Stock Pick

  • Want high-paying dividends? Try Wesfarmers shares and these 2 other ASX options

    Hand drawing growing Dividends investment business graph with blue marker on transparent wipe board.

    Are you looking for an extra income stream? I believe that investing in ASX shares paying high dividends is an excellent strategy for achieving this. My top 3 picks right now are BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES) shares.

    All 3 of these ASX 200 shares pay strong dividends and are fully franked. This can further boost your income as you get a 30% tax rebate.

    Wesfarmers shares

    Wesfarmers is a highly diversified business. I believe this is the group’s core strength.

    It has operations across a broad spectrum of the Australian economy. This provides it with a buffer to any industry-specific challenges that may come its way.

    Wesfarmers has operations in general retail segments including merchandise and office supplies. It also has a number of industrial divisions with operations in energy and fertilisers, and industrial and safety products.

    It continues to evolve its online offering, which has seen strong demand during the coronavirus pandemic. This includes its online-only channel via Catch and its Target and Kmart online offerings.

    The Wesfarmers share price is sitting at $41.72 and offers a very nice forward fully franked dividend yield of around 3.6%.

    BHP shares

    BHP has diversified operations across a range of divisions. These include iron ore, as well as copper and aluminium.

    The mining giant is definitely my pick of the resource companies listed on the ASX right now.

    In its April quarterly activities report, it noted that it continues to expect to generate strong cash flows. This is despite the continued challenges it faces in light of the coronavirus pandemic.

    Also, with signs of global markets improving, this could see its business pick up further in the second half of the year.

    Based on current earnings with a share price of $36.34, BHP offers a very attractive forward fully franked dividend yield of around 5.2%.

    Telstra shares

    In a recent market update, Australia’s largest telecommunications provider revealed that it is on track to achieve most of its T22 strategy goals.

    This includes a goal to reduce its underlying fixed costs by as much as $2.5 billion annually by the end of FY 2022. The telco giant is evolving into a leaner, more efficient telco provider.

    Telstra has also witnessed strong demand for its services throughout the pandemic so far. This has helped to boost its recent performance.

    I believe that Telstra remains well placed for long-term growth over the next five to 10 years.

    Growth over the next few years will be partly driven by its market-leading position in the rollout of 5G services.

    In addition, Telstra provides investors with a forward fully franked dividend yield of around 3.1% with a current share price of $3.23.

    For additional dividend options to add to your portfolio, have a read of the below report.

    NEW: Expert names top dividend stock for 2020 (free report)

    When our resident dividend expert Edward Vesely has a stock tip, it can pay to listen. After all, he’s the investing genius that runs Motley Fool Dividend Investor, the newsletter service that has picked huge winners like Dicker Data (+92%), SDI Limited (+53%) and National Storage (+35%).*

    Edward has just named what he believes is the number one ASX dividend stock to buy for 2020.

    This fully franked “under the radar” company is currently trading more than 24% below its all-time high and paying a 6.7% grossed-up dividend.

    The name of this dividend dynamo and the full investment case is revealed in this brand new free report.

    But you will have to hurry — history has shown it can pay dividends to get in early to some of Edward’s stock picks, and this dividend stock is already on the move.

    See the top dividend stock for 2020

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    Motley Fool contributor Phil Harpur owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers 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 Want high-paying dividends? Try Wesfarmers shares and these 2 other ASX options appeared first on Motley Fool Australia.

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  • How to build a $20,000 passive income with ASX shares

    Earning passive income, ASX shares

    The current economic environment has got many people thinking about passive income and ASX shares.

    The sum of $20,000 creates a baseline level of income that can help to pay the bills and basic living expenses for many individuals.

    Of course, that doesn’t mean you can’t continue to work. But the potential to add $20,000 without lifting a finger is enticing to most savvy investors.

    So, how can you build a strong passive income stream with ASX shares in 2020?

    Save as much as you can

    This is a critical step in the process. There’s no magic cure here that will build your wealth overnight.

    Trimming down expenses where possible is a great first step. That means creating a budget and looking at cutting down on discretionary spending.

    All of this extra income can go towards investing in ASX shares. Whether it’s an extra $500, $5,000 or $50,000 per year, strong savings habits are crucial to developing a passive income.

    Invest in ASX shares for a passive income

    Once you’ve got strong personal finance habits in place, it’s time to start investing.

    There are many ASX shares like Fortescue Metals Group Limited (ASX: FMG) with strong dividend yields.

    Of course, dividend yields can be misleading but are the best income indicator we have right now.

    At the time of writing, Fortescue shares are yielding 6.88% while Harvey Norman Holdings Ltd (ASX: HVN) shares are yielding 9.18%.

    If you can consistently save $10,000 per year and invest in a diversified ASX share portfolio, you can quickly generate a $20,000 passive income stream.

    If we assume a 7% average dividend yield, we would need to build a $285,714 portfolio for a $20,000 per year passive income.

    Let’s say we save $10,000 per year and invest it in ASX shares. If we receive a 7% yield and reinvest it into these shares, we could generate a $21,588 passive income in just 17 years.

    Foolish takeaway

    It’s easy to think that creating a passive income from ASX shares is all too hard.

    However, while the above calculation is a simplified example, it does demonstrate that discipline and a strong dividend portfolio can help you build your long-term wealth.

    For more ASX shares to achieve your retirement goals, check out these top picks today!

    5 “Bounce Back” Stocks To Tame The Bear Market (FREE REPORT)

    Master investor Scott Phillips has sifted through the wreckage and identified the 5 stocks he thinks could bounce back the hardest once the coronavirus is contained.

    Given how far some of them have fallen, the upside potential could be enormous.

    The report is called 5 Stocks For Building Wealth after 50, and you can grab a copy for FREE for a limited time only.

    But you will have to hurry — history has shown the market could bounce significantly higher before the virus is contained, meaning the cheap prices on offer today might not last for long.

    See the 5 stocks

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    Motley Fool contributor Ken Hall 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.

    The post How to build a $20,000 passive income with ASX shares appeared first on Motley Fool Australia.

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  • There’s No Reason to Have FOMO About Royal Caribbean

    There’s No Reason to Have FOMO About Royal CaribbeanRoyal Caribbean (NYSE:RCL) is having itself a month. RCL stock is up over 40% since the beginning of May on what can only be described as discount shopping at the clearance rack. Right now, it seems that investors keep buying the stock as if they're afraid of missing out on the next leg up.Source: Laszlo Halasi / Shutterstock.com The problem with that thinking is that Royal Caribbean had already nearly doubled from where it had fallen in March. And at around $40 per share, RCL stock felt a little ahead of itself. So, with a stock price nearing $60 per share, it seems like a classic case of investors who have a fear of missing out (FOMO). Royal Caribbean Is Not to BlameLike all cruise lines, Royal Caribbean saw its stock price plummet in March as the Covid-19 pandemic forced a complete suspension of operations. The cruise line industry is no stranger to overcoming situations regarding shipborne illnesses. But the nature of the novel coronavirus and its potential to be transmitted asymptomatically is a particular problem for an industry that relies on having a captive audience for days or even weeks.InvestorPlace – Stock Market News, Stock Advice & Trading TipsThen you throw in the possibility of being quarantined on a cruise ship (those cabins aren't that big) and you can understand why many cruise line passengers may be taking a wait-and-see approach. * 7 Hotel Stocks to Buy Before Vacationing Restarts In early May, I questioned if the stock was priced too high at $41 per share. Since then, the company reported its first-quarter earnings. And it announced that it would not start sailing again until August 1, 2020. That's a month longer than previously planned.The company also said that forward bookings for the remainder of 2020 were "meaningfully lower" on a year-over-year basis. The Future Revenue Picture Is Still Not ClearLast year, Royal Caribbean brought in about $10.6 billion in revenue. On the conference call to discuss first quarter earnings in May, Jason Liberty, RCL's CFO announced that the company had cut back on capacity by 25%.Liberty also stated that Royal Caribbean, like every other cruise line, was offering its guests who had their cruises suspended the option to receive a 125% future cruise certificate (FCC) in lieu of a cash refund. However, as of the earnings call, approximately half (45%) of guests had asked for a refund.On the face of it, retaining approximately half of potential revenue would seem like "less bad" news. But here's something else to remember about the future cruise certificates. In a blog post from the company, Royal Caribbean stated "the deadline to request to change a future cruise credit to a refund deadline is December 31, 2020."It makes sense that many customers will want to take a wait-and-see attitude. If cruise lines begin to sail without incident, they can book a trip. If they don't, they can get their cash refund.The company did say about 20% of the guests who have an FCC have already rebooked future cruises. But here's the rest of that story. On the same conference call, Chairman and CEO Richard Fain spoke about Royal Caribbean's Cruise with Confidence program that allows guests to cancel a booking up to 48 hours before the cruise is set to sail.All of this put together makes a tricky revenue picture even more complex. RCL stock seems priced for the company to realize all available revenue. And that seems unlikely. You Can Wait on RCL StockCovid-19 and the novel coronavirus that causes it will continue to infect cruise lines for quite some time. Fain confidently told investors that he was confident the cruise industry would bounce back similar to what occurred after 9/11.I do believe that people will continue to cruise. As treatments, and possibly a vaccine, become available, the number of passengers should increase. But right now, RCL stock has a price-earnings ratio of over 60 at a time when the cruise line is burning through between $250 million to $275 million per month.My InvestorPlace colleague Todd Shriber has a different opinion. Shriber suggests that you can't wait for the right time to buy cruise line stocks because the market will already have beaten you to it. He also says RCL's forward bookings are within historical ranges.I understand his point, but I don't agree with it. There are times when things can be simple. RCL stock is needlessly expensive at the current price. I want to see revenue before I'm going to overpay for a cruise line stock.Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019. As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * Top Stock Picker Reveals His Next 1,000% Winner * The 1 Stock All Retirees Must Own * Look What America's Richest Family Is Investing in Now The post Therea€™s No Reason to Have FOMO About Royal Caribbean appeared first on InvestorPlace.

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