Hi, everyone, so this is the Morningstar tutorial. Now, I’m going to assume you’ve signed up the four-week trial so that we’re both able to access the same type of information in the same screens. There is so much amazing information available on this website and I could probably spend hours just going through this website showing you lots of cool different things but to keep it nice easy and simple and so you can understand it and get the most out of this I’m just going to show you the parts that I love the most and the parts that I use for me building up a thousand dollar project and this SugarMamma portfolio. So, let’s get started. Starting with the home page, now there’s a lot of interesting information and some really enjoyable quick reads for you here. Stories on diversification, the psychology of money, what’s been going on the markets both in Australia overseas.
Again, really to understand really easy to read, quick, informative and actually really interesting. So, when you log in to the home page definitely check out this page first. So, when it comes to investing for the thousand dollar project and thinking about what’s the next stock I want to add to the portfolio to keep it will probably diversified and growing. Sometimes I might have heard something on the news or read something in the newspaper about a certain company and that are doing interesting things And I’ll just go straight into this section here and type in the either the company or the code. Now, I’m going to use Woolworths as an example, and I’m not recommending necessarily you buy woolworths stock I don’t know if it’s the right stock for you, but I’m just to see what the research Morningstar have on Woolworths and the code the asx code code I should say is what for woolworths is wo w so I’ll just type in wo w and then as it comes up and I’ll Click go Now, this will bring up brings up some information about Woolworths, what the stock is currently trading at and I can go to current research view This will give me a summary of what they think about this stock and as you can see we have accumulate which essentially means, they’re happy for you to recommend purchasing this stock.
It also has some boundaries as to what they consider buying it and what they consider to be expensive. If I scroll down the page I can also see the analyst Gareth James and his opinion of us as a stock to buy. We also have some important summaries on the stock and these are really important but before we start going to this I want to learn more what does as a business and what is products and services entail. So, I will go to business summary to read about Woolworths as a company. Now, this gives me a really good background as to who Woolworths are and what they do and what their businesses are all about because always actually has a variety of different businesses beyond the supermarket.
Let’s go back and look into those key financials for more detail the first thing. I like to look at are franking credits now Franking credits are quite a technical , and I’m going to do a separate video explaining it in more detail but in summary thank franking credits actually are tax credits that you can use to help reduce or offset some of your passive income tax now Personally and ideally I like to see franking credits Which are that means they come with the most amount of franking credits or tax credits possible? So if I look at woolworth’s and I scroll down to this table here, and you can even read it out What franking credits actually mean by clicking on the question mark I can see that woolworths pays 100% Fully franked dividends which for me right now in my financial goals and for the thousand dollar project objective is perfect Next section I like to look at is dividend Yields now I can see that estimated dividend yield is around about percent which means if I’m going to be buying a thousand dollars with a woolworths stock I can expect to receive about Dollars a year in dividends now Understanding the estimated dividend is actually quite important because as you know for the the objective of this thousand dollar project is to build a passive income of up to two thousand dollars a year by july 2016 so if I was to buy a thousand dollars worth of woolworths stock and the estimated dividend yield is three point nine percent? That thirty nine dollars year an estimated Passive income is just under two percent of what I need so I’m going to be needing buy a lot of different shares and a lot of different passive income streams to slowly build my way but at least $39 is two percent or almost two of my way towards my long-term goal of two thousand dollars a year in passive income The next important number that I like to look at is the p/e ratio now P stands for price earnings Ratio which means? How long how many years will take for me to get back my initial investment through receiving dividends and profits so for example? Say I buy a stock and the estimated earnings are a dollar fifteen That means that will take me just over years and four months to receive back my initial investment of Thirty dollars through receiving dividends each year of a dollar fifteen now in Australia the average p/e ratio is around about fifteen, so Ideally but not always like to buy stock which has a p/e ratio of less than fifteen but if we have a look at this website through Morningstar We can actually see that the p/e ratio at the moment is seventeen point eight so potentially that this might not be Necessarily the best time to be looking at buying this stock However, you cannot look at these numbers in isolation Just because the stock has high or a low p/e ratio does not mean It’s the right or wrong stock to buy because you need to make sure you’re considering the long term Growth Characteristics and benefits and possibilities of that stock and the p/e ratio doesn’t necessarily account for that the second last number They’d like to look at is the earnings per Share now as a shareholder.
You’re essentially a business owner you own some bit a little bit of the company, but you are considered a business owner of that organization, so earnings per Share Talks about how much of the profits the company giving back the shareholders how much they’re putting back into the business is really important that a company Doesn’t distribute all of its profits back to the shareholders nice as that you want to make sure the company you’ve actually got Money invested with is going to continue to grow They’re going to continue to employ staff they’re going to continue to Expand their products and services And they’re going to continue on growing and into other countries and taking their to the next level and their share price increasing So looking at the earnings per share is also equally important, and then finally I like to look at how much debt the company I’m looking at investing in carries, so then I will go across to Balance sheet and Here I can see the debt levels for woolworths as a company It’s really important that if a company has a large amount of debt on their books That they’re actually able to service that debt and actually have the capability of paying it down if they need to You want to make sure that they’re growing but at a healthy level and it’s not Artificially off the back of you know other people’s money they want to be making their own profits Internally and be able to fund their own plot their own projects and growth without always having to rely on borrowings so that’s how research stocks on companies I’ve heard about or read something about sometimes I can be a bit dumbfounded as to which stocks I really want to buy especially when I’ve already got quite a few stocks in the portfolio I’m looking for something new to diversify the Portfolio to keep it growing so in this case when I have no idea What stock I want to be is that what want is the next stock to add to the Portfolio? I follow this process Morningstar have a very unique and special equity style box.
Which really helps me narrow down appropriate stocks that I’m looking for So I would go to stocks and then scroll down Go to stock screener So here I can adjust the filters and really fine-tune and narrow down exactly which stock is the right stock for me So I will select analyst recommendation. I want to buy get use a stock that’s recommended so I’m going to Select Buy I’m not really worried about sectors or industry names When the select the equity style box now. I want a stock that is mid to large Company and is Has Growth characteristics? the rating I Want it to be fair value? Now as you can see the list of recommended stocks has already started to reduce and I can see a list of stocks that look interesting and worth potentially buying Now if I wanted to I could fine tune this list already By playing with these other filters but at this stage I’m quite happy with that list and there’s some really interesting stocks in there Which I have heard of before which I’d like to consider reading and a look at adding it to the sugar Mama Portfolio Now one stock here.
I have actually been interested for a while. It’s Macquarie group If I click on the stock I can now research all I can read everything I need to know about this stock Again, I can click current research view and it will bring me back that page very similar to the woolworths one where it summarizes What they think of that stock? Again, they’ve got the ranges of think a good value down here They have an accumulator which means they recommend purchasing that stock if you like it and again I can read the analysts note which I can also download if I need to and all the reports and valuations as well as all the summaries along through here and of course those key financial numbers which I like to look at which help me really sort of Understand what a stock is all about and then the expected returns I should be looking at now not only does mine style have this unique equity style box but they also have this software built into program called X-Ray and That enables me to upload the my portfolio And for Morningstar to be able to have a look at it and break down the actual diversification of the Portfolio This is really important because I can see how the struggle and my portfolio is diversified Across different industries and what areas I should really be looking which again helps me work out which stocks I need to be adding to the Portfolio So let’s have a look I’ve already pre-loaded the sugar Mama investment Portfolio so we can see it here now If I click portfolio is going to look at it in a different format instead of just summarizing in a table list like this So as mentioned I’ve actually pre-loaded the sugar Mama Portfolio into this software if I scroll down I can see the breakdown of where the money is actually invested and as you can see I’ve invested in Australian equity so far, so of my money at this stage is invested in on the australian stock market in Australian based companies I Can also see where the invested I’ve got a lot of consumer Staples.
I’ve got a little bit of I don’t have any utilities in the portfolio. Which I should really consider about when I purchase some stock I’ve obviously got lots of financials and I’ve also got some communication services through Telstra so these looking at each individual area I can see the areas where I’m overexposed potentially and Underexposed so where I might be underexposed that’s where I should be looking at maybe Reducing the risk by adding some new companies and new stocks to the Portfolio It also means if I wanted for example look at buying another banking stock. I’ve got to be careful because already I have 36% of the Portfolio is exposed to finance and banking stocks so got to be careful. I buy some of that Macquarie bank stocks It’s going to add to my risk in scrolling through this x-Ray page, I can also see a lot more in-depth analysis of where my portfolio is sitting and averages of my ratios and other key Financials and Finally, I scroll back up here. can see my own personal equity style box for the sugar Mama Portfolio can see that most of my stocks in my portfolio are large cap stocks and They are a blend between value stocks and growth stocks So that’s it.
It was quick insight as to how to use the Morningstar website as a sugar Mama subscriber if you liked this video Let know because there are so many other videos I can do using this website plus Morningstar actually have their own videos Which you can access as a subscriber plus if you get stuck they’ve actually got a number help you Talk you through using the software and I have used that number a couple of times and they are Incredibly helpful and incredibly patient and kind with directing you and showing you also different things you can use you act with this website So if you’re if you think this is interesting, and you’d like to start using it for your investment Portfolio Make sure you click on the link below to activate your discount And I will see you in my next video soon Ciao for now.
Here is the link to access the SugarMamma Morningstar research!