• Lest We Forget

    Anzac Day 2021 banner image

    I was still a kid in 1987 when Australia belatedly welcomed home our Vietnam Veterans.

    I can’t really remember what conversations I was part of, or overheard. At least not in any detail.

    But I remember, deep in my bones, how important that march was for those returned service personnel.

    How viscerally important.

    It didn’t heal old wounds. At least not completely.

    But it was, in many respects, if not a new beginning, at least a new place from which to continue.

    My father was a Vietnam Veteran.

    He bore the emotional scars of his service.

    And the emotional scars of his — our — nation’s shameful treatment of our Veterans.

    That Welcome Home parade showed me how important commemoration is.

    It says ‘we know’.

    It says ‘we remember’

    It says ‘we care’.

    Today is ANZAC Day.

    It is, for our nation, and for our cousins, allies and comrades in arms in New Zealand, a sacred day.

    It might be the most important day on our national calendar.

    As it was last year, this ANZAC Day commemoration will be different to most.

    Many Dawn Services have been cancelled.

    Many marches have been scaled back.

    But, as we do every year, today we will remember.

    We will, in our own ways, stand in solidarity. In solemnity. In silence.

    I was fortunate to get one of a limited number of tickets to the scaled down Dawn Service at the RSL Sub-Branch of which my father was, for a time, President.

    As the dawn breaks today, I will be where I’ve been on more ANZAC Days than I can count.

    So many times that I think I could probably recite the order of service by heart.

    Yet the service never fails to affect me.

    So much, sacrificed by so many.

    The soldiers, sailors and aviators who paid the supreme sacrifice.

    Those who returned, with the physical, mental and emotional scars of their service.

    They went because their country asked them to.

    They served in our name.

    The duty falls to us, to remember.

    These are the words of the ANZAC Dedication:

    At this hour, upon this day, ANZAC received its baptism of fire and became one of the immortal names in history.

    We who are gathered here think of the comrades who went out with us to battle but did not return. We feel them still near us in spirit. We wish to be worthy of their great sacrifice.

    Let us, therefore, once again dedicate ourselves to the service of the ideals for which they died. 

    As the dawn is even now about to pierce the night, so let their memory inspire us to work for the coming of the new light into the dark places of the world.

     

    This morning — today — we remember.

     

    They shall grow not old,

    as we that are left grow old;

    Age shall not weary them,

    nor the years condemn.

    At the going down of the sun

    and in the morning

    We will remember them.

     

    Lest We Forget.

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  • Meet the real ASX winners from record high Chinese steel prices

    Record steel price ASX shares Tank pours the liquid steel in the molds

    Record high Chinese steel prices will put ASX iron ore producers in the spotlight on Monday, but there’s another group of ASX shares that could be the real winners.

    While the futures market is pointing to a small drop in the S&P/ASX 200 Index (Index:^AXJO) investors will be eyeing the Fortescue Metals Group Limited (ASX: FMG) share price, Rio Tinto Limited (ASX: RIO) share price and BHP Group Ltd (ASX: BHP) share price to see how they react to the jump in the price of steel on Friday.

    However, its the BlueScope Steel Limited (ASX: BSL) share price and Sims Ltd (ASX: SGM) share price that could benefit more. I’ll explain in a moment.

    Chinese steel prices at record highs

    The Rebar price hit its highest level on the Shanghai Futures Exchange since record began in 2009, reported Bloomberg.

    Further, Hot-Rolled Coil (HRC) is trading close to a seven-year high with both steel products gaining 2% last week.

    The price increases come even as Chinese authorities threaten to clamp down on steel production.

    Steel output curbs could impact on ASX mining shares

    “We expect the central government will likely launch a nationwide production control plan soon,” Bloomberg quoted a Citigroup report.

    “Despite the market concerns of potential inflation risks, we believe the government is determined to curb steel production in order to reduce its carbon footprint.”

    What’s more, nationwide controls could be followed by more cuts in other provinces in the second half.

    Not all bad news for ASX iron ore miners

    Chinese restrictions are a potential threat to ASX iron ore miners. The commodity they export are a critical input consumed by steel mills.

    But experts are divided on how big of a risk this poses to the ASX shares. While weakening steel output technically means lower demand for iron ore, supply curbs are supportive of high steel prices.

    High steel prices are great news for our miners as the price of iron ore is likely to remain near record highs of their own.

    Brazilian wildcard

    The thing that could tip the scale in favour of the bulls or bears may be Brazil. Output from Australia’s rival iron ore supplier is struggling due to the rampant outbreak of COVID-19.

    Brazil’s largest iron ore miner, Vale SA, missed production expectations for the first quarter of 2021. News that the country’s environmental agency ordered Vale to suspend operations at its Ilha da Guaiba export terminal is adding to the angst.

    However, Bloomberg reported that another Brazilian government department has allowed Vale to resume exports at the terminal hours later.

    The uncertainty in Brazil will make forecasting all that much challenging for ASX investors.

    The real ASX shares that benefit from record steel prices

    While experts are working out the real impact of China’s measures on ASX iron ore shares, shareholders in BlueScope and Sims will be grinning.

    If Chinese steel prices remain buoyant, this will also likely put upside pressure on global steel prices. That puts the BlueScope share price and Sims share price in the box seat as their margins should be able to withstand lofty iron ore prices.

    And if they are doubly lucky, the iron ore price may weaken to deliver their bottom line an extra boost.

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  • 2 quality ASX growth shares rated as buys

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    If you’re a fan of growth shares like I am, then you’ll be pleased to learn that the Australian share market is home to a good number of them.

    But with so many options, it can be hard to decide which ones to choose over others. To narrow things down, I have picked out two growth shares that are highly rated. They are as follows:

    Adore Beauty Group Limited (ASX: ABY)

    Adore Beauty is a growing online beauty retailer. It was founded in a Melbourne garage by Kate Morris and James Height back in 2000.

    Since then, it has evolved into an integrated content, marketing, and ecommerce retail platform in order to better meet customer needs. And what a lot of customers it is meeting the needs of.

    At the end of the first half of FY 2021, the company had almost 800,000 active customers. From these, it generated revenue of $96.2 million, up 85% on the prior corresponding period.

    Positively, even if you annualise this, it is still only a very small slice of the Australian beauty and personal market worth an estimated ~$11 billion a year. This gives it a very long runway for growth, particularly given the low penetration of online beauty sales compared to other Western markets.

    Morgan Stanley is a fan of the company. Last month its analysts reiterated their overweight rating and lifted their price target on its shares to $8.75.

    Breville Group Ltd (ASX: BRG)

    Another growth share for investors to consider is this appliance manufacturer.

    Breville has been growing strongly over the last decade thanks to the increasing popularity of its products and its international expansion. Positively, the latter is continuing and provides it with numerous growth opportunities.

    As does the acquisition of Seattle-based coffee grinding company Baratza late last year. This brought together two of the world’s leading companies in the design and global distribution of coffee products.

    Like Adore Beauty, Breville was a strong performer in the first half of FY 2021. It delivered a 28.8% increase in revenue to $711 million and a 29.2% increase in net profit after tax to $64.2 million.

    The good news is that the second half is expected to be similarly strong. It is forecasting EBIT of $136 million for the full year. This will be a 20% year on year increase.

    UBS is bullish on the company due to product launches and its expansion into new markets. Its analysts have a buy rating and $35.70 price target on its shares.

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    James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Adore Beauty Group Limited. 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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  • 2 growing small cap ASX shares you need to watch

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    While small cap shares carry a lot more risk than blue chips, the potential returns on offer are vastly superior. This could make it well worth having a little exposure to this side of the market if your risk tolerance allows.

    But which small caps should you be looking at? Two to get better acquainted with are as follows:

    Damstra Holdings Ltd (ASX: DTC)

    The first small cap to look at is Damstra. It is an integrated workplace management solutions provider.

    Damstra provides businesses with a cloud-based workplace management platform that tracks, manages, and protects their workers and assets. 

    Demand for its offering has been growing strongly in recent years and has continued in FY 2021. For example, in February Damstra reported a 29.6% increase in revenue to $13.3 million. 

    Analysts at Shaw and Partners are positive on the company. They currently have a buy rating and $1.93 price target on its shares. This compares to the latest Damstra share price of $1.10.

    Whispir Lrd (ASX: WSP)

    Another small cap to look at is Whispir. It is a technology company that provides a communications workflow platform automating interactions between organisations and people.

    There’s a very strong chance that you’ll have come across its offering in your day to day life. Uses included COVID-19 communications by the government at the height of the pandemic and website chat pop ups that are designed to reduce call centre volumes.

    Demand continues to grow for Whispir’s platform, which is underpinning solid recurring revenue growth. In fact, just this week the company released its third quarter update and revealed further growth in this key metric.

    Analysts at Ord Minnett have been pleased with its performance this year. As a result, they currently have a buy rating and $4.25 price target on its shares. This compares to the latest Whispir share price of $3.32.

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    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 Damstra Holdings Ltd and Whispir Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd and Whispir 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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  • How $20,000 turns into $250,000 in 10 years with ASX shares

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    I’m a big fan of buy and hold investing and believe it is the best way for investors to grow their wealth. To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

    This time around I have picked out the three ASX shares that are listed below:

    Goodman Group (ASX: GMG)

    This integrated commercial and industrial property group owns, develops, and manages industrial real estate in 17 countries. It has been a very strong performer over the last decade thanks to its focus on investing in and developing high quality industrial properties in strategic locations. These are close to large urban populations and in and around major gateway cities globally, where demand is strong and transformational changes are driving significant opportunities. This has underpinned strong earnings and distribution growth, leading to its shares generating a total average return of 19.4% per annum since this time in 2011. This would have turned a $20,000 investment into ~$120,000.

    NEXTDC Ltd (ASX: NXT)

    NEXTDC is Australia’s leading data centre operator. Thanks to the shift to the cloud, a significant increase in demand for capacity in data centres, and its growing network of centres, NEXTDC’s sales and earnings have been growing at a strong rate for a decade. This has led to its shares smashing the market over the last 10 years. During this time, the NEXTDC share price has provided investors with an average total return of 21.8% per annum. This would have turned a $20,000 investment into ~$145,000 in 2021.

    REA Group Limited (ASX: REA)

    Another company that has been growing very strongly thanks to a structural shift has been REA Group. With property listings moving from newspapers to online, its realestate.com.au website has benefited greatly over the last decade. Especially given its dominance of the industry. This has been supported by the growth of its complementary businesses and its international operations. All in all, this has led to REA Group share price generating a total average return of 28.6% per annum for shareholders since 2021. This means that a $20,000 investment in REA Group’s shares in 2011 would now be worth ~$250,000.

    Where to invest $1,000 right now

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    Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has recommended REA Group 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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  • What’s been happening with ASX renewable energy shares lately?

    A graphic featuring renewable energy sources such as wind, solar and battery power, indicating positive share prices growth in the ASX renewable sector

    ASX renewable energy shares have been a much-discussed area of interest over the past few months (and years, to be fair). After all, 2020 was a pretty good year for the sector. On top of that, interest has picked up in recent weeks on the back of significant talk of a renewables-focused infrastructure package over in the United States. Such a package has indeed been proposed by the Biden administration, although we will have to see how it looks if it ever gets out of a closely divided US congress.

    So, how have ASX renewables shares been tracking recently?

    Quite well, as it turns out.

    Take Tilt Renewables Ltd (ASX: TLT). Tilt is a power generation company that owns a portfolio of wind and solar farms across Australia and New Zealand. It has been a consistent winner for investors, adding nearly 90% to its share price in 2020. And another 31% in 2021 so far. Tilt was in the news last week after receiving an NZ$8 per share acquisition offer from a Canadian pension fund called CDPQ. That follows the takeover offer last month from AGL Energy Limited (ASX: AGL) and Mercury NZ Ltd (ASX: MCY).

    ASX renewable energy shares continue to excite

    Speaking of Mercury NZ, we have another ASX renewable energy share that has performed rather well over the past year, although not so well more recently. Just this week, in fact, we got a quarterly update from Mercury. The company announced that its hydro-electrical generation was up 8.5% over the quarter, although its forecasts for the full year reminded unchanged. Investors weren’t too impressed though, judging by the flat share price that day.

    ClearVue Technologies Ltd (ASX: CPV) has been another recent performer. As my Fool colleague reported last week, investors seem to have linked ClearVue with the Biden infrastructure plan. This company develops glass that can function effectively like a solar panel. ClearVue is up more than 500% over the past year, so it definitely has a lot of support out there.

    Another ASX renewables company that isn’t fairing so well though is Meridian Energy Ltd (ASX: MEZ). Meridian rose almost 100% in value between September last year and January this year. But the past few months have been proportionally unkind. Meridian has lost close to 40% of its value since 8 January. Investors weren’t too impressed with an update that month which saw the company report a fall in electricity demand. Meridian has also been suffering more recently from institutional investment outflows as well.

    I think we can all agree that ASX renewables shares have a birth future. So it will be interesting to see how these companies perform in the weeks, months and year ahead.

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    Motley Fool contributor Sebastian Bowen 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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  • These were the best performers on the ASX 200 last week

    rising asx share price in food and consumer staples sector represented by happy face made from cut up banana

    After a solid start to the week, the S&P/ASX 200 Index (ASX: XJO) gave back its gains and finished the period ever so slightly lower. The benchmark index lost 2.8 points over the five days to finish it at 7,060.7 points.

    That didn’t stop some shares from recording very strong gains over the week. Here’s why these were the best performing ASX 200 shares:

    Megaport Ltd (ASX: MP1)

    The Megaport share price was the best performer on the ASX 200 last week with a gain of 10.5%. The catalyst for this was the release of the elastic interconnection services provider’s third quarter update. Megaport reported monthly recurring revenue (MRR) of $6.8 million for the three months ended 31 March. This represents a lift of $0.5 million or 8% quarter-on-quarter and was driven by an increase in its footprint, ports, and customer numbers. UBS was happy with the update and retained its buy rating and lifted its price target to $17.10.

    Monadelphous Group Limited (ASX: MND)

    The Monadelphous share price wasn’t far behind with a gain of 8.6% over the five days. This was despite there being no news out of the mining services company. However, a positive announcement at the end of last week in relation to a lawsuit settlement with Rio Tinto Limited (ASX: RIO), which was covered by insurance, could have helped. As could its exposure to iron ore, which was on fire again last week.

    Champion Iron Ltd (ASX: CIA)

    The Champion Iron share price was on form last week and stormed 8.3% higher last week. As mentioned above, the iron ore price was a very strong performer last week. The base metal climbed to its highest level in 10 years and now has the US$200 a tonne level in its sights. This was driven by strong steel margins in China.

    Reliance Worldwide Corporation Ltd (ASX: RWC)

    The Reliance Worldwide share price was a positive performer and recorded a gain of 8.1% last week. This led to the plumbing parts company’s shares hitting a multi-year high on Friday. While there was no news last week, investors have been buying its shares since the release of a very strong half year update in February. During the half, Reliance Worldwide reported a 56% increase in adjusted net profit after tax to $99.3 million.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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    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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended MEGAPORT FPO and Reliance Worldwide 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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  • 2 excellent ASX growth shares that are rated highly

    A drawing of a white rocket streaking up, indicating a surging share pirce movement

    If you’re a growth investor then you’re in luck. The Australian share market is home to a number of quality shares that have the potential to grow strongly in the future.

    Two top ASX growth shares that have been tipped as buys are listed below. Here’s why they are highly rated:

    Redbubble Ltd (ASX: RBL)

    The first ASX growth share to look at is Redbubble. This ecommerce company’s shares have come under significant pressure this month following the release of its third quarter update.

    For the three months ended 31 March, Redbubble reported a 54% increase in gross transaction value to $134 million. However, from this, it only generated EBITDA of $2.2 million. This compares to its first half EBITDA of $48.8 million, which averages out at $24.4 million per quarter.

    Management advised that it is sacrificing margins in order to invest in its growth. An investment that it hopes will lead to gross transaction value of $1.5 billion by 2024 with an EBITDA margin of 10% to 15%. This compares to gross transaction value of $620 million and an EBITDA margin of 9% in 2020.

    In response to the update, RBC Capital held firm with its buy rating but cut its price target to $5.60. This compares to the latest Redbubble share price of $4.08.

    Zip Co Ltd (ASX: Z1P)

    Another ASX growth share to consider is Zip. Thanks to the increasing popularity of the buy now pay later (BNPL) payment method with consumers and retailers across the world, Zip has been growing at a rapid rate in recent years.

    This has continued in FY 2021, with Zip recently releasing its third quarter update. That update revealed an 80% increase in group quarterly revenue to $114.4 million. This was driven by a 195% increase in transaction numbers to 12.4 million, a 114% jump in quarterly transaction volume to $1.6 billion, and an 88% lift in active customers globally to 6.4 million.

    The key driver of its growth was its Quadpay business in the United States. Pleasingly, with a $5 trillion market opportunity in the country, this side of the business still has a significant runway for growth over the next decade and beyond.

    One broker that was pleased with its update was Citi. In response, the broker upgraded its shares to a buy rating with an $11.30 price target. This compares to the latest Zip share price of $8.90.

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    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 ZIPCOLTD FPO. 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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  • High iron ore prices are boosting the Fortescue (ASX:FMG) share price again

    top asx shares represented by investor kissing piggy bank

    High iron ore prices are continuing to boost the Fortescue Metals Group Limited (ASX: FMG) share price.

    Over the last month the Fortescue share price has gone up by 12%. It has been a sizeable recovery after a decline between the end of February and the recent low in March 2021.

    Even so, the Fortescue share price remains down by around 14% from that high in February 2021.

    What’s going on with the iron ore price?

    There have been some effects from COVID-19 on the iron ore price. China has been providing stimulus for its economy which has seemingly benefited the iron ore price. The Chinese demand for iron ore remains high and the iron ore price is also high. The iron ore price is currently around US$190.

    Another factor for the strong iron ore price is that supply from Brazil continues to be lower than expected from the iron ore miner Vale. COVID-19 impacts have meant that production continues to be disappointing.

    Analysis by the Australian Financial Review pointed out that margins for the miners are higher than they were a decade ago during the last boom. Another difference with that boom is that the US and Europe are spending a lot of money on infrastructure which should help things.

    The iron ore price isn’t going to stay this strong according to analysts.

    The AFR reported that Goldman Sachs said on Tuesday it thinks the iron ore will fall to $US137 a tonne by the end of June 2021, this could mean a 27% fall by the end of the financial year.

    Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) think that conditions in China remain strong. This may mean that FY21 earnings of the iron ore giants are stronger than some analysts are expecting.

    How good is the Fortescue FY21 result going to be?

    It’s hard to know exactly how good the result will be because of the unknown of how iron ore prices will go over the next couple of months. But prices have remained high for most of the second half of the financial year too.

    Morgan Stanley is one of the brokers that’s most bearish about Fortescue with a share price target of $17.45 over the next 12 months. The broker is concerned that emission reductions in the Chinese city called Tangshan could cause trouble for lower grade miners like Fortescue. Morgan Stanley thinks that Chinese stimulus ending will be a negative for the iron ore price.

    Broker UBS also thinks the good times aren’t going to continue, with lower Chinese demand and more supply from Brazil.

    But not every broker thinks that way. Ord Minnett thinks that concerns about China are too pessimistic. Production can come online in other places. The broker thinks that the Fortescue share price could go higher, with a share price target of $29.

    According to Ord Minnett, Fortescue has a FY21 grossed-up dividend yield of 23%. Using its earnings estimates, the Fortescue share price is valued at 7x FY21’s estimated earnings.

    Where to invest $1,000 right now

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    Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. 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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  • 2 ASX dividend shares with generous yields

    Are you looking to add some dividend shares to your portfolio next week? Then take a look at the ones listed below.

    Here’s why they could be top options for income investors:

    BWP Trust (ASX: BWP)

    When it comes to retail property, there are few retailers (if any) that you would want more as a tenant than Bunnings Warehouse.

    So, as the largest owner of Bunnings Warehouse sites across Australia, BWP is the envy of many retail landlords.

    At the last count, BWP had a total of 68 properties which were leased to the home improvement giant. And thanks to its key tenant’s strong performance during the pandemic, it has been able to collect rent as normal this year.

    This led to BWP reporting a 6% increase in profit during the first half of FY 2021, allowing the BWP board to reaffirm its plans to pay a full year distribution of ~18.3 cents per share.

    Based on the current BWP share price, this equates to an attractive 4.45% dividend yield.

    Telstra Corporation Ltd (ASX: TLS)

    Another dividend share to look at is this telco giant. Telstra’s outlook has improved greatly recently thanks to the easing NBN headwind, rational competition, lucrative 5G internet, and the planned splitting up of the company to unlock value.

    In fact, management expects the above to put Telstra in a position to return to growth as soon as next year.

    In light of this, the company’s dividend cuts appear to be over, with almost all analysts now expecting 16 cents per share to be the bottom.

    So, with the Telstra share price ending the week at $3.41, this means its shares will provide investors with a fully franked dividend yield of approximately 4.7%. Given how low interest rates have fallen in recent years, this is certainly an attractive yield for income investors.

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    Returns As of 15th February 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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