Exchange traded funds (ETFs) can be a great way for investors to diversify a portfolio. This is because they give investors access to a large group of shares through just a single investment.

But which ETFs should you look at? Listed below are two ETFs that have fallen heavily in 2022 and are now trading close to 52-week lows. This could make them top options for long term focused investors. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF for ASX investors to look at is the BetaShares Asia Technology Tigers ETF. This popular ETF gives investors easy exposure to many of the Asian region’s most exciting growth shares. At present, the ETF is home to ~50 tech companies that are leading Asia’s technological revolution.

The BetaShares Asia Technology Tigers ETF unit price is down 25% since the start of the year. This has been driven by weakness in the tech sector and regulatory concerns in China.

Among the ETF’s holdings are giants such as Alibaba, Baidu, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent.

In respect to Baidu, it is the search engine giant regarded as the Google of China. It is also an artificial intelligence leader and is aiming to be an autonomous vehicle powerhouse.

Whereas Tencent is the tech giant responsible for the WeChat super app which is used by approximately a billion people. This app also has a virtual duopoly with Alibaba’s Ant Group in the mobile payments industry in the country.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another beaten down ETF for ASX investors to look at is the BetaShares Global Cybersecurity ETF. This ETF gives investors exposure to the leading companies in the growing global cybersecurity sector.

The BetaShares Global Cybersecurity ETF unit price is down almost 20% since the start of the year. Once again, this has been driven by weakness in the tech sector amid rising rates and inflation.

While this is disappointing, it could be a buying opportunity given the increasing demand for cybersecurity services as more infrastructure shifts to the cloud and cyber attacks increase.

Among the companies you’ll be owning with the ETF are Accenture, Cisco, Cloudflare, Crowdstrike, Okta, and Splunk.

CrowdStrike provides the popular Falcon platform. This platform delivers incident response and forensic analysis services that are designed to help businesses understand whether a breach has occurred.

Where Okta is a leading provider of workforce identity solutions. It provides cloud software that helps companies manage and secure user authentication into applications.

The post 2 beaten down ETFs for investors to buy now appeared first on The Motley Fool Australia.

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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. owns and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Investors who prioritize dividends and intentionally build a portfolio of dividend-paying stocks typically see massive rewards in the long run, often receiving thousands in monthly retirement income. Profiting from some stocks relies solely on increases in their stock price, but dividends essentially reward investors for holding onto shares. If you want to become a better dividend investor, here are three things you should do. 

1. Focus on companies that increase dividends

What largely makes you successful as an investor is seeing the potential in companies and capitalizing accordingly. You should make decisions primarily with the future in mind, not focusing solely on the past or current metrics. A company’s current dividend yield is important, but what dividend investors should strongly consider is its ability to increase its yearly dividend. Companies may pay the same dividend, but if one is increasing its dividend by 10% annually, it’s more attractive.

Certain companies that have increased their annual dividend payouts for at least 25 consecutive years become part of S&P Dow Indices’ Dividend Aristocrats list, while companies that have increased their payouts for at least 50 consecutive years are Dividend Kings. As a dividend investor, if you focus on either, you can be more confident in your investment. Any company that has managed to become a Dividend Aristocrat or King has shown it can withstand broader economic down periods and recessions and still have the proper cash flow to reward shareholders.

History shows that market down periods are inevitable; you might as well invest in companies that have the financial means to make it through such times.

2. Focus on dividend payouts, not yield

It’s common for investors to look at a company’s dividend yield before making investment decisions, but that can sometimes be misleading. Think about this: Dividend yield is based on the annual dividend payout relative to the company’s stock price. If a company pays out $5 annually in dividends and the stock price is $100, the yield is 5% — which is very lucrative on the surface level.

However, if the stock price drops to $50 for whatever reason, the dividend yield becomes 10%. By all means, a 10% dividend payout is seen as good, but when you consider the sharp price drop that led to that yield, you understand why that alone isn’t a good metric. It would be best if you considered what caused that sharp price drop.

Instead of a strict focus on dividend yield, examine a company’s dividend payout to get more insight into its financial health. The payout ratio is how much of a company’s earnings it’s paying out in dividends. A payout ratio above 100% — meaning the company is paying out more than it’s making — is a major red flag because it’s unsustainable in the long run. It helps to be skeptical of companies that have a dividend payout of more than 50%.

3. Watch out for dividend traps

Dividend traps often occur when something is too good to be true. Let’s take younger, smaller companies, for example. Dividends are paid from a company’s earnings, so any money paid out in dividends is money that’s not being reinvested back into the company. For smaller companies, growth is often high on the priority list, and if management is giving too much of its profit to shareholders instead of reinvesting it back into the company, that could be a cause for concern.

There are some exceptions — like real estate investment trusts (REITs) and master limited partnerships (MLPs) — which have high dividend yields built into their structure. But generally speaking, if the dividend yield seems to be questionably high, you likely want to take a deeper look at why.

The same goes for debt. A company’s debt-to-equity ratio — found by dividing its total debt by shareholder equity — lets you know how much of its daily operations are financed through debt. As a rule of thumb, the higher the debt-to-equity ratio, the more risk a company is taking. You want to be cautious of companies with a lot of debt that pay out dividends. Financially healthy companies should be able to pay out dividends from their profits. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 ways to become a better dividend investor appeared first on The Motley Fool Australia.

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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 Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The Nasdaq Composite fell 9% in the first quarter, as many investors weighed concerns about the strength of the economy. Even so, a wave of Form 13-Fs recently filed with the US Securities and Exchange Commission suggests that some asset managers remain bullish on growth stocks.

In the first quarter, billionaire Chase Coleman of Tiger Global Management added over a million shares of CrowdStrike Holdings (NASDAQ: CRWD) to his hedge fund, making it the third-largest position in the portfolio. Likewise, billionaire James Simons of Renaissance Technologies doubled down on Tesla (NASDAQ: TSLA), and the stock now ranks as the second-largest holding in his hedge fund.

Clearly, these professional money managers see something they like in both companies. But let’s take a closer look before you add them to your own portfolio. Here’s what you should know.

1. CrowdStrike Holdings

CrowdStrike is the gold standard in endpoint and cloud workload security. Its cloud-native architecture is the foundation of that success, as it allows the company to crowdsource tremendous amounts of data from the devices on its network. In fact, its Falcon platform captures trillions of security signals each week, and it leans on artificial intelligence (AI) to surface insights and prevent cyberattacks.

That forms a powerful network effect. Each new data point makes CrowdStrike’s AI models a little better at identifying malicious activity, meaning each new customer creates incremental value for all existing customers and vice versa. To add, CrowdStrike has further differentiated itself with a broad suite of software beyond endpoint and cloud workload security, including solutions for identity protection, threat intelligence, and managed services.

Financially, CrowdStrike is firing on all cylinders. Its customer base jumped 65% to 16,325 in the past year, and the average customer spent 24% more, evidencing the successful execution of its land-and-expand growth strategy. In turn, revenue climbed 66% to $1.4 billion and free cash flow jumped 51% to $442 million.

Looking ahead, CrowdStrike is well-positioned to maintain that momentum. The company puts its market opportunity at $67 billion by 2024, and its capacity for innovation should keep it on the cutting edge of cybersecurity. For example, CrowdStrike recently debuted the industry’s first fully managed identity threat protection service. That means organizations that lack the time or talent to handle their own security can outsource it to CrowdStrike. And adding identity protection to that service is especially significant because 80% of cyberattacks start with compromised credentials.

In summary, CrowdStrike has a strong presence in a critical industry, and its market opportunity should only get bigger as digital transformation creates more attack surfaces for hackers. With that in mind, Coleman’s decision to add shares to his hedge fund makes a lot of sense. More importantly, with the stock price down 50% from its high, now is a great time to buy a few shares for your own portfolio.

2. Tesla

In the first quarter, Tesla once again ranked as the leading electric vehicle (EV) brand, capturing a 15.5% market share. The company also continued to take share in total car sales across its three core geographies: China, Europe, and the US. But the real story was Tesla’s operating margin.

In the first quarter, revenue rose 81% to $18.8 billion, but GAAP earnings surged 633% to $2.68 per diluted share. What drove that accelerated growth on the bottom line? Tesla posted an industry-leading operating margin of 19.2%, fueled by increased production, pricing power, and initiatives like single-piece casting. That figure is likely to drop in the near term as production scales at the new factories in Berlin and Texas, but that uptick in capacity should make Tesla even more efficient in the long run.

Even more exciting, CEO Elon Musk announced plans for an EV robotaxi. The company aims to reach volume production by 2024, which puts Tesla one step closer to realizing its goal of launching an autonomous ride-hailing platform. On that note, Musk believes the company’s full self-driving software will be safer than a human driver by the end of the year, paving the way for software to become the most important source of profitability for Tesla’s car business.

Asset manager Ark Invest has a similar outlook. In a recent report, the firm says autonomous ride-hailing platforms could generate $2 trillion in profits by 2030, while boosting global economic output by $26 trillion. On that note, Tesla has more real-world driving data than any rival, which arguably makes it a frontrunner in the race to build a fully autonomous car.

If you think self-driving cars sound like science fiction, what about intelligent machines? Musk believes Tesla’s autonomous humanoid robot (known as Optimus) will ultimately be worth more than the car business. The company could have a prototype as early as this year, and full-scale production could start next year.

The biggest argument against Tesla is valuation. It’s currently worth more than the next seven automakers combined, and the stock trades for 12.8 times sales. But if Tesla executes on its vision of robotaxis and autonomous robots, that multiple may look cheap in hindsight. Renaissance Technologies clearly believes in the company, but should you add the stock to your own portfolio? That depends on your risk tolerance. If you can handle volatility and you believe in Tesla’s vision, I think it’s worth buying a few shares. For what it’s worth, I own the stock and I have no plans to sell. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nasdaq sell-off: 2 growth stocks billionaires were buying in Q1 appeared first on The Motley Fool Australia.

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Trevor Jennewine has positions in CrowdStrike Holdings, Inc. and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CrowdStrike Holdings, Inc. and Tesla. The Motley Fool Australia has recommended CrowdStrike Holdings, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The rise in the popularity of index exchange-traded funds (ETFs) on the ASX over the past decade or two has no doubt been supported by the idea of ‘if you can’t beat it, join it’. The ‘it’ in this case is the market. Specifically the S&P/ASX 200 Index (ASX: XJO).

‘Beating the market’ is the goal of every ASX investor. After all, if an investor can’t beat the market, then they are mathematically better off investing every cent they have in an index fund. So to hear one ASX fund manager has beaten the market every year for two decades is definitely worth a closer look.

As revealed in the Australian Financial Review (AFR), Jamie Nicol is co-founder of the Brisbane-based DNR Capital. This ASX fundie has managed to steer DNR Capital’s flagship High Conviction Australian Equities fund to an annual return of 12.9% per annum since its inception in 2002. That’s a market outperformance of an average 9.3% per annum that the fund’s ASX 200 Accumulation Index benchmark has achieved over the same period.

Meet ‘Mr 13%’ ASX fundie Jamie Nicol

This outperformance has held over many periods of market turmoil. These include the global financial crisis, the pandemic crash, and the gyrations we have seen over 2022 so far.

Nicol reckons this can be explained by “an eye for quality stocks, smart recruitment and decades of hard work”:

Remember, we started at the end of the dotcom crash, some people ended up with portfolios full of junk, it’s got similarities today… When we set up 20 years ago we were keen to go where ideas were, which would provide us with opportunities at different points in the cycle. Quality stocks at attractive prices is what we thought worked. Once this was defined, we then concentrated our portfolios in a limited number of high-quality businesses, but sought to buy them when there was a mispricing opportunity.

But Nichols also says that his firm still looks at finding value in companies that are suffering from “inefficiencies” in the market. These can be a mispricing of a growth opportunity. Or else buying a company that has been oversold over temporary concerns.

At the moment, DNR is “overweight in the mining sector”. But Nicol is also looking at Aristocrat Leisure Limited (ASX: ALL) and Domino’s Pizza Enterprises Ltd (ASX: DMP) as possible candidates for the ‘oversold’ label.

Nicol also cites patience as a necessary virtue for market outperformance. He says, “opportunities to be contrarian and buy out-of-favour businesses remain a fruitful exercise, you perhaps need more patience for the opportunities to be realised”.

The post This fundie has beaten the ASX 200 every year for the past 2 decades. Here’s how appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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