If you’re anything like me, this time of year is when you start having a good look at your portfolio and considering what changes, if any, you should make for 2016.
Generally speaking, it’s better for your portfolio if you err on the side of caution and make no changes but, with that said, remember it’s never too late to toss the junk and replace it with great companies that will build your wealth over the long term.
I’ve been taking a hard look at my portfolio – as I do every year – and here are the three stocks I most want to add to my holdings in 2016:
SEEK Limited (ASX: SEK)
Seek is an online jobs portal with investments in Brazil, China, Mexico, and Australia. While the Australian business’s performance looks to be slowing, Seek still retains significant growth potential in its overseas markets, each of which could become significantly more lucrative than Australia with its tiny population.
2016’s results may confuse some investors as a result of the divestment of subsidiary IDP Education, although the sale will provide a healthy windfall for Seek that will help pare back debt and maintain investment in overseas opportunities. With a low-cost structure and a self-reinforcing network effect, it’s hard to look past Seek for wealth creation.
On the downside, its potential is well known and the company is not cheap, meaning investors will be best served by building a position over time.
Retail Food Group Limited (ASX: RFG)
Retail Food Group is the master franchisor responsible for the licenses of many of the most well-known brands in Australia; Brumby’s, Donut King, Michel’s Patisserie, Crust Pizza, and more. After some major acquisitions in 2015 – like Gloria Jean’s – Retail Food Group now controls around a third of Australia’s coffee roasting market, and has a stream of international earnings that it is hoping to grow rapidly over the next few years.
A joint venture in China combined with significant cost savings to be achieved as new businesses are integrated means that Retail Food Group ticks all the boxes, and a 5.3%, fully franked dividend is the icing on the cake.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
Consider making 2016 the year you take your first baby steps towards investing overseas. This particular Exchange Traded Fund (ETF) aims to match the performance of the MSCI World ex-Australia index, with dividends automatically reinvested for you.
With a fee of just 0.18% per annum it’s a fantastic way to gain international exposure. Don’t be fooled by returns of 20% p.a. advertised on the website – this is since the ETF commenced trading on the ASX in 2014. Long-term, the MSCI World ex-Australia index has returned around 7% per annum over the past 15 years.
Top ten holdings are Apple, Microsoft, Exxon Mobil, General Electric, Johnson & Johnson, Wells Fargo, Amazon.com, JP Morgan Chase, Nestle, and Alphabet C, and make up 10% of the total index. 60% of the fund’s holdings are centred on the US, although all of its holdings have significant international earnings, meaning this would be a solid long-term position to add to over time.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Sean O'Neill owns shares of Retail Food Group Limited. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Retail Food Group 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 Bruce Jackson.
- Results: Is G8 Education Ltd a buy for its 4% dividend? – August 27, 2018 12:22pm
- Results: Why the Adacel Technologies Limited (ASX:ADA) share price is down 7% – August 26, 2018 9:54pm
- Results: Why the Nearmap Ltd (ASX:NEA) share price is up 4% today – August 22, 2018 5:15pm