Author: therawinformant

Plenty of ASX retail shares are doing incredibly well. Are some of them buys right now?

When you look at the performance of the share prices since the 23 March 2020 low, it’s staggering how hard some of these ASX shares have bounced.

The Adairs Ltd (ASX: ADH) share price is up 504%.

The Kogan.com Ltd (ASX: KGN) share price is up 402%.

Plus-size women’s fashion retail City Chic Collective Ltd (ASX: CCX) has seen its share price go up 326%.

The Kathmandu Holdings Ltd (ASX: KMD) share price is up 127%.

The JB Hi-Fi Limited (ASX: JBH) share price is up 88%.

Even the Wesfarmers Ltd (ASX: WES) share price is up 52%.

In hindsight it was a great buying opportunity to buy many of these shares at much cheaper prices.

I don’t think you can say that investors are purely bidding up the smaller retailers on speculation. They are delivering fantastic growth numbers.

Retail growth examples

In today’s FY20 results announcement, Adairs said that in FY20 its online sales grew by 61.4% during the year and underlying earnings before interest and tax (EBIT) grew by 39.7%. Statutory net profit was up 195%.

In the first five weeks of FY21, online sales were up 103.2%, Mocka sales were up 46.8% and like for like store sales were up 15.8%.

Kogan.com also delivered an update to investors today for July 2020. It showed that gross sales were up 110% year on year, gross profit was up 160% and it achieved more than $10 million of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).

When you look at today’s ASX retail share prices and the growth they’re delivering, it doesn’t actually seem too bad.

But there’s a big question:

Will the sales growth continue?

I think there are two main elements that are supporting the growth of some of these businesses.

The first is that they have a strong online presence. Indeed, some of them like Kogan.com and Temple & Webster Group Ltd (ASX: TPW) are set up as online-only retailers.

Businesses with an effective, easy-to-use website like Adairs or City Chic can simply shift most of their sales from stores to online fulfillment. The lockdowns and restrictions didn’t affect them too much.

The shopping centre shares like Scentre Group (ASX: SCG) are still substantially down from their pre-COVID-19 levels. If most of these stunning retail sales were being done in-store then Scentre and others would have recovered further.

The other thing that seems to be boosting them indirectly is the government stimulus. I don’t think it’s a negative at all – the country needed it. I think the government payments are the main reason why the economy is in better shape than it could have been, aside from controlling the spread of COVID-19 effectively.

Jobkeeper is now scheduled to last until March 2020, at a lower rate than the first six months. Once the government help turns off it will be interesting to see if the economy is back to normal operations or not.

Government assistance can’t go on forever like this. If businesses are being boosted by temporary measures then I don’t think that we can project a permanent uplift of sales like we’re seeing today.

Which ASX retail shares I’d buy today

Of the ones I’ve mentioned so far, I think City Chic has the best chance of continuing to perform. I really like the direction the business has gone on over the past two and a half years with its international growth and improving margins. It looks pretty reasonably valued to me – at the current City Chic share price it’s trading at 23x FY22’s estimated earnings.

City Chic is rapidly expanding overseas with both organic sales growth and acquisitions of troubled competitors. The company could be one to watch, particularly as there’s not much strong competition in the plus-size fashion space.

More reading

• Why I would buy Goodman Group and these blue chip ASX shares
• Why I’ve gone cold on ASX REITs
• 4 ASX shares I’m expecting big things from this reporting season
• Adairs share price soars 14% following results announcement
• 3 ASX shares to buy and hold for the next decade

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Kogan.com ltd, Scentre Group, and Temple & Webster 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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Australian mining services company Mineral Resources Limited‘s (ASX: MIN) share price rocketed 21.6% in July. The increase in the Mineral Resources share price put it in the top five gainers on the S&P/ASX 200 (INDEXASX: XJO), which itself gained 0.5% for the month.

Notwithstanding these gains, the company’s share price wasn’t immune to the COVID-19  selloff. The Mineral Resources share price dropped 36% from 20 February through 23 March, almost in line with the losses incurred by the ASX 200.

Since then, the company’s shares have trended steadily higher, ending July up 104% from their 23 March low at $25.74 per share.

Year-to-date, Mineral Resources’ shares are up 69.9%. At its current price of $28.06 per share, the company has a market capitalisation of $5.3 billion.

What does Mineral Resources do?

Mineral Resources is a mining services company with a portfolio of operations across multiple commodities. Services are provided to clients in Western Australia and the Northern Territory, with the company operating mine sites in the Pilbara and Goldfields, and shipping through Utah Point and Esperance.

Mineral Resources has a portfolio of subsidiary businesses comprised of industry leading brands. These include Process Minerals International Pty Ltd, Energy Resources Limited, and Mining Wear Parts.

Why did the Mineral Resources share price rocket 22% in July?

Although this wasn’t reflected in the 36% share price drop from late February into late March, Mineral Resources’ operations weren’t negatively impacted by the COVID-19 shutdowns hampering so many other companies.

In fact, the company reported a record breaking June quarter for its iron ore business with total iron ore production reaching 4.2 million wet metric tonnes (wmt). That was up 22% on the previous quarter. Its full year shipments of 6.7 million wmt were in line with guidance.

Additionally, the company hit record production levels at its Mt Marion Lithium Project.

Mineral Resources also sold its non-core manganese assets to Resource Development Group Ltd (ASX: RDG) for equity equivalent to a 75% shareholding in RDG.

High iron ore prices — currently US$105.59 per dry metric ton — have helped support Australia’s iron ore miners’ share prices across the board. Mineral Resources is no exception.

In late afternoon trading, the Mineral Resources share price is at $28.06 putting the company’s shares up another 9% since 31 July.

More reading

• These were the best performing ASX 200 shares in July

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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With populations around the world getting older and chronic disease burden increasing, I think the healthcare sector could be a great place to look for long term investments.

Three healthcare shares that I feel could be long-term market beaters are listed below. Here’s why I like them:

iShares Global Healthcare ETF (ASX: IXJ)

The first healthcare option to consider buying is this exchange traded fund. I think the iShares Global Healthcare ETF is a great option due to its exposure to many of the biggest healthcare companies in the world. This includes CSL Ltd (ASX: CSL), Johnson & Johnson, Novartis, Ramsay, and Sanofi. Given the positive outlook for the healthcare sector over the next couple of decades, I believe it could provide strong returns for investors.

Ramsay Health Care Limited (ASX: RHC)

Another healthcare share to consider buying is Ramsay Health Care. Although trading conditions are tough for the private hospital operator right now, I believe its long term outlook is very positive. This is because as the global population ages, demand for its services is likely to increase substantially. I feel this puts Ramsay and its sprawling global network of private hospitals in a strong position to deliver solid earnings growth for decades to come. Ramsay also has a history of growing through acquisitions. I suspect this will remain the case in the future.

ResMed Inc. (ASX: RMD)

A final healthcare share to consider buying is ResMed. I’m a big fan of the sleep treatment focused medical device company and believe it could be a fantastic long term option. This is due to its very positive outlook thanks to its world-class products and massive addressable market. Last week on its earnings call, management stated that there are 936 million people with sleep apnoea globally. There are also over 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. From these, ResMed is aiming to improve a total of 250 million lives by 2025. I expect it to achieve this.

More reading

• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• Sigma share price jumps on $172 million deal
• Got $3,000 to invest? Try these 2 dirt-cheap ASX shares
• Why CIMIC, oOh!Media, ResMed, & Resolute shares are dropping lower
• These were the worst performing ASX shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed 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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It isn’t just Qantas Airways Limited (ASX: QAN) that has completed its share purchase plan on Monday. Also completing its respective share purchase plan has been personal care products company, BWX Ltd (ASX: BWX).

But unlike Qantas, which was only able to raise $71.7 million of its targeted $500 million, BWX’s share purchase plan was in great demand with retail investors.

What did BWX announce?

This afternoon the company behind the Sukin skincare brand announced that its share purchase plan was strongly supported by eligible shareholders.

So much so, it was oversubscribed and BWX received applications totalling approximately $30.3 million at an issue price of $3.40 per new share. This represents a discount of 19% to the current BWX share price, which is up 1% to $4.19 this afternoon.

This was over triple the original target of $10 million. In light of this strong demand, the company elected to increase its share purchase plan slightly to $12 million.

Combined with its $40 million institutional placement, which was undertaken at the same price, this means BWX has raised a total of $52 million.

Why did BWX raise funds?

In contrast to Qantas, these funds were not raised to help the company navigate the coronavirus pandemic. In fact, BWX has performed in line with expectations in FY 2020 and delivered revenue growth of 25% and EBITDA growth of 30%.

These funds were raised to fund the development and construction of a new manufacturing facility to support its future growth.

Last month, BWX’s Chief Operations Officer, Rory Gration spoke about the new facility and the impact it is expected to have on its future growth.

He said: “This future world-class facility is expected to significantly boost BWX’s in-house manufacturing capacity, capability and competitive advantage; provide up-skilling opportunities for our team; and enhance the ways in which we serve our retail partners, customers, and consumers all over the world.”

“Importantly, this initiative supports local manufacturing and Australian jobs at a time when the retail landscape is being heavily disrupted, and as more companies look to future-proof their business models. As part of this significant investment in Australian manufacturing, we are working with the Government to look to broaden the scope and speed of how we implement this exciting project,” he added.

More reading

• Fund managers have been buying BWX and this ASX share
• Fund managers have been buying these ASX shares
• Why AGL Energy, Alumina, BlueScope, & BWX shares are dropping lower
• ASX 200 finishes up 0.4%, Rio Tinto grinds higher
• Brokers name 3 ASX shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX 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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ASX real estate investment trusts (REITs) have had a tough year in 2020 so far. Formerly favoured for their income potential, REITs were among the hardest hit sector in the coronavirus-induced market crash in March.

Take the Vanguard Australian Property Index ETF (ASX: VAP) – an exchange-traded fund that tracks the REIT sector on the ASX. VAP units fell almost 50% in value between 31 February and 23 March this year. That compares very unfavourably against the broader S&P/ASX 200 Index (ASX: XJO), which fell by 36.3% over the same period. The ‘recovery’ period hasn’t been kind to REITs either. Today, the ASX 200 is down around 8.7% year to date, whereas VAP units are still down around 22% since 1 January.

So are REITs a bargain buy at these prices? The economy, although still very much compromised as a result of the pandemic today, will no doubt recover in the months and years ahead, right? That means REITs should follow suit… right?

Well, perhaps not. As you’ve probably gathered from the headline, I’m not too wild about REITs today or for future investment. Here’s why.

What does an ASX REIT offer investors?

A REIT is a company that makes its profit from the rental of property and land assets — think retirement villages, apartments, warehouses, offices, shopping centres, and business parks. A REIT benefits from a special tax structure, in which company tax isn’t paid on earnings. In return, a REIT is normally required to pay out 90% or more of its profits as shareholder distributions. Because this money is untaxed, these yields will typically offer a higher yield compared to other ASX dividend-paying shares (albeit without the benefits of franking credits).

As such, I used to believe REITs were a useful income area to explore and useful shares for dividend investors to own as part of a diversified, income-focused portfolio.

What’s changed for REITs in 2020?

So why have I gone cold on REITs as an avenue for dividend investors to explore? Well, (as you might have guessed) it’s all to do with the coronavirus pandemic.

REITs have been among the worst hit sectors of the economy as a result of the pandemic. Lockdowns (both past and ongoing) have resulted in shopping centres closing, businesses shuttering and rental payments being deferred. All of this is terrible news for REITs. Consider Scentre Group (ASX: SCG), a REIT and owner of the Westfield-branded centres in Australia and New Zealand. It has already cancelled its dividend payment this year, and I’m not convinced they’ll be coming back this year or perhaps even in 2021.

Even if the economy returns to some state of normalcy in the next few years, I think the outlook for most property assets has irrevocably changed.

Think about the trends that the pandemic has accelerated. Online shopping – through the roof. Working from home – a new normal today. Sure, some of these trends might recede once the pandemic is over. But I don’t think it will be anything like it was in 2019.

I believe we have seen a decisive shift in economic behaviours that is set to become permanent. And what does more online shopping and working from home mean? It means fewer people going to the shops less often. It means fewer people going to the office less often.

And that, in turn, means the land that houses shops and offices is less valuable. That is a great big problem for the companies that own these assets.

Foolish takeaway

REITs have been smashed in this pandemic, and I think the changes in consumer behaviour that have accompanied it have permanently damaged the investment prospects of REITs. As such, I’ve gone cold on REITs as viable, income-producing assets. It’s a shame, but one must never invest on sentiment alone! Thus, I’ll probably be avoiding the REIT sector from now on.

More reading

• The ASX stocks that could enjoy a consensus earnings upgrade this reporting season
• Are ASX retail shares buys right now?
• Sigma share price jumps on $172 million deal
• Why the Breville share price gained 14% in July
• Why the Afterpay share price is yet to be impacted by Tencent’s US troubles

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre 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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In an announcement by the ACCC today, Inghams Group Ltd (ASX: ING) and other chicken producers were granted authority to work together in preventing food shortages. The Inghams share price has been flat today and, at the time of writing, is still sitting at its Friday closing price of $3.22.

What were the details of the ACCC announcement?

According to the ACCC, conditional interim authorisation has been granted to allow Inghams and its competitors to cooperate on a range of measures relating to their plants. The measures are aimed at ensuring sufficient supply of chickens and chicken meat, reducing job losses, and managing the effects of stage 4 restrictions in Victoria on chicken growers and other parts of the supply chain.

The authorisation will allow Inghams and its competitors to share or coordinate their processing capacity, essential staff, facilities and products, however, the authorisation does not allow agreements on the pricing of goods and services supplied or acquired.

ACCC Deputy Chair, Mick Keogh, commented on the authorisation, stating;

“We recognise that these heightened COVID-19 restrictions in Victoria are requiring many businesses and industries to make significant changes to their operations, and this includes the Victorian chicken meat sector. Chicken is a staple of many consumers’ diets. This authorisation should assist the chicken meat sector to implement arrangements that maintain supply and minimise the risk of food shortages during the COVID-19 restrictions. We will be carefully monitoring the conduct of chicken processors under this authorisation, and it is our expectation that any arrangements do not disadvantage chicken growers. This authorisation does not override any contractual obligations processors have with growers. Additionally, our decision will assist the chicken meat industry to make arrangements that keep staff employed who would otherwise have been laid off or adversely impacted by the additional restrictions.”

About the Inghams share price

Inghams is a producer and supplier of poultry products in Australia and New Zealand. The company was founded in 1918 and has grown to be one of the biggest poultry suppliers in Australia.

Earlier this month, Inghams announced that its processing plants in Somerville and Thomastown would be reduced to 33% capacity as a result of stage 4 restrictions in Victoria.

In May, Inghams announced that it was on track to deliver record earnings before interest, tax, depreciation and amortisation (EBITDA) growth in the second half of the 2020 financial year. However, the company also stated that it was uncertain how the final nine weeks of the 2020 financial year would impact earnings.

The Inghams share price is up 11.42% since its 52-week low of $2.89, however, it has fallen 5.85% since the beginning of the year. The Inghams share price is down 16.58% since this time last year.

More reading

• These are the 10 most shorted shares on the ASX
• How will Victoria’s stage 4 lockdowns impact ASX shares?
• These are the 10 most shorted shares on the ASX
• These are the 10 most shorted shares on the ASX
• Inghams share price falls 5% on coronavirus closure

Motley Fool contributor Chris Chitty 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla (NASDAQ: TSLA) rose 32.5% in July, according to data from S&P Global Market Intelligence. The stock climbed thanks to momentum for the broader market, favorable analyst coverage, and a fourth-quarter earnings beat. 

^SPX data by YCharts

The stock may also be benefiting from expectations that the company will be added to the S&P 500 index, which could boost the stock price thanks to shares being included in popular index-tracking funds. Tesla has climbed nearly 250% year to date, making the company one of the year’s best large-cap performers and by far the largest auto manufacturer in the world. 

Tesla reported fourth-quarter results on July 22, posting results that came in significantly ahead of the market’s expectations. The electric-vehicle company delivered sales of $6.04 billion and earnings per share of $0.50, while the average analyst estimate had called for a loss of $0.82 per share on $5.15 billion. However, a J.P. Morgan analyst noted that 87% of the company’s operating income beat in the quarter stemmed from higher-than-expected regulatory credit sales and that this source of income couldn’t necessarily be counted on in the future.

Oppenheimer analyst Colin Rusch then published a note on the stock on July 23, maintaining an “outperform” rating on the company and raising his one-year price target on the stock from $968 per share to $2,209. Wedbush analyst Daniel Ives published a note on Tesla the same day, raising the firm’s price target from $1,250 to $1,800 and establishing an upper-level target on the company’s stock of $2,500.

Tesla now has a market capitalization of roughly $271 billion. For comparison, Ford is valued at $27 billion and General Motors at roughly the same. 

Now what

Tesla’s stock has continued to climb early in August’s trading. The company’s share price is up roughly 1.5% in the month so far. 

^SPX data by YCharts

Tesla’s valuation remains highly controversial, with some analysts citing the company’s transformative potential in the auto and energy markets as reasons the stock can climb higher, while more bearish takes on the company cite the fact that it has only recorded its first year of being profitable on GAAP basis and that its sales are significantly smaller than those of its rivals, including Ford and GM. 

Tesla is scheduled to host a presentation displaying its new battery technology on Sept. 15, an event that’s sure to attract lots of attention and coverage from analysts and investors. The company is valued at roughly 160 times this year’s expected earnings and 9 times expected sales. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Elon Musk was right: Tesla’s share price is too high
• Why I think Megaport shares offer enormous long-term growth potential
• ASX investors have been buying Tesla and these international shares
• ASX investors were buying these 5 international shares last week
• How Elon Musk overtook Warren Buffett’s net worth

Keith Noonan 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 Tesla. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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August means one thing – it’s reporting season for ASX shares. But this reporting season is different. The spectre of coronavirus hangs over results. The pandemic and associated lockdowns have wreaked havoc on businesses across Australia, and ASX shares have not been exempt. But some have actually benefitted from the changes brought by coronavirus, which has shifted consumer demand.

Below, we take a look at 4 ASX shares I’m expecting strong results from this reporting season. 

Kogan.com Ltd (ASX: KGN)

Kogan has seen a surge in sales since coronavirus lockdowns began. The online-only retailer has seen active customers grow to 2.3 million at the end of July, with 126,000 customers added in July alone. Gross sales for the month grew more than 110% year on year with gross profit up more than 160%. This follows strong trading in May and June, with 4Q FY20 sales up by more than 95%. Full year results are due for release on 17 August. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi saw a surge in sales in March and April as office workers were sent home and hurriedly set up home offices. Australian sales grew 20% in the second half to early June with demand for tools to support working, learning, and entertaining from home high. JB Hi-Fi has forecast total FY20 sales of around $7.86 billion. Total profits is expected to be in the range of $300 million to $305 million, a 20–22% increase on FY19. JB Hi-Fi is due to report full year results on 17 August. 

Afterpay Ltd (ASX: APT)

Afterpay has also seen surging customer numbers, boosted by the shift to transacting online and a renewed focus on budgeting. The buy now, pay later (BNPL) provider reported underlying sales of $3.8 billion in the fourth quarter, up 127% Q4 FY19. In May, Afterpay reached 5 million customers in the US, closely followed by 1 million in the UK. The BNPL provider now boasts nearly 10 million customers globally. Afterpay is due to report its full year results on 27 August. 

Zip Co Ltd (ASX: Z1P)

BNPL provider Zip Co has also seen strong growth in customer numbers with 197,000 added in the June quarter. This brings total customers to 2.1 million, up 63% year-on-year. Transaction volumes in the June quarter were up 120% to $570.7 million. This means Zip Co achieved annualised transaction volumes of $2.3 billion in FY20, above its $2.2 billion target. Zip Co is due to release full year results on 27 August. 

More reading

• Why the Afterpay share price is yet to be impacted by Tencent’s US troubles
• Why Adairs, Coles, Kogan, & Tyro shares are storming higher
• What to look for in the Vicinity Centres FY20 report
• Kogan share price in spotlight after it releases new profit update
• These are the 10 most shorted shares on the ASX

Kate O’Brien 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 and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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.

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Finding top-quality ASX shares that you could buy for growth and income potential is difficult in the best of times. But with the coronavirus pandemic smashing both the growth and dividend-paying abilities of countless companies in 2020, this task is now far more difficult.

Income streams from former dividend heavyweights like the ASX banks, Transurban Group (ASX: TCL) and Ramsay Health Care Limited (ASX: RHC) have slowed to a trickle. And growth companies like Seek Limited (ASX: SEK) and REA Group Limited (ASX: REA) have had to pivot very quickly from prioritising growth to sandbagging their earnings.

Luckily, the following 2 ASX shares still offer prime opportunities for both growth and income, in my opinion. A large part of that is because they are exchange-traded funds (ETFs), rather than individual businesses. That means they are well-placed to capture the growth and income of an entire market, albeit with some drag from the companies that are still struggling.

Let’s look at my pick of 2 top ASX shares for growth and income.

1) Vanguard Australian Shares Index ETF (ASX: VAS)

This ETF from the reputable Vanguard Group is basic in nature: it simply tracks the largest 300 companies listed on the ASX. That means everything from Commonwealth Bank of Australia (ASX: CBA), Coles Group Ltd (ASX: COL) and CSL Limited (ASX: CSL) to Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). The ASX is a share market that has always delivered a healthy mix of growth and income, and I don’t see this changing anytime soon.

Vanguard has delivered an average of around 8.18% per annum in returns since its inception. It also currently offers a trailing dividend distribution yield of around 4.07%, which comes partially franked as well. The best thing about an index fund like Vanguard is that it automatically adds to winners while jettisoning losers, all while you don’t have to lift a finger. As such, I think Vanguard is a top growth and income AXS share to buy today.

2) BetaShares FTSE 100 ETF (ASX: F100)

This ETF is similar to Vanguard, but instead of tracking the largest 300 Aussie companies, F100 tracks the 100 top shares on the FTSE Index. The FTSE is the United Kingdom’s equivalent to the ASX. Ergo, the FTSE 100 tracks the largest 100 UK companies listed in London. You will find companies like AstraZeneca, GlaxoSmithKline, HSBC, Diageo, British American Tobacco and Royal Dutch Shell amongst F100 largest holdings. Like the ASX, the FTSE has a reputation for offering relatively high dividends. F100’s trailing yield doesn’t disappoint in this regard, currently offering a trailing 4.4% per annum on current prices.

This ETF’s price is still relatively low as well, still down 22% year to date which to me hints at the prospect of some potential growth in its future. The clouds covering the UK markets right now (such as the coronavirus and Brexit) will surely clear over the coming years. As such, I think F100 offers top prospects for both growth and income at its current price.

More reading

• Is the Vanguard Australian Share ETF the best long-term ASX investment?
• 3 quality ETFs I’d buy for my portfolio
• How to turn $20,000 into $100,000 with ASX ETF shares
• Is it time to dollar-cost average into ASX shares?
• 5 simple steps to financial independence

Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, and Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited, REA Group Limited, and SEEK 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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