JSE Power Hour Investing for Income

JSE Power Hour Investing for Income Simon Brown JustOneLap.com / JSE.co.za 10 March 2016 #JSE / @JustOneLap

Disclaimer The information and opinions stated in this presentation / document / video / webinar are of a general nature, have been prepared solely for information purposes and do not constitute any advice or recommendation to conclude any transaction or enter into any agreement. It is strongly recommended that every recipient seek appropriate professional advice before acting on any information contained herein. Whilst every care has been taken in preparing this document, no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or representations. All information contained herein is subject to change after publication at any time without notice. The past performance of any investment product is not an indication of future performance.

Income investing Income for; Living on Investing back into JSE or other assets

Asset classes for income JSE stocks Listed property Unlisted property? Debt Bond ETFs / Preference Shares / retail saving bonds Offshore Unit trusts

Risks Dividend disappears / shrinks African Bank, Kumba, PPC Capital depreciation African Bank, Kumba, PPC Tax law Company / sector / dividend needs to be rock solid

Potential yield? First year 4.5% - 6.0% Growing at?% a year Equity growing +20% / year? (double every 4 years) Property growing +10% / year? (double every 7 years) Pref shares growing at prime increase Year one not going to knock it out of the park

Sector risk equity / property Share price decrease (short term concern) Dividend growth Worse dividend cut? Yield is historic Rand strength (if offshore earnings)

Sector risk preference shares Share price decrease (short term concern?) Should trade at NAV with no capital gain / loss Rate cut reduce yield Down grade to junk status and impact in bank preference shares? Banks will be delisting their preference shares

Sector risk bonds Yield up price down Down grade to junk status = yield up but price down Priced in already? Interest NOT dividend Tax implications

So the hunt is on - equities 77 JSE listed DY +4%

So the hunt is on - equities Solid yields? (before DWT) Barlowworld 4.6% ELB Group 5.1% Vodacom 5.4% Metrofile* - 5.3% Clientele Life 6.0%

So the hunt is on - VOD

So the hunt is on MFL*

So the hunt is on BAW

So the hunt is on - ETFs PTXTEN (ETF, TFSA complaint) 4.4% STANPROP (ETF, TFSA complaint) 4.8% PREFTX (ETF, TFSA compliant) 8.66%

So the hunt is on - bonds Exchange Traded Funds (ETFs) TFSA complaint NFGOVI (SA government TRI) no dividends NFILBI (SA government inflation linked) no dividends RMBINF** - (SA government inflation linked) 2.3%

So the hunt is on preference shares PREFTX (ETF, TFSA compliant) 8.66% DSBP 9.38% INPP 9.66%

So the hunt is on property Hyprop 5.1% Delta 13% PTXTEN (ETF, TFSA complaint) 4.4% STANPROP (ETF, TFSA complaint) 4.8%

So the hunt is on retail bonds

So the hunt is on offshore IDV - ishares International Select Dividend ETF - 5.38% Financials + energy = 35% PFF - ishares U.S. Preferred Stock ETF - 5.82% Financials = 59% Dividend tax in USA is 30%, can claim half back

Putting it together (5.7% / 7.8% / 9.6%) Code Yield % Portfolio Potential growth? DIVTRX 4.0% 20% +/- 15% VOD 5.4% 10% +/- 15% MFL* 5.3% 10% +/- 20% HYP 5.1% 5% +/- 15% CLI 6.0% 5% +/- 15% PREFTX 8.66% 10% / 20% +/- 10% DSBP 9.38% 5% +/- 10% STANPROP 4.8% 20% +/- 10% Retail bonds 9.75% 5% 0% Cash 5% 10%

In closing Quality Capital growth / protection Dividend withholding tax

Questions?

Contact Simon Brown www.justonelap.com @JustOneLap @SimonPB

Disclaimer The information and opinions stated in this presentation / document / video / webinar are of a general nature, have been prepared solely for information purposes and do not constitute any advice or recommendation to conclude any transaction or enter into any agreement. It is strongly recommended that every recipient seek appropriate professional advice before acting on any information contained herein. Whilst every care has been taken in preparing this document, no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or representations. All information contained herein is subject to change after publication at any time without notice. The past performance of any investment product is not an indication of future performance.