Should you cash out of this S&P/ASX 200 Index (ASX: XJO) rally?

The ASX 200 has had a pretty top few weeks. Since the lows we saw in late March, the ASX 200 has rallied almost 20%. That’s more than double the index’s long-term average annual return – albeit following a 37% crash earlier in the year.

Still, the confidence of many ASX investors would be well up from the widespread panic we saw in March. Some shares like the ASX banks have stabilised. Others like CSL Limited (ASX: CSL) are edging ever closer to their pre-crash highs.

But this begs the question – is now a good time to ‘cash out’ and lock in some gains? Particularly since the markets don’t seem to be factoring in that we’re about to go through the worst recession Australia has seen in decades.

Time to cash out?

It might be tempting to cash out of some or all of your holdings if you’re nervous about the markets right now. After all, cash is king in a market crash.

But here’s the problem.

Do you actually know what the markets will look like tomorrow, in two months, six months or a year’s time? Of course not, otherwise you wouldn’t be reading this article! Even the best investors in the world, like Warren Buffett, don’t try to pretend they know exactly what the markets will do next.

Plus, odds are (like most ASX investors), your portfolio still has some losses left over from the March crash. To paraphrase a great song, you can cash out any time you’d like, but you can never leave… your losses once you do so.

Yes, the ASX might crash the day after you cash out and you’ll look and feel like a genius.

But maybe it won’t. Maybe it will go on to hit new highs – stranger things have happened. As the legendary economist John Maynard Keynes once said, “Markets can remain irrational longer than you can remain solvent”. And if that happens, you probably won’t feel so smart.

And even if you do pull off a well-timed cash out, when are you going to jump back in? That’s two incredible punts you’re going to have to pull off.

Throw in the costs of jumping in and out of the markets (taxes, brokerage, fees etc.) and it’s a very narrow tightrope you’re trying to walk.

Foolish takeaway

Like most of us Fools, I think having a long-term mindset is the best way to invest in shares. Thus, I think trying to time the market by cashing out ‘before the crash’ is folly. Investing in shares means you’re in it for the good times and the bad – it’s all part of the game. Trying to dodge the inevitable will usually result in poor returns over the long run!

More reading

• This ASX 200 share is rocketing higher after delivering more strong sales growth
• If you invested $10,000 in the Afterpay IPO, this is how much you’d have now
• David Tepper believes we’re in the biggest stock bubble since 1999
• 5 things to watch on the ASX 200 on Thursday
• The latest ASX shares upgraded by brokers to “buy”

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One of my favourite dividend shares has just announced it is forecasting growing dividends to March 2022.

That business is Duxton Water Ltd (ASX: D2O). It’s a unique company that’s building a portfolio of water entitlements across the southern Murray Darling Basin. It then leases that water to farmers, through long-term leases and both spot and forward contract allocation sales.

The Duxton Water share price is up over 1% in response to the news this morning.

Today, it announced the execution of a new water lease arrangement starting 1 July 2020. This will take the leased portion of the permanent water portfolio to 66%, generating $9.5 million of annualised leasing revenue from 1 July 2020.

Duxton Water has a weighted average lease expiry (WALE) of 2.9 years with 5.2 years inclusive of renewal options. This WALE provides a lot of medium-term certainty for the dividend share.

Duxton Water’s dividend share credentials

The Board of the company doesn’t foresee any significant impacts from the coronavirus. Firstly, the company has reaffirmed the intention to pay a 2.9 per share fully franked dividend in September. Then a fully franked 3 cent dividend in March 2021.

Today, thanks to the forward visibility of lease revenue, Duxton Water announced a dividend target of 3.1 cents to be paid in September 2021 and a further target of 3.2 cents to be paid in March 2022. That’s two years of dividends pencilled in. Great news for people looking for a reliable dividend share.

At the current Duxton Water share price the next 12 months of dividends amounts to a grossed-up dividend yield of 6.4%. The dividends in the subsequent 12 months amounts to a grossed-up dividend yield of 6.75%.

Is the Duxton Water share price a buy?

Duxton Water has increased its dividend every six months since November 2017. I think it could be one of the best dividend shares on the ASX over the next two years. Many others are cutting their dividends. It’s currently trading at a discount of around 20% to its pre-tax NTA and a 28% discount to the post-tax NTA. I’d be happy to buy a few shares today. 

More reading

• Is it time to buy ASX small caps for your portfolio?
• Replace your term deposit with these 3 ASX dividend shares
• Bank dividends deferred. Where should retirees get dividends?
• Forget ANZ! Buy these top ASX dividend shares instead for income
• 4 top ASX dividend shares for income investors in May

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO. The Motley Fool Australia has recommended DUXTON FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 1 of my favourite dividend shares just forecast growing dividends to March 2022 appeared first on Motley Fool Australia.

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The COVID-19 pandemic may have forced many retailers to close their doors forever. Despite the doom and gloom, I believe it is still possible for investors to find long-term value in the Australian retail sector.

Here’s why Premier Investments Limited (ASX: PMV) could be the best retail share listed on the ASX.  

How has Premier Investments performed?

As the owner of prominent retail brands such as Smiggle, Peter Alexander and Just Jeans, Premier Investments has suffered the same fate as most retailers in Australia. The company recently released an update informing the market that sales had plunged 74% for the 6 weeks to 6 May 2020, with overseas sales tanking 99% in the same period.

In response to the pandemic, the Premier Investments share price had dropped more than 56% year-to-date by late March. Despite the sharp fall, the company’s share price has recovered more than 87% from its low in March and is poised to continue as the Australian economy looks to restart.  

Billionaire owner taking fight to landlords

Billionaire Solomon Lew is the chairman of Premier Investments and has built his fortune working in the retail business over the past 50 years. Drawing on his wealth of experience, Mr. Lew has made it clear to commercial landlords that stores under Premier Investments will only pay rent in arrears based on a proportion of gross sales when they reopen.

In an article in The Australian, Mr. Lew stated that Premier Investments intends to do everything possible in order to get people back to work. The company was forced to stand down 9,000 employees last month as governments imposed restrictions to curb the pandemic.

What is the outlook for Premier Investments?

Despite the fall in sales, Premier Investments saw online sales surge more than 99% for the 6 weeks to 6 May 2020. The increase in e-commerce reflects the change the pandemic has had on consumer behaviour. Although Premier Investments’ stores are largely brick and mortar stores, 70% of the company’s leases in Australia and New Zealand expire in the near future.

As a result, Premier Investments has the luxury of adjusting its online and physical store mix. The company has also reassured shareholders of its strong balance sheet that has Premier Investments well placed to begin a recovery.

Foolish takeaway

In my opinion, Premier Investments is possibly the best retail share listed on the ASX. The company boasts a strong portfolio of competitive global brands and has the cash to capitalise on future opportunities.

In addition to its size, the company also boasts the flexibility to adapt to changing consumer behaviour and e-commerce facilities. Premier Investments also has an experienced board that gives the company the luxury of experience that not many ASX retail shares have.

As the Australian economy restarts, it is far from going back to business as usual. Now may not be the time to invest in retail, however, I believe it would be prudent to keep Premier Investments on your watchlist for the future.

More reading

• Top brokers name 3 ASX 200 shares to buy right now
• ASX retail rental war gathers pace
• ASX 200 drops over 1% at the market close
• Why CSR, Kogan, Premier Investments, & ResMed shares are storming higher
• Premier Investments share price higher after announcing store reopenings and online sales surge

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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