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 The Sharenet Daily 
Tuesday, 20 September 2011 - 20:00
Top News
SA Business
Company News
Company Results
World Markets (Spot Prices)
JSE Today
JSE Trading Statistics
Major Moves
Index Summary
Latest Consensus Changes / Results Expected
Recent Dividends / Ex Div
Upcoming AGMs
Stock Exchange News Service (SENS)

The Benefit of Dividends

I am convinced that our generation will suffer from information overload and successful individuals will be those that are able to focus on really important matters. There is just so much out there screaming for our attention that it makes it very difficult to be focused.

Likewise, having too much information can influence one’s investment decisions negatively. This is compounded due to emotions of fear and greed.

Let’s assume an investor builds a share portfolio of about 15 shares, not for tradability and liquidity, but because the companies in the portfolio have proper business models, management that is trustworthy, and steady profit generating businesses. Assume also that the investor is investing into these businesses because of their quality and sustainability over the next 10 years as opposed to being the “next best thing”. A portfolio with the above characteristics can be built relatively easily with a starting dividend yield of 4.5% pa (at current market levels). Key is not look at the share prices for the next 10 years but only at whether the businesses still have relevant business plans, trusted management, and are generating enough cash to pay out dividends.

If this is the case then a lot more people will become investors as opposed to share traders and a lot more investors will make good steady returns over a long period.

To build wealth takes time. There are no short cuts in making money.

Let’s compare the cash flows of a RSA retail savings bond and the cash flows of the businesses we selected by way of our investment criteria.

Currently there is a 5 year RSA retail bond that pays 8% p.a.

The following assumptions are made:
- R1m to invest
- There is a 10 year bond with the same terms
- Income tax is calculated at 25%
- The average starting dividend yield of the portfolio is 4.5%
- The dividends will grow at a modest 8% per annum (6% inflation + 2% real growth)

The likely payoff profile from these two investments net of tax for the next 10 years will be as follows:

From the graph it is clear that after about 4.5 years the annual dividends paid will be higher than the (net of tax) income received from the retail bond.

It is important to realize that the nominal value of the dividends is not dependent on the market price of the share portfolio but rather on the sustainability of the discussed investment criteria.

The above analysis has not taken into account the capital value at the end of the period. The bond’s R1m nominal will be repaid at the end of the term (losing purchasing power). The shares in the portfolio will only be sold if their prices have reached (or exceeded) fair value, based on the above assumptions fair value will be approximately R1.9m. The market value of the share portfolio could be less than R1.9m in which case the likely decision would be not to sell, but to carry on receiving the increasing dividends. Any dividends received in excess of the required income level can be reinvested to grow the capital invested.

Based on the above analysis and with interest rates possibly falling further and tough economic times predicted it makes sense to be an investor, investing in quality businesses that pay out sustainable dividends rather than a speculator that attempts to extract short term capital gains or an investor with a short term horizon that limits their income growth by investing into nominal bonds.

Seed has developed a process to manage share portfolios for private clients based on similar principles explained in this article. If you want to know more and are able to invest more than R1m in a share portfolio then contact us at info@seedinvestments.co.za

To sign up to Seed's newsletter (which includes weekly investment reports, fund fact sheets, market overviews, and more) click here and enter your details. For regular updates on investment and economic news visit our Facebook Fan Page by clicking here and 'Liking' our page.

Kind regards

Vincent Heys
021 9144 966

Tue, 20 Sep 2011
Top News
South Africa's rand briefly ploughed a fresh 14-month low against the dollar on Tuesday before wiping out most of those losses as comments that Italy is not likely to default on its debt helped ease some of the risk aversion that has beset emerging markets.  Full story

South African stocks rose to their highest level in more than six weeks on Tuesday, bouncing back from the previous session's decline, with gold miners among the top gainers as the domestic currency falters and bullion prices cruise higher.  Full story
Raging battles between government forces and military units opposed to Yemen's president killed 12 people in the capital on Tuesday as a crisis over a violent state crackdown on popular unrest drifted towards civil war.  Full story
An explosion from a suspected car bomb ripped through a street in the Turkish capital Ankara on Tuesday near a neighbourhood housing government buildings, killing three people and wounding 15, Interior Minister Naim Sahin said.  Full story
Former Afghan President Burhanuddin Rabbani and head of the council tasked with trying to negotiate a political end to the war was killed at his home on Tuesday in what one diplomat called a major blow to the government's peace efforts.  Full story
SA Business
Strong growth prospects and double-digit returns for investors will help shield Africa from the debt crisis enveloping the western world, the. . .  Full story
Ivory Coast will award third-generation mobile telecoms licences by the end of the year, information technology and communications minister Bruno Kone. . .  Full story
Sub-Saharan Africa is poised to maintain its economic expansion in the near term, but faltering U.S. or European recovery could threaten. . .  Full story
Gold Fields, the world's fourth largest gold producer, has upgraded the mineral resource estimate for its Chucapaca joint-venture project in Peru. . .  Full story

Angola's banks must use their strong capital and liquidity positions to help fund the diversification of the oil-dependent economy by providing loans for agriculture. . .  Full story
Standard & Poor's cut Italy's credit rating on Tuesday in a surprise move that increased strains on the debt-stressed euro zone, and the International. . .  Full story
Strong growth prospects and double-digit returns for investors will help shield Africa from the debt crisis enveloping the western world, the chief economist of. . .  Full story
South Africa's National Union of Mineworkers said on Tuesday that a seismic event had rocked DRDGold's troubled Blyvoor mine west of. . .  Full story

The number of people employed in South Africa's formal sector increased slightly in the second quarter, with the mining and retail. . .  Full story
South Africa's Treasury sold 1.1 billion randworth of the 2026 bond and 1.0 billion rand of the 2041 issue on Tuesday.. . .  Full story
South Africa exported 29,486 tonnes of white maize last week compared with 9,056 tonnes in the previous week, the South African. . .  Full story
South Africa's rand pared earlier losses against the dollar on Tuesday, bouncing from a 14-month low as investors bought bonds in. . .  Full story
Company News
Mr Arthur Mashiatshidi has resigned as a non-executive director of the company with effect from 19 September 2011.. . .  Full story
As per the SENS announcement, dated 28 August 2009, the company has adopted the net asset value per share ("NAVPS") measure. . .  Full story
Absa and Absa Bank Ltd announced that Ivan Ritossa has been appointed as non-executive director of Absa, representing Barclays Bank PLC,. . .  Full story
Shareholders are referred to the trading update released on SENS on 28 July 2011 ("28 July trading update") and were advised. . .  Full story

Pick n Pay welcomed the Federal Court of Australia's decision to dismiss the Australian Competition and Consumer Commission`s (ACCC) application for. . .  Full story
Shareholders were advised that the company's annual financial statements for the year ended 30 June 2011 were posted to shareholders today. . .  Full story
Resgen has completed detailed mining fleet and engineering designs for its planned Boikarabelo mine in the Waterberg region of South Africa,. . .  Full story
PPC advised that earnings per share and headline earnings per share for the year ending 30 September 2011 are expected to. . .  Full story
Company Results
Revenue rose to R181.1 million (R139.5 million) and gross profit improved to R30.5 million (R22 million). The operating loss narrowed to. . .  Full story
Revenue amounted to R6.5 billion for Clover's maiden final results as a listed company. Operating profit was R319 million and net. . .  Full story
Revenue improved by 21.63% to 427.4 million (R351.4 million) and gross profit jumped to R136.1 million (R115.7 million). Operating profit rose. . .  Full story
Coal announced the change in presentation currency from the Australian dollar to the United States dollar in conjunction with the release. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0031343.90384.311.24%
JSE Top 4017:0028043.66389.991.41%
JSE Gold17:003045.4439.291.31%
JSE Financial17:0021185.5882.610.39%
JSE Industrial17:0033164.58343.111.05%
JSE Indust 2517:0027988.12330.961.20%
JSE Resource17:0051693.22971.691.92%
DJ Futures20:0011460.00150.001.33%
DJ Ind19:4511516.817.720.07%
SP 50020:001216.300.290.02%
FTSE 10017:355363.71104.151.98%
All Ords08:364124.80-39.30-0.94%
NZSE 5007:463290.62-2.06-0.06%
NameTimeRPMove% Move
Gold/R kg20:0044763765111.48%
Brent Crude19:56111.86.580.52%
Rand / Dollar19:597.70930.06450.84%
Rand / Pound19:5512.08460.10110.84%
Rand / Euro19:5510.54070.06900.66%
Rand / NZD19:586.35980.06210.99%
Rand / AUD19:557.93300.11651.49%
Yen / Dollar19:5976.4000-0.1700-0.22%
Euro / Dollar19:550.7309-0.0001-0.01%
Dollar / Euro19:591.36740.00020.01%
Pound / Dollar19:550.6359-0.0011-0.17%

Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics

Major Moves Up
SharenameSaleMove% MoveVolume
1 NICTUS  175159.38.%18533
2 TASTE  125108.70.%12000
3 PLATMIN  410307.89.%6000
4 S-OCEAN  145107.41.%29892
5 CBH  429297.25.%670055
6 HULAMIN  730476.88.%46298
7 TSOGO-SUN  19081086.00.%420708
8 RBPLAT  62063065.19.%33527
9 MVELAGP-P  1025505.13.%9
10 CROOKES  42002005.00.%6096
11 HUDACO  78503044.03.%77658
12 CALGRO  13054.00.%24967
13 ANGLOPLAT  5842022203.95.%638906
14 NASPERSN  3630013003.71.%1653019
15 ASSORE  219507083.33.%28858
16 TRADEH  599193.28.%2000
17 RICHEMONT  42451343.26.%6757849
18 MMG  16553.13.%20000
19 DRDGOLD  433133.10.%2689160
20 BELL  1455433.05.%14878

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Major Moves Down
SharenameSaleMove% MoveVolume
1 NUWORLD  1800-175-8.86.%11416
2 COMAIR  200-18-8.26.%1212109
3 ROLFES  230-17-6.88.%7500
4 ARB  301-20-6.23.%3000
5 HOSP-B  535-35-6.14.%10330
6 GRANPRADE  300-15-4.76.%5790
7 WITSGOLD  4500-200-4.26.%200
8 ANOORAQ  480-20-4.00.%12750
9 ONELOGIX  135-5-3.57.%97735
10 RAINBOW  1630-60-3.55.%1120
11 TELEMASTR  145-5-3.33.%18407
12 MUSTEK  570-19-3.23.%267613
13 BRIMST-N  670-20-2.90.%49000
14 OANDO  180-5-2.70.%1070
15 EQSTRA  727-18-2.42.%323838
16 CAT  1460-35-2.34.%8037
17 DCENTRIX  420-10-2.33.%521525
18 AMA  171-4-2.29.%10905
19 AVUSA  2300-51-2.17.%23983
20 ALTRON  2547-53-2.04.%51152

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New Highs
SharenameSaleHighMove% MoveVolume
1 TASTE  125125108.70.%12000
2 BATS  33975340007402.23.%839406
3 GFIELDS  13500135502451.85.%2345426
4 LIB-HOLD  795579551201.53.%314999
5 SABMILLER  26630266503301.25.%1203184
6 GOLDONE  41541651.22.%1270934
7 AMECOR  18518521.09.%41780
8 ANGGOLD  36470368203200.89.%1774319
9 SPANJRD  43043020.47.%5900
10 HOLDSPORT  330033200.75729

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New Lows
SharenameSaleLowMove% MoveVolume
1 AFROX  1670165350.30.%26680
2 AFGRI  580561101.75.%343758

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Index Summary
Index NameRPMove% Move
Top 4028,043.66389.991.41%
Mid Cap41,916.94162.960.39%
Small Cap31,340.1762.440.20%
Resource 2051,693.22971.691.92%
Industrial 2527,988.12330.961.20%
Financial 157,926.6333.540.42%
Financial & Ind. 3030,773.99305.921.00%
All Share31,343.90384.311.24%
Oil & Gas 26,494.01397.181.52%
Mining 33,927.41656.311.97%
Gold Mining3,045.4439.291.31%
Platinum Mining64.301.352.14%
GENERAL MINING8,158.17170.402.13%
Oil & Gas Producers 14,245.34213.561.52%
Basic Materials 28,640.44520.611.85%
Chemicals 12,458.0894.170.76%
Forestry & Paper 13,051.5252.160.40%
Industrial Metals 27,665.09168.160.61%
Industrials 27,273.5880.500.30%
General Industrials 75,780.18-27.79-0.04%
Consumer Goods 28,165.13479.381.73%
Automobiles & Parts 3,577.84.000.00%
Household Goods148.3921.30%
Health Care 34,046.11159.870.47%
Index NameRPMove% Move
Food Producers 48,563.52-156.68-0.32%
Personal Goods 423.9713.383.26%
Consumer Services 54,858.07779.071.44%
General Retailers 45,714.98212.640.47%
Travel & Leisure 3,552.87-17.82-0.50%
Media 80.092.743.54%
Support Services 2,177.90-.37-0.02%
Telecommunications 68,606.2659.130.09%
Financials 21,185.5882.610.39%
Banks 39,607.1247.200.12%
Non-life Insurance 33,221.26242.490.74%
Life Insurance 15,619.04121.950.79%
General Financial 2,140.845.220.24%
Technology 23,489.38198.070.85%
SHARIAH TOP40 3,054.33501.68%
FTSE/JSE SHARIAH ALL3,114.98481.56%
COAL MINING25,988.526042.38%
FTSE JSE Fledgling 4,511.2720.05%
FTSE/JSE Alt X 1,129.06100.88%
RESOURCE 28,627.325371.91%
DIVIDEND PLUS168.4810.53%
FTSE/JSE RAFI 406,476.55731.14%
Capped Top 4014,755.701991.37%
Capped All Share15,839.721921.23%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
Results Expected**
ExpectedCompany NameFin. Date
21 Sep 2011BLACKSTARJune 2011 (Interim)
21 Sep 2011DIGICOREJune 2011 (Final)
21 Sep 2011ELBGROUPJune 2011 (Final)
21 Sep 2011ELBGROUP6June 2011 (Final)
21 Sep 2011LITHAJune 2011 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
CLOVER11-09-1911-10-0711-10-17R 0.1500
PINNACLE11-09-1611-12-0211-12-12R 0.2300
UBUBELE11-09-1511-12-0811-12-19R 0.0200
MVELASV11-09-1511-11-1111-11-21R 0.3600
SASFIN11-09-1411-10-0711-10-17R 0.6900
Ex Div**
Share NameDec-DateLDTPay-DateAmount
MWNT11-09-0911-09-1611-09-30R 55.0000
MWNT11-09-0911-09-1611-09-30R 55.0000
ARM11-08-3111-09-1611-09-26R 4.5000
CAPITEC-P11-08-3111-09-1611-09-26R 3.4027
PSGFIN PREF11-09-0111-09-1611-09-26R 3.4024

Upcoming AGMs**
CodeCompany NameDateStatus
COLPColliers South Africa Holdings Ltd22/09/2011Confirmed
COLColliers South Africa Holdings Ltd22/09/2011Confirmed
RACCRECM - Calibre Ltd22/09/2011Confirmed
RACPRECM - Calibre Ltd22/09/2011Confirmed
BSSBSI Steel Ltd23/09/2011Confirmed

Stock Exchange News Service
20/09/201117:08 Excellerate Holdings Limited - Trading Statement
20/09/201117:01IVA149 - iVuzi Investments Limited - Tap Issue
20/09/201117:00IND203 - iNdwa Investments Limited - Listing of New Financial Instrument
20/09/201117:00 Remgro Limited - Audited consolidated results for the fifteen months
20/09/201117:00 Investec Property Fund Limited - Notice of posting of circular and
20/09/201116:30OML - Old Mutual Plc - Form 8.3
20/09/201116:29OML - Old Mutual Plc - Form 8.3
20/09/201116:20 Kelly Group Limited - Dealing in securities by a director
20/09/201116:01BRT/BRN - Brimstone Investment Corporation Limited - Disclosure of disposal of
20/09/201116:00 Masonite (Africa) Limited - Trading update
20/09/201115:30 African Eagle Resources plc - JV partner announces drill results at
20/09/201115:19 Growthpoint Properties Limited - Dealing in securities by directors and
20/09/201115:16 Metrofile Holdings Limited - Dealing in securities by directors
20/09/201115:09 O-line Holdings Limited - Declaration of final dividend
20/09/201115:03 Wesizwe Platinum Limited - Changes to the board of Wesizwe Platinum
20/09/201115:00 Sephaku Holdings - Trading statement for the year ended 30 June 2011
20/09/201114:41BIFR1 - FirstRand Bank Limited - Interest Rate Reset Announcement
20/09/201114:33ASA/ABSP - Absa Group Limited/Absa Bank Limited - Change to boards of
20/09/201114:10 Resilient - Dealing in securities
20/09/201113:42 Southern Electricity Company Limited - Change of Company Secretary
20/09/201113:30 Calgro M3 - Further Trading Update
20/09/201112:59PC2 - Private Commercial Mortgages (PTY) Limited - Interest Rate Reset
20/09/201112:58GEN - IDI - Idion Technology Holdings Limited - Final distribution to
20/09/201112:40INL/INP - Investec Limited/ Investec plc - Form 8 (DD)
20/09/201112:39INL/INP - Investec Limited/Investec plc - Form 8 (DD)
20/09/201112:11 Exxaro Resources - Trading of Exxaro ordinary shares on behalf of the
20/09/201111:06 AFGRI Limited - No change statement and notice of Annual General
20/09/201111:05PWK/PIK - Pick n Pay Holdings Limited - Update on proposed sale of Franklins to
20/09/201111:04 Metrofile Holdings Limited - Dealings in securities by directors
20/09/201110:58 Redefine Properties Limited - Fairness opinion and financial
20/09/201110:29 Resource Generation Limited - Boikarabelo update
20/09/201110:20 Pretoria Portland Cement Company Limited - Trading statement
20/09/201109:50INL/INP - Investec Limited/Investec plc - Disclosure in accordance with Rule
20/09/201109:20 Pioneer Food Group Limited - Voluntary Trading Update
20/09/201108:51BIIND - iNdwa Investments Limited - Full capital redemption
20/09/201108:50BIIVU - iVuzi Investments Limited - Tap Issue
20/09/201108:49BIIND - iNdwa Investments Limited - Listing of New Financial Instrument
20/09/201108:15 Taste Holdings Limited - Further cautionary announcement
20/09/201108:00 Litha Healthcare Group Limited - Reviewed condensed consolidated interim
20/09/201107:11 Digicore Holdings Limited - Abridged Group Audited Results for the year
20/09/201107:10 British American Tobacco p.l.c - Transaction in own shares
20/09/201107:06 Cashbuild Limited - Audited group annual financial results and dividend
20/09/201107:06GND/GNDP - Grindrod Limited - Grindrod announces a R2 billion capital raising
20/09/201107:05GND/GNDP/REM - Grindrod Limited/Remgro Limited - Joint announcement regarding a

Click here for more SENS news