Author: therawinformant

When COVID-19 arrived uninvited on Australia’s shores on 25 January, few could have imagined the massive disruptions that soon followed.

Among the biggest of those disruptions was a rapid shift towards shopping and working from home.

The shopping from home shift saw the share prices of ASX-listed brick and mortar retailers – and their landlords – fall hard. Most of them have yet to recover their January share price levels.

On the flip side, a handful of shrewd ASX-listed online retailers not only recovered from the viral selloff in February and March, but have gone on to post hefty gains.

The share price winners and losers

Take online retail darling Kogan.com Ltd (ASX: KGN), for example. Despite falling more than 52% earlier in the year, Kogan’s share price is up 173% since 2 January.

Most of those gains have come as the company’s 200 some staff work from home. Like the majority of businesses across Australia, Kogan’s offices have not been able to accommodate their normal occupancy in these days of social distancing.

But now even Kogan’s tech savvy management is eager to open the office doors and get its staff back in for face to face engagement.

As founder Ruslan Kogan said in the Australian Financial Review:

I’m craving to get back into the office and I know that the majority of our team also can’t wait to get back.

I think as humans we have a tendency to extrapolate the current environment when predicting the future so lots of people are saying that offices will never be the same. I think it’s the wrong view. The same happens when your poor football team wins two matches in a row and all of a sudden you think they’re a chance at the premiership.

The office environment is currently undergoing massive disruption and we’re not permitted to use our offices. I’m sure once it’s safe to do so, things will return to just how they were very quickly.

Office shares emerging from massive disruption

Like brick and mortar retailers, most office shares are still posting significant losses for 2020. But if Kogan is correct and the office market returns to how it was very quickly, then the share price gains should come just as fast.

One way to gain exposure to a basket of quality office assets is with the Centuria Office REIT (ASX: COF), which makes up part of the S&P/ASX 300 Index (ASX: XKO).

Real estate investment trusts (REITs) trade on the ASX just like any other share.

Centuria holds 23 quality office assets valued at $2.1 billion as at 30 June. Most of the assets are located in or near Australia’s major city centres, close to transport. The REIT pays an 8.6% annual dividend yield, unfranked.

Centuria was a strong performer in 2019, with the share price gaining 33% from February 2019 through to February 2020. But after office buildings largely closed in the wake of the pandemic, the share price fell 55% from 21 February through to 23 March. It has since regained 40%.

Year-to-date, the Centuria share price is still down 31%. As the work from home shift reverses and workers return to the office, this could prove an attractive entry point.

More reading

• 4 stellar ASX growth shares to buy right now
• Centuria Capital’s fund managers’ insights on A-REITs and unlisted property funds
• 3 ASX tech shares to buy and hold for the next decade
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
• How to generate $50k a year from ASX dividends

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia 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 With even Kogan (ASX:KGN) eyeing a return to the office, where next to invest? appeared first on Motley Fool Australia.

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Altium Limited (ASX: ALU) advised the market of a restructure this afternoon, sending the Altium share price rocketing up to $35.76, before falling back to intra-day levels. The Altium share price was trading relatively flat, up 0.43% to $35.23 at close of trade.

This compares to the S&P/ASX 200 Index (ASX: XJO) which was up 2.6% at 5,941 points.

Expansion and restructure

Altium advised it was expanding its leadership and organisation capacity to drive growth and further invest in its new cloud platform, Altium 365. The company’s successful launch and strong early adoption of its product created the opportunity for structural review.

In the restructure, Altium will separate its cloud operations from its software business. The company will also focus on its growing market opportunity and expansion into the broader electronics ecosystem.

Altium CEO Aram Mirkazemi said the launch of Altium 365 marked a significant turning-point in the company’s journey. He said:

We are deep in execution mode toward our dominance and transformation goals. This has led to the creation of a new organisational structure to support us on this journey and to drive the high performance required to achieve our goals. I refer to this as Altium’s Netflix moment, which is commonly referred to in the high-tech industry as a hard pivot to the cloud.

Under the restructure, the cloud and software departments will have their own leadership teams and roadmaps. This will allow both divisions to develop at their own pace to its product and go-to-market processes. The separation of high-volume sales from high-touch sales is expected to support Altium’s goal to reach 100,000 subscribers by 2025.

Leadership changes

Altium’s executive director Sergey Kostinsky was appointed president in the restructure. He will focus on executing business operations, with emphasis on the rapid deployment and adoption of Altium 365.

Altium chair Sam Weiss was upbeat with Mr Kostinsky’s new role, saying:

We are excited to see Sergey appointed to the new role of president at Altium. Sergey has been the driving force behind Altium’s technology development that underpins the company’s bid for market dominance and to transform the electronics industry.

Under Sergey’s leadership, Altium’s PCB design tools have become world-class and Altium 365 is set to revolutionise the way that electronic products are designed and manufactured. We are confident that Sergey will bring his unique focus on discipline and value to all of Altium’s product development and go-to-market domains to deliver winning outcomes.

Furthermore, Altium CFO Joe Bedewi will assume the new role of EVP corporate development and external affairs. This role was created to capitalise on the growing market opportunity for Altium 365 and the wider electronics industry.

The vacant CFO role will be filled by Martin Ive, who has led the company’s global finance function for more than 15 years. Mr Ive has provided strong business support to Altium’s sales teams, while being a key figure in strategic and operational decision-making. As CFO, Mr Ive will work closely with Mr Kostinsky to push Altium’s performance.

More reading

• The latest ASX small cap buy ideas from leading brokers
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins
• 2 outstanding ASX tech shares to buy for the long term
• Ignore the noise and focus on these ASX shares instead

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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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Risk appetite has come roaring back on Monday and these ASX small caps are outperforming as they are listed as the latest broker buy ideas.

The S&P/ASX SMALL ORDINARIES (Index: ^AXSO) and S&P/ASX 200 Index (Index:^AXJO) rallied around 2.4% each at the close.

If the rebound is sustained, ASX small caps could pull ahead as these higher risk propositions tend to perform better when fear turns to greed.

ASX small cap that’s ripe for the picking

There are two on the Small Ordinaries that stand out today. The first is the Costa Group Holdings Ltd (ASX: CGC) share price, which gained 3.3% to $3.47 today.

UBS reiterated its “buy” recommendation on the fruit and mushroom grower after it noted wholesale prices for most of its key products have improved.

Sweet outlook puts Costa on “buy” list

“Overall, wholesale trends through 3QCY20 were strong with prices (ex-Blueberries) up 19-34% y/y, accelerating vs. 2QCY20,” said UBS.

“Mushrooms have been particularly strong, with progressive improvement since July despite additional capacity.

“While the Blueberry category was weak during Jul/Aug, a significant improvement during Sep-20 resulted in ~flat y/y prices during 3Q.”

The other worry about the lack of pickers during COVID-19 travel restrictions. But the broker believes this isn’t an issue, in part due to Costa’s geographically diverse operations.

UBS’ 12-month price target on Costa is $3.55 a share.

Fallen far enough

Meanwhile, the Integrated Research Limited (ASX: IRI) share price surged 4.4% to $3.60 after Bell Potter upgraded the stock.

The big drop in the share price of the IT services group since the August reporting season meant there is a 20% upside including dividends.

The broker is forecasting earnings per share growth of 10% for the current financial year, 11% for FY22 and 15% for FY23.

Double-digit earnings growth

“The lower forecast growth in FY21 is due to the release of new SaaS and hybrid products this half which are only expected to start contributing in 2HFY21,” said the broker.

“There is, however, a lack of short term catalysts for the stock – at least which we can see – and we also only expect modest growth in 1HFY21 with the anticipated skew in earnings towards 2HFY21.

“But we do expect solid growth for the full year result which in our view supports the upgrade in recommendation.”

Bell Potter lifted its rating on the stock to “buy” from “hold” with a 12-month price target of $4.25 a share.

More reading

• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• Top broker tipping turnaround in ASX big bank profit margins
• Ignore the noise and focus on these ASX shares instead
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump

Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Integrated Research Limited. The Motley Fool Australia owns shares of and has recommended COSTA GRP 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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The S&P/ASX 200 Index (ASX: XJO) went up 2.6% today to 5,942 points.

If the ASX fell last week because of President Trump’s COVID-19 diagnosis, then it may have reversed that negative sentiment with a prediction that he could leave hospital as early as Monday.

Tax cuts

The ASX may be getting a bit of a boost today after more of the upcoming federal budget was reported by media.

Tax cuts will reportedly be backdated to 1 July 2020. The tax first bracket that gets taxed (with a 19% rate) will be extended to $45,000 (up from $37,000) and earners above $90,000 will benefit with the 37% tax rate changed to start at $120,000 rather than $90,000.

Plenty of ‘Australian economy’ ASX 200 shares went up today.

The Commonwealth Bank of Australia (ASX: CBA) share price grew 3.6%, the Westpac Banking Corp (ASX: WBC) share price rose 4.4%, the Australia and New Zealand Banking Group (ASX: ANZ) share price rose 4.2% and the National Australia Bank Ltd (ASX: NAB) share price grew 4%.

In other movements, the biggest gain today came from Mesoblast Limited (ASX: MSB), its share price jumped 11.6%. According to the ASX, the worst performer was the Viva Energy Group Ltd (ASX: VEA) share price which dropped 12.1%.

Altium Limited (ASX: ALU)

The ASX 200 software business announced today that it’s expanding its leadership and organisational capacity to improve performance and invest more into Altium 365.

Altium said that the successful launch and the strong early adoption of Altium 365 has created the opportunity to pivot Altium’s leadership and organisation structure towards the cloud. It’s separating its cloud operations from its software business and will focus on growing its market opportunity and expansion into the broader electronics ecosystems.

Under the new organisation structure, the ‘cloud’ and ‘software’ sections will each have their own leadership and organisational roadmap. It will allow the cloud business to develop at a different cadence and to form a “SaaS-like organisational structure around its product and go-to-market processes.”

The company said that another benefit would be the separation of high-volume sales from high-touch sales for its journey to market leadership.

Altium has appointed executive director Sergey Kostinsky to the role of president. He will be focused on driving high performance of operations with an emphasis on developing and adopting Altium 365.

Joe Bedewi has stepped down as Altium CFO in order to take on the new role of EVP corporate development and external affairs. This role has been created to capitalise on the Altium 365 market opportunity and the interest in it from the electronics industry.

Altium has appointed Mr Martin Ive as the new CFO, who has led the ASX 200 share’s global finance function for over 15 years.

Altium CEO Mr Aram Mirkazemi said: “The launch of Altium 365 marks a significant turning-point in Altium’s journey. We are in deep execution mode toward our dominance and transformation goals. This has led to the creation of a new organisational structure to support us on this journey and to drive the high performance required to achieve our goals. I refer to this as Altium’s Netflix Moment, which is commonly referred to in the high-tech industry as a hard pivot to the cloud.”

The Altium share price rose 0.4% today.

McMillan Shakespeare Limited (ASX: MMS)

The McMillan Shakespeare share price went up after announcing that the class action has been settled.

The class action related to a warranty product business which McMillan Shakespeare acquired in 2015. A significant portion of the relevant period that the claim was when the business wasn’t actually owned by McMillan Shakespeare.

The company said that the parties have reached agreement to settle the matter with no admission of liability. The agreement is subject to the approval of the Australian federal court.

McMillan Shakespeare provided a net charge of approximately $2 million plus legal costs in its statutory FY20 result. Management said this would be sufficient to deal with the agreed settlement.

The McMillan Shakespeare share price grew around 4.75%.

More reading

• Top broker tipping turnaround in ASX big bank profit margins
• Why the Mesoblast (ASX:MSB) share price jumped 14% higher today
• 2 outstanding ASX tech shares to buy for the long term
• Why the Viva Energy (ASX:VEA) share price crashed 14% lower today
• Why today’s NAB (ASX:NAB) share price gains could be just the beginning

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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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I think that investing in ASX shares is a great idea if you’re wondering where to start with $500.

You don’t need $50,000 to start investing in shares. You can start with $1,000, or even half that amount. It also costs very little to do a transaction. Buying (or selling) a property usually costs many thousands of dollars.

But which share should you buy? There are lots of different things you can invest in. These days one of the best ways to get started is with an exchange-traded fund (ETF) which allows you to invest in lots of different shares through a single investment.  

But the ASX share that I’m going to tell you about in this article is a listed investment company (LIC).

A LIC is somewhat similar to an ETF. Most LICs usually provide a diversified portfolio of shares, just like an ETF. However, LICs don’t just follow an index – the portfolios are constructed by managers. Some of those managers can outperform the index over the long-term (and plenty don’t).

Here’s my ideas for $500:

Future Generation Investment Company Ltd (ASX: FGX)

As I said, this is a LIC. But there are a few key differences.

The ASX share doesn’t charge any management fees or performance fees. Indeed, it hardly has any costs at all because of its philanthropic nature. It donates 1% of its net assets to youth charities each year. That’s where the ‘Future Generation’ part of the name comes in.

It doesn’t invest in individual businesses like a normal LIC does. Instead, Future Generation is invested in around 20 funds of different fund managers that invest in ASX share. The managers that it’s invested in include: Bennelong, Paradice, Regal, Eley Griffiths and Wilson Asset Management. The fund managers I mentioned represent almost half of Future Generation’s overall portfolio.

Each of those funds represent a portfolio shares, which could mean Future Generation may be invested in hundreds of different ASX shares. I think that’s great diversification. It probably provides better diversification than an ETF like BetaShares Australia 200 ETF (ASX: A200).

Performance

When you look at the latest performance update from 31 August 2020, Future Generation shows outperformance of the S&P/ASX All Ordinaries Accumulation Index over the past month, six months, year, three years, five years and since inception in September 2014.

Indeed, since inception the Future Generation gross portfolio return has beaten the index by an average of 2.6% per annum.

Good diversification and outperformance is a nice combination.

Dividend

LICs can choose to pay out a dividend from its investment performance. Future Generation aims to pay out a slightly higher dividend each year, if the profit reserve allows.

The ASX share currently has an annualised dividend of 5.2 cents per share. That amounts to a grossed-up dividend yield of 6.5% at the current Future Generation share price.

Is the ASX share a good buy today?

One of the most important things to know about LICs is that they can trade at discounts or premiums to their underlying asset value. In other words, sometimes you can buy $0.90 of assets for $1 of shares. Or sometimes you have to pay $1.10 for $1 of assets.

At the time of writing Future Generation has a share price of $1.14. This compares to pre-tax net tangible assets (NTA) of $1.2517 per share. That means it’s trading at a discount of 9% to August’s NTA. The NTA may have grown since then.

When you consider the diversification, the outperformance, the dividend yield and the NTA discount, I think Future Generation is a great ASX share investment for $500 right now.

More reading

• How to create a yearly income of $65,000 in dividends
• 3 LICs with high dividend yields of over 6.5%
• 3 star ASX income shares for 2021
• How to generate $1,000 a month in dividends

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. 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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Following a stellar performance in 2019, which saw the Image Resources NL (ASX: IMA) share price gain 108% in only 12 months, Image Resources’ share price has been far choppier in 2020.

Like most every company on the ASX, Image Resources share price was savaged by the COVID-19 panic selling earlier this year, falling 45% from 24 February through to 23 March. From there it gained 75% through to 18 September before again sliding lower.

Year-to-date the share price is down 30% despite today’s strong performance, which saw shares trading 9% higher in mid-afternoon before giving up some of those gains to be 6% higher at time of writing.

What does Image Resources do?

Image Resources is a mining company primarily focused on mineral sands. The company operates an open-cut mine and ore processing facility at its 100%-owned Boonanarring Project, one of the highest-grade zircon-rich mineral sands projects in Australia. Just 80 kilometres north of Perth, the mine is well serviced by existing infrastructure.

Image Resources achieved profitability in the first quarter of 2019 and was cash flow positive in the second quarter of 2019. It is now at steady state production.

Image Resources has a market cap of $162 million.

Why is the Image Resources share price soaring higher today?

After closing on Friday at 16 cents per share, Image Resource’s shares are trading at 18 cents this afternoon.

Aside from a potential lift from the broader rise of the All Ordinaries Index (ASX: XAO), up 2.1% in intraday trading, Image Resources’ share price looks to have gained a boost from the company’s share buy back announcement to the ASX this morning.

The shares in question, just over 495,000 of them, had been issued to employees as part of the company’s Employee Share Plan (ESP). Image Resources noted that:

Some of those employees have ceased employment with the company and the loans made to the employees to fund the issue of the shares became repayable on the cessation of employment. In accordance with the terms of the ESP, the board has determined that the company will buy back and cancel the relevant shares, with the proceeds applied to offset the loans.

The company is offering 26.7 cents per share, considerably higher than the current share price of 18 cents.

More reading

• Why the Droneshield (ASX:DRO) share price has rocketed higher
• Starpharma (ASX:SPL) share price tumbles on oversubscribed placement
• Why the Paradigm (ASX:PAR) share price has rocketed 8% higher today
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• Village (ASX:VRL) share price edges lower after BGH takeover update

Motley Fool contributor Bernd Struben 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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ASX bank stocks are on fire today! And a prediction by JPMorgan that their profit margins could improve will give investors an extra reason to get excited.

Growing optimism on news of US President Donald Trump’s improving COVID-19 condition is lifting sentiment.

The S&P/ASX 200 Index (Index:^AXJO) rallied 2.4% in after lunch trade but ASX banks are outperforming.

ASX big banks outperforming

The National Australia Bank Ltd. (ASX: NAB) share price, Westpac Banking Corp (ASX: WBC) share price and Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price are up around 3.7% each.

The Commonwealth Bank of Australia (ASX: CBA) share price is lagging its peers but its 2.7% jump still puts it ahead of the broader market.

ASX bank stocks’ margin outlook improving

JPMorgan delivered extra good news for the big four’s net interest margin (NIM) outlook. Investors have been keenly watching this key profitability measure as bank margins have been under pressure from falling interest rates.

It doesn’t help that the Reserve Bank of Australia is tipped to cut the cash rate again in November to a record low of just 0.1%.

NIM is the difference between the interest banks have to pay for its funds and the interest it can charge borrowers.

One of the biggest profit levers

But at least for September, funding costs have eased for the banks and JPMorgan believes this remains one of the best profit levers for the sector.

“Over the last six months, spreads on savings products and TDs [term deposits] have improved by 38ps and 53bps, respectively,” said the broker.

“We estimate this should provide a meaningful tailwind of 3-6bps [basis points] to major bank 1H21 NIMs.”

Low expectations are a saving grace

This equates to around a 3% increase for the big four. This may not sound like much, but any NIM expansion will be warmly welcomed by investors.

This is because expectations are set low for banks, which have been underperforming the market. The fallout from COVID-19 on jobs and the property market have hammered sentiment towards our biggest mortgage lenders.

Even with today’s big bounce, there’s little good news priced into the sector. Also, I believe banks stocks are underheld by fund managers.

Any excuse to turn positive on banks will trigger a big rally.

Big banks have an upper hand

But banks aren’t out of the woods just yet. JPMorgan believes competition for borrowers is heating up with second-tier lenders cutting rates to win business.

On the other hand, the big banks are better placed to win any war of attrition. The big boys have a distinct advantage over their smaller rivals in securing cheaper funding.

More reading

• Why today’s NAB (ASX:NAB) share price gains could be just the beginning
• Ignore the noise and focus on these ASX shares instead
• ASX 200 up 2.3%: Big four banks charge higher, Qantas soars, energy shares jump
• Why Costa, Qantas, Santos, & Westpac shares are storming higher today
• Could industrial REITs be the best ASX shares to buy for dividends?

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. Connect with me on Twitter @brenlau.

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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The best performer on the S&P/ASX 200 Index (ASX: XJO) on Monday has been the Mesoblast limited (ASX: MSB) share price.

In afternoon trade the biotechnology company’s shares are up a sizeable 11% to $3.54.

At one stage the Mesoblast share price was up as much as 14.5% to $3.65.

Why is the Mesoblast share price surging higher?

Investors appear to have been buying Mesoblast’s shares on Monday on the belief that they were oversold on Friday following the release of a disappointing announcement.

That announcement revealed that the U.S. FDA has not approved its remestemcel-L (RYONCIL) treatment for paediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD).

This came as a big surprise to the market because in August the Oncologic Drugs Advisory Committee (ODAC) of the FDA voted 9:1 in favour that the available data support the efficacy of remestemcel-L in pediatric patients with SR-aGVHD.

It isn’t often that the FDA goes against the ODAC’s vote, but this is what happened last week.

However, it isn’t the end of the road. The regulatory body has recommended that Mesoblast conduct at least one additional randomised, controlled study in adults or children to provide further evidence of the effectiveness of remestemcel-L for SR-aGVHD.

In addition to this, as there are currently no approved treatments for the life-threatening condition in children under 12, Mesoblast is urgently requesting a Type A meeting with the FDA. This meeting is expected within 30 days and will discuss a potential accelerated approval with a post-approval condition for an additional study.

Judging by the Mesoblast share price performance today, some investors appear optimistic the company will be able to convince the FDA to approve the treatment at this meeting.

Should you buy the dip?

Mesoblast is an exciting company, but I would suggest investors keep their powder dry until a final decision is known.

Until then, I believe there are too many risks and not a sufficient reward for investors.

As a result, I think investors would be better off buying biotech giant CSL Limited (ASX: CSL) at this point.

More reading

• These were the worst performing shares on the ASX 200 last week
• ASX 200 drops, Trump has COVID-19, Mesoblast (ASX:MSB) share price sinks
• Why Beach, Fortescue, Mesoblast, & SeaLink shares are tumbling lower
• ASX 200 down 0.95%: Mesoblast crashes lower on FDA update, Afterpay surges higher
• Mesoblast (ASX:MSB) share price tumbles 32% lower on update

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 CSL Ltd. 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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I think there are some ASX dividend shares which pay out huge amounts of cash could be good picks. 

It’s hard to make any money from a bank account at the moment because Australia’s official interest rate is now just 0.25% and could go even lower.

Here are some ways to boost income:

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a listed investment company (LIC) which is run by the highly-capable team at Wilson Asset management. It targets ASX blue chip shares.

The benefit of the LIC structure is that it can invest in any shares/assets that it sees as an opportunity. Investment gains can be generated by both capital growth and dividends received. That combined investment return can then be used to pay a solid dividend to investors. LICs can be very good ASX dividend shares with this setup.

In the latest WAM Leaders update, it was able to point to strong investment performance in the short-term and the long-term.

Over the past year, WAM Leaders’ gross portfolio return (before fees, expenses and taxes) has been 5.6% – outperforming the S&P/ASX 200 Accumulation Index by 10.7%. Since inception in May 2016, WAM Leaders’ portfolio return has been 10.6% per annum, outperforming the index by 3.5%.

WAM Leaders has been able to use this strong performance to pay a growing dividend each year since FY17.

Including the guidance of an interim FY21 dividend of 3.5 cents per share, WAM Leaders offers a grossed-up dividend yield of 7.8%.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current is an asset management company which has strategic stakes in other asset managers and tries to help them grow.

The ASX dividend share is on an upwards trend with a few key investments doing really well, with GQG growing its funds under management (FUM) increased from US$25.1 billion to US$44.6 billion in FY20.

Excluding boutiques sold and acquired during the year, Pacific’s FUM rose 52% despite COVID-19. It ended with FUM of A$93.3 billion in FY20.

The strong level of growth helped the ASX dividend share’s underlying earnings per share (EPS) rose by 18% to $0.44 per share. This earnings growth help support a 40% increase of total dividends to $0.35 per share.

At the current Pacific Group share price it offers a trailing grossed-up dividend yield of 8.3%.

The company thinks it will secure new commitments in FY21. It could have a grossed-up dividend yield of 9.5% for FY21 if it grows its underlying earnings nicely again.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This is another LIC, but it targets much smaller businesses than the ones that WAM Leaders looks at.

The ASX dividend share’s hunting ground is ASX shares with market capitalisations between $100 million and $1 billion. Smaller businesses have more return potential, partly due to their size and partly because mainstream investors haven’t discovered the business yet.

NAOS Small Cap Opportunities Company has a high conviction portfolio of around 10 names. Some of those picks include: Eureka Group Holdings Ltd (ASX: EGH), Consolidated Operations Group Ltd (ASX: COG), MNF Group Ltd (ASX: MNF), BSA Limited (ASX: BSA) and Over The Wire Holdings Ltd (ASX: OTW). I think that’s a solid group of businesses.

The ASX dividend share has settled into paying a 1 cent per share dividend every quarter. At the current NAOS Small Cap Opportunities Company share price it has a grossed-up dividend yield of around 10%.

It’s also trading at a 18.3% discount to its August 2020 pre-tax net tangible assets (NTA) per share. That’s a pretty big discount.

Foolish takeaway

Each of these ASX dividend shares offer a big dividend and seem to be at least maintaining their payments to shareholders. WAM Leaders and Pacific are growing the dividends. At the current prices I think Pacific could be the best buy because of its medium-term growth prospects. However, both of the LICs could offer attractive diversified income for your portfolio.

More reading

• 3 ASX shares that I’d invest $1,000 into EVERY month
• 3 small cap ASX shares I’d buy with $3,000 right now
• How to create a yearly income of $65,000 in dividends
• 3 LICs with high dividend yields of over 6.5%
• 3 ASX shares now trading at crazy cheap prices

Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended Over The Wire Holdings 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 Get paid huge amounts of cash to own these ASX dividend shares appeared first on Motley Fool Australia.

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The ASX is littered with lots of companies that show potential to become the next market darling. While I mostly invest in the mid-to-large cap space, I do look for small cap ASX shares that could deliver strong returns.

Every company has a story to sell. The trick is to identify value and opportunities. Researching your chosen business is a great start, but it also pays off to look at its rivals and the macro-environment.

Here are my top 2 small cap ASX shares that I think will perform in 2021.

Botanix Pharmaceuticals Ltd (ASX: BOT)

Botanix is a synthetic cannabinoid pharmaceutical company that focuses on dermatology and antimicrobial products.

Pipeline products include the BTX 1801 gel which prevents surgical site infections by killing bacteria during surgery incisions. Currently in a phase 2a study, Botanix aims to combat the growing global antibiotic resistance that affects millions each year.

In April, Botanix received a major boost from the United States Food and Drug Administration (FDA). The company’s flagship BTX 1801 received a Qualified Infectious Disease Product status. The incentivised status grants an additional five-year regulatory exclusivity, meaning generic products cannot enter the market. Furthermore, Botanix is eligible for a priority FDA review, cutting the standard review period to 6 months from the original 12 months. Furthermore, fast-track designation enables Botanix to have more frequent communication with the FDA during the drug development and review process.

At the time of writing, the Botanix share price is trading at 10 cents, up 7.5% for the day. With a market capitalisation of $97 million, if the company can perform to market expectations, its share price will soar.

Botanix could be a game-changer for infection preventative diseases. I would keep an eye on the medical company as a speculative buy.

Osteopore Ltd (ASX: OSX)

A medical technology company based in Australian and Singapore, Osteopore specialises in the production of 3D printed bioresorbable implants. The in-house manufactured product is used in conjunction with surgical procedures to assist with the natural stages of bone healing.

Osteopore recently secured an initial US distribution agreement with Bioplate Inc. that looks to penetrate the world’s largest healthcare market in the second half of 2020. The company also gained approval from the Therapeutics Goods Administration (TGA) for market entry in Australia. Osteopore’s new geographical presence should see incoming revenue streams as it expands manufacturing capabilities.

Allied Market Research estimates the market opportunities for bone graft substitutes will be US$3.9 billion by 2025. Osteopore’s current sales come from the cranial/maxillofacial (CMF) area which represents 20% of the entire market. Other market segments like dental and cosmetic (nasal) are comparable to size with CMF, which Osteopore is now starting to penetrate.

Most significantly, 40% of the bone graft substitute market derives from orthopaedic and spine. This untapped opportunity could be huge from Osteopore should it succeed in its clinical trials.

The Osteopore share price has moved 0.9% higher today to 53 cents at the time of writing. The med tech company is valued at $62 million and has no debt. In light of this, I think the Osteopore share price might surge much higher if it can develop new distribution networks.

I believe this relatively new ASX-listed company (floated in September 2019) could be destined for big things. I would consider snapping up Osteopore as a small cap ASX share in the buy zone today.

More reading

• 2 outstanding ASX tech shares to buy for the long term
• Why I would buy Wesfarmers (ASX:WES) and this ASX share for a retirement portfolio
• Why the Viva Energy (ASX:VEA) share price crashed 14% lower today
• Why today’s NAB (ASX:NAB) share price gains could be just the beginning
• Ignore the noise and focus on these ASX shares instead

Motley Fool contributor Aaron Teboneras 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 Why I think these small cap ASX shares will perform in 2021 appeared first on Motley Fool Australia.

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