Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Cochlear Limited (ASX: COH)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $229.00 price target on this hearing solutions company’s shares. The broker notes that its industry research shows that most U.S. patients which postponed implant procedures at the height of the pandemic have now had them implanted. It feels this supports the view that trading conditions are returning to pre-COVID 19 levels. In addition, its analysts found that there is a preference for Cochlear’s product among patients due to their quality and design. The Cochlear share price is trading at $228.54 this afternoon.

Collins Foods Ltd (ASX: CKF)

Analysts at Morgans have retained their add rating and lifted the price target on this quick service restaurant operator’s shares to $10.80. According to the note, the broker believes that Collins Foods’ KFC and Taco Bell restaurants will benefit from a return to normality following the release of an effective COVID-19 vaccine. This follows news that Pfizer has had very positive results from its phase 3 trial. The Collins Foods share price is changing hands for $10.01 on Wednesday.

Pushpay Holdings Ltd (ASX: PPH)

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating and $10.35 price target on this donation management and community engagement platform provider’s shares. It notes that at the broker’s recent tech forum, Pushpay revealed that it is observing early indications of stickiness with digital giving. It also expects the integration of Church Community Builder to help it capture a greater share of the wallet. This is particularly the case among larger churches which see value in a full service one stop shop offering. The Pushpay share price is fetching $7.17 this afternoon.

More reading

• 2 fast-growth ASX tech shares that are being sold off
• Pushpay (ASX:PPH) investor day presentation: any updates to recover its share price?
• 3 mid-cap ASX shares with recent price pullbacks
• Reasons to be confident and cautious as ASX shares are bouncing back
• 2 ASX healthcare shares to buy today

James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Cochlear Ltd., Collins Foods Limited, and PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When an investor mentions ‘infrastructure’ companies on the ASX, one’s mind might turn to companies like Transurban Group (ASX: TCL), the famed tollroad operator. Or perhaps Sydney Airport Holdings Pty Ltd (ASX: SYD), the eponymous company behind Sydney’s sole international airport. Infrastructure companies have (or at least used to have) a reputation for being amongst the ‘safest’ investments on the ASX. Sure, you probably weren’t going to get yourself a 10-bagger in this sector, but you would get a steady, inflation-resistant stream of income.

However, like most sectors, the coronavirus pandemic has wreaked havoc on this sector, and by extension, this reputation. Transurban suddenly wasn’t too defensive when we all had to stay indoors for months earlier in the year, and working from home suddenly became necessary. And I’d wager we don’t need to discuss in detail the damage the pandemic has done to airports, as well as the entire travel sector.

That’s why this highly diversified infrastructure share might be worth a look today instead.

Enter Magellan Infrastructure Fund (ASX: MICH)

Magellan Infrastructure Fund is an infrastructure investment you might want to consider today if steady income and defensive investing is important to you and your portfolio. This fund isn’t a company, instead it is an ‘active exchange-traded fund (active ETF). This means that it is essentially a managed fund that you can buy units of on the ASX, just like any other ASX share, rather than having to go through the conventional ‘off-market’ transactions of a traditional managed fund.

This fund holds between 20 and 40 individual companies hailing from all around the world. A plurality of the holdings are US-listed (41%), but Europe, the Asia Pacific and Canada also feature heavily in the listings.  These companies cover a range of sectors within infrastructure, including airports, toll roads, electricity and water utilities and communications. Incidentally, Transurban is a large holding in the fund, as of 30 September.

Since this fund’s inception, it has returned an average of 5.1% per annum. It compares favourably to the funds’ index benchmark (the S&P Global Infrastructure Index), which has returned an average of 1.3% per annum over the same period.

Over the past 12 months, Magellan Infrastructure Fund has paid out 11.7 cents per unit in dividend distributions. That gives this fund a trailing yield of 3.99% on current prices.

Is this fund a buy today?

The Motley Fool’s Dividend Investor service currently rates Magellan Infrastructure Fund as a ‘buy’. Ed Vesely and the team at Dividend Investor like this fund’s track record of beating its index, as well as the global diversification it brings to the table (not to mention the yield, of course).

More reading

• Where to invest $20,000 into ASX shares today
• Commonwealth Bank (ASX:CBA) share price higher on Q1 and loan deferral update
• Macquarie Telecom (ASX:MAQ) share price surges on contract win
• How high-yield dividend stocks could make a generous passive income
• Why Bingo, Evolution, JB Hi-Fi, & Super Retail shares are dropping lower

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Magellan Infrastructure Fund. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At the weekend I wrote about how $20,000 investments had fared in certain shares over the last 10 years.

But that was then, what about the next 10 years? If you’re in a position to invest $20,000 into the share market, then these buy-rated shares might be the ones to look at.

Here’s what you need to know:

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company. It gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This means that users can undertake site visits from the comfort of their home or workplace, which offers both significant time and cost savings.

Management appears confident that it is well-positioned for growth thanks to its recent capital raising and new growth initiatives. It is targeting annualised contract value (ACV) growth of 20% to 40% per annum over the long term, with underlying churn of less than 10%.

One broker that likes what it sees here is Macquarie. It currently has an outperform rating and $3.20 price target on Nearmap’s shares. It notes that its capital raising will bolster its balance sheet, allows management to push ahead with growth plans in the US, and enables the roll out of HyperCamera3.

ResMed Inc. (ASX: RMD)

ResMed is a medical device company with a focus on sleep treatment products and ventilators. It has been growing at a consistently strong rate over the last decade thanks to its industry-leading products and the growing awareness of sleep disorders.

The good news for ResMed is that it still has a very large market opportunity to grow into in the future. Management estimates that there are 936 million people with sleep apnoea globally, with the majority of these sufferers undiagnosed. In addition to this, the company notes that there are 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. These are all people whose lives could be improved with ResMed’s products in the future. 

Last week analysts at Credit Suisse upgraded ResMed’s shares to an outperform rating with a $31.00 price target. The broker believes ResMed is perfectly placed to benefit from a post-pandemic shift to home health care. It expects this to underpin double-digit earnings growth over the medium term.

More reading

• Why ResMed (ASX:RMD) and these ASX shares just hit record highs
• ASX 200 jumps 1.75% on Monday
• These were the best performing ASX 200 healthcare shares in October
• Leading brokers name 3 ASX shares to buy today
• Why the ResMed (ASX:RMD) share price smashed the market in October

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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Commonwealth Bank of Australia (ASX: CBA) share price has been a positive performer on Wednesday and is pushing higher in afternoon trade.

At the time of writing, the banking giant’s shares are up 2% to $73.83.

Why is the Commonwealth Bank share price pushing higher today?

There have been a couple of catalysts for the rise in the Commonwealth Bank share price today.

The first is the release of its first quarter update, which revealed a stronger than expected cash net profit after tax of $1.8 billion.

While this was a 16% decline on the prior corresponding period, a note out of Goldman Sachs reveals that it is run-rating ~6% ahead of what is implied by the broker’s half year forecasts. This was driven largely by lower than forecast bad and doubtful debt charges.

COVID-19 temporary loan deferral update.

Also giving the Commonwealth Bank share price a boost today was the release of an update on its COVID-19 temporary loan deferrals.

According to the release, at the end of October there was a net reduction in total loan deferred facilities of 59%, representing a monthly net reduction in deferred balances of ~$21 billion.

New approved deferrals totalled $4.6 billion during the month, of which $4.5 billion were an extension of an existing deferral.

There are now approximately 52,000 loans in deferral, down 75% from the 210,000 it recorded at the end of June.

Which loans are being deferred?

There has been a net reduction in deferred home loan facilities of 51% during the month of October, representing a monthly net reduction in deferred balances of ~$18 billion.

9,300 facilities have been granted an extension of their deferral arrangement for a period of up to 4 months. Victoria continued to account for the largest proportion of monthly deferral extensions (39%).

At the end of the period there were approximately 45,600 home loans still in deferral. Of these, 27% (balances of $4.8 billion) are due to expire and exit in November.

In respect to SME loans, there was a net reduction in deferred SME loan facilities of 87% during the month of October. This represents a monthly net reduction in deferred balances of $2.5 billion.

Approximately 4,200 SME loans remained in deferral at the end October (balances of $1.5 billion), with 31% ($0.5 billion) of these due to expire and exit in November.

More reading

• ASX 200 up 1.3%: CBA Q1 update, tech shares rebound, JB Hi-Fi sinks
• Why CBA, Straker, Woodside, & Xero shares are surging higher
• CBA (ASX:CBA) share price lifts on first quarter results
• These ASX dividend shares offer 4.5%+ dividend yields
• 5 things to watch on the ASX 200 on Wednesday

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Macquarie Telecom Group Ltd (ASX: MAQ) has just announced a significant client contract win. Macquarie Telecom’s share price is up 4.39% at the time of writing amid a broader rise in the ASX.

What was the deal?

The company advised that its Macquarie Data Centres business has entered a contract to provide approximately 10MW of capacity (IT load) at its Macquarie Park Data Centre Campus. The contract details cannot be disclosed at this stage for confidentiality reasons.

Macquarie Telecom said it would provide updated guidance on the associated capital expenditure in an upcoming investor briefing later this month.

Chief executive David Tudehope said: 

Macquarie’s 20-year strategy of investing in world class data centres is based on strong demand for data centre capacity as customers migrate to cloud and colocation services. This customer win recognises the world class investment we have made in the Macquarie Park Data Centre Campus in Sydney’s North Zone.

A brief take on Macquarie Telecom

Macquarie Telecom provides telecom services to corporate and government customers within Australia. The company operates through two segments, namely: Hosting (for business and government customers), and Telecom mobiles.

The hosting segment relates to the provision of services utilising Macquarie Telecom’s data hosting facilities. The company generates the majority of its revenue from the this segment. The telecom segment on the other hand, relates to the provision of voice and mobile telecommunications services utilising the Macquarie Telecom data network. 

Macquarie Data Centres’ customers include Fortune 500 companies as well as the Australian Federal Government, where it provides secure and compliant data centre services.

Macquarie Telecom won the award for Best Customer Experience in the World, and Macquarie’s CEO won the CEO of the Year at the World Communications Awards in London on 28 October.

How has the company performed in 2020?

Macquarie Telecom’s full year revenue for FY20 was $266.2 million, a year-on-year increase of 8%. Its earnings before interest, tax, depreciation and amortisation (EBITDA) rose 25% to $65.2 million. This compared favourably against its competitor Nextdc Ltd (ASX: NXT), which posted an overall net loss after tax of $45.2 million for FY20. 

Macquarie Telecom’s share price has gone through the roof this year, gaining around 110%, including today’s rise of 4.39%, where the share price is currently trading at $48.96. The company has a market cap of $1 billion at this price.

More reading

• The 5 best-performing ASX 200 shares so far this year
• Why ResMed (ASX:RMD) and these ASX shares just hit record highs
• Which 5 ASX shares hit 52-week highs on Friday?
• 5 best performing large caps in 2020
• These ASX growth shares could be long-term market beaters

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 2020 COVID-19-related stock market crash may mean that some investors look outside of dividend shares for a passive income. For example, they may decide to purchase bonds or hold cash for their lower risks and more stable outcomes.

However, the high yields currently available across the stock market could mean that dividend shares are a more attractive option. They could also offer dividend growth over the long run.

Meanwhile, building a diverse portfolio of financially-sound businesses could mean less risk in an uncertain economic period.

Making a passive income with high-yield dividend stocks

High-yield dividend stocks could offer a far more attractive passive income than other assets. Although some shares have recovered from the 2020 stock market crash, many others continue to trade at low prices. As a result, their yields are above their historic averages.

By contrast, income-producing assets such as cash, bonds and property may offer relatively unattractive income prospects. Low interest rates could remain in place over the medium term, as policymakers seek to stimulate the economy. This may mean that the returns on cash and bonds struggle to beat inflation. Over time, this may lead to a loss of spending power. Meanwhile, high house prices may mean that investing in property yields a relatively low level of income compared to dividend shares.

High-yield dividend stocks could also offer a growing passive income. The current economic woes facing the world are unlikely to last over the long run. Positive GDP growth has always followed recessions on a global basis. Therefore, investors could benefit from dividend growth as a result of their holdings generating higher profits as the world economy recovers.

Reducing risks from dividend investing

Of course, making a passive income from dividend stocks is riskier than other mainstream assets. Even the very best companies can experience periods of disappointing performance that disrupts their ability to pay dividends. Therefore, it is a good idea for an investor to try to reduce risks wherever possible.

One simple strategy to achieve this goal is to build a diverse portfolio of stocks. In doing so, an investor reduces their exposure to a specific business, sector or region. This can mean their income is more stable and reliable than it would be in a more concentrated portfolio. It may also provide them with greater opportunity to benefit from growth prospects in a wider range of industries and countries.

Meanwhile, selecting the most financially-sound businesses for a passive income may mean risks are further reduced. Companies with strong balance sheets, wide economic moats and solid track records of performance in a range of economic conditions may offer a more stable income return over the long run. They may also be better able to adapt to changing operating conditions, which could lead to rising dividends in the long run.

More reading

• Why Bingo, Evolution, JB Hi-Fi, & Super Retail shares are dropping lower
• 2 ASX dividend shares analysts rate as a ‘buy’
• Why the Electro Optic Systems (ASX:EOS) share price is up today
• Ausnet (ASX:AST) share price higher following half year results
• ASX 200 up 1.3%: CBA Q1 update, tech shares rebound, JB Hi-Fi sinks

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has continued its remarkable run and is storming 1.45% higher to 6,432 points.

Four shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bingo Industries Ltd (ASX: BIN)

The BINGO share price is down 1% to $2.65 following the release of its annual general meeting update. The waste management company’s update was reasonably downbeat, with management continuing to expect COVID-19 headwinds to impact its business in 2021. In light of this, it expects its group EBITDA margin to decline by approximately 2% to 3% in FY 2021.

Evolution Mining Ltd (ASX: EVN)

The Evolution share price has fallen 3% to $5.61. Investors have been selling the gold miners again on Wednesday despite a small rebound in the price of the precious metal. It appears as though safe haven assets are losing their allure due to the prospect of a working COVID-19 vaccine being released soon. The S&P/ASX All Ordinaries Gold index is down 1.7% today.

JB Hi-Fi Limited (ASX: JBH)

The JB Hi-Fi share price has tumbled 5% lower to $44.18. The catalyst for this has been a broker note out of Macquarie this morning. According to the note, the broker has downgraded the retailer’s shares to a neutral rating and cut the price target on them to $49.50. It believes consumer behaviour will return to normal in 2021 due to the aforementioned vaccine.

Super Retail Group Ltd (ASX: SUL)

The Super Retail share price has dropped 3% to $10.02. This also appears to have been driven by a broker downgrade. Analysts at Morgans have downgraded this retailer’s shares to a hold rating and reduced the price target on them to $11.78. While it is expecting a strong holiday period, it believes a redirection of spending (post-vaccine) will slow its growth in 2021.

More reading

• ASX 200 up 1.3%: CBA Q1 update, tech shares rebound, JB Hi-Fi sinks
• The Bingo (ASX:BIN) share price dips on AGM
• Why the JB Hi-Fi (ASX:JBH) share price is down 7% today
• Gold shares tumble on vaccine news
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The recent reduction in interest rates from the Reserve Bank of Australia (RBA) has once again highlighted the appeal of ASX dividend shares for those investors seeking regular investment income. At the new cash rate of 0.1%, there really are few alternatives.

Whilst some investors might seek the safety of cash and term deposits (complete with government guarantee), the reality is that an interest rate of 1% (if you’re lucky) isn’t going to help you build wealth or provide a decent income.

Here’s a closer look at 2 ASX dividend shares that have been recommended by Motley Fool analysts.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the most diversified companies on the ASX. It owns a massive portfolio of businesses, ranging from Bunnings and Officeworks to Kmart and Target. It also owns mines, chemical manufacturing plants, Kleenheat Gas, and a clothing line, amongst other things. Wesfarmers also still retains a ~5% stake in Coles Group Ltd (ASX: COL).

Wesfarmers has a long history on the ASX – a history that includes a long streak of dividend payments. This company has paid 2 dividends every year since at least 1985 (when Wesfarmers’ online records go back to). Its two most recent payouts came in at 75 and 95 cents per share, respectively (the latter including an 18 cents per share special dividend). That gives Wesfarmers a trailing dividend yield of 3.6% on current prices, or 5.14% grossed-up with full franking credits.

Wesfarmers is currently a recommendation of the Motley Fool’s Everlasting Income service.

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

Soul Patts is another ASX company that’s very old and highly diversified. But instead of owning a portfolio of underlying businesses, this company instead owns a portfolio of ASX shares within it. Some of the businesses Soul Patts has large stakes in right now include Brickworks Ltd (ASX: BKW), TPG Telecom Ltd (ASX: TPG) and New Hope Corporation Limited (ASX: NHC). It also owns a portfolio of unlisted assets, such as property.

Soul Patts also has the rare distinction of having a record of 20 straight years of annual dividend increases – a record unmatched on the ASX today. Its last two dividend payments came in at 25 cents and 35 cents a share, respectively. That gives this company a trailing dividend yield of 2.2% on current prices, or 3.14% grossed-up with full franking.

Soul Patts is a current recommendation of the Motley Fool’s Dividend Investor service, as well as Everlasting Income alongside Wesfarmers.

More reading

• 3 compelling ASX shares rated as buys by brokers
• Why Coles, Incitec Pivot, Kogan, & Northern Star shares are crashing lower
• Why big brokers are bullish about the Woolworths (ASX: WOW) share price 
• ASX 200 Weekly Wrap: US election special
• Why Soul Patts (ASX:SOL) is a strong ASX dividend share

Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Electro Optic Systems Hldg Ltd (ASX: EOS) share price is rising higher today after the company provided an update on its EM Solutions business.

During late-morning trade, shares in the global defence contractor are up 1.99% to $5.90.

Let’s take a look at how EM Solutions performed over the year.

EM Solutions update

Following the integration of EM Solutions into the Electro Optic Systems group, management advised of strong growth from the newly acquired business.

The Brisbane-based division recorded a successful first year under ownership, with new contract wins and significant technology development. EM Solutions achieved growth of more than 20% year-on-year in both revenue and earnings before interest and tax (EBIT).

As expected, critical supply chain components were affected by delays due to COVID-19. However, management is confident that all schedule shipments will be met before the end of the year.

For the current calendar year, EM Solutions has delivered its tri-band Cobra satellite communications terminals to the Royal Australian Navy. The upgrades were implemented on the Anzac frigates and new offshore patrol vessel programs. In November, the first series of Cobra terminals were shipped as part of a $14 million contract with three NATO navies.

In addition, EM Solutions received a $3 million order from a United States contractor supplying manpack satellite terminals. The equipment will be employed into a US defence program, and include Ka-band transceivers onto multi-layered platforms.

As a result of the new deals, EM Solutions advised it has a record confirmed order backlog of 14 month’s production. Furthermore, the company is in discussions with an overseas defence force that could see future production stretch to more than 2 years.

The company is investing strongly in research and development, using its knowledge on electromagnetics and microwaves. EM Solutions is seeking to enhance a new breed of hybrid RF-optical systems that will support forthcoming satellite systems.

What did management say?

Commenting on the efforts made to accomplish its goals, EOS Communications Systems CEO Glen Tindall said:

The team at EM Solutions have worked exceptionally hard to deliver a fantastic result, demonstrating their dedication to their clients, adding to EOS’ proprietary technology base, and maximising the synergies between EM Solutions and the broader EOS group.

As government customers continue to evolve towards multi-orbit, multi-band satellite communications, EM Solutions is uniquely positioned to deliver products that provide maximum flexibility and resilience.

We will be developing next generation satcom-on-the-move terminals that can support the optical technology that will be deployed by the EOS SpaceLink MEO Satellite Relay System.

How has the EOS share price performed?

The EOS share price suffered a setback when COVID-19 hit global logistics, restricting exports to overseas markets. Since the fall-out in March, the defence contractors’ shares have somewhat recovered but are meeting resistance around the $6 mark.

For EOS to reach back to its share price from pre-pandemic levels, supply chains constraints will have to be lifted. This will allow a steady flow of products to be delivered to international customers, thus receiving a steady flow of revenue.

More reading

• Why the Electro Optic Systems (ASX:EOS) share price is pushing higher

Aaron Teboneras owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Ausnet Services Ltd (ASX: AST) share price is up by 2.79% at the time of writing to $2.02 per share. This comes after the energy distribution company released its results for the 6 months to 30 September 2020.

What did Ausnet announce?

In the 6 months to 30 September 2020, Ausnet had revenue of $1.04 billion, an increase of 1.8% compared to the prior corresponding period (pcp). Higher revenues were driven by increased residential electricity distribution volumes as a result of COVID-19. The company also had higher lease interest income from completed wind farms.

Other features of Ausnet’s results for the 6 months to 30 September 2020 included:

• earnings before interest, tax, depreciation and amortisation (EBITDA) of $661.6 million, an increase of 5.7% on pcp
• earnings before interest and tax (EBIT) of $429.7 million, an increase of 8.1% on pcp
• net profit after tax of $225.7 million, up 31.4% on pcp
• $1.5 billion liquidity at 30 September 2020
• dividends of 4.75 cents per share for the half year (40% franked), down 6.9% on the pcp

According to the company, profits were boosted by lower finance costs. At 30 September 2020, Ausnet had an average cost of debt of 4.25% compared to 4.48% in the prior corresponding period. The company held an A-/stable rating from Standard and Poors and an A3/stable rating from Moody’s.

Ausnet gave some guidance on its future performance. Dividends for the full year were expected to be 9–9.5 cents, 40% franked. The company forecast that:

• its regulated asset base growth would be around 2–2.5% per annum to FY2024
• it is on track to hold $1.5 billion of contracted energy infrastructure assets by FY2024
• net debt to contracted and regulated asset base should be less than 70% by FY2024

About the Ausnet share price

The Ausnet share price is up more than 37% from its 52-week low of $1.46 and up 11.7% since this time last year. On current prices, Ausnet’s price-to-earnings ratio sits at 25.68 and its market capitalisation comes in at $7.5 billion.

More reading

• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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