Strong balance sheets the investment key
Investors should be looking more to dividend returns to sustain them through what is promising to be a tough market cycle, according to Perpetual Investments.
Perpetual senior manager of investment markets research Matthew Sherwood has used the company’s July newsletter to recommend that investors stay focused on companies with robust balance sheets.
“The recent market sell-off has opened up more buying opportunities in the Australian market for the patient, medium-term investor than has been seen for at least five years,” he said.
“What investors can control in this environment is their investment approach by realising that driving close to the edge of a rocky road, whilst exciting, is not always desirable and that being conservative can be the best path forward.”
Sherwood said that in a world of lower share price growth, dividend income was likely to contribute more to total returns than in recent years.
“That is, the share market may not be as depressing as it currently seems and we are not all doomed if we focus on companies with robust balance sheets, sustainable earnings growth and reasonable valuations,” he said.
AUTHOR
Mike Taylor
Recommended for you
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
