A LIST of the country's 10 most popular stocks shows retail investors face a difficult decision: they can accept lower rates of return from some of their favourite companies or they can look for other stocks to invest in.
Telstra was the only one on the list whose share price went up, with popular stocks such as AMP, Westpac and Wesfarmers performing worse than the market over the past one year.
Telstra shares, held by nearly 1.4 million investors, are up more than 20 per cent in value over the past year. Shareholders have welcomed the billions of dollars flowing from the telco's national broadband network deal - on top of a dividend yield that reached 8 per cent last year.
If you bought the shares a year ago, you would have got - apart from the share price gains - a double-digit yield.
Analysts have warned that the sectors to which the most popular stocks belong - banking and finance, retail, and resources - hold little prospect for immediate earnings growth.
"This is the old headache for retail investors," the Bank of America Merrill Lynch chief equity strategist, Tim Rocks, said.
"Overall the market's tough, but its been tougher for retail investors because the big mature dividend-paying companies that they tend to own have all done pretty badly, [in some cases] worse than the market."
The recent peak in commodity prices would make things harder for resource companies, adding to investor concern, while the banking sector remained under pressure from changes in the economy and the end of the leveraging cycle, he said.
But offsetting the share price declines, some stocks have delivered reasonable dividends over the past year, particularly the banks.
"The deposit rates that the banks are offering have gone down, and if you can only get 4 to 5 per cent on bank deposits, then a 7 or 8 per cent yield on some of these stocks still looks attractive," Mr Rocks said.
"[But] you've still got to accept that you're going to make your dividend yield but you're not going to make much else, [the stock's] not going to grow very strongly."
Retail stocks have also suffered because consumers are spending less and paying down debt.
Coles will release its quarterly sales results today, and is expected to beat its rival Woolworths for an eleventh consecutive quarter - not that you would know from the share price performance over the past year, with Coles parent Wesfarmers down by double digits compared with Woolworths' more modest falls.
This performance is more an overall reflection on the Wesfarmers group, which has had trouble with its insurance and coal divisions. It is also increasing investment spending and not everyone is sure this will generate acceptable returns.