The S&P 500 was down by 39.40points or 2.0%on Wednesday to 1930.67. U.S. stocks tumbled on Thursday, with the S&P 500 posting its worst daily decline since April and first monthly drop since January as economic data sparked concern that the Federal Reserve could raise interest rates sooner than some expect. The CBOE Vix index of equity volatility, Wall Street’s so called fear gauge leapt 28% to its highest level in more than 3 months.

Across the Atlantic the FTSE Eurofirst 300 index fell 1.3% while the XETRA DAX in Frankfurt ended 1.9% lower. The overriding driver of the market action remained the outlook for the U.S monetary policy. Worries that interest rates could rise sooner than expected were heightened by a robust second quarter US GDP report on Wednesday as well as a statement from the Federal Reserve which hinted the hawks on the Open Market Committee might be becoming more vocal.


SPX Daily Chart (Source – Thomson Reuters)

S&P ASX 200was up by 10points or0.20%on Thursday and closed at 5632.9 points. Gentrack Group (GPT) has advised that its financial results to 30 September 2014 will be lower than forecast. Perpetual Limited (PPT) has become a substantial owner of Z Energy (ZNZ) with a voting power of 5.01%. Australian Masters Yield (AYH) Fund has announced a fully franked dividend of $0.94 per share for the June 2014. Among the top 5 performers on ASX 200 was Seven West Media (SWM). To read our report SWM Click Here

Australian shares have posted their strongest month for the calendar year. Australia’s S&P/ASX200 Index climbed 4.4 per cent over July to close the month at a six-year high of 5632.9 points. Australian Bureau of Statistics data showed a much bigger than expected drop in new dwelling approvals in June. The spot price for iron ore, delivered in China, is on track for the biggest monthly gain this year, up 2.2 per cent over the month at $US95.90 a tonne. Travel website operator Wotif.com Holdings was the best-performing stock in ASX 200. It rose 37.5 per cent to $3.34 after a takeover by US rival Expedia was announced.


SWM Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Why BUY dividend stocks?


Stock of the Day – NAVITAS (NVT)

Navitas announced last month that Macquarie University has decided to take its University Pathway program in house from start of Semester 1, 2016. This is an unexpected development that not only will have a one-time impact on group earnings but will also impact sentiment around the state and sustainability of future contracts. Navitas will continue to operate the Sydney Institute of Business and Technology (SIBT) pathway programs from its existing Sydney CBD campus, and will continue to place students into Macquarie University via Streamlined Visa Processing .The existing partnership with Macquarie University expires in February 2015. This has been extended for 12 months to February 2016, after which Navitas will lose its capacity to deliver its Sydney Institute of Business and Technology pathway courses at Macquarie University’s North Ryde campus. 



NVT Earnings (Source – Company Reports)

In year ended 30 June 2014 was a period of investment and growth for the business across the entire group and growth can be largely seen in increased student and client volumes across all Divisions resulting in substantial improvement in revenue. Company recorded 20% revenue growth to $878.2m compared to previous year 2013 which is $731.7m. Earnings before Interest, Tax, Depreciation and Amortization growth (excluding goodwill impairment) of 11% to $144.9m in comparison with previous year 2013 of $130.00m. The full year dividend remains at 19.5 cents per share fully franked in accordance with the transition arrangements as the group moves to an 80% payout ratio.


Navitas Revenue (Source – Company Reports)

We believe that the risk of other contracts being taken in house by University partners is low. The Macquarie development at face value seems to be driven by a change in academic focus rather than commercial gain. Navitas offers investors exposure to a quality business model with growth options combined with defensive counter cyclical earnings drivers. We estimate recent investment in growing the campus footprint globally sets the stage for for solid growth over the next five years. The US expansion offers significant incremental value potential.


NVT Daily Chart (Source – Thomson Reuters)
The key short term challenge is to demonstrate that the recent loss of contract with Macquarie University is an isolated rather than structural development. Continuation strength in headline enrolments trends is backed by maturation profile of the campus network. Strong cornerstone positions in the English Language and vocational training in Australia. In our view, Navitas does have other growth levers to pull to mitigate the impact of this contract loss. There remains 40% upside to campus student capacity within the remaining Australian campus network, SIBT can still matriculate students through to Macquarie from the Sydney CBD campus  and there is also the potential for new campus contracts with other institutions to pursue. We believe the stock is expensive at its current price and would review the stock at  later date.

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