Question 1: My bad dream is ZIP Co (ZIP) , where I am down 67% at present. Do you think they could recover to $2 or above at year’s end ?
Answer: A couple of weeks’ back, I would have thought getting back up to $1 would be a challenge – now ZIP is trading around $1.45. I guess that shows how quickly sentiment can change – particularly when a company “listens to the market” and takes actions on costs, moderates its growth ambitions and focusses on its core business. I wouldn’t rule out $2 in the next 12 months.
Question 2: What do you think the next Woodside (WDS) dividend will be in the August interim results?
Answer: There is a high degree of “unpredictability” when it comes to resource companies’ dividends. According to FN Arena, the broker consensus is for a full year dividend of US$2.38, or approx. A$3.43 per share. But there is a huge range amongst individual brokers – a low of A$1.87 through to a high of A$4.14.
My guess is that the Woodside management will be a little conservative with their first interim dividend (post the BHP demerger), and overall in FY22. My guess is the equivalent of A$1.25 for the interim and A$1.75 for the final. This puts Woodside on close to a prospective yield of 10%. Forecasts for FY23 are lower, with the current consensus being a total dividend of A$2.75.
Question 3: What do you think of Challenger Fixed Term annuities?. They seem to be a secure form of investment at a reasonable interest rate.
Answer: Term annuities are an attractive option for retirees who want a “set and forget” investment option. They pay a fixed income, sometimes indexed for inflation, for a guaranteed period of time. At the end of the period, you receive your capital back. Current interest rates are around 4.5%.
Because the capital doesn’t grow, at the end of the term, the value you get back will have significantly less buying power – for example, $100,000 today is worth a lot more than the $100,000 you get back in 10 years’ time.
Challenger is one of the bigger providers, but not the only one. Annuities are issued by regulated life insurance companies – so I would get competitive quotes from several providers. In addition to Challenger, try AIA Insurance. Also, you may want to consider the benefits of a lifetime annuity compared to a term annuity.
Question 4: What is the last day to buy RIO shares to get the dividend?
Answer: RIO will pay an interim fully franked dividend of $3.837. The shares will trade ‘ex-dividend’ on 11 August, so the last day to buy the shares and receive the dividend is Wednesday 10 August. The dividend will be paid on 22 September. If you want to participate in the Dividend Reinvestment Plan, elections must be received at the registry by COB on 1 September.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
