Question 1: The Switzer Dividend Growth Fund (SWTZ) ticks a lot of boxes for me: monthly income, DRP available and 100% franking. The share price is relatively static, but I’m fine with that given the regular dividends and stability. What other stocks are available that are similarly structured to SWTZ: primarily monthly dividends and 100% franking credits?
Answer: In regard to a stock that pays monthly dividends and is usually 100% franked, you could look at Plato Income Maximiser Limited (PL8 is its ASX code). A listed investment company, It has a solid performance record, is paying a yield of around 5.8% and distributes this monthly. It is currently 100% franked. A small hesitation I have is that it is trading at a premium to its underlying NTA (net tangible asset value). That said, it has held this premium (about 10%) for a long time.
If you are prepared to forgo a monthly dividend, two broad based listed investment companies to consider are Argo Investment Management (ARG) and Australian Foundation (AFI). Dividends are half yearly and lower at around 3.75%, but they are fully franked. You should enjoy market performance and as a bonus, they are currently trading at a discount to their NTA of around 12%.
Question 2: A2 Milk (A2M) has gone for a bit of a run following the trading update at their AGM and announcement that it intends to start paying a dividend. What do the major brokers think?
Answer: At its AGM, A2M upgraded its revenue guidance from “mid-single digit” growth on financial year 2024 to “mid to high single digit” growth. It announced that it intended to start paying a dividend, most likely to be declared in Feb 2025. The brokers are marginally positive on the stock. According to FN Arena, there are two “buy” recommendations and four “neutral” recommendations. The consensus target price is $6.14, about 6.8% higher than the last ASX price of $5.75. The range of targets is relatively tight: from a low of $5.90 through to a high of $7.15.
Question 3: If inflation in October was down to 2.1%, why isn’t the RBA cutting the cash rate now and providing a bit of relief to those paying a mortgage?
Answer: Yes, the monthly inflation rate was down to 2.1% but this was mainly due to the impact of the Government’s electricity rebates. Excluding volatile items, travel and electricity, the inflation rate was 3.5%. This is higher than the RBA’s target for inflation of between 2% and 3%.
Question 4: There is talk that Pro Medicus (PME) might do a share split. Will this be good for its share price?
Answer: I think the Chair set this one off. Yes, there is talk. In theory, a share split should make absolutely no difference to the value of a parcel of shares. It is a paper exercise and creates absolutely no value. In practice, however, it can be a little different. Potentially, it makes the shares a little more accessible by lowering the share price. If there is (say) a 10 for 1 split, the share price will reduce to around $23. Some people are happier buying 10 $23 shares rather than 1 $230 share.
