Friday, October 25, 2019

Contact Energy: Buy for Yield





Last time we talked about this one it was selling at about $7.50   Little did I know about it when I wrote about it in June that yesterday it was trading at $7.68.

It has traded at a high of $9.05c and was savaged recently when Rio Tinto decided it was going too do its semi annual raid of the taxpayer dollar by sticking its hand out - BUT quite rightly Labour said NO.

That is the ONLY thing this writer sees fit that Labour have done.

It is paying a good dividend of 5.7% which is forecast to stand still next year. Pretty good return when compared with a 2.5% gain in the bank.

I know I said sell before but I have changed my mind.

With CEN only supplying 10% of the power to Tiwai Point (the smelter) that lot should be gobbled up pretty quickly should the padlocks need to come out for Rio Tinto. It means Contact Energy will not have to spend as big for many many years on new power sources.

But there will a few casualties if Rio decide to go - those with high debt may need to start looking around for cheaper rates.

You would do well to have a few thousand of these to pay the power bill every year.




c Share Investor 2019



Wednesday, September 4, 2019

It's all about the Return


Image result for investment returns in a inflation cartoons

It's all about the return.

After real estate, for better or for worse, the NO 2 investment is the stockmarket.

But what we have here is diff - I changed what I was going to talk about after a well earned nap.

We have interest rates at an ALL TIME LOW.

When you change something so fundamental - forget the reason why they "had" to change - to the structure of the economy you are going to get distortions.

In this case your going to get assets - and having a share is an asset - priced way ahead of where they actually should be.

But that's normal now.

So what I'm saying is.

Until this all comes crashing down - who knows it could be right now - then rightly or wrongly. And I would say wrongly. Your just going to get the housing market - sorry to Kirsty Merriman for this one - and the sharemarket will follow. Until the last 10th of a percentage point I fear is going to be wrung out of those.

So your Meridian Energy your Contact Energy everything with a return will get hammered up and up.

When do I get out? If your me I wouldn't be too concerned.

But what goes up eventually settles down to somewhere more manageable.

I leave the rest for up to you to decide.







c Share Investor 2019