Today, I’m going to discuss 3 ASX shares that I’m absolutely desperate to add to my portfolio in 2020.

I’m not the kind of investor who buys a share just because I like (or love) the company. For me, the price also has to make sense, and preferably offer some kind of margin of safety as well.

So here are the 3 ASX shares that I’m desperate to own by the end of this year, but for which the stars have not yet aligned.

An ASX blue chip staple

Brickworks Limited (ASX: BKW) is a solid ASX blue chip that is primarily in the business of making building materials (yes, including bricks). It’s been around since 1934 and has managed to survive everything thrown at it since – including the Great Depression, World War II and the global financial crisis. Building materials are a cyclical game to be in, but Brickworks tempers this by also leasing out tracts of land it owns for rent. This gives the company a stable and reliable source of income on the side, which helps buttress its finances when things get tough. As such, I would love to own this company for a long-term, buy-and-hold investment in 2020.

An ASX healthcare giant

CSL Limited (ASX: CSL) is another ASX share I would love to see join my portfolio in 2020. It’s that rare combination of an ASX blue chip as well as a growth company, which I find highly desirous to have in a portfolio. Due to its world-class R&D programs, I think CSL will continue to be in the vanguard of the blood and plasma medicine space for the foreseeable future. I also feel confident the Aussie giant will continue to reward its shareholders with strong capital growth as well as growing dividends. As such, CSL is on the top of my 2020 wishlist.

A defensive ASX growth share

How can a company be defensive and a growth share? Well, Cleanaway Waste Management Ltd (ASX: CWY) answers that question, with a highly successful growth strategy to expand in the defensive waste collections/management business. Waste is something we all produce, through thick and thin, in good times and bad times. I don’t see this changing anytime soon either – such is human nature.

Cleanaway has been a high growth share for a while – rising from 75 cents per share in 2015 to $2.12 today. Due to waste being an evergreen and growing industry (from population increases if nothing else), I think Cleanaway is a great, long-term buy. I would love to see an entry point in the Cleanaway share price this year that matches the lows we saw in March. I might have to wait a while, but here’s to holding out hope!

More reading

• Top fund manager reveals some of the best ASX shares to own
• I would buy and hold Kogan and these ASX shares until 2030
• What are the best ASX shares for dividends?
• How the ASX 200 can help first home buyers save for a deposit
• ASX 200 finishes higher by 0.8%, Carsales share price driven up by FY20 guidance

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks. 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 Why I’m desperate to add CSL and 2 other ASX shares to my portfolio in 2020 appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) rose by 0.1% to 5,943 points today.

It was retail that dominated the headlines. According to the stats produced by the Australian Bureau of Statistics (ABS), Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years.

On the ASX it was also retailers that had some of the best share price performances:

Nick Scali Limited (ASX: NCK)

The Nick Scali share price climbed by around 20% today, making it one the leading businesses.

The company said that it’s now expecting second half net profit to be up 15% to 20% compared to the second half of FY19, which will help achieve FY20 underlying net profit of between $39 million to $40 million. The underlying profit excludes the impact of the gain of the sale of property and the impact of the adoption of AASB 16.

FY20 revenue is expected to be in the range of $260 million to $263 million. The fourth quarter of FY20 to 14 June 2020 saw written sales order growth of 20.4%.

Nick Scali responded to showroom closures by launching its digital offering, allowing customers to purchase the entire range of Nick Scali products through digital channels. Management see further scope to invest into its digital capabilities, though it’s early days.

Nick Scali estimated that store closures meant $9 million to $11 million of sales were unable to be recorded. However, the range of actions taken by management, plus government support, meant the second half profit should be solid.

The company expects sales revenue for the first quarter of FY21 will be up approximately 30%. This should underwrite profit growth for the first half of FY21.

The Nick Scali board has decided to bring forward the payment of the deferred interim dividend. The deferred 25c per share dividend will be paid on 29 June 2020.

Adairs Ltd (ASX: ADH)

The Adairs share price rose by 10.5% after giving a trading update.

Adairs said that in the 24 weeks to 14 June 2020, like-for-like (LFL) online sales rose by 92.6%. LFL total sales increased by 27.4%.

In the year-to-date numbers, which is for the 50 weeks to 14 June 2020, LFL online sales were up 64% and total LFL sales were up 15.7%.

The managing director and CEO of Adairs, Mark Ronan, said: “Since Adairs stores re-opened we have seen strong sales across both the store network and online channel as customers return for the in-store service and experience they expect from Adairs. Pleasingly, Mocka’s online sales growth has continued at high levels. Both businesses have also remained disciplined on inventory and margin management.

“Our omni channel strategy and focus on the home decorating and furnishing category has served us well during this period where our customers have spent significantly more time at home.”

In terms of final FY20 guidance, the company is now expecting the Adairs division to generate between $358 million to $362 million of revenue (with around 27% of this total being online). Mocka is expected to contribute $27 million to $28 million of sales. Overall, the company is expecting to report $385 million to $390 million of revenue in FY20.

Other noteworthy movements of the day

The ASX 200 gold miner Evolution Mining Limited (ASX: EVN) share price dropped around 1% after giving a Mt Carlton update.

Sydney Airport Holdings Pty Ltd (ASX: SYD) suffered a share price drop of 2% after releasing another monthly update of a huge decline of passenger numbers.

Buy now, pay later business Splitit Ltd (ASX: SPT) saw its share price end 6.9% higher at $1.47, though it reached $1.88 in early trading. Yesterday the company announced it had made an agreement with Mastercard.

The Orora Ltd (ASX: ORA) share price dropped 15.7% today after going ex-dividend.

There were some impressive gains today at the top end of the ASX 200. The AP Eagers Ltd (ASX: APE) share price went up almost 10%, the Netwealth Group Ltd (ASX: NWL) share price rose 9% and the Avita Medical Ltd (ASX: AVH) share price climbed 8.3%.

More reading

• These 3 ASX ETFs are yet to recover from the market crash
• Investing experts warn of second ASX market crash
• 3 ASX shares I think are super cheap right now
• Why the Splitit share price has shot up 135% in 2 days
• ASX stock of the day: Nick Scali share price leaps 21% on sales numbers

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited and Netwealth. The Motley Fool Australia has recommended Avita Medical 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 ASX 200 up again, ASX retailers make big gains appeared first on Motley Fool Australia.

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ASX big bank dividends are a write-off in FY20 but are set to rebound as we head into the new financial year.

The question is which of the big four dividend favourites will generate the best yield for income seeking investors in FY21?

The answer isn’t quite as straightforward to work out. While we are very likely to see a dividend recovery in the near-term, the payouts are unlikely to match pre-COVID-19 levels for at least a few years.

How to value the big banks

But trying to work out what the dividend is going to be is important as dividends are the primary driver for the sector, in my opinion.

Morgan Stanley throws in credit quality and capital on top of dividends as key considerations for the sector as it calculates what is a sustainable payout for the sector.

The risk of loan defaults and capital adequacy are important in so much as how they relate to dividends though, but that’s just my opinion.

Key things you should know about ASX bank dividends

On that note, there are some interesting findings from Morgan Stanley. Firstly, the broker doesn’t believe dividends will return to FY19 levels until sometime after FY22 as dividends forecast for that year will still be around 25% lower than last financial year.

However, it believes that dividends will trough in FY20 before staging a gradual recovery. This means dividends are set to rise over the next few years.

Further, the average dividend payout ratio in FY22 is estimated to be 64%. That’s well below the 80% plus range that the big four were coughing up during in their heydays.

But the 64% is still high by global standards as US and UK banks are only expected to pay out 32% and 47% of their profits as dividends, respectively, according to Morgan Stanley’s estimates.

The ASX big bank with the best yield

Coming to the main event, the ASX big bank with the best forecast dividend for FY21 is Westpac Banking Corp (ASX: WBC).

The broker is tipping a $1.05 a share distribution for the next financial year, and that increases to $1.20 in FY22.

This gives Westpac a net yield of 5.8% in FY21 and 6.6% the following year. Throw in the franking and the gross yield shoots up to 8%-9%.

How the other banks’ dividends compare

Next on the dividend leader board is Australia and New Zealand Banking GrpLtd (ASX: ANZ). The stock is sitting on an expected net yield of 5.6% in FY21 and 6.7% in FY22.  

National Australia Bank Ltd. (ASX: NAB) is in third place with a net yield of 5.1% next year and 5.9% in FY22, while Commonwealth Bank of Australia (ASX: CBA) is sitting on an expected yield of 4.9% and 5.4% for the two years, respectively.

Foolish takeaway

I won’t necessarily say that the big bank with the best yield right now is the top buy. The yields can change as bank share prices fluctuate, so WBC may not hold on to its crown next week.

What I will say is that even CBA’s gross yield (lowest of the lot) of 7% is looking quite appealing in this record low interest rate environment.

CBA has the strongest balance sheet and is arguably the best placed big bank. So, while it’s the most expensive of the big four and has the skinniest yield, it remains my top pick in the sector given the uncertain times we live in.

More reading

• ASX 200 up 0.9%: Big four banks rebound, Appen hits record high
• Where to invest for reliable dividend shares
• Diversify your portfolio with 3 top ASX 200 shares from 3 sectors
• Beat the cash rate cuts with these top ASX dividend shares
• How the ASX 200 can help first home buyers save for a deposit

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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.

The post The ASX big bank stock with the best forecast dividend yield for the new year appeared first on Motley Fool Australia.

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