Author: therawinformant

It may seem counterintuitive, but if you’re looking for the best dividend shares to own, it doesn’t necessarily mean you should be buying the ones with the most attractive yields.

I think the best example of this is biotherapeutics company CSL Limited (ASX: CSL).

Very few people think about dividends when they think of CSL. I feel this is completely understandable, given that its shares only offer a trailing 1% dividend yield.

However, anyone that invested in the CSL IPO will not agree with this view. I suspect they will be counting down the days to the next dividend payment from the healthcare giant.

As I mentioned here recently, if you were lucky enough to buy CSL’s shares at its IPO, you could’ve picked them up for a stock-split-adjusted price of $0.76 per share.

Let’s say you bought $20,000 worth of its shares at that point. You would have ended up with approximately 26,316 shares.

We’re not going to focus on what they would be worth today (a lot!), instead we’re going to focus on the dividends these shares would have received this year.

Over the last 12 months, CSL has paid its shareholders two dividends. A final dividend in October 2019 of $1.455 per share and an interim dividend in April of $1.471 per share. Combined, that’s a total of $2.926 per share.

This means that those 26,316 shares you received from a $20,000 investment at its IPO, generated $77,000 of dividends over the last 12 months. That’s almost four times the original investment!

I feel this demonstrates why companies with strong growth potential can become dividend stars even if they only offer small yields.

Which shares could be future dividend stars?

I think three growth shares that could become future dividend stars are fintech company Bravura Solutions Ltd (ASX: BVS), lottery ticket seller Jumbo Interactive Ltd (ASX: JIN), and ecommerce company Kogan.com Ltd (ASX: KGN).

At present Bravura’s shares offer a 2% yield, Jumbo offers a 3.1% yield, and Kogan offers a 1.4% yield.

I believe all three are well-positioned for long term growth thanks to favourable tailwinds, strong businesses, and massive market opportunities. This could make it worth buying them today for the dividends of tomorrow.

More reading

• 10 ASX 200 shares that are fit for the Queen
• 3 ASX shares for a stress-free life
• Where I’d invest $2,500 in ASX shares today
• Invest like Warren Buffett with these ASX 200 shares
• Should you buy ASX shares or hold cash right now?

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 and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited and Kogan.com 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.

The post Could these ASX shares be the future dividend stars that make you rich? appeared first on Motley Fool Australia.

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Across the past week, Vicinity Centres (ASX: VCX) shares are up by 14.5%. Vicinity is also easily the most traded large-cap share this week on the entire ASX. Last Monday, the real estate investment trust (REIT) announced its intention to carry out an immediate share placement worth $1.2 billion to take pressure off its balance sheet. Eligible investors were able to participate at an 8.1% discount to the last close price of $1.61 on 29 May 2020.

It also plans an additional security placement for $200 million. Last Tuesday it followed this with an announcement that it would cancel its distribution payment for the 6 months to June 30 this year.

The balance sheet

The capital raising has had a large impact on the REIT’s balance sheet. Namely, it reduced the company’s gearing from 34.9% down to 26.6%. Net tangible assets per security (NTA) have reduced to $2.23 from $2.40 pre-placement. Lastly, the REIT is now sitting with cash and unused debt facilities valued at $2.6 billion. 

This has clearly impressed investors who have piled into the share. It has also had an impact on several other REIT’s and real estate companies. 

“Stay at home” orders and some forced closures have had a unique impact on Vicinity Centres. However, the company has announced that foot traffic is now 74% of the prior year, from a low of 50% in April 2020. Approximately 80% of stores across the portfolio are now trading, from a low of 42% in April 2020.

While revenue is down for this period as the REIT moves to help its retailers, it is taking a raft of cost control measures.

Most large-cap REIT’s on the ASX enjoyed share price gains during the week. At the time of writing this includes Mirvac Group (ASX: MGR), Scentre Group (ASX: SCG), Stockland Corporation Ltd (ASX: SGP) and GPT Group (ASX: GPT).

The case for Vicinity Centres

As is clear above, this REIT is very tightly managed and a good custodian of investors assets. It is currently selling at a price-to-earnings ratio of 5.62. This is lower than many of its large-cap real estate stablemates.

At the current price, it has a twelve-month trailing average distribution yield of 9.23%. This is higher than its sector large-cap contemporaries. While it has cancelled the current distribution it has a prior record of paying a stable distribution every year.

Over the medium term, I believe Vicinity Centres is the best value opportunity among all of the large-cap REIT’s and real estate developers. 

More reading

• Is this ASX small cap the best placed to benefit from the $700m HomeBuilder grant?
• Why Alumina and Stockland share prices could outperform in coming weeks
• 2 ASX REITs to buy with $1,000 today
• Top brokers just upgraded these 3 ASX 200 stocks to buy
• Meet the ASX stocks to benefit from the new $688m home stimulus

Motley Fool contributor Daryl Mather 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.

The post Why I think the Vicinity Centre share price could be a great buy on Tuesday appeared first on Motley Fool Australia.

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The Australian share market is closed today for the Queen’s birthday. In the spirit of this holiday, I thought I would look for 10 ASX 200 shares that I think are fit for a queen.

The 10 shares I have chosen are listed below. Here’s why I think they should be in Buckingham Palace’s portfolio:

a2 Milk Company Ltd (ASX: A2M)

The first ASX 200 share to consider buying is a2 Milk Company. It is a New Zealand-based infant formula and fresh milk company with a focus on A2-only products. This point of difference has gone down well with consumers. This is particularly the case in China where it sales continue to grow rapidly. 

Afterpay Ltd (ASX: APT)

Another option to consider is Afterpay. I think this payments company could be a fantastic long term investment due to the way it is revolutionising the payments industry. It still has a significant runway for growth in the United States and opportunities to expand into mainland Europe and Asia.

Altium Limited (ASX: ALU)

Altium is an award-winning printed circuit board (PCB) design software provider. I think it is a standout buy due to its leading position in a market exposed to the Internet of Things boom. I expect the proliferation of electronic devices to lead to increasing demand for its software over the next decade.

Appen Ltd (ASX: APX)

Appen is another exciting ASX 200 share with enormous promise. Its million-plus team of crowd sourced experts prepare the data that goes into the artificial intelligence and machine learning models of some of the biggest tech companies in the world. Given how these markets are expected to grow materially in the future, Appen looks well-placed to profit.

Cochlear Limited (ASX: COH)

I think Cochlear would be another great option. It is one of the world’s leading hearing solutions companies and has a long track record of delivering earnings growth. I believe this trend will continue for a long time to come thanks to the ageing populations tailwind.

CSL Limited (ASX: CSL)

Another ASX 200 share which I would buy is CSL. I think the biotherapeutics company’s shares can continue to be market beaters over the next decade. This is due to the increasing demand for its immunoglobulins, its world class plasma collection network, growing demand for influenza vaccines, and its burgeoning research and development pipeline.

IDP Education Ltd (ASX: IEL)

I think it would be worth considering IDP Education. It is a provider of international student placement services and English language testing services. I’ve been very impressed at the way the company has been performing over the last few years and expect more of the same over the next decade.

Nanosonics Ltd (ASX: NAN)

Another ASX 200 share to consider buying is Nanosonics. I’m a big fan of the infection control specialist due to its very positive long term outlook. Its trophon EPR disinfection system for ultrasound probes has a massive market opportunity and could alone support solid earnings growth over the next decade. But the upcoming launch of new products make the investment proposition even more attractive.

REA Group Limited (ASX: REA)

REA Group is a digital advertising company that operates Australia’s leading property websites. It also operates real estate websites in Europe, Asia, and the United States. While trading conditions are tough now, I expect these headwinds to ease once the pandemic passes. And when they do, I believe its earnings growth will accelerate once again.

SEEK Limited (ASX: SEK)

A final ASX 200 share to consider buying is SEEK. I’m very positive on its long term outlook due to the strength of its core ANZ business and the growth potential of its international operations. This is particularly the  case with its China business. I believe it has the potential to underpin strong earnings growth over the next decade. 

More reading

• Is the Macquarie share price the best ASX bank to buy?
• 3 ASX 200 blue chip dividend shares to buy in June
• Could these sensational ASX shares help you beat the market?
• 3 top ASX 200 shares to buy next week
• 3 ASX shares for a stress-free life

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium, Cochlear Ltd., CSL Ltd., Idp Education Pty Ltd, and Nanosonics Limited. The Motley Fool Australia owns shares of A2 Milk, AFTERPAY T FPO, and Appen Ltd. The Motley Fool Australia has recommended Cochlear Ltd., Nanosonics 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.

The post 10 ASX 200 shares that are fit for the Queen appeared first on Motley Fool Australia.

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The Macquarie Group Ltd (ASX: MQG) share price has been hit hard by the coronavirus concerns in 2020.

Macquarie shares slumped 52.41% lower between 21 February and 23 March as the S&P/ASX 200 Index (ASX: XJO) slumped into a bear market.

Investors were clearly worried about the pandemic’s impact on the Aussie banks.

We saw many banks report billion-dollar impairments while an oil price war also weighed on valuations.

But the Macquarie share price has been on a solid run and edged 0.42% higher in Friday’s trade. That means the ASX bank share climbed 7.30% higher in the last week.

So, with all the volatility, is Macquarie the best bank share to buy today?

Why the Macquarie share price could be a bargain

I like to look at the relative value of Macquarie versus its other major bank peers.

The National Australia Bank Ltd (ASX: NAB) share price is down 20.91% in 2020. Similarly, Westpac Banking Corp (ASX: WBC) shares have fallen 22.45% lower this year.

In contrast, the Macquarie share price is down 14.40%. That says to me that investors are somewhat more bullish on Macquarie versus the other ASX banks.

That could be for good reason, too. Macquarie isn’t so much a retail bank as it is a business and investment bank.

That means Macquarie generates significant earnings from investments like infrastructure and its corporate banking compared to home loans for the other ASX banks.

No one knows if that will be a good or bad thing in 2020. However, I think diversified and strategic investments could translate to some big wins for Macquarie.

The Macquarie share price closed at $118.00 per share on Friday. That means a price to earnings (P/E) ratio of 13.86 right now.

That makes it about on par with Westpac (14.11) and cheaper than NAB (17.48) right now.

Foolish takeaway

There’s no such thing as a sure thing in ASX bank shares right now. However, the Macquarie share price could be a cheap relative buy if it outperforms its major bank peers in 2020.

More reading

• 10 ASX 200 shares that are fit for the Queen
• 3 ASX 200 blue chip dividend shares to buy in June
• 3 top ASX 200 shares to buy next week
• Where I’d invest $2,500 in ASX shares today
• Top brokers name 3 ASX 200 shares to sell next week

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie 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.

The post Is the Macquarie share price the best ASX bank to buy? appeared first on Motley Fool Australia.

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The ASX 200 is home to a good number of blue chip shares which pay dividends.

Three which I think would make great additions to a balanced portfolio are listed below. Here’s why I rate them:

Coles Group Ltd (ASX: COL)

One of my favourite blue chip dividend shares is this supermarket giant. I’m a big fan of the company due to its defensive qualities and solid growth prospects. The latter is thanks to its refreshed strategy. This strategy is aiming to cut costs materially through efficiencies and automation. Together with its long track record of delivering solid same store sales growth, I believe Coles is well-placed to grow its earnings and dividends over the next decade. Currently, I estimate that its shares offer a forward 4% dividend yield.

Macquarie Group Ltd (ASX: MQG)

Another blue chip ASX dividend share to consider buying is Macquarie. I like the investment bank due to the quality and diversity of its operations. This diversity means Macquarie can often grow its earnings when the big four banks are struggling. And while the pandemic is very likely to weigh on its performance in the near term, I believe it will bounce back when the crisis passes. Currently, I estimate that its shares offer investors a partially franked 4% FY 2021 dividend yield.

Woolworths Limited (ASX: WOW)

Finally, I think this conglomerate would be another top blue chip dividend share to buy. Woolworths is best known for its eponymous supermarket business, but also has a number of other businesses in different markets. These include Big W, BWS, Dan Murphy’s, and a large number of hotels/pubs. I think these are quality businesses and the majority of them have defensive characteristics and solid growth potential. Overall, I think this makes Woolworths worth considering with a long term view. At present I estimate that its shares offer investors a forward fully franked 3% dividend yield.

More reading

• 3 top ASX 200 shares to buy next week
• Where I’d invest $2,500 in ASX shares today
• Top brokers name 3 ASX 200 shares to sell next week
• Top brokers name 3 ASX 200 shares to buy next week
• How mum and dad investors are beating fund managers at their own game

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 ASX 200 blue chip dividend shares to buy in June appeared first on Motley Fool Australia.

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