Dona Ferentes
A little bit OC⚡DC
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Tying up the thread (it started with a mention of AFI) and looking at trading activity plus dividend forecasts plus positioning for the future, AFI has announced Half Year accounts today. As well as holding dividend steady, the following comments flow from the trimming banks and participating in BHP and Rio buybacks: and repositioningThere seems to be a tendency to look at percentages ..... So if you are looking at income in terms of percentages which would an investor prefer? A yield of 6.5% or 1.0%?
Because if you selected 6.5%, you have chosen NAB which paid $1.66 (before franking) in 2019 calendar year. If you chose 1% you have selected CSL which paid $2.65 (no franking) in the same period.
Just throwing it out there as food for thought.
...holdings have been disposed of where the sustainable competitive advantage of the business has come into question. Over a four-year period, the number of stocks in the portfolio has been reduced from 95 to 70. This has led to a reallocation of funds to preferred companies, generally into larger companies in the ASX 200 Index which have better growth prospects.
The more recent effect of this repositioning when combined with a general upward move in the market has meant that the top 24 largest holdings in the portfolio (excluding the major banks and resources) have risen from 47.2% to 51.4% over the six-month period, and their value has gone from $3.5 billion to $4.1 billion.
It is also worth making some observations on the effect of the change in profile of the portfolio on AFIC’s more immediate income streams. The dividend cuts from three of the four major banks, combined with a reduction in the proportion of our portfolio in financials, has put a short term drag on our dividend income streams as many of our new investments have lower yields. We believe the move to stocks with a better growth profile should enhance the potential for dividend growth in the medium to long term, particularly as bank dividends are expected to remain stagnant.