This article was published by Investor Daily

Plato Investment Management has announced it is targeting 10 per cent gross income from Australian equities during the current financial year.

The upgraded yield target for the Plato Australian Shares Income Fund was the result of a number of factors according to the firm, including a series of tax-effective off-market buybacks from companies including the Commonwealth Bank, Woolworths and Metcash as well as the strength of the Australian economy.

Plato co-founder and senior portfolio manager Dr Peter Gardner said that a recent “cash splash” from mining companies was also a major factor in its forecast.

“While the retraction in the iron ore price has worried investors, we’ve seen companies such as BHP, RIO and Fortescue generate exceptional cash and franking credits for investors in recent months and many of these strong companies remain highly profitable,” he said.

“Looking ahead, there will be further tax-effective income opportunities in the sector, in particular we think the BHP and Woodside merger could result in BHP’s petroleum assets being spun-off in the form of a special dividend with franking credits attached, in order to merge with Woodside.”

Dr Gardner suggested that the strong economic bounce-back from the COVID-19 pandemic was sustainable despite the uncertainty brought by new variants.

In particular, he highlighted financials and retail as two sectors with strong dividend prospects.

“When you look at financials, a return to pre-COVID levels of dividends looks likely over the next year and many of the leading banks have robust balance sheets,” said Dr Gardner.

“The retail sector is another area that could generate strong income in the second half of the financial year. We expect strong retail trading over Christmas to benefit select retailers such as JB Hi-Fi and Super Retail Group.”

In the midst of a “bonanza year” for dividends, Dr Gardner suggested Australian equity income investors should review their portfolios.

“To take full advantage of the potential yield on offer, they need to ensure their portfolios are actively managed and optimised to maximise after-tax returns,” he said.

SUBSCRIBE TO OUR NEWSLETTER

Subscribe to keep up to date with the latest fund
information and insights.

“A good decision is based on knowledge and not on numbers.”

Plato (427-347 BC)

Disclaimer

Plato Investment Management Limited AFSL 504616 ABN 77 120 730 136 (‘Plato’).

Whilst Plato believes the information contained in this communication is based on reliable information, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. Subject to any liability which cannot be excluded under the relevant laws, Plato disclaim all liability to any person relying on the information contained on this website in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information.

Pinnacle Fund Services Limited ABN 29 082 494 362 AFSL 238371 is the product issuer of funds managed by Plato. Any potential investor should consider the relevant Product Disclosure Statement available at https://plato.com.au/retail-funds/ in deciding whether to acquire, or continue to hold units in a fund. The issuer is not licensed to provide financial product advice. Please consult your financial adviser before making a decision. Past performance is not a reliable indicator of future performance.

Disclosure contained on this website is for general information only. Any opinions or forecasts reflect the judgment and assumptions of Plato on the basis of information at the date of publication and may later change without notice. Any projections are estimates only and may not be realised in the future. Information on this website is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained on the website is prohibited without obtaining prior written permission from Plato. Past performance is not a reliable indicator of future performance.

Leave a Reply