When markets diverge from fundamentals, look for quality income

While the disconnect between markets and the real economy has widened further, there is no guarantee that it will narrow, especially with central banks acting as the buyer of last resort. Yet the risk of an extended run of corporate insolvencies remains. In this environment, high-quality income generation is the key, together with the flexibility to move quickly as new opportunities and threats emerge.

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Don’t Count On Dividend Stocks Like Telstra & Big Banks For Your Income

Shareholders have been spoilt by Telstra and big banks in recent years and can be forgiven for thinking the stocks can act like bonds. These shares, often tagged as “bond proxies”, have been consistent and delivered high income with franking credits making them broadly appealing to many investors. But recent history tells us you can’t rely on shares for income or capital preservation and so they should never be thought of as proxies for bonds.

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