe/gold. Capital gain not essential but welcome ! Possibly 5/6 different shares. Your opinions welcomed. cheers

My best ones have been:

NZR
MCY
MEL
GNE

I also had some PGW and they were awesome until I decided to sell out.

[Schrodinger]

https://www.interest.co.nz/saving/term-deposits-1-to-5-years

So according to this you get 1% extra from a finance company for a huge increase in risk (Fijian hotels/sub prime car lending/dodgy hotel developers). Why would anyone place money in a term deposit there?

[JeremyALD]

Ift would be my pick

[Beagle]

I’m looking for shares that pay 5% plus and are safe/gold. Capital gain not essential but welcome ! Possibly 5/6 different shares. Your opinions welcomed. cheers

Might help clarify people's thoughts if you are talking net 5% in your hand or gross yield. That helps people's thoughts in terms of trying to help you.
FYI - 5% net in your hand after full imputation credits at 28% = 5 / 0.72 = 6.94% gross.

[King1212]

OCA..at least 3 cents a share on this wed announcement

[huxley]

OCA..at least 3 cents a share on this wed announcement

I’d be surprised if it’s as high as 3c, what are you basing that figure on?

Also, the market update is Thursday the 25th..

[troyvdh]

PFI....I understand that PFI has returned 9+ % pa since inception..over 20 years.
I could be wrong but I believe that PFI ..was/has been the best performing property listed company for a significant period of time.

Am I incorrect ???

Just checked....over 9.5 % over twenty years.

[Beagle]

Hard to go past the various power companies if you're looking for safe yield come whatever may on the market.

[King1212]

I’d be surprised if it’s as high as 3c, what are you basing that figure on?

Also, the market update is Thursday the 25th..

let see..Thursday....shall we...

[huxley]

Hard to go past the various power companies if you're looking for safe yield come whatever may on the market.

While the cashflow should remain indefinitely (assuming tesla doesn’t pull a black swan out of its hat!), but these are basically priced at bond proxy valuations, no? What happens if interest rates rise?

[huxley]

OCA..at least 3 cents a share on this wed announcement

Sure, I’ll be pretty happy if you’re right!

[tim23]

Spark and Goodman Property Trust work well for me

[Bumkin]

Might help clarify people's thoughts if you are talking net 5% in your hand or gross yield. That helps people's thoughts in terms of trying to help you.
FYI - 5% net in your hand after full imputation credits at 28% = 5 / 0.72 = 6.94% gross.
Happy with 5% gross compared to term deposit. My uneducated thinking favours the power companies but looking for diverse shares. How about SPK high imputation? Many thanks for all replies.

[Jonboyz]

Safe bet hgh div, I’d go smartshares NZ Dividend fund with 6.55% gross div

[Beagle]

Happy with 5% gross compared to term deposit. My uneducated thinking favours the power companies but looking for diverse shares. How about SPK high imputation? Many thanks for all replies.

I put together a portfolio for my Mum a while back, (the aim was a very strong focus on yield but a little growth), which was my best thinking at that time
AIR Gross expected yield 10% but headwinds are emerging so watch for probable capital loss.
ARG Steady as she goes commercial property PIE, fully taxed within the company, net yield 5.8% in the hand, trading about asset value
GMT Ditto above net yield 5% in the hand, expect divvy increases in the years ahead as they complete their Highbrook development
GNE About 6.6% net, mostly imputed, nice recent Q2 market update, well diversified generation portfolio, upside from rising oil prices and LPG business integration
HLG Expecting 35 cps fully imputed this year, gross yield 11.8%, growing Glassons in Australia very nicely, slick retail operation with a 144 track record
HBL 9.5-10 cps divvy this year, fully imputed gives about 6.5% gross yield which is a lot more than depositing it with them, reasonable EPS growth going forward, currently very fully priced
MEL Similar safe yield and investment to GNE
THL Meets the 5% gross criteria just with a very good earnings growth outlook.

That portfolio would give you about an 8% gross return, (assuming a 33% tax rate) with equal amounts in each share. Substituting Spark for AIR wouldn't change that much.

Doing it now I'd probably substitute Spark for AIR, (see AIR thread for reasons why).

As some others have quite correctly noted, if we see a material increase in interest rates its quite possible that some of the pure yield plays could correct a bit which is why I put in some shares like THL which has about a 5% gross divvy so meets the target yield but has strong growth potential.

If you want to spread your net far and wide and a one stop shop with no hassles whatsoever then the NZX smartshares high yield fund is well worth considering, see www.smartshares.co.nz

[Baa_Baa]

Bumkin, how active are you likely to be investing, like make a deposit and in a decade count the tally, or all over it like a rash managing capital, or something in between?

[hardt]

I put together a portfolio for my Mum a while back, (the aim was a very strong focus on yield but a little growth), which was my best thinking at that time
AIR Gross expected yield 10% but headwinds are emerging so watch for probable capital loss.
ARG Steady as she goes commercial property PIE, fully taxed within the company, net yield 5.8% in the hand, trading about asset value
GMT Ditto above net yield 5% in the hand, expect divvy increases in the years ahead as they complete their Highbrook development
GNE About 6.6% net, mostly imputed, nice recent Q2 market update, well diversified generation portfolio, upside from rising oil prices and LPG business integration
HLG Expecting 35 cps fully imputed this year, gross yield 11.8%, growing Glassons in Australia very nicely, slick retail operation with a 144 track record
HBL 9.5-10 cps divvy this year, fully imputed gives about 6.5% gross yield which is a lot more than depositing it with them, reasonable EPS growth going forward, currently very fully priced
MEL Similar safe yield and investment to GNE
THL Meets the 5% gross criteria just with a very good earnings growth outlook.

That portfolio would give you about an 8% gross return, (assuming a 33% tax rate) with equal amounts in each share. Substituting Spark for AIR wouldn't change that much.

Doing it now I'd probably substitute Spark for AIR, (see AIR thread for reasons why).

As some others have quite correctly noted, if we see a material increase in interest rates its quite possible that some of the pure yield plays could correct a bit which is why I put in some shares like THL which has about a 5% gross divvy so meets the target yield but has strong growth potential.

If you want to spread your net far and wide and a one stop shop with no hassles whatsoever then the NZX smartshares high yield fund is well worth considering, see www.smartshares.co.nz (http://www.smartshares.co.nz)

Solid write up Beagle.

Thoughts on AUG and IFT being on the list?

[Bumkin]

Bumkin, how active are you likely to be investing, like make a deposit and in a decade count the tally, or all over it like a rash managing capital, or something in between?
Invest and forget !

[Joshuatree]

Theres a thread on Investment strategies Bumkin that shows all the yields. No idea if it is current or not. Ive just brought up again as i forget its there and its not promoted.

[Bumkin]

Thanks Beagle exactly what I’m looking for. Also your advice on nett and gross dividends affected by imputation credits appreciated. cheers

[Beagle]

Solid write up Beagle.

Thoughts on AUG and IFT being on the list?

Thanks. No issues with IFT, good solid underlying assets and well managed and more or less meets the dividend yield criteria. I'm not especially enthusiastic about it because of the management fees charged.
Augusta's earnings tend to be a bit lumpy depending upon how many property syndications they get away in any one year. I won't comment on what I think of the directors...you can read between the lines I am sure.

Invest and forget !


Thanks Beagle exactly what I’m looking for. Also your advice on nett and gross dividends affected by imputation credits appreciated. cheers
You're welcome. Set and forget the best option for you mate is the smart shares dividend fund. http://smartshares.co.nz/types-of-funds/smartdividend/nz-dividend
They do all the work for you and its easy as.
Best wishes.

[steveb]

Don't forget to have a look at Chorus and Telstra

[couta1]

Don't forget to have a look at Chorus and Telstra No to Telstra, cutting back dividends and no imputation credits for NZ residents to claim.

[peat]

Don't forget to have a look at Chorus and Telstra

ugh Chorus!?

I dont think its that safe myself, - the business model is under threat from 4g and will be even more so from 5g

Telstra yes

[LAC]

I have used the power companies for divies over the years.
RBD was the other that I kept for divies only but they performed really well for capital growth over the years (sold out now though as I have moved the capital gain elsewhere)

Just a note, there isnt any safe investment, so just make the best educated decision with the data that you have.

[iceman]

Bumkin this is a good website to look at, run by a fellow ST http://www.dividendyield.co.nz/

[minimoke]

Bumkin this is a good website to look at, run by a fellow ST http://www.dividendyield.co.nz/ but if I look on anz securities top ranked twr is paying 0% dividend. who to believe?

[percy]

but if I look on anz securities top ranked twr is paying 0% dividend. who to believe?

ANZ's is always up to date.

[BobbyMorocco]

but if I look on anz securities top ranked twr is paying 0% dividend. who to believe?

You could also go to the NZX website, search for whatever stock you're looking for and then it's gross dividend yield based off the previous days closing price will be shown under the heading "Fundamental". Further to this you can click Dividends on the left hand side and it will take you to a page that shows the past few years historical dividends, the dates they were paid and what imputation credits were attached to them.

In Tower's case a dividend hadn't been paid since June 2016.

[peat]

No to Telstra, cutting back dividends and no imputation credits for NZ residents to claim.

but still meets the stated criteria.

[Joshuatree]

VCT been mentioned? Very overlooked reliable payer but a little under 5%, 4.73% nett

[Antipodean]

Despite (or even perhaps because?) recent short term weakness I would rate HLG very highly for a dividend play in 2018 and beyond with potential capital gain on top.

[Beagle]

Despite (or even perhaps because?) recent short term weakness I would rate HLG very highly for a dividend play in 2018 and beyond with potential capital gain on top.

Agree 100% with that. XXL holding.

[Lewylewylewy]

The banks pay ok div. Also scl and thl if bought at the right time. Sum also pays a high div but reinvests most of it for you lol (ie low pe)

[MauroNZ]

I put together a portfolio for my Mum a while back, (the aim was a very strong focus on yield but a little growth), which was my best thinking at that time
AIR Gross expected yield 10% but headwinds are emerging so watch for probable capital loss.
ARG Steady as she goes commercial property PIE, fully taxed within the company, net yield 5.8% in the hand, trading about asset value
GMT Ditto above net yield 5% in the hand, expect divvy increases in the years ahead as they complete their Highbrook development
GNE About 6.6% net, mostly imputed, nice recent Q2 market update, well diversified generation portfolio, upside from rising oil prices and LPG business integration
HLG Expecting 35 cps fully imputed this year, gross yield 11.8%, growing Glassons in Australia very nicely, slick retail operation with a 144 track record
HBL 9.5-10 cps divvy this year, fully imputed gives about 6.5% gross yield which is a lot more than depositing it with them, reasonable EPS growth going forward, currently very fully priced
MEL Similar safe yield and investment to GNE
THL Meets the 5% gross criteria just with a very good earnings growth outlook.

That portfolio would give you about an 8% gross return, (assuming a 33% tax rate) with equal amounts in each share. Substituting Spark for AIR wouldn't change that much.

Doing it now I'd probably substitute Spark for AIR, (see AIR thread for reasons why).

As some others have quite correctly noted, if we see a material increase in interest rates its quite possible that some of the pure yield plays could correct a bit which is why I put in some shares like THL which has about a 5% gross divvy so meets the target yield but has strong growth potential.

If you want to spread your net far and wide and a one stop shop with no hassles whatsoever then the NZX smartshares high yield fund is well worth considering, see www.smartshares.co.nz (http://www.smartshares.co.nz)

Given few of them have already reported, how your list would look after the updates?. I assume ARG/GMT because of the tax imputation would be more suitable than GNE/MEL ? Do you consider the PE as a matter when looking for dividends?.

[Beagle]

Given few of them have already reported, how your list would look after the updates?. I assume ARG/GMT because of the tax imputation would be more suitable than GNE/MEL ? Do you consider the PE as a matter when looking for dividends?.

Hi mate,

That post from quite a while back but by and large I'm happy with the stock picking for yield with those shares.
Yes I consider the PE and it's run too high for HBL and I sold right at the peak for $2.14 and sold out of THL for the same reason.
I bought back into AIR @ $3.05 cum the 11 cps fully imputed dividend as the risks surrounding their engine problems have abated.
Happy to continue holding the rest of them. GNE should probably get a special mention as their result was very good off the back of much stronger wholesale pricing in the December quarter last year.
I expect as the swing producer covering unusual weather events, (climate change) and with the quicker than Govt expected rate of electric vehicle uptake that the supply demand situation in the electricity market will tighten and that GNE will do very well sitting in the box seat to cover this tightly constrained market in the years ahead. I added some GNE a little while back too for both my Mum's portfolio and my own.
Just adding that in regard to the PE's of the power companies, the cash flow is what matters with those companies.

[Sgt Pepper]

I remember when Cavalier was the dividend king. How times have changed!

[Ohdoyle]

I am keen to rekindle this thread somewhat.

I am coming back to share investing after having my capital tied up in property for about 5 years.

It recently occurred to me that theres alot of people who previously relied on term deposits for income who are now getting about .5% after tax.

I am thinking that as interest rates continue to track lower that more and more of these people will start to see a 2 to 3 percent net divedend yield as very attractive.

As a result I am keen to invest in largely well known companies with a good yield. GNE is standing out to me as one but interested in any others out there.

I am also considering the DIV. Smartshares, admittedly a lazy option, but a simple way to diversify and they seem to have a reasonably solid track record of paying divedends.

Anyone else thinking along a similar strategy or have any recommendations.

[nztx]

I am keen to rekindle this thread somewhat.

I am coming back to share investing after having my capital tied up in property for about 5 years.

It recently occurred to me that theres alot of people who previously relied on term deposits for income who are now getting about .5% after tax.

I am thinking that as interest rates continue to track lower that more and more of these people will start to see a 2 to 3 percent net divedend yield as very attractive.

As a result I am keen to invest in largely well known companies with a good yield. GNE is standing out to me as one but interested in any others out there.

I am also considering the DIV. Smartshares, admittedly a lazy option, but a simple way to diversify and they seem to have a reasonably solid track record of paying divedends.

Anyone else thinking along a similar strategy or have any recommendations.


For those with a taste for the US market & risk - there are a number (many being repriced) which are north of 10%
quite a number paid quarterly and a few monthly (pre-tax)

[Snoopy]

I am coming back to share investing after having my capital tied up in property for about 5 years.

It recently occurred to me that theres a lot of people who previously relied on term deposits for income who are now getting about .5% after tax.

I am thinking that as interest rates continue to track lower that more and more of these people will start to see a 2 to 3 percent net dividend yield as very attractive.

As a result I am keen to invest in largely well known companies with a good yield. GNE is standing out to me as one but interested in any others out there.

I am also considering the DIV. Smartshares, admittedly a lazy option, but a simple way to diversify and they seem to have a reasonably solid track record of paying dividends.

Anyone else thinking along a similar strategy or have any recommendations.

Hi Ohdoyle and welcome to the forum. By chance I am also investigating the DIV Smartshares fund for a relative. The top ten holdings in this fund I noted were heavily weighted towards the electricity sector. This is because the electricity sector are good dividend payers. But at the same time this introduces an 'industry sector risk' that holders of a diversified dividend fund such as this might not expect. If you bought into this fund and bought Genesis Energy separately as well, you would be compounding your electricity 'industry sector risk'.

Right now the driving factor of electricity sector risk is what is going to happen to the Tiwai Point Aluminium Smelter. My feeling that the the market is currently pricing in an orderly wind down over a time frame of five years, in accordance with political promises made during the election campaign. You should be aware though that this is in direct contrast to owner Rio Tinto's stated intent to shut down the smelter by August 2021. Should the government and electricity sector players fail to come to an agreement that is in along the lines of what was promised at election time, I would expect a substantial correction in the price of all of the gentailer shares, including Genesis Energy. I am not saying don't invest in Smartshares DIV or GNE. I am saying that if you do this it might be a good idea to stagger your purchases in say three tranches over say 12 months to ameliorate any one off electricity market shock event risk,

SNOOPY

[Snoopy]

I am keen to rekindle this thread somewhat.

I am coming back to share investing after having my capital tied up in property for about 5 years.

It recently occurred to me that theres alot of people who previously relied on term deposits for income who are now getting about .5% after tax.

I am thinking that as interest rates continue to track lower that more and more of these people will start to see a 2 to 3 percent net divedend yield as very attractive.

Anyone else thinking along a similar strategy or have any recommendations.


You ask for recommendations. As always I give the caveat DYOR, but I don't mind telling you what I am doing in these very low interest market circumstances

My own quest for building a solid portfolio of good dividend paying shares has lead me to substantially increase my holding in Heartland Group Holdings over the year. On first glace this is an unusual thing to do. Second tier finance companies do not have a good record in recessions. But Heartland have a very large reverse mortgage loan book. And in a time of very strong house prices, I believe this substantially de-risks the Heartland receivables loan book as a whole. I don't think the market has fully absorbed this fact, and as a result a window of accumulation opportunity for HGH shares has been created. I consider a share price under $1.40 will prove an attractive entry price in the medium term. Beagle has previously stated he has more to say on Heartland today, so watch the HGH thread today. And no Beagle and I aren't working together on this!

SNOOPY

[NZSilver]

CDI isn't a bad option, great balance sheet, 5% div that will likely increase.

[Jantar]

….

Anyone else thinking along a similar strategy or have any recommendations.

I concur with Snoopy's comments. I generally look at sectors rather than individual companies as the conditions that favour one company within a sector will often favour all of them. Having said that, there are some companies that do stand out within their sector, or will take up a niche position that will allow them to pay a higher ROI.

I also tend to look at sectors that are still needed in a downturn, so more likely to weather any storm that appears. No matter how bad the economy gets people still need shelter, warmth, food and care.

On that basis I have 39% of my portfolio in Energy to supply that warmth. My largest holding is CEN simply because for many years I was not permitted to freely trade them and so received a number of shares from the company at $0.01. My pick of the energy companies would be MEL, but all are pretty good. One I do not hold, and will not hold directly is TPW, although I still do have an interest in them through IFT.

For the food sector my pick is SCL, but I do have a small number of PGW as a punt. My feeling is all food sector shares are overpriced at present, but the established ones may be worth buying in the dips.

For the care sector I have chosen the ones with the most growth potential: ARV and OCA. Dividends are not high, but should grow nicely over time.

There is one other company, not in any of those main sectors that is 10% of my portfolio, and that is SKL. They pay a very good dividend, and although not in the food sector, they a major supplier of products needed by primary industry, and are also a large exporter of products.

HGH are a further 10% of my portfolio. They pay a very good dividend, and were the only Australasian bank not to downgraded recently. Their reverse mortgages, while not helping cashflow, are extremely profitable, and carry little risk in a rising property market.

[Ohdoyle]

Interesting I hadn't picked heartland as a yield play. Must do some research into them again. I actually had shares in heartland years ago which I sold for a house deposit.

Thanks snoopy regarding the smartshares, I had noticed the same about it being weighted heavily to energy but I'm ok with that I think. In fact i have noticed alot if the smart shares are in fact not as diversified as what I expected.

The nzx 50 index fund is 16 percent in fph. That shocked me as I had no idea fph was now our biggest company but a long way.

Anyway I will continue the research. Cheers for the tips.

[peat]

One I do not hold, and will not hold directly is TPW, although I still do have an interest in them through IFT.

What is your reasoning against TPW Jantar, other than that it is held by IFT

[Jantar]

What is your reasoning against TPW Jantar, other than that it is held by IFT In my opinion they are the least trustworthy of all the energy retailers and habitually lie to their customers. In most places they operate they are also the most expensive.

I guess it is just my own feelings that I would rather not be associated with them irrespective of how good their business strategy may be.

[peat]

In my opinion they are the least trustworthy of all the energy retailers and habitually lie to their customers. In most places they operate they are also the most expensive.

I guess it is just my own feelings that I would rather not be associated with them irrespective of how good their business strategy may be.

so its nothing to do with their actual assets or model. just the way they choose to operate it. ok cool thank you.