The BWP Trust (ASX: BWP) share price is on the move on Wednesday following the release of its half year update.

At the time of writing, the commercial property company’s shares are up 1% to $4.33.

How did BWP perform in the first half?

This morning the Bunnings landlord delivered a half year result that was largely flat on the prior corresponding period.

For the six months ended 31 December, BWP reported revenue of $76.1 million, which compares to $76.25 million for the same period last year.

It was a similar story for its profit before gains on investment properties, which came in at $56.9 million. This compares to $57.15 million a year earlier.

However, its overall profit for the first half climbed 6% over the prior corresponding period to $144 million. This was driven by an 11% increase in gains in the fair value of investment properties to $2.6 billion. The latter was in line with the value of its properties at the end of FY 2020.

In light of its flat profit before gains on investment properties, the BWP board has opted to maintain its interim distribution at 9.02 cents per unit. This was in line with management’s guidance for flat distributions in FY 2021.

What about other metrics?

At the end of the period, BWP reported like-for-like rental growth of 2% for the 12 months to 31 December 2020.

It finished the period with a weighted average lease expiry of 4.3 years, with 97.4% of its properties leased.

BWP’s gearing (debt/total assets) stood at 17.8% and its weighted average cost of debt was 3.2% per annum for the six-month period.

Outlook

Management advised that the company is well positioned in the current COVID-19 environment due to the significant majority of its rental income coming from Bunnings and other national large format retailers. It notes that these are all trading well during this time.

Rent reviews are expected to contribute incrementally to property income for the second half. It advised that there are 41 leases to be reviewed to the CPI or by a fixed percentage increase during the second half of FY 2021. There are also 19 market rent reviews of Bunnings Warehouses that remain unresolved and are in the process of being finalised.

In addition, it expects demand for Bunnings Warehouse properties to remain relatively stable in the near-term given the current low interest rate environment and the strength of the Bunnings covenant.

BWP’s primary focus for the remainder of FY 2021 will be on leasing vacancies in the portfolio, progressing store upgrades, and extending existing leases with Bunnings through the exercise of options.

Once again, management reiterated that it expects its full year distribution to be similar to the one paid in FY 2020. Though, it warned that its distribution may be reviewed in the event that COVID-19 impacts are more severe or prolonged than anticipated.

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Motley Fool contributor James Mickleboro 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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If you have some cash to invest into ASX shares then there could be some businesses worth looking into right now.

Here are three businesses thinking about:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an electronic donation ASX share that facilitates payments to large and medium US churches.

The company’s role is not only to be a payments processor, but it also has a number of church management systems for the church to use, as well as offering a community app for the church.

One of the most useful tools is a livestreaming option which has been helpful during this period of the COVID-19 pandemic.

Over the long-term Pushpay is hoping to reach a 50% market share of this industry, which could translate into US$1 billion of annual revenue.

The ASX share is proving to be very scalable with how fast its profit margins are increasing. In most recent result, the FY21 half-year result, it saw its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) margin rise from 17% to 31%. That result also saw operating revenue growth of 53%, EBITDAF growth of 177% and operating cashflow growth of 203%.

In a recent update, Pushpay upgraded its FY21 EBITDAF guidance again to a range of US$56 million to US$60 million.

At the current Pushpay share price, it’s valued at 21x FY23’s estimated earnings.

Bubs Australia Ltd (ASX: BUB)

Bubs is an infant formula company that specialises in goat milk products. It also has adult goat dairy products, grass-fed cow milk infant formula and a vitamins and minerals supplement range.

The ASX share recently gave its quarterly update for the three months to 31 December 2020 which showed a recovery of revenue in many categories compared to the first quarter of FY21.

Quarterly revenue went up 36% quarter on quarter to $12.8 million, though total revenue dropped 12% compared to last year.

Export sales to markets outside of China continued to see rapid growth, with revenue rising 194% quarter on quarter.

The corporate daigou trade was still softer than pre-COVID-19 levels, but it was up 122% on the first quarter.

Bubs boasted that it was fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse with combined retail scan sales growth at the checkout of 41% quarter on quarter.

The Bubs infant nutrition portfolio, which represented 57% of total second quarter revenue, saw sales increase by 27%.

Bubs’ goat dairy gross revenue went up 45% quarter on quarter. Finally, China cross border e-commerce (CBEC) sales went up 27% quarter on quarter.

Investors will need to monitor whether this was a one-off quarter for the ASX share or if the growth continues.

Pacific Current Group Ltd (ASX: PAC)

This business takes investment stakes in fund managers around the world and then tries to help them grow with Pacific’s expertise.

Dean Fremder of Perpetual Limited (ASX: PPT) said about Pacific Current: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

Largely thanks to the GQG investment, Pacific Current has continued to see FUM growth during FY21 after FY20’s growth. In FY20 Pacific Current saw 18% growth of underlying earnings per share (EPS) and 62% growth of FUM to $93 billion. In the first quarter of FY21, FUM went up 14% to $106.4 billion and then in the second quarter FUM rose 8.3% to $112.8 billion.

At the current Pacific Current share price, it’s valued at under 10x FY22’s estimated earnings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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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Amazon.com Inc (NASDAQ: AMZN) founder Jeff Bezos will step down from the chief executive role he has held for the entire 27 years of the company’s life.

The online retailer made the shock announcement while revealing its quarterly financial results on Wednesday morning Australian time.

In the third quarter of this year, Bezos will shift to the role of executive chair while cloud computing boss Andy Jassy will become the new chief executive.

Bezos, who is the world’s wealthiest person, wrote in a memo to employees that this “isn’t about retiring”.

“Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else,” he said.

“As exec chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.”

He added that when he started Amazon in the 1990s, it was “only an idea” and it had no name.

“The question I was asked most frequently at that time was, ‘What’s the internet?’ Blessedly, I haven’t had to explain that in a long while,” he said.

“Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognised as one of the most successful companies in the world.”

Bezos goes out as Amazon posts record results

Bezos definitely goes out on a high as a company famous for three decades of running in the red just posted its third consecutive quarter of record profit.

Amazon posted US$7.2 billion net income for the December quarter, up from US$3.3 billion one year earlier.

In the three months to December, Amazon’s quarterly sales exceeded US$100 billion for the first time.

The online seller has been a major beneficiary of staying at home more due to the COVID-19 pandemic. 

Bezos attributed the current financial success as a cumulative effect of decades of bringing new ideas into the world.

“Amazon is what it is because of invention. We do crazy things together and then make them normal,” said Bezos, naming innovations like personalised recommendations, Amazon Prime’s fast shipping, Just Walk Out shopping, Kindle, Alexa, marketplace, cloud computing.

“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive.”

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo owns shares of Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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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ASX coal exposed stocks are looking even more unloved as the Hunter Valley looks beyond coal through start-ups like MGA Thermal.

The New South Wales township that was built on the back of the coal industry is sensing a foreboding as the world tries to rid itself from the fuel.

The Australian Broadcasting Corporation (ABC) reported that locals are feeling nervous as residents do not know what work there will be left for their kids.

Hunter on the coal transition path

But Hunter Valley isn’t about to rollover. There’s a view among experts that the Hunter is well placed to secure its future as a sustainable electric powerhouse.

The region’s legacy in coal has left it with extensive electrical infrastructure and easy access to a deep water port.

The locals are also exploring new ways to capitalise on a carbon-free future. The ABC highlighted MGA Thermal as one example with the company using recycled metals to create “bricks”.

Who is MGA Thermal

These bricks are good for storing energy as heat. As MGA Thermal’s Alex Post explained to the ABC:

“We stack the bricks up into large energy storage systems; we heat them with waste heat from industry or with electricity from the grid when we have too much solar, and these bricks store all of that energy as heat.

“Six to eight hours later we can use all that stored heat to drive an industrial process or create steam to run a power plant and put energy back onto the grid.”

Multi-pivots to create new jobs

Even mining services companies in the area that used to focus only on the coal industry are starting to pivot. They are looking at new applications, in areas such as healthcare, to apply their know-how.

The coal-dependent regions of Northern Queensland are also likely to be paying attention. These communities know they have to start planning now while there are still coal jobs to aid the transition.

MGA Thermal sparks questions about ASX coal stocks

There’s little doubt Aussies will find a way, we always have. The key question though is what now for ASX investors in coal stocks.

These include the Yancoal Australia Ltd (ASX: YAL) share price, Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC).

While regions like the Hunter are laying out a transition plan, coal miners have yet to articulate how it will secure the future.

The risk of miners holding stranded assets are real, especially if coal mining communities are looking elsewhere for jobs.

Other ASX stocks exposed to coal

The trio aren’t the only ones on the S&P/ASX 200 Index (Index:^AXJO) that are exposed to coal of course. The BHP Group Ltd (ASX: BHP) share price and South32 Ltd (ASX: S32) share price are also linked but these diversified miners will have an easier time transitioning.

There are also those that service carbon emitters, such as the Worley Ltd (ASX: WOR) share price and Aurizon Holdings Ltd (ASX: AZJ).

Worley is shifting its focus on providing engineering services to renewable energy providers, while rail operator Aurizon doesn’t only haul coal.

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Motley Fool contributor Brendon Lau owns shares of Aurizon Holdings Limited, BHP Billiton Limited, South32 Ltd, and WorleyParsons Limited. Connect with me on Twitter @brenlau.

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

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook Inc (NASDAQ: FB) CEO Mark Zuckerberg didn’t mince his words on the company’s recent earnings call.

“I do want to highlight that we increasingly see Apple Inc (NASDAQ: AAPL) as one of our biggest competitors,” the Facebook chief said.

It’s rare for company executives to speak in such direct terms about rivals, especially on earnings calls, as management usually seeks to downplay prospective competition and generally doesn’t mention competitors by name.

This isn’t the first time Apple and Facebook have thrown shade at each other. Referencing Facebook’s use of tracking tools, Apple CEO Tim Cook called such companies “totally out of control” in 2018, and responded to Zuckerberg’s recent call-out by saying, “Technology does not need vast troves of personal data” in order to succeed, another reference to Facebook.

The two companies have long feuded over privacy issues, but the stakes are about to get a lot higher with billions of dollars now being fought over in this battle.

Uncertainty ahead for Facebook

Facebook destroyed analyst estimates in its fourth-quarter report, but the stock price still fell on the report as management warned of “significant uncertainty ahead,” primarily because of ad targeting headwinds tied to Apple’s rollout of iOS 14, its new mobile operating software.   

iOS 14 includes a number of changes designed to increase user privacy and control over their data. Apps like Facebook will now have to ask users for permission to track them or to use the device’s advertising identifier, which allows the kind of ad targeting that is a central part of Facebook’s ad product.

For Facebook, this change is introducing an unusual level of uncertainty in its business. And it’s warned its millions of advertisers repeatedly of the disruptions that iOS 14 is likely to cause. On the earnings call, Zuckerberg laid the blame on Apple:

Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own. This impacts the growth of millions of businesses around the world, including with the upcoming iOS 14 changes, many small businesses will no longer be able to reach their customers with targeted ads. Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.

Regarding the removal of ad targeting tools, Chief Operating Officer Sheryl Sandberg added: “Small businesses are really concerned because they’re worried that they’re not going to be able to buy effective advertising. If all personalized ads went away, small businesses would see a 60 percent cut in website sales.” 

Small businesses make up the bulk of Facebook’s 10 million advertisers, driving the vast majority of the company’s revenue, and those businesses are clearly worried about the changes.

In an interview last week, Dee Deng, CEO of Right Hook Digital, a digital ad agency in Australia, compared the threat to what small businesses just faced with the COVID-19 pandemic, saying: “There are so many similarities between this and [COVID-19]. New phenomenon, uncertain future, people freak out and stem their spend as a knee jerk.” He also told me he expects more inexperienced advertisers to be driven off of Facebook as the economics change and said the policy could even lead to weaker businesses failing in some cases.

Facebook’s worst-case scenario of a 60% drop in return on advertising spending would be disruptive or even catastrophic to many of the businesses that depend on the platform. The company is hearing those concerns right now and responding accordingly.

Blaming Apple

For Facebook, which is often called a monopolist itself, Apple serves as a useful foil. The social media giant often casts itself as a hero of small businesses, providing free and paid tools that millions of small businesses depend on, and Sandberg shares success stories of small businesses on Facebook on every earnings call. 

Positioning itself on the side of small businesses is a smart strategy for a company that’s often at the center of controversy and antitrust inquiries more recently, as small businesses are crucial to the economy and it’s good politics to claim to be on their side.

Based on Apple’s telling of this saga, Facebook is invading user privacy without their permission, but according to Facebook, this strategy is in the best interest of millions of small businesses. The company also says that users prefer ads that are relevant to them. 

By blaming Apple, the company also portrays itself as a victim of even a larger tech giant that’s harming Facebook in order to advantage its own apps like iMessage. Apple is also the subject of an antitrust investigation, particularly regarding its relationship with apps, so it’s a smart argument for Facebook to make.

What it means for Facebook investors

It’s hard to doubt Facebook’s business after the quarter it just reported. Revenue jumped 33% year over year to $28.1 billion, and operating income jumped 44% to $12.8 billion, delivering a fat operating margin of 46%.

However, the company faces a number of risks ahead, including the potential for increased regulation and the threat of another backlash like the advertiser boycott last year, but management seems most concerned about the impacts of iOS 14.

The good news is Facebook’s guidance doesn’t seem to anticipate a major impact from the rollout and even calls for accelerated growth through the first half of the year as it laps the worst of the pandemic. It did, however, anticipate slower growth in the second half of the year and expected the disruption for iOS 14 to begin by the end of the first quarter.

Investors should also remember that Facebook has been nimble before when it needed to adapt, whether that was transitioning to mobile in the company’s early days as a publicly traded company, or changes it made in response to Russian hacking of the 2016 election and the Cambridge Analytica scandal. Facebook surely won’t be standing still this time around, either, as it will adjust its algorithms and continue to build out new features like e-commerce.

Overall, the issue deserves attention from investors, but it’s not a reason to sell, especially given the solid value in the stock. Keep an eye on the iOS 14 rollout in the coming months as tensions with Apple are only going to heat up from here.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Jeremy Bowman owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Facebook. The Motley Fool Australia has recommended Apple and Facebook. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The values of buy now, pay later (BNPL) ASX shares have soared over the last year.

After bottoming out at $1.05 in the March 2020 COVID-19 crash, Zip Co Ltd (ASX: Z1P) shares have surged over 650% to $7.95 at the time of writing. And at one point in late August, the Zip share price even touched a record high of $10.64.

And then there’s Afterpay Ltd (ASX: APT). Since falling to a low of $8.01 in March, the Afterpay share price has skyrocketed a whopping 1730% to $146.62. With a scarcely believable market capitalisation of well over $40 billion, it is now larger than Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL), and might soon overtake Rio Tinto Limited (ASX: RIO).

But with companies like Afterpay hogging all the media spotlight, it’s easy to forget that there are many other companies trying to carve out a niche for themselves in the buy now, pay later space.

Over the last year, Sezzle Inc (ASX: SZL) shares have also been soaring higher – even outpacing Afterpay. The Sezzle share price was trading at just 35 cents last March, but has now climbed over 2300% to $8.50. And back in August, Sezzle shares peaked at a record high price of $11.83.  

What makes Sezzle different?

Like Afterpay, Sezzle gives consumers the ability to repay their purchases over four fortnightly instalments. Provided all instalments are paid on time, there are no interest or late fees charged to the customer. Instead, Sezzle makes its money by charging a small fee to the merchant.

The reason you may not have heard as much about Sezzle as Afterpay is that it is headquartered in Minneapolis and predominantly targets the North American market. It has been growing rapidly in the United States, driven by rising rates of online shopping spurred by COVID-19 lockdowns.

Sezzle has also been targeting global expansions into the Indian and European markets. It estimates the total retail market to be worth US$882 billion in India, and US$232 billion in Europe.

Recent news out of the company

Sezzle reported record results for the December 2020 quarter. Underlying merchant sales (UMS) through the payment platform increased 40.6% quarter on quarter and 205.4% year on year to US$320.8 million. Active customers were also well up, increasing by 24.5% quarter on quarter and 143.9% year on year to over 2.2 million. Active customer repeat usage was also up 89.8%. The company collected US$17.2 million in merchant fees for the quarter, a jump of 32.6% quarter on quarter and 195.6% year on year.

In the September quarter, the company reached its 2020 target of annualised run rate for UMS of US$1 billion (A$1.4 billion).

While this is a notable achievement for a rapidly growing company, it’s worth noting that Sezzle is still significantly trailing Afterpay, which reported underlying global sales (a similar metric to Sezzle’s UMS) for the September quarter alone of $4.1 billion.

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• ASX 200 up 0.9%: Credit Corp impresses, Afterpay jumps, bank shares rise
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Rhys Brock owns shares of AFTERPAY T FPO,  ZIPCOLTD FPO and Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some ASX shares that are generating faster growth because of demand for their products or services due to COVID-19.

Some areas of the share market are still in doldrums in terms of customer volume demand, such as travel shares like Qantas Airways Limited (ASX: QAN) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

However, there are some businesses that are seeing record demand:

Sonic Healthcare Ltd (ASX: SHL)

Headquartered in Australia, Sonic is the world’s third largest pathology and laboratory healthcare business, with operations in eight countries. Some of the countries that it operates in includes Germany, the UK, Switzerland, the USA and Belgium. Sonic is also a provider of general practice, radiology, occupational medicine and corporate medical services in Australia.

Sonic is playing a key role in the fight against COVID-19 as it carries out large numbers of PCR tests.

Whilst the ASX share’s base pathology revenue was severely impacted during 2020 in March, April and May, there was a recovery starting from May 2020, with a near normal revenue run rate by the year end in most divisions. COVID-19 testing ramped up progressively from March 2020.

In the first quarter of FY21 Sonic saw revenue grow by 29% to $2.1 billion and earnings before interest, tax, depreciation and amortisation (EBITDA) went up 71% to $580 million. In October 2020, revenue was 33% higher than October 2019.

In November 2020, in the northern hemisphere, the base business is being hurt less compared to the first waves, with COVID-19 testing at record levels due to the high level of COVID-19 cases in Europe and the US. In Australia, the base revenue is in positive growth territory and COVID-19 testing was still at around 50% of half of prior peak levels.

According to Commsec, the Sonic share price is valued at 17x FY21’s estimated earnings.

Ansell Limited (ASX: ANN)

Ansell is an ASX share that is best known for its protective gloves. It also sells other items such as chemical protective clothing.

A couple of weeks ago the company gave a trading update which said that due to the level of coronavirus cases globally, it’s still seeing an elevated level of demand for products across its examination, life sciences and chemical protective clothing. That’s despite the pandemic being around for almost a year.

Ansell said that by implementing efficiencies to improve output and investing in increased production capacity at its own plants, Ansell has been able to successfully and safely meet higher demand where others in the industry have struggled.

Sonic has been able to pass through price increases to customers to offset higher costs from raw materials, which demonstrates pricing power for Ansell.

Ansell acknowledged that there remains significant uncertainties given that the ASX share’s manufacturing operations and supply chain continues to be impacted by COVID-19, such as ocean freight delays.

The company was able to provide earnings guidance for the upcoming FY21 first half result, showing double digit growth. Ansell is expecting to report organic revenue growth of more than 20%, with earnings per share (EPS) in the range of 81 cents to 84 cents, representing growth 62% to 68%. It’s now expecting its FY21 EPS to be higher than 145 cents per share, beating its previous guidance.

Ansell expects higher demand for its products to continue for the remainder of FY21.  

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ansell Ltd. and Sonic Healthcare 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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Fortunately for growth investors, there are a good number of companies growing at a strong rate on the Australian share market.

Three ASX growth shares that you might want to get better acquainted with are listed below. Here’s what you need to know about them:

Adore Beauty Group Limited (ASX: ABY)

Adore Beauty is Australia’s number one online beauty retailer. At the last count, it had just under 600,000 active customers and was expecting to generate revenue of $158.2 million from them in calendar year 2020. This will be a big increase on the prior corresponding period and is being driven by the ongoing shift to online shopping. Morgan Stanley is a fan of the company and currently has an overweight rating and $8.35 price target on its shares.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. Thanks to the shift to the cloud and its growing footprint in data centres, Megaport has been growing strongly over the last few years. This has continued in FY 2021, with Megaport recently reporting a 10% quarter on quarter increase in second quarter underlying monthly recurring revenue (MRR) to $6.3 million. Goldman Sachs was pleased with its update and has put a buy rating and $15.00 price target on its shares. Goldman expects Megaport to benefit from growing demand for public cloud infrastructure and the broadening of its product suite.

Nuix Limited (ASX: NXL)

Nuix is a leading provider of investigative analytics and intelligence software. Its software helps process, normalise, index, enrich, and analyse large amounts of data from different sources. This has proven invaluable during investigations including the Banking Royal Commission. Nuix delivered a 25.9% increase in total revenue to $175.9 million in FY 2020 and is expected to report further growth in the current financial year. Morgan Stanley is also a fan of Nuix. It currently has an overweight rating and $11.00 price target on the company’s 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. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended MEGAPORT FPO and Nuix Pty 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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There are some ASX dividend shares that are paying steady, and growing, income to shareholders each year.

Some businesses cut their dividends in the 2020 calendar year such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Transurban Group (ASX: TCL).

However, these two ASX dividend shares have continued increasing:

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) that owns a diversified farm portfolio.

A core aim for the management of Rural Funds is to grow the distribution by 4% per annum for investors.

It has grown the distribution by that 4% per annum since it listed several years ago. In increased its distribution during the COVID-19-affected 2020 year like clockwork. In FY21 it’s expecting to grow the distribution to 11.28 cents per unit.

The ASX dividend share is invested across different sectors like cattle, almonds and vineyards. The business is regularly looking for other investments to diversify the portfolio further. It used to own poultry assets, but it sold those as there wasn’t much capital growth potential.

Rural Funds has rental indexation built into all of its contracts. That rental growth is linked either to a fixed 2.5% annual increase, or it’s linked to CPI inflation, plus occasional market reviews.

The farmland REIT is on the lookout for assets that it can invest in and improve the productivity. For example, with some cattle properties it has improved them with water points and pasture improvements, while at its cropping properties it has added water storage and irrigated cropping.

One of the features of this ASX dividend share is that it has a long weighted average lease expiry (WALE). At the last update its WALE was approximately 11 years.

At the current Rural Funds share price it has a FY21 distribution yield of 4.5%

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Also known as Soul Patts, this ASX share has the longest consecutive dividend growth streak on the ASX. It has grown its dividend every year since 2000.

It has been increasing its dividend each year by 2 cents per share for almost a decade. Another increase of 2 cents per share in FY21 would represent an increase of 3.3% to 62 cents per share.

These dividend increases by Soul Patts are funded by the dividends paid to it from its investment portfolio.

There are some key businesses in the portfolio that pay most of the dividend income such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Australian Pharmaceutical Industries Ltd (ASX: API).

Aside from the above names, the ASX dividend share also has other listed businesses which make up a sizeable portion of the portfolio like Apex Healthcare, Tuas Ltd (ASX: TUA) and Clover Corporation Limited (ASX: CLV).

Soul Patts also has a portfolio of unlisted businesses in different sectors like agriculture, financial services, resources, swimming schools and electrical engineering and control systems (Ampcontrol).

The ASX dividend share has long-term employees. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

At the current Soul Patts share price, a FY21 dividend of 62 cents per share would equate to a dividend yield of 3.1%.

More reading

• These ASX dividend shares offer attractive yields
• 3 ASX 200 shares that keep growing their dividends
• 3 reasons why Rural Funds (ASX:RFF) is a strong ASX dividend share
• 3 ASX dividend shares with yields above 4%
• 2 strong blue chip ASX shares rated as buys by brokers

Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Carsales.Com Ltd (ASX: CAR) share price will be one to watch on Wednesday.

This morning the auto listings company’s shares were upgraded by a leading broker.

Is the Carsales share price in the buy zone?

According to a note out of Goldman Sachs, it believes recent weakness in the Carsales share price has created a buying opportunity for investors.

The note reveals that the broker has upgraded the company’s shares to a buy rating with an improved price target of $22.60.

Based on the latest Carsales share price, this price target implies potential upside of 13% over the next 12 months excluding dividends. Including dividends, the potential return stretches to over 15%.

Why is Goldman Sachs bullish on Carsales?

The broker made the move largely on valuation grounds, noting that the Carsales share price has come under pressure since COVID-19 vaccine trial results were announced. Its shares are down 14% from their October high.

It believes that the market is concerned that the rollout of vaccines will impact demand for used cars and stifle its growth. Consumers have been buying used cars during the pandemic to avoid public transport.

However, Goldman doesn’t believe investors should be worried and is forecasting strong earnings growth over the coming years.

It commented: “Although the sustainability of used car volume is a key investor focus, we remain optimistic on the outlook, believing CAR can deliver a relatively assured FY20-23E EBITDA / EPS CAGR of +11% / +14%.”

This is expected to be driven largely by its dominant ANZ business and online migration driving growth in its international segment.

Domestic growth

In respect to the former, Goldman commented: “We forecast +11% 3Y EBITDA CAGR for the core ANZ Online Advertising business. Although the recent strength in the used car market presents some headwinds, we believe CAR can continue to deliver strong earnings growth.”

“Driven by: (1) Return to (some) growth in Display revenues, given improving New Car sales in Australia (i.e. Dec +13%); (2) The non-repeat of the covid related dealer concessions made across FY20-21 ($40mn revenue in total); (3) ongoing c.5%+ yield growth, supported by dealer profitability and CAR strong domestic franchise (which is increasing share); (4) Increasing contribution from new revenue streams (i.e. Instant Offers); and (5) ongoing cost discipline, supporting margins,” it added.

Valuation

Overall, in light of its outlook and the recent share price weakness, the broker believes Carsales’ valuation is compelling.

It explained: “We believe valuation is now compelling, given: (1) CAR multiples have compressed since the vaccine announcement, despite consensus earnings upgrades; (2) Relative to AU classified peers, CAR trades at a -21% 12mf EV/EBITDA discount, the greatest level in recent history.”

Carsales will release its half year results 17 February.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why the Eagers Automotive (ASX:APE) share price is on watch today
• Aussies ready to splash on travel, entertainment, cars
• Think you saw growth in 2020? Just wait for 2021: fundie
• Why these leading ASX gold and tech shares could rally on through 2021

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

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