Ask FNArena: High Divvies & Franking, Plus More

This story features ENDEAVOUR GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: EDV

Earlier this month we asked investors to send in their questions. Today, we answer another five questions received.

By Rudi Filapek-Vandyck, Editor

Question: Where do I find a list of high dividend paying stocks with good franking credits?

We do have all the information necessary to conduct your search, but you will have to do some of the extra legwork required.

Let’s start with the easy part: you can access all implied forward-looking dividend yields via the Australian Super Stock Report, which is updated every month and can be downloaded here:

https://fnarena.com/index.php/analysis-data/super-stock-report/

Do note all data are in excel which allows one to rank stocks on chosen selection such as dividend yield.

There are multiple tabs inside each Report. Choose the second one (bottom) if you don’t want to limit yourself to the Top40.

There is an alternative on the website via the FNArena Sentiment Indicator which includes a predefined button to rank all companies via Highest Dividend Yields:

https://fnarena.com/index.php/analysis-data/consensus-forecasts/sentiment-indicator/

These options only provide you with the forecast yield, to add franking you’ll need to consult Stock Analysis where updated information about franking is displayed underneath FNArena’s Consensus Forecasts, to the left of the Dividend Calculator.

For example, our data show ANZ Bank’s franking is currently only 65%, while dividends paid by McMillan Shakespeare are 100% franked and those by Amcor have no franking at all.

Depending on your specific needs and strategy, simply picking the highest yielding stocks incl franking is not the smartest investment strategy if you’re measuring your performance in terms of total return.

Our Special Reports section includes two reports that might have your attention in this regard:

(Not) About The Banks & Dividend Investing, The Smart Way

Those Reports, and many others can be downloaded from: https://fnarena.com/index.php/analysis-data/special-reports/

Note this section is only available to paying subscribers, such as yourself.

Question: Broker ratings on your website often come with a number attached (1, 2, 3, etc). Is there a specific meaning behind these numbers?

While the average investor tends to think in terms of Buy, Hold and Sell, in practice broker recommendations come in all kinds of flavours and subtleties.

Many an investor has no idea, and that’s fine as herein lays one task for FNArena to educate and to explain.

We have available on the website a document that explains the various ratings/recommendations for the key brokers we cover through The Australian Broker Call Report:

https://fnarena.com/index.php/broker-recommendations-explained/

The daily Broker Call Report includes a link to this document (near the top to the right of each Report).

Some brokers have three degrees of ratings, similar to Buy, Hold, Sell, but others have steps in between.

To point out where on the rankings a certain rating sits, we add a number from 1 to 5 whereby 1 = Buy and 5 = Sell.

So if you see a rating and it comes with the number 3 you know it’s the equivalent of Hold/Neutral.

If the number is 2 the rating sits in between Buy and Hold. 4 indicates below Neutral but above Sell.

Question: What is your view on Endeavour Group ((EDV)) since it is part of your selection of Trusty Defensives Stocks?

If I remember correctly, last time I was asked about Endeavour I suggested it was worth owning the shares as a more defensive exposure with a longer term focus.

That view hasn’t changed.

Staples are under the pump in 2024, see also Woolworths Group ((WOW)) and Coles Group ((COL)), but we both know (should know) operational dynamics will not remain this tough forever and ever.

Having said so, it should be clear there is no quick fix on the horizon, with rate cuts from the RBA even more distant following the election of Trump.

And all of these companies are still under threat of regulatory interventions. Patience seems to be the most appropriate term. A longer-term horizon is the pre-condition.

Question: what are your thoughts on buying HomeCo Daily Needs REIT ((HDN)), HealthCo Healthcare  & Wellness REIT ((HCW)) and Transurban ((TCL)) for income? Looks like they are all trending down.

I wouldn’t worry too much. Share prices are responding to bond yields which are rising as markets are hedging their bets on next year’s inflation reading.

One other reason could be the strong ‘risk on’ environment in October and November which leaves no remaining funds for lagging defensives, such as REITs.

As an investor, in particular in high income generating stocks, you need to be able to distinguish volatility from bad news, otherwise you’re never going to be comfortable enough to sleep well at night.

As you probably know, the All-Weather Model Portfolio owns HomeCo Daily Needs REIT and while it’s frustrating to see the price fluctuate between $1.04 and $1.35 it tells you nothing about the yield or your income.

Share prices do fluctuate over time and when they go down it’s not by definition a harbinger of negative news forthcoming.

One would have to have a very negative outlook for next year (not my view) on inflation and bond yields to start worrying today.

Question: I would like to bring your attention to the 18 year real estate cycle which has been in existence for over 400 years and is well documented by many reputable economists over the last 100 years.

Essentially the cycle leads to a major financial crash every 18 years, the last being in 2008. It is well documented in a book ” The secret life of real estate and banking” written by the Australian Phillip Anderson.

We are coming to another close in the cycle which means we can expect a major financial crash and recession around the end of 2026 or early to mid-2027.

There is evidence to suggest the next crash and recession will be worse than anything that has preceded it by virtue of the astronomical amount of debt in existence.

So, provided the theory holds true, as I expect it will, we will see two strong years for the stock market and property.

And then it will be time to go to cash fast. I am surprised that with all the thousands of experts out there, none ever refers to this cycle.

Thanks for the reminder. That timing might well coincide with the next round of financial tightening.

While it holds true that global debt levels are as high as ever, my instinct tells me it’s not debt, but leverage that spoils the party.

With another two years in the cycle, let’s see how that period plays out.

****

See also:

https://fnarena.com/index.php/2024/12/17/ask-fnarena-high-multiples-about-to-collapse/

https://fnarena.com/index.php/2024/12/16/ask-fnarena-csl-charter-hall-dexus/

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

P.S. I – All paying members at FNArena are being reminded they can set an email alert for my Rudi’s View stories. Go to My Alerts (top bar of the website) and tick the box in front of ‘Rudi’s View’. You will receive an email alert every time a new Rudi’s View story has been published on the website. 

P.S. II – If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

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