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.

Another stock market crash is coming. That’s not hyperbole. Stock market crashes are predictable. Since 1950, the S&P 500 Index (INDEXSP: .INX) has crashed, or lost at least 10% of its value, on 38 occasions – once every 1.84 years. So you can be pretty sure it will happen again.

The unpredictable part of stock market crashes is the timing. It’s impossible to know when stocks will tank or how long a bear market will last. But regardless of when it happens, a market crash isn’t something to lose sleep over. Here’s why you shouldn’t panic next time the market plummets. 

1. You’ll only lose money if you sell.

Technically, your net worth rises and falls with the stock market. But you only lose money if you sell at a loss. As long as you’ve invested with a time horizon of five years or more, meaning you haven’t put money in the stock market that you’ll need for at least five years, there’s no reason to worry. Your investments have plenty of time to recover.

How much your portfolio is worth on any given day doesn’t matter. It’s long-term performance that counts. Don’t cash out while everyone else is panicking and you’ll be just fine. 

2. The best days of the stock market often follow the worst ones.

If accurately timing the market were possible, of course everyone would do it. But for those who lack psychic powers, the best strategy is to stay put in the stock market, knowing history tells us some great days are ahead.

A J.P. Morgan analysis found that six of the 10 best days for the S&P 500 index between 1999 and 2018 occurred within two weeks of the 10 worst days. There’s a high cost when you’re not invested for those good days. Missing the 10 best days of the market over those 30 years would have reduced annual returns for a hypothetical $10,000 investment from 5.62% to 2.01%, reducing the portfolio’s value by about half.

3. It’s an opportunity to buy more.

If you love a bargain sale when you shop, why not invest in stocks when they’re on sale? Granted, investors often think they’ll jump on the opportunity when stocks nosedive – but fail to do so because it’s scary to throw money into a plunging market.

But if you believe a company will be successful in the long run, a crash is a golden opportunity to scoop up more shares on the cheap. Plus if you invest in dividend-paying stocks, by buying more shares, you’ll naturally buy more dividends that you can reinvest in a company you believe in.

4. A recovery is inevitable.

Whether a recovery will be V-shaped or U-shaped or W-shaped is debatable. But what’s pretty clear is that a recovery eventually happens. It just may not happen as quickly as you want it to. 

All 38 of those stock market crashes that have happened since 1950 have been followed by a rebound. While prolonged downturns like the Great Recession, which stretched from December 2007 to June 2009, are no doubt etched in your memory, it’s important to remember that most corrections are relatively short – about six months on average.

5. You know it’s coming, so you can prepare.

Since you know another crash is inevitable, don’t be caught off guard when it happens. Focus on stockpiling at least six months’ cash in an emergency fund. That ensures you won’t have to sell investments while they’re down due to a short-term cash crunch. If you’re well-prepared for an emergency, consider setting aside even more money to invest so you can lock in low share prices.

Another smart move is to review your risk tolerance while the stock market is still strong. If you opt to rebalance your allocation to be more aggressive or conservative, it’s best to do it while you can still fetch top dollar on your investments – plus you won’t have to make emotion-driven decisions when the market does crash.

A market crash is something to be very afraid of if you have a short-term mindset. But true investors focus on companies they’ll still want to own years from now, if not forever. If you stay focused on your long-term goals, there’s no reason to fear a stock market crash.

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

More reading

• Volpara (ASX:VHT) share price on watch after Q2 trading update
• Coles (ASX:COL) share price on watch after beating Q1 expectations
• Millionaire investors admit their 3 biggest mistakes
• How ASX shares like Afterpay (ASX:APT) push for explosive growth
• The RBA says the recession could be over. What does it mean for your ASX shares?

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

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The Volpara Health Technologies Ltd (ASX: VHT) share price will be on watch today following the company’s release of its Q2 trading update.

Let’s take a look and see how Volpara performed in the second-half of the year.

How did Volpara perform in Q2 FY21?

For the quarter ending 30 September, Volpara reported strong cash receipts from customers, despite the impacts of COVID-19. The NZ$4.7 million received in Q2 represented the fifth straight quarter of consistent sales greater than NZ$4.5 million.

Management noted material changes were minimal from the pandemic, highlighting the resilience of Volpara’s business model.

The company transitioned from a capital model to a software-as-a-service model for sales of its MRS patient management software. This resulted in a slight drop in cash receipts over the prior corresponding period, down 4%. However, for the half-year recorded, sales were 33% higher than H1FY20.

Most of the receipts have been attributed with the strong inflows from subscription customers, which increased 16% year on year in Q2FY21.

Net operating cash outflow totalled NZ$3.5 million for the quarter, less than originally forecasted. Volpara said despite the US dollar weakness, cash receipts continue to flow in and costs are carefully managed.

The company closed the quarter with a healthy cash balance of NZ$64.3 million.

Informal reports

Volpara responded to speculation about the United States Food and Drug Administration (FDA) regulations on breast density reporting being delayed. The company advised that it has no knowledge of the postponement and will update the market when appropriate.

What did the CEO say?

Volpara CEO, Dr Ralph Highnam, commented on the results. He said:

It has been a remarkable quarter. We’ve followed a key company value of ‘being bold.’ We’ve changed the way we do business and put digital marketing expert Katherine Singson in charge of our US commercial activities to tackle the implications of COVID-19 head on.

Despite the virus, we’ve maintained sales momentum and released key new software. We’re very pleased with our current situation, but we are fully aware that COVID-19 is still potentially disruptive to all businesses in any sector.

About the Volpara share price

The Volpara share price hasn’t moved much since hitting a multi-year low of 79 cents in March. Although having partially recovered to above 70%, shares in the med tech are still significantly off their 52-week high of $2.17.

More reading

• These exciting small cap ASX shares could smash the market in the 2020s
• 3 exciting small cap ASX shares that ought to be on your watchlist
• Volpara (ASX:VHT) share price jumps 5% up after business update
• 3 small cap ASX healthcare shares to watch closely in the 2020s

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. 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 Coles Group Ltd (ASX: COL) share price could be on the move today after the supermarket giant released its first quarter update.

What happened in the first quarter?

Coles was an impressive performer during the first quarter and delivered a result ahead of expectations.

For the three months ended 30 September, Coles reported a 10.5% increase in total sales revenue over the prior corresponding period to $9.6 billion.

As I mentioned here earlier this week, Goldman Sachs was estimating that the company would report a 7.7% increase in total first quarter sales to $9,365 million. Based on this, Coles has smashed expectations.

What were the drivers of Coles’ strong quarter?

The key driver of the company’s growth during the first quarter was its Supermarkets business.

It reported comparable sales growth of 9.7% for the three months and online sales growth of 57%. This led to the Supermarkets business recording a 9.8% increase in sales to $8,464 million.

Management advised that its strong comparable sales growth was driven largely by its Victorian stores which benefited from stage 3 and stage 4 restrictions. It notes that sales growth in other states were on average elevated but tapered off in the latter part of the quarter.

In addition to this, the pattern of bigger basket sizes continued across the country, which is more than offsetting lower transactions.

Management also notes that customers continue to focus on home cooking and hygiene. Key growth categories included baking mixes, herbs and spices and flour, cleaning goods, and dishwashing.

Conversely, categories most negatively impacted by COVID were infant formula, facial tissues, and beauty. It advised that these all experienced double-digit declines, which could be bad news for A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB).

Supporting its growth was its Liquor business. It delivered comparable sales growth of 17.8% and online sales growth of 57%. This resulted in first quarter Liquor sales of $852 million, up 17.4% on the prior corresponding period.

Management notes that its liquor sales remained elevated throughout the first quarter across all states despite the relaxation of on-premise consumption of liquor in some states. Customers are continuing to purchase value-oriented larger pack sizes in beer and spirits.

Also delivering strong growth was its Express business. It reported comparable sales growth of 10.2%, leading to first quarter sales growth of 10.3% to $291 million.

Finally, Coles provided investors with an update on its costs. While it has continued to implement industry leading safety measures in stores and distribution centres, these were delivered at a lower cost.

Approximately $65 million of COVID costs were incurred in the first quarter as restrictions also eased outside of Victoria.

Coles’ CEO, Steven Cain, commented: “We have made further progress executing our strategy to ensure the long-term growth of Coles, particularly in digital and online. This is despite significant COVID related restrictions in Victoria related to our main Store Support Centre, our distribution centres, our meat suppliers and of course, our customers.”

Outlook.

In the first four weeks of the second quarter of FY 2021, Supermarkets comparable sales growth was 6.4% (5.4% excluding Victoria). Online sales growth for the first four weeks of the second quarter was 45%, as demand eased in Victoria.

Liquor comparable sales growth for the first four weeks of the second quarter was 16.9% (15.3% excluding Victoria).

And while there remains uncertainty around COVID with regards to the foreseeable future, Coles sees a number of important trends that will impact its business positively. 

These include high levels of awareness of personal hygiene standards, increased levels of at-home activity, online consumption, restricted international travel, and opening state borders.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Are Coles (ASX:COL) or Woolworths (ASX:WOW) shares a better ASX dividend buy today?
• Could this HomeCo (ASX:HMC) REIT IPO be the biggest in 2020?
• Buy these ASX dividend shares in November
• What to expect from the Coles Q1 update this week

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 BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended BUBS AUST FPO. 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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Do millionaire investors have any investing secrets the rest of us don’t know about?

Not really, suggests a United Kingdom study, which showed they fall into the same share market traps everyday folks do.

Financial advisory firm, deVere Group, surveyed 752 investors around the globe with assets totalling more than 1 million pounds sterling ($1.83 million) each.

The top 3 investing mistakes they admitted to sound very familiar:

1. Relying on historical returns

The top error, which 38% of millionaires confessed to, is choosing their investments based on historical returns.

“It’s interesting to see that for the first time in our surveys of this kind that the number one investment mistake high-net-worth individuals have made is, they say, reliance on guidance from historical returns,” said deVere founder and chief executive, Nigel Green.

“With fundamental shifts in economies and the markets, the often-quoted industry phrase ‘past performance is not a reliable indicator of future performance’ has perhaps never rung more true than it does today.”

Green said the year of COVID-19 has especially emphasised this lesson.

“Wealthy investors are paying attention to how the world has changed dramatically this year and, therefore, investment strategies need to adapt and evolve too in order to reflect the new era we’re living in.”

2. Not seeking out advice

Millionaires also fell prey to their own pride and urge for self-reliance. Not seeking advice was a mistake that 35% of wealthy investors admitted to. 

It seems both ordinary and rich people are vulnerable to the Dunning-Kruger effect. This is a psychological tendency for humans to overestimate their own abilities.

Or inversely, human nature means we find it difficult to recognise our own incompetence.

Too many times investors, both amateur and professional, will subconsciously believe they know better than the market.

“It’s encouraging that seeking advice is deemed fundamental to success by millionaires as it shows that DIY investing and not having a regularly reviewed plan is, typically, a path full of costly pitfalls,” said Green.

3. Not diversifying

Lack of diversification was a trap that 21% of millionaires confessed to.

Green was not entirely surprised this one made the top 3.

“Why? Because it is universally regarded as an investor’s best tool to mitigate risks and capitalise on opportunities that arise.”

The fact that even rich folks suffer from these common foibles might frighten some would-be investors.

But Green emphasised that this sort of mindset in itself is the biggest mistake of all.

“Nothing could be further from the truth – not investing is likely to be more dangerous to your wealth over the longer-term,” he said.

“This is shown by the fact that most of the world’s wealthiest people are themselves committed investors.”

More reading

• Coles (ASX:COL) share price on watch after beating Q1 expectations
• How ASX shares like Afterpay (ASX:APT) push for explosive growth
• The RBA says the recession could be over. What does it mean for your ASX shares?
• Afterpay (ASX:APT) share price on watch after stellar Q1 growth
• 2 Warren Buffett ASX dividend shares to buy in November

Motley Fool contributor Tony Yoo 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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Most fintech ASX shares operate in contested markets of high volume transactions with low margins. Nonetheless, many of them have been able to rapidly increase their level of transactions via careful strategic partnerships.

For instance, Tyro Payments Ltd (ASX: TYR) recently announced a partnership with Bendigo and Adelaide Bank Ltd (ASX: BEN). ASX share Tyro is currently Australia’s 5th largest merchant acquiring bank, falling just after the big four banks. Meanwhile, Bendigo is Australia’s 5th largest retail bank.

In this deal, Tyro will provide its payments processing services to all of Bendigo’s business customers. This includes both the card-present and card-not-present solutions. Accordingly, Tyro believes it has captured approximately $19 million in gross profit for FY22 via this agreement. Moreover, shortly afterwards, and in an apparent vote of confidence, Morgan Stanley secured $142 million in Tyro shares.

Financial ASX shares in strategic deals

Buy now, pay later (BNPL) giant, Afterpay Ltd (ASX: APT) recently announced a tie up with Westpac Banking Corp (ASX: WBC). Westpac’s digital banking-as-a-service platform will enable Afterpay to introduce savings accounts and cash flow tools to its 3.3 million customers without the need for a banking license. 

Although not an exclusive arrangement, Afterpay believes it will be the default BNPL mechanism on the platform. Moreover, it can scale using the bank infrastructure while retaining the customer relationship. In addition, earlier in the year, Afterpay announced a deal with eBay Inc (NASDAQ: EBAY) in Australia to provide consumers the ability to pay across four payment instalments. 

Rival ASX share, Zip Co Ltd (ASX: Z1P) also has a strategic partnership with eBay. Since August, it offers 40,000 Australian small and medium-sized businesses access to working capital. In addition, it announced a recent deal with Visa Inc (NYSE: V) for its new Zip and Go service. At the same time, the company announced partnerships with Apple Inc.‘s (NASDAQ: AAPL) Apple Pay and Alphabet Inc‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google Pay, thus linking its BNPL services to both physical and digital payment methods. Company CEO Larry Diamond, said:

We continuously hear from Zip customers that they want to use their digital wallet to pay for everyday purchases like groceries and petrol or to buy products and services from merchants that don’t accept BNPL.

The company believes this will not only improve customer experience, but also provide additional revenue opportunities for merchants using its service. 

Foolish takeaway

Successful ASX shares in the fintech sector have recently inked several strategic partnerships in an attempted shortcut to faster growth. Of all of the companies discussed above, only the Tyro deal provides for a guaranteed increase in customers. Nevertheless, both Afterpay and Zip are using partnerships to potentially access broader client bases. 

More reading

• Afterpay (ASX:APT) share price on watch after stellar Q1 growth
• Tyro Payments (ASX:TYR) share price tumbles lower following AGM update
• The ASX 200 sank almost 2% today
• Do you have to pay tax on your ASX shares? – A common question answered
• Douugh and Ioupay were among the most traded shares on the ASX last week

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Daryl Mather 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 Alphabet (A shares), Alphabet (C shares), Apple, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends eBay and recommends the following options: long January 2021 $18 calls on eBay and short January 2021 $37 calls on eBay. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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 Reserve Bank of Australia (RBA) has indicated the Australian recession could be over and this may be good news for ASX shares and the S&P/ASX 200 Index (ASX: XJO).

Why is the RBA saying the recession is over?

Although third quarter data isn’t available yet, RBA Deputy Governor, Guy Debelle, believes that the technical recession may be over. A recession occurs when there are two consecutive periods of negative GDP growth, which we saw in the first and second quarters this year.

However, the coronavirus pandemic and subsequent response has made this recession different to many others. Instead of a steady activity decline, we saw a sharp drop due to lockdowns and border closures in March. That coincided with the March bear market which saw ASX shares plummet lower.

The June quarter saw many states across Australia enter lockdown which reduced economic output, while just Victoria remained locked down in the September quarter. That means there is a good chance that GDP growth will be positive in next Friday’s data.

What does this mean for ASX shares?

In my opinion, the short answer is, not much. While we may be out of a technical recession, the economy is still on life support and heavily reliant on government stimulus measures.

However, that doesn’t mean upcoming RBA announcements won’t impact on valuations. The RBA is set to meet next Tuesday to discuss monetary policy while next Friday’s data could be key.

Forecasts showing strong expected growth could boost market sentiment and send ASX shares climbing. However, a hawkish outlook may create further investor uncertainty and add to current volatility.

Foolish takeaway

It would be a remarkable turnaround to exit the recession after only two quarters. However, investors know that there is likely more pain on the way in 2021 and I don’t expect ASX shares to surge higher on the latest news.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• The ASX 200 sank almost 2% today
• Why the Probiotec (ASX:PBP) share price is trading higher
• Will COVID-19’s second wave crash share markets a second time?
• ASX 200 down 1.2%: Blackmores jumps, Bendigo and Adelaide Bank’s update, Zip sinks

Motley Fool contributor Ken Hall 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 Afterpay Ltd (ASX: APT) share price will be one to watch on Wednesday after the release of its first quarter update.

How did Afterpay perform in the first quarter?

The payments company continued its explosive growth during the first quarter of FY 2021 and recorded strong performances across all regions.

For the three months ended 30 September, Afterpay reported a 115% increase in underlying sales to a record of $4.1 billion.

The biggest driver of this growth was its US business, which delivered a 229% increase in underlying sales to $1.6 billion. This was supported by a 346% jump in UK underlying sales to $0.3 billion and a 63% lift in Australian underlying sales to $2.2 billion.

Pleasingly, Afterpay advised that its revenue margin remained stable and in-line with what it achieved in FY 2020.

Another positive was that the trend towards lower gross losses continued throughout the first quarter. Afterpay revealed that customer default payments remain below historical rates in all regions. This has resulted in its net transaction losses as a percentage of underlying sales also remaining low.

What were the drivers of its strong quarter?

This strong result was driven by another large increase in active customers and the growing frequency of use by its customers.

In respect to its customer numbers, Afterpay reported a 98% increase in active customers to 11.2 million. This comprises 3.4 million ANZ customers, 1.2 million UK customers, and 6.5 million US customers. The latter was up 175% on the prior corresponding period and now accounts for 58% of its total customer base.

Interestingly, Afterpay notes that 45% of its like for like sales growth in the first quarter was driven by Millennials, with Gen X and Gen Z driving 25% and 24% respectively.

Also growing strongly was its active merchants. At the end of September there were a total of 63,800 merchants on its platform, up 70% on the prior corresponding period. This comprises 48,000 ANZ merchants, 13,900 US merchants, and 1,900 UK merchants.

Management advised that the new merchants added over the quarter bring over $10 billion of total addressable online sales.

This has had a positive impact on customer acquisition in October. Management advised that it has seen an 18% increase in the daily average number of new customers month to date compared to the first quarter average.

Expansion update.

The company’s launch into Canada has progressed well with a number of large retailers now live, integrating, or signed. Key new retailers in the country include Aritzia, Lush, Ardene and Goop.

In Europe, the acquisition of Pagantis is progressing well and is on track for completion by the end of the 2020 calendar year. This remains subject to regulatory approval by the Bank of Spain.

Management notes that Pagantis provides it with a licence to operate in Spain, France, Italy and Portugal, as well as pending licence passport applications in Germany and Poland.

A cross functional detailed 100-day integration and launch plan has been developed to ensure Afterapy can launch as soon as possible post completion.

Finally, its plans to expand into Asia are progressing well. The company has established a base in Singapore to drive the development of the South East Asia market. Initial development of the EmpatKali opportunity in Indonesia is also underway.

More reading

• The ASX 200 sank almost 2% today
• Do you have to pay tax on your ASX shares? – A common question answered
• Why Afterpay, LiveTiles, PointsBet, & Santos shares are tumbling lower
• How did ASX buy now, pay later shares perform in the latest quarter? 
• ASX 200 Weekly Wrap: ASX snaps winning streak… just

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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I think Warren Buffett is one of the world’s best investors. There are some wonderful ASX dividend shares he’d like in my opinion.

Warren Buffett’s Berkshire Hathaway is one of the world’s largest businesses. Mr Buffett likes to stick to investing in businesses that he understands. I think these two ASX shares are really good Warren Buffett options:

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

Soul Patts is the business that’s most comparable to Berkshire Hathaway in Australia.

It is an investment conglomerate. It has both listed and unlisted business investments, just like Berkshire Hathaway.

The ASX shares that Soul Patts is invested in includes TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industries Ltd (ASX: API), Clover Corporation Limited (ASX: CLV), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI).

It’s also invested in various unlisted industries like financial services, resources, agriculture and swimming schools. Soul Patts is invested in private businesses like Ampcontrol, Seven Mile Coffee Roasters and Dimeo.

This ASX share is a lot older than Warren Buffett’s Berkshire Hathaway. It has been listed since 1903, so it has shown it has great staying power.

It has grown its dividend ever year since 2000, including through COVID-19. That’s the best dividend growth record on the ASX. This is one of the main reasons why I think Soul Patts is such a good dividend. A dividend certainly isn’t guaranteed, but it’s very reassuring to know that your investment is very likely to grow the dividend in the next financial year.

Soul Patts has built a substantial profit reserve and franking credits balance. It will be able to continue pay growing dividends for the foreseeable future.

At the current Soul Patts share price it offers a grossed-up dividend yield of 3.4%.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX dividend share that I think Warren Buffett would really like.

Berkshire Hathaway has a house building division called Clayton Homes, so I think that Brickworks is close enough to Clayton that Mr Buffett wouldn’t be put off by Brickworks.

I really like how long-term focused Brickworks is. It aims to be the market leader in the bricks market. It is the leading bricks business in Australia as well as the north east of the US. In Australia, Brickworks also sells a number of other building products including masonry, paving, roofing and precast.

Brickworks actually owns around 40% of Soul Patts. So it receives a reliable and growing stream of dividends from the investment conglomerate. The Soul Patts dividends and earnings have helped Brickworks to be a stable business over the previous decades, particularly during the lull periods for the construction industry.

Another pillar that Brickworks is building effectively is its property segment. It owns half of an industrial property trust along with Goodman Group (ASX: GMG). This property trust is seeing steadily-growing valuations of the property and rising net rental income. The trust recently secured a lease pre-commitment for 20 years with Amazon at the Oakdale West Estate in Western Sydney. It also has an agreement with Coles Group Limited (ASX: COL).

Brickworks hasn’t cut its dividend for over 40 years. In other words, for more than four decades it has maintained or grown its dividend each year. That’s a great record for an ASX dividend share.

At the current Brickworks share price it offers a grossed-up dividend yield of 4.8%. It’s also trading at 17x FY21’s estimated earnings.

Foolish takeaway

I think Warren Buffett would like both of these ASX dividend shares. I know I do. That’s why Soul Patts is one of the biggest ASX shares in my portfolio. I really like the defensive nature of it. It’s likely to be something that I’m still holding in 20 or 30 years.

More reading

• Why you should pay attention when management buy (or sell) ASX shares
• Why it makes sense to invest in ASX shares
• 2 Warren Buffett ASX shares to buy right now
• 3 must-have ASX income shares for your portfolio
• Why the Soul Patts (ASX:SOL) share price is up 25% in 2 months

Tristan Harrison owns shares of 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 and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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Is the BetaShares Australia 200 ETF (ASX: A200) the best exchange-traded fund (ETF) to get exposure to ASX shares?

What is the BetaShares Australia 200 ETF about?

As the name may suggest, it aims to give investors exposure to the ASX 200. That represents 200 of the biggest businesses on the ASX.

This ETF is provided by BetaShares, one of the biggest ETF providers in Australia. It offers other popular ETFs like Betashares Nasdaq 100 ETF (ASX: NDQ) and BetaShares Global Sustainability Leaders ETF (ASX: ETHI).

What shares does it own?

The BetaShares Australia 200 ETF is designed to track the ASX 200, so it gives investors the biggest exposure to Australia’s blue chips, and some smaller ones. The bigger the business, the more the ETF will own of that business because it’s just tracking the ASX 200.

Its biggest 10 positions were: CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ), Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW), Macquarie Group Ltd (ASX: MQG) and Transurban Group (ASX: TCL).

In terms of the sector allocation, you’re getting a big allocation to just two sectors. There’s a 26.2% allocation to financials and a 20% allocation to materials. Healthcare is the only other sector with an allocation of more than 10% (largely thanks to the CSL investment).

How much is the annual management fee?

The lower the annual management cost the better it is for investors’ net returns. This is helpful for building long-term wealth. 

This ETF has an annual management fee of just 0.07% per annum. That’s one of the cheapest available to investors on the ASX.

Is it the best ETF for ASX shares?

This ETF is certainly the cheapest for Aussie investors. So if you just want to invest in the broad ‘Australian share market’ then this could be the best option.

However, for me it’s certainly not the best investment option around. That’s nothing against BetaShares, I’m just not a fan of most of the biggest holdings of this ETF.

I think CSL is a great business. Macquarie is pretty good too. But the rest of the larger businesses don’t excite me.

They offer very limited earnings growth over the next few years with the economic impacts of COVID-19. They are also at the peak of the market share because they already dominate in Australia (and New Zealand). 

Compare this ETF to a global one like Vanguard Msci Index International Shares ETF (ASX: VGS) where there are much higher quality businesses that make up the largest positions like Apple, Microsoft, Alphabet and Amazon. I don’t think the ASX can compare, in terms of growth and diversification, to the global share market. 

The initial dividend (in normal times) of the BetaShares Australia 200 ETF may be high, but it doesn’t offer much growth. Indeed, since inception in May 2018 the BetaShares Australia 200 ETF has only returned an average of 2.08% per annum, which includes the distributions.

I think there are other ETFs that invest in ASX shares such as BetaShares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20) and BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) which are better in my opinion.

However, there are also plenty of other ASX shares that offer diversified investments that I’d prefer to buy like WAM Leaders Ltd (ASX: WLE), Brickworks Limited (ASX: BKW) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). In my opinion, these ASX shares would be better dividend ideas than the overall BetaShares Australia 200 ETF. I think the bank exposure brings down the long-term potential of the ETF. 

I think the BetaShares Australia 200 ETF isn’t a terrible option for investing, I just think that the largest underlying holdings are going to be disappointing in the next few years.

More reading

• This is how you can become a millionaire with ASX shares
• Why you may not need ASX REITs for dividends

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Brickworks, Macquarie Group Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Transurban Group and Wesfarmers Limited. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and Vanguard MSCI Index International Shares ETF. 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.

The post Is the A200 ETF (ASX:A200) the best ASX ETF? appeared first on Motley Fool Australia.

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According to the latest cash rate futures, the market is currently pricing in an 84% probability of a rate cut to zero by the Reserve Bank next week.

While this is more good news for borrowers, it will be another bitter blow for income investors who will have to contend with even lower rates.

But don’t worry if you’re part of the latter group, as there are a number of quality dividend shares that will help you beat low interest rates.

Two that I would buy are listed below. Here’s why I like them:

BWP Trust (ASX: BWP)

The first dividend share I would buy is BWP. It is a real estate investment trust (REIT) that invests in and manages commercial assets. The majority of its assets are leased to home improvement giant, Bunnings Warehouse, which has proven to be a big positive during the pandemic. At a time when many retail landlords have struggled to collect rent, business has been booming for Bunnings, allowing BWP to collect rent largely as normal.

Looking ahead, with tax cuts and government stimulus likely to support solid sales growth for Bunnings in the years ahead, I believe BWP is well-positioned to continue increasing its rental income and growing its distribution. Based on the current BWP share price, I estimate that it offers investors a forward 4.4% yield.

Rural Funds Group (ASX: RFF)

Another option for investors to consider buying is fellow property company Rural Funds. It owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. The company’s revenues are derived from long-term leases across five sectors: almonds, cattle, vineyards, cropping and macadamias.

Given their ultra-long leases and built-in rental increases, I believe Rural Funds is perfectly positioned to continue growing its rental income and distribution at a solid rate over the next decade. In FY 2021, the company plans to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a generous 4.6% yield.

More reading

• Extreme levels of demand AND future growth prospects. Are you invested in these niche ASX shares?
• Don’t worry about low interest rates, just buy these ASX dividend shares
• Why Rural Funds (ASX:RFF) is a great ASX dividend share
• 2 must-buy ASX dividend shares for income investors to snap up
• Buy Coles (ASX:COL) and this dividend share before the next RBA meeting

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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.

The post Buy these ASX dividend shares if the RBA cuts rates again appeared first on Motley Fool Australia.

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