Here’s what you need to know today

• Two popular small Australian companies had great days. DroneShield was up 7% after announcing it would significantly expand US operations. Shares are up 188% in the past 12 months. (Capital Brief) Telix Pharmaceuticals was up 9% after receiving approval from US Medicare to pay for its prostate cancer imaging agent Gozellix. (Capital Brief)
  
  

• One Australian company that did not have a good day was Myer. Shares in the department store fell 25% after reporting a $211 million loss for FY25. This is down from a $44 million profit in FY24. (Capital Brief)
  
  

• Anthony Albanese has weighed in on the Optus triple-0 failure, with the Prime Minister saying he’d be “surprised” if Optus CEO Stephen Rue was not considering resigning. (The Age)
  
  

• Meanwhile, Australia’s Prime Minister has been unsuccessful in landing a meeting with US President Donald Trump. The US President released a schedule that included several bilateral meetings, but did not include Australia. (ABC News)
  
  

• Nvidia announced it would invest up to US$100 billion in OpenAI to build AI data centres. The two companies have a symbiotic relationship, with Nvidia’s chips powering OpenAI’s systems, while the success of OpenAI’s ChatGPT (now with 700 million weekly users) has sparked a buying frenzy for Nvidia chips. (FT)
  
  

• The OpenAI partnership announcement saw Nvidia shares jump 4% and push America’s S&P 500 index to its 28th record high of the 2025 so far. (Bloomberg)
  
  

• Pharmaceutical giant Pfizer is trying to play catch up in the obesity drug market, announcing a US$7.3 billion acquisition of Metsera. Metsera has a portfolio of experimental therapies, including an appetite-regulating hormone that in early trials showed 8.4% weight loss in 36 days. The deal comes after Pfizer scrapped its own lead obesity drug candidate earlier this year. (WSJ)
  
  

• Trade talks between the US and South Korea have stalled. After verbally agreeing to a trade deal in July that included South Korea investing $350 billion in the US, a deal is yet to be signed over disagreement on how that money will be invested. South Korean President Lee Jae Myung warned the economy could fall into a crisis rivalling the 1997 Asian Financial Crisis if South Korea accepts US demands. (Reuters)
  
  

• Disney has announced it will be reinstate Jimmy Kimmel’s late night show. The entertainment giant reversed its decision after significant backlash from lawmakers and audiences. (Axios)

What the…?

The rise of collectables as investable assets has been a wild story of the past 5 years. Pokemon cards, sports cards and other collectables had a huge run during COVID (as did every asset class) but it has been notable how this market has kept growing.

A recent example: Kevin O’Leary, one of the stars of America’s Shark Tank, has just spent $13 million for a Kobe Bryant and Michael Jordan signed sports card. This sets the record for the most paid for a sports trading card, surpassing the $12.6 million paid for a Mickey Mantle card in 2022. (CNBC)

Investing is a lifelong journey

Here’s what you can learn today

Is Dividend Investing worth it for younger investors?

Community Question: Is Dividend Investing worth it if you’re younger and in ‘accumulation’ phase?

We put this question to Samuel Fenning, senior financial adviser and founding partner at Esencia Wealth

When evaluating any investment strategy, irrespective of one’s life stage, it is vital to consider the financial objectives, the risk tolerance (the extent and comfort with risk exposure), the risk capacity (the ability to withstand potential losses) and the associated timeframes.

Dividend investing involves buying and holding shares with the primary purpose of generating income from dividends paid by those shares.

Dividend investing in Australia has a unique aspect in the fact that dividends often include franking credits, which can lower income tax.

This approach has its own set of advantages and disadvantages, including:

Pros:

• Regular Income: Dividend paying shares can provide a consistent stream of income, which can be useful for covering living expenses or reinvesting in additional investments.

• Tax Advantages: Dividends often attract franking credits which can reduce the overall tax paid by the investor.

• Compound Growth: Reinvesting dividends can lead to the compounding effect, where the initial investment grows exponentially over time.

• Diversification: Dividend shares can offer diversification in a portfolio depending on the companies used (i.e., from different industries or sectors) and the existing strategies in a portfolio.

• Long-Term Focus: Dividend investing encourages a long-term perspective, which can be favourable for younger investors who have time on their side.

Cons:

• Lower Growth Potential: Dividend shares may not provide the same level of capital appreciation as growth shares, which can limit the overall capital growth in a portfolio.

• Income Tax: While dividends can provide income, they are also subject to income tax. This can reduce the overall return on the investments (often called Total Return).

• Limited Diversification: While aspects of this strategy have diversification benefits, this strategy can also limit diversification by solely relying on dividend paying shares, as this may increase the exposure and reliance on certain industries and sectors.

• Market Risk: Even dividend paying shares can be affected by economic downturns and market fluctuations.

• Opportunity Cost: By focusing on dividend shares only, there are potential returns that could be sacrificed at the cost of not investing in other types of shares as well as other asset classes.

• Company Risk: Not all companies with high dividends yields are financially stable. Investing in poorly managed or financially troubled companies can lead to dividend cuts or even bankruptcy.

In conclusion, dividend investing can be a prudent strategy for young investors who seek income, stability, and a long-term approach. However, it’s important to balance your portfolio and consider other investments to achieve diversification and consider the trade-offs between income and growth.

The individual goals, risk tolerance, risk capacity and timeframes will ultimately help determine whether this strategy is suitable.

Seeking advice from a financial adviser can ensure you make informed decisions tailored to your specific circumstances.

Feel like its time to speak to a qualified financial adviser? Fill out the form on our website and we’ll match you with an adviser suitable to your circumstances.

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