I believe maintaining a diversified portfolio is one of the keys to success when investing.

While a diverse portfolio won’t necessarily protect you from market crashes like we experienced earlier this year, it will limit the damage of them.

This is because it means you won’t be over exposed to sectors that are hit harder than others. The travel sector is a great example of this in 2020.

In light of this, I have picked out three top shares in three different sectors which I think could be great additions to most portfolios. They are as follows:

Financial sector – Commonwealth Bank of Australia (ASX: CBA)

Investors that don’t already have exposure to the banks might want to consider Commonwealth Bank. I think the pullback its share price this year has left it trading at a very attractive level for a long term and patient investment. Especially if, like me, you’re optimistic the worst is now behind the banks and better days are ahead. Another reason to consider Commonwealth Bank is its dividend. I expect a final dividend cut in FY 2021 down to approximately $3.70 per share. This equates to a fully franked 5.3% dividend yield.

Healthcare sector – ResMed Inc. (ASX: RMD)

In the healthcare sector I think ResMed is worth considering. It is a medical device company which manufactures ventilators and sleep treatment products. It is the latter products that I believe will be the key drivers of growth during the 2020s. This is because of the proliferation of sleep apnoea globally, which is leading to increasing demand for solutions. I believe the quality of its CPAP portfolio and its growing software businesses have positioned it perfectly to capture a growing slice of this market and deliver further strong earnings growth for many years to come.

Tech sector – Appen Ltd (ASX: APX)

Finally, I think Appen is one of the best options in the tech sector right now. The language data company looks well-positioned to continue growing its earnings at a strong rate over the next decade thanks to the increasing importance of artificial intelligence (AI). Appen has exposure to the AI market through its million-plus team of crowd-sourced experts that prepare the data that goes into machine learning models. It has worked with the likes of Facebook, Microsoft, and Apple. I believe this is a testament to the quality of its services.

More reading

• How the ASX 200 can help first home buyers save for a deposit
• Millennials be warned! Signs of dangerous ASX share trading grow
• 2 ASX shares to buy for beginners
• Is the Macquarie share price a solid buy today?
• 3 high quality dividend shares to buy instead of the big four banks

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended ResMed Inc. 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.

The post Diversify your portfolio with 3 top ASX 200 shares from 3 sectors appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fvmqEk

An online sales boom has been magnified as a result of the lockdown during the pandemic. It’s anticipated this boom will continue post the coronavirus.

ABC News reported that the virus has shifted consumer behaviour. Because consumer preferences have changed, this has forced retailers to re-think their offerings and move to, or compliment, their operations with an online presence.

For this reason, I believe an investment in either one of these 3 companies could reward the willing investor:

• Kogan.com Ltd (ASX: KGN)
• Goodman Group (ASX: GMG)
• NextDC Ltd (ASX: NXT)

Kogan.com

The Kogan.com share price has soared 185% in the past year.

Why?

As an online retailer selling a diversified mix of products and services and with a loyal customer base, sales have soared – especially since the lockdown. 

Is it too late to buy?

After completing a A$100 million capital raise this month, Kogan now has the flexibility to invest and grow the business.

In its investor presentation released this month, the group announced a significant increase in sales, earnings and customer numbers. 

In my view, Kogan has benefited enormously from online sales because of its diverse offering. Its increase in marketing spend is helping attract customers and boost sales. For this reason, I believe the share price will continue to rise.  

Goodman Group

While the share price has increased by 2% in the past year, I believe there are reasons to be optimistic. 

In its recent investor newsletter to security holders, the group advised it remains in a solid position and reaffirmed its FY20 earnings guidance of 57.3 cents per share, up 11% on FY19, and a full year distribution of 30 cents per share. 

Goodman supplies logistics and warehousing globally. This aids in the delivery of goods for the online sales boom. It’s seeing stronger demand for new space and the development book stands at $4.8 billion. 

In my view, Goodman is an attractive investment that I think will reward investors despite the small increase in share price in the past year.

NextDC

The NextDC share price has soared 38% in the past year on the back of the demand for its data centres. 

Last month, the group completed a $191 million share purchase plan for eligible shareholders. It’s expected that the funds raised will help the development of a new data centre to meet increased demand. 

CEO, Craig Scroggie, said 

“…well capitalised to continue growing our premium data centre services platform in support of our key customers who continue to drive the growth of the digital economy.”

As a result, NextDC Ltd could deliver significant capital gains for buy and hold investors. 

Foolish takeaway

The recent crisis promoted the benefit of e-commerce with some trying online shopping for the first time. The above-mentioned companies could reward investors who are looking to profit from the rise of online sales.

More reading

• I would buy and hold Kogan and these ASX shares until 2030
• Up 250% since March: is it too late to buy Kogan shares?
• 2 ASX shares to buy for beginners
• Will Xero shares and these 2 other ASX companies be portfolio staples by 2030?
• Why Zip Co and these All Ords shares have doubled in 12 months

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com 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.

The post 3 ASX shares I’d buy because of the online sales boom appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fvm2pm

ASX dividend shares are a great place to find a good source of income in my opinion. 

Bank interest is now very low. People may want their money to work harder, particularly if income is the goal.

Growth shares can create solid returns with the compounding of earnings. However, growth shares can be risky because they may be overpriced and the growth may not go according to plan. 

Dividends from ASX shares can be an attractive way to be rewarded each year. Share prices are volatile, whereas dividends can be consistent. Dividends are decided by the boards of companies, so businesses have more control of the dividend income for shareholders.

I think that dividend payments are a good sign of business profitability. It also shows that the leadership are thinking about their shareholders. You don’t want a CEO with an empire-building mindset who may lose a lot of money with risky acquisitions.

What type of ASX shares are good for dividends?

Do you want a mix of growth and income? Are you looking for the highest income? Is dividend growth your main concern?

High yield

The yield from an ASX dividend share is a big consideration. There are both positives and negatives to consider when thinking about high yield dividend shares.

If a business is paying out most of its profit each year as a dividend then there is little left for re-investment. It’s the re-investing for growth that is one of the key factors for long-term growth of the business.

But maybe you don’t want a lot of capital growth from your ASX dividend share. Perhaps a high level of income is all you want. In that case then shares like WAM Research Limited (ASX: WAX), Challenger Ltd (ASX: CGF) and Medibank Private Limited (ASX: MPL) could be decent ideas with their current yields.

Franking credits can really add to the yield on offer with the boost to the after-tax returns.

A healthy mix of income and growth

Some ASX dividend shares may not have grossed-up yields that are around 8% or over. They may be closer to the 5% level.

I like these types of income ideas the most because they may offer a good mix of long-term growth, whilst also paying solid dividends in the short-term.

If a dividend isn’t growing then it’s more likely to face a potential cut in the future. If a business isn’t moving forward then its competition is probably catching up. It’s the businesses with strong economic moats that can keep growing and fend off competition. I don’t think stagnant businesses are worth investing in for the long-term. Shares like banks aren’t attractive dividend ideas to me. 

Some ASX dividend shares that offer solid yields now, with good growth potential, are: Brickworks Limited (ASX: BKW), Arena REIT No 1 (ASX: ARF), APA Group (ASX: APA), Amcor Plc (ASX: AMC), Invocare Limited (ASX: IVC), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) Service Stream Limited (ASX: SSM).

Fast-growth income shares

There’s also the option of going for shares that seem as though their dividend income will grow at a fast pace.

For example, a dividend yield starting at 3% doesn’t sound like much. But if the dividend payment grows by say 10% a year then it compounds into a much larger number over time. After several years the 3% yield could pay more in dollar terms than the high yield dividend share, plus it may come with pleasing capital growth.

In this area I’m thinking about shares like Magellan High Conviction Trust (ASX: MHH), Propel Funeral Partners Ltd (ASX: PFP) and TechnologyOne Ltd (ASX: TNE).

ASX dividend shares that I’m going for

There is a lot of uncertainty at the moment with COVID-19 and with the US, particularly as it’s an election year.

If I had to pick some of the ASX dividend shares that I’ve named in this article for my portfolio I’d go for Washington H. Soul Pattinson, Brickworks, Magellan High Conviction Trust and Propel. They all offer decent starting yields and I think they are all trading at good value with good future growth prospects.  

More reading

• Top brokers name 3 ASX 200 shares to sell today
• Fund managers have been buying these ASX shares
• Forget bank interest, try these ASX 200 dividend shares!
• Why G8 Education, InvoCare, Megaport, & Webjet shares are tumbling lower
• ASX 200 jumps almost 4%, Webjet share price soars

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited, Brickworks, Challenger Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended InvoCare Limited, Propel Funeral Partners Ltd, and Service Stream 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.

The post What are the best ASX shares for dividends? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2YKuJ8F