Shares in BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) have struggled to make headway after going ex-dividend earlier this month.

Sky-high iron ore prices saw record dividends flow through to investors, with an average dividend yield of 9.33% between the BHP share price and the other 2 ASX mining giants.

However, shares typically fall on the ex-dividend date to reflect the dividend being paid. The greater the dividend, the greater the fall.

Meanwhile, over in China…

China has made its move to tighten environmental regulations over the next few years. Earlier in March, the country’s industrial hub, Tangshan, was ordered to limit or halt production on days when a heavy pollution alert was in place.

Producers were ordered to reduce the overall emission of air pollutants by 50 per cent. There are increasing concerns that this could see the iron ore market return to a surplus. Last week, Morgan Stanley analysts warned that this move could be the beginning of major iron ore headwinds. 

Despite the announcement from Chinese authorities, the iron ore spot price has remained relatively buoyant at US$166 per tonne, slightly down from its high of US$173 per tonne in early March. 

Broker rates BHP share price, Fortescue and Rio Tinto as ‘outperform’

Macquarie Group Ltd (ASX: MQG) believes there could be stronger demand and prices for commodities, including iron ore, manganese and thermal coal. The broker upgraded its forecast for the respective materials by 18%, 22% and 17%. 

The broker notes that its preference for the BHP over Rio Tinto has narrowed. But reiterates an outperform rating with a $57 target for the BHP share price. This represents an upside of 25% at today’s prices, excluding its 6.10% dividend yield. 

Similarly, the broker’s update retained an outperform rating for Fortescue. However, it has lowered its target price from $25.50 to $23.00 on rolling forward to FY22 earnings multiples. This represents an upside of 13% at today’s prices. Fortescue also pays a market-leading dividend of 13.10%. 

Finally, Macquarie is also bullish on Rio Tinto shares but reduced its target price from $142 to $140 to reflect movements in exchange rates. If Rio Tinto meets the price target, it will return 25% from today’s prices. 

More reading

• ‘Remarkable resilience’ in Aussie farmland a tailwind for ASX agriculture shares
• Leading brokers name 3 ASX shares to buy today
• Why the South32 (ASX:S32) share price is outperforming today
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back
• 3 ASX dividend shares with yields over 4% right now

Motley Fool contributor Kerry Sun 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’re wanting to boost your portfolio with some quality 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:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX growth share to look at is this pizza chain operator. Domino’s has been growing at a strong rate over the last decade thanks to consistent like for like sales growth and the expansion of its store network footprint.

Positively, this strong form has continued in FY 2021. Last month Domino’s released its half year results and revealed a 16.5% increase in total global food sales to $1.84 billion.

While its top line growth was impressive, its bottom line was even more so. Thanks to operating leverage, Domino’s delivered a sizeable 32.8% increase in underlying net profit after tax to $96.2 million.

But perhaps best of all, is that management is expecting an even stronger performance in the second half. In light of this, Domino’s looks set to deliver a bumper full year profit in FY 2021.

Analysts at Macquarie are confident this will be the case. As a result, they have put an outperform rating on its shares and lifted their price target to $120.20.

Kogan.com Ltd (ASX: KGN)

Another ASX growth share that is highly rated is Kogan. Like Domino’s, this ecommerce company has been in fine form during FY 2021.

For example, during the first half of FY 2021, Kogan reported a 96% increase in gross sales and a 140% jump in earnings before interest, tax, depreciation and amortisation (EBITDA).

This strong growth was driven by a surge in customer numbers, increased repeat customer rates, acquisitions, and the accelerating shift to online shopping.

One broker that believes Kogan is well-placed for growth over the long term is Credit Suisse. At the start of the month its analysts put an outperform rating and $21.08 price target on its shares.

More reading

• 2 ASX dividend shares to buy in April
• $10,000 invested in the Kogan (ASX:KGN) IPO is worth how much today?
• Got money to invest? Here are 2 ASX shares to buy
• 2 great value ASX growth shares to buy today
• Is Temple & Webster (ASX:TPW) the best e-commerce ASX share to buy right now?

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 Kogan.com ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and Kogan.com 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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After a strong rally over the second half of 2020, shares in ASX workplace management consultancy Damstra Holdings Ltd (ASX: DTC) have come off the boil more recently.

Since touching a new all-time high of $2.44 in October of last year, the Damstra share price has plunged more than 50% to just $1.13 as at the time of writing. So, what has driven the massive decline?

First, a little background on Damstra

The company develops tailored workplace management solutions for corporate clients operating in specialised industries like mining, construction and energy and utilities.

Damstra partners with these organisations to develop systems and processes that will protect the safety of their employees and also help them to meet regulatory compliance standards.

It has already racked up an impressive client list, including ASX energy company AGL Energy Limited (ASX: AGL), Swiss multinational Glencore, and construction and engineering company John Holland.

Recent financials

Damstra released its first-half FY21 results to the market in February. The company reported a 30% jump in revenue versus the prior comparative period (to $13.3 million). Despite this strong top-line growth, pro forma earnings before interest, tax, depreciation and amortisation expenses (EBITDA) actually edged down 1% to $2.5 million.

The drag on earnings came from the costs associated with the acquisition of Vault Intelligence Limited, which completed in October. Vault develops workplace management technology that helps companies involved in potentially dangerous industries such as transport and logistics, construction, or mining, to monitor their employees’ safety and prevent accidents.

Despite Vault being a loss-making company, Damstra saw enough potential business synergies to acquire it.

Damstra’s target for synergies for the first 12 months after the acquisition was $4 million, which it subsequently upgraded to $5.2 million in the release of its first-half results. Damstra reported that Vault had been integrated ahead of plan, with Vault’s flagship safety platform, Solo, now part of Damstra’s product suite.

So why the decline in the Damstra share price?

It’s easy to blame the Damstra share price decline on risk-averse investors who were spooked by the company’s underwhelming first-half earnings result. However, in truth, the share price decline had begun well before the release of its first-half results.

A possible contributor to the drop in Damstra’s share price may simply be dilution from the Vault acquisition. Damstra issued almost 45 million new shares to Vault shareholders as part of the deal.

This flood of new shares put downward pressure on the company’s share price around the same time many tech growth stocks were beginning to suffer the effects of a broader sector-wide correction.

Long-term shareholders will be hoping that this might mean the dip will only be temporary. And even in just the last few weeks, the Damstra share price has shown some tentative signs of recovery, up almost 24% since bottoming out at a lowly $0.92 in early March.

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Rhys Brock owns shares of Damstra Holdings Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings 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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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.

Why would someone want to invest in a company that seems to be constantly making headlines for all the wrong reasons? Between manufacturing snags, clinical trial inconsistencies, repeated hiccups with regulators on both sides of the Atlantic, and a global public clamoring for coronavirus vaccination, AstraZeneca‘s (NASDAQ: AZN) reputation is getting a beatdown, and its stock is struggling. What’s more, these issues have played out every few months over nearly a year’s time, making them much easier to integrate into a narrative of a mounting meltdown. 

As monumental as the company’s stumbles may seem, however, investors need to keep their eyes on the long term. AstraZeneca’s all-important coronavirus vaccine is reaching the public, and its reputation will eventually recover. Even with its recent troubles, its stock may start to grow sooner than one might expect. But could it double the investment of someone who bought it right now?

Vaccine setbacks abound

Let’s start with the bear case first. In my view, the bearish argument against AstraZeneca is that the parade of issues with its coronavirus vaccine point to deeper problems in the way the company operates. Specifically, its clinical and regulatory operations — both of which are critical for a company dedicated to making pharmaceuticals — appear to be the source of the most recent fumbles.

In November, management claimed that the company’s coronavirus vaccine, developed jointly with Oxford University, was 70% effective. Upon closer inspection of the results, however, observers recognized that the claim of 70% efficacy was in fact derived from two separate clinical trials with slightly different parameters.

Soon after, it became apparent that a manufacturing issue had led to some of the doses in the trial being only half as large as they were intended to be. That cast doubt on the company’s summarization of its data while also making its manufacturing and clinical operations look less than stellar. At the time, I noted that the mishaps had shaken my (previously quite strong) faith in the stock. 

More recently, one of AstraZeneca’s press releases in the U.S. used older data on vaccine efficacy than what was available. This led Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases (NIAID), to say earlier this week that the issue with the data was “really what you call an unforced error because the fact is this is very likely a very good vaccine.”

To say that such criticism from one of the top regulatory leaders in a major market might make investors facepalm is a massive understatement. Once again, AstraZeneca’s communication introduced more problems for itself, except now there’s enough ammunition for naysayers to legitimately chart a trend from crisis to crisis.

Buckle up for a half-decade-long haul

As bad as all of this may seem, it’s critical to keep a long-term perspective about the company’s fortunes. Over the past five years, AstraZeneca’s total shareholder return has more than doubled. Presently, its quarterly revenues are growing by 11.2% year over year, and its earnings are expanding even faster at a rate of 223.3%.

Remember, the coronavirus vaccine is only one revenue-bearing project among countless others in the company’s portfolio. Plus, there are dozens of other medicines currently in development, each of which could catalyze further growth of the stock as they advance through clinical trials. Regardless of how successful the vaccine is commercially — and if worldwide demand is any indication, it’ll be a big hit — shareholders can still look forward to moderate growth.  

^SPX data by YCharts

That said, AstraZeneca isn’t about to explode overnight. Its market cap is simply too large for its share price to make big swings, even with the added boon of new vaccine revenue. That shouldn’t dissuade potential buyers who have a long-term approach to the market, however.

Nor is the share price the only element to consider. The company’s forward dividend yield of 2.82% is a key element of its total shareholder return, and its dividend has inched upward consistently over the last 20 years. So, buying the stock now might mean getting it at a discount, as its share price is still reeling from the effect of the recent slew of bad news.

Assuming that the vaccine revenue doesn’t change dramatically from management’s expectations and there are no major catastrophes in store (knock on wood), it’s reasonable that AstraZeneca could once again double between now and 2026 or 2027. Don’t wait too long to decide, though: Once the vaccine rollout gets back on track, the stumbles will recede from the market’s memory quite quickly, and the stock might not be much of a bargain thereafter.

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

More reading

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

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The Cann Group Ltd (ASX: CAN) share price was out of form on Monday.

The cannabis company’s shares fell 3.5% to 55 cents.

This latest decline means the Cann share price is now down a disappointing 56% from its 52-week high.

Why is the Cann share price on the slide today?

The Cann share price came under pressure despite the release of two announcements.

This first, covered in more detail here, reveals that the company has signed a partnership with Emyria Ltd (ASX: EMD).

That partnership will see the two parties work together to accelerate the registration of a unique, low-dose, cannabidiol (CBD) only capsule with Australia’s Therapeutic Goods Administration (TGA).

What was the second announcement?

This afternoon Cann also provided the market with an update on the cyberattack it experienced in February.

In case you missed it, in February the company advised that it had been the victim of a complex and sophisticated cyber fraud perpetrated against it and its overseas contractor.

This saw Cann make a payment of EUR2.25 million (~$3.5 million) to an overseas contractor, only for it to end up with an unknown third party.

According to today’s announcement, Cann has commenced a civil proceeding in the High Court of the Hong Kong Special Administrative Region against a third-party defendant, Er Ya Trade, seeking recovery of EUR2.25 million.

The company also advised that an injunction has now been granted by the Court in favour of Cann to freeze certain assets of the defendant and to compel disclosure of ancillary information relating to assets held by it.

What next?

The release explains that the matter will now go through the Court process. Based on current information, Cann has been advised that this is likely to take between four and six months.

However, management has warned that there is no guarantee that any amount will be awarded to Cann or funds ultimately recovered from the Defendant through this process.

Cann intends to provide further updates as material events in the proceeding arise.

More reading

• Cann (ASX:CAN) share price slides despite collaboration news
• Japan’s $103 million pot stock hypocrisy unmasked

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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The Imagion Biosystems Ltd (ASX: IBX) share price has rocketed 1,166% over the past 12 months due to a series of promising projects around cancer detection.

The company’s bio is truly a mouthful: its principal business activities consist of nanotechnology, biotechnology, cancer diagnostics, and – the clincher — superparamagnetic relaxometry. 

What investors should know is that it develops medical devices focused around cancer screening technology.

Imagion’s Magsense cancer screening technology

One of these tech projects, called Magsense, is a diagnostic imaging tool that can potentially increase the accuracy of magnetic resonance imaging scans (MRIs) and PMSA-PET scans. For the record, PMSA-PET scans are prostate cancer scans, which work by using radioactive dye to light up areas of the body.

What’s more, the company’s long term goal is to fully develop a cancer screening technology that’s not only more accurate, but entirely radiation free. Scientific Advisory Board member Professor Lisa Horvarth explained Imagion’s technology in slightly more detail.

MRI and PSMA-PET have limits of detection, so small cancer foci in lymph nodes may not be detected,” she said. “Imagion’s new imaging technology would allow precision mapping of the lymph nodes, identifying smaller foci of cancer that current imaging modalities are unable to identify. This would guide the treatment of the lymph nodes either by surgery or radiotherapy.

What’s happening to Imagion’s share price?

The Imagion share price has surged 1,166.67% over the past 12 months, from 0.012 cents per share to over 15 cents today. However, it’s down 15% this month and 5% this week.

It’s down nearly 2% today, despite a positive report to its shareholders regarding its expansion into breast cancer screening trials. The effects of COVID-19 on the healthcare sector are still hard to shake off: cancer diagnostic procedures dropped by 30% throughout the pandemic and still haven’t recovered.

It revealed this month that the CSIRO have granted it $50,000 for a prostate cancer screening project related to its Magsense technology.

While the executive chair of Imagion Biosystems, Bob Proulx, was thankful for the government support.

“This collaboration with Monash, assisted by funding from CSIRO, helps jump start our prostate cancer project by leveraging the expertise at Monash University and provides a key opportunity to advance our MagSense technology for another important cancer indication,” Proulx said.

“We’re grateful for the support from the Australian Government through the Entrepreneurs’ Programme and their recognition of the medical need for improved methods of prostate cancer detection.”

Imagion “excited for what lies ahead”

It’s worth noting that Imagion is still small cap and Magsense is still in its relative infancy. Its current market capitalisation is $157 million, ranking it 66th in the healthcare sector and 790th on the ASX All Ordinaries Index (ASX: XAO)

But its team clearly believe they’re making progress.

“After much diligence and hard work, we are delighted to have finished the year with our first inhuman study established and open for enrolment,” Proulx said in Imagion’s 2020 Annual Report, released last month.

“We are excited for what lies ahead in 2021, particularly as the MagSense HER2 breast cancer phase one study progresses and we explore further development areas including manufacturing scale-up and preparing for a larger pivotal study.”

More reading

• Is the Clean TeQ (ASX:CLQ) share price really up 927% today?
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Motley Fool contributor Lucas Radbourne-Pugh 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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Some investors may have spotted what looks like an incredibly lucrative ASX share this morning.

Several sources, including the ASX itself, are today telling investors that the Clean TeQ Holdings Limited (ASX: CLQ) share price is up an incredible 927%. It’s not often we see an ASX share price move triple digits in one day, let alone by close to 1,000%

So did Clean TeQ really make its investors 927% richer today? The answer is not as simple as it seems…

So yes, on the surface, it looks as though Clean TeQ shares are up 927%. That’s because when we last saw the Clean TeQ share price on Friday, it was sitting at 26 cents a share. But this morning, it had seemingly had one of the greatest weekends of all time when it opened at $2.65 a share.

At the time of writing, Clean TeQ shares are trading at $2.67.

A ‘reverse split’ for Clean TeQ

If you are a shareholder in Clean TeQ, I hope I’ve caught you before you’ve found a way to the nearest Lamborghini dealer because I’m afraid you’re not suddenly rich.

The ‘rise’ in the Clean TeQ share price has nothing to do with the company getting any bigger. It’s actually a result of Clean TeQ executing what’s known as a share consolidation, which is sometimes called a ‘reverse split’.

Put simply, the company has reduced its share count by a factor of 10, making each share 10 times more valuable. That explains why Clean TeQ has seemingly 10Xed over the weekend. But for every 10 CLQ shares a shareholder might have owned on Friday, they now own 1.

It’s the opposite process to what companies like Pushpay Holding Ltd (ASX: PPH), Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA) have done in recent months. Unfortunately for shareholders, it does not mean any real change in either the company’s market capitalisation, valuation, or any individual shareholders’ wealth.

Clean TeQ did tell us this was happening last Wednesday. It’s part of the company’s plan to rename itself Sunrise Energy Metals Limited (SRL) come 9 April 2021.

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Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX and recommends the following options: short March 2023 $130 calls on Apple and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Apple and PUSHPAY FPO NZX. 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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When you think of ASX resource shares, the likes of S&P/ASX 200 Index (ASX: XJO) mining giants Fortescue Metals Group Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP) probably spring to mind.

Or perhaps the host of ASX gold shares trading on the index.

But Australia is rich not just in hard commodities like iron ore and gold. The lucky country also has a great wealth in its expansive farmlands. With a number of quality ASX agricultural shares investors can consider.

And, according to the latest report from the ANREV Australian Farmland Index, the fourth quarter 2020 returns for managed investments in Aussie farmlands came in strong, despite the ongoing global pandemic. Which could provide some welcome tailwinds for ASX agriculture shares.

28% returns from annual farmland

ANREV’s index tracks some $1.1 billion worth of agricultural assets, including farming assets held by Rural Funds Group (ASX: RFF)

As Institutional Real Estate Inc reports, the quarterly performance of annual farmland, “which includes broadacre grain and oilseed farming and livestock grazing” had its best returns since ANREV launched the index.

The annualised returns on the grazing and annual cropland came in at an impressive 28.37%, with 13.34% coming from increased income and 15.03% from capital growth.

The ANREV report credited rising beef cattle prices and an above-average winter crop harvest in the eastern states for much of the increased returns.

Amélie Delaunay, director of research and professional standards at ANREV said, “In the face of the unprecedented turmoil of 2020, investments in Australian farmland showed remarkable resilience compared to other asset classes.”

A leading ASX agricultural share

As mentioned above there are a number of quality agricultural shares trading on the All Ordinaries Index (ASX: XAO).

Rural Funds Group, whose assets make up part of the ANREV index, counts among those.

Rural Funds holds and leases agricultural property and equipment. Its agricultural holdings include cattle, vineyards and cropping. As far as its leases go, the company is well-positioned with an average weighted lease expiry (WALE) of 11.1 years.

Rural Funds has a market cap of $801 million and is well-known among ASX dividend investors for a lengthy track record of regular and growing dividends. At the current share price Rural Funds pays an annual dividend yield of just over 4.6%, unfranked.

The Rural Funds share price, down 2% today, is up 24% over the past 12 months.

More reading

• 2 ASX dividend shares to buy in April
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• How much is the Fortescue (ASX:FMG) dividend worth today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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A number of ASX dividend shares could be good ideas to own for income.

It’s a tough environment for income-focused investors right now with how close to 0% the official interest rate is at the moment.

But there are still some businesses that could represent good value, growth and offer a solid starting yield:

Rural Funds Group (ASX: RFF)

Rural Funds currently has a forward distribution yield of 5% for FY22 after management confirmed that the real estate investment trust (REIT) distribution would rise by 4% again.

That’s actually the aim of the farmland landlord – to grow the distribution by 4% each year.

It owns a number of different farm types including almonds, macadamias, vineyards, cattle and cropping (sugar and cotton). However, Rural Funds plans to turn the sugar properties into macadamia to generate more earnings in the future.

A key part of the growth is the rental indexation that is built into its contracts with tenants like JBS and Olam. The increases are either a fixed 2.5% annual increase, or it’s linked to CPI inflation.

Rural Funds also has a strategy where it invests some of its retained profit each year into productivity improvements, further increasing the capital value and rental potential of those farms. It has been focusing on cattle farm improvements in recent years.

It was one of the few REITs to increase the distribution during FY20 despite all of the impacts of COVID-19.

Rural Funds’ farms are spread across a variety of states and climactic conditions, which means it has a diversified portfolio.

Kogan.com Ltd (ASX: KGN)

Kogan.com currently has a trailing grossed-up dividend yield of 3.3%. According to Commsec, Kogan.com could pay an annual dividend per share of $0.49 per share in FY23. This would translate to a grossed-up dividend yield of 5.5% at the current Kogan.com share price.

The e-commerce business has been growing its dividend for the last few years since it started paying one.

In the FY21 half-year result, the board grew the interim dividend by 113.3% to 16 cents per share, which is a big increase for an ASX dividend share. That was after an increase of the adjusted earnings per share (EPS) of 211.7% to $0.35 per share, whilst statutory EPS was 135.1% higher to $0.20.

That means that the Kogan.com interim dividend represented a dividend payout ratio of 80%, leaving plenty of profit for re-investment back into more growth for the business.

Kogan.com is growing various parts of its business at a fast rate. Its exclusive brands and marketplace businesses are increasing in size at a very fast pace at the moment.

One area that Kogan.com is looking to for more growth is New Zealand after its Mighty Ape acquisition. Mighty Ape now has 719,000 active customers and December 2020 trading showed “strong sales” with revenue of $20 million and gross profit of $5.4 million.

The ASX dividend share is continuing to focus on more growth by expanding its exclusive brands and enhancing and developing Kogan Marketplace.

In January 2021, Kogan.com saw gross sales increase by 45% year on year which included 111.6% growth of Kogan Marketplace, 54.6% growth of exclusive brands, 102% growth of gross profit and 90% growth of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA).

More reading

• $10,000 invested in the Kogan (ASX:KGN) IPO is worth how much today?
• Got money to invest? Here are 2 ASX shares to buy
• 2 quality ASX dividend shares with generous yields
• Is Temple & Webster (ASX:TPW) the best e-commerce ASX share to buy right now?
• ASX retail shares beware: Aldi e-commerce is coming

Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended Kogan.com 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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The Afterpay Ltd (ASX: APT) share price is 3.48% lower today. At the time of writing, shares in the buy now, pay later (BNPL) provider are trading for $102.20.

Today’s negative movement comes at the same time as the company launches its new offering for in-store purchases – Afterpay Card.

For comparative purposes the S&P/ASX 200 Index (ASX: XJO) is down 0.24%. BNPL competitor Zip Co Ltd (ASX: Z1P) is down 4.58% to $7.40.

Let’s take a closer look at the company’s announcement.

Afterpay Card

Afterpay Card is a digital offering customers can access using their mobile wallets, much like a credit or debit card.

Afterpay users will be able to tap the card at merchant terminals to make the purchase. Just like its app, customers will pay for their product over four instalments, interest free. Afterpay estimates around 22% of its Australia and New Zealand total gross merchandise volume (GMV) comes from in-store purchases.

“Over the past five years we have built a strong in-store offering, with tens of thousands of merchants currently offering Afterpay in-store in Australia,” co-CEO and co-founder Nick Molnar said.

“The new Afterpay virtual card, which will sit in a customer’s digital wallet, is an evolution of our offering, making it even easier for millions of our Australian customers to split their in-store payments in four instalments without incurring interest — ever.

“There is enormous opportunity to reach a new customer, who out of habit or preference, opts to shop in-store, to easily and seamlessly utilise Afterpay at the point of checkout.”

Mr Molnar says the new product will benefit merchants as well as consumers.

“Merchants will also benefit as a result of the Afterpay Card as it will remove integration effort and costs for their business to support Afterpay in-store, which in turn provides more merchants for customers to shop at, in more verticals, with more merchants on offer.”

Merchants will be prevented to from surcharging users who use this product, just as with other Afterpay products. The Reserve Bank is, however, looking at ending this practice in Australia for BNPL providers.

Afterpay’s half-year results

For the 6-months ending 31 December 2020, Afterpay recorded a 106% increase in operating sales to total $9.8 billion. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew a massive 521% over the prior corresponding period (pcp) to $47.9 million.

The number of customers grew by 80% on the pcp to 13.1 million. Over 8 million of the company’s customers live in North America (a 127% increase in the region on the pcp).

Afterpay recorded a loss of $79.2 million, which was in line with expectations.

Afterpay share price snapshot

The Afterpay share price hit a 3-month low last week. It’s down 18.67% from 1 month ago and 36.14% from its all-time high. The Afterpay share price is still 435.08% higher than this time 52-weeks ago. The Zip Co share price is similarly 422.7% higher from this time last year.

Many BNPL providers have seen their share price slide because of rising treasury bond yields. As well, competition in the sector is heating up, with both Commonwealth Bank of Australia (ASX: CBA) and PayPal Holdings Inc (NASDAQ: PYPL) entering the fray.

Afterpay has a market capitalisation of $29.2 billion.

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Marc Sidarous 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 PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. 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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