BAT, Richemont, MTN
“THEIR PROFITS SEEM to be holding up pretty well despite the global downturn. Giving up smoking is tough: the rich spend, no matter what the circumstances. And it would seem many people would rather have cellphone airtime than eat,” says Shapiro. While his comments may appear flippant, they’re based on sound logic.
He’s looking for high dividend payers – companies likely to preserve earnings and importantly maintain regular payouts to shareholders. Even property unit trusts are starting to look interesting, Shapiro says, as they appear able to continue raising rentals, with some yielding more than 10%.
Though he cautions against getting sucked into the historic 10%+ returns of shares like Old Mutual, Abil and Metropolitan, he remains optimistic about prospects for cement producer PPC, which remains a strong cash generator with a dividend yield of around 8%. However, his current favourite asset class is preference shares: they have taxfree yields of between 12% and 15%. “In this market they’re a gift from above, despite the mumbo jumbo surrounding them – which is totally unfounded.”
Consultant, Sasfin Securities David Shapiro