GLOSSARY

Dividend traps

Stocks are referred to as ‘dividend traps’ when their dividend disappoints expectations (often based on last year’s dividend) and their share price subsequently falls.

Dividend yield

Dividends shown as a percentage of the last sale price of securities.

Downside protection

The use of an option or other hedging instrument in order to limit or reduce losses in the case of a decline in the value of the underlying security. Downside protection often involves the purchase of an option to hedge a long position.

Earnings momentum

When corporate earnings per share (EPS) is increasing from either the prior period or versus market expectations. Earnings momentum typically coincides with increasing revenues and/or expanding margins caused by increased sales, cost improvements or overall market expansion.

Franking credits

A franking credit is a type of tax credit which transfers taxes paid on corporate profits by the company back to the shareholder with the dividend payment. It eliminates the double taxation of dividends and acts as a prepayment of tax for tax-payers whose personal tax-rate is above the company tax-rate and may be refunded […]

Futures

An agreement to buy or sell an asset or cash equivalent at a date in the future at a price agreed today. The contracts are traded on a futures market.

Global shares

Ownership of a company traded internationally on a listed exchange, often providing diversification to local share portfolios.

Gross yield

Dividends plus any franking credits attached, shown as a percentage of the last sale price of securities.

High yield

High-yield is often used to describe a stock that pays out an above average percentage of its share price as dividends each year.

IDPS Investment

Investor Directed Portfolio Services (IDPS) are custodial, transactional and consolidated reporting services, which are often referred to as master funds, master trusts or wrap services.