MENU

Here’s how to diversify your portfolio

Don't put all your eggs in one basket...

Most of Australia’s biggest companies have large market share positions like the big four banks, Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW). It is unlikely most of Australia’s top stocks can grow faster than the national population growth, plus inflation. This also means that Australia’s index funds could also be on course for poor performances.

Therefore, I believe that investors need to look at different sized businesses, in different industries and perhaps in different countries.

In light of Labor’s franking credit announcement today, here are three shares to diversify your portfolio and avoid the franking credit refund removal:

Magellan Global Trust (ASX: MGG)

This is a listed investment trust (LIT) that invests in some of the largest companies in the world. The Magellan investment team have a long-term track record of outperforming the global share market’s returns.

Some of its top holdings include Facebook, Alphabet (Google), Apple, Lowe’s, Kraft Heinz, Starbucks and Visa.

The trust has an aim to pay a yield representing 4% of its net asset value each year.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that purely invests in agricultural property and then leases them out to high quality tenants.

All of Rural Fund’s contracts include rental indexation, which means management can confidently predict a 4% increase to the distribution each year.

I really like Rural Funds as a long-term investment idea because farmland has been a useful asset for an extremely long time and should continue to be useful for a long time to come.

Rural Funds is currently trading with a distribution yield of 4.6%.

National Storage REIT (ASX: NSR)

National Storage is the largest self-storage provider in Australia and New Zealand.

Real estate prices per square metre are really high these days in most Australia capital cities, so it makes sense to store items in a cheaper location, which is exactly what National Storage offers.

The business is benefiting from economies of scale, land value growth and population growth.

The bigger it gets the slower the growth may become, but it currently offers a distribution yield of 5.96%.

Foolish takeaway

I believe all three will deliver better returns than the ASX index over the medium-term. At the current prices I believe that the Magellan Trust is the best buy because it’s trading below its net asset value and has some very high-quality holdings.

Another way to diversify your portfolio is with this top-quality growth stock.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of MAGLOBTRST UNITS and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Telstra Limited. The Motley Fool Australia has recommended National Storage REIT. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.