In 2019 the S&P/ASX 200 index was an impressive performer. The benchmark index recorded a return of just over 20% excluding dividends.
A few key drivers of this strong gain are summarised below. Here’s why these are some of my highlights of 2019:
The rise of buy now pay later.
For me, 2019 will go down as the year that buy now pay later became a force to be reckoned with in the payments market. The growing popularity of the payment method led to the likes of Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) delivering explosive customer, merchant, and underlying sales growth in FY 2019. With demand for these services growing, they both look well-positioned to continue this positive form in the new financial year.
Iron ore price jump.
There was a significant rise in the iron ore price in 2019 due to strong demand from Chinese steelmakers and supply disruptions in Australia and Brazil. This led to pureplay iron ore producer Fortescue Metals Group Limited (ASX: FMG) generating bumper profits and free cash flow. This allowed Fortescue to reward its shareholders handsomely with dividends. BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) also benefitted from the rise and delivered strong results of their own.
Healthcare shares smash the market.
The healthcare sector was a great place to invest your money in 2019. Investor favourites Cochlear Limited (ASX: COH), CSL Limited (ASX: CSL), and ResMed Inc. (ASX: RMD) all raced to all-time highs last year after the release of solid full year results. CSL recorded a gain of 49%, ResMed was up 37.5%, and Cochlear climbed 29.5% higher during 2019.
Falling rates send income shares to new highs.
A number of popular income shares raced to new highs in 2019 after the Reserve Bank took the cash rate down to a record low of 0.75%. Aventus Group (ASX: AVN), Stockland Corporation Ltd (ASX: SGP), Sydney Airport Holdings Pty Ltd (ASX: SYD), and Transurban Group (ASX: TCL) were amongst the strongest performers. And with the outlook for interest rates remaining negative in 2020, demand for these shares from income investors looks set to remain strong in 2020.
These 3 stocks could be the next big movers in 2020
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*Returns as of 6/8/2020
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Cochlear Ltd., CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. The Motley Fool Australia has recommended AVENTUS RE UNIT, Cochlear Ltd., and ResMed Inc. 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.