Author: therawinformant

As regular readers would know, one of my highest-conviction long-term ASX share ideas is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). It reported this week, is the Soul Patts share price a buy?

FY20 report

The Soul Patts report was covered here. WHSP was listed in 1903 and it has been going strong ever since. 

There were a number of interesting pieces in the report.

Regular profit after tax was down 44.7% because of lower coal prices and demand for New Hope Corporation Limited (ASX: NHC) as well as COVID-19 impacts on construction with Brickworks Limited (ASX: BKW).

Statutory profit after tax increased by 284.3% to $953 million largely due to the accounting profit from merger involving TPG Telecom Ltd (ASX: TPG).

The net cash flows from investments increased by 48.8% to $252.3 million thanks to the special dividend declared by TPG.

Soul Patts’ net asset value (pre-tax) decreased by 5.3% to $5.2 billion. The net asset value decline of 5.3% was 6.9% better than the S&P/ASX All Ordinaries Index (ASX: XAO) decline of 12.2% over the year to 31 July 2020.

The Soul Patts directors decided to declare a final dividend of 35 cents per share, which was an increase of 2.9% compared to last year’s final dividend. That brought the total dividend for FY20 up to 60 cents per share – an increase of 3.4%.

Its equities portfolios did very well during the year.

The small cap portfolio delivered a 4.4% return, beating the ASX Small Ords Accumulation Index by 12.9%. This portfolio aims to identify fast growing companies that are outside the companies monitored by the large cap portfolio monitors. These ideas could become larger positions in the overall Soul Patts portfolio.

The large cap portfolio – managed by Contact Asset Management – delivered a total return of -7.8%, beating the 9.7% return of the S&P/ASX 300 Accumulation Index over the year. This portfolio aims to preserve long-term capital and deliver an attractive income stream of a grossed-up yield of 6%.

Total returns

The most important reason for any investor to like any ASX share is the total return. The total return is the share price growth plus the dividends. The Soul Patts share price has done very well over the long-term. 

Over the past five years its average total shareholder returns (TSR) per annum has been 10.6%, outperforming the All Ordinaries Accumulation Index by 5.1% per annum. Over the past two decades its average TSR per annum has been 12.7%, outperforming the All Ordinaries by 5.2% per annum.

It has done this whilst improving its diversification. During FY20 one of its main new investments was a $127.7 million investment into agriculture, managed by Argyle Capital Partners. It also increased its stake in Ironbark Asset Management and it participated in the Palla Pharma Ltd (ASX: PAL) capital raising.

The outperformance and increasing diversification is an attractive proposition.

Reliability for dividend investors

I think that Soul Patts could be one of the best ASX dividend shares on the ASX, if not the best. It has actually increased its dividend every year for the past 20 years in a row.

At the current Soul Patts share price it has a grossed-up dividend yield of 3.6%. The yield has lowered recently as the Soul Patts share price has risen strongly in September.

As I mentioned, the total dividend for FY20 was increased by 3.4% to 60 cents per share.

If you’re looking to buy Soul Patts shares then I imagine the dividend is part of the focus. Soul Patts is a great dividend idea with its diversified and growing assets in my opinion.

Is the Soul Patts share price a buy?

Since the end of August 2020 the Soul Patts share price has gone up by 13%. It has now risen beyond the pre-COVID-19 crash price. So it’s not as cheap as a buy as it was before over the past few months.

For the long-term I think Soul Patts could be a very good buy for steady returns and growing dividends.

Soul Patts’ returns will largely be decided by the performance of its underlying assets. I think some of its businesses like TPG, Brickworks and Clover Corporation Limited (ASX: CLV) are on track to deliver good returns over the next few years. The future investments will help grow its asset value, with the potential for something like regional data centres as an investment idea in FY21.

I’m not jumping to buy Soul Patts shares today, as it’s already one of my biggest positions. However, I like the business a lot so I’d be happy to buy a parcel today and buy more on price weakness.

More reading

• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• 3 star ASX income shares for 2021
• Here’s why Soul Patts (ASX:SOL) is the king of ASX dividend shares
• Top brokers name 3 ASX shares to sell today
• ASX 200 down 1.2%: Westpac hit with $1.3bn penalty, Brickworks disappoints, tech shares lower

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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On Thursday the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped notably lower following heavy declines by tech and gold miner shares. The benchmark index fell 0.8% to 5,875.9 points.

Will the market be able to bounce back from this on Friday? Here are five things to watch:

ASX 200 futures pointing higher.

It looks set to be a better day of trade for the ASX 200 index on Friday. According to the latest SPI futures, the benchmark index is poised to rise 6 points or 0.1% at the open. This follows a positive night of trade on Wall Street, which saw the Dow Jones rise 0.2%, the S&P 500 climb 0.3%, and the Nasdaq index push 0.4% higher.

Oil prices mixed.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) will be on watch today after a mixed night of trade for oil prices. According to Bloomberg, the WTI crude oil price is up 0.6% to US$40.18 a barrel and the Brent crude oil price is down slightly to US$41.76 a barrel. Traders appear undecided on oil prices amid falling inventories but concerns over demand.

Gold price recovers.

Gold miners Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could be on the rise today after the gold price recovered after a series of declines. According to CNBC, the spot gold price is up 0.3% to US$1,873.40 an ounce. The precious metal tumbled to a two-month low during Thursday’s trade.

Premier Investments full year results.

The Premier Investments Limited (ASX: PMV) share price will be one to watch this morning when it hands in its full year results. According to a note out of Goldman Sachs, its analysts expect the company to report net profit after tax of $152.2 million on a pre-AAB16 basis or $138.8 million adjusted for AASB-16. The latter is up 11.1% year on year. Goldman is also forecasting a fully franked 20 cents per share final dividend, down from 37 cents per share a year earlier.

Westpac rated as a buy.

Analysts at Goldman Sachs have retained their buy rating on Westpac Banking Corp (ASX: WBC) shares after it announced a $1.3 billion settlement with AUSTRAC. The broker has a $19.80 price target on the banking giant’s shares. It commented: “With this significant overhang for the stock now behind it, at a digestible incremental financial cost, we expect the stock to begin to re-rate (currently trades at a 17% PER discount to peers, versus in line historically), and reiterate our Buy.”

More reading

• ASX 200 falls 0.8%, Afterpay (ASX:APT) share price drops 6%
• Westpac (ASX:WBC) share price hits 4-month low. Is it time to buy the ASX bank?
• Why I just bought shares of this ASX ETF
• Gold retreats! Is this a buying opportunity?
• How Elon Musk’s Tesla delivered a body blow to these ASX stocks

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Premier Investments 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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I continue to believe that dividend shares are the best way for investors to generate an income in the current environment.

Luckily, there are a good number for investors to choose from on the Australian share market right now.

Two that I think would be great options for income investors are listed below. Here’s why I would buy them:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to consider buying is Accent. This footwear-focused retailer was a positive performer in FY 2020 despite the pandemic. It delivered a full year net profit after tax of $58 million, up 7.5% year on year. Thanks to its very strong start to FY 2021, I’m optimistic it will record similar growth this year.

Looking further ahead, I expect its expansion plans, strong online business, and on trend offering to underpin solid earnings and dividend growth over the next decade. In the meantime, I’m forecasting a 9 cents per share fully franked dividend in FY 2021. Based on the current Accent share price, this equates to a 5.7% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend share to consider buying Wesfarmers. I believe the conglomerate is well-placed for growth over the coming years thanks to the quality of its portfolio and particularly its Bunnings business. The hardware giant is now the company’s biggest contributor to earnings. Which, given its strong performance during the pandemic, has proven to be a very good thing.

While there is a lot of uncertainty because of the crisis, I’m optimistic that government stimulus will support the home improvement market and allow Bunnings to maintain its positive form in FY 2021. All in all, I expect this to lead to the company paying a fully franked dividend of ~$1.50 per share in FY 2021. Based on the current Wesfarmers share price, this equates to an attractive fully franked 3.3% dividend yield.

More reading

• The ASX stocks most leveraged to the Victorian economy re-start
• 3 mid cap ASX shares to buy for strong potential returns
• 2 high yield ASX dividend shares to buy this week
• Macquarie says ASX value shares will outperform growth stocks from here
• Is it time to buy Telstra and these high quality ASX 200 shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group. 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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Qantas Airways Limited (ASX: QAN) has lost a Federal Court case regarding the way it handled JobKeeper payments.

In a decision that could also affect other businesses that have utilised JobKeeper to improve their bottom lines, the court ruled the airline misused the COVID-19 assistance scheme.

The case brought on by unions concerned penalty wages paid in arrears and whether they could be counted towards the $1,500 JobKeeper payment for that second fortnight.

For example, a Qantas worker performs $2,500 worth of overtime in fortnight number 1. Penalties are paid in arrears so they receive nothing out of Qantas’ pocket but do receive $1,500 from JobKeeper.

Then in fortnight number 2, the worker doesn’t do any shifts but receives the $2,500 they’re owed from the previous period.

Qantas’ argument was that the $2,500 counts towards the JobKeeper allowance for fortnight 2. So the airline has been giving such workers just the $2,500 while the company keeps the $1,500 from the government assistance.

The Federal Court disagreed with Qantas on Thursday, and ruled that employees should be receiving both the $1,500 and $2,500 for fortnight number 2.

The court’s logic was that money owed for work from other periods can’t be counted towards JobKeeper for the fortnight of payment. That is, JobKeeper can only offset wages earned in the same fortnight.

Many Australian businesses could owe backpay

Qantas has a large workforce on shifts, fortnightly pay and ‘period on and period off’ cycles due to the nature of the aviation industry.

The court has yet to decide on remediation orders. But Thursday’s decision could mean the airline is up for a large backpay bill.

“The judgment will likely have adverse implications for all companies receiving JobKeeper, who are already reeling from the impacts of COVID,” stated Qantas.

Justice Geoffrey Flick acknowledged his decision could result in a “windfall” for employees.

“It remains a matter for the legislature to ‘tweak’ or adjust the scheme if it sees fit,” he said in the ruling.

According to Qantas, it had followed ATO guidance in handing out the ‘safety net’ assistance of $1,500 per fortnight.

“That ‘safety net’ assurance is a central part of the government’s JobKeeper policy,” the airline stated. “Today’s judgement appears to cut across that principle.”

The ruling especially impacts 8,000 Qantas workers terminated this year, as they would not have had subsequent fortnights to make up for the shortfall.

Qantas has 28 days to appeal to the full Federal Court, which it is “carefully considering”. 

The Australian Services Union has vowed it would “fight this all the way if we need to”.

“This is money stood-down Qantas workers desperately need. Qantas should do the right thing by its workers and promise to pay you what you are owed as soon as possible,” stated the union.

“This is money that Qantas workers will spend in their local businesses, helping our economy to bounce back as soon as possible.”

More reading

• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Why the Regional Express (ASX:REX) share price is taking off today
• Why Jumbo, New Hope, Northern Star, & Qantas shares are dropping lower
• The moment Virgin Australia CEO knew the airline was in trouble
• Is the Qantas (ASX:QAN) share price a cheap buy?

Motley Fool contributor Tony Yoo 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 an eligible Telstra Corporation Ltd (ASX: TLS) shareholder, earlier today you should have been paid the telco giant’s fully franked 8 cents per share final dividend.

While many shareholders will be using these funds as a source of income (particularly in this low interest rate environment), others may plan to reinvest these dividends back into the share market.

If you’re in the latter group, here are two top ASX shares that I would invest these funds into:

Dicker Data Ltd (ASX: DDR)

If you’re on the lookout for even more dividends, then you might want to take a look at Dicker Data. It is the leading wholesale distributor of computer hardware and software across the ANZ region. I believe Dicker Data is well-placed to continue its growth over the next decade thanks to its strengthening market position, growing vendor agreements, and positive tailwinds. In addition to this, the company is currently constructing a new distribution centre. This will give Dicker Data significant room to expand its operations and boost its revenue once complete. 

In FY 2020 the company is aiming to lift its dividend by 31% to 35.5 cents per share. Based on the current Dicker Data share price, this represents a generous fully franked 4.6% dividend yield. 

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another option to consider reinvesting your Telstra dividends into is the BetaShares NASDAQ 100 ETF. As its name implies, this ETF gives investors exposure to 100 of the largest non-financial companies listed on the famous Nasdaq index.

Among its holdings you’ll find some of the biggest and brightest companies in the world and those at the forefront of the new economy. This includes giants such as Amazon, Apple, Facebook, Microsoft, and Netflix. Another positive is that the ETFs strong focus on technology gives investors diversified exposure to a high-growth potential sector that is under-represented on the Australian share market. Given the quality of the companies included in the ETF, I believe it can outperform the ASX 200 over the long term.

More reading

• 3 top ASX tech shares to buy in 2020
• Forget term deposits and buy Coles (ASX:COL) and this ASX dividend share
• Telstra (ASX:TLS) share price is one of the latest ASX buy ideas from brokers
• Buy these ASX dividend shares to beat low interest rates
• Buy BetaShares NASDAQ 100 ETF (ASX:NDQ) and these ETFs today

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and Telstra Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 Tesserent Ltd (ASX: TNT) share price closed 4.65% higher today after the company announced the acquisition of iQ3, a major private cloud provider for secure data. During intraday trading, the Tesserent share price rose as high as 23 cents before closing the session at 22.5 cents. It feels like just yesterday I was writing about another Tesserent acquisition, this being their third so far this month.

What iQ3 does

iQ3 is a secure cloud services firm headquartered in Sydney. It provides services to internationally established brands in Australia and Singapore, with particularly strong ties to New South Wales state and local governments. The firm has been delivering secure cloud infrastructure and related services to a long list of government agencies since 2010.

Furthermore, iQ3 has an excellent operating record. The company had FY20 turnover in excess of $25 million, delivered $3 million earnings before interest, taxes, depreciation and amortisation (EBITDA) and is immediately earnings and cash flow accretive to Tesserent. Strong revenue and earnings are expected to continue into FY21.

Importantly, more than 70% of iQ3’s revenue comes from recurring, multi-year, annuity-based contracts. The now gives the Tesserent group in excess of $30 million annual recurring revenue from multiple, locked-in contracts.

What’s moving the Tesserent share price?

The Tesserent share price was on the rise today as the company announced this strategic acquisition. The cyber-security provider announced the acquisition of iQ3 with the signing of a share purchase agreement executed between both parties. Investors will no doubt be pleased as iQ3’s services and solution offering materially complement Tesserent’s ‘Cyber 360’ strategy.

Furthermore, by introducing iQ3 into the group, there are considerable Cyber 360 cross and up-sell opportunities at a customer, geographic and solution level. 

Additionally, there are also notable benefits associated with iQ3’s operations centre and Tesserent’s existing ISO-certified security operations centre in relation to the delivery of associated cloud, connectivity and new managed security services capabilities.

Foolish takeaway

Significantly, the acquisition sees Tesserent expeditiously achieve its goal of $100 million turnover on an annualised basis. This marks an increase in excess of 1000% since the refresh of the Tesserent board in January 2020. It also contributes to the existing impetus that has seen the Tesserent share price soar 462% so far this year.

More reading

• Tesserent share price soars 8% on acquisition

Motley Fool contributor Daniel Ewing owns shares of Tesserent Limited. 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 S&P/ASX 200 Index (ASX: XJO) fell 0.8% today to 5,876 points.

Here are some of the main highlights from the ASX 200:

Afterpay Ltd (ASX: APT)

The Afterpay share price fell around 6% today after the buy now, pay later company announced that its chief financial officer (CFO), Luke Bortoli, would be leaving.

Afterpay said that Mr Bortoli has played a critical role in delivering the significant growth and success of the business of that period. He transformed the finance function of the company from a small cap start-up to a global market leader.

The ASX 200 share said that following discussions with Mr Bortoli regarding his future ambitions, the company went looking globally for a replacement. Rebecca Lowde will assume the role of CFO effective 6 October 2020.

Rebecca Lowde has been the CEO and CFO of Salmat for a combined six years and she was also the CFO of fintech business Bravura Solutions Ltd (ASX: BVS).

Afterpay CEO and managing director Anthony Eisen said: “Luke has made a transformational contribution to Afterpay in its highly crucial years. He has built a world class finance function that has grown from a small number of employees based in Australia to a high performing team operating across multiple regions and functions.

“Luke has worked tirelessly as a partner to the executive leadership team and been integral in driving our strong performance trajectory and expansion into new regions, while ensuring we had the right capital structure and investor base to achieve our strategic objectives.”

The ASX 200 share also announced that it has appointed Meahan Callaghan as chief people officer and Mark Teperson as chief strategy officer.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) FY20 result

The Soul Patts report was covered here. The Soul Patts share price rose around 1% today in reaction to the result.

There were a number of interesting pieces in the report from the ASX 200 share.

Regular profit after tax was down 44.7% because of lower coal prices and lower demand with New Hope Corporation Limited (ASX: NHC) and COVID-19 impacts on construction with Brickworks Limited (ASX: BKW).

Statutory profit after tax increased by 284.3% to $953 million largely due to the accounting profit from the merger involving TPG Telecom Ltd (ASX: TPG).

The net cash flows from investments of the ASX 200 share increased by 48.8% to $252.3 million thanks to the special dividend declared and paid by TPG.

Soul Patts’ net asset value (pre-tax) decreased by 5.3% to $5.2 billion. The net asset value decline of 5.3% was 6.9% better than the S&P/ASX All Ordinaries Index (ASX: XAO) decline of 12.2% over the year to 31 July 2020.

The Soul Patts directors decided to declare a final dividend of 35 cents per share, which was an increase of 2.9% compared to last year’s final dividend. That brought the total dividend for FY20 up to 60 cents per share – an increase of 3.4%.

Brickworks

Brickworks also announced its FY20 result today. The Brickworks share price fell 1%. 

The Australian building products company said that its continuing revenue rose 4% to $953 million.

However, the ASX 200 share’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to $281 million, underlying earnings before interest and tax (EBIT) dropped 34% to $206 million and underlying net profit after tax (NPAT) declined 38% to $146 million. Underlying earnings per share (EPS) fell 38% to 98 cents.

Profit was impacted by COVID-19 and was down from a record result last year.

However, statutory profit rose 93% to $299 million thanks to its investment in Soul Patts which benefited from the TPG merger. Brickworks also benefited from positive property revaluations with lower interest rates.

The Brickworks board decided to increased the final dividend by 3% to 39 cents per share. The full year dividend was increased by 4% to 59 cents per share.

The ASX 200 share said that the building products Australia division has seen rising orders and sales in September which reflected the various government stimulus measures.

More reading

• 3 star ASX income shares for 2021
• Why I just bought shares of this ASX ETF
• Gold retreats! Is this a buying opportunity?
• How Elon Musk’s Tesla delivered a body blow to these ASX stocks
• Nufarm’s (ASX:NUF) share price retreats giving back yesterday’s gains

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T 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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Investors have been caught in the Brainchip Holdings Ltd (ASX: BRN) hype with promising developments over the last few months. This has led the BrainChip share price soaring to an all-time high of 97 cents. However, shareholders quickly sold off their positions for profit, bringing the share price lower.

At the time of writing, the BrainChip share price is trading at 41 cents, down 4.65% for the day. Many investors may be now wondering, has the dramatic price drop created a buying opportunity?

What does BrainChip do?

BrainChip develops software and hardware accelerated solutions for advanced artificial intelligence (AI) and machine learning applications. The company has a primary focus on it Akida neuromorphic processor unit hardware product.

In layman’s terms, the Akida chip thinks like a human brain and can be used in a variety of world-wide purposes.

The BrainChip share price rollercoaster ride

The BrainChip share price started the year at a price of 4.7 cents and did not move much until the end of May. An agreement with the Ford Motor Company to evaluate the Akida Neural Processor kicked off the investor hype.

In early June, BrainChip announced a joint development agreement with Valeo Corporation, a tier 1 automotive supplier. This further strengthened BrainChip’s momentum on its development of the Akida System-on-Chip (SoC).

A July update on the company’s quarterly earnings, and completion of wafer fabrication, pushed the share price higher. When the results were released to the market, the BrainChip share price reached as high 17.5 cents. This represented a 372% increase from January.

The company’s share price then exploded on news it had partnered with Magik Eye Inc. to provide 3D depth sensing to the Akida chip. The BrainChip share price hit 36.5 cents in the following days, a jump of more than 208% from the prior month.

In addition, Vorago Technologies signed to the Akida early access program agreement in early September. The collaboration – intended to support a Phase I NASA program – shot the BrainChip share price to new horizons.

This prompted a speeding ticket from the ASX which saw the share price touch 97 cents. An investor’s dream run if they held onto the company’s shares since May.

But as all hype wears off without concrete material earnings, the BrainChip share price plummeted. Shareholders took profit off the table and BrainChip shares fell to the mid-40 cent range. A 50% decline from the NASA announcement, but still 1,000% up for shareholders who bought before May.

Buying opportunity?

As BrainChip has made a string of positive developments, its half-year report revealed its Achilles heel. For the period ending 30 June, company recorded revenue of just $13,397, down 80% from $66,635 in 1HFY19.

Brainchip had a net loss of $6.8 million compared to $4.4 million loss in prior period. On an upbeat note, half of the company’s expenditure was in research and development.

In my opinion, I think that the strong pullback in the BrainChip share price has created a small buying opportunity. I would recommend investors with a higher risk profile to allocate a maximum of 5% value of their holdings into BrainChip.

Whether BrainChip can become the next Altium Limited (ASX: ALU), only time will tell.

More reading

• 3 top ASX tech shares to buy in 2020
• Why I would buy Altium (ASX:ALU) and these ASX growth shares
• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares
• BrainChip (ASX:BRN) and Afterpay (ASX:APT) were among the most traded shares on the ASX last week
• Brainchip (ASX:BRN) share price shoots 9% higher on software development centre

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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If you’re a retiree, you might be looking for a way to generate an income after the interest rates on traditional interest-bearing investment products collapsed over the last few years.

One way you can do this is by investing in dividend shares. Luckily, the Australian share market is home to a large number of them.

But which ones should you buy? Here are two that I like:

BWP Trust (ASX: BWP)

One of my favourite options for retirees is commercial real estate company BWP. The majority of its properties are leased to retail giant Bunnings Warehouse, which is owned by Wesfarmers Ltd (ASX: WES). Given the quality of the Bunnings business and its strong performance during the pandemic, BWP was largely unaffected by the crisis in FY 2020. In fact, just $435,886 of rent abatements were granted during the height of the pandemic. This meant 98.8% of rent was collected as normal during the months of March to June.

While management didn’t provide any real guidance for the year ahead, it expects to at least pay a distribution in line with the 18.29 cents per unit it paid shareholders in FY 2020. Based on the current BWP share price, this equates to a 4.5% distribution yield. Looking longer term, I believe the company is well-placed to continue growing its income and distribution consistently over the remainder of the decade.

Coles Group Ltd (ASX: COL)

Another high quality option for retirees to consider buying is Coles. In fact, I would argue that it is the best ASX share for a retirement portfolio. This is due to its defensive qualities, attractive dividend yield, and solid long term growth prospects.

In respect to the latter, I believe Coles is well-placed for growth over the 2020s thanks to its long track record of delivering same store sales growth, strong market position, and its refreshed strategy. This strategy is embracing automation, cutting costs, and supporting margin expansion. Overall, I’m confident Coles can grow its earnings and dividend at a solid rate over the 2020s.

More reading

• Is the Coles (ASX:COL) share price a buy after renewable energy deal?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and 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.

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The market may have sunk lower on Thursday, but that didn’t stop the NEXTDC Ltd (ASX: NXT) share price from continuing its charge.

At one stage the data centre operator’s shares hit a new record high of $12.62.

When the NEXTDC share price hit that level, it meant it was up an impressive 93% since the start of the year.

Why is the NEXTDC share price at a record high?

Investors have been buying NEXTDC’s shares this year after increasing demand for capacity in its data centres led to it reporting a strong full year result in FY 2020.

For the 12 months ended 30 June 2020, NEXTDC delivered a 14% increase in revenue to $205.2 million. This was at the top end of its guidance range of $200 million to $206 million.

The catalysts for this were a 15% rise in customers to 1,364, a 33% increase in contracted utilisation to 70MW, and a 19% lift in interconnections to 2,079.

Pleasingly, NEXTDC is continuing to demonstrate operating leverage. It reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $104.6 million. This was an increase of 23% year on year and at the top end of its guidance range.

What else is driving the NEXTDC share price higher?

Also supporting the NEXTDC share price has been a number of positive broker notes.

One broker that is particularly bullish is Goldman Sachs. It recently reiterated its buy rating and $13.20 price target on the company’s shares.

But it may not even stop there, with the broker suggesting NEXTDC’s shares could be worth upwards of $20.00.

Goldman commented: “Our scenario analysis suggests that a value of $20 per share is possible for NextDC, based on assumptions that are high, but in our view not unrealistic considering the current acceleration in demand that is evident across the business.”

Should you invest?

I’m a huge fan of NEXTDC and continue to believe that it would be a fantastic buy and hold option for investors. This is thanks to its strong market position and exposure to the seismic shift to the cloud.

More reading

• Where to invest $10,000 into ASX shares right now
• Got $3,000? Buy these exciting ASX growth shares
• Up 79% this year, is the NextDC (ASX:NXT) share price the next Afterpay (ASX:APT)?
• Can Macquarie Telecom (ASX: MAQ) become the next NextDC?
• Insiders have been buying NEXTDC (ASX:NXT) and this ASX share

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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 NEXTDC (ASX:NXT) share price just hit a record high: Can it go higher? appeared first on Motley Fool Australia.

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