10% return on my investment as income?

[JackJackJack]

Hi,
I am so new to all this its not funny.
My aim is to get a minimum of 10% return on my investments as regular distributions / dividends etc.
Being new, I am thinking managed funds or the like until I get some sort of trading methodology in place.
Is this feasible or am I dreaming?

Thanks
Jack

 

[nizar]

Hi,
I am so new to all this its not funny.
My aim is to get a minimum of 10% return on my investments as regular distributions / dividends etc.
Being new, I am thinking managed funds or the like until I get some sort of trading methodology in place.
Is this feasible or am I dreaming?

Thanks
Jack

10% as income is a pretty high yield.
Most ASX listed companies pay less than 5%.

But you could try listed property trusts.
I know some of them pay high yields.

 

[nioka]

Hi,
I am so new to all this its not funny.
My aim is to get a minimum of 10% return on my investments as regular distributions / dividends etc.
Being new, I am thinking managed funds or the like until I get some sort of trading methodology in place.
Is this feasible or am I dreaming?

Thanks
Jack

Because the dividend yield on most sound stocks is less than 5 to 6% you will not get that yield unless the price of the stock is increasing. However it is reasonably easy to get that yield if you chose stocks which are paying dividends and decreasing their PE ratio if the calculation is made on the purchase price and not the current market price. There are stocks I hold which are not paying dividends at this stage but are nearing profitable production. eg. AGM. Current price 72c. I expect a price in excess of $1.50, maybe $2.50 by mid year 2008. They should be in a position to pay early dividends and the yield on 72c should well exceed 10 to 15%, and dividends are mostly franked and have a tax credit. If AGM don't pay early dividends then I would sell down and hopefully take some capital gain.
Dividends aside it is relatively easy to get high annual returns with stock value appreciation by doing the right research. It is also easy to lose money.
The higher the potential gain the higher the risk.
Please take this as comment and not recommendation. I am often wrong.

 

[JackJackJack]

Hmmmm - what about managed funds?

 

[stoxclimber]

There's nothing you can get that will yield 10% as dividends basically. Depending on the size of your investments you can put it in a high yield managed fund (e.g. Vanguard's high yield index fund), take the ~4% distributions per year and sell 6% of your investment to replicate a 10% income. But if your investment stake is small fees will make this unpractical.

 

[motorway]

DSF Deep Sea Fisheries Ltd 123.08%
ADT Advent Limited 35.82%
MTD Metroland Australia Limited 32.26%
UOS United Overseas Australia Limited 25.93%
AJL AJ Lucas Group Limited 25.86%
EBI Everest Babcock & Brown Alternative Investment Trust 20.12%
GLE GLG Corp Ltd 16.23%
RRT Record Realty 13.86%
PBD Port Bouvard Limited 13.78%
CDF Commonwealth Diversified Share Fund 13.61%
IWI International Wine Investment Fund (The) 13.47%
ABW Aurora Buy-Write Income Trust 13.41%
VBP Van Eyk Blueprint Alternatives Plus 12.76%
RAT Rubicon America Trust 12.62%
CPK CP1 Limited 12.50%
HLD HomeLeisure Limited 12.50%
CWT Challenger Wine Trust 12.05%
REU Rubicon Europe Trust Group 11.80%
MRA Mariner American Property Income Trust 11.72%
CIY City Pacific Limited 11.57%
CRT Consolidated Rutile Limited 11.48%
CFI Colonial First Private Capital Limited 11.46%
TGP Trafalgar Corporate Group 11.24%
MPY MFS Living and Leisure Group 11.22%
NAM Namoi Cotton Co-Operative Limited 10.78%
EIG European Investors Global Property Trust 10.73%
BLP Babcock & Brown Residential Land Partners Group 10.39%
MMG Macquarie Media Group 10.39%
TPF Timbercorp Primary Infrastructure Fund 10.36%
BCF Blue Chip Financial Solutions Limited 10.34%
VIR Viridis Clean Energy Group 10.15%

A quick search for companies that are yielding > 10% based on Historical information..........

Is there anything here worth investing ?

A lot of other factors would matter ( and div yields mightn't matter at all )
Some of these might be anything but good investments..

NO Recommendations

Purely for discussion

10% div yields are really a RED FLAG

motorway

 

[nioka]

A quick search for companies that are yielding > 10% based on Historical information..........

Is there anything here worth investing ?

A lot of other factors would matter ( and div yields mightn't matter at all )
Some of these might be anything but good investments..

NO Recommendations

Purely for discussion

10% div yields are really a RED FLAG

motorway

DSF is a good example as to why research is vital. The shares are not of great value and the dividends can not be repeated. It topped the list given and is in my opinion near the bottom of the list as a good investment.

 

[JackJackJack]

Wow - this is a great forum - the replies so far have taught me a lot that I didnt find in the 4 or 5 books that I have read so far.

 

[happytrader]

Welcome JackJackJack

Have you considered the big 4 banks? Excellent value as long as you remember to make your money when you buy. If so, search for the thread 'Banks what a pack of losers' By the way I think the title was actually a challenge by the original poster rather than a remote truth.

Cheers
Happytrader

 

[bvbfan]

Thinking a bit outside the box but perhaps an option strategy, covered calls may help lift your returns a little?

But on your dividends doubt it unless you buy for long term and are prepared to wait for dividends.

I'm on about 50% yield (on purchase price) for OXR

 

[imitrust]

If you are willing to go overseas maybe a Dogs Of The Dow strategy may work for you.

General Motors paid over 10% last year. Though the way they have gone this year I'll doubt they'll do it again.

Best Of Luck.

 

[niknah]

Try some notes...
http://www.asx.com.au/asx/markets/displayInterestRateSecurities.do

The price is stable most of the time but when there's trouble, the value goes down quickly.

 

[boiler123]

This is not a recommendation or an advertisement for a particular fund, but I just want to add something new to the other posts.

If you want to receive 10%pa income as cash, then also look at NavraInvest funds (navrainvest.com.au). We have invested in the Australian Blue Chip Retail Fund with NavraInvest for the last 2 years, and we chose to receive cash distribution each quarter (we did not choose to reinvest the distributions) and the return has been around 15%pa. A word of caution, though, this is strictly an income fund - you don't get much (or no) capital gain. Depending on the timing of your investment, you can end up in an unrealised capital loss like we have been in - because we bought the units at their highs. Another word of caution is that investments in this fund is not for short term but for medium term (like 5 years). Do your homework first. There is an associated forum which discusses in detail the pros and cons of Navra funds is invested.com.au.

The reason why the distributions for Navra fund are higher than other managed funds because Navra gives holders all the realised gains each quarter; whereas other funds give holders a little bit of income each half-year or yearly, and keep most back to create growth. We don't put all our money in Navra but it has served our purposes well.

 

[Mrs Mackie]

Hi JJJ

I'm new here too and probably in the same boat as you - looking for income rather than cap growth. I have made an OK part-time income trading shares over the past year but being super lazy have diversified into managed funds including Navra Fund and UBS Property fund. If you search Commsec for managed funds they show how much is paid in income and how much as growth. AMP Small Companies fund for example (which I am looking at) shows income of 28.16 % and growth of 11.06 % annualised over the past 5 years. Of course, doing your own research is a must.

 

[ROE]

The reason why the distributions for Navra fund are higher than other managed funds because Navra gives holders all the realised gains each quarter; whereas other funds give holders a little bit of income each half-year or yearly, and keep most back to create growth. We don't put all our money in Navra but it has served our purposes well.

How do they do this unless they sell shares in companies every quarter for gain and paid out? This can't last

And if they can it more like a ponzi scheme where new investors paid higher unit price to pay out existing earlier investor in that case they would never get the same return and eventually lose.

 

[OmegaTrader]

Hi,
I am so new to all this its not funny.
My aim is to get a minimum of 10% return on my investments as regular distributions / dividends etc.
Being new, I am thinking managed funds or the like until I get some sort of trading methodology in place.
Is this feasible or am I dreaming?

Thanks
Jack

This is not Advice Do your own research

Tell them they're dreaming

Only under specific circumstances, would a stable constant income return of 10% be viable

1) high interest rates
2)Taking on extra risk above money in the bank
3) Being a really astute investor.
4) Why is everyone obsessed with income?

High rates:
If interest rates spiked like in the past eg 18% etc. Then you could get 10%+ in the bank. However, inflation would probably also be high during this period and so returns would be eaten away after tax and inflation. If rates did go that high then one could buy a bond or fixed interest product at that point, but for that strategy to work, rates would have to go back down otherwise real returns would continue to be terrible. Also at the moment this does not look it is going to happen any time soon.

Risk/Volatility:
Taking on risk will hurt the returns in two main ways. One, risk of ruin and two volatility of returns.

If too much risk is taken on the investment could go bust or if geared losses could overwhelm the whole portfolio. Also when more risk is taken on generally returns will vary more, which is not what one wants as the goal is too get stable returns for income. Some of these micro loan schemes look great with 8+% guaranteed income etc. But what happen if someone defaults??



Astute investing:

To get to a level of 10% would require significant leg work and a amatuer would be hard pressed to get that year in year out.

Income obsession/ Liquidity risk;

Alot of people seem to be obsessed with income investing. They think that because returns are offered as income or their is a constant payment that somehow it is less risky. This is absolute BS. Dividends are not guaranteed and capital losses can still occur. In my opinion a stable income based strategy should only be used towards the end of ones life when they don't want to take on risk or if someone is really conservative. Whether the gain is from a share price or distribution, it is still a gain. A constant income can occur until a crisis point and this is often forgotten by income investors. Reading history of REITS would show that distributions can be halted and what happens if property touch wood actually does fall once in a while.

Capital gains are just gained locked up in an asset which should be able to be sold anyway on a liquid market. They are more volatile but the differenc in net worth does not change, a gain is again- a loss is a loss.


If the market is returning 7%-12% with 12%-14% std/volatility. How the hell is an income investor going to get 10%, REITS seemed to have worked, but if there is an inflection point investors can get crushed. 10% is too high to expect.

my two cents

 

[peter2]

This thread has been dead for 10 years and Navra has been dead for 5 after investing too much in Great Southern. Let it RIP.

 

[OmegaTrader]

This thread has been dead for 10 years and Navra has been dead for 5 after investing too much in Great Southern. Let it RIP.

i just saw it on latest replies so i though it was current.

let it be a lesson

 

[ROE]

hahah, I didn't bother checking the date, my bad