The two unloved ASX shares in this article could stage a big turnaround if things go their way.

COVID-19 caused most shares to crash during February 2020 and March 2020. Many of those shares have since recovered. Some of them have even gone on to hit new highs like Afterpay Ltd (ASX: APT).

But some ASX shares are still lagging behind. They are seemingly unloved by the market. But I think they could stage a big turnaround around if things go their way:

Share 1: Challenger Ltd (ASX: CGF)

At the time of writing the Challenger share price is still down around 50% from where it was just before the COVID-19 share market crash.

This ASX share is the leading annuity provider in Australia. An annuity provides a guaranteed source of income for people from their capital. It sells annuities under its own name and it also offers a white label product for a number of other financial institutions.

The low interest rates across the world is definitely a problem for Challenger. The RBA has pushed Australia’s interest rate down to just 0.25%. Challenger needs to generate a return to pay for the annuities that it issues. It’s much harder to make a decent return from fixed interest investments when interest rates are almost 0%.

However, I think the ASX share is priced too cheaply for the long-term. Interest rates could rise again and sales remain robust. In the third quarter of FY20 Challenger reported total life sales of $949 million, up 9% compared to the prior corresponding period. Total annuity sales were down 10% to $593 million but other life sales were up 71% to $356 million.

COVID-19 and the Hayne Royal Commission has caused disruption for financial advisers. But I believe these effects will dissipate as time goes on and life goes back to normal.

One of the most important things in my opinion is that Challenger is still guiding for normalised net profit before tax of $500 million to $550 million in FY20. I think this would be a solid result under the circumstances.

Don’t forget, Challenger didn’t cut its dividend during the GFC. So the grossed-up dividend yield of 9.6% could be the ongoing dividend payment. The dividend alone could be a solid return from this ASX share.

Share 2: Brickworks Limited (ASX: BKW)

The Brickworks share price is still down 22% from the 20 February 2020 level.

Brickworks is a diversified building products business with two additional asset divisions. It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares which provides reliable earnings and growing dividends.

The ASX share also owns a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). The rise of ecommerce is helping increase the demand for industrial properties. The new industrial estate at Oakdale in New South Wales will materially increase the value of the property trust and its rental income once the project is completed.

Investors have rightly identified that construction in Australia faces a difficult time in the shorter-term because of the economic impacts caused by COVID-19.

However, I don’t think that demand for bricks, masonry, roofing and so on has been reduced forever. Construction is known for being cyclical. I believe that construction will return to somewhat normal once the economy has completely opened up and normal immigration can restart. The $25,000 HomeBuilder scheme could also help Brickworks in the shorter-term.

I’m excited by the potential of the recent US acquisitions that Brickworks has made because of how large the market is in North America. The US is also dealing with the impacts of COVID-19, but again, it won’t last forever.

The ASX share also happens to be one of the best dividend shares on the ASX in my opinion. It hasn’t cut its dividend in over four decades. It currently offers a grossed-up dividend yield of 5.3%.

Foolish takeaway

Both of these ASX shares look cheap to me. They have fallen on hard times but I think they could bounce back nicely as Australia continues its recovery from COVID-19. Out of the two I’d prefer to go for Brickworks because it’s hard to say how long interest rates will still at these ultra-low levels.

More reading

• 2 ASX blue chip shares I think every portfolio should hold
• My ASX share for the week
• If I won the lottery I’d buy these 6 ASX shares
• 12 top ASX dividend shares to buy in June 2020
• ASX shares I’d buy if this decline is a second COVID-19 crash

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, Challenger Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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Due to all the suspensions, deferments, and cancellations, estimating the average dividend yield of the Australian share market is difficult right now.

However, traditionally, the local share market would generally yield an average of approximately 4% each year.

While this is a fantastic yield in comparison to term deposits and savings accounts, you don’t have to settle for that.

Listed below are three top dividend shares which offer very generous yields. Here’s why I would buy them for income:

Commonwealth Bank of Australia (ASX: CBA)

I believe this banking giant would be a good option for income investors. Although the bank will almost certainly cut its dividend significantly in FY 2021, I believe it will still offer an above-average yield. At present I believe a dividend of $3.70 per share is possible next year. This equates to an attractive fully franked 5.3% yield.

Rio Tinto Limited (ASX: RIO)

Another dividend share to look at buying is this mining giant. Thanks to its strong balance sheet, sky high iron ore prices, and the expectation that prices will stay higher for longer, I believe Rio Tinto is likely to reward shareholders handsomely in FY 2020 and FY 2021. I estimate that its shares offer a forward fully franked dividend yield of at least 5%.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A final dividend option is the Vanguard Australian Shares High Yield ETF. If you’re looking for high yield dividend shares, then you can’t go wrong with this exchange traded fund. It provides investors with low-cost exposure to 62 companies that have higher forecast dividends relative to other ASX-listed companies. This includes many of the most popular dividend options such as the banks and miners. I estimate that its units offer a forward dividend yield of at least 5%.

More reading

• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Why I would buy Wesfarmers and these ASX dividend shares
• Can ASX big banks generate an attractive sustainable dividend yield from FY21?
• ASX 200 down 0.3%: Big four banks mixed & Healius rockets on medical centre sale
• ASX 200 Weekly Wrap: ASX bears take control as market volatility returns

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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It has been a great day for the ASX with the S&P/ASX 200 Index (ASX: XJO) up by a staggering 4.28% at the time of writing. While all sectors have performed well, ASX tech shares, in particular, have seen strong share price gains.

Here we look at 4 companies that were among the standout performers.

Wisr Ltd (ASX: WZR)

Small-cap fintech provider, Wisr has seen its share price soar by a massive 32% so far today. It provides online loans for services including debt consolidation, car loans, home renovations, and travel.

Its strong share price rise appears to be linked to a market announcement earlier today. Wisr revealed that new loan originations grew 48% in May 2020, compared to April 2020. This was despite the company maintaining much tighter credit policies during March in response to the coronavirus outbreak.

The company was able to deliver a total of $23.1 million in new loans during the months of April and May. Overall growth during May resulted in loan originations returning to levels before the coronavirus pandemic. It also reported that customer support requests have returned to pre-COVID-19 levels.

EML Payments Ltd (ASX: EML)

EML Payments has seen its share price by 10.3% so far today. The company is an electronics technology solutions provider offering gift and reward cards, pre-paid cards and supplier payments. It manages more than 1,200 card programs across North America, Europe and Australia.

EML payments have diversified its business model via the acquisition of Prepaid Financial Services.

Its share price was hit hard in the early part of the coronavirus crisis. Prior to this period, this tech share been growing strongly for several years.

Easing national lockdown restrictions is starting to stimulate consumers to spend more. This is helping overall demand for card services get back to pre-COVID 19 levels.

The third strong ASX tech share rising today: Openpay Group Ltd (ASX: OPY)

Openpay is a small-cap buy now, pay later (BNPL) provider. Its share price has risen strongly by 13% today. This comes after a wild ride on the ASX over the past week. It suffered heavy share price falls late last week.

This tech share only recently launched on the ASX at the end of 2019. If offers payment plans that range anywhere between 2 and 24 months. Loans provided are for amounts up to the $20,000 mark.

Openpay targets the 3 key markets of automotive, healthcare and home improvement. In comparison, Afterpay Ltd (ASX: APT) targets the retail sector.

More reading

• Why the Wisr share price is surging 32% higher today
• The Zip Co share price is up 500%. Too late to invest?
• Why Afterpay, Super Retail, Uniti, & Viva Energy are charging higher
• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Afterpay and Zip shares are rocketing higher today: Can they go even higher?

Phil Harpur owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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