Question 1: I am looking to invest part of my SMSF funds in fixed income, property and infrastructure ETF’s. Could you please recommend a property ETF that should capture the proposed upside in residential property prices and any infrastructure ETF’s.
Answer: I am not aware of any ETF that captures exposure to residential property. The property ETFs capture exposure to commercial property (office, retail, industrial) – which is a very different proposition to residential property. You could perhaps consider stocks such as Mirvac (MGR) or Lend Lease (LLC), but it is not something I would recommend.
On infrastructure, I would look at actively managed exchange traded funds such as the Magellan Infrastructure Fund (MICH) or Argo Global Listed Infrastructure (ALI).
Question 2: Do you expect NAB and ANZ will hit $30 in 2021? Do you think Westpac will reach at least $26? How much in dividends can we expect from above banks in 2021?
Answer: I can see the major banks rising by about 10% over 2021, but I cannot see either of ANZ or NAB hitting $30 (that would be equivalent to a 27% increase), or for Westpac to get to $26, a 30% increase.
On dividends, the major brokers currently have each of these banks paying total dividends in 2021 of around 85c to 90c per share. This is up from the circa 60c ANZ and NAB paid in 2020, but still a long way short of the 160c – 174c they paid in 2019. I expect that the major banks will still be quite conservative on dividends in 2021 and they will pay around 100c per share, and by 2022, 125c per share.
Question 3: A lot of analyst seem to be predicting a significant fall in the US dollar. Will this have much of an impact on the earnings of CSL and therefore cause a drop in its share price
Answer: It is a negative for CSL, with about 50% of its earnings from the USA another 40% from Europe and Asia.
It is one of the reasons that CSL has struggled to move sustainably higher over the last 5 months as the aussie dollar has risen from 57 US cents to 75 US cents (a gain of 30%). Most of our other health care leaders (stocks such as Resmed, Cochlear, Sonic and to a smaller extent Ramsay) are also impacted.
Question 4: I am a little concerned about the forthcoming retirement of Peter Coleman as CEO of Woodside (WPL), and what this may mean for the company’s investment strategy and ultimately the share price. Am I right to feel concerned?
Answer: I understand your concern about the resignation of the Woodside CEO, but he has provided a significant period of notice (second half of 2021) which gives the Woodside Board ample time to find a replacement.
What his resignation means for the key investment decisions in 2021 (Scarborough and Pluto Train 2) is hard to say – the former is also due to be taken in the second half. The brokers don’t seem too concerned although J P Morgan (Ord Minnett) did downgrade from ‘accumulate’ to ‘hold’ on the news. According to FN Arena, the consensus target price is $23.57 – about 2.5% higher than the last ASX price of $23.00. Range is a low of $21.20 to a high of $24.60.
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