There are some S&P/ASX 200 Index (ASX: XJO) shares that could be the right picks for income.

The below two businesses are amongst the market leaders in the country and have long-term growth plans to try to grow profit, whilst also paying dividends:

Premier Investments Limited (ASX: PMV)

Premier Investments operates a number of retail brands. Names like Smiggle, Peter Alexander, Just Jeans and Jay Jays are some of the names it runs. It also has a large investment in Breville Group Ltd (ASX: BRG).

The business has seen a lot of online and profit margin growth, which is what is driving the bottom line. In the first six months of FY21, global like for like sales went up 18.2% with the retail gross margin increased 286 basis points. Online sales surged 61.3%.

Retail earnings before interest and tax (EBIT) grew 88.5% to $237.8 million, with the EBIT margin increasing 1,308 basis points.

The business is focused on its profitability. The accelerated swing in customer preference to shopping online has meant that management are looking at each store’s profitability. It has closed around 50 stores over the last 12 months, showing that the company is willing to walk away from stores with high rents that deliver unprofitable sales. The business has been able to reduce its rent to sales ratio by 318 basis points to 12.7% of sales.

The ASX 200 share believes that Smiggle is a powerful global brand set to rebound and grow from the COVID-19 impacts as children return to school and stores open.

At the current Premier Investments share price, it has a projected grossed-up dividend yield of 4.3% according to Commsec.

Cleanaway Waste Management Ltd (ASX: CWY)

Cleanaway describes itself as Australia’s leading total waste management, industrial and environmental services company.

It has over 6,000 staff and over 5,000 specialist vehicles spread across more than 260 locations.

The business has been steadily growing its dividend over the past five years, including through the difficult COVID-19 year.

Cleanaway believes it has a positive future with a growing footprint of prized infrastructure assets that are making a sustainable future possible.

The business says that market growth is being driven by the emergence of energy from waste, increased resource recovery and value chain extension supported by rising levies and government policy.

The ASX 200 share recently announced an acquisition from Suez Australia, a portfolio of strategic post collection assets in Sydney. Those assets comprise two landfills and five transfer stations. They will be acquired for $501 million. It’s expected that these landfills will have more than 15 years of available airspace.

The brokers at Macquarie Group Ltd (ASX: MQG) rate Cleanaway as a buy with a price target of $3. The broker likes the long runway that Cleanaway has from the circular economy trend.

According to Macquarie, the Cleanaway share price is valued at 32x FY21’s estimated earnings.

More reading

• Retail sales rose 1.1% in April, but some ASX retail shares are selling off in May
• Cleanaway (ASX:CWY) share price lifts on ‘critical’ court win
• 2 ASX 200 shares to buy for growth
• Down 9% today, why the Redbubble (ASX:RBL) share price continues to tumble
• Brokers name 3 ASX shares to buy now

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The Link Administration Holdings Ltd (ASX: LNK) share price could be one to watch on Friday.

This follows the release of an update on its PEXA business after the market close yesterday.

What did Link announce?

According to the release, Link has received a proposal for its 44.18% stake in the PEXA business from private equity firm Kohlberg Kravis Roberts (KKR). Property listings company Domain Holdings Australia Ltd (ASX: DHG) is expected to team up with KKR on the deal.

The release explains that KKR’s offer values the PEXA business at $3 billion plus cash on the balance sheet on a 100% basis. PEXA has $126 million of cash on its balance sheet at the end of March.

This would value Link’s stake at approximately $1.32 billion.

Proposal conditions

KKR’s offer comes with a number of conditions.

These include the agreement on transaction documentation, including a Sale and Purchase Agreement, Foreign Investment Review Board approval and relevant approvals from the State land registries, and an agreement by PEXA shareholders to a number of actions and waivers under the existing PEXA Shareholders’ Deed.

It is also conditional on the IPO of PEXA not proceeding.

What now?

KKR advised that the proposal remains open and is capable of acceptance until 5:00pm on Sunday 30 May 2021.

Link advised that it is considering the proposal and is obtaining advice from its financial and legal advisors. However, as no decision has been made, both the trade sale process and exploration of the viability of an IPO continue to proceed.

The Link Board advised that they will continue to act in the best interests of the company and seek to maximise the value of its PEXA investment.

It also intends to keep the market informed of any material developments in accordance with its continuous disclosure obligations.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why did ASX tech shares like Afterpay (ASX:APT) have such a good day?
• 5 things to watch on the ASX 200 on Wednesday
• TPG (ASX:TPG) shares whacked by cyberattack
• Domain (ASX:DHG) rocked by cyberattack

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If you’re looking for some top ASX dividend shares to add to your income portfolio, then you might want to look at the ones listed below.

Here’s what income investors need to know about them:

Carsales.Com Ltd (ASX: CAR)

This auto listings company could be an ASX dividend share to consider buying.

Carsales is the dominant force in the ANZ market and has a number of growing operations across the world. It is also planning to expand into the US market with the acquisition of Trader Interactive.

This acquisition appears to have gone down well with analysts at Morgans. The broker has recently put an add rating and $20.82 price target on the company’s shares.

Morgans is also forecasting dividends of 56 cents per share in FY 2021 and 59 cents per share in FY 2022. Based on the current Carsales share price of $19.09, this will mean fully franked yields of 2.9% and 3.1%, respectively.

Westpac Banking Corp (ASX: WBC)

If you haven’t got exposure to the banking sector, then it could be worth considering Westpac.

Australia’s oldest bank has well and truly returned to form since the height of the pandemic. For example, during the first half of FY 2021, the bank reported cash earnings of $3,537 million. This was a 256% increase over the prior corresponding period and a 119% lift over the second half of FY 2020.

In light of its strong form, the Westpac board declared a fully franked interim dividend of 58 cents per share.

One broker that expects the dividends to continue to increase is Morgan Stanley. It is forecasting fully franked dividends per share of $1.18 and $1.25 over the next two years. Based on the latest Westpac share price of $26.09, this will mean yields of 4.5% and 4.8%.

Morgan Stanley has an overweight rating and $29.20 price target on the bank’s shares.

More reading

• 2 growing ASX dividend shares analysts are tipping as buys
• Expert says buy these ASX expensive defensives as market momentum is peaking
• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• 2 ASX dividend shares analysts rate as buys
• The ANZ (ASX:ANZ) share price leads the ASX 200 banks this week

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On Thursday the S&P/ASX 200 Index (ASX: XJO) fought hard to record the smallest of gains. The benchmark index rose slightly to 7,094.9 points.

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

ASX 200 expected to rise

The Australian share market looks set to end the week on a solid note. According to the latest SPI futures, the ASX 200 is expected to open the day 54 points or 0.75% this morning. This follows a reasonably positive night on Wall Street, which saw the Dow Jones rise 0.4%, the S&P 500 climb 0.1%, and the Nasdaq trade flat.

Oil prices rise

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could finish the week on a positive note after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.9% to US$66.81 a barrel and the Brent crude oil price is up 0.7% to US$69.36 a barrel. Solid US economic data gave prices a lift.

Afterpay on watch

The Afterpay Ltd (ASX: APT) share price will be on watch today after its rival Klarna announced a major investment. According to CNBC, the buy now pay later provider is expected to secure new funding valuing it at US$40 billion. SoftBank is believed to be backing the deal. Commonwealth Bank of Australia (ASX: CBA) owns a stake in the company.

Link receives offer for PEXA

The Link Administration Holdings Ltd (ASX: LNK) share price could be on the move on Friday. This follows news that the company has received an offer for its PEXA business. Private equity firm KKR has tabled an offer that values PEXA at $3 billion on a 100% basis. Link owns 44.18% of the property settlement business. The Link Board is considering the proposal.

Gold price softens

Gold miners Newcrest Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) will be on watch today after the gold price softened. According to CNBC, the spot gold price is down 0.2% to US$1,897.50 an ounce. Strong economic data out of the United States weighed on demand for the safe haven asset.

More reading

• ASX 200 rises, Costa smashed, Fisher & Paykel drops
• The RBNZ could hike rates in 2022. Will the RBA follow suit?
• ASX 200 flat: Costa crashes & Fisher & Paykel Healthcare tumbles
• Commonwealth Bank (ASX:CBA) share price higher on digital banking update
• 5 things to watch on the ASX 200 on Thursday

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The S&P/ASX 200 Index (ASX: XJO) went up by 0.03% today to 7,095 points.

Here are some of the highlights from the ASX:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price fell by 6% after the business reported its FY21 result and also gave some commentary about FY22.

FY21 total operating revenue rose 56% to $1.97 billion, with hospital operating revenue growing 87% to $1.5 billion. However, homecare operating revenue only went up 2%.

This led to net profit after tax going up 82% to $524.2 million. The ASX 200 share’s board decided to implement a 42% increase of the final dividend to 22 cents per share.

Given the wide range of scenarios and uncertainties, the company didn’t give guidance but instead made some observations. It said that a global vaccine rollout during FY22 is likely to reduce global hospitalisations requiring respiratory support for COVID-19 compared to FY21.

It also said that its customers’ stocking and de-stocking choices in response to the pandemic are likely to vary over time. The gross margin is likely to be impacted with freight costs likely to remain elevated and air freight a higher proportion of freight. Fisher & Paykel also said it expects to retain its COVID-19 safety practices on its manufacturing sites.

In the financial year so far, hospital revenue continues to remain variable with higher volume of hospital hardware and consumables to locations with hospitalisation surges and an ongoing shift towards Optiflow nasal high flow therapy. OSA shows signs of recovery after a slower fourth quarter.  

Costa Group Holdings Ltd (ASX: CGC)

The Costa share price was smashed by around 24% today after giving a trading update about its different operating segments.

Overall, the 2021 first half performance is expected to be marginally ahead of the comparable period in 2020, with strong international operations offset by challenges in domestic produce conditions.

In its international segment it’s well progressed with its harvests in both China and Morocco. The ASX 200 share said performance has been very positive versus the previous year and expectations.

In China, although volumes were initially slightly down due to late flowering, the yield is expected to finish in line with the company’s expectations. Management said there has been strong pricing and demand over the season.

Costa said that in Morocco, early season plantings in Agadir as well as earlier season higher volumes across its northern farms together with “generally strong” pricing has seen the business perform well, although ongoing supply chain and COVID-19 related costs have had an impact.

However, the ASX 200 share’s international segment is going to be impacted in the reported result by the higher Australian dollar.

Domestically, there is a mixed performance. Overall mushroom demand remains strong, but mushroom production at Monarto has been impacted by short-term labour constraints.

Avocado volumes and quality have been pleasing and export volumes continue to grow. However, it has seen recent pricing pressure due to increased haas variety production across the sector resulting in reduced pricing compared to last year. It is likely this pricing trend will continue into the second half of the year as increased volume is expected to be delivered across the industry.

Current half performance has been impacted by hail damage and fruit fly restrictions. Costa explained that the 2021 calendar year is an ‘on year’ in terms of yield and it is expected that results in the second half of the year, where the bulk of harvest occurs, will benefit from strong yields.

In tomatoes, whilst it has seen some short-term pricing pressure arising from increased tomato supply, this currently abating and pricing is improving.

It was the worst performer in the ASX 200.

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price went up around 15% today in response to the company releasing its FY21 half-year result.

It said that revenue increased 0.7% year on year to $51 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 63.2% to $7 million. However, the business reported a statutory net loss of $1.1 billion.

Revenue was down in the airport business by $2.1 million due to the industry downturn, but annual recurring revenue (ARR) rose 5.8%.

The business reduced costs by 5% due to cost saving measures. That assisted in the $5.6 million cash generation for the period. It ended with net cash of $22.4 million.

It’s now expecting FY21 EBITDA to be around $5 million and revenue to be similar to FY20 of $100.5 million. Gentrack is expecting to be net cashflow positive.

More reading

• ASX tech shares roar higher, puts ASX 200 index in the shade
• The Costa Group (ASX:CGC) share price is down 22%. Could it be a buy?
• The RBNZ could hike rates in 2022. Will the RBA follow suit?
• Why ALS, Costa, Fisher & Paykel Healthcare, & Ramsay shares are falling
• Here’s why the Gentrack (ASX:GTK) share price is rocketing 14% higher

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The Next Science Ltd (ASX: NXS) share price has closed today well in the green.

This comes after the company announced its patented wound-healing product has been approved for sale in Australia.

Next Science shares rose to an intraday high of $1.93 at market open, before profit takers swooped in.

At market close, the medical technology company’s shares were trading at $1.87, up 3.31%.

What did Next Science announce?

Investors have been buying up Next Science shares today after the company was given the go-ahead to commercialise its BlastX product in Australia.

According to its announcement, the Therapeutic Goods Administration (TGA) has approved the company’s wound gel for sale in Australia.

It has been sold in the United States since 2017 and has been cleared for sale in the European Union and the UK.

BlastX is an antimicrobial gel for the treatment of open wounds. It uses the company’s patented Xbio technology that breaks down bacterial biofilm on wounds and prevents further bacteria from growing. The product then maintains a moist wound environment which allows the body’s healing process to begin.

In addition, BlastX can be used in operating theatre environments to help prevent infections in acute and surgical wounds.

According to Next Science, the TGA approval clears the way for the company “to sell BlastX in Australia for use as a hydrogel wound dressing on all open wounds”.

The company also highlighted the efficacy the product has shown in the treatment of chronic wounds such as diabetic foot ulcers, bedsores (pressure ulcers) and venous leg ulcers.

Chronic wounds such as ulcers continue to be a major health issue for patients across the world. They are considered difficult to treat, cause pain at the wound site and increase mortality rates.

A 2015 independent study found combining BlastX with antibiotics increased chronic wound closures by 40% in 4 weeks. This was based on a randomised and controlled trial of 45 patients.

Next Science managing director Judith Mitchell said:

I am delighted that we can offer this proven product to healthcare professionals and patients in Australia as we continue to pursue our mission to heal patients and save lives worldwide by reducing the impacts of biofilms on human health.

The company is expecting its first sales in Australia to occur from next month.

About the Next Science share price

Next Science shares have performed strongly so far this year and are up by almost 50%. The company’s share price is now edging closer to its 52-week high of $2.06.

Next Science has a market capitalisation of roughly $366 million, with approximately 197 million shares outstanding.

More reading

• Next Science (ASX:NXS) share price falls despite ‘exciting future ahead’

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If you’re a fan of growth shares, then you might want to take a look at the exchange traded funds (ETFs) listed below.

These ETFs give investors access to a collection of some of the highest quality growth shares in the world. Here’s why they could be top options for investors:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ASX ETF to consider is the BetaShares Global Cybersecurity ETF. This popular ETF gives investors exposure to the leading companies in the global cybersecurity sector. 

The cybersecurity sector has been growing rapidly in recent years and has been tipped to continue doing so in the years to come. This is due to increasing demand for cybersecurity services because of the growing threat of cyber attacks.

BetaShares notes that the portfolio includes global cybersecurity giants, as well as emerging players, from a range of global locations. Among the companies you’ll be buying a slice of are the likes of Accenture, Cisco, Cloudflare, Crowdstrike, Okta, and Splunk.

In respect to Okta, it provides businesses with workforce identity solutions. This ensures that access to information is given only to those that are meant to have it. Given the importance of data protection, this is unsurprisingly in demand with businesses right now.

Whereas the latter, Splunk, is the world’s first Data-to-Everything Platform. It allows users to modernise their security operations with a portfolio of advanced data, analytics and operations solutions that help them defend against the latest threats.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another ETF to look at is the VanEck Vectors Video Gaming and eSports ETF. It gives investors exposure to a portfolio of the largest companies involved in video game development, hardware, and esports.

This certainly is a large market. VanEck notes that there are 2.7 billion active gamers in the world. This is more than Netflix subscriptions and active Apple devices. VanEck also points out that the game industry is disrupting traditional sports and media and experiencing a period of transformative growth, which has been accelerating in the COVID-19 world.

Among the companies included in the fund are giants such as graphics processing unit developer Nvidia and gaming giants Take-Two and Electronic Arts.

Take-Two is the company behind the Grand Theft Auto and Red Dead franchises, among many other games. Whereas Electronic Arts is the games company responsible for the FIFA and Madden NFL series and countless other popular games. 

More reading

• Got money to invest? Here are 2 ASX shares that could be buys
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• 3 ETFs for ASX investors to check out
• Why this ASX ETF is trouncing the index today
• 2 high quality ASX ETFs to buy

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Iron mining magnate Gina Rinehart has once again affirmed her place at the top of the Australian wealth pile.

That’s according to the Australian Financial Review (AFR) Rich List, which is published annually.

The AFR has released a ‘sneak peek’ at the top 10 list before the entire thing is released on Friday.

It shows Rinehart coming in as the richest Aussie for a second year in a row, with a fortune of $31.06 billion. That’s up a casual few billion from the $28.89 billion she was worth in the 2020 list.

Even more interesting is the fact Rinehart would have been worth more than $40 billion – three times the $13.8 billion she was worth in 2019 – if the analysis has been done earlier this month when iron ore was fetching a record high of US$240 per tonne. It’s asking US$172 a tonne today.

Rinehart is the head of Hancock Prospecting, one of the few privately owned iron ore miners in the country.

Iron ore remains the best route to the top of the Rich List, it seems.

Taking the number 2 spot is Fortescue Metals Group Limited (ASX: FMG) boss Andrew ‘Twiggy’ Forrest, with an estimated net worth of $27.25 billion.

That’s also up substantially from the $23 billion he was worth in 2020.

Outside iron ore, the richest Aussies are…

Atlassian Corporation PLC (NASDAQ: TEAM) founders Mike Cannon-Brookes and Scott Farquhar take the third and fifth spots, with net worths of $20.18 billion and $20 billion, respectively.

Anthony Pratt and the Pratt family are at number 4 with $10.09 billion. Pratt is head of the private packaging company Visy, which was founded by his late father Richard.

Property magnate Harry Triguboff, of Meriton, takes the sixth spot with an estimated net worth of $17.27 billion.

Clive Palmer is also featured at number 7. His net wealth is estimated at $13.01 billion, up substantially from 2020’s $9.18 billion.

Hui Wing Mau, a Hong Kong property developer, is the only Rich Lister in the top 10 to see their net wealth fall in 2021.

He is still one of the richest Aussies in the country, worth $11.7 billion. But that’s a hefty backwards step from the $18.06 billion he was worth in 2020.

Frank Lowy remains a top-10 fixture, long after his family’s exit from the old Westfield family business. This is currently represented by both Scentre Group (ASX: SCG) and Unibail-Rodamco-Westfield (ASX: URW) on the ASX.

Finally, we have Canva founders Melanie Perkins and Cliff Obrecht taking out the 10th spot. These billionaires are worth a collective $7.98 billion in 2021, well up from 2020’s $3.43 billion.

Something to aspire to for the rest of us!

More reading

• 4 ASX 200 resource shares poised to deliver: AMP Capital
• The Champion Iron (ASX:CIA) share price lifts on 419% profit news
• Top brokers name 3 ASX shares to sell today
• The ASX dividend party’s here: how to get yours
• Up then down, what’s with the Fortescue (ASX:FMG) share price?

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“It’s been a wild ride,” said Matt Hopkins.

Matt’s the Senior Portfolio Manager of the AMP Capital Income Generator. In case you’re wondering, he was commenting on the share market performance over the past year.

Matt was speaking at AMP Capital’s Webinar, ‘The Hunt for Yield in 2021’. He was joined by Dermot Ryan, Co-Portfolio Manager of the AMP Capital Equity Income Generator.

Below we take a look at some key outtakes from the webinar.

Where is the Aussie economy heading?

AMP Capital revealed an overall bullish outlook for the Australian economy.

“There’s a lot of momentum in reopening the economy and a few bottlenecks as well,” Matt said. He pointed to PMIs (purchasing managers indexes) as rebounding rapidly in both the United States and Australia.

“The Aussie economic growth has been at the top end of expectations from where we were a year ago,” Matt added. Australians have the incredible amount of stimulus – both monetary in terms of low interest rates, and fiscal in terms of the massive new budget – to thank for that. The level of stimulus we’re seeing, Matt said, is really only “comparable to wartime”.

The 2 biggest risks to Australia’s continued economic growth in his view are how the vaccinations work out and inflation.

On the inflation front, Matt cited “a lot of bottlenecks where the demand for labour is higher than the supply… The expectation is that a lot of these bottlenecks will ease over the year. But if they don’t and inflation gets unanchored that could potentially cause a problem.”

Are growth shares overpriced?

Looking at where investors may get some of the best returns in the year ahead, Matt said we’ve seen “a lot of earnings momentum into a market that is already quite rich. But we can differentiate that expensiveness”.

He said that most of the overpricing is in the growth parts of the market, fuelled by low interest rates. But AMP expects rates will start ticking higher, perhaps sooner than the RBA has indicated. “Certainly, you’d expect interest rates to be higher in a year’s time than where they are now,” Matt said.

Broadly, AMP Capital believes that will assist value shares over growth shares, helping sectors like banks and materials, and more cyclical areas. They also expect a continuing rotation from pandemic shares, like healthcare and IT, to recovery shares, like resources, industrials, travel shares and financials.

Dermot agreed that “Growth stocks are really coming under pressure now.”

He explained that when you try to value tech companies, “It’s what the value of the cash flow is over 10 years’ time. If interest rates stay low, then maybe that cash flow is worth more… But as interest rates rise, the cost of not getting paid in those 10-year periods goes up.”

Dermot added, “Growth has been the big outperformer in the market versus income or value stocks.”

Indeed, growth shares have largely outperformed since 2015 until around November last year, when the vaccines came through.

A record year ahead for ASX dividend shares?

AMP Capital is particularly bullish on its outlook for ASX dividend shares.

“If we get a traditional cyclical rebound with inflation and an overheating economy, we think this will be very good for income stocks,” Dermot said. “They’re cheap relative to history, and at almost their cheapest level against growth stocks for a very long time. A lot of them have good balance sheets but have really just not had the opportunity to grow well in a lacklustre recovery over the last couple of years.”

Addressing the high dividend yielding parts of the market, Matt added, “Those valuations are actually lower than they were a couple of years ago. There’s a lot of bifurcation in different parts of the market.”

Consensus dividend growth forecasts are at 4%. AMP Capital believes the ASX could be shaping up to deliver a record year for dividends.

According to Dermot, “We think this may culminate with next year being a record year for dividends in the market. We’re also seeing a lot of franking credits being accumulated.” He added that available franking credits are at “highly attractive levels”.

Expanding on that, Dermot said, “At the moment in Australia, we’re seeing somewhat of a triple boom. The first being resources, the second being housing, and the third being corporate profitability.”

All of this has played through into a “very overstimulated market. The RBA has overcommitted to the zero interest rate, and we’re also getting a lot of fiscal stimulus coming through.

“This means there’s going to be a lot of domestic profits… and that means there’s a good chance we’re going to see a lot of franking credits coming through into the hands of shareholders over the next year… The current area where we’re finding good opportunities is in the mid-cap space.”

4 ASX 200 resource shares poised to deliver

Dermot pointed that the big S&P/ASX 200 Index (ASX: XJO) listed iron ore miners are well placed to deliver to shareholders.

“We really like resources because we think that the short-term cash flows are going to start coming through on ungeared balance sheets for the likes of the large iron ore miners,” he said.

He listed BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG), Mineral Resources Limited (ASX: MIN) as shares in a strong position.

“We see the potential across all the iron ore miners for buybacks… So we think there’s some really big opportunities there,” he said.

AMP Capital notes that there are risks around the sustainability for iron ore dividends. Nonetheless the analysts believe the outlook for dividend growth in the sector is as strong as it’s been for years.

Dermot also pointed to growth stories around the lithium space:

It’s very interesting. You can buy a lot of the assets and mines that were built in the last boom, then almost went bust, and you can basically participate on a cashflow basis… It’s the second mouse eats the cheese analogy. The people that originally bought it didn’t see the benefits, but now with the latest boom in lithium you can basically buy those assets at less than replacement costs.

More reading

• Brokers name 3 ASX shares to buy now
• ANZ and BHP among ASX 200 shares aiming for 40% female leadership
• The Champion Iron (ASX:CIA) share price lifts on 419% profit news
• The ASX dividend party’s here: how to get yours
• Up then down, what’s with the Fortescue (ASX:FMG) share price?

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The Dragontail Systems Ltd (ASX: DTS) share price has delivered an outstanding performance for shareholders today.

At the market close, the restaurant-focused technology company’s shares were up 24.3% trading at 23 cents.

Tantalising offer ignites Dragontail share price

Investors have really sunk their teeth into the Dragontail share price today after notifying the market of its entry into a scheme implementation agreement.

The agreement is with Yum! Connect Australia, which is an entity controlled by Yum! Brands Inc (NYSE: YUM). The real spicy part of the agreement is Yum! Brands will acquire 100% of the ASX-listed small-cap for $93.5 million.

Based on the agreed terms, shareholders will be entitled to receive 23.5 cents per share once all conditions are satisfied. The offer represents a 30.5% premium over Dragontail’s closing price on Wednesday.

If you’re unaware, Yum! Brands operates fast food brands globally – including KFC, Pizza Hut and Taco Bell. Its market capitalisation is in excess of US$35 billion, which roughly equates to the same size as five Domino’s Pizza Enterprises Ltd (ASX: DMP).

Will Dominos burn Dragontail?

Dragontail being acquired might have been good for its share price, but it could make partnerships messy. The company’s quality control system is used by Dominos, known as the pizza checker.

As you might know, Dominos and Pizza Hut (operated by Yum! Brands) are in competition with each other… Awkward! At this stage, it is unknown what Dominos will do now that its quality control system might be owned by a rival.

Where to next?

If the buyout is approved, the company intends to dispatch a scheme booklet to shareholders around July 2021 to vote on approving the proposal.

Dragontail shareholders must be pleased with their investment over the past year. Accounting for today’s gain, the Dragontail share price has returned 109% in the last year. Far exceeding the 23% from the S&P/ASX 200 Index (ASX: XJO).

More reading

• Here’s why the Domino’s (ASX:DMP) share price is sizzling hot today
• Why Corp Travel, Domino’s, Kogan, & Zip shares are storming higher
• The Domino’s (ASX:DMP) share price is up 22% this year
• 2 top ASX growth shares rated as buys in May
• 2 quality ASX shares that could be fantastic buy and hold options

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