The S&P/ASX 200 (ASX: XJO) gained 0.5% for the week while US stock markets finished mostly higher.
Here are my three key investor takeaways from the week.
What to do with those dividends?
As highlighted earlier in the week, after a year of massive dividend cuts, management have once again rained cash on income starved shareholders.
On the one hand, this is a positive for those relying on this income for their lifestyle. On the other, it suggests these companies have little confidence in their ability to reinvest this capital.
Either way, it leaves investors with a difficult decision: Reinvest? Diversify? Or cash out?
With ASX reporting season just finished in both the US and Australia, the market will now focus on economic data for direction, in which case volatility is likely to increase. For this reason, I’d be holding onto some cash for the time being.
Changing of the guard
The week saw another rebalancing of the ASX indices, the highlights being the inclusion of ResMed (ASX: RMD) into the ASX 50, and the removal of two old-fashioned commodity businesses in Ampol Ltd (ASX: AMP) and AGL Energy Limited (ASX: AGL).
Pinnacle Investment Management Group Ltd (ASX: PNI) finally re-joined the ASX 200 after an incredible year, joined by EFTPOS terminal provider Tyro Payments Ltd (ASX: TYR), which replaced embattled tech company Nuix Ltd (ASX: NXL) and G8 Education Ltd (ASX: GEM).
GDP surprises
Australia’s GDP result was another surprise, gaining more than double the level predicted by economists courtesy of significant government support.
Despite the positivity, it is clear that conditions are becoming more difficult for businesses, meaning investors must choose wisely with their capital.