Global growth looks positive but there are reasons to remain alert
February! It gives us Valentine’s Day, it sends the kids back to school and it delivers the latest news on company profits. But wait, there’s more. This year, February also brings us a new leader at the US Federal Reserve. These are exciting times for investors! Well, almost.
Whether you’re a set-and-forget investor, a day trader or somewhere in between, the month ahead will provide plenty of food for thought.
Reporting season will tell you if your income from shares is surging, falling or, as is most likely, fairly steady. Even with rising share prices, dividend yields, excluding franking credits, have been in the 4%-5% range for the past 10 years. Given low inflation, this suggests that Australian companies continue to provide a good stream of income.
Barring individual corporate disasters, the profit results in February will provide support for the sharemarket over the months ahead. In addition, support should come from a growing economy, global economic tailwinds and ongoing low interest rates.
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