Your best “safe” high dividend yield shares ?

[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.