In this era of low interest rates, ASX dividend shares could be the way to generate a higher level of income.

The Reserve Bank of Australia (RBA) has pushed the official Australian interest rate to almost 0%, which makes it hard to make much money from a bank account.

These two businesses are building reputations as ASX dividend shares:

Accent Group Ltd (ASX: AX1)

Accent has been steadily growing its dividend over the last few years as profit grows as well.

The company’s CEO himself, Daniel Agostinelli, has said:

With long-term objectives and incentives linked to driving at least 10% compound earnings per share (EPS) growth, Accent continues to be defined by strong cash conversion and the consistently strong returns it delivers on shareholders’ funds.

Accent said it has strong future growth initiatives through its online sales growth, new store rollouts across its different brands and new brands. Not only is it looking to increase its gross profit margins but it’s trying to be more cost efficient too.

The shoe business saw pre-AASB-16 earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 44% to $97.5 million, earnings before interest and tax (EBIT) growth of 47.3% to $81.8 million and net profit after tax (NPAT) growth of 57.3% to $52.8 million.

It was that profit growth that allowed the ASX dividend share’s board to increase the interim dividend by 52.4% to 8 cents per share.

For the first eight weeks of the second half of FY21, the like for like (LFL) retail sales across the whole network was up 10.7%.

According to Commsec, Accent Group is expected to pay a grossed-up dividend yield of 6.4% for FY21.  

Rural Funds Group (ASX: RFF)

Rural Funds is a fairly different real estate investment trust (REIT) compared to most others in the industry. It owns a portfolio of farming assets rather than retail, office or industrial properties.

It owns agricultural real estate in various sectors – cattle, almonds, macadamia, vineyards and cropping (sugar and cotton).

Rural Funds has a target of growing its distribution by 4% per annum for unitholders. It achieves this through a combination of ways.

Rental increases built into the contracts with its high-quality tenants produce organic rental profit growth each year. Those rental increases are either a fixed 2.5% per annum, or linked to CPI inflation, with some having occasional market reviews.

Some of those strong tenants include Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV), Olam, JBS and Australian Agricultural Company Ltd (ASX: AAC).  

Another of the ways that Rural Funds can grow its rental profit is by re-investing some of its retained cash profit into improving its farms for the tenants. This can then make the ASX dividend share’s farms worth more in capital value and lead to higher rent over time.

Rural Funds has a large water entitlements portfolio to ensure that tenants have access to the water they need. The water value is a sizeable part of the overall underlying Rural Funds value. 

Rural Funds has forecast a distribution of 11.73 cents per unit in FY22, which translates to a forward distribution of 4.75%.

More reading

• 2 ASX dividend shares with attractive yields
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• 2 ASX 200 shares that could be great for dividends
• 2 ASX dividend shares that could be a buy for income today
• 2 attractive ASX dividend shares that could be a buy

The post 2 ASX dividend shares that could be buys in June 2021 appeared first on The Motley Fool Australia.

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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In Part 1 of this edition, Kardinia Capital’s portfolio manager Kristiaan Rehder explains when his fund goes long and when it decides to short ASX shares, along with 1 sector investors should steer clear of.

Fund snapshot

The Bennelong Kardinia Absolute Return Fund was launched in May 2006. That makes it one of the longest running absolute return funds in the Australian market. Bennelong assumed responsibility as a replacement trustee in August 2011.

The fund employs a long/short strategy. It invests in ASX shares with the goal of making positive returns, whether the broader market is rising, falling, or flat.

Over the past 12 months, the fund has returned 14.04% as at 30 April. The 6 months to 30 April saw the fund return 15.01%.

Now, on to Part 1 of the Motley Fool’s interview with Bennelong Kardinia Absolute Return Fund’s portfolio manager, Kristiaan Rehder.

Starting with the long side of your investment strategy, what triggers a buy signal for an ASX share? 

We’re very much fundamental stock pickers. We do our analysis from a bottom-up basis. What we’re trying to do is identify companies with as many winning attributes as possible. Only companies which have our targeted attributes become contenders for our long portfolio.

What are some of those winning attributes?

First of all, we look for companies with a strong balance sheet, good earnings quality, cash conversion, and higher returning businesses.

We like to see businesses in large potential markets. If you can find a company that’s operating in a large potential market that has an industry that’s growing, and they’re growing that market share within that industry, then you’ve got multiple powerful tailwinds for that business.

Governance is also important. And if anything, it’s becoming even more important, with ESG [Environmental, Social, and Corporate Governance] considerations a real focus for investors.

Ultimately, we’re after good quality companies at a fair price. We’re not looking at dirt-cheap valuations. Because the reality is when you’re trying to identify quality companies you often need to pay for those. But we are looking for companies with fair valuations.

On the other side of your strategy, what do you look for in ASX shares before you might short sell them?

I don’t want to get bogged down in too much industry jargon, but we’re what’s referred to as a variable beta strategy. That means we can adjust our net exposure, depending on how bearish or bullish we are.

It’s probably not much different from how you or I might invest in the market. If you are bearish, you have the ability to sell your shares and go to cash. And we have the same flexibility in our strategy. A lot of long-only managers are forced to be fully invested, but that’s not the case with us.

How does that impact your short strategy?

What that actually means is that we need to make money off our shorts. That might sound obvious, but there are other absolute return funds who are happy to lose money on their shorts, because they approach their shorts as a hedge. As long as they make more money on the long side of their book than they lose on the short side of their book, they are satisfied with that.

We’re different. They [shorts] need to make money in their own right.

So we approach our shorts the same way we approach our longs. We go through the same investment process with them. We’re looking for companies that have weak balance sheets, poor earnings quality and cash conversion, low returns, and operating in a small potential market. Hopefully a shrinking market. At best the business is also suffering from market share erosion.

If you can find those sorts of ‘loser attributes’, if you will, then they can be contenders for our short portfolio.

Any areas you think our readers should look into shorting?

Broadly, a sector that’s caught us a little by surprise is the mining services sector. It’s a sector that should be doing incredibly well in theory [with high commodity prices].

Unfortunately, the issue of inflation is starting to creep into the mining sector. We’ve had a number of miners come out recently complaining about inflation. And often mining services contractors will win their contract on a fixed price basis. When inflation starts to occur, that causes issues to their margins.

We’re seeing real signs of inflation right across the industry, particularly in Western Australia where labour is becoming increasingly hard to find. So mining services is one area at this time we’re staying well away from.

Do you take the macro picture into account as well?

By virtue of our strategy, we need to take into account our outlook for equity markets. That helps us set the net exposure for the strategy. Splitting it up, about 30% of our time is focused on top down macro considerations and 70% of our time is focused on bottom up, fundamental stock picking.

What factors determine when you decide to exit your long and your short ASX share positions?

If there are changes to our investment thesis, including valuation, we’ll close our positions. We generally live by the old adage that we let our profits run and cut our losses early.

We have a very disciplined stop-loss limit in place.

Once a stock falls by 15% [from the entry price] we close that position out, no questions asked. We actually have 2 stop losses that run parallel with one another. One is reset each month, so if the market moves against us by 15% that month, even though it might be profitable, we close it out.

This helps limit any losses to 15% and also forces us to lock in those profits when prices turn.

You normally hold 20–50 shares in your portfolio. What’s the breakdown there between long and short positions?

Our short book is typically smaller than our long book. It’s harder to find good quality shorts. On average our short book will contain between 5 and 12 individual names while our long book would be on average between 30 and 40 names.

And what’s your average holding period for those shares?

Our typical holding period for our longs and our shorts is about 12 months. But our portfolio is made up of core positions and trading positions. The core positions make up a much larger component of our portfolio than our trading positions, which can move quite quickly.

We typically hold our core positions for 2–3 years.

Tomorrow, in Part 2 of our interview, Kristiaan Rehder reveals 2 small-cap ASX shares with huge potential and explains why his fund remains bullish on CBA.

More reading

• How are the ASX WAAAX shares performing in 2021?
• 2 ASX dividend shares that could be buys in June 2021
• 2 excellent ASX growth shares named as buys
• Leading brokers reveal 2 ASX shares to buy right now
• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares

The post When to go long and when to short ASX shares… and 1 sector to avoid: fund manager appeared first on The Motley Fool Australia.

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If you’re a fan of growth shares, then you might want to take a look at the ones listed below.

Here’s why these quality ASX growth shares have been tipped as ones to buy right now:

Altium Limited (ASX: ALU)

The first growth share to look at is Altium. It is the electronic design-focused software provider behind the Altium Designer and Altium 365 platforms. The company also has the Octopart electronic parts search engine business and the NEXUS design collaboration platform supporting the core business.

These businesses are well-placed for growth over the next decade. This is thanks to the quality of the platforms and the growing internet of things and artificial intelligence markets. These markets are supporting an explosion in electronic devices globally.

Citi is a fan of Altium. It currently has a buy rating and $33.50 price target on Altium’s shares. Its analysts are optimistic that Altium is nearing the end of its COVID-19 related downgrade cycle.

NEXTDC Ltd (ASX: NXT)

Another ASX growth share to look at is NEXTDC. Like Altium, it appears well-placed for growth over the long term. This is thanks to the cloud computing boom and NEXTDC’s position as one of the region’s leading data centre-as-a-service providers.

At present, the company has 11 world class centres in key locations across Australia. However, this may soon increase, with management looking at expanding into the Asian market. The company has recently opened offices in Singapore and Tokyo with a view of operating in these huge markets in the near future.

If NEXTDC can replicate its Australian success in these markets, then it could provide it with a very long runway for growth over the 2020s.

UBS is positive on NEXTDC. The broker currently has a buy rating and $15.40 price target on its shares.

More reading

• Why did ASX tech shares like Afterpay (ASX:APT) have such a good day?
• 2 ASX tech shares rated as buys by brokers
• Why Zip (ASX:Z1P) and these ASX growth shares are highly rated
• These were the best performers on the ASX 200 last week
• 2 fantastic ASX shares with long runways for growth

The post 2 excellent ASX growth shares named as buys appeared first on The Motley Fool Australia.

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There are some ASX shares that are liked by some brokers and are currently rated as buys.

The below two businesses are not only rated as buys, but brokers think they could produce quite a good return over the next 12 months with their price targets.

Here are two to consider:

Seven West Media Ltd (ASX: SWM)

Seven West is described as one of Australia’s leading media companies with a strong presence in broadcast television, magazine and newspaper publishing and online.

There’s a lot of content that Seven West broadcasts including My Kitchen Rules, House Rules, Home and Away, Sunrise, the Australian Football League, Cricket Australia, the Olympic Games and Better Homes and Gardens.

UBS is one of the brokers that currently rates Seven West as a buy with a price target of $0.60. That means the potential upside over the next 12 months is more than 40%.

The broker likes the trajectory that TV advertising is going and is expecting growth during FY21.

The FY21 half-year result saw underlying earnings before interest and tax (EBIT) rose 29% year on year to $152 million. Part of that performance was from operating expenses declining 18% to $480 million. It also reduced net debt by 42% to $329 million – a decrease of $241 million.

Seven West revealed that the metropolitan free-to-air TV advertising market increased 0.6% during the half with a strong recovery in the December quarter (up 17%). The area of particular growth was digital revenue which increased 73% year on year, driven by broadcaster video on demand (BVOD) market growth of 44% and eight percentage points in share gains during the half.

Karoon Energy Ltd (ASX: KAR)

Karoon Energy is an oil and gas business on the ASX. It currently has a market capitalisation of around $667 million according to the ASX.

The ASX share is currently rated as a buy by Morgan Stanley with a price target of $1.80. That suggests a potential upside of around 47.50% over the next 12 months.

The broker pointed to higher production in the Bauna oil field in Brazil as a reason to be positive, as well as its tax losses.

In the quarterly update for the three months to March 2021, Karoon said oil production from the Bauna Field totalled 1.14 million barrels from oil equivalent (mmBOE), produced at an average rate of 12,641 barrels of oil per day.

Total oil sales receipts for the quarter (which included proceeds from the December cargo) were $97.2 million, representing the company’s first cash flow from oil sales.

In April 2021, the Maersk Developer rig was contracted for the Bauna workover campaign, with the option to extend the contract for the potential development of the Patola Field and drilling of a control well on the Neon light oil discovery.

Management said this is an exciting time for Karoon as it becomes an established upstream producer, with material production and near-term growth opportunities.

More reading

• Is Boral (ASX:BLD) preparing for battle?
• Facebook to invest $15 million into regional Australian news media
• Brokers point to these ASX 200 shares to beat the market in May
• Seven West (ASX:SWM) share price wobbles on market update

The post Leading brokers reveal 2 ASX shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares
• Wake up world, this tech sector is the future: analyst
• 2 buy-rated ASX dividend shares
• 5 things to watch on the ASX 200 on Monday
• VanEck Vectors Video Gaming and eSports ETF (ASX:ESPO) could be a top ETF to own

The post LIVE COVERAGE: ASX to expected rise; Link PEXA business to IPO appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) has just recorded another bumper week, even notching up another record high by Friday. Yes, the ASX 200 hit 7,186.8 points in intraday trading on Friday, which is now the index’s new all-time high. The ASX 200 closed slightly below that peak at 7,179.5 points by end of trade.

It’s the second record the index has now broken over the month of May. On 11 May, the ASX 200 hit 7,172.8 points, ending a ~15-month wait for it to get back to the levels we saw just before the big COVID-induced market crash last year.

As we pointed out last week, the ASX 200 is something of a laggard in this department. The US S&P 500 Index (SP: .INX) passed its pre-COVID all-time high way back in August last year and is now almost 25% higher than that benchmark. For some context, if the ASX 200 had experienced those kinds of gains, it would be sitting pretty close to 9,000 points right now. But enough hypotheticals!

CBA share price hits $100

It was the ASX banks investors could largely thank for the ASX 200’s new milestone. The Commonwealth Bank of Australia (ASX: CBA) share price hit $100 for the first time ever last week, a move investors have been anticipating for more than 6 years now (CBA shares got painfully close back in 2015, but never hit 3 digits).

The big miners in BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) also did some of the index’s heavy lifting. As did CSL Limited (ASX: CSL).

But, as mentioned in the headline, not all ASX shares were hitting record highs last week. Costa Group Holdings Ltd (ASX: CGC) was the worst ASX 200 performer with a nasty loss of 23.73% over the week. Investors seemed pretty spooked by the company’s annual general meeting. An update Costa Group gave during this meeting indicated it would only be bringing in a similar profit level to what it managed for the first half of last year. Investors weren’t impressed.

But overall, most ASX shares had a top week. We saw rising prices in ASX tech shares (which have tended to go in the opposite direction to the broader market in recent months). Kogan.com Ltd (ASX: KGN), Domain Holdings Australia Ltd (ASX: DHG) and Carsales.com Ltd (ASX: CAR) were among the biggest beneficiaries in this space.

We also saw healthy gains from other ASX blue chips like Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW).

How did the markets end the week?

As you can imagine, it was a pretty nice week overall for ASX shares. Monday and Tuesday both saw the markets start the week strongly, with gains of 0.22% and 0.98%, respectively. Wednesday brought with it the only down day of the week, with a loss of 0.32%.

But then Thursday and Friday turned things around again and brought gains of 0.03% and 1.19%, respectively. Since the ASX 200 started out at 7,030.3 points and finished up at 7,179.5 points, the week’s gain stood at a healthy 2.12%.

Meanwhile, the All Ordinaries Index (ASX: XAO) also fared very well. The All Ords started out at 7,265.3 points and finished up at 7,424 points for a gain of 2.18%.

Which ASX 200 shares were the biggest winners and losers?

Time now for our most salacious of segments, where we break down the ASX 200’s best winners and poorest losers. So put the kettle on and fetch the biscuits while we start with the losers:

Worst ASX 200 losers	% loss for the week
Costa Group Holdings Ltd (ASX: CGC)	(23.7%)
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)	(12%)
CSR Limited (ASX: CSR)	(6.5%)
Resolute Mining Limited (ASX: RSG)	(5.6%)

We’ve already discussed the ASX 200’s wooden spoon recipient Costa Group which, prior to Thursday’s hammering, had reached a new 52-week high of $4.89 just last month. If you’d like to read more about the company’s AGM, here’s our coverage.

Next up we had the healthcare company Fisher & Paykel. Fisher & Paykel seems to have displeased investors with its full-year results, which were released on Thursday. This was rather surprising on the surface, given the company reported revenue growth of 56% and an 82% lift in net profits after tax. But perhaps its reluctance to provide any guidance on the year ahead did it no favours in investors’ eyes.

Construction products company CSR was next up with a 6.5% fall. But this was due to one of the best reasons to have a company drop in value – the shares going ex-dividend. The company has a 24-cent-per-share dividend coming investors’ way on 2 July. Prior to the fall, CSR shares had also notched up a new, all-time high of $6.48 a mere few weeks back.

And Resolute Mining fell, despite continuing strength in the gold price. Go figure.

Now with the losers out of the way, let’s have a look at last week’s winning ASX 200 shares:

Best ASX 200 gainers	% gain for the week
HUB24 Ltd (ASX: HUB)	18.5%
Kogan.com Ltd (ASX: KGN)	17.1%
Domain Holdings Australia Ltd (ASX: DHG)	14.8%
Pilbara Minerals Ltd (ASX: PLS)	13.4%

Wealth management platform HUB24 was the ASX 200’s best performing share last week with a hefty 18.5% gain. Despite the size of this move, there was no obvious reason investors seemed to have comprehensively revaluated HUB24. However, this is a rather volatile company, so it’s possible a group of investors simply decided the shares were too cheap last Friday.

Next up, we had the aforementioned Kogan. Again, there were no major developments for this e-commerce company last week. However, the shares have now bounced more than 17% after the company delivered a disappointing (at the time anyway) update last week. Kogan is now 0.4% higher than it was on the day before that particular update.

Property lister Domain was also on fire last week. A new potential acquisition Domain is participating in appears to have been the catalyst here. The company announced on Friday it is in talks to acquire PEXA from Link Administration Holdings Ltd (ASX: LNK) in conjunction with the private equity firm KKR. Investors seem to think it’s a good idea.

And finally, we had lithium miner Pilbara Minerals. Once again, there appears to have been no official catalyst here, just some good old fashioned buying pressure.

A wrap of the ASX 200 blue-chip shares

Before we go, here is a look at the major ASX 200 blue-chip shares as we commence yet another week on the ASX boards:

ASX 200 company	Trailing P/E ratio	Last share price	52-week high	52-week low
CSL Limited (ASX: CSL)	38.4	$289.12	$320.42	$242
Commonwealth Bank of Australia (ASX: CBA)	22.37	$100.56	$100.56	$61.74
Westpac Banking Corp (ASX: WBC)	22.64	$26.46	$26.49	$16
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	17.48	$28.86	$29.55	$16.40
National Australia Bank Ltd (ASX: NAB)	20.79	$27.07	$27.84	$16.56
Fortescue Metals Group Limited (ASX: FMG)	8.32	$22.12	$26.40	$12.95
Woolworths Group Ltd (ASX: WOW)	37.41	$41.91	$42.57	$34.26
Wesfarmers Ltd (ASX: WES)	33.49	$55.53	$56.40	$39.78
BHP Group Ltd (ASX: BHP)	27.17	$48.16	$51.82	$33.73
Rio Tinto Limited (ASX: RIO)	15.9	$123.02	$132.94	$90.04
Coles Group Ltd (ASX: COL)	21.12	$16.61	$19.26	$15.04
Telstra Corporation Ltd (ASX: TLS)	23.42	$3.49	$3.58	$2.66
Transurban Group (ASX: TCL)	–	$13.90	$15.64	$12.36
Sydney Airport Holdings Pty Ltd (ASX: SYD)	–	$5.92	$7.49	$4.99
Newcrest Mining Ltd (ASX: NCM)	18.19	$28.12	$38.15	$23.08
Woodside Petroleum Limited (ASX: WPL)	–	$22.11	$27.60	$16.80
Macquarie Group Ltd (ASX: MQG)	18.49	$152.47	$162.06	$107.03
Afterpay Ltd (ASX: APT)	–	$93.93	$160.05	$44.87

And finally, here is the lay of the land for some leading market indicators:

• S&P/ASX 200 Index (XJO) at 7,179.5 points.
• All Ordinaries Index (XAO) at 7,424 points.
• Dow Jones Industrial Average (DJX: .DJI) at 34,529 points after rising 0.19% on Friday night (our time).
• Bitcoin (CRYPTO: BTC) going for US$35,931 per coin.
• Gold (spot) swapping hands for US$1,904 per troy ounce.
• Iron ore asking US$184.60 per tonne.
• Crude oil (Brent) trading at US$68.72 per barrel.
• Australian dollar buying 77.11 US cents.
• 10-year Australian Government bonds yielding 1.69% per annum.

That’s all folks. See you next week!

 

More reading

• Wake up world, this tech sector is the future: analyst
• 2 buy-rated ASX dividend shares
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 shares that could see a COVID-19 recovery
• Top brokers name 3 ASX shares to sell next week

The post ASX 200 Weekly Wrap: ASX record highs tumble like… Costa shares appeared first on The Motley Fool Australia.

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A subsector within technology presents share investors with a massive long-term opportunity, according to one fund manager.

Munro Partners head of investment Nick Griffin said tech shares have been sold down heavily in the recent rotation to value stocks.

But just because the share price has dipped, this doesn’t mean certain businesses won’t keep growing earnings.

“Inflation is going to change the re-rating or the de-rating of Amazon.com Inc (NASDAQ: AMZN),” he told a Livewire video.

“Yes, it will change the price we pay, but it won’t change the fact that Amazon’s earnings will continue to grow in the future. And in the long run, we expect their share price to follow their earnings and ultimately deliver the returns that we’re looking for.”

Hello, Australia is the crystal ball for the rest of the world

Griffin is particularly surprised by how much the cloud commuting subsector has been sold off.

“It’s one of the bigger areas in our fund today,” he said.

“They don’t look optically cheap, but on cash flow metrics, they actually are not as expensive as what people think.”

A major reason for this investor reticence is a post-COVID prediction that northern nations have made — that we Australians already know is completely wrong.

“There’s been this assumption — and it’s very much coming from the northern hemisphere — that COVID’s going to go away and we’re all going to go back to work.”

Griffin’s US and European colleagues have told him cloud computing usage will wane because work-from-home infrastructure won’t be in as high demand as last year.

“We can say, look, we’re calling you from the future here. We’re here in Australia, there’s no COVID and no one’s going back to work. Work-from-home is somewhat here to stay,” he said.

“The digital transformation got accelerated by COVID — and there’s no reason to think it will slow down just because COVID goes away.”

This is why Griffin reckons there’s currently a major stock-buying opportunity for “some of the big winners in the next decade”.

“Because it’s fairly clear that a lot of these software solutions we’re using for it — whether it be Zoom Video Communications Inc (NASDAQ: ZM) or Docusign Inc (NASDAQ: DOCU) or Atlassian Corporation PLC (NASDAQ: TEAM) products are going to be with us for a long time.”

One of the beneficiaries from the demand for work-from-home technology, Telstra Corporation Ltd (ASX: TLS), this week announced that it wouldn’t force its own 26,000 employees to return to the office.

“There’s an opportunity for employers to look forward and create a completely different vision of the workplace rather than trying to hold on to the past,” Telstra executive Alex Badenoch told the Australian Financial Review.

“Every single one of our employees can have an element of choice about how they work, when they work and the kind of work they do.”

More reading

• An ASX guide to Cathie Wood and ARK Invest ETFs
• Amazon CEO Jeff Bezos to formally step down, turn reins over to Andy Jassy
• Can the Telstra (ASX:TLS) share price keep climbing?
• The richest Aussies have been revealed … so who makes the top 10?
• Is the Telstra (ASX:TLS) dividend still safe from a cut?

The post Wake up world, this tech sector is the future: analyst appeared first on The Motley Fool Australia.

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Are you looking for some excellent ASX dividend shares to add to your income portfolio? 

Then you might want to take a look at the ones listed below. Here’s what you need to know about these dividend shares:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX dividend share to look at is the Charter Hall Social Infrastructure REIT.

The Charter Hall Social Infrastructure REIT is a Real Estate Investment Trust that is the largest Australian property trust investing in social infrastructure properties within Australia and New Zealand.

These properties include childcare centres and government properties that have specialist use, limited competition, and low substitution risk. Another positive is that they come with long leases and fixed rent reviews. For example, at the end of the first half, the Charter Hall Social Infrastructure REIT had an occupancy rate of 99.7% and a weighted average lease expiry (WALE) of 14 years.

This bodes well for distribution growth in the coming years. In the meantime, the company intends to pay a distribution of 15.7 cents per unit to shareholders. Based on the current Charter Hall Social Infrastructure share price, this represents a 4.6% yield.

Goldman Sachs has a buy rating and $3.45 price target on its shares.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Another ASX dividend share to look at is Sydney Airport. While the airport operator has had a tough 12 months because of the pandemic, traffic numbers continue to improve. And with vaccines rolling out across both Australia and the globe, these numbers look likely to continue to grow over the next 12 months and beyond.

Goldman Sachs is also a fan of Sydney Airport. While it isn’t expecting much by way of dividends in FY 2021, the broker expects this to change in FY 2022.

It is forecasting an 8.8 cents per share dividend in FY 2021 and then 27.1 cents per share in FY 2022. Based on the current Sydney Airport share price of $5.92, this will mean yields of 1.5% and 4.6%, respectively.

Goldman has a buy rating and $6.73 price target on its shares.

More reading

• 2 ASX 200 shares that could see a COVID-19 recovery
• 2 ASX dividend shares that analysts rate as buys
• ASX shares in this sector are pushing towards 52-week highs
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• Sydney Airport (ASX:SYD) share price rises amid AGM updates

The post 2 buy-rated ASX dividend shares appeared first on The Motley Fool Australia.

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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a positive week with a strong gain. The benchmark index rose 1.2% to 7,179.5 points. This was a record close for the index.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to open slightly higher

The Australian share market is expected to open the week slightly higher this morning. According to the latest SPI futures, the ASX 200 is expected to open the day 6 points or 0.1% higher. This follows a subdued but positive end to the week on Wall Street. The Dow Jones rose 0.2%, the S&P 500 climbed 0.1%, and the Nasdaq edged 0.1% higher.

Link’s PEXA business to IPO

The Link Administration Holdings Ltd (ASX: LNK) share price will be on watch today. This follows reports that the company’s part-owned PEXA business will be undertaking an IPO in the very near future. According to the AFR, the property settlements business will be valued at $3.3 billion on a 100% basis. This follows a takeover offer last week by private equity firm KKR valuing the business at $3 billion.

Oil prices soften

It could be a poor start to the week for energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices softened on Friday. According to Bloomberg, the WTI crude oil price fell 0.8% to US$66.32 a barrel and the Brent crude oil price dropped 0.7% to US$68.72 a barrel. This wasn’t enough to stop both benchmarks from recording gain of over 3% for the week.

Gold price rises

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch today after the gold price pushed higher on Friday night. According to CNBC, the spot gold price rose 0.35% to US$1,905.30 an ounce. This meant the precious metal climbed 1.4% over the five days, thanks partly to a pullback in bond yields and the US dollar.

Inghams rated as a buy

The Inghams Group Ltd (ASX: ING) share price may have jumped 8% on Friday but analysts at Goldman Sachs still see a lot of value in the poultry producer. In response to its trading update, the broker has retained its buy rating and lifted its price target to $4.50. This compares to the latest Inghams share price of $3.40.

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There are many exchange-traded funds (ETFs) on the ASX, but one of the best could be VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO).

What’s VanEck Vectors Video Gaming and eSports ETF all about?

The idea of this investment is that investors can get exposure to a portfolio of the largest businesses that are from the game development, e-sports and related hardware and software global sector.

The gaming sector is huge

VanEck says that there are now more than 2.7 billion active gamers worldwide. Not only that, but the video gaming business is now larger than both the movie and music industries combined. It has become a major industry in the entertainment space.

It’s not just casual gamers that are causing growth. The top e-sports tournaments attract viewer numbers that rival World Cup football and the Olympic Games.

With video games now available on our phones, people can decide to play anywhere at any time. They don’t need to bring their gaming console with them.

There is large revenue growth across the world

As a group, the underlying businesses in this portfolio have been achieving consistently-growing revenue.

Since 2015, video gaming has achieved average annual revenue growth of 12%. E-sports has seen revenue growth of an average of 28% per annum since 2015.

According to the Newzoo Global Games Market Report, the Asia Pacific region is forecast to show gaming revenue of US$78.4 billion in 2020, amounting to almost half of the global games market.

The Middle East and Africa region is expected to be the fastest growing games market from 2020, with 14.5% year on year growth to US$5.4 billion.

New revenue streams

E-sports has the potential to create new revenue and earnings streams.

More products and services could mean more profit and help shareholder returns of those businesses.

Those new revenue streams includes game publisher fees, media rights, merchandise, ticket sales and advertising.

Gaming businesses have the potential to earn higher profit margins as they benefit from more global interest. Once a game developer has created the game, extra game sales should mostly add to the bottom line, apart from distribution costs.

What shares are actually in the VanEck Vectors Video Gaming and eSports ETF portfolio?

A few days ago on 27 May 2021, the ETF’s biggest positions were: Nvidia, Sea, Tencent, Advanced Micro Devices, Nintendo, Activision Blizzard, Netease, Take Two Interactive, Bilibili, Electronic Arts, Bandai Namco and Unity Software.

It has a total of 25 positions across the portfolio with the US, Japan and China making up the bulk of the geographical diversifications.

Fees and returns

The management costs of this investment is 0.55% per annum.

Whilst past performance is not an indicator of future performance, the returns in recent times have been above average compared to general share markets.

The index that VanEck Vectors Video Gaming and eSports ETF tracks has delivered an average return per annum of 32.4% over the last three years.

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