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Last week, I warned investors about this “income-trap” and it just crashed 31%!

by , 09 December 2019
Last week, I warned investors about this “income-trap” and it just crashed 31%!
In November's issue of the South African Investor, I warned readers about two types of “danger” shares lurking on the JSE.

One of these types is called the “High-Yielder”.

Simply these are shares that sit on suspiciously high dividend yields.

You've probably heard me speak about these “income-traps” before, but in the South African Investor, I went further and revealed 10 specific “high-yielders” to avoid at all costs.

And lo and behold, one of them JUST crashed 31% in two days!
 
 
________________________________________
 
Is this the secret to becoming a stock market millionaire? 
 
You don’t get taught it at school.
 
And you’ll hear shockingly little about it in the press, or on the evening news.
 
But right now, a tried and tested wealth building secret is helping make investors a fortune.
 
 
________________________________________
 
If it’s too good to be true…it usually is!
 
The company I warned readers about is JSE-listed Accelerate Property Fund.
 
Accelerate owns numerous shopping malls, office and industrial parks. The biggest development being Fourways shopping centre. 
 
The reason why Accelerate made my top 10 “high-yielders to avoid” was because of its suspiciously high 30% plus dividend yield. 
 
You see, over the past year, the company’s shares have crashed over 60%. 
 
Why?
 
Well, it’s no secret that SA listed property companies have struggled to grow income due to low economic growth, pressure on consumer’s income and rising costs like maintenance, electricity and water. 
 
Accelerate is no different. 
 
The company has even been forced to implement softer rentals and rent-free periods just to make sure its vacancies don’t fall.
 
But doing this, came at a hefty cost, as it has significantly lowered the company’s income growth. For instance, earlier this year, the company announced a 10.8% decrease in distributable earnings.
 
Fast-forward to this week, and the company’s in no better financial position.
 
In Accelerate latest half year results, they said it has experienced considerable income pressure on several fronts, including:
 
  • Higher than expected rental reversions on renewal of leases as well as additional assistance provided to tenants necessitated by the current trading environment
     
  • Additional spending on assets such as Cedar Square, The Buzz and Waterford centres in Fourways to improve asset quality and to attract exciting new tenants
     
  • Increased rates and utility costs
     
  • Higher than expected funding cost for the funding of the Fourways equalisation
Consequently, the company’s revenue fell 6.5% from R603 million to R564 million.
 
Even worse, Accelerate warned shareholders that its interim dividend would crash a whopping 41% from 27.26c to 16.12c per share.
 
And as expected, investors weren’t too happy with its shares crashing 31% over the past two days!
 
So what’s the lesson you can learn?
 
Investing in “high-yield investment traps” could be devastating to your entire investment portfolio!
 
________________________________________
 
The very next SMS you receive could make you R1,914!
 
550 people ALREADY have my number in their address book - and since I started SMSing them, they've made thousands in profit  in the last few weeks alone.
 
Now it's YOUR turn to see how much you could make!
 
Best of all, you don't need ANY previous experience, hard work or special equipment aside from a stick-standard cell phone.
 
Just add me to your contacts today - and you could be collecting your first pay outs by the end of the week
 
________________________________________
 
Rather buy safe, quality companies who generate consistent income that grows every year
 
And I just revealed one such company in December’s issue of Real Wealth.
 
It’s a company that opened for business in 1918. And over the past 100 years, it’s grown into a R33billion insurance powerhouse.
 
But why I like this share is because it’s a cash-flush business. And that means, it pays great income. In fact, it’s paid and grown dividends every single year since 2010!
 
In 2010, the company paid an annual dividend of 510c per share. In 2018, investors would’ve received 1028c per share.  
 
Just consider that a R100,000 investment back in 2010 would’ve netted you over R168,000 in capital growth and R62,000 in dividends! 
 
And in 2019, this share continued its track-record of dividend growth with its interim dividend rising 8%. 
 
So if you’re looking for income, this is the type of share you should be buying instead of the “high-yield investment traps”.
 
See you next week.
Joshua Benton,
The South African Investor
 


Last week, I warned investors about this “income-trap” and it just crashed 31%!
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