Category: Stock Market

With most savings accounts offering interest rates of just 1% per annum, if I had $10,000 in an account I would consider putting it to work in the share market instead.

After all, if you invest wisely, you could generate a return ten times that with shares.

But where should you invest $10,000? Three top shares to consider are listed below:

a2 Milk Company Ltd (ASX: A2M)

I think a2 Milk Company has the ability to continue its strong growth for a long time to come due largely to increasing demand for its infant formula products in China and its relatively modest market share. In addition to this, the expansion of its fresh milk footprint in the United States should be supportive of its growth in the coming years. Overall, I think it is a great place to invest $10,000 right now with a long term view.

Bigtincan Holdings Ltd (ASX: BTH)

Another option for a $10,000 investment is Bigtincan. It is a provider of enterprise mobility software. This software essentially allows sales and service organisations to improve mobile worker productivity through smart devices. A growing number of blue chip companies such as banking giant Australia and New Zealand Banking Group (ASX: ANZ), sports giant Nike, and global beauty retailer Sephora are using its software. Which I feel is a testament to its quality.

Bravura Solutions Ltd (ASX: BVS)

A final option for a $10,000 investment is Bravura Solutions. Bravura is a growing fintech company which provides high quality software and services to the wealth management and funds administration industries. While the company has a number of different products in its portfolio, the key product in my eyes is the Sonata wealth management platform. In the same vein as Bigtincan, it is used to connect and engage with clients anytime, anywhere, via computers, tablets or smartphones.

More reading

• ASX shares can help millennials retire before their parents
• Are these China-exposed ASX shares in danger in 2020?
• 2 ASX tech shares to buy with stellar growth prospects
• 2 exciting ASX tech shares to buy right now
• Could these small cap ASX shares be the next Afterpay?

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 owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of A2 Milk. 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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There’re few things more exciting than debating about the merits of Australia’s two biggest asset classes on the weekend!

In case you missed that, I am being sarcastic – although the COVID-19 crisis is an opportune point to review your asset allocation.

There have been comments by experts in the press recently that property bears are wrong and that house prices will stay flat or dip by 5% or less right through the pandemic.

Property vs. shares

If those arguments hold true, property could make a better option than shares, particularly for those who can’t stomach the volatility or are close to retirement.

But there are a few holes in the logic that need to be examined more closely. One of the key arguments from property bulls is that gross rental yields of 5% is very attractive in this near zero-interest rate environment.

The many meanings of the word “gross”

The issue I have is that the “gross” means different things when it comes to property and shares. For investment properties, gross rental is the amount the landlord gets before expenses.

This means the actual (or net) return is always going to be lower. The opposite is true for shares that pay franking credits where the net return is before franking.

Skinny risk-adjusted yield

What this means is that a residential investment property with a gross yield of 5% will likely generate a 2% net return after you pay the rental agent, mortgage, insurance, property taxes, council rates and other operating expenses.

And this assumes you don’t get a vacancy in that current financial year. If you did, you’ll lose another two to three months of rent depending on how long it takes you to find a tenant in this market.

That’s a pretty skinny return, especially if you can get 1% on some bank deposit products – risk free!

How dividend yields stack up to rental yields

Property supporters will point to the falling dividend yield on the S&P/ASX 200 Index (Index:^AXJO), no thanks to the big banks like National Australia Bank Ltd. (ASX: NAB) no doubt!

Nonetheless, even if we assumed a 30% dividend cut across the ASX 200, the net yield is still likely to be over 3% net, or just over 5% gross.

We also shouldn’t forget that rents are falling due to the swelling ranks of the unemployed. Many of them may need more than six months to get back on their feet and I believe this will have a big impact on property prices and their ability to get a home loan.

Reasons to stick to property

There are only two possible reasons why an investor will favour residential rents over share dividends. The first is because negative gearing makes it worth their after-tax while. The other is to bank on rising property prices.

If the yield argument is removed, and if you don’t buy the “V” shape recovery for jobs or a resurgence in immigration, then the outlook for home property prices looks bleak.

This is less so for shares as the stimulus from the central bank will have a more direct positive impact on financial assets than real assets.

Whoever coined the term “safe as houses” might need a rethink.

More reading

• These were the best performing ASX 200 shares last week
• Buy these ASX 200 shares for your kids today
• 2 ASX shares for a first-time investor
• ASX 200 finishes up 1.4%, gold miner share prices surge
• The next ASX sector in a post COVID-19 earnings upgrade cycle

Motley Fool contributor Brendon Lau owns shares of National Australia Bank Limited. Connect with me on Twitter @brenlau.

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

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The S&P/ASX 200 Index (ASX: XJO) was on form last week and recorded a 0.25% gain to finish at 5404.8 points.

While a number of shares pushed higher, some climbed more than most. Here’s why these were the best performing ASX 200 shares last week:

The Pilbara Minerals Ltd (ASX: PLS) share price was the best performer on the index last week with a 19.9% gain. This was despite there being no news out of the lithium miner. Some investors may believe its shares have bottomed after falling extremely heavily over the last 12 months. Even after this strong gain, Pilbara Minerals’ shares are down 70% over the period. One broker that isn’t convinced that now is the time to buy is Macquarie. Earlier this month it slapped an underperform rating and 10 cents price target on its shares.

The Southern Cross Media Group Ltd (ASX: SXL) share price wasn’t far behind with an 18.5% gain. This gain appears to have been driven by another broker note out of Macquarie. Its analysts have reinstated coverage on the media company’s shares with an outperform rating and 18 cents price target. It notes that its balance sheet has been strengthened by its capital raising and believes it is well-placed to benefit when ad markets recover.

The Resolute Mining Limited (ASX: RSG) share price was a strong performer and climbed 14.2% last week. Investors were buying Resolute’s shares last week after the gold price surged higher. The precious metal jumped to a three-week high due to stimulus hopes and concerns that a trade war could be brewing between the U.S. and China. A number of other gold miners were close behind including Saracen Mineral Holdings Limited (ASX: SAR) and St Barbara Ltd (ASX: SBM).

The Graincorp Ltd (ASX: GNC) share price was the next best (non-gold miner) performer with a 9.2% gain. This followed the release of a better than expected half year result from the grain exporter. For the six months ended March 31, Graincorp delivered an underlying net profit after tax of $55 million. This was a massive improvement from its $48 million net loss after tax in the prior corresponding period.

More reading

• Are rental yields better than dividend yields?
• Buy these ASX 200 shares for your kids today
• 2 ASX shares for a first-time investor
• ASX 200 finishes up 1.4%, gold miner share prices surge
• The next ASX sector in a post COVID-19 earnings upgrade cycle

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.

The post These were the best performing ASX 200 shares last week appeared first on Motley Fool Australia.

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Last week was a positive one for the S&P/ASX 200 Index (ASX: XJO). A strong finish on Friday led to the index recording a 0.25% gain to end the period at 5404.8 points.

Not all shares were able to climb higher with the market last week. Here’s why these were the worst performing ASX 200 shares:

The Corporate Travel Management Ltd (ASX: CTD) share price was the worst performer on the ASX 200 last week with an 11.8% decline. This weakness appears to have been driven by concerns that travel markets may not recover for some time. Last week the International Air Transport Association (IATA) warned that the impact of the pandemic on air travel was likely to be felt for many years to come. The IATA estimates that passenger traffic won’t rebound to pre-crisis levels until at least 2023.

The Challenger Ltd (ASX: CGF) share price was out of form last week and fell 10.9%. This was despite there being no news out of the annuities company. Investors appear concerned that Challenger may continue to struggle in the current environment. Its shares are down around 60% from the 52-week high they reached in February.

The Unibail-Rodamco-Westfield (ASX: URW) share price wasn’t far behind with a 10.4% decline last week. The shopping centre operator’s shares fell to an all-time low during the week amid concerns over the impact the pandemic is having on its operations. The majority of the company’s shopping centres have been forced to close due to lockdowns.

The Jumbo Interactive Ltd (ASX: JIN) share price was a poor performer with a 9.8% decline last week. This decline appears to have been driven by profit taking after some strong gains over the last couple of months. Prior to last week, the online lottery ticket seller’s shares were up 88% from their lows in March. Jumbo’s shares are still down 57% from their 52-week high.

More reading

• Why Qantas, Webjet and these ASX travel shares are dropping lower today
• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• These ASX 200 shares just crashed to multi-year lows
• ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs
• Are ASX travel shares like Qantas great value?

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 and recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Corporate Travel Management 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.

The post These were the worst performing ASX 200 shares last week appeared first on Motley Fool Australia.

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If you would like a passive income of $50,000 per year, then the share market is arguably the place to do it.

This is because a large number of shares on the Australian share market pay their shareholders dividends each year.

How can you earn $50,000 worth of dividends each year?

There are two ways to earn $50,000 of passive income from dividends each year – the long way and the short way.

The way you go depends entirely on your starting finances. Those that have built up a considerable nest egg can do it the short way.

The short way involves investing into the shares of dividend favourites such as Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS). I estimate that their shares currently offer FY 2021 dividend yields of 5.3% and 5% yields, respectively.

This means that investments of $940,000 and $1 million in their respective shares would yield $50,000 in dividends next year.

What about the long way?

Not everyone has funds of that nature to invest. So how else can you do this?

The long way to achieve this is to invest in dividend-paying shares which have the potential to grow strongly over the long term.

The prime example of this is CSL Limited (ASX: CSL). As I mentioned here earlier this week, if you invested in the biotech giant at its IPO, you would have paid a stock-split-adjusted price of $0.76 per share.

In FY 2020 CSL is expected to pay a dividend of approximately $3.13 per share. This means that its shares provide a yield on the cost you paid of 411%.

This means that if you had invested just $12,165 into CSL’s shares at its IPO in 1994, you would have 16,006 shares. And those shares would be yielding $50,000 in dividends this year.

Not only that, but with CSL’s shares now changing hands at $301.84, they would have a market value of approximately $4.8 million.

Not bad for a ~$12,000 investment, right?

But what about the future? It is worth remembering that very few shares will have as much success as CSL. But I’m confident there are some out there which have the potential to grow both their share price and dividends at a strong rate over the next couple of decades.

Two that come immediately to mind are electronic design software company Altium Limited (ASX: ALU) and ecommerce company Kogan.com Ltd (ASX: KGN).

More reading

• Buy these ASX 200 shares for your kids today
• ASX shares can help millennials retire before their parents
• Why a buy and hold strategy for ASX shares is best
• Should you invest in super or your ASX share portfolio?
• If you invested $10,000 in the Altium IPO, this is how much you’d have 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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Telstra Limited. The Motley Fool Australia owns shares of Altium. 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 over 2,000 companies listed on the ASX, it can be hard to know what to invest in. Especially since most investors have specific needs. So which ASX shares should parents looking to invest early on their children’s behalf buy today?

Unless you watch the share market and have been investing for a while, you are probably looking for a ‘set and forget’ investment. In other words, you want to buy shares in a company that doesn’t require you to constantly keep up to date with its reports. You want something that can be a consistent grower but is on the safer side of the risk profile.

For these reasons, I would start by looking within the S&P/ASX 200 Index (ASX: XJO). In fact, I would start by looking at the below companies as I believe they make great candidates if you’re looking to invest today on your children’s behalf.

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

I would be hard-pressed not to recommend an investment house like ‘Soul Patts’ as a candidate for a child’s portfolio. It has been listed and paying dividends for over 100 years.

Additionally, it has far outperformed the All Ordinaries (ASX: XAO) since 2000. Soul Patts’ managing director, Todd Barlow, recently commented: “Over the last 20 years to 31 January 2020, an investment in WHSP with dividends reinvested has increased by 11.1 times while the Index has increased just 4.2 times.”

Soul Patts makes its money through a diverse range of investments – from stakes in ASX shares such as TPG Telecom Ltd (ASX: TPM), coal miner New Hope Corporation Limited (ASX: NHC) and building supplies manufacturer Brickworks Limited (ASX: BKW), to investments in unlisted equity, real estate and credit.

If there was a downside, it would be that Soul Patts does not currently offer a dividend reinvestment plan. This would mean, depending on the size of the investment, you would have to manually reinvest the dividend payments periodically (if you’re so inclined).

Altium Limited (ASX: ALU)

Altium is a bit more of a growth story when compared to Soul Patts. It does currently pay a small dividend, however, which will likely increase long term. But its return is likely to be more skewed towards capital growth, which I think is ideal when trying to grow a portfolio long term as you are not required to pay any capital gains tax until the shares are sold. 

Altium has grown strongly recently, pushing it well into the ASX 200. The demand for its software has been growing and it is currently aiming to achieve 100,000 Altium Designer subscribers by 2025.

In addition, Altium recently noted that it is “operationally and commercially well positioned, with electronic design anticipated to be relatively resilient to weather the prevailing and unfolding market conditions”. This gives me confidence in the short term, with a tailwind provided by the Internet of Things boom and its growing market share giving me confidence for the longer term.

Foolish takeaway

I would be happy to purchase both of these companies for a child’s portfolio with a long-term view. Alternatively, if you’re looking for something requiring less ‘thought’, an investment in the BetaShares Australia 200 ETF (ASX: A200) is an option. This gives you a portion of each of the largest 200 ASX-listed companies and has a dividend reinvestment plan.

More reading

• Are rental yields better than dividend yields?
• These were the best performing ASX 200 shares last week
• How to earn $50,000 of passive income with ASX shares
• ASX shares can help millennials retire before their parents
• 2 ASX shares for a first-time investor

Motley Fool contributor Michael Tonon owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. 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 coronavirus pandemic has changed consumer behaviour in 2020 and beyond. Social distancing and isolation measures have shut down dine-in restaurants and deterred people from going shopping. As a result, instead of eating out or heading to the shops, consumers have opted for more convenient and, at times, cheaper alternatives.  

Here’s how e-commerce is revolutionising the food sector and the ASX shares that could benefit.

ASX supermarkets focussing on e-commerce

In early March, ASX supermarkets like Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) saw unprecedented demand as consumers flocked to panic buy essentials. Some shoppers looked to bypass physically going to busy supermarkets and utilised online grocery delivery. Due to the demand, Coles and Woolworths were forced to shut down their online services.

With in-store sales starting to level out, both Coles and Woolworths have re-opened their online delivery and ‘click and collect’ services. According to the supermarket giants, the coronavirus pandemic has seen a surge in consumers adopting online grocery shopping.

In order to accommodate the expected change in consumer behaviour, Woolworths recently doubled its capacity for online grocery deliveries as the company expects $3 billion in e-commerce sales next year. The company has also hired an additional 5,000 third-party couriers to strengthen its current fleet of 800 delivery trucks in order to service more delivery orders.

Direct to consumer meal subscriptions

Subscription-based meal-kit providers such as Marley Spoon AG (ASX: MMM) have also seen a surge in consumer demand during the coronavirus pandemic. Marley Spoon, which delivers fresh ingredients directly to consumers, reported unprecedented demand, forcing the company to scale up its operations and expand its global workforce.

Marley Spoon currently operates in 3 primary regions; Australia, the US and Europe. The company recently completed a $16.6 million capital raising in order to strengthen its balance sheet and fund continued global expansion.

In an update to the market earlier this month, Marley Spoon revealed it had delivered 7.5 million meals in the first quarter of 2020 and reported its first-ever positive cash flow since its IPO.

The company also saw a 46% increase in revenue for the first quarter, with growth accelerated by the coronavirus pandemic. As a result, Marley Spoon expects to have an accelerated path to profitability and expects to achieve positive operating earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter of 2020.

Foolish takeaway

In addition to supermarkets and subscription services, traditional takeaway operators like Domino’s Pizza Enterprises Ltd (ASX: DMP) have also reported a material surge in online demand. As a result, the company has been hiring team members in order to support the change in consumer demand.  

In my opinion, the coronavirus pandemic has irreversibly changed consumer behaviour and demand for certain goods and services. As long-term investors, this provides us with the opportunity to identify and capitalise on the trends that will become normal in the future.

I think investors should think of further shares and themes that could prosper post-pandemic and wait for positive price action before making an investment decision.

More reading

• Double your money with these high quality ASX shares
• Forget CBA and buy these top ASX dividend shares
• 4 top ASX 200 shares for blue chip investors
• 3 top ASX dividend shares you can buy today for income
• Negative interest rates coming? Here’s what it would mean for ASX shares

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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 shares can help millennials retire before their parents.

There are a lot of people out there that have not been building up their retirement nest enough to be able to retire comfortably at 65, perhaps not even by 70.

I don’t know every family tree out there. If you’re a millennial who has parents who are about to retire in 2021 I’m not sure I can help. But the younger millennials – those born in the mid 1990s – have the potential to beat their parents to retirement if they work hard at it. I think ASX shares are key.

Why are ASX shares the answer?

I believe that most asset classes offer very little potential for long-term wealth growth. Cash and bonds offer very little return due to the RBA’s ultra low interest rate.

I think capital city property could be permanently changed by the coronavirus crisis. More people may decide to rent than buy with cheaper rental prices (lowering demand for property buying). Immigration could be low for a long time. Interest rates can’t really go any lower. People may want to avoid big cities and live in small regional areas.

ASX shares on the other hand are great for millennials to invest in. The purchase costs are very low (think how expensive stamp duty and other buying fees are). You can start with as little as $500, whereas you need a huge cash deposit for a property. Most of those property return calculations don’t include the costs of purchasing. Think of other costs of negative gearing, the loss of money when the property is vacant and so on. These usually aren’t included either.

Plenty of millennial parents may be invested in the wrong assets at the moment.

Which investments would be good ideas?

Not every ASX share investment is a good idea. Expensive and poor performing investment managers are drains on your potential wealth. Plenty of people just own mature, low-growth businesses like Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW). These probably won’t do much over the 2020s. 

It’s growth that will make the biggest difference. Individual ASX shares like A2 Milk Company Ltd (ASX: A2M), Pushpay Holdings Ltd (ASX: PPH), Brickworks Limited (ASX: BKW), Bubs Australia Ltd (ASX: BUB) and Altium Limited (ASX: ALU) are names that I think could be much bigger businesses in five years.

There are some listed fund managers that I think have a very good strategy. Does their style mean they’re likely to produce strong returns over the long-term? Some ideas are: WAM Microcap Limited (ASX: WMI), MFF Capital Investments Ltd (ASX: MFF), Magellan Global Trust (ASX: MGG) and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

Many millennials find the easiest way to invest in shares on the ASX is in low cost exchange-traded funds (ETFs). Some examples are: BetaShares Australia 200 ETF (ASX: A200), iShares S&P 500 ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS).

How fast could a millennial retire?

I’m not sure how much your finances would be able to invest. But let’s say you make it a big goal in you’re life and you’re able to achieve returns of 10% a month with ASX shares. According to Moneysmart if you were aiming for $1 million in 20 years (to beat your parents) you’d have to invest around $1,325 a month. Obviously if you invested more, or made better returns, then you could return quicker.

I think that’s entirely possible for two-adult household who diligently saved and invested each month.

More reading

• Should you invest in ASX shares for income?
• 2 ASX shares for a first-time investor
• Are these China-exposed ASX shares in danger in 2020?
• If you invested $10,000 in the Altium IPO, this is how much you’d have now
• 2 ASX 50 shares to buy for your retirement portfolio

Tristan Harrison owns shares of Altium, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, PM Capital Global Opportunities Fund Ltd, and WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, and Telstra Limited. The Motley Fool Australia owns shares of A2 Milk and Altium. The Motley Fool Australia has recommended BUBS AUST FPO and Vanguard MSCI Index International Shares ETF. 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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