As one of the major brick manufacturers in Australia, Brickworks' (ASX: BKW) revenues are significantly determined by the state of the housing market. Given the housing market's current depressed state the company has done well, reporting solid numbers, with revenues up 15% and normalised net profit after tax up 13% to $56 million. The results were helped along by property sales from the Land and Development division which contributed $37 million to earnings before interest and tax.

Currently Brickworks' earnings are "shielded" from the depressed housing market thanks to a 40 years cross-shareholding in conglomerate Washington H. Soul Pattinson & Co (ASX: SOL). This arrangement means Brickworks is not a pure-play building products company but rather an investment conglomerate with a controlling interest in brick manufacture and land development and minority interests in a diverse range of businesses including coal mining, retailing and telecom. As management points out the cross-shareholding smooth's earnings from the cyclical housing business which it is exposed to.

Whilst management considers the cross-shareholding arrangement to be an advantage for the company, some investors disagree, believing it is not in the best interests of shareholders. This has led to a proposal from investor Mark Carnegie supported by fund manager Perpetual (ASX: PPT) for Washington to distribute its shareholdings in investee companies. Meanwhile broker Hunter Green would prefer to see the cross- shareholding unlocked all together. Both parties proposals are attempts to realise value which they believe is currently locked up and not reflected in the share price.

While management is partially distracted with these proposals, they would also along with fellow brick manufacturers CSR Limited (ASX: CSR) and Boral Limited (ASX: BLD) and building supply companies James Hardie (ASX: JHX), Fletcher Building (ASX: FBU) and Adelaide Brighton Cement (ASX: ABC) be focused on the latest housing starts numbers. Pleasingly NSW, WA and New Zealand all showed growth over the previous period, however the rest of the nation contracted; coupled with the reduction in Housing Finance and the tunnel still looks pretty dark.

Foolish takeaway

The best time to buy cyclical companies is at the bottom of the cycle. Astute investors can often be found investing in quality businesses near a cycle's bottom.

Looking to build a portfolio of high yielding ASX shares? Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Tim McArthur owns shares in CSR and Perpetual.

The post Brickworks' profits on solid foundation appeared first on The Motley Fool Australia.

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You can get lucky and pick a huge winner, or you can use this time-tested investing strategy.

There are some people who have made good money finding shares like CSL Limited (ASX: CSL) or Oil Search Limited (ASX: OSH) when they were tiny companies, then staying with them until their market cap is well over $9 billion.

But finding such future stock market stars isn't easy. The odds are very much against you, as most small caps never make it to the big league.

We'd like to share with you a simple, easy strategy for becoming wealthy — and then give you share ideas based on it. Although it's simple, it takes discipline to adhere to the rules. But if you follow this advice, you'll be well on your way to a million-dollar portfolio.

Keep it simple

One of the biggest mistakes investors make is complicating the process. Academics have proven that more information doesn't necessarily lead to better decisions — but it does lead to overconfidence. Even worse, the more time and effort you put into researching, analysing, and deciding whether to buy a share, the more likely you are to buy it — even if it's a horrible company after all.

Overconfidence and over-commitment are counterproductive in investing — and it's why keeping your investment criteria simple and easy can help you avoid falling into these traps.

What sort of criteria are we suggesting? Just two steps:

1. Find strong, long-term dividend-paying companies

Dividends are the surest gains you can find in any market environment. No matter what the capital gain or loss is for the market, when you factor in dividends, the returns can look quite different.

It's best to look for companies with a long history of paying out dividends, and a long history of not cutting dividends.

You should find companies with predictable, sufficient free cash flow, so you can be reasonably sure these dividends will continue to be paid.

And now for the hard part…

2. Hold forever

The strongest of dividend-paying companies raise their dividend over time. So when you hold one for long enough, you eventually reach a point where you are making more money annually in dividends than you initially invested in the company.

This is hastened when you reinvest your dividends back into the company, with each dividend purchasing even more shares of the company, meaning even more payout at the next interim or final dividend.

So long as the business continues to perform, and the company continues to maintain or raise its payouts, the simplest and most lucrative approach is to remain an owner and collect your dividends.

Implementing this strategy

The ASX 200 has many steady dividend-paying companies. For example…

Woolworths Limited (ASX: WOW), Coca-Cola Amatil Ltd (ASX: CCL), Washington H. Soul Pattinson (ASX: SOL) – which hasn't missed a dividend since 1902, and ARB Corporation (ASX: ARP).

We've seen more than a fair share of dividend blowups over the past year, but if you look for a company with enduring demand, and sufficient free cash flow — you are following the easiest way to become a millionaire.

Looking to add a little growth to your portfolio? We've just released our "Top 2 Biotechs to Buy Now." These two companies — each with potential blockbuster drugs in the pipeline — could create untold wealth for early investors. Will you be one of them? Click here for this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in CSL & Woolworths. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article originally appeared on Fool.com. It has been updated by Mike King.

The post The easiest way to become a millionaire appeared first on The Motley Fool Australia.

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With the summer of cricket starting today, what better time to imagine what an ASX test team would look like.

The selectors at Motley Fool HQ  put our heads together to come up with a team of Australia's best companies. Bear in mind, these aren't buy recommendations – we've focused on business quality.

Some of our picks may be controversial, so if you'd like to have your say, feel free to comment on our Facebook page. We'll publish some of your suggestions in Take Stock, our free newsletter. You can click here to subscribe.

So here goes.

The top order

Firstly, we need some good solid, dependable openers -companies with solid competitive advantages, that are hard to shift out of their market leading positions. We've gone for Coca-Cola Amatil Limited (ASX: CCL) and Telstra Limited (ASX: TLS). Strong brands and recurring revenues make our openers a natural choice to see off the new ball.

At three, we've gone for arguably the best company in Australia, as captain and our best batsman. CSL Limited (ASX: CSL) is not just an Australian market leader, but a global market leader, that keeps going from strength to strength. Who can argue with a consistent run rate on equity of 28%, and an average earnings per share growth of 22% over the last 10 years?

Coming in at number four, we have hearing device maker, Cochlear Limited (ASX: COH). A potential future captain of the team, and current vice-captain. Another market leader in its field, it delivers through consistent practice and spend on research & development in the nets, keeping it ahead of its competitors.

All-rounders and the keeper

Holding down the fifth and sixth positions in the batting order, we wanted two companies that could bat through an innings and still be performing for years to come. Fool selectors have plumped for Woolworths Limited (ASX: WOW) and Wesfarmers Limited (ASX: WES). With the full range of shots and divisions, both are dependable and versatile. Picked for the supermarket prowess, both have the ability to backup the spearhead bowlers with some part time bowling of hardware stores, petrol stations, and bottle shops, which comes in handy.

At number seven, we have the 'keeper. Washington H. Soul Pattinson (ASX: SOL), Australia's second oldest company has paid a dividend every year since listing on the ASX in 1920. Not a bad batsman either, Soul Patts has delivered an average 11.5% per year to shareholders over the past 15 years. No debt, plenty of cash and a huge range of diversified investments make this company one to keep.

Bowling lineup

Number 8 in the Australian team has traditionally been a mercurial spinner and a half-decent batsman. Fool selectors have picked Crown Limited (ASX: CWN), best known for its casinos and majority shareholder James Packer. Wicket taking ability is a must have and Crown has it in spades (sorry!). This was most recently shown by Crown's ability to befuddle Echo Entertainment in its quest for a Sydney casino. Echo is left with no alternative but to limp back to the change room, head slumped low, and bat dragging along the ground.

Australia's fast bowling stocks are well and truly overflowing. We selected Flight Centre Limited (ASX: FLT) here as opening bowler, for its astonishing speed of growth and dominance in its market. Once written off as past its age, the company has shown that as it matures it seems to get better and better.

Although not as fast as Flight Centre, BHP Billiton (ASX: BHP) has been selected at number 10, for its ability to operate in many different countries on many different pitches, and be very good at it. Honing its skills to focus on five major deliveries, iron ore, coal, oil & gas, copper and potash should see BHP able to dig out most opposition. Unfortunately, its batting has been called into question on occasion, and BHP has been demoted down the order from 8.

The line and length bowler, at number 11, is a company that needs to be consistent year in year out. Fool selectors have opted for Westfield Group (ASX: WDC) for its consistency, even during the GFC, when other property companies were dropping like flies. The name Westfield has become synonymous with shopping malls, and the aging company shows no signs of slowing down, sticking to its tried and true methods.

What's a team without a backup and twelfth man? In a hotly disputed contest, Fool selectors have gone for a big game player, out of form and looking to resurrect its career. Dropped from the starting side, but still on selectors minds is Macquarie Group (ASX: MQG). Its recent deal with Yellow Brick Road (ASX: YBR) may signal a switch of direction for the group, but whether this will return the company to its average return on equity of over 20% remains to be seen.

The Foolish bottom line

So there you have it, Motley Fool's Test XI. If you have any suggestions or comments, feel free to comment on our Facebook page, and let us know what you think. Oh and good luck to the Aussie team against South Africa!

If you only invest in one company this year, make it our "Top Stock for 2012-13". Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King owns shares in Cochlear, CSL, Woolworths, Flight Centre and BHP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Motley Fool's Test XI appeared first on The Motley Fool Australia.

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Whitehaven's shares are trading at $3.55, a massive discount to the offer price, and almost falling back to 52 week lows. Investors appear to be indicating that the takeover will not go ahead, and newspaper reports suggest they may be right.

Just yesterday, Blackwood Corp Ltd (ASX: BWD) advised that Mr Tinkler's private investment company, Mulsanne Resources, had been given an extension to find $28.4m for a stake in the company. Back in May, Mr Tinkler agreed to be become a majority shareholder in Blackwood with 33.85% of the company. It appears that he may be having trouble coming up with the funds, so investors, probably quite rightly, are questioning whether he's going to be able to raise $5.3 billion to take over Whitehaven.

According to the Sydney Morning Herald, a representative for Mr Tinkler denied any connection between the Blackwood and Whitehaven deals. The spokesperson went on to say that there had been a delay finishing the Blackwood deal documentation, which could take another few weeks.

Compounding his problems are the fact that coal prices have fallen to a two year low, and have fallen 20% since April 2012. With a 21% holding in Whitehaven, much of Mr Tinkler's wealth is tied up in the company, and with the falling share price, it may be difficult for him to raise the funds necessary to complete the takeover.

The Whitehaven takeover is the latest in a series of coal mergers and acquisitions with many coal miners leaving the ASX, with just a handful of independent miners left. (New Hope Corporation (ASX: NHC), which is currently the largest miner by market cap, is majority owned by Washington H Soul Pattinson (ASX: SOL), with a 60% shareholding.)

Apart from Whitehaven, most of the other listed coal companies on the ASX are explorers, rather than producers of coal.

Foolish takeaway

Nathan Tinkler may walk away from the Whitehaven deal, or even come back with a lower offer, given the rapid fall in coal prices. That's if he can find funding of course, which he may be struggling with.

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Tinkler's bid for Whitehaven on the rocks? appeared first on The Motley Fool Australia.

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Sigma Pharmaceutical Limited (ASX: SIP) doesn't seem to be able to take a trick.

The company today announced that workers at its Rowville site who are members of the National Union of Workers intend to continue industrial action. Sigma has made an application to Fair Work Australia to bring the matter to a head, according to an announcement from this company this morning.

Sigma has had a tough few years, with challenges seemingly coming from all angles.

The consumer business it bought from Bristol Myers Squibb in 2009 was a constant underperformer, and the company's Herron brand, though steeped in heritage, was unable to remain relevant for consumers in either the complementary health or pharmaceutical arenas.

A reassessment of these brands led the company to announce a $390m loss for its 2010 financial year, including a $424m goodwill impairment. That loss led the business to breach certain banking covenants and ended up costing its then-CEO his job.

The consumer business was sold to Aspen Pharmacare early in 2011; the sale allowing Sigma to retire debt of over $650 million, putting it on much surer footing.

Barely recovering, Sigma and wholesale competitor Australian Pharmaceutical Industries Ltd (ASX: API) (the latter part-owned by Washington H. Soul Pattinson and Co. Ltd (ASX:SOL)) were then confronted by major supplier Pfizer pulling its products out of the wholesale channel, preferring instead to distribute directly to pharmacies itself. Among other products, Pfizer produces and distributes the cholesterol blockbuster drug Lipitor.

Being wholesalers – and with significant logistics footprints to support next-day delivery to every pharmacy in Australia – Sigma and API exist on a high-volume, low-margin business model. The removal of Pfizer's volume from the supply chain meant further pressure for both wholesalers.

Completing the full-court press, the federal government is reducing payments under the Pharmaceutical Benefits Scheme, putting pressure on pharmacies and wholesalers alike.

In that context, a strike at Rowville isn't the biggest problem Sigma has faced recently, but it's certainly yet another unwelcome disruption to a simple business with immensely difficult headwinds to face.

If you are looking for ASX investing ideas, look no further than "The Motley Fool's Top Stock for 2012." In this free report, Investment Analyst Dean Morel names his top pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

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Scott Phillips is a Motley Fool investment analyst. Scott owns shares in Washington H. Soul Pattinson. You can follow him on Twitter @TMFGilla. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

The post More challenges for Sigma appeared first on The Motley Fool Australia.

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