One of the things I have learned over the years investing in ASX dividend shares is that this is not a spectator sport. In my view, investing for dividends requires regular analysis, review, and the willingness to make changes if required. For example, Telstra Corporation Ltd (ASX: TLS) was considered a rolled gold ASX dividend share for many years. And then one day, it wasn’t.

The same could be said for our large banks like Commonwealth Bank of Australia (ASX: CBA), right up until the regulator put a cap on how much banks could distribute to shareholders. Moreover, a myth of ASX dividend investing is that it applies mainly to mid cap shares or larger. I have always rejected this premise. While large caps are more secure, small cap shares often pay higher dividend yields.

Small cap ASX dividend shares

New Energy Solar Ltd (ASX: NEW) currently pays a trailing 12 month (TTM) unfranked dividend yield of 9.1%. This is an infrastructure trust that buys, builds, and operates solar farms in Australia and the United States. It continues to ride a wave of government enthusiasm and spending and has positioned itself as a high margin provider of electrical power. The company’s revenue stream is susceptible to changes in weather, yet it is currently priced at 39.4% less than its net asset value per share.

G8 Education Ltd (ASX: GEM) is an early learning and childcare company with assets predominantly in Australia, and some in Singapore. Over the past 10 years, the company has had a share price CAGR of 16.7%, enough to triple the initial investment in this time. Furthermore, it presently has a TTM dividend yield of 10.3%. As this is a 100% franked payment, it also carries a tax credit of 4.4%. Like New Energy, this company is also trading at a discount to its net tangible asset value of 42.9%.

Base Resources Limited (ASX: BSE) is an early stage, but producing, mineral sands company. At today’s price this company has a TTM dividend yield of 14%, which is very large. However, this year was the company’s maiden dividend payment. So there is some risk as to whether they will do so again. The company’s net profit after taxes (NPAT) for FY20 was $39.6 million. This was a slight reduction on 2019 due to reducing ore grades. Nevertheless, the company intends to produce 700,000 tonnes in FY21, an increase of 50.2%.

Foolish takeaway

There are a few things investors can take away from this article. First, an effective ASX dividend paying portfolio needs to be actively managed. Second, small caps often pay more per share than large caps. Nonetheless, they are considerably more risky. Third, the dividend yield itself must be considered along with an evaluation of company performance, future growth plans, and management skill. 

More reading

• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• How to make $50,000 of passive income with ASX dividends
• Aussie Broadband (ASX:ABB) share price rockets 122% following IPO

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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Yet another technology company is floating on the ASX this week, taking advantage of a hungry market that just can’t get enough of the sector.

Shares for e-commerce site MyDeal.com.au Limited (ASX: MYD) will start trading on Thursday.

The initial public offering (IPO) price is $1 per share, giving MyDeal a market capitalisation of $258.8 million.

Founder and chief executive, Sean Senvirtne, told The Motley Fool it was a long journey to reach this milestone.

“The business is almost a decade in the making,” he said.

“We managed to build an e-commerce site with excess of $100 million of sales with very minimal capital raising to date.”

He’s right — MyDeal had only raised $5.1 million in equity funding before the initial public offer.

Tony Gandel, who is the son of AFR Rich List real estate developer, John Gandel, put in $5 million back in 2017 through his investment vehicle, Gandel Invest. 

Now, in just 3 years, that will turn into $51.4 million as the company lists on the ASX.

Senvirtne and his partner and chief product officer, Kate Dockery, will own 49% of the shares upon the float, worth $126.9 million.

Remember group buying?

Remember when ‘group buying’ was all the rage and it was meant to be the next dominant shopping trend? MyDeal started off in 2011 as a group buying site but has since pivoted several times to find its groove.

It had some good years selling pretty much everything but these days it’s focused on furniture and homewares.

The current model is that MyDeal acts as a pure marketplace between sellers and buyers, rather than warehousing and packing goods itself.

Share prices for similar e-tailers like Temple & Webster Group Ltd (ASX: TPW) and Kogan.com Ltd (ASX: KGN) have gone gangbusters during the tech boom this year.

In the 2020 financial year, MyDeal put through $103 million of gross transaction value, which was up 164.6% year on year. Its revenue was a fraction of that, raking in $15.8 million.

The company made a small net profit after tax of $850,000 statutory or $37,264 pro forma.

MyDeal’s ace up its sleeve

Senvirtne told The Motley Fool he has gun executives with excellent online retail pedigree steering the ship.

“Our chairman Paul Greenberg is a veteran in this space… When I was starting up he ran DealsDirect — one of the very first online retail stores [in Australia],” he said.

“Dean Ramler — he’s an investor and he’s our chief merchandising officer — he’s the guy who built Milan Direct back in the day, which was acquired by Temple & Webster.”

Even though competition is fierce in online retailing in Australia, Senvirtne reckons the country is “underpenetrated” in the furniture and homewares sector compared to the United Kingdom and the United States.

“If you look at our mattresses or bed frames, you see there are 400 or 500 different products from different sellers,” he said.

“In Australia, no one has been able to build a business to the level where we are — being able to offer 500 SKUs [per category].”

More reading

• How to make $50,000 of passive income with ASX dividends
• Should you stay invested in an ASX share after a strong run?
• Why Kogan (ASX:KGN) and this hot stock just hit record highs
• 3 hot ASX shares to buy when you’re young
• 3 unstoppable ASX shares to buy with $3,000

Tony Yoo 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 and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. 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 Australian Pharmaceuticals Industries Ltd (ASX: API) share price will be on watch this morning following the company’s release of a trading update late Friday.

At the closing bell on Friday, which was prior to the announcement, the Australian Pharmaceuticals share price finished the day at $1.06, down 1.4%. A catalyst for the slight drop in the company’s shares could have been the broad sell-off in the market.

In comparison, the All Ordinaries Index (ASX: XAO) ended Friday’s session down 0.5% at 6,385 points.

Trading update

Friday evening, Australian Pharmaceuticals provided shareholders with an update in relation to its full-year results, and the impacts of COVID-19.

For the period ending 31 August, the company advised its underlying net profit after tax (NPAT) will be broadly in line with market expectations. Australian Pharmaceuticals is expecting to report an underlying NPAT in the range of $30 million to $31 million.

The company noted that during the second-half, significant improvements in key balance sheet metrics were made. These included net debt and cash conversion days.

In addition, Australian Pharmaceuticals also made the decision to downsize its Priceline store network (non-pharmacy stores). Management said the closure of 14 Priceline stores, among other restructuring costs, are an outcome of the long-term impacts of COVID-19.

After reviewing its balance sheet to determine its core assets in the post-pandemic world, the company made several adjustments. The Soul Pattinson Chemist brand has been written down to the carrying value of $37.5 million. The pre-tax reduction is a one-off, non-cash item.

With the permanent closure of 14 non-pharmacy Priceline stores, Australian Pharmaceuticals completed a detailed stock review and identified surplus inventory. The company will seek to use these items in a clearance pricing strategy, further reducing working capital costs. This will create an NPAT reduction of $5.5 million, and will be considered as a non-cash accounting adjustment.

The company will announce its full-year results to the market on 22 October.

What did the CEO say?

Australian Pharmaceuticals Industries CEO, Richard Vincent, spoke about the Victorian COVID-19 restrictions, and the anticipated demand when lockdown laws ease. He said:

We currently have 14 Clear Skincare clinics and 22 Priceline company-owned stores temporarily closed in Victoria. These will re-open when COVID-19 lockdown rules allow. Where we have re-opened Clear Skincare clinics after mandated shutdowns, pent-up demand has been significant, with comparative sales up 25% on pre COVID-19 levels, followed by a sustained uplift. Since the half year, a further eight clinics have been opened, with the pipeline for further openings remaining strong.

Furthermore, Mr Vincent touched on Priceline’s performance. He added:

Priceline company stores and Priceline Pharmacies are also trading strongly compared to the same period last year in those States where COVID-19 restrictions have been lifted. Priceline’s online sales reflect growth of more than 100%, albeit from a low but growing base.

About the API share price

The API share price has been on a bumpy road over the last five years. The company reached a multi-year high in April 2017, but has been on a downhill trend ever since. With a market capitalisation of $522 million, the Australian Pharmaceuticals share price could be considered as modest with a price-to-earnings (P/E) ratio of 10.

More reading

• 2 ASX dividend shares raising their dividends like clockwork

Motley Fool contributor Aaron Teboneras 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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Investors have a lot more reason to be feeling confident about the ASX bull market as our central bank has given the green light on risk-taking.

The Reserve Bank of Australia (RBA) governor Philip Lowe has effectively given banks permission to opened the lending floodgates to home buyers in a speech last week.

The RBA also isn’t worried about property bubbles as it regards the COVID‐19 recession a bigger threat to our economy.

Industry watches are expecting mortgage lenders to step up their war for market share as a result, reported the Australian Financial Review.

RBA gives green light for bull market run

Dr Lowe’s speech may have been aimed at the property market. But make no mistake, this carries implications for ASX investors.

You only need to examine his commentary that interest rates will stay low for at least three more years to understand the significance.

Our central bank head won’t lift interest rates until actual inflation, not forecast inflation, reaches the RBA’s target of 2% to 3%.

Shock change to inflation targeting

This may sound like a very subtle difference, but it isn’t. The RBA is effectively saying it doesn’t mind inflation jumping above its target band because that is what will likely happen.

Monetary policy (meaning interest rates) is a blunt instrument as the impact of a rate change won’t be felt in the real economy for some time.

If the RBA waits till inflation actually hits 2-3% before lifting acting, there is a very good chance inflation will overshoot before the impact of higher interest rates kick in.

Monetary policy on steroids?

Concern about runaway inflation is one of the things that would normally hold back a central bank. With this caveat removed, the RBA is putting the pedal to the metal as it prepares to cut rates again next month.

The cut to the official cash rate to 0.1% will supplement a step-up in the RBA’s quantitative easing program of buying bonds.

If you remember, its the flood of liquidity (cheap money) that helped trigger a 36% rebound in the S&P/ASX 200 Index (Index:^AXJO) from its COVID low in March.

Be ready to pedal on a fresh wave of liquidity that’s unrestrained from worries about asset bubbles or inflation risks.

Inflation could be bigger risk than you’d think

But things could turn ugly quicker than you’d think even though no one here is worried about inflation.

Some economists are starting to wake up to the inflation risks facing the US as the property market heats up and the US dollar stays on the back foot. It won’t take long for US inflation to reach our shores given how interconnected global financial markets are.

Foolish Takeaway

The problem with inflation is that once that genie pops out of the bottle, getting it back in is a difficult task.

Right now though, inflation is seen as the lesser of all COVID evils. We might as well climb on our surf boards and enjoy the bull market ride fellow Fools.

We’ll worry about paying the piper later.

More reading

• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week
• How to turn $20k in ASX shares into $1 million in 30 years
• These were the worst performing shares on the ASX 200 last week

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

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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Buying the best shares currently available could prove to be a sound move. They may be better able to withstand a period of weak economic growth. They could also deliver higher returns as the world economy’s performance improves.

Therefore, spending time analysing industry growth prospects, assessing company reports and valuing businesses could be a sound move. It may mean that you purchase the most attractive investment opportunities that can make a major impact on your long-term financial prospects.

Analysing industry prospects to find the best shares

The best shares to buy today may not necessarily have the brightest near-term outlooks. For example, they may face a tough set of trading conditions as a result of downbeat consumer sentiment or disruption caused by lockdown measures implemented due to coronavirus.

However, they could have improving outlooks over the long run that make them attractive investment opportunities. As such, analysing the long-term prospects for a wide range of sectors may help you to deduce where the best buying opportunities are located. This may lead you to focus your efforts on a smaller number of industries where a mix of short-term uncertainty and long-term growth potential may provide a larger number of attractive stocks to buy today.

Using annual reports to assess a company’s prospects

As well as analysing industries to find the best shares, assessing annual reports and recent company updates could be a shrewd move. They provide detailed information on the financial position of a business. This could be very useful in the current economic climate, since slowing sales growth may mean that businesses with solid balance sheets have a higher chance of surviving a difficult set of trading conditions.

Furthermore, annual reports provide information regarding a company’s strategy. This may help you to determine whether it has the right plan to adapt to a fast-changing economic environment, or if its business model is outdated. Through reading management commentary and viewpoints, you can build a picture as to how strong a company’s position may be over the long run. This may have a significant impact on its financial performance and investment gains.

Valuing businesses

Of course, buying the best shares at the wrong price may not lead to impressive returns for investors. Therefore, it is important to try to estimate the value of a company prior to purchase. Should it be trading at a higher price than it is worth, it may be a good idea to look elsewhere or wait until it trades at a lower price.

Fortunately for new investors, many high-quality companies have not yet recovered from the stock market crash. Therefore, good value stocks are likely to be on offer at the present time. They could have a positive impact on your financial prospects in the coming years.

 

More reading

• Got a spare $10,000 to invest? Smart investors should buy these ASX shares
• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 3 ASX shares to hold forever
• These are the 10 most shorted shares on the ASX
• Beat the low interest rate with these ASX dividend shares

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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If you’re lucky enough to have a spare $10,000 in your savings account and no near term plans for it, I would suggest you consider putting it to work in the share market.

After all, the potential returns on offer are vastly superior to the interest rates most bank accounts offer right now.

But where should you invest these funds? My money would be on one of these high quality ASX shares:

Appen Ltd (ASX: APX)

I think this global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence (AI) could be a great option for a $10,000 investment. In a presentation last year, management noted that the AI market is expected grow to be worth up to US$191 billion by 2025. Approximately 10% of this market spend is expected to relate to the data labelling which Appen is involved in. Due to its industry leading position, I believe the company is well-positioned to capture a growing slice of this massive market in the coming years. This should underpin strong earnings growth for the foreseeable future.

Cochlear Limited (ASX: COH)

Another option for a $10,000 investment is Cochlear. It is a leading global hearing solutions company. I believe it has outstanding long term growth potential due to the ageing population tailwind. As people get older their hearing will tent to fade. So, with the over-65 population expected to increase significantly globally over the next couple of decades, I believe Cochlear is well-positioned to profit due to the quality of its product portfolio, investments in R&D, and global distribution network.

ResMed Inc (ASX: RMD)

A final option to consider investing $10,000 into is ResMed. I continue to believe the sleep treatment-focused medical device company’s shares could be market beaters over the next decade. This is due to the quality of its portfolio of cloud-connected devices which care for people with sleep apnoea, chronic obstructive pulmonary disease (COPD), and other chronic diseases. It is worth noting that this is not a small market. Management estimates that there are 936 million people with sleep apnoea globally and over 380 million people who suffer from COPD. This provides ResMed with a significant runway for growth in the future.

More reading

• 5 things to watch on the ASX 200 on Monday
• 3 core holdings for a $100,000 ASX portfolio
• 5 things to watch on the ASX 200 next week
• 10 must-buy ASX shares to snap up before it’s too late
• How to make $50,000 of passive income with ASX dividends

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 Cochlear Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Cochlear 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 S&P/ASX 200 Index (ASX: XJO) has just capped off another stunning week of gains that have helped it achieve a new post-crash high. Last week, the ASX 200 added another 1.2% on top of the previous week’s stupendous 5.37% gain, which pushed the index to new post-March highs. The ASX 200 closed at 6,176.8 points but reached as high as 6,230 points during the week.

Whilst we are still a long way from touching the 7,000-points-plus levels the ASX 200 was trading at back in pre-COVID February, it certainly was a good week to have an ASX share portfolio.

As seems usual these days, it was ASX tech shares leading the gains last week. The S&P/ASX All Technology Index (ASX: XTX) was up 3.7% for the week, helped by major constituent Afterpay Ltd (ASX: APT) printing yet another new all-time high of $98.68 on Wednesday. It looks like the countdown to a triple-digit Afterpay share price is nearing midnight. The Xero Limited (ASX: XRO) share price was also on fire last week and printed a new all-time high of its own at $119.88.

In a rare departure, ASX tech shares’ gains weren’t accompanied by their American counterparts. Most significantly, Apple Inc (NASDAQ: AAPL) was on the nose with investors after releasing details of its new iPhone 12 range. The ‘fresh design’ and the new handset’s 5G capability evidently didn’t impress investors, who sent Apple shares down more than 4% between Monday and Friday last week.

So what was the catalyst behind the week’s double-up gains? Two words: easy money.

RBA flags QE

On Thursday, Reserve Bank of Australia (RBA) Governor, Dr. Philip Lowe, told Australians that the RBA is now ‘considering’ further easing, which may include the purchase of longer-term bonds (such as 5 or 10-year bonds). Until now, the RBA has been intervening in the bond market, but in the purchasing of shorter-term bonds. But if the RBA does indeed expand this program, Australia will almost certainly be described as entering official quantitative easing territory.

Further RBA intervention into these markets is generally regarded as conducive to higher share prices. As such, I believe these comments were partly behind last week’s ASX 200 push higher. Dr Lowe’s comments did nothing to dampen speculation that the RBA is about to initiate a further reduction in the cash rate from 0.25% to 0.1%, which also likely helped.

It’s also worth mentioning the stunning initial public offering (IPO) of Aussie Broadband Ltd (ASX: ABB). The Aussie Broadband share price skyrocketed 90% on its first day on the ASX boards when it closed at $1.90 after listing at just $1 per share. It was even better intra-day too — at one point, the shares were up more than 122%.

How did the markets end the week?

The markets ended the week well, as we already discussed. But here’s the long version of the story. Monday saw a strong start to the week with a 0.5% gain, which was backed up with another 1% top-up on Tuesday. Wednesday saw this streak end with a 0.3% loss, but this was quickly forgotten on Thursday with a 0.5% gain on the back of the RBA’s comments. Friday saw another 0.54% cool-off, but it wasn’t enough to stop the ASX 200’s substantial gain for the week.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a strong week, starting at 6,312.85 points and finishing up at 6,385 points for a 1.1% gain for the week.

Which ASX 200 shares were the biggest winners and losers?

It’s gossip time (Fool style) now, where we look at the week’s biggest winners and losers. So put the kettle on and we’ll start with the losers first, as always.

More reading

• 3 ASX shares to hold forever
• These are the 10 most shorted shares on the ASX
• Is it time to go all in on ASX shares?
• Why HUB 24 (ASX:HUB) and these ASX shares are hitting new highs
• 5 things to watch on the ASX 200 on Monday

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Link Administration Holdings Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited, Super Retail Group Limited, Telstra Limited, and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Apple, Flight Centre Travel Group Limited, and Link Administration Holdings Ltd. 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 there are some ASX shares that are worth holding forever.

Not only are these businesses high-quality but they could be around for an extremely long time. That’s why I think the below three ASX shares may be worth holding forever:

Xero Limited (ASX: XRO)

Xero is a leading cloud accounting software business. It has only been around for a decade and a half but it has already made massive market share gains in New Zealand and Australia. It’s also growing really impressively in the UK, whilst making steady progress in the USA.

Accounting has been around for many hundreds of years. Using software is the best way to do it these days. Businesses need software to prepare their financials and lodge their tax returns

Xero is at the forefront of accounting software in the world. It allows accountants and non-accountants alike to easily do accounting and other business processes really easily, in an understandable way. It has loads of useful automation processes and time-saving tools. People will happily pay to save themselves time. 

Xero continues to invest in its product to provide the best service for subscribers. The regular monthly cashflow from those subscribers is very attractive considering Xero’s high retention rate and high gross profit margin. That’s great for an ASX share.

In FY20, Xero grew its gross profit margin from 83.6% to 85.2%. This is among the best on the ASX. I think Xero is going to be one worth holding for a very long time as it grows its market share internationally.

CSL Limited (ASX: CSL)

Staying healthy and alive is extremely important to everyone. CSL offers very important products across its various businesses. Its flu vaccines and plasma products are quality and big earners for the company. Its role in manufacturing COVID-19 shows how much Australia needs the healthcare giant.

The company was founded over a century ago, so it shows how much longevity the ASX share already has.

CSL invests hundreds of millions of dollars into research and development every year. This shows that you can think about CSL for the long-term because the company itself is investing for the long-term into new products. It’s the upcoming products that will unlock further earnings for the ASX share.

Unless humanity can somehow change biology, I think CSL’s services will be in demand for many decades into the future. Its high quality and essential products make it an ultra-long-term pick in my opinion.

A2 Milk Company Ltd (ASX: A2M)

Infant formula has been around for many decades. Young children obviously need nutrition and families are always going to pick products that they trust.

A2 Milk is regarded as a high-quality consumer brand which sells premium infant formula, milk and other dairy products.

Compared to many of the other large consumer product businesses, A2 Milk is fairly young at only two decades old. But it has become a juggernaut in the infant formula industry. It’s a real compliment to A2 Milk when other global giants try to copy A2 Milk’s products.

A2 Milk has a global growth strategy and it’s doing well at growing in China and the US. I think it’s going to be growing for many years to come, particularly into markets outside of China. Canada and the US look like very promising growth markets to me.

I think it’s one of the best ASX shares around. Its balance sheet alone is very strong with hundreds of millions of dollars, giving the company a strong position.

The recent decline in the A2 Milk share price makes me think today is a good time to buy shares. It’s valued at 24x FY23’s estimated earnings.

Foolish takeaway

I think these three ASX shares will be quality businesses and leaders in the industries in five years, ten years, twenty years and so on. I’d be happy to have any of them in my portfolio. Indeed, I’d be happy for each of them to be the biggest position in my portfolio. I think they’d be great ideas to hold forever.

More reading

• ASX 200 Weekly Wrap: Promises of easy money push ASX 200 to post-crash high
• 3 core holdings for a $100,000 ASX portfolio
• Is the CSL (ASX:CSL) share price a buy?
• 5 things to watch on the ASX 200 next week
• 3 brilliant ASX growth shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia owns shares of and has recommended A2 Milk. 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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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted ASX share with short interest of 14.7%. Recent spikes in COVID-19 cases in Europe and the United States have sparked concerns that global travel markets could take longer to recover than expected.
• Speedcast International Ltd (ASX: SDA) has short interest of 10.6%. This embattled communications satellite technology provider’s shares have been suspended for most of 2020 whilst it undertakes a recapitalisation. Last week Speedcast advised that it has filed its restructuring plan and expects to emerge in the first quarter of 2021.
• InvoCare Limited (ASX: IVC) has short interest of 9.9%, which is down slightly week on week. Short sellers have been targeting this funerals company due to the impact that social distancing restrictions are having on its performance.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest fall again to 9.5%. Short sellers may believe that this department store operator will be left behind by the structural shift to online shopping.
• Mesoblast Limited (ASX: MSB) has seen its short interest rise to 8.9%. This biotech company’s short interest has risen strongly since the US FDA didn’t approve its remestemcel-L application for steroid-refractory acute graft versus host disease (SR-aGVHD). Short sellers may believe it will struggle to gain approval even after additional trials.
• Galaxy Resources Limited (ASX: GXY) has seen its short interest slide to 8.9%. This lithium miner’s shipments, grades, and recoveries have been lower than expected this year. Combined with weak prices, FY 2021 looks set to be a tough year.
• Inghams Group Ltd (ASX: ING) has 8.7% of its shares held short, which is up slightly week on week yet again. Short sellers have been targeting the poultry producer due to higher input costs and an unfavourable shift in its sales mix.
• Flight Centre Travel Group Ltd (ASX: FLT) is back in the top 10 with short interest of 7.7%. As with Webjet, there are concerns that delays in the recovery of the global travel market could weigh on Flight Centre’s performance for longer than hoped.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest fall to 7.55%. Unfortunately for short sellers, this regional bank’s shares stormed higher last week after it delivered a stronger than expected full year result.
• CLINUVEL Pharmaceuticals Limited (ASX: CUV) has seen its short interest remain flat at 7.5%. The biopharmaceutical company has seen its short interest ease notably in recent weeks after announcing plans to extend the use of its SCENESSE product.

More reading

• Top brokers name 3 ASX shares to sell next week
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• These were the worst performing shares on the ASX 200 last week
• Bank of Queensland (ASX:BOQ) among the latest buy ideas from brokers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and InvoCare 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.

The post These are the 10 most shorted shares on the ASX appeared first on Motley Fool Australia.

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I believe there are a number of interesting ASX dividend shares that could be good picks to buy for income to beat the very low interest rate.

The RBA doesn’t have many options of what it can do to assist the economy. I understand why the interest rate has been pushed as low as it has. However, it has made it really hard to generate any income for savers. ASX dividend shares like these might be the answer to the problem:

Pacific Current Group Ltd (ASX: PAC)

I think that Pacific looks like a really good dividend option at the moment. The company describes itself as a global multi-boutique asset management business committed to partnering with exceptional investment managers.

The idea is to invest in investment managers, help them grow with Pacific’s expertise and generate good long-term growth.

Some of Pacific’s investments performed very well in FY20. Asset manager GQG grew its own funds under management (FUM) from US$25.1 billion to US$44.6 billion in just one year. Excluding boutiques sold and acquired during the year, Pacific’s FUM grew by 52% to $93.3 billion.

It was this strength of the FUM that helped it grow its underlying earnings per share (EPS) by 18% to $0.44 which helped the FY20 annual dividend grow by 40% to $0.35 per share. That’s strong growth for an ASX dividend share. 

At the current Pacific share price it offers a grossed-up dividend yield of 7.9%. I think

WAM Leaders Ltd (ASX: WLE)

This is a listed investment company (LIC) which targets the larger shares on the ASX. It’s very capably run by the team at Wilson Asset Management (WAM).

WAM Leaders aims to actively move around in the large caps to provide shareholders with blue chip exposure, but not just a passive investment style.

Its gross portfolio return (before fees, expenses and taxes) has been comfortably more than the S&P/ASX 200 Accumulation Index. WAM Leaders’ portfolio has outperformed the index by 9.7% over the past year and 4.7% per annum over the past three years.

Some of its largest 20 positions at the end of September 2020 included: Challenger Ltd (ASX: CGF), OZ Minerals Limited (ASX: OZL), Downer EDI Limited (ASX: DOW) and Star Entertainment Group Ltd (ASX: SGR).

LICs like WAM Leaders can use the investment gains to fund a stable and steadily growing dividend, which is what WAM Leaders is doing.

At the current WAM Leaders share price it offers a grossed-up dividend yield of 7.6%. However, the WAM Leaders net tangible assets (NTA) is no longer trading at an obvious discount to the share price as it was before.

Australian United Investment Company Ltd (ASX: AUI)

AUI is another LIC that invests in large cap ASX shares, but this one is a long-term investor which owns its positions for the long-term.

It’s actually one of the oldest LICs around, it was founded in 1953 by the late Sir Ian Potter and The Ian Potter Foundation Ltd is today the company’s largest single shareholder.

AUI owns all of the recognisable names like CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), Rio Tinto Ltd (ASX: RIO) and BHP Group Ltd (ASX: BHP).

One of the most attractive things about AUI is its dividend record. It’s a very reliable ASX dividend share. Its website outlines that it has grown or maintained its dividend every year going back to 1993.

Another great benefit of AUI is its extremely low operating cost. In FY20 its management expense ratio (MER) was just 0.12%, which is one of the lowest on the ASX.

At the current AUI share price it offers a grossed-up dividend yield of 6.2%.

More reading

• New WAM Alternative Assets LIC appoints portfolio manager
• 3 top global ASX dividend share ideas
• 2 little-known ASX dividend shares to buy for income
• How to replace your entire wage with ASX dividend shares
• Get paid huge amounts of cash to own these ASX dividend shares

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Transurban Group. 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 Beat the low interest rate with these ASX dividend shares appeared first on Motley Fool Australia.

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