While budget measures have been effective in keeping the economy on life support, the real economic numbers have yet to be announced. Last week in parliament, Treasurer Josh Frydenberg revealed that the economic contraction for the current quarter is expected to be 10%. This will be the biggest 3 month decline on record. It’s a sobering number, but a recovery can be anticipated when lockdowns ease and economic activity around the globe returns to normal.

Here are 5 ASX 200 dividend shares that can be expected to bounce when an economic recovery takes hold.

Premier Investments Limited (ASX: PMV)

Premier Investments is the investment company of retail mogul Solomon Lew. It owns several famous retail brands including Just Jeans, Portmans, Peter Alexander and Smiggle. The company has been in temporary lockdown as a result of the coronavirus pandemic and all its stores have been closed. While the company’s online retailing was up a massive 99%, its sales overall were down 74% for the 6 weeks to 6 May 2020 on the prior corresponding period.  

In response, the Premier Investments share price has fallen from a high of $21.31 in February to $15.58 at present, previously falling as low as $8.95 at the height of the crisis. However, all of the company’s Australian stores reopened on Friday 15 May. This should assist the company in returning to previous earnings and maintaining its dividends. Premier Investments has a trailing dividend yield of 4.56% fully franked.

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is a retailer of consumer goods in Australia and New Zealand. It also owns The Good Guys network of stores. Despite the recent crisis, JB Hi-Fi stores in Australia have remained open and the company has continued taking online orders. JB Hi-Fi have actually announced sales growth throughout the last 2 months. The company attributes this growth to people stocking up in preparation for the COVID-19 crisis. Whatever the cause, it is good news for JB Hi-Fi shareholders.

JB Hi-Fi is a considered a consumer discretionary stock. This means that as a recession kicks in people can be expected to spend less on its products than they would otherwise. However, when the economy recovers and consumer confidence picks up, JB Hi-Fi can be expected to see increased buying by consumers. JB Hi-Fi trades on a trailing dividend yield of 4.32% fully franked.

BHP Group Ltd (ASX: BHP)

BHP is one of the oldest companies listed on the ASX. While it is often seen as an engine of stability in an often unpredictable share market, it is actually highly cyclical. During the GFC, the BHP share price dropped from a high of $95 in May 2008 down to a low of just $24.62 in November 2009. Just 2 years later in 2011, it recovered to a high $102.68. Currently it sits back at $34.52.

In a question and answer session with the BHP CEO on 30 April, the company’s leader promised a continued dividend and strong balance sheet through the economic cycle. These are reassuring words considering that this could be the worst recession since the Great Depression. BHP is deferring investments in projects to keep cash on hand and maintain a dividend of at least 50% of earnings.

Additionally, the company is looking out for strategic acquisitions that may be brought about by the economic downturn. BHP is leveraged to a recovery in the world economy and a subsequent recovery in oil, coal and iron ore prices. This is something that has historically eventuated throughout the economic cycles of previous decades. BHP has a trailing dividend yield of 6.17%, fully franked.

National Australia Bank Ltd. (ASX: NAB)

NAB is the third largest bank on the ASX by market capitalisation. With dividends from rival banks becoming uncertain, NAB’s recently announced capital raising will allow it to continue paying a dividend. This will also help them to keep a strong balance sheet during a severe economic downturn. NAB’s ratio of tier one equity capital, an important ratio for liquidity and balance sheet strength, is high by international standards at around 11.20%. This means that the bank should remain financially secure in difficult times.

When an economic rebound eventuates, NAB will see a significant boost to new loans issued by the bank. This will mean more interest and higher profits. Additionally, NAB has recently been required to make provisions of $4.4 billion to allow for bad debts. During an economic recovery, this number will be significantly reduced freeing up cash for dividend increases. NAB has a trailing dividend yield of 7.32% fully franked.

Boral Limited (ASX: BLD)

Boral is a manufacturer of bricks and other construction materials. Its share price has recently fallen a massive 50.38% from a high of $5.20 in February to just $2.58. Last week, Boral released an update to the market. The company recently worked to ensure the liquidity of its balance sheet by issuing US$200 million of unsecured notes and extending its banking facilities. In addition to keeping Boral in good shape financially, these measures are a smart move while the US dollar is fetching $1.56 Australian (at the time of writing).

During the COVID-19 crisis, Boral’s products have been considered essential and the company has been allowed to keep operating throughout the crisis. Additionally, despite a >50% drop in share price, Boral’s revenue has only been affected by around 6% compared to 2019, despite the bushfires and the coronavirus crisis. Going forward, Boral is leveraged to continued strength in the property market as Australia absorbs significant population growth. While short-term weakness in property prices is expected, history has shown that Australia’s housing market has recovered over time. Boral trades on a trailing dividend yield of 9.35% with 50% franking.

More reading

• This is the latest ASX 200 stock to unveil double digit profit growth
• 4 ASX 200 shares exposed to a fall in house prices
• NAB is going to question borrowers with loan holidays
• 3 industries that may never recover from COVID-19
• Why ASX iron ore miners like BHP aren’t afraid of the China trade war

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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 200 travel shares have been hit hard in 2020, but could they be back in the buy zone today?

Why Aussie travel stocks have slumped lower

The biggest factor hitting Aussie travel shares has been the coronavirus pandemic. Countries have been shutting their borders since late February and still many domestic borders remain shut.

The S&P/ASX 200 Index (ASX: XJO) is down 18.31% in 2020 but many of the Aussie travel shares have fallen much further than that.

The extraordinary measures taken both in Australia and abroad are designed to reduce the spread of the global pandemic. However, it’s also reduced the value of ASX 200 travel shares and left shareholders blindsided by the sudden turn of events but some of the biggest travel names might have been oversold in 2020…

Can ASX 200 travel shares bounce back in 2020?

There does appear to be light at the end of the tunnel for travel companies. The Federal Government is looking to ease COVID-19 restrictions and that could soon see domestic border restrictions loosened. There’s even talk of creating a “bubble” with New Zealand to boost tourism and ease the economic burden.

That means travel shares like Flight Centre Travel Group Ltd (ASX: FLT) could be in the buy zone. The Flight Centre share price has slumped 74.05% in 2020 while Corporate Travel Management Ltd (ASX: CTD) shares are down 45.51%.

Now, I don’t think anyone believes that these travel groups should be valued what they were before. The International Air Transport Association (IATA) has said we may not see travel normalise until 2023 which means things have changed. Earnings have changed, dividends have changed and that means that share prices have changed. 

One bit of good news for ASX 200 travel shares is in Aussie business and the government sector. If businesses and the government are returning to work, that could mean more bookings for companies like Corporate Travel.

Foolish takeaway

ASX 200 travel shares have been hammered lower in 2020, but I think they could be oversold. Flight Centre and Corporate Travel seem like speculative buys right now, but there could be big upside for investors willing to roll the dice and add travel exposure to a diversified portfolio.

More reading

• Is the Bega Cheese share price a strong ASX buy today?
• ASX 200 storms 2% higher: Big four banks jump on COVID-19 vaccine news
• This ASX 200 tech share is sinking 5% lower after its half year update
• 3 ASX 200 dividend shares I’d buy today
• How to invest $10,000 in ASX 200 shares today

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

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The Bega Cheese Ltd (ASX: BGA) share price hit a new 52-week high in morning trade before dipping slightly, but is it a strong ASX buy right now?

Why the Bega Cheese share price hit a new 52-week high

It’s been a hectic start to the year for many ASX 200 shares. The S&P/ASX 200 Index (ASX: XJO) is down 16.67% this year but Bega Cheese has been one of the least volatile constituents. The Aussie food company’s shares started the year at $4.32 per share and it’s lowest closing price has been $3.92 per share. That was on January 6, meaning the coronavirus pandemic hadn’t yet gripped markets.

The relative stability of Bega’s share price can partly be attributed to the fact that it operates in the Consumer Staples sector and has non-cyclical earnings. The dairy producer has also benefitted from strong supermarket sales this year as Aussies flocked to stock up on essential supplies. This strong consumer demand has trickled down from ASX supermarkets to boost suppliers like Bega this year.

This has also been good news for shareholders with the Bega Cheese share price closing at a new 52-week high of $5.29 per share yesterday before opening higher again today and rallying to $5.50 before dropping back late morning. This is in stark contrast to last year when Bega’s share price largely followed a downward trajectory resulting partly from a devastating bushfire season that hit the region around Bega particularly hard. While Australia grapples with the pandemic, many local businesses and individuals are still reeling from last summer.

But with the Bega Cheese share price rocketing 21.53% higher in 2020, is it still a strong ASX buy?

Is Bega a strong ASX buy today?

It’s great news for shareholders and the Aussie economy when Bega is doing well. However, when it comes to investing in ASX shares, I’m focused on the long-term.

I think the recent boost for Bega may be a little short-lived. There’s strong competition from the homebrand products in Coles Group Ltd (ASX: COL) supermarkets which are supplied by rival Murray Goulburn. On top of that, Australia’s relationship with China appears frayed which could hit Aussie exports hard.

Bega exports over 60 million units of cheese per year to approximately 40 different countries. That means the Aussie dairy group is facing some medium-term headwinds and could see earnings under pressure in 2021.

Foolish takeaway

The Bega Cheese share price has been a strong outperformer in 2020. It’s hard to bet against ASX shares with positive momentum, but no one knows what to expect right now. I wouldn’t be speculating on Bega’s short-term share price movements. Instead, I’d only buy if the long-term picture makes it a strong ASX buy for the future.

More reading

• Are ASX 200 travel shares in the buy zone?
• ASX 200 storms 2% higher: Big four banks jump on COVID-19 vaccine news
• This ASX 200 tech share is sinking 5% lower after its half year update
• 3 ASX 200 dividend shares I’d buy today
• How to invest $10,000 in ASX 200 shares today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 Bega Cheese share price a strong ASX buy today? appeared first on Motley Fool Australia.

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