Day: October 22, 2021

Is Coles (ASX:COL) a must-buy dividend share for income investors?

a happy, smiling woman rides on the back of a trolley down the aisles of a supermarket.

Luckily for income investors, the Australian share market is home to a good number of quality dividend shares. One of those is Coles Group Ltd (ASX: COL).

Why buy Coles’ shares?

Since GJ Coles opened his first store in Collingwood, Victoria in 1914, Coles has gone on to become one of Australia’s most recognisable brands and one of the big two players in the supermarket industry with a network of over 800 locations across the country. In addition to this, Coles has an equally large liquor store and express store network.

This gives the company extraordinarily defensive qualities, which have been on display for all to see during the pandemic. For example, in FY 2021, Coles delivered a 3.1% increase in sales to $38,562 million and a 7.5% jump in net profit after tax to $1,005 million despite cycling panic buying in parts of FY 2020.

The good news is that the company still sees plenty of room to grow its footprint further and also its online business. Combined with its focus on automation, this is expected to underpin solid earnings and dividend growth over the 2020s.

In the meantime, the team at Morgans expect Coles to pay fully franked dividends of 61 cents per share in FY 2022 and then 62 cents per share in FY 2023. Based on the current Coles share price of $17.95, this represents yields of ~3.4% for both years.

Another positive is that the broker sees decent upside in the Coles share price at the current level.

Morgans currently has an add rating and price target of $19.80. This implies a potential return of 10.3% over the next 12 months, which stretches to almost 14% if you include dividends.

All in all, this could make the Coles share price a decent option for income investors next week.

The post Is Coles (ASX:COL) a must-buy dividend share for income investors? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Coles right now?

Before you consider Coles, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Coles wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Here’s why the Airtasker (ASX:ART) share price could be a buy

a man sits at a computer in deep thought with hand on chin in a darkened room as though it is late and night and he is working on cybersecurity issues.

The Airtasker Ltd (ASX: ART) share price may be worth thinking about because the business could have a lot of growth potential.

What is Airtasker?

For readers that don’t know what Airtasker is, it’s a platform business that connects people who are ready to work with people who need work to get done.

It offers a wide range of tasks, such as home cleaning, handyman jobs, admin work, photography, graphic design or building a website.

With that in mind, here are some reasons why the Airtasker share price could be one to think about:

Rapid growth

A business that is growing revenue quickly over several years gives itself more chance to deliver good returns to shareholders.

In FY21 alone, it saw 38% revenue growth to $26.6 million. This beat the prospectus guidance of $24.5 million. Gross profit went up 39% to $24.8 million.

The last financial year also saw gross marketplace revenue (GMV) increase by 35% year on year to $153.1 million, beating the prospectus forecast of $143.7 million. Two years ago in FY19 its GMV was $93.2 million.

Underlying pro forma earnings before interest and tax (EBIT) grew by 57.2% to a loss of $2.2 million.

Very strong margins

The ASX share says that its user-aligned business model and light touch operations deliver strong gross profit margins.

In FY21 it saw a gross profit margin of 93%. Not many ASX shares have gross margins above 90%. Within that gross margin, 4.9% was for payment costs and 2.1% of insurance costs.

When a business has such a high gross profit margin, it means that a lot of the new revenue can fall straight to the next line of profit. This could be helpful for driving the Airtasker share price higher if underlying profit can grow.

Already cashflow positive

Lots of technology businesses list onto the ASX with outflows of operating cashflow as they spend for growth until scale allows them to reach breakeven.

However, Airtasker achieved positive operating cashflow of $5.5 million in FY21, beating its prospectus forecast of $0.1 million.

Management said that with positive operating cashflow and a strong cash balance, it is well positioned to invest in international expansion.

Global growth potential

International growth could help the Airtasker share price climb over time.

The business is already making progress overseas. In FY21, the UK marketplace saw GMW growth of 232% year on year and growth of 93% quarter on quarter.

In the US, it said that the Zaarly integration and US expansion planning was progressing well. It is aiming to start in the cities of Kansas City, Dallas and Miami.

It’s hoping to reach an international annualised run rate of GMV of between $8 million to $10 million by June 2022.

Airtasker thinks that its total addressable market is many billions of dollars across Australia, the US and UK for existing local service industries. It wants to grow new services like flatpack furniture assembly and date night planning to complement existing services like cleaning, photography and office administration.

In FY22, it’s targeting revenue of at least $35 million and GMV of at least $200 million.

The post Here’s why the Airtasker (ASX:ART) share price could be a buy appeared first on The Motley Fool Australia.

Should you invest $1,000 in Airtasker right now?

Before you consider Airtasker, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Airtasker wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Could the South32 (ASX:S32) share price reach $4.50 by Christmas?

One of the best large cap performers in the resources space this year has been the South32 Ltd (ASX: S32) share price.

Since the start of the year, the mining giant’s shares have risen a sizeable 52%.

This is almost five times greater than the return of the S&P/ASX 200 Index (ASX: XJO).

Could the South32 share price hit $4.50 by Christmas?

Given the impressive run that the South32 share price is on, investors may be wondering just how high it can climb.

Well, the good news is that one leading broker still sees plenty of upside ahead for the company’s shares.

According to a note out of Goldman Sachs this week, its analysts have retained their conviction buy rating and $4.40 price target on its shares.

Based on the current South32 share price of $3.80, this implies potential upside of approximately 16% for investors.

But it gets even better. Goldman believes that South32’s shares will provide investors with a fully franked 11% dividend yield in FY 2022. This brings the total potential return to 27%. Not bad considering its shares are already up 52% this year.

Based on the above, the team at Goldman Sachs appear to see scope for the South32 share price to be trading in or around the $4.50 mark by Christmas.

What did it say?

There are a few reasons why Goldman is bullish on the mining giant.

It explained: “1. Valuation: The stock is trading at c. 1x NAV (A$3.88/sh) excluding [the recently announced copper acquisition of] Sierra Gorda.

2. Strong FCF outlook: We forecast a FCF yield of c. 15% in FY22 & FY23 (over 20% at spot), driven mostly by exposure to base metals (aluminium & alumina c. 50% of FY22 EBITDA, zinc/nickel c. 20%).

“3. Increased capital returns: We assume the buyback continues to be extended (at US$250mn p.a) and S32 continues to pay out 70% of earnings (40% ordinary, 30% special dividend component). On our estimates, S32 is on a dividend yield of c. 11-12% in FY22 & FY23.”

In addition, the broker notes that there’s positive newsflow on the horizon that could be a catalyst to driving the South32 share price higher.

Goldman commented:: “We would see the commitment to the restart of the Alumar aluminium smelter as a positive (c. 6% upside to EBITDA), and highlight the potential for capex on the US$800mn Dendrobium next domain (DND) met coal project to be reduced (which we would view as a positive), S32 is currently selling a base metal royalty portfolio (no value in our model), and is due to release the PFS results from the Hermosa zinc/silver/lead project (GS NPV US$1.1bn) in Arizona in Nov/Dec.”

The post Could the South32 (ASX:S32) share price reach $4.50 by Christmas? appeared first on The Motley Fool Australia.

Should you invest $1,000 in South32 right now?

Before you consider South32, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and South32 wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2 high-yielding ASX dividend shares – Saturday

a man throws his arms up in happy celebration as a shower of money rains down on him.

In this era of very low interest rates, it’s no wonder that investments that have higher yields might be interesting to some investors. This article is about two ASX dividend shares.

There are some ASX dividend shares that have relatively high dividend yields.

Just because a company pays a dividend doesn’t automatically make it worth owning. However, these two may be particularly interesting over the coming years:

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the largest furniture retailers across Australia and New Zealand.

At the time of the FY21 result, it had 61 showrooms. The company continues to assess new opportunities in line with its long-term network target of 85 showrooms.

The business is also looking to grow with online sales. In FY21, its online written sales orders were $18.3 million, compared to $3 million in FY20. The earnings before interest and tax (EBIT) contribution from the online channel was $8.8 million compared to $0.6 million in FY20.

In FY21, its total sales grew 42.1% to $373 million, whilst underlying net profit after tax (NPAT) doubled to $84.2 million.

The ASX dividend share paid a full year dividend of $0.65 per share. That equates to a trailing grossed-up dividend yield of 6.4%.

Nick Scali is rated as a buy by Citi, with a price target of $16.80. One of the reasons for the broker’s positivity about the business is its recent announcement that it’s buying Plush. In FY21, Plush made $160 million of revenue with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $27 million.

Citi thinks the Nick Scali share price is valued at 16x FY23’s estimated earnings with a FY23 grossed-up dividend yield of 6.7%.

Centuria Industrial REIT (ASX: CIP)

This ASX dividend share is a real estate investment trust (REIT) that owns a portfolio of industrial properties. Indeed, it aims to be Australia’s leading domestic pure play industrial REIT.

Its goal is to deliver income and capital growth to investors.

The portfolio is diversified by geography, sub-sector, tenants and lease expiry. The sectors it’s invested in are: manufacturing, distribution centres, transport logistics, data centres and cold storage. Centuria Industrial REIT currently has around 75 properties, with a portfolio occupancy of 97.4% and a weighted average lease expiry (WALE) of nine years.

It’s regularly expanding the portfolio. For example, it recently settled on the $200 million acquisition of a distribution centre at 56-88 Lisbon Street, Fairfield, New South Wales.

In FY22, it is expected to generate funds from operations (FFO) per security of at least 18.1 cents. The ASX dividend share is expected to pay a distribution of 17.3 cents per unit in FY22 – that translates to a forward distribution yield of around 4.6%.

The manager of Centuria Industrial REIT, Jesse Curtis, said:

Centuria Industrial REIT continues to benefit from macro trends that increase demand for last mile industrial space within close proximity to large population catchments. Centuria Industrial REIT’s industrial portfolio is skewed towards these infill markets where increased tenant demand and limited supply opportunities is driving upward pressure on market rents.

It’s currently rated as a buy by the broker Macquarie Group Ltd (ASX: MQG), with a price target of $4.22. In FY23, Macquarie thinks the ASX dividend share will pay a distribution of 18.40 cents per unit. That would be a yield of 4.9%.

The post 2 high-yielding ASX dividend shares – Saturday appeared first on The Motley Fool Australia.

Should you invest $1,000 in Centuria Industrial REIT right now?

Before you consider Centuria Industrial REIT, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Centuria Industrial REIT wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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