News: IFL IOOF says as at Dec 31, 2015, funds under management, administration, advice and..., page-18

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Investor Bob

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01/02/16

08:45

Post #: 16910102
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Originally posted by DSD ↑

A couple of comments.

I wrote:

a) "correlation is not causation. But the correlation between share prices and dividends rises considerably when divs exceed a certain level. In times of high growth in the mkt index eg 2004 to 2007 (inclusive).... SPs rose whether divs did, or not. Some companies paid zero or very low divs, yet SPs doubled or more."
comment: when mkt is booming eg 2004-2007 (incl) SPs grew irrespective of whether divs grew or not. i.e. low correlation.
However, when divs reach a level well above the mean it will influence/help drive the SP. i.e. higher correlation.

b) "today we have low inflation and the ASX index is back at levels seen several years ago. In this environment high dividend yields are much more likely to influence SP. What is a 'high yield'? Ten years ago a high yield (gross) was 6%."
Comment: i cannot see how a stk with high yields does not influence the SP esp in environment of low inflation.

c) "But companies with good growth prospects and a yield above a certain level are likely (in my estimation) to see buyers push SPs higher."
I seem to have repeated myself but cannot see anything illogical.

d) "In 2016 what yield level is required to significantly influence a SP? I reckon anything at/above 8% has a bearing."
Yet again watch stks that post results with 8% gross yields receive favourable response from Mr Mkt.

e) "At/above 10% and the influence rises considerably."
There won't be many but watch stks that ann results with 10% gross yields receive a very positive response. I'm expecting IFL to fall into this category.

f)"Takeaway: Look for combination of highish/high gr yields, along with a company whose earnings you feel are sustainable. Are their any right now? Well, IFL at $8.00 (using my FY16 estimates above) will pay a gross yield of 9.76%. Raise the div by one cent and you hit the magic 10% mark."
comment: Watch the upcoming reports. A company that posts a gross yield of 8-10% gross will please the mkt significantly, and SP will respond.

g) "Takeaway: Look for combination of highish/high gr yields, along with a company whose earnings you feel are sustainable. Are their any right now? Well, IFL at $8.00 (using my FY16 estimates above) will pay a gross yield of 9.76%. Raise the div by one cent and you hit the magic 10% mark."
Geez I do repeat myself. My 'takeaway' sez: "Look for combination of highish/high gr yields, along with a company whose earnings you feel are sustainable."

I can't see anything to change my view. A company has sustainable earnings and pays handsome divs. In this deflationary mkt i reckon it is a formulae that will influence the SP significantly.

We've already seen a couple of results announced where earnings were maintained/rose and divs rose and bingo the SP jumped.

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IFL Price at posting: $8.21 Sentiment: Hold Disclosure: Held
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(20min delay)
Last $3.53		Change -0.040(1.12%)		Mkt cap ! $2.371B

Open	High	Low	Value	Volume
$3.56	$3.56	$3.49	$1.159M	329.3K

Buyers (Bids)

No.	Vol.	Price($)
13	3304	$3.53

Sellers (Offers)

Price($)	Vol.	No.
$3.54	2653	14

View Market Depth

No.	Vol.	Price($)
14	3609	3.530
15	12487	3.520
11	23670	3.510
10	21901	3.500
9	9360	3.490

Price($)	Vol.	No.
3.540	2711	13
3.550	23733	14
3.560	21102	11
3.570	10685	13
3.580	9270	9

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