Top 10 stocks Australians are buying

Photo of Al Bentley By Al Bentley

min read

Amid all the tips, here’s what’s actually trending in portfolios.

There is no shortage of investing ideas out there. Every day people are bombarded with them when they read a newspaper, check their inbox or turn on the TV. A well-meaning friend will no doubt spruik something to you at the weekend barbecue.

Amid this plethora of information you might ask a simple question: what do people actually invest in?

I can answer that question better than most because more than 45,000 people use the Simply Wall St platform and many have loaded in their portfolio details. With this data we can cut through the noise and look to see what is currently trending.

(Editor's note: Do not read the following ideas as stock recommendations. Do further research of your own or talk to a financial adviser before acting on themes in this article).

The top 10 stocks our Australian users have invested in over the past three months are:

Bentley image of logos of top stocks

Let’s look at the companies broken down by industry and group them into some themes.

Companies by diversification

Bentley Image of portfolio diversification flow

Source: Simply Wall St

The usual suspects
No prizes for guessing that Telstra, Woolworths, BHP Billiton and the banks are all still proving to be popular. All have had negative returns over the past year, but our users obviously think they are a good long-term bet and are snapping them up at reduced prices.

Safety and food
One word: China. This topic has been fairly extensively covered but because of food safety issues in mainland China, there has been runaway demand for Australian food products, especially in relation to baby nutrition – very applicable to Bellamy’s and a2 Milk. And while it didn’t make it into the top 10, Blackmore’s (known for its vitamin supplements) was also a favourite.

While only a fool would be surprised if minerals did not feature heavily in an Australian’s portfolio, what was a little more surprising was the amount of attention the small-caps Northern Star and Metal X received. The attention on these gold stocks could be linked to the upward trend of the gold price over the past six months.

Applying a fundamental filter
To gain some further insight into the list we applied fundamental value analysis checks across popular stocks in the Simply Wall St platform. As could be expected, a lot of these ratios average out in a portfolio of 10 stocks that by coincidence seems to be fairly well balanced. However, two points of interest emerged:

  1. Surprisingly low levels of debt, with an average of just under 30 per cent. Perhaps investors are applying a level of caution in their selections with companies finding it harder to refinance in this environment.
  2. Dividends.

If there is one thing Australians are more obsessed with than banks and mining stocks, it is those that pay dividends. Nine out of 10 companies on the list pay dividends, with only a2 not featuring (Bellamy’s recently joined the dividend club with its inaugural payment in 2015).
The top five dividend payers in the list (ANZ, CBA, Woolworths, Telstra and Flight Centre) all pay above 5 per cent or close to it), with ANZ on top with a yield in excess of 7.5 per cent.
On the flip side of these high yields is the ability to actually continue to pay them. Woolworths has already cut its dividend this year and it will not be the last company to do so.

Stocks that missed the top 10
It is interesting to see what people searched for on our platform but which did not make it into the top 10 investments; basically, our users filtering out the noise. The top three companies searched for that were not in the top 10 investments were:

  • Westpac: The third most-searched stock. To be honest, we have no words of wisdom on this one. From a fundamental perspective it actually scores higher than many of its competitors, but for whatever reason has not had as much support from our users.
  • Wesfarmers: In the news for all the wrong reasons. Rebate scandals at Target that claimed the scalp of that division’s MD; terrible timing for its investment in the British hardware market, with the Brexit vote just after the acquisition of Homebase; and to top it all off, an announcement to the market of a writedown. Users may have been attracted to look into the company because of a nearly 5 per cent dividend yield, but after reviewing the payout figures might be worried about it continuing.
  • Vocus Communications: A small mid-cap company that recently announced it was raising $650 million to buy NextGen, a behind-the-scenes provider of data centres and communication cables. Analysts are expecting big things with Vocus, but the interest from our users has not translated quite enough to make it into the top 10, although it made an admiral attempt.

The takeaway
Overall, it appears retail investors are currently looking to take advantage of reduced prices in a number of blue-chips, while also investing in companies based on trending issues in the world.
An insight into what other people are investing in can be a valuable thing, but always conduct your due diligence and invest based on your own circumstances and goals.

About the author

Al Bentley is CEO and founder of Simply Wall St. Its mission is to help people become better investors by turning complicated financial data into easy-to-understand infographics. The platform has more than 45,000 users and covers US, UK and Australian markets. Simply Wall St is based in Sydney.

The above graphics use data supplied by S&P Global Market Intelligence. Figures quoted are from the week beginning July 18, 2016. The portfolio of stocks discussed in this article is available here.

Follow on Twitter: @simplywallst

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