One of the best performers on the S&P/ASX 200 Index (ASX: XJO) on Monday has been the Fortescue Metals Group Limited (ASX: FMG) share price.

At one stage today the iron ore producer’s shares were up as much as 8% to a record high of $13.53.

When its shares reached that level, it meant they had gained a sizeable 25% since the start of the year.

Not bad when you consider that the ASX 200 is down over 18% during the same period.

Why is the Fortescue share price at a record high?

Investors have been buying the iron ore producer’s shares on Monday after the price of the steel making ingredient climbed higher on Friday night.

According to CommSec, the benchmark iron ore price rose by US$2.50 or 2.8% to US$93.25 a tonne. This brought its weekly gain to a solid US$4.80 or 5.4%.

Iron ore prices have been increasing thanks to solid demand in China and production disruptions from key Brazilian miners.

Pleasingly, analysts at Goldman Sachs appear confident that iron ore prices will remain solid for some time to come. They recently ruled out a crash in the base metal’s price.

What else is supporting Fortescue’s shares?

In addition to this, with the interest rates on offer with savings accounts and term deposits at ultra low levels, income investors have been attracted to Fortescue for its generous yield.

Especially given how countless dividend favourites such as Australia and New Zealand Banking GrpLtd (ASX: ANZ) have been deferring or even outright cancelling dividend payments during the pandemic.

According to a note out of Macquarie Group Ltd (ASX: MQG) on May 1, it expects Fortescue to pay a 73.3 cents per share dividend in FY 2021. This implies a 5.5% fully franked forward dividend yield.

While that is very generous already, I suspect that if iron ore prices remain at these levels for longer, Fortescue’s free cash flows will be strong enough to pay an even bigger dividend next year.

Overall, I think this yield and its positive outlook makes it worth considering Fortescue along with fellow mining giant BHP Group Ltd (ASX: BHP).

More reading

• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble
• Beat falling rates with these strong ASX dividend shares
• Are these China-exposed ASX shares in danger in 2020?
• Get paid huge amounts of cash to own these ASX dividend shares
• Goldman Sachs names 5 reasons iron ore prices won’t crash

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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 Fortescue share price hits a record high: Is it too late to invest? appeared first on Motley Fool Australia.

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I think the smartest shares to buy if you have $2,000 are ones that are seeing an acceleration of growth.

In light of the ongoing coronavirus pandemic and the share market decline, I think there are three groups of shares.

There’s one group that have seen their earnings and share prices smashed. Think of industries like retail and travel. There may be a few shares to buy in that group, but I don’t think the Flight Centre Travel Group Ltd (ASX: FLT) share price will be back above $30 any time soon.

There’s another group of shares that generally don’t seem to be significantly affected either way for the medium-term. I’m thinking of eesource shares like Rio Tinto Limited (ASX: RIO), supermarkets like Coles Group Limited (ASX: COL) and energy infrastructure like APA Group (ASX: APA). I think you need to decide if you’re happy to invest in these names, when other shares have fallen hard in price.

Finally, I think there’s another group where growth has been, or will be, accelerated by the current conditions. This largely describes business that have an important digital element to their service. I think it’s within this group that could be the smartest shares to buy if you have $2,000.

Two of the smartest shares to buy with $2,000

Pushpay Holdings Ltd (ASX: PPH) is a compelling smaller business that provides electronic donation services to not-for-profits, predominately US churches.

In this period of social distancing, having the ability to donate digitally to the church is extremely useful. Pushpay also enables churches to livestream the church service to the congregation.

The company generated excellent growth in FY20 and in FY21 it’s expecting earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to approximately double.

I think Pushpay is one of the smartest shares to buy because people are shifting to electronic giving much faster than what would have happened otherwise.

Magellan High Conviction Trust (ASX: MHH) is a listed investment trust (LIT) that invests in high quality globally listed shares which have very strong economic moats. This trust has a small portfolio of names that it has high conviction in. Those businesses generally provide most of their services digitally.

Some of the shares within the trust’s holdings are Alibaba, Alphabet, Microsoft, Facebook and Visa. I think these are some of the smartest shares to buy in the world. We can get exposure to all of them with a single investment in Magellan High Conviction Trust.

Even the advertising businesses like Alphabet and Facebook could be good picks because whilst total marketing spend is obviously down, digital advertising is the best way to reach customers at the moment.

As a bonus, the trust targets a 3% distribution yield each year.

Foolish takeaway

I really think both of these shares will see stronger underlying user growth and this will help generate stronger long-term growth. At the current prices I think Pushpay could be one of the smartest shares to buy on the ASX. Magellan High Conviction Trust could be another great idea, particularly if the Australian dollar keeps strengthening.

More reading

• Why I would buy these exciting ASX growth shares right now
• ASX shares can help millennials retire before their parents
• These 4 ASX shares are at 52-week highs. Time to invest?
• Take advantage of ASX share market volatility
• Double your money with these high quality ASX shares

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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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