We need to continually update our investment plans to protect the purchasing power of our savings, investments and pensions.
Let’s begin this international investment update with a look at the state of the market for bonds.
At Jyske Bank’s most recent Global Wealth Seminar, one of the great speakers was Tommy Leung. He is in charge of the bond trading for UBS in London… so I really enjoyed listening to him and then talking more about bonds over dinner.
Tommy Leung speaking to Thomas Fischer and other speakers at the Jyske Global Wealth Seminar.
Tommy pointed out that there may be a bond bubble in several segments of the bond markets.
This chart from his speech at the Jyske conference shows how bonds out- performed shares even during the credit crisis.
He showed how some segments of the corporate bond yields are near…
20 year lows. This is what a bond bubble is about… low yields. This means that bonds are expensive.
However Tommy looked at some segments of the bond market that still offer potential.
Here is another slide from his presentations.
Summed up this slide says to me: There are still opportunities in high yield investment grade bonds. Avoid the below investment grade (BBB) issues.
Some bond issues he reviewed included the bonds below:
Name: New World Resources Miners (NWORLD)
Bond: 7.875% 2018
Name: Rhodia Chemicals RHA
Bond: 7% 2018
Name: Obrascon Huarte Lian Construction OBRAS
Bond: 7.375% 2015
Name: Virgin Media Cable VMED
Bond: 9.5% 2016
Name: Campofrio Food Group Food CPFSM
Bond: 8.25% 2016
Be sure to check with your investment adviser for current bond yields as they continually change.
Leung also mentioned high yielding equities.
With the global economy in a shaky recovery… with continued high US and Western European unemployment and… since equity markets had bounced strongly after the recession, we are likely to see a period of high uncertainty volatility and low growth in stock markets.
Yet we face great inflation risk. The huge debt and public spending in both the US, Europe and Asia will at some time lead to global inflation.
The normal investments thus are equities, high yielding bonds, commodities, real estate or one’s own business.
If bonds are expensive and equities risky, where does one go?
High yielding equities may be the answer.
Jyske Global Asset Mangers (JGAM) believe this and have produced a report “High Dividend Paying Stocks” that identifies 54 high yield shares.
JGAM wrote: As the next few years most likely will show subdued economic growth, we believe that less cyclical companies and companies paying high dividend yields have become even more attractive.
With interest rates at historic lows, money in the bank generates little or no return, while the yield from government bonds -2.6% for the 10-year Treasuries – is not that appealing. We believe there are a great number of high-quality equities which offer a yield in excess of cash and bonds.
In addition to their attractive dividends yield above that of cash and bonds, most also offer good prospects for long-term growth.
We have prepared a list of companies we find interesting. High dividend yield stocks tend to be less risky and volatile than growth stocks, as long as they keep pumping out the dividend. This may partly be due to investors being content with sitting back and collecting their checks when the market gets rough. Please note though, they are still stocks and in case of a new contraction, these may to varying degree be negatively affected by this.
Here are seven of these shares that I like and will review at our October 7 to 10 International Investing and Business Course.
American Water Works Co USA USD provides drinking water, wastewater and other water-related services in multiple states and Ontario, Canada. The Company’s primary business involves the ownership of regulated water and wastewater utilities that provide water and wastewater services to residential, commercial and industrial customers.
E.ON AG E.Germany EUR operates in power generation and gas production businesses. The Company’s operations include electric generation at conventional, nuclear, and renewable-source facilities; electric transmission via high-voltage wires network; regional distribution of electricity, gas, and heat; power trading and electricity, gas, and heat sales.
Endesa, S.A. Spain EUR generates, distributes, and trades electricity in Spain, Italy, France, Portugal, North Africa, and Latin America. The Company distributes natural gas, operates co-generation plants, and treats and distributes water.
Enel S.p.A. Italy EUR 3 generates, transmits, distributes, and trades electricity. The Company operates hydroelectric, geothermal, and other generating plants. Enel, through subsidiaries, also provides fixed-line and mobile telephone services, installs public lighting systems, and operates real estate, factoring, insurance, telecommunications, and Internet service provider businesses.
Veolia Environnement France EUR operates utility and public transportation businesses. The Company supplies drinking water, provides waste management services, manages and maintains heating and air conditioning systems, and operates rail and road passenger transportation systems.
Land Securities Group Plc UK GBP a property investment and management company. The Group invests in real estate, including offices, shops and shopping centres, out of town retail locations, supermarkets and industrial/warehouse facilities throughout the United Kingdom. Land Securities’ portfolio also consists of a small percentage of hotel, leisure and residential properties.
Suntec REIT Singapore SGD is a real estate investment trust. This Asian company was established with the objective of investing in income-producing real estate properties which are used primarily for retail and office purposes.
You can get the report on all 54 shares including a table that JGAM has prepared mid-August that shows:
#1: Latest share price
#2: Latest paid dividend
#3: Yield – latest paid dividend as a percent of latest share price
#4: Whether the dividend is paid annually, semiannually or quarterly
#5: Bloomberg recommendation – on Bloomberg analysts following the company stating thei4 recommendation to Buy, Hold or Sell
#6: Bloomberg 12 month Price Target – is an average on the analysts price targets
#7: Morgan Stanley – Their 12 month price target and recommendation
(UW = Under Weight – EW = Equal Weight – OW = Over Weight) and Percentage Upside/downside on the 12 month price targets from Bloomberg and Morgan Stanley.
To obtain this report, contact Thomas Fischer at JGAM at email@example.com
Or join me with Thomas Fischer, Jean Marie Butterlin at Team Ecuador, David Cross, my webmaster, Bob Shane and Ann Russell Roberts for our October seminar…coming up in the Blue Ridge with all its autumnal glory!
I also believe there is excellent opportunity for income and growth in real estate… especially in Florida and Ecuador.
This is why we are continually adding Ecuador properties in our Ecuador Multiple Listing like this house in Guayaquil. Here you gain rental income potential and appreciation potential when inflation surges.
2 story, 3 bedroom, 3 bath home. Large European style kitchen, guest bathroom, foyer, living room dining room, laundry room and a very large backyard. Ciudad Celeste is near the Babahoyo River. Upgrades on closets, lighting and cabinets.
This is a gated community with tennis court, olympic size swimming pool, social area, gym. Maintenance fee is $55 a month.