Today, I was studying more about the Australian stock market and sieving through stock filters to find interesting companies that warranted a second look based on my investing criteria.
Interestingly, many companies that filtered past were commodity, property and engineering companies, which I thought were cyclical in nature and tended to be heavily leveraged. The others consisted of mainly finance and asset management companies, with a few retail and technology stocks in the list. Australia is a huge land of massive resources, and it is expected that there will be a large number of commodity and property related companies listed on the stock exchange.
Upon further studying, the dividend yields of many blue chips in Australia seem to be pretty high, ie. more than 5%. However, it is important to note that one would have to pay a tax of 30% on the dividends gained. The term used here is “franked”, which basically means that the company pays the tax on the unfranked dividends for the investor before distributing it to them. After “full franking”, some of the blue chips like Telstra Corp and ASX are giving out yields of approximately 5% which are still attractive to the income investor. Another thing I learnt is that many companies in Australia tended to have operations both locally and in New Zealand, which is rather close to Australia.
I have visited Australia on a number of occasions when I was younger, but have not had the chance to scuttlebutt around yet. Australia remains one of the favourite countries for Singaporeans to invest in, especially in property, due to its developed market, transparent laws, vibrant cities and the attraction of many foreign students into its universities. With regards to the stock market, there are a few interesting companies that I have noted down to pay more attention to in the future, but it is likely that I will not be investing in this market soon as I feel I have not developed a circle of competence for it yet. Nevertheless, it is a good learning exposure to a new market, and the opportunities that it provides.