Dividend streams tend to be stable and determined by fundamental factors. Unlike capital valuations, which are affected by estimates of prospective returns which are, in turn, strongly affected by market sentiment.
Author Archive | Anton Tagliaferro
Investors chasing high yielding stocks without considering the fundamentals risk falling into the ‘income trap’, where weak businesses are eventually forced to reduce their dividends.
There is always market uncertainty, but the economic outlook is broadly set and investors should focus more on companies delivering solid returns over the next few years almost regardless of market conditions.
SMSFs are more heavily exposed to listed Australian equities than are default options in public funds, and particularly to the big S&P/ASX20 stocks. There are good companies in Ex20 segment which can help diversify a portfolio.