Publications
Partners
Forget the talking heads on television telling you how to pick the next hot stock. Or that annoying guy on the 6pm radio show who rolls out his market commentators to tell you where to put your money. If you want to build long-term wealth without breaking a sweat then you’re going to be hard-pressed to beat the Satrix Divi product.
The beauty of the product is its simplicity. You get a basket of 30 companies, selected from the JSE Top 40 and mid-cap indices that are expected to pay the best normal dividends over the next year. There’s no analysis of individual stocks or trying to time individual shares: you simply get your share of the company’s profits.
The worst case scenario is you’ll probably walk away with around a 4% dividend yield and if you’re already making an investment into a fixed income or property product then there won’t be any overlap, because the Satrix product excludes property assets. Importantly for the smaller retail investor, you’re looking at a total expense ratio of around 0,45% for the investment, which means you can accumulate units quickly without fattening up the asset manager.
Satrix CEO Brett Landman says more than 13 000 South Africans have already voted with their wallets and are putting money into the Satrix Divi product, whose assets under management have grown to more than R1bn. Considering roughly 5 500 people signed up for the initial public offering in 2006 that’s credible growth in the SA market.
Asked what he believed was driving that move, Landman says: “To December 2010 it was the best performing product over a three-year period and to March 2011 it was the second best performer. In the current economic climate investors are attracted to its high yield.”
At end-May this year the Satrix Divi product had returned 19,7% on a three-year basis. On a one-year basis that dropped to just a tad under 17% – but that’s still not a bad return in a market where “value” is hard to find.
Forget hype, inflation and all the other factors being touted about building a portfolio. A dividend in your pocket is something you can physically touch or reinvest to build your wealth. Mechanically, it will rock up each quarter in your portfolio. Though you might argue it’s a pretty boring way of making money, consider that between 90% and 96% of real investment returns actually come from dividends and you begin to appreciate you don’t need to be a rocket scientist to make money in the market.
Wealth managers who spoke to Finweek pointed out that for the entry level retail investor with a bit of an appetite for risk the Satrix Divi makes sense, as it allows investors to methodically acquire dividend stocks while trying their hand at some riskier assets.
Investors still not convinced about the value of dividends should perhaps remember the wise words of leading global investor Richard Russell: “A stock dividend is something tangible – it’s not an earnings projection; it’s something solid, in hand. A stock dividend is a true return on the investment. Everything else is hope and speculation.”
The beauty of the product is its simplicity. You get a basket of 30 companies, selected from the JSE Top 40 and mid-cap indices that are expected to pay the best normal dividends over the next year. There’s no analysis of individual stocks or trying to time individual shares: you simply get your share of the company’s profits.
The worst case scenario is you’ll probably walk away with around a 4% dividend yield and if you’re already making an investment into a fixed income or property product then there won’t be any overlap, because the Satrix product excludes property assets. Importantly for the smaller retail investor, you’re looking at a total expense ratio of around 0,45% for the investment, which means you can accumulate units quickly without fattening up the asset manager.
Satrix CEO Brett Landman says more than 13 000 South Africans have already voted with their wallets and are putting money into the Satrix Divi product, whose assets under management have grown to more than R1bn. Considering roughly 5 500 people signed up for the initial public offering in 2006 that’s credible growth in the SA market.
Asked what he believed was driving that move, Landman says: “To December 2010 it was the best performing product over a three-year period and to March 2011 it was the second best performer. In the current economic climate investors are attracted to its high yield.”
At end-May this year the Satrix Divi product had returned 19,7% on a three-year basis. On a one-year basis that dropped to just a tad under 17% – but that’s still not a bad return in a market where “value” is hard to find.
Forget hype, inflation and all the other factors being touted about building a portfolio. A dividend in your pocket is something you can physically touch or reinvest to build your wealth. Mechanically, it will rock up each quarter in your portfolio. Though you might argue it’s a pretty boring way of making money, consider that between 90% and 96% of real investment returns actually come from dividends and you begin to appreciate you don’t need to be a rocket scientist to make money in the market.
Wealth managers who spoke to Finweek pointed out that for the entry level retail investor with a bit of an appetite for risk the Satrix Divi makes sense, as it allows investors to methodically acquire dividend stocks while trying their hand at some riskier assets.
Investors still not convinced about the value of dividends should perhaps remember the wise words of leading global investor Richard Russell: “A stock dividend is something tangible – it’s not an earnings projection; it’s something solid, in hand. A stock dividend is a true return on the investment. Everything else is hope and speculation.”
