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Online Share Trading

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Investing 100-00 over a three year period.

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mehroon
Frequent Contributor
If I invest R100-00 in RMH over a three-year period, I will collect total dividends of R23.49 over this period, according to the forcasts stated. If I invest R100-00 in MTN I will collect R4.48 over the same period. So, over a five-year or ten-year period, will MTN give a better return? I don't think so.
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10 REPLIES 10
louisg
Super Contributor
What about capital appreciation? MTN certainly has a better growth outlook than RMH. Baring a serious rerating upwards for RMH and derating for MTN, I would say MTN would show a better total return.ie capital appreciation plus dividend. PS I hold both.
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john_1
Super Contributor
Micky can you tell me what a loaf of bread will cost in ten years time? NO. SO why do you think you can do it with somthing that has such dynamic pricing changes as a stock. I cant tell what Anglo's price will be tomorrow never mind 10 years out. If you can, could you please tell me how you do it.
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louisg
Super Contributor
In the long run price is a function of earnings. John I agree that 10 years is too far out. Perhaps 3-5 years more reasonable in terms of earnings, not price.
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john_1
Super Contributor
Can you tell me the profits tiger brands will make on a loaf of bread in 3 years time?
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mehroon
Frequent Contributor
Thanks for your input John and Louis. I don't know what the price of bread will be. I am only relying on the three-year forecasts that have been provided on this website. MTN 1.17 1.44 1.77 6.59 7.70 9.70 I agree that shares are bought for capital growth, but does not capital growth have a bearing on dividend growth? Suppose invest R100 in RMH and R100 in MTN at these prices, I find it hard to believe that after a five year period I will be getting a better return on the MTN shares. I am not an expert and only placed this opinion for discussion. I agree that MTN is a sound share but i think it is overpriced. It is only my humble opinion. I also hold RMH Louis but not MTN.
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john_1
Super Contributor
1. never trust the info on this site (sorry simon) but it is notoriously out of date. Second can the guy who made that guess please tell me the profit and price of a loaf of bread in 5 years time?
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louisg
Super Contributor
Micky, what happens in the longer term is that the share price should reflect the earnings potential of the company. In the short term it is extremely difficult to know what the market is going to do.Hence timing the market is extremely difficult if not futile.
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louisg
Super Contributor
As long as Tiger can retain their profit margin on the loaf of bread they will be happy.
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mehroon
Frequent Contributor
I still have a gut feeling that buying MTN is like buying bread today at tomorrow's prices. I read that Avusa/Element sold off its entire holding in MTN. I think that the big investors are slowly selling off this share and the public is buying them. Also that the public is selling the property and bank shares while the wise investors are getting in at these low levels.
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Not applicable
A loaf of bread will cost R22.50 in ten years time. From here on out I am charging you all R10 for future advice on where prices are going!!
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