A True Trump Trade to make your portfolio great again

Gold down.

Aussie dollar down.

Shares flat.

Trump still president-elect.

US interest rates set to rise in December.

Australian interest rates set to remain around these low levels for at least another year… likely longer.

Millennials struggling to buy a house.

Seniors struggling to earn an income.

Everyone struggling to get ahead.

Same old, same old, dear reader.

On the bright side, at least we’re getting a new cricket team.

Happy Monday.

Very happy Monday for shareholders in US-quoted construction company Headwaters Inc.

Not only have Headwaters shares risen 25% in the past 3 weeks on the back of the post Trump boost for infrastructure stocks, but now our own Boral Limited  (ASX: BLD) have offered a 20% premium to acquire the company in a $3.5 billion deal.

Boral chief executive Mike Kane — the AFR‘s 2014 business person of the year — is one of the best operators in the business.

He’d want to be too… many an Australian company has come a cropper paying top dollar for an American company.

Time will tell on this one. But if nothing else, it shows Kane’s utmost confidence in the prospects ahead for the US economy, even under a Trump presidency.

Kane’s an American, from the Bronx. He took on, and stared down the CFMEU in Melbourne, despite it costing his Boral millions in legal fees and lost business. Hard as nails, if anyone can pull off the $3.5 billion acquisition of a US construction company, Mike Kane can.

It helps to have some significant tailwinds, in the form of Trump’s “Make America Great Again” pledge. That involves not only repairing much of the USA’s crumbling infrastructure, but building for the future.

Of course, there’s a flipside to Trump’s policies.


But unlike Australia, US politicians don’t bicker over the levels of government debt. I guess, when it’s already running at around $20 trillion, what’s another trillion dollars between friends?

No wonder US infrastructure stocks have been on a tear… and no wonder Mike Kane and his Boral are willing to bid up for a piece of the action.

Does all that sound like a US economy, and indeed a global economy about to fall into recession?

Far from it. The opposite seems more likely… the next big boom, lead by US construction. If China can do it — take on trillions in debt to build a 21st century economy, complete with 21st century infrastructure — America can do so too.

Where the US economy goes, so does its stock market. And where Wall Street goes, the ASX follows.

Bull markets climb a wall of worry. And this is some wall…

Bonds predicted to crash, taking equities with them. Overvalued shares. Inflation ahead. Apartment glut to crash house prices. Brexit. The euro.

Investment legend Sir John Templeton once said…

Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

Given the S&P/ASX 200 Index has been flat for the past three years, you could hardly argue this market is maturing on optimism, let alone dying on euphoria.

Onwards we go… a few steps forward, a couple back, slowly and steadily climbing the wall of worry.

Folks love piling into the market when shares are flying. They’ll happily buy shares just after a major stock market dislocation… like Brexit.

But flat markets? Yawn.

Yet, flat markets are some of my favourite times to buy. They give you time to do your research, to pick your target, without having to worry about the share price getting away from you.

And dividends. The great thing about buying dividend-paying stocks is that you are only ever a few months away from your next dividend cheque.

Last week in this space I highlighted toll road operator and Motley Fool Dividend Investor recommended stock Transurban Group (ASX: TCL), particularly focusing on its forecast dividend yield of close to 5.2%.

So far so good, with the shares up a couple of per cent in the past week or so.

Better though, is that their next dividend payment just got another week closer. Come February shareholders can expect the interim dividend to hit their bank accounts.

February. Not too long to wait for a nice little payday. And if the Transurban shares can keep chugging higher too, the total return will be more than decent. After all, they are still 27% off their 52-week high.

Not bad for a flat market, huh?

One small-cap stock that’s the exact opposite of flat is Monash IVF (ASX: MVF).

In the past few weeks its shares have crashed over 25% after rival IVF company Virtus Health Ltd (ASX: VRT) warned of a sharp slowdown in cycle activity.

At its most recent results, Monash IVF reported outstanding growth, gobbling up market share, and increasing its fully franked dividend by over 22%.

Today, with Monash IVF shares trading around $1.88, they now trade on a forecast fully franked dividend yield of 5%.

No bad for a small-cap growth stock, one that most recently reported revenue growth of 25%, huh?

No wonder Claude Walker, our resident small-cap expert and Motley Fool Hidden Gems Advisor, recently named Monash IVF as one of his Best Buys Now.

If all goes according to Claude’s plans, come April next year, not only will the Monash IVF share price have recovered some, but shareholders will also be banking a juicy, fully franked dividend.

Not bad for a flat market, huh? A good dividend, whatever the market, never goes astray… particularly those of the fully franked variety.

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Of the companies mentioned above, Bruce Jackson has an interest in Transurban.

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