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Morningstar runs the numbers

Lex Hall  |  18 Nov 2019Text size  Decrease  Increase  |  
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We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended 15 November.

5.3 per cent

The Australian unemployment rate. That adds to tepid wages growth of just 2.2 per cent in the year ended September. “The outlook for retailers is grim for Christmas,” says Morningstar’s head of equity research Peter Warnes, “with widespread discounting likely well before 25 December. The RBA may now cut rates again in December and the impact on economic activity and consumption will be minimal at best.”

$57.2 billion

The Australian ETF industry set yet another record, ending October with $57.2 billion in funds under management, according to the latest BetaShares Australian ETF Review. The $1 billion increase in FUM for the month was due entirely to net inflows of $1.2 billion, with market falls detracting from growth. “October’s growth caps off a remarkable 12 months for the industry, which added $16.4 billion in market cap, the largest 12-month increase on record,” said BetaShares chief executive Alex Vynokur.

5.5 per cent

That’s the Commonwealth Bank’s fully franked dividend yield. In a first quarter update last week, the bank’s chief executive Matt Comyn signalled he would avoid using the historically low cash rate of 0.75 per cent to justify a cut in dividends. Morningstar analyst Nathan Zaia has maintained his fair value estimate of $80 for Australia’s largest lender, and says the dividend yield faces no threat. “Despite the ongoing pressure on interest income, we view the dividend as sustainable and the fully franked dividend yield of 5.5 per cent attractive,” Zaia writes. “While some peers recently lowered payout ratios and raised capital, we remain comfortable with Commonwealth Bank on both fronts.”

4 per cent

One of the best starting points for testing the viability of your current spending rate is the 4 per cent guideline, writes Morningstar’s Christine Benz. The notion that 4 per cent is generally a safe withdrawal rate was originally advanced by American financial planner William Bengen. The 4 per cent guideline assumes that the retiree spends 4 per cent of his or her initial balance in year one of retirement, then subsequently nudges the amount up in subsequent years to keep pace with inflation. In reality, most retirees spend more in some years and less in others.

39 to 64 per cent

That’s how much Australian listed property stocks have increased since the start of the year. And the good times could roll on, writes Nicki Bourlioufas, if interest rates stay low. Strong performers include REA Group (ASX: REA), Lendlease (ASX: LLC), Stockland (ASX: SGP), Mirvac (ASX: MGR) and Domain Group (ASX: DHG). While the S&P/ASX 200 is up around 19 per cent over the year to 8 November, Lendlease has jumped 64 per cent, Mirvac 45 per cent, REA 41 per cent, Domain Group 40 per cent and Stockland around 39 per cent.

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