The Rules of Investing Livewire Markets

Fully franked dividends are a prized asset of the Australian market. While the lack of growth is often lamented, plenty of self-funded retirees are content to dine on the distributions of Australia's big miners and banks. 
And who can blame them - high commodity prices, particularly in iron ore and lithium, resulted in record dividends from the top end of town. However, after peaking in 2021 and 2022, dividends from mining companies are steadily declining.
Research from Commsec published late in 2023 showed that the 12-month forward dividend yield for the ASX200 has been below the long-run average of 4.7%, and dividend per share estimates have been cut by 14 per cent. 
The good news is that Australian banks have been increasing their dividends whilst also enjoying surging share prices. There is also a long list of consistent dividend paying stocks that often fly under the radar.
In this episode of the Rules of Investing, Livewire's James Marlay speaks with Plato Investment Management's Dr Don Hamson to get his diagnosis on the case of the 'disappearing dividends'. Hamson insists that diversification remains a free lunch for investors, especially for those seeking stable and consistent returns. He also emphasizes that fully franked dividends continue to stack up as the backbone of an income-generating portfolio.
Timecodes:
0:00 - Introduction
1:43 - The outlook for dividends
8:27 - Dividends versus Fixed Income
10:25 - Dwindling dividends
13:08 - The dividend outlook for mining shares
17:00 - Tactics to combat declining dividends
20:07 - Australian banks - stable but expensive
22:10 - The case for diversification
25:15 - Winning by avoiding the losers
28:09 - What returns are realistic for Plato?
31:26 - A lesson from Medibank Private
34:10 - Don’t focus on the US election
36:23 - The stock most likely to be a 5-year resident in the Plato Australian Shares Income Fund

This time last year, PIMCO Portfolio Manager Adam Bowe told Livewire that there was a 50/50 chance that Australia would slip into recession. March GDP figures show that the economy grew at just 0.1 per cent, the slowest rate since December 2020. Today, Bowe says interest rates are sufficiently restrictive, and the chance of recession remains a ‘line ball’. 
In this episode of The Rules of Investing, Bowe explains why interest rates in Australia don't need to go higher, why house prices have been immune to interest rate increases and where he is finding the best income opportunities right now.
 
 

While "survival of the fittest" certainly applies to the Earth's abundance of flora and fauna, it may be time for investors to take a page out of Darwin's book.
 
That's according to FNArena's Rudi Filapek-Vandyck, who believes the market has irreversibly changed since 2014 - as has the way investors should value stocks.
 
In this episode, Rudi outlines why he believes technological innovation will transform the market as we know it. He also discusses some of his favourite ASX-listed stocks to play the AI theme, the importance of quality companies in today's markets, and what it takes for a company to be an all-weather stock.
















 






Note: This episode was recorded on Wednesday 29 May 2024. Note #2: Ally was today years old when she learnt what R.E.M. is, she apologises for any harm her ignorance may have caused hardcore fans. If it's any excuse, the song was released seven years before she was born. 
 
https://www.livewiremarkets.com/wires/rudi-ai-is-the-end-of-investing-as-we-know-it 
 

Hello and welcome to the Rules of Investing, brought to you by Livewire Markets. This week’s guest is on a mission to truly surprise our listeners. He believes investors are underappreciating the real impact of artificial intelligence on markets and how we value stocks. In fact, he believes it’s the end of the world as we know it. 
I’m talking of course, of FNArena’s Rudi Filapek Vandyck. 
Here’s a sneak peek of what you can expect….

There seems to be no stopping Australia's ultra-wealthy, with the number of billionaires down under growing by 14.4% over the past 12 months, to a record 159 people. For some context, in 2020, this number was 117, according to The Australian. 
While it's wonderful to daydream about what you would buy or do with a few billion dollars, the true secret success of the ultra-wealthy is their ability to stay that way. After all, how many stories have you read of lottery winners squandering their newfound wealth just a few short years later? 
So, how do the other half continue to grow their wealth? 
To find out, Livewire sat down with MRB House's Peter Magee and Walsh Capital's Louise Walsh for their insights into how Australia's ultra-wealthy invest as part of Livewire's Undiscovered Funds Series. 
They share their tips and tricks for identifying "exceptional" funds, outline the factors that are important to their processes, share what to do when a fund isn't performing as expected, and name one recently launched fund that has impressed in recent years. 
Note: This interview was recorded on Wednesday 15 May 2024. 
https://www.livewiremarkets.com/wires/the-investment-secrets-of-australia-s-billionaires 

In investing, just as in love, trust is everything - and without it, you really don't have anything at all. 
It's for this reason that the Wilson Asset Management global equities team meets with more than 700 management teams across the world each year - including in the US, Japan, and Europe. In addition, they also meet with competitors and suppliers, as well as talk to current and past employees and industry experts. 
According to WAM Global (ASX: WGB) lead portfolio manager Catriona Burns, the team does this because trust in a company's management team is paramount. 

"Have they hit their targets? Have they done what they said? If we have any doubts on that trust factor, for us, that's completely a non-negotiable and we won't invest," she says. 
Burns is reading between the lines, and looking beneath the surface for red flags. And while management teams selling stock, poor track records and value-destructive deals can certainly be warning signs, she argues that alignment - and the lack thereof - can often be far more telling for the future direction of a company's share price. 
"Incentives drive outcomes... I can't tell you how many times I have seen incentives for management based on earnings per share growth," she says. 
 "Companies just chase acquisitions to meet earnings growth without thinking about the returns that are being generated on the dollars spent. That happens time and time again and is a massive red flag." 
In this episode of The Rules of Investing, Burns takes listeners through some of the companies that have managed to pass her filters, as well as why catalysts are so important for investors with a penchant for value. 
She also outlines why the listed investment company's growing annual yields won't be slowing over the next five years, what it's actually like on the ground in the US right now, as well as what the US election at the end of the year could mean for markets. 
Note: This interview was recorded on Tuesday 14 May 2024. 
https://www.livewiremarkets.com/wires/700-meetings-each-year-how-wam-global-uncovers-under-the-radar-stocks 
0:00 - Intro 
1:21 - What it is actually like on the ground in the US 
2:14 - Catriona Burns' outlook on rates and inflation 
3:26 - The WAM Global (ASX: WGB) investment process (and the importance of trust) 
8:09 - Alignment is everything + why CTS Eventim (ETR: EVD) is a good example 
9:35 - Artificial intelligence and where Catriona is invested here 
13:38 - On not owning NVIDIA (NASDAQ: NVDA) 
14:41 - Why she's overweight financials and healthcare 
16:47 - Picks + shovels approach versus drug developers in healthcare 
18:18 - Stock with major catalysts on the horizon: CTS Eventim (ETR: EVD) and Quanta Services (NYSE: PWR) 
20:01 - Why catalysts are so important 
21:27 - The sustainability of WAM Global's yields + franking credits 
22:46 - How to think about performance 
24:33 - Why Catriona is bullish on the outlook for global small and mid caps 
25:42 - One thing investors are getting wrong about today's markets 
26:51 - US politics + what a Trump win would mean for markets 
29:10 - A story of a loss from Catriona's career and what she has learnt from this 
31:19 - One stock that Catriona would buy and hold if the market were to close for the next five years: Intercontinental Exchange (NYSE: ICE)