Author: therawinformant

Many S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) dividend-paying shares have significantly cut or deferred its dividend payments. This is not the case for the likes of BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). With the current iron ore spot price sitting at US$91.13 per tonne and the benefit of a weak Australian dollar, iron ore miners can be expected to continue generating strong cash flows to pay a leading dividend yield.  

Iron ore tailwinds 

The iron ore spot price has remained resilient throughout the coronavirus pandemic. China iron ore futures hit record peaks this week as industry data showed that port inventory levels had fallen to the lowest in more than 3 years. 

Following China’s targeted tariffs on Australian sectors such as grain and beef, investors might be concerned that iron ore could be next. However, China and Australia are incredibly co-dependent on iron ore trade. There is no replacement for Australia’s iron ore. 

This is strengthened by the fact that one of the world’s biggest iron ore producing countries, Brazil, is struggling to contain the coronavirus. Brazil’s confirmed cases have grown to more than 250,000, with almost 17,000 confirmed deaths. The world’s largest iron ore miner, Vale, is also recovering from the fatal dam disaster last year that significantly disrupted its production. This could drastically threaten Brazil’s iron ore production and seaborne exports.  

China’s post-coronavirus stimulus 

Infrastructure construction and industrial output has been pivotal to China’s economic growth. The market is expecting further infrastructure stimulus measures to be decided in May or June. 

In response to the global financial crisis in 2008, the Chinese government unleashed a RMB$4 trillion stimulus package, equivalent to approximately 13% of the country’s GDP. This stimulus went towards various government-led projects, with a particular focus on infrastructure such as high speed rail lines, train stations, metro systems and airports. An infrastructure and commodity-reliant stimulus should further support the iron ore spot price and Aussie miners. 

Market-leading dividends 

Australian miners are positioned front and centre to generate strong cash flows and provide investors with a market-leading dividend.

At the time of writing, Fortescue pays a 7.70% dividend yield, BHP pays a 5.10% dividend yield and Rio Tinto pays a 4.90% dividend yield. Given Fortescue’s pure iron ore operations, it has greater exposure to the stable/rising iron ore spot price. 

I see a lot of potential in iron ore moving forward and these shares no doubt deserve a place on your watchlist. 

More reading

• How to invest $1,000 in ASX 200 shares like Warren Buffett today
• Why I’d invest $1,000 in this ASX tech share today
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Lina Lim 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 looking at investing at the small side of the market, I think the three small caps listed below could be worth considering.

While there is certainly still a lot of work to be done, they all appear to be carving out bright futures for themselves.

Here’s why I think they should be on your watchlist:

Alcidion Group Ltd (ASX: ALC)

Alcidion is a fast-growing health informatics company which is aiming to transform healthcare with smart, intuitive technology solutions. It has a growing portfolio of software products and services such as Miya Precision, Smartpage and Patientrack. Combined, they support interoperability, allow communication and task management, and deliver clinical decision support at the point of care to improve patient outcomes.

Serko Ltd (ASX: SKO)

Serko is an online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. Zeno Travel provides AI-powered end-to-end travel itineraries, cost control and travel policy compliance to corporate customers. Whereas the latter platform allows its users to automate and streamline the expense administration function, identify out-of-policy expense claims, and prevent fraud. While Serko’s growth will be hit hard by the pandemic, I believe it will bounce back strongly when travel markets return to normal. Until then, it looks well-funded to ride out the storm.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a Software-As-A-Service (SaaS) company that leverages artificial intelligence to improve the early detection of breast cancer by analysing mammograms and associated patient data. After which, the software is able to provide clinical decision support and practice management tools and a cost-effective way. But most importantly, it can be used to reduce breast cancer deaths. The company is currently generating NZ$18 million in annual recurring revenues (ARR), but estimates that it has a US$750 million ARR opportunity in breast cancer screening.

More reading

• These small cap ASX shares could be stars of the future
• Could these small cap ASX shares be the next Afterpay?
• 3 exciting ASX healthcare shares to watch in the 2020s
• 3 exciting small cap ASX shares to invest $3,000 into right now
• Why these 4 exciting ASX tech shares are soaring higher 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 Alcidion Group Ltd and Serko Ltd. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Alcidion Group Ltd and Serko 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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I often ask myself, “how would Warren Buffett invest in ASX 200 shares right now?”

The Oracle of Omaha is arguably the most successful investor ever. He has built his fortune by combining long-term thinking with short-term tactical buying. His investment strategy has clearly paid dividends (even if Berkshire Hathaway doesn’t!) and I think the current market is ripe with opportunities for value investing.

Many ASX 200 shares have been smashed in the recent downturn. But a large proportion of these will emerge from the coronavirus pandemic with their businesses intact. They, therefore, could represent super cheap buying right now. Furthermore, with markets remaining volatile amid COVID-19 related updates, large daily swings are offering up plenty of chances to snap up some bargain buys. 

So, amongst all the noise, how can you invest $1,000 in ASX shares like Warren Buffett himself?

How to invest $1,000 in ASX 200 shares like Warren Buffett

The key to value investing is looking for undervalued companies. This means those that have experienced heavy share price falls are prime buying candidates.

However, share prices don’t often fall for no reason. Investors are usually pricing in actual or expected decreases in earnings and/or future growth. The trick to investing like Warren Buffett is finding those that have been unfairly oversold.

I’ve got my eye on a couple of such ASX 200 shares. I think some of the real estate investment trusts (REITs) could be oversold right now. Take, for instance, National Storage REIT (ASX: NSR).

National Storage specialises in self-storage units and its share price has fallen 5.98% lower in 2020. However, if the economy and residential housing market nosedive this year, I think National Storage REIT earnings could benefit. Increasing numbers of people would be looking to store their possessions while they search for housing and/or temporarily downsize to save costs. The ASX 200 REIT was also a potential takeover target amongst several contenders prior to the pandemic. As such, it could be back on the acquisition radar when the market settles.

I also like the look of Macquarie Group Ltd (ASX: MQG). The ASX 200 financial group’s shares are down 23.21% in 2020 and could represent a great vehicle for investing $1,000 today. All of the ASX bank shares have been smashed this year, but I think Macquarie’s diversified investments and earnings streams could see it pull through the market downturn in good shape.

More reading

• Why ASX 200 iron ore miners are your best bet for dividends right now
• Why I’d invest $1,000 in this ASX tech share today
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday

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.

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Looking for a source of income in this low interest rate environment? Then the three ASX dividend shares listed below could be great options.

I believe all three are well-positioned to continue paying dividends during the pandemic and then grow them in 2021. Here’s why I would buy them:

BWP Trust (ASX: BWP)

The first dividend share I would suggest investors consider buying is BWP. It is a real estate investment trust investing in and managing commercial properties throughout Australia. The majority of its properties are large format retail properties, which are predominantly leased to home improvement and outdoor living giant, Bunnings. I think this is a high quality tenant to have and feel confident it will be staying put in its warehouses for the long term. Especially given how Bunnings is owned by Wesfarmers, which just happens to own a ~23.6% stake in BWP. At present I estimate that the company’s units offer a forward 5.1% yield.

Dicker Data Ltd (ASX: DDR)

Another dividend share to consider buying is Dicker Data. It is a leading distributor of information technology products which has been growing at a strong rate over the last few years. This has been driven by its strong market position, growing demand, and the addition of many new vendors. I believe Dicker Data is well-positioned to continue its growth over the coming years, which should be good news for income investors. In fact, this year the company intends to grow its dividend 31% to 35.5 cents per share.  This represents a fully franked 4.8% yield.

Wesfarmers Ltd (ASX: WES)

A final option to consider is Wesfarmers. It is one of Australia’s leading conglomerates and the company behind brands such as Bunnings, Kmart, Target, online retailer Catch, and Officeworks. In addition to its retail exposure, the company also owns a number of businesses in the chemicals and industrials industries. Combined, I believe this leaves Wesfarmers well-positioned to grow its earnings and dividends consistently over the coming years. At present I estimate that its shares offer a forward fully franked ~3.9% dividend yield.

More reading

• Is the Wesfarmers share price in the buy zone?
• 3 safe and strong ASX dividend shares to buy right now
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Forget term deposits and buy these top ASX dividend shares
• The importance of diversifying your ASX portfolio and how you can do it

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of 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 Commonwealth Bank of Australia (ASX: CBA) share price has certainly been on a rollercoaster over the past few months. It was only back in February that CBA shares were trading over $90 a share.

Today, you can get the same shares for just $60.07 (at the time of writing), not too far off the lows of $53.44 we saw in March.

On current prices, CBA shares are offering a trailing dividend yield of 7.17%, which grosses-up to 10.24% with CommBank’s full franking credits.

But is this dividend yield too good to be true?

All three of the other big four ASX banks have proved to be dividend traps in 2020 so far. National Australia Bank Ltd. (ASX: NAB) has slashed its 2020 interim dividend to just 30 cents per share (down from 86 cents per share last year).

And it’s likely that Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) won’t be paying an interim dividend at all this year. Both banks have ‘deferred’ their shareholder payouts until further notice.

So what’s the story with Commonwealth Bank? CBA is generally regarded to be the best ASX bank on the market by investors. We can see this through the higher price-to-earnings ratio that CommBank has always and continues to command compared with the other ASX banks.

Are CBA shares a dividend trap?

Well, Commonwealth Bank has already paid a dividend in 2020 – an interim dividend of $2 that was steady with the 2019 payout.

But its 2020 final dividend is scheduled for a September payout, and it’s very unclear whether this payout will go ahead at all. The only thing we know is that it probably won’t be matching the 2019 final dividend of $2.31 a share.

All of the ASX banks are being caught in a gale of nasty headwinds right now. Economic activity is being severely depressed by the coronavirus and associated lockdowns. Businesses and consumers alike will struggle to service existing loans in 2020, let alone take out new ones.

And interest rates remain at virtually zero (0.25%) and look set to remain so until at least 2022, if the Reserve Bank of Australia’s guidance is anything to go by. It becomes much harder for banks to generate profits when interest rates are at these levels.

On the bright side, CommBank’s capital position remains strong, and (I would say) better than the other ASX banks. Its coffers have also recently been boosted by the partial sale of Colonial First State.

But combining all of these factors still point to reduced dividends from Commonwealth Bank for the rest of 2020 and going into 2021.

Foolish takeaway

We might see a dividend from CBA later this year, but even if we do, it’s not likely to be close to what shareholders have become used to. Thus, Commonwealth Bank is certainly a dividend trap (in my view) if you are expecting a 7.17% yield this year. As for the future? We’ll just have to wait and see.

More reading

• Are NAB shares a bargain buy?
• Why the Commonwealth Bank share price is the best buy among the Big 4 banks
• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans
• Are ASX bank shares worth buying despite dividend cuts?
• Is it time to buy ASX banks?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank 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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A recent report from broker UBS has predicted that online sales will double post-pandemic, with a slew of traditional retailers expected to close shop permanently.

The report follows data from the Australian Bureau of Statistics released yesterday, which revealed that retail spending fell a record 17.9% in April. Social distancing and travel restrictions have sapped demand from traditional retail outlets, with consumers moving to online platforms.  

Here are 3 retail shares on the ASX that have outperformed during the pandemic and are well poised to adapt to the new age of retail.

Adairs Ltd (ASX: ADH)

Adairs is a home furnishings retailer that boasts more than 160 speciality stores in Australia and New Zealand. In addition to physical stores, the company also has a robust and growing online presence. Adairs recently released a trading update, informing the market that online sales surged 221% for the 5 weeks that stores have been closed.

Despite only contributing 20% to Adairs’ total sales, strong growth in online transactions has resulted in Australian sales over the period only being down approximately 37% compared to last year. Since 23 March, the Adairs share price has surged more than 285%, reflecting substantial interest from investors.

Kogan.com Ltd (ASX: KGN)

Kogan.com is probably one of the most prominent online retailers on the ASX. The company has been on the receiving end of huge demand as consumers flock to stock up on essential and discretionary items. Kogan released a trading update recently which reported a 100% growth in gross sales and 150% increase in gross profit for April.

The company also saw the largest monthly increase in active customers since its IPO. This surge in demand has been reflected in the Kogan share price which has bounced more than 155% from its March low. Kogan also made headlines recently, announcing that it had acquired furniture and homeware retailer, Matt Blatt.  

Temple & Webster Group Ltd (ASX: TPW)

Believe it or not, the Temple & Webster share price has recovered more than 155% from its low in March and is currently trading near all-time highs. Temple & Webster is Australia’s largest online retailer of furniture and homewares and has thrived during the coronavirus pandemic.

The company recently provided an update, reporting record numbers in new and repeat customers, whilst also reporting that second-half revenue (to 24 April 2020) had increased by 74% year-on-year.  

Foolish takeaway

The move online is not only limited to traditional ASX retail shares. Even essential stalwarts like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) have seen a surge in online participation and are preparing to meet future demand by investing heavily in the segment.

I think a prudent strategy for investors is to compile a watchlist of ASX retailers that will thrive in the next 20 years and wait for a good buying opportunity.

More reading

• Is the Wesfarmers share price in the buy zone?
• Down 10% in 2 months. Are Coles shares a buy today?
• Aussie retail numbers paint a gloomy ASX picture
• $2,500 invested in these 3 ASX shares could make you a fortune in 10 years
• The Bubs share price is up 20% in May, will it catch up to the A2 Milk share price?

Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of 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.

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The Aristocrat Leisure Limited (ASX: ALL) share price could be on the move this morning following the release of the gaming technology company’s half year results.

How did Aristocrat Leisure perform in the first half?

For the six months ended March 31, Aristocrat posted a 7% increase in operating revenue to $2,251.8 million. This was driven by a 27.3% increase in Digital segment revenue to $1,044.6 million, which offset declines in its Land-based segments.

However, due to the lower share of Land‐based revenue because of COVID‐ 19 impacts and its investments in user acquisition for its Digital portfolio, the company’s EBITDA margin fell 5 percentage points to 31.4%.

This led to normalised EBITDA falling 7.7% on the prior corresponding period to $707.6 million and normalised NPATA dropping 12.8% to $368.1 million.

On a reported basis, NPATA jumped 232.1% to $1,367.4 million. This was due to a one-off ~$1 billion deferred tax benefit. This follows group structure changes announced in November 2019, which are expected to generate long term cash tax savings.

As was widely expected, Aristocrat has decided to suspend its dividend in order to enhance its liquidity position and balance sheet.

Land-based segment.

During the half, Aristocrat’s Class III Premium installed base grew 9.4% and its Class II installed base grew 1.8%.

Management notes that this was driven by continued penetration of leading hardware configurations and high-performing game titles.

Its market-leading average fee per day (pre-COVID-19 casino closures) increased 0.3% to US$50.20. On an unadjusted basis, the average fee per day for the period was just above US$46.

Digital segment.

The growing Digital business was the star of the show during the half. It delivered double-digit growth in bookings, revenue, and profit during the half.

The RAID: Shadow Legends game was a highlight, continuing its impressive growth trajectory by generating US$160 million in bookings over the six months. This was supported by additional targeted user acquisition (UA) investment.

Speaking of which, the company’s total UA spend grew to 29% of Digital revenue in the period. This was due to the availability of quality investment opportunities.

Another big positive was its growth in Average Bookings Per Daily Active User (ABPDAU). It grew over 30% to US$0.50 due to management’s successful focus on monetisation and the scaling of RAID: Shadow Legends.

Management commentary.

Aristocrat’s chief executive officer and managing director, Trevor Croker, was pleased with how the company performed given the challenging trading conditions.

He commented: “Aristocrat delivered a result for the half year to 31 March 2020 that demonstrates our core strengths and the relevance of our product-led strategy, despite the unprecedented challenges generated by the COVID-19 pandemic.”

“Our progress in driving share through outstanding product and diversifying revenue streams – including across attractive Digital genres and titles – are also evident in this result,” he added.

Looking ahead, the chief executive remains focused on growing the business when trading conditions improve.

He said: “We will also continue to drive our strategic advantages in product, with aggressive investment in our core growth engines of Design and Development and User Acquisition to target share and continue to diversify our portfolios.”

“In Land-based, we will execute our ambitious plans to partner and grow with our customers as conditions improve. And in Digital, we will accelerate execution of our portfolio-based growth strategy as we further mature and scale the organisation,” Croker added.

No guidance was given for the second half, which is understandable given the current environment.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why this ASX 200 stock could surge higher tomorrow
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• Leading brokers name 3 ASX shares to buy today
• Why Aristocrat Leisure, Newcrest, Santos, & Zip Co shares are charging higher

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

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ASX tech shares have not all enjoyed the same fortune in 2020. While the S&P/ASX 200 Index (ASX: XJO) has slumped 16.62% this year, investors have struggled to value many of our largest listed technology companies.

We’ve seen the Afterpay Ltd (ASX: APT) share price rocket from a 52-week low of $8.01 per share to a new 52-week high of $43.68 in the space of a couple of months. I think a 445% share price increase in such a short space of time means the ship may have sailed on Afterpay for now.

However, if you’re looking for ASX tech shares that are good value today, check out one of my top picks below.

Why this ASX tech share is in the buy zone

Let’s ignore the big winners in 2020 like Afterpay and NextDC Ltd (ASX: NXT) for just a moment. While their recent gains are good news for shareholders, the rest of us may be experiencing a bit of FOMO!

That’s why I’m focusing on what could be ‘the next Afterpay’. Sitting at the top of my list is one of my favourite ASX tech shares, Xero Limited (ASX: XRO).

Xero shares haven’t crashed lower in 2020 and are actually outperforming the ASX 200 by quite a margin. Whilst the Xero share price has only edged 0.20% higher this year, it has been far less volatile than many of its ASX 200 cohorts. 

It’s true that the ASX tech share is already highly valued. However, I don’t think this means it can’t continue to grow well into the future. Xero is still continuing to sign large clients and I can see demand for its services increasing in the current climate. Businesses need to carefully manage their obligations under government stimulus programs like JobKeeper and Xero’s platform is perfect for just that.

Foolish takeaway

Xero shares have been holding their value in 2020. That’s a real plus for investors given it is a highly valued growth share. Despite the fact some believe it is currently overvalued, I like Xero’s prospects this year and think we could see a solid earnings result in August 2020. Therefore, I still like this share for adding some growth potential to a diversified portfolio.

More reading

• Afterpay share price on watch after hitting 5 million active US customers
• Is the Wesfarmers share price in the buy zone?
• 3 five-star ASX 200 shares to buy right now
• 5 things to watch on the ASX 200 on Thursday
• Save your future self from financial misery

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 Xero. 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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