Author: therawinformant

Afterpay Ltd (ASX: APT) is fast becoming the success story of 2020. The Afterpay share price has risen a staggering 1,000% since its March lows and is rocketing higher again this week.

Why the hype around the Afterpay share price?

The hype surrounding the Afterpay share price isn’t new. The company is arguably the most well known buy now, pay later (BNPL) brand in Australia, even though it’s only been operating for around three years. During that time, more and more retailers have been displaying the Afterpay logo on their doors and windows, so it’s a brand that is hard to ignore.

Earlier this year, Chinese fintech giant Tencent Holdings, acquired approximately 5% ownership, driving the Aftrepay share price higher. Tencent is a well known player in the tech world, so having it onboard as a major shareholder certainly made Afterpay investors happy.

Recently, Afterpay announced its intentions to expand into Europe through the $82 million acquisition of Pagantis, a Spanish fintech company in the BNPL space. Although based in Spain, Pagantis currently operates in Spain, France and Italy, providing multi-region access for Afterpay.

Justifying the acquisition, is Afterpay’s intention to use this brand to access the massive $500 billion eCommerce market in the European Union.

The Pagantis brand will ultimately be rebranded as Clearpay, with the existing technology being merged into the core tech provided by Afterpay. As a rough guide, Afterpay has earmarked the expansion plans to commence early next year.

As the BNPL giant already has operations in Australia, New Zealand, the United States and the United Kingdom, Europe is a logical next step.

Afterpay share price performance

The Afterpay share price is currently trading at $92.48, at the time of writing. This is almost crazy, considering the BNPL giant’s stock was selling for less than $10 in March this year!

The last six months of trading represents a return to investors in excess of 1,000% – a staggering run.

When Tencent Holdings announced its 5% stake in the company, the Afterpay share price jumped more than 20% in a single day. This latest announcement around a European Union venture has had a similar effect, sending the stock in excess of 10% higher in Tuesday’s trade.

Afterpay has returned an astronomical 3,300% to investors since its initial public offering (IPO), and doesn’t look to be slowing down any time soon.

Upcoming results

Afterpay issued an announcement to the ASX on 18 August stating it would be releasing its FY20 results on Thursday 27 August at 10am, Melbourne time. While the expansion plans are very exciting for the BNPL player, investor concerns will no doubt be circling the fact that Afterpay is still unprofitable, losing more than $40 million per year. With revenue increasing, however, a break even could be achieved in a few short years.

Main competition

Afterpay is by no means the only player in this space, but it is one of the biggest and has a massive market share. Some of Afterpay’s biggest competitors include Sezzle Inc (ASX: SZL), Splitit Ltd (ASX: SPT) and Zip Co Ltd (ASX: Z1P).

Foolish takeaway

The Afterpay share price has sustained a massive run for a company that isn’t making any profit. I believe this is largely due to investors piling into the stock and wanting to share in the success. However, just because there’s no profit yet, this doesn’t mean it won’t be there in the near future. Companies in this space need time to generate a profit and, at the end of the day, Afterpay is only three years old, so it’s still very early days. The results release on Thursday this week should be very interesting given all the company’s recent developments.

More reading

• Afterpay share price leaps 7% today after 3 broker upgrades
• Leading brokers name 3 ASX shares to sell today
• This rising sentiment is spurring the share market’s bull run
• Why Afterpay, BINGO, Scentre, & Westpac shares are charging higher
• Why the Xero share price can crack $100 per share in 2020

glennleese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week blood product company CSL Limited (ASX: CSL) released a huge result for the 2020 financial year. The CSL share price soared on the news. But three things in particular caught me by surprise:

1. CSL was able to avoid major COVID-19 disruption

Collecting plasma from donors is an essential part of producing many of CSL Behring’s products. I was expecting the disruption from the COVID-19 pandemic might have a big impact on the company’s performance. However CSL was able to avoid major disruption and says plasma collections only dropped by around 5% compared to the prior financial year.

This was helped somewhat by the opening of 40 new plasma collection centers and a US Food and Drug Administration mandate that reduced plasma quarantine periods from 60 to 45 days. The reduction opened up inventories and improved the availability of essential blood components.

Still, CSL says that COVID-19 restrictions are expected to continue to restrain plasma collections in the 2021 financial year and it expects increased collection costs for plasma in the year ahead.

2. Cash flow from operations rocketed 51%!

Given revenue lifted by a solid 7.2% in the 2020 financial year I was not expecting a huge 51% jump in cash flow from operations. The increase helped to power CSL’s cash balance to US$1.2 billion, up almost 82% on the prior year.

Because CSL has changed to the ‘indirect’ method of reporting cash flows, it can be a little tricky to tell exactly what drove the increase. But essentially, the higher profit result, combined with less cash tied up in working capital and less cash paid out in taxes, helped to lift cash from operations higher.

3. CSL has one of the top CEOs in the world

Earlier this year, I wrote that I think CSL could be one of the best companies in the world. So I shouldn’t have been surprised to discover that CEO Paul Perreault had been named as one of the top 100 CEOs in the world by Harvard Business Review. In fact, he came in a few places ahead of fellow healthcare titan Colin Goldschmidt, CEO of Sonic Healthcare Limited (ASX: SHL).

Paul Perreault has been with CSL since July 2013. CSL’s reported revenues have almost doubled since then, climbing from US$5.1 billion to US$9.2 billion.

With the successful integration of flu vaccine business Seqirus, and continuing success in research and development, it’s no wonder Perreault is considered one of the best.

More reading

• The latest ASX stocks that brokers just upgraded to “buy”
• 3 ASX shares that could give investors a stock split in 2020
• Here’s why I would buy CSL and this ASX blue chip share
• Here are the highlights of this ASX reporting season
• This healthcare share could be a COVID-19 bargain

Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has recommended Sonic Healthcare 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 Bravura Solutions Ltd (ASX: BVS) share price will be on watch on Wednesday following the release of its full year results.

How did Bravura perform in FY 2020?

Bravura was on form in FY 2020 and delivered another year of growth and further operating leverage expansion.

For the 12 months ended 30 June 2020, Bravura reported a 6% increase in revenue to $274.2 million. This comprised a 2% increase in Wealth Management revenue to $180.4 million and a 16% lift in Funds Administration revenue to $93.8 million.

Thanks to the aforementioned operating leverage expansion, the company earnings before interest, tax, depreciation and amortisation (EBITDA) margin increased from 18.8% to 21.1% in FY 2020. This led to Bravura reporting a 19% increase in EBITDA to $57.8 million.

This EBITDA growth was driven entirely by its Funds Administration business, which reported a 33% increase in EBITDA to $43 million. This offset a 2% decline in EBITDA for its Wealth Management segment to $52.9 million. Management advised that this decline was driven by lower licence fees during the year. Nevertheless, it notes that the business has a sales pipeline that is strong and growing, with significant opportunities across all key markets. Though, it warned that COVID-19 is lengthening the sales cycle.

On the bottom line, Bravura posted a 22% increase in net profit after tax to $40.1 million. Approximately $3 million of this came from acquisitions. On a per share basis, earnings came in at 16.5 cents.

In light of its positive form during the pandemic, the Bravura board declared a 5.5 cents per share unfranked final dividend.

Bravura’s Chief Executive Officer, Tony Klim, was pleased with the company’s performance in FY 2020.

He said: “We are pleased to report our FY20 results, with continued investment and the acquisitions of FinoComp and Midwinter positioning Bravura for long-term growth driven by market demands for microservices ecosystems, digital solutions and automation. Midwinter and FinoComp expand our product ecosystem, integrating adviser and microservices solutions with our core registry offerings. As expected, group margins continued to expand, reflecting the benefits of scale and operating leverage in the business.”

FY 2021 outlook.

Although the company has a strong sales pipeline across its key markets, management has warned that FY 2021 could be a challenging year because of the pandemic. As a result, its earnings could be flat year on year.

It explained: “While the new sales pipeline remains strong, due to the wider impact of COVID-19 there is greater uncertainty in the timing of deal closures when compared to prior years. It is therefore possible that FY21 NPAT will be similar to FY20.”

More reading

• 2 ASX growth shares to buy with $2,000
• 3 exciting mid cap ASX tech shares to buy for the long term
• 2 top ASX tech shares to buy and hold beyond 2026
• 2 ASX growth shares to buy with $2,000
• 3 exciting ASX growth shares to buy with $3,000

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 Bravura Solutions Ltd. The Motley Fool Australia has recommended Bravura Solutions 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.

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The Spark New Zealand Ltd (ASX: SPK) share price is on watch after the Kiwi telco’s full-year earnings result delivered to guidance.

What does Spark New Zealand do?

Spark New Zealand is a major New Zealand telecommunications company with operations as a fixed-line telephone, mobile networks, internet service and ICT service provider.

Prior to the market open, the Kiwi telco share was up 9.9% in 2020 with a market capitalisation of $8.3 billion.

Why is the Spark New Zealand share price on watch?

Spark reported 2.5% revenue growth for the year ended 30 June 2020 (FY20) to deliver $3,623 million in revenue.

A strong first half of the year established the momentum which saw mobile service revenue grow 3.9% and cloud, security and service management revenue climb 10.8%.

Spark noted a quick response to the coronavirus pandemic as a key factor. The group moved to maintain essential services and contain costs to help offset lost earnings.

Earnings before interest, tax, depreciation, amortisation and investment income (EBITDAI) grew 2.1% to $1,113 million. That delivers to the middle of Spark’s previously provided guidance for earnings.

Net profit after tax climbed 4.4% to $427 million thanks to that earnings growth and a lower tax expense.

Dividends

The Spark New Zealand share price is one to watch after reporting a final dividend of 12.5 cents per share (cps).

Combined with the 12.5 cps interim dividend announced in February, Spark’s total FY20 distribution will be 25 cps.

Based on yesterday’s closing Spark New Zealand share price of $4.54 per share, that represents an approximate 5.5% dividend yield.

FY21 guidance

After a strong yearly result, management did provide guidance for FY21 despite the current uncertainty.

EBITDAI is expected to fall between $1,090 million and $1,130 million compared to $1,113 in FY20.

Spark is targeting an FY21 dividend of 23 to 25 cps, 100% imputed. That represents a flat or marginal decline in distributions versus FY20 distributions.

The Spark New Zealand share price is one to watch as investors weigh up the FY21 forecast versus FY20 growth.

More reading

• 3 big surprises from the CSL full year results
• Bravura Solutions share price on watch after strong FY 2020 growth but cautious guidance
• Seven Group share price on watch following FY 2020 earnings release
• Betmakers share price on watch as revenues rocket 39%
• Steadfast share price on watch as dividends jump 13%

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.

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The Seven Group Holdings Ltd (ASX: SVW) share price is on close watch today following the release of the company’s full year financial results.  

Seven Group owns a portfolio of investments including industrial services, media and property.

Reasonably solid result in challenging market conditions

Investors will be watching the Seven Group share price today after the company reported total trading revenues of $4.6 billion for the 12 months ending June 30 2020. This was a strong increase of 12% on the prior financial year. The group achieved underlying earnings before interest and tax (UEBIT) of $740 million, a marginal increase of 2% on FY 2019. Underlying net profit after tax (NPAT) came in at $474 million. This was a 3% rise on the prior financial year.

Seven Group ended FY 2020 with a relatively strong balance sheet. Underlying operating cash flow for the company came in at $826 million, a 29% rise on the prior corresponding period.

The group declared a fully franked final dividend of 21 cents per share, the same level as in the previous year.

WesTrac outperforms other Seven Group segments

WesTrac was the standout segment in terms of profitability performance for Seven Group. The WesTrac segment delivered EBIT of $371.0 million, up a very strong 22% on the prior year. Revenue also grew strongly for WesTrac, up by 15%. Demand in the company’s Parts and Service segment remained resilient during the 12 month period. This was supplemented by a continued rise in product sales for the CAT equipment dealer.

Seven Group’s investment holdings in energy, however, saw a sharp decline in profitability (underlying EBIT) of 19% to $126.6 million for FY 2020. Beach Energy Ltd (ASX: BPT) was still able to achieve a robust production result for the 12 month period though, with pro-forma production levels up 2%.

In other segment results, underlying EBIT for Coats Hire declined by 1%. Meanwhile, media investments took a big hit, with EBIT down by 25% due to a particularly challenging fourth quarter from the impacts of COVID-19.

Ryan Stokes, Managing Director and Chief Executive Officer, commented: “Today’s result reflects a strong performance from our operating businesses and the robustness of our diversified model….In particular our Industrial Services portfolio has delivered solid growth with WesTrac executing a standout performance, reflecting the strong demand from customers who remain active in mining production and construction.”

Market outlook

Due to the continuing uncertainty surrounding the global coronavirus pandemic, Seven Group decided not to provide earnings guidance.

Over the medium to long term, the group will continue to focus on mining production and infrastructure investment. In particular, east coast gas demand is is viewed by the group as a key  growth opportunity.

The Seven Group share price closed yesterday at $19.18.

More reading

• The next ASX stocks to beat expectations during this reporting season

Motley Fool contributor Phil Harpur 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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The Betmakers Technology Group Ltd (ASX: BET) share price is on watch after the company posted a 39% jump in full-year revenue.

What does Betmakers do?

Betmakers is an Aussie racing data and analytics supplier  with a number of products and solutions. These include DynamicOdds, BettingHub, Global Tote and GBS. 

Betmakers is focused on providing innovative industry and bookmaker solutions to improve industry coverage and the consumer experience.

Why is the Betmakers share price worth watching?

Betmakers released its earnings for the year ended 30 June 2020 (FY20) headlined by a 39.1% increase in revenue to $8.58 million.

That included $2.25 million from Content and Integrity with a further $6.33 million generated from the Wholesale Wagering Products segment. 

However, that strong revenue didn’t flow to the bottom line with the Aussie wagering group posting a $2.1 million loss, down 40.6% from FY19.

It’s been a wild ride for investors with the Betmakers share price surging 468.8% higher since 23 March at the bottom of the bear market.

The coronavirus pandemic has impacted the racing industry and the Betmakers share price in 2020. However, the company reported growing demand for its digital products and services since the pandemic began.

New deals in global markets like the United States and United Kingdom underpinned strong revenue growth.

Pleasingly for shareholders, the Betmakers share price grew more than 800% in FY20 from 4.5 cents to 42.5 cents at 30 June.

The company raised $35 million in June 2020 thanks to several new institutional investors betting on further growth.

It was good news on the balance sheet side with net tangible assets climbing from -0.60 cents to 7.09 cents in FY20.

FY21 outlook

There was no specific guidance provided for FY21 but Betmakers does have a few key focus areas.

One of those is advancing its position in the US as the country’s wagering market continues to grow.

The strong demand reported in Managed Trading Services, Platforms and Global Racing Network are expected to continue this year.

The Betmakers share price was up 228.6% for the year prior to this morning’s open.

More reading

• Steadfast share price on watch as dividends jump 13%
• Jumbo Interactive share price on watch after signing Tabcorp deal
• 5 things to watch on the ASX 200 on Wednesday
• Beat ultra low interest rates with these top ASX dividend shares
• CBA and NAB may suggest to risky borrowers to sell their property

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.

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The Steadfast Group Ltd (ASX: SDF) share price is on watch after the Aussie insurer reported a strong underlying result last night.

What does Steadfast do?

Steadfast is Australia’s largest general insurance broker with growing operations in Asia and Europe.

The insurer boasts a network of more than 458 general insurance brokerages in Australasia.

Why is the Steadfast share price on watch?

The statutory numbers were soft as Steadfast reported a $55.2 million net profit after tax (NPAT) loss due to acquisition and impairment costs.

However, on an underlying basis, Steadfast enjoyed a healthy period of growth in the year ended 30 June 2020 (FY20).

The insurer reported a 15.5% increase in earnings before interest, tax and adjustments (EBITA) to $193.3 million. That was on the back of a 21.4% jump in underlying revenue to $688.3 million with underlying NPAT rocketing 19.0% to $89.2 million.

The Steadfast share price is on watch this morning after yesterday’s result which was underpinned by 36% growth in network gross written premiums (GWP) to $8.3 billion. That included 6.3% of organic growth before including Authorised Representatives and IBNA contributions.

The insurer reported record organic GWP growth in its Steadfast Underwriting Agencies business. Segment GWP jumped 13.1% to $1.33 billion with underlying EBITA up 14.7% to $105.8 million.

Steadfast’s insurTech segment also posted strong growth figures. GWO transacted through the Steadfast Client Trading Platform (SCTP) jumped 45% to $638 million in FY20.

Free cash flow jumped 27.2% to $70.6 million driven by strong operating cash flow figures.

Steadfast remains conservatively geared at 21.5%, well below its 30% maximum gearing ratio, with $323 million of borrowings.

Dividends

Steadfast reported a 13.2% increase in its final dividend to 6.0 cents per share (cps), fully franked.

Combined with its 3.6 cps interim dividend, the group’s final dividend is 9.6 cps up 12.9% on its FY19 payout.

Based on yesterday’s closing Steadfast share price that translates to a 2.7% dividend yield per annum.

FY21 outlook

The Steadfast share price will be one to watch as investors process the insurer’s FY21 guidance.

Steadfast is projecting underlying EBITA of $235 million to $245 million, compared to $193.3 million in FY20.

Underlying NPAT is forecast to increase from $89.2 million to between $115 million and $122 million this financial year.

The coronavirus pandemic has created ‘significant uncertainty’ but Steadfast sees trading conditions similar to those seen in Q4 2020.

More reading

• Betmakers share price on watch as revenues rocket 39%
• Jumbo Interactive share price on watch after signing Tabcorp deal
• 5 things to watch on the ASX 200 on Wednesday
• Beat ultra low interest rates with these top ASX dividend shares
• CBA and NAB may suggest to risky borrowers to sell their property

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Steadfast Group 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.

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The Jumbo Interactive Ltd (ASX: JIN) share price is one to watch after the company signed a long-term deal with Tabcorp Holdings Limited (ASX: TAH).

What does Jumbo Interactive do?

Jumbo Interactive is an Australian-based entertainment company and a digital retailer of official government and charitable lotteries.

The group’s flagship service, OzLotteries, is one of Australia’s largest digital retailers with over $150 million in ticket sales per year and over 2 million customer accounts.

Based on the current $13.62 Jumbo Interactive share price, the entertainment group is valued at $850.6 million.

Why is the Jumbo Interactive share price on watch?

Jumbo has finalised and signed a 10-year deal with Tabcorp to extend its current 15-year arrangement. The deal, announced on 29 June, locks in the current partnership across most of Australia until 2030.

That’s good news for investors and we could see the Jumbo Interactive share price on the move in early trade.

This helps build the platform for Jumbo’s plan to expand its lottery sales across Australia as part of its ‘$1 billion vision’ by 2022.

However, the new deal does not permit the sale of Tabcorp lottery products to Western Australian customers (where Tabcorp does not have a license).

Jumbo expects to know by 30 September the prospects of an agreement with Lotterywest regarding a potential solution for Western Australia.

The company’s shares have fallen 9.0% lower this year despite a strong recovery since the March bear market.

The Tabcorp share price is also under pressure after falling 21.2% lower this year.

What does this mean for Jumbo Interactive?

This is good news for Jumbo Interactive in providing some more long-term certainty.

I’d expect the Jumbo Interactive share price to be on the move as investors take in the latest announcement.  This should also underpin sales growth and help build momentum behind the ‘Powered by Jumbo’ software platform.

Despite challenges amid the coronavirus pandemic, Jumbo reaffirmed its FY20 guidance on 29 June 2020. That included higher revenue expectations despite soft net profit and earnings numbers.

More reading

• Tabcorp share price halted ahead of $600 million equity raising
• Why I would buy Nearmap and this ASX mid cap share right now
• Why Tabcorp is the latest “conviction buy” recommendation from this top broker
• 50% off: 2 dirt cheap ASX shares to buy today
• 3 mid cap ASX shares that could generate strong long term returns

Ken Hall 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 Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive 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 Tuesday the S&P/ASX 200 Index (ASX: XJO) was on form again and pushed notably higher. The benchmark index rose 0.5% to 6,161.4 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 poised to sink lower.

The ASX 200 looks set to end its winning streak on Wednesday. According to the latest SPI futures, the benchmark index is poised to drop 31 points or 0.5% lower at the open. This is despite it being a reasonably positive night of trade on Wall Street. The Dow Jones fell 0.2% but the S&P 500 rose 0.35% and the Nasdaq jumped 0.75%.

Woolworths result.

All eyes will be on the Woolworths Group Ltd (ASX: WOW) share price this morning when it releases its eagerly anticipated full year results. A strong result is expected from the conglomerate thanks to the strength of its key Woolworths supermarkets business during the pandemic. According to CommSec, the market is expecting a net profit after tax of $1.34 billion.

Oil prices jump.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could be on the rise today after oil prices jumped overnight. According to Bloomberg, the WTI crude oil price is up 1.8% to US$43.40 a barrel and the Brent crude oil price is up 1.8% to US$45.96 a barrel. Storm driven output cuts have given prices a boost.

Gold price softens.

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Resolute Mining Limited (ASX: RSG) could come under pressure on Wednesday after the gold price softened further. According to CNBC, the spot gold price dropped 0.3% to US$1,933.30 an ounce amid optimism over a trade deal between the United States and China.

Flight Centre to report major loss.

The Flight Centre Travel Group Ltd (ASX: FLT) share price will be in focus this morning when its full year results are released. The travel agent giant is expecting to report a significant loss after tax in FY 2020 because of the pandemic. It has provided guidance for a statutory loss of between $825 million to $875 million. Investors will no doubt be keen to hear about current trading conditions.

More reading

• ANZ-Roy Morgan consumer confidence rises as COVID-19 case numbers fall
• ASX 200 rises, Bingo jumps after reporting
• Afterpay share price leaps 7% today after 3 broker upgrades
• The latest ASX stocks that brokers just upgraded to “buy”
• ASX 200 up 0.7%: Big four banks storm higher, Blackmores disappoints, Xero acquisition

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended Flight Centre Travel Group 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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With the cash rate tipped to remain on hold for at least a couple of years, it looks as though income investors will have to contend with ultra low interest rates for some time to come.

But don’t worry! Because there are easy ways to beat these low interest rates on the Australian share market.

Two ASX dividend shares that offer vastly superior yields are listed below. Here’s why I would buy them:

Rural Funds Group (ASX: RFF)

One of my favourite dividend shares on the Australian share market is Rural Funds. It is a leading agriculture-focused property company which owns a total of 61 properties across five agricultural sectors including almonds, cattle, cropping, vineyards and macadamias. One of the main reasons I’m a fan of the company is its long leases. At the end of FY 2020 Rural Funds had a weighted average lease expiry of 10.9 years.

Combined with periodic rent increases and its high quality tenants, which include Treasury Wine Estates Ltd (ASX: TWE), I believe Rural Funds is well-positioned to grow its distribution at a consistently solid rate over the next decade. In FY 2021 the company intends to grow its distribution by 4% to 11.28 cents per share. Based on the current Rural Funds share price, this equates to a very attractive 5.1% yield.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share to consider buying right now is Telstra. Times have been hard for the telco giant over the last few years, but things are starting to improve greatly now. This is thanks to the easing NBN headwind, the simplification of its business, its cost cutting plans, and the arrival of 5G.

And while the pandemic is going to weigh on its performance slightly because of the loss of roaming revenue, I remain confident the company is well-positioned to return to growth in the near future. In the meantime, I’m optimistic that Telstra will change its dividend policy and continue to pay a 16 cents per share dividend in FY 2021. Based on the current Telstra share price, this will mean a generous fully franked 5.2% dividend yield.

More reading

• 3 ASX dividend shares that have increased their payouts in 2020
• Rural Funds share price rises on FY20 results
• What are dividend shares and how do you find them?
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• Why I would buy CBA and this top ASX dividend share

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED, Telstra Limited, and Treasury Wine Estates 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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