You know, there are two ways to try to build a business:

You can pull a Steve Jobs, and offer customers something they didn’t know they wanted.

That’s how we got the iPhone.

It’s also how we got the Laser Disc, so there’s that.

If you can tap into something deep — or create that ‘something’ with a great product and great marketing, you’re set.

Afterpay Ltd (ASX: APT) might be perhaps the best recent Australian example.

It’s a high-wire act, but it’s possible for a special few.

The other way?

You can ask customers what they want, then build it.

Bonus points if the customer will pay you to build it, and you can sell that same thing to even more customers.

Unlikely?

For the most part, yes.

Woolworths Group Ltd (ASX: WOW) can’t ask each customer what they want, then stock just those things.

And even if they did, it’s not a great way to run a high volume, wide-range business.

Ah, but if you’re a software company?

Well, that’s different.

Not only can you design something by working with current or prospective customers, but they’ll likely pay you for doing the work.

No, not ‘Build it and they will come’, but rather ‘They’ll come, and then you can build it’.

Sounds good huh?

And, as I intimated above, the great thing about software is that it’s completely replicable.

Write the code for one customer, and you can sell the resulting software to tens, hundreds, and thousands of others.

It’s so good that it’s almost unfair.

No business is quite that straightforward, of course, but it beats many of the alternatives.

You don’t have to put cars on the lot.

You don’t have to build the apartment building and hope the buyers come.

You don’t have to tool up the factory, hoping they’ll want your widgets.

Being able to build something, to meet a customer’s needs, who then commits to take the end result… well, that’s a pretty good start.

Then sell a copy. And another one. And another.

Good huh?

(A quick aside: it’s one of the benefits of studying company business models. Knowing how and when the cash flows, plus the assets and liabilities involved in running a business can be a big advantage. It doesn’t always lead to outsized investment returns, but can help swing the odds in your favour).

Investing doesn’t need to be super-complex.

But knowing a little about how a company makes its money, as well as the advantages and disadvantages of its business model, can really make a big difference.

Fool on!

The post Another reason software wins appeared first on The Motley Fool Australia.

More reading

• The CBA (ASX:CBA) share price is now trading on a 3.46% fully-franked dividend yield
• These ASX 200 dividend shares slashed their payouts in August
• Here’s why the Pilbara Minerals (ASX:PLS) share price is up 25% in a month
• These ASX 200 dividend shares increased their payouts this earnings season
• Top broker says CSL (ASX:CSL) share price is a buy

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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August was a big month for ASX 200 dividend shares. The latest earnings season saw some surprise income boosts but it wasn’t all good news for shareholders of the S&P/ASX 200 Index (ASX: XJO) constituents.

Here are some of the notable names that slashed payouts to shareholders in the most recent reporting season.

ASX 200 dividend shares that slashed dividends in August

1. AGL Energy Limited (ASX: AGL)

AGL Energy Limited (ASX: AGL) was one of the big names to slash payouts. The decision came after a difficult 2021 for shareholders as the pandemic continued to weigh on energy shares. The AGL share price is down 45.6% in 2021 and the group’s FY21 results didn’t provide great news for shareholders.

AGL reported a 10% drop in revenue as underlying net profit slumped 33.5% to $537 million. The Aussie energy generator and retailer slashed its final dividend by 23.5% to 75 cents per share and ultimately slid lower in August.

2. Origin Energy Ltd (ASX: ORG)

Perhaps unsurprisingly, another ASX energy giant also trimmed its payout in August. Origin, another of the Big 3 Aussie energy companies, slashed its final dividend from 10 cents in FY20 to 7.5 cents in FY21.

The ASX 200 dividend share slumped lower following the news after Origin reported a $2.2 billion net loss. Investors weren’t pleased with the 20% decline in the full-year dividend payout after a tough year for ASX energy shares marred by COVID-19 restrictions and lower energy prices.

3. Carsales.Com Ltd (ASX: CAR)

Carsales.Com Ltd (ASX: CAR) was another notable ASX 200 dividend share to slash payouts in August.

The Aussie online automotive and marine classifieds business cut its final dividend by 10% to 22.5 cents per share. That came despite Carsales reporting an 11% jump in net profit after tax to $153 million and “excellent free cash flow generation”, according to its media statement.

The post These ASX 200 dividend shares slashed their payouts in August appeared first on The Motley Fool Australia.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Pilbara Minerals Ltd (ASX: PLS) share price was on form again in August.

During the month, the lithium miner’s shares smashed the market with a sizeable gain of 25%.

This means that Pilbara Minerals shares are now up over 150% since the start of the year.

Why did the Pilbara Minerals share price race higher in August?

There were a number of catalysts giving the Pilbara Minerals share price a boost last month.

This includes strong lithium prices, the release of its full year results for FY 2021, positive broker notes, and the results of the lithium miner’s inaugural battery materials exchange (BMX) auction.

In respect to its results, in FY 2021 Pilbara Minerals reported a 142% increase in shipments to 281,440 dry metric tonnes (dmt). This underpinned a 108.9% increase in revenue to $175.8 million.

Management’s forecast for the year ahead also appears to have given investor sentiment a lift. It is forecasting shipments of 440,000 to 490,000 dmt for the year. This will be a 56.3% to 74.1% increase on FY 2021’s shipments. Which bodes well for its sales in FY 2022, especially given how strong lithium prices have been this year.

Bullish brokers

Also helping drive the Pilbara Minerals share price higher last month was a bullish broker note out of Macquarie.

That note reveals that its analysts have retained their outperform rating and lifted their price target on the company’s shares to $2.70.

Based on the latest Pilbara Minerals share price, this implies potential upside of almost 22% over the next 12 months.

Macquarie is very positive on the company due to its favourable outlook for lithium prices and Pilbara Minerals’ long term production growth potential. The broker believes the company can grow its production by an average of 20% per annum over the next seven years.

The post Here’s why the Pilbara Minerals (ASX:PLS) share price is up 25% in a month appeared first on The Motley Fool Australia.

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• When was the best ever day on the Pilbara Minerals (ASX:PLS) share price chart?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Commonwealth Bank of Australia (ASX: CBA) share price has enjoyed robust returns over the past year.

In fact, investors were treated with the company’s full year results on 11 August, underlining growth across key metrics.

At Wednesday’s market close, CBA shares finished the day up 0.88% to $101.

What’s happened to CBA recently?

Investors have been bidding on the CBA share price in 2021 as the company continues to impress the market.

According to its latest scorecard, CBA achieved almost a 20% increase of statutory net profit after tax to $8,843 million. An improvement in Australia’s economic conditions and outlook resulted in lower loan impairment expenses of $554 million, down 78% on FY20.

In addition, net interest margin came to 2.03%, down 4 basis points due to higher liquid assets. The impact of a low-rate environment had been largely offset by management actions, lower wholesale funding costs and favourable funding mix.

It’s worth noting that CBA is conducting a $6 billion off-market share buy-back to reduce surplus capital and increase shareholder value. The capital management program will see about a 3.5% reduction of its total shares on the registry.

Basically, this means that when CBA buys back its shares, the number of shares on its registry will decrease. With a lesser amount, this effectively increases the value of each share as the revenue and profits remain the same.

Traditionally, when this occurs, a company’s share price tends to rise over time.

CBA shares are just 7.3% off their all-time high of $109.03, which was reached on the day the company reported in August.

How much is CBA paying in dividends?

CBA is scheduled to pay a fully-franked dividend of $2 per share to eligible shareholders on 29 September. Coupled with the interim dividend of $1.50, the full year dividend for FY21 is $3.50 per share. This represents a 17% increase on FY20’s dividend, and a payout ratio of 71% on the bank’s cash earnings.

When factoring in the current CBA share price along with its full year dividend, CBA’s dividend yield rises to 3.46%.

About the CBA share price

In 2021, the CBA share price gained around 20% in value for investors. However, when looking at this time last year, its shares are up roughly 50%, highlighting significant returns for a blue-chip company.

On valuation grounds, CBA is the biggest company on the ASX with a market capitalisation of approximately $179.1 billion.

The post The CBA (ASX:CBA) share price is now trading on a 3.46% fully-franked dividend yield appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There were a number of S&P/ASX 200 Index (ASX: XJO) companies on watch in the August earnings season. While growth shares generally reported strong results, investors had their eye on the ASX 200 dividend shares as well.

Here are a few of the big names that increased their payouts to shareholders in the last month or so.

ASX 200 dividend shares that increased payouts

1. WiseTech Global Ltd (ASX: WTC)

WiseTech Global Ltd (ASX: WTC) has long been known as a “WAAAX” growth share. However, the Aussie tech group boosted its dividend by a whopping 141% increase in its full-year dividend.

WiseTech reported a 63% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) to $206 million. The group announced a 3.85 cents per share dividend, up 141% on its FY20 final dividend and more than the 3.30 cents per share payout for the entirety of FY20.

The payout surge sent the ASX 200 dividend share soaring in August as investors processed the surprise result.

2. CSL Limited (ASX: CSL)

CSL Limited (ASX: CSL) also increased its payout to shareholders after the Aussie biotech’s strong FY21 result.

CSL reported a 10% jump in constant-currency net profit to US$2.375 billion and bumped its dividend as a result.

The group’s final dividend of US$1.18 per share translated to a full-year dividend of US$2.22 per share – up 10% on FY20’s payout.

The news didn’t stop the ASX 200 dividend share from sliding lower on its results day before ultimately climbing 6% higher in August.

3. Wesfarmers Ltd (ASX: WES)

Wesfarmers Ltd (ASX: WES) was yet another ASX 200 dividend share to boost its dividend in the latest earnings season.

The Aussie retail conglomerate reported a 16.2% jump in net profit to $2,421 million for FY21. The group announced a 90 cent per share ordinary dividend to bring its full-year dividend up to 178 cents – a 17.1% increase on the FY20 payout.

That doesn’t include the $2 per share proposed return of capital as Wesfarmers looks to give back some spare cash to its investors.

The post These ASX 200 dividend shares increased their payouts this earnings season appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 and has recommended CSL Ltd. and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The CSL Limited (ASX: CSL) share price has been underperforming the market again in 2021.

Since the start of the year, the biotherapeutics company’s shares have risen 8.5%.

This compares to a 12.5% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Is the CSL share price good value?

One leading broker that believes the underperformance in the CSL share price is a buying opportunity is Morgans.

According to a recent note, the broker has put an add rating and $324.40 price target on its shares.

This compares to the latest CSL share price of $309.08.

What did Morgans say?

Morgans was pleased with CSL’s performance in FY 2021, noting that its full year sales and profits were stronger than expected despite facing tough trading conditions. This resilient performance is partly why it remains positive on the CSL share price.

The broker was particularly impressed with CSL’s Seqirus business, which smashed forecasts thanks to strong demand for influenza vaccines.

Commenting on the result, Morgans said: “FY21 results were solid, beating on both top (US$10,310m, +10% cc; Morgans US$9,816m) and bottom lines (US$2,375m, +10% cc; Morgans US$2,174m). Seqirus (15% of profit) was exceptional (US$1,736m, +30% in cc, EBIT US$483m, +95%, margin +7.4pp to 27.8%), underpinned by increased sales of seasonal influenza vaccines (+41%; record doses c130m) and ongoing shift to more differentiated products.”

What about FY 2022?

Morgans acknowledges that FY 2022 will be a transitional year, with weaker margins, and an expected decline in profits.

It said: “FY22 guidance is targeting cc NPAT between US$2,150-2,250bn (-9% to -5%) on revenue growth between 2-5%, with management flagging a “transitional year”, core plasma products “robust”, but margins contracting on increased costs, and Seqirus strength ongoing.”

However, it remains positive on the long term and believes CSL shares would be a great addition to a balanced portfolio.

It concluded: “We view CSL as a core holding and best positioned among its peers to meet growing patient demand, but the near term remains challenged, with timing uncertainty around a full recovery in plasma collections and increasing costs.”

The CSL share price is up almost 200% over the last five years despite its recent underperformance.

The post Top broker says CSL (ASX:CSL) share price is a buy appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re planning to add some growth shares to your portfolio in September, then you might want to look at the shares listed below.

All three of these ASX growth shares have been tipped as buys recently. Here’s what you need to know about them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX growth share to look at is Domino’s. This pizza chain operator has been growing at a solid rate for a long time. This has been driven by the expansion of its store network at home and overseas, acquisitions, and its focus on technology. The good news is that management isn’t resting on its laurels and is aiming to continue expanding and growing its sales for some time to come. This could make it a top long term pick.

Citi is a fan of Domino’s. It currently has a buy rating and $159.05 price target on its shares.

Nitro Software Ltd (ASX: NTO)

Another growth share to look at is Nitro Software. It is a software company that is aiming to drive digital transformation in organisations around the world with its key solution – Nitro Productivity Suite. Demand has been growing strongly in recent years and has continued in FY 2021. For example, during the first half it reported a 56% increase in annual recurring revenue (ARR) to $33.8 million.

Wilsons has been pleased with its performance so far in FY 2021. It recently retained its overweight rating and lifted its price target to $4.22.

PointsBet Holdings Ltd (ASX: PBH)

A final growth share to look at is PointsBet. It is a sports betting and iGaming provider with operations in the ANZ and US markets. It has been growing at a rapid rate thanks to the increasing popularity of mobile sports betting and its US expansion. Pleasingly, it is still only scratching at the surface of its US opportunity and has a significant runway for growth over the next decade.

Goldman Sachs is very bullish on PointsBet. It currently has a buy rating and $14.75 price target on its shares. The broker believes the company is well-placed to win a 10% share in the US states it operates in.

The post 3 quality ASX growth shares analysts rate as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited, Nitro Software Limited, and Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Exchange-traded funds (ETFs) can be an effective way to gain diversification in just one investment. The two in this article could be good to think about in September 2021.

Aussies may benefit from investing in non-ASX shares for geographic diversification and probably sector diversification as well. The ASX is quite focused on resource businesses and banks.

Some ETFs have very low management fees, allowing investors to get exposure to global blue chips for a low price.

So that’s why these two ETFs could be ideas this month:

iShares S&P 500 ETF (ASX: IVV)

Warren Buffett himself is a fan of S&P 500 funds for the diversification and low costs that they offer.

iShares S&P 500 ETF is one of the cheapest ETFs on the ASX. It has an annual management fee of just 0.04%. That means almost all of the gross returns can turn into net returns for investors.

There have been a lot of returns over the last decade, though past performance does not guarantee future results. In the past ten years, the ETF has delivered an average return per annum of 19.9%.

A portfolio-based investment like this one simply provides the combined return of its underlying holdings. At the end of August, these were its largest positions: Apple, Microsoft, Amazon.com, Facebook, Alphabet, Tesla, Nvidia, Berkshire Hathaway and JPMorgan Chase. These businesses are some of the global leaders at what they do. 

As the name suggests, it actually owns 500 businesses. These holdings are some of the largest and most profitable in the US and indeed the world. They come from many different sectors, but technology, healthcare and consumer discretionary are the three industries with the largest representations.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

This ETF actually provides even more diversification than the S&P 500 one.

It’s not just invested in US shares, it is invested in many major developed countries like Japan, the UK, France, Canada, Switzerland, Germany, the Netherlands, Sweden and so on.

Vanguard MSCI Index International Shares ETF also has ownership of more businesses. Its number of holdings is just over 1,500.

All of that diversification comes with an annual management fee of 0.18% per annum.

In terms of the biggest holdings, it has a similar list to the S&P 500: Apple, Microsoft, Alphabet, Amazon.com, Facebook, Tesla, NVIDIA, JPMorgan Chase, Johnson & Johnson and Visa. But because there are more positions (around 1,500), the allocation is smaller to these huge US companies because the money has to be split more ways.

There are obviously plenty of non-US shares in there too like Nestle, Roche, LVMH, Novartis, Toyota, AstraZeneca, Shopify and Novo Nordisk.

Whilst technology is the industry that still gets the biggest allocation with this ETF too, the financials sector is higher up the allocation list. Healthcare is a close third.

The returns here haven’t been quite as high as the S&P 500 – over the last five years the Vanguard MSCI Index International Shares ETF has returned an average of 15.3%.

The post 2 ETFs for strong diversification in September 2021 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF and iShares Trust – iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’re wanting to overcome low interest rates, then you may want to look at the dividend shares listed below.

Both shares are expected to provide investors with generous yields that are vastly superior to those offered with term deposits and savings accounts.

Here’s what you need to know about these dividend shares:

Aurizon Holdings Ltd (ASX: AZJ)

The first ASX dividend share to look at is Aurizon. It is Australia’s largest rail freight operator, transporting more than 250 million tonnes of Australian commodities each year.

Last month Aurizon released its full year results and revealed a 1% decline in revenue to $3.019 billion and a flat net profit after tax of $531 million. While not a result to get excited about, it was in line with expectations and allowed the company to declare another generous dividend.

Credit Suisse was pleased with the result and has put an outperform rating and $5.30 price target on its shares. Its analysts are forecasting dividends per share of 29.5 cents in FY 2022 and then 30.9 cents in FY 2023.

Based on the current Aurizon share price of $3.79, this represents yields of 7.8% and 8.1%, respectively.

South32 Ltd (ASX: S32)

Another dividend share to look at is South32. This mining giant has exposure to a diverse group of commodities, including alumina, aluminium, energy coal, metallurgical coal, manganese ore, nickel, silver, lead, and zinc.

The key commodity at present is aluminium. This is due to the belief that aluminium is in the early stages of a multi-year bull market. Combined with largely favourable outlooks for many of its other commodities, this bodes well for future earnings and dividend growth.

Goldman Sachs is very positive on the company. It currently has a conviction buy rating and $3.60 price target on its shares.

In addition, based on the latest South32 share price, Goldman is forecasting double-digit dividend yields from FY 2022 through to FY 2025.

The post 2 top ASX dividend shares named as buys appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) was ran out of steam and edged lower. The benchmark index fell 0.1% to 7,527.1 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall again on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 15 points or 0.2% lower this morning. This follows a mixed night of trade on Wall Street, which saw the Dow Jones fall 0.15%, the S&P 500 trade flat, and the Nasdaq rise 0.3%.

BHP shares go ex-dividend

The BHP Group Ltd (ASX: BHP) share price is likely to trade sharply lower on Thursday. This is due to the mining giant’s shares trading ex-dividend for its fully franked final dividend. BHP will then be paying eligible shareholders the 273.6 cents per share dividend later this month on 21 September.

Oil prices fall

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could have an off day after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 0.4% to US$68.24 a barrel and the Brent crude oil price has fallen 0.45% to US$71.30 a barrel. OPEC has revealed that it plans to stick to gradual output hikes.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a subdued day after the gold price edged lower. According to CNBC, the spot gold price is down 0.1% to US$1,816.6 an ounce. The release of key economic data in the US appears to be weighing on the safe haven asset.

Other shares going ex-dividend

It isn’t just BHP that is going ex-dividend today. A number of ASX 200 shares are also going to trade without the rights to upcoming dividends. This includes biotherapeutics giant CSL Limited (ASX: CSL), funeral company InvoCare Limited (ASX: IVC), health insurer NIB Holdings Limited (ASX: NHF), and retail giant Woolworths Group Ltd (ASX: WOW).

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 has recommended CSL Ltd. The Motley Fool Australia has recommended InvoCare Limited and NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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