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I’ve been overweight in the four banks and Telstra for some years now, and have reaped the benefits.
What weightings do you advise going forward for the short, medium & long term?
I have been dividend stripping for several years and have enjoyed around 12% pa income over that period. This works in a growth market but will obviously cost capital in one without growth.
A: Really hard to comment because you haven’t indicated what other assets (cash, bonds, property etc) you hold.
Two points I would make:
a) Yes – dividend stripping is going to be harder going forward; and
b) Banks plus Telstra index weighting is around 43%. I don’t feel there is any urgency to go below index weight because I can’t see the ready investment alternative. Further, my senses is that the “yield trade” is not over yet. Personally, I am staying moderately overweight.
