Many dividend shares have experienced difficult trading conditions over recent months. COVID-19 is an unprecedented crisis that has produced a challenging outlook for a wide range of businesses. This may dissuade many investors from buying high-quality companies at the present time.

However, rising demand for income shares due to low-interest rates suggest that now could be the right time to purchase a diverse range of dividend shares. They could produce high returns that make you a fortune over the next 10 years.

Rising demand for dividend shares

Demand for dividend shares may not be especially high at the present time. After all, risks such as trade tensions between the US and China, and the prospect of a second wave of coronavirus, could cause difficult trading conditions for many.

However, companies that maintain shareholder payouts in the medium term may experience high demand from income-seeking investors. They are unlikely to have plenty of alternative options available in an era where low-interest rates are set to remain in place. For example, investors who had relied on bonds or cash in the past to generate an income may now focus their capital on dividend shares.

Rising demand for income shares could mean that their prices rise. As such, they may produce high capital returns that boost your portfolio’s prospects in the next decade.

Economic recovery

Buying dividend shares while an economic recovery is uncertain could be a sound move. At the present time, weak GDP growth could cause many investors to doubt the capacity of the global economy to bounce back from recent difficulties. This is an understandable view, often present during bear markets and recessions.

However, past performance of the economy shows it has always recovered to produce improving growth after even severe difficulties. This time, major stimulus packages have been announced across many large economies. They could catalyse the trading conditions for a wide range of companies. This could then lead to rising profitability and a greater capacity to pay improving dividends.

Capitalising on a recovery

It’s difficult to ascertain which industries will produce the quickest and strongest recovery from present economic challenges. Therefore, buying a diverse range of dividend shares could be a shrewd move. By spreading the risk across a number of companies, you can limit your exposure to a concentrated few businesses and benefit from the likely growth of the wider economy. This strategy could boost your portfolio’s performance and improve your financial position over the next decade.

More reading

• 3 ASX growth shares that could be future market beaters
• Short-sellers are stepping up their attack against these popular ASX shares
• Why I’m desperate to add CSL and 2 other ASX shares to my portfolio in 2020
• ASX 200 up again, ASX retailers make big gains
• The ASX big bank stock with the best forecast dividend yield for the new year

Motley Fool contributor Peter Stephens 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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If you’re a fan of growth shares then you might want to check out the shares listed below.

I believe that all three are well-placed to grow their earnings at a rapid rate over the coming years. Here’s why I think they could be future market-beaters:

Aristocrat Leisure Limited (ASX: ALL)

The first growth share to consider buying is this gaming technology company. Its shares have fallen heavily this year due to the negative impact of the pandemic on its poker machine business. While this is disappointing, it is worth remembering that this is only a short term headwind and demand for its poker machines will soon rebound. When it does, this should complement the fast-growing digital business which has been benefiting greatly by casino closures and lockdowns.

Megaport Ltd (ASX: MP1)

Another growth share to consider buying is Megaport. It is an elasticity connectivity and network services company which offers a service which allows its customers to increase and decrease their available bandwidth in response to their own demand requirements. This is proving very popular because it means a user no longer has to be tied to a fixed service level on long-term and expensive contracts. Demand for its service has been growing very strongly, leading to stellar recurring revenue growth. I expect this trend to continue for some time to come thanks to the cloud computing boom.

Nanosonics Ltd (ASX: NAN)

Another ASX growth share to consider buying is Nanosonics. It is an infection prevention company which I believe has the potential to grow materially in the future. This is due to the large market opportunity of its industry-leading trophon EPR disinfection system for ultrasound probes and the upcoming release of secret new products targeting other unmet needs. Nanosonics is remaining tight-lipped on these products, but has mentioned that its first new product has a similar market opportunity to the trophon EPR system.

More reading

• Top fund manager reveals some of the best ASX shares to own
• Looking to buy ASX technology shares? Here are 4 to consider
• Top brokers have just downgraded Carsales.Com and these outperforming ASX 200 stocks
• Where to invest $5,000 in an irrational market
• Are these beaten down ASX shares in the buy zone?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO and Nanosonics Limited. The Motley Fool Australia has recommended MEGAPORT FPO and Nanosonics 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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Short-sellers have pared their bearish bets as the S&P/ASX 200 Index (Index:^AXJO) recovered from its COVID-19 meltdown. But these traders have stepped up their attack against a number of popular stocks this month!

The number of shares that are shorted dropped by 4.4% since the market bounced from its bear market low on 23 March.

Short-sellers are those who borrow stock to sell on-market with the aim of buying it back at a lower price later to profit from the difference.

It’s useful to keep an eye on what this group does. While they don’t always get their trades right, they tend to be more sophisticated than the average investor.

ASX stock with largest increase in shorts

One stock that caught their eye is the Southern Cross Media Group Ltd (ASX: SXL) share price after its big surge in May.

The regional broadcaster experienced the largest increase in shorts of any ASX stock this month, according to the latest ASIC data which is always a week behind.

The number of shares in the regional broadcaster that have been short-sold increased a whopping 362 basis points to 7.2% since the start of this month to 15 June.

It seems Southern Cross isn’t a recent favourite. Short-interest in the company jumped 543 basis points (or 5.43 percentage points) since 23 March.

Losing appetite

In second place is Freedom Foods Group Ltd (ASX: FNP). Shares in the nutritional food and drink supplier saw the second biggest increase in shorts this month.

Short interest in the company jumped 185 basis points to 4.8%, and that’s probably something to do with its dismal trading update as it was hit by the coronavirus shutdown.

Management said it was seeing green shoots of recovery but short-sellers don’t seem to share that view.

Looking tarnished

In third spot is the Lovisa Holdings Ltd (ASX: LOV) share price with short-interest in the jewellery chain increasing 164 basis points to 6.3% in the first two weeks of June.

The performance of the retailer stands in contrast to some of its peers who have benefited from the COVID-19 restrictions. These lucky retailers like Temple & Webster Group Ltd (ASX: TPW) and Premier Investments Limited (ASX: PMV), which have seen online sales spike.

But as I reported last week, Lovisa isn’t as well placed due to its weak online presence and expected weak demand as weddings and other social events are unlikely to return to normal anytime soon.

Other notable stocks that have seen big increases in short-interest include fund manager Perpetual Limited (ASX: PPT), consumer finance company FlexiGroup Limited (ASX: FXL) and travel agent Flight Centre Travel Group Ltd (ASX: FLT).

More reading

• ASX 200 up again, ASX retailers make big gains
• These 3 ASX ETFs are yet to recover from the market crash
• Investing experts warn of second ASX market crash
• What’s next for these 4 ASX travel shares?
• Temple & Webster shares continue to grow despite coronavirus restrictions

Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia has recommended FlexiGroup Limited, Flight Centre Travel Group Limited, Freedom Foods Group Limited, and Temple & Webster Group Ltd. 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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