If you’re wanting to invest in the small side of the Australian share market, I think the three small caps listed below could be worth a closer look.

While there is certainly still a lot of work to be done, they all appear to be carving out bright futures for themselves.

Here’s why I think they should be on your watchlist right now:

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider. It is best known for its innovative Dante audio over IP networking solution which is used widely across the professional live sound, commercial installation, and recording industries globally. This product is the clear market leader with a significant advantage over the competition. And while the pandemic has hit its sales greatly this year, I’m confident this is just a short term headwind and expect demand to increase materially once trading conditions improve.

Serko Ltd (ASX: SKO)

Another small cap share that has been hit by the pandemic is Serko. It is the online travel booking and expense management provider behind the Zeno Travel and Zeno Expense platforms. Zeno Travel provides AI-powered end-to-end travel itineraries, cost control and travel policy compliance to corporate customers. Zeno Expense allows its users to automate and streamline the expense administration function, identify out-of-policy expense claims, and prevent fraud. As with Audinate, I believe demand will bounce back strongly when the pandemic passes and travel markets return to normal.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a healthcare technology company that uses artificial intelligence to assist with the early detection of breast cancer. It achieves this by analysing mammograms and associated patient data. Users can then use this software to provide clinical decision support and practice management tools in a cost-effective way. Volpara is currently generating NZ$19.9 million in annual recurring revenues (ARR), but estimates that it has a US$750 million ARR opportunity in breast cancer screening.

More reading

• Leading brokers name 3 ASX shares to buy today
• Volpara (ASX:VHT) share price jumps 5% up after business update
• Top ASX growth shares to buy in October 2020
• 3 small cap ASX healthcare shares to watch closely in the 2020s
• Why Afterpay, Genetic Signatures, Qube, & Serko shares are charging higher

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 AUDINATEGL FPO, Serko Ltd, and VOLPARA FPO NZ. The Motley Fool Australia has recommended AUDINATEGL FPO, Serko Ltd, and 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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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.

Microsoft Corporation‘s (NASDAQ: MSFT) stock has generated a total return of more than 400% over the past five years, thanks to CEO Satya Nadella’s “mobile first, cloud first” strategy. Under Nadella, who took the helm in 2014, Microsoft expanded its cloud services, integrated them into Windows 10, launched new mobile apps on iOS and Android, introduced new Surface devices, and grew its Xbox gaming ecosystem.

Those efforts turned Microsoft, which had often been dismissed as a mature tech stock, into an exciting growth stock again. It also rallied more than 50% over the past 12 months as it brushed off the trade war, COVID-19, and other macro headwinds. Investors might be reluctant to buy Microsoft’s stock at these levels, but I believe it could still head higher through to the end of the year, for four simple reasons.

Microsoft’s “commercial cloud” revenue rose 36% to over $50 billion, more than a third of its top line, in fiscal 2020 (which ended on June 30). That business includes Office 365, the cloud-based versions of its productivity software; its CRM (customer relationship management) platform Dynamics; and its cloud infrastructure platform Azure.

Azure, which grew its revenue year-over-year at an average rate of nearly 60% over the past four quarters, is the segment’s core growth engine. Microsoft doesn’t disclose Azure’s exact revenue, but Canalys estimates it controlled 20% of the cloud infrastructure market in the second quarter of 2020 — putting it in second place after Amazon.com, Inc (NASDAQ: AMZN) Web Services’ (AWS) 31% share.

Azure could still have plenty of room to run, for three reasons. First, companies that compete against Amazon, particularly retailers, will likely use Azure instead of feeding Amazon’s most profitable business. Second, Microsoft recently beat Amazon to secure the Pentagon’s lucrative $10 billion JEDI (Joint Enterprise Defense Infrastructure) contract for upgrading its cloud infrastructure — which could open the door for more government contracts.

Lastly, the broader cloud infrastructure market will keep expanding as people use more cloud-based services, apps, and streaming services. Grand View Research estimates the global cloud computing market could still grow at a compound annual growth rate of 14.9% between 2020 and 2027.

2. The Xbox Series S and X are about to launch

Microsoft will launch its next-gen Xbox gaming consoles, the Series X and Series S, next month. The Series X will cost $500, while the cheaper, less powerful, and all-digital Series S will cost $300.

Sony Corp‘s (NYSE: SNE) PS5 will cost the same as the Series X, but its all-digital PS5 Digital Edition (which sports the same hardware as its bigger brother) will cost $400. Microsoft’s Series S will be less powerful than the PS5 Digital Edition, but the $100 difference could win over more casual gamers.

Microsoft also recently purchased ZeniMax, which owns iconic franchises like Doom, Fallout, Wolfenstein, and The Elder Scrolls, for $7.5 billion to strengthen its game publishing division and counter Sony’s exclusive games. Microsoft is already bundling ZeniMax’s games with its Xbox Game Pass subscription service (which offers unlimited downloads from a library of over 100 games), Xbox Live, and Project xCloud with its new “Xbox Game Pass Ultimate” subscription plan for $15 a month.

If those aggressive efforts bear fruit, Microsoft’s gaming business, which grew its revenue 2% to $11.6 billion and accounted for 8% of its top line last year, could become a major growth engine again in fiscal 2021.

3. The PC market is still strong

Worldwide shipments of PCs rose 13% year-over-year in the third quarter and marked the industry’s strongest growth in a decade, according to Canalys. That expansion was largely attributed to a shift to remote work and online learning throughout the COVID-19 crisis.

Rising PC sales will bolster Microsoft’s Windows business, which generated 16% of its sales last year, as well as its Office and other products business, which generated 25% of its sales. The growth of those two core businesses, along with the strength of its cloud and gaming segments, should offset the impact of the pandemic on its enterprise-oriented businesses.

4. Its premium valuation is justified

Wall Street expects Microsoft’s revenue and earnings to rise by 10% and 12%, respectively, this year. Those are stable growth rates, but some investors might flinch at the stock’s forward price-to-earnings (P/E) ratio of 33. That valuation isn’t cheap, and its forward dividend yield of 1% doesn’t offer much downside protection.

Nonetheless, I believe Microsoft’s resilience throughout the pandemic, the ongoing growth of its commercial cloud business, and its upcoming gaming tailwinds all justify that slight premium. In short, investors who accumulate the stock today could be sitting on decent gains next year.

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

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• Microsoft (NASDAQ:MSFT) boosts dividend by 10%
• Brokers upgraded JB Hi-Fi (ASX:JBH) share price and this other ASX stock to “buy” today
• Better buy: Slack Technologies vs Microsoft

Leo Sun owns shares of Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 Buddy Technologies Ltd (ASX: BUD) share price is trading higher after the company announced it was expecting record sales from Amazon Prime Day, 2020. The Buddy share price is currently trading 3.03% higher to a price of 68 cents.

Buddy’s consumer business trades under the LIFX brand and is a provider of smart lighting solutions. The company has a wide portfolio of Wi-Fi enabled lights that are used in nearly 1 million homes and sold in more than 100 countries.

What happened today?

After a brief trading halt this morning, the Buddy share price soared as it announced that US giant Amazon.com, Inc. (NASDAQ: AMZN) had purchased large quantities of its LIFX white smart lights for its Amazon Prime Day. The massive two-day global shopping event is happening in Australia today and tomorrow.

Amazon is launching Prime Day bundle deals that will offer the light free with the purchase of select Alexa devices. This includes the Amazon Echo Dot which has historically been one of the highest selling products across all of Prime Day. The bundle is expected to boost Buddy light sales significantly. The 2019 Prime Day event saw more than 175 million items sold, eclipsing the previous Black Friday and Cyber Monday sales combined.

In a later announcement today, Buddy advised that Amazon had ordered approximately 1 million LIFX smart lights to support its Prime Day and holiday sales events.

What now for the Buddy share price

Bundling of Buddy LIFX lights with Amazon products offers a huge market opportunity for the light company. Its product will now be marketed to millions of Prime members worldwide. Furthermore, the company has confidence that it will see record sales over the duration of this sales event. The Buddy share price is currently sitting at 68 cents having risen 73% so far this year.

More reading

• Where will Facebook (NASDAQ:FB) be in 5 years?
• Where will Amazon (NASDAQ:AMZN) be in 10 years?
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• This is my favourite ASX share right now
• ASX investors were buying Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL) shares last week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daniel Ewing 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 that there are some little-known ASX dividend shares that could be worth buying for income.

Australia’s official interest rate is now just 0.25%. That makes it really hard to generate any meaningful income from a bank account. It’s hard for bank interest to even keep up with inflation at the moment.

I believe that these two ASX dividend shares could be good ways to generate more dividend income:

Pacific Current Group Ltd (ASX: PAC)

Pacific is a boutique investment business. It partners with global asset managers to help them grow. Pacific takes an equity stake and it also brings its expertise to help them grow funds under management (FUM).

One of the most important things to remember is that a dividend is going to be quite closely linked to the earnings. If the earnings are growing at a fast pace then the dividend can rise rapidly too.

In FY20, Pacific Current delivered underlying net profit after tax (NPAT) growth of 21%, rising to $25 million and underlying earnings per share (EPS) grew by 18% to $0.44. The FY20 annual dividend was grown by 40% to $0.35 per share. That represents a sustainable underlying dividend payout ratio of around 80%.

Despite COVID-19 impacts, FY20 was a strong year of growth for the ASX dividend share. Excluding stakes sold and acquired during the year, funds under management (FUM) grew by 52% to $93.3 billion. Pacific thinks that asset gathering efforts could improve in FY21 with new commitments.

Using the current Pacific share price and FY20 dividend, it has a grossed-up dividend yield of 8%. That’s a good starting yield for an ASX dividend share.

However, looking ahead, the Pacific share price is trading at just 9x FY23’s estimated earnings.

Naos Emerging Opportunities Company Ltd (ASX: NCC)

This is a small listed investment company (LIC) which targets small ASX shares. Indeed, it looks for businesses with market capitalisations under $250 million.

Naos operates a strategy of only owning shares that it has high conviction in. That translates to owning around 10 names in its portfolio.

It owns some promising ASX shares in its portfolio. In its latest update for September 2020, it revealed that three examples of its core portfolio are: BTC Health Ltd (ASX: BTC), Saunders International Ltd (ASX: SND) and Experience Co Ltd (ASX: EXP).

Naos tries to invest for the long-term and it sticks to the industrial sector. The LIC ignores the index, so over the shorter-term its performance can be quite different to the index. Since inception in February 2013, its investment portfolio (after operating expenses) has outperformed the S&P/ASX Small Ordinaries Accumulation Index by an average of 5.45% per annum.

The benefit of a LIC structure is that it can generate investment returns from growth shares and then pay out a reliable and consistent dividend from those returns.

Naos Emerging Opportunities Company has increased or maintained its dividend every year since FY13. That’s a good record considering its dividend yield is so large.

At the current Naos Emerging Opportunities share price it offers a trailing grossed-up dividend yield of 10.5%.

Foolish takeaway

Both of these ASX dividend shares seem like good options to grow your income in my opinion. Naos offers high-conviction diversification. There are some great companies that are valued at under $250 million.

However, my pick for income would be Pacific because of its potential growth over the next few years, which could lead to a rising share price and a growing dividend. I think it could grow its FUM strongly during FY21, particularly if COVID-19 impacts start subsiding.

More reading

• Get paid huge amounts of cash to own these ASX dividend shares
• 3 LICs with high dividend yields of over 6.5%
• Give yourself a payrise, buy these 3 ASX dividend shares
• 2 top ASX shares to buy for income and growth
• 3 ASX dividend shares I’d buy with $3,000 today

Motley Fool contributor Tristan Harrison 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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Market optimism may be on the rise, but short-sellers have been increasing their bearish bets on these three ASX stocks.

Short-sellers are traders who borrow stock to sell on market with the aim of buying it back later at a lower price to profit from the difference.

While the S&P/ASX 200 Index (Index:^AXJO) closed at a seven-month high on Tuesday, short-sellers believe some ASX stocks are poised to fall.

It pays to keep an eye on what this group of traders are doing as they tend to be more sophisticated than the average punter.

Short-sellers invading this Galaxy

The stock that has seen the biggest increase in short bets over the past month is the Galaxy Resources Limited (ASX: GXY) share price.

The latest ASIC data to 7 October (the data is always a week behind) showed 285 basis point increase in short interest over period. The total percentage of Galaxy’s shares that have been short sold stands at 9.13%.

This is probably due to Tesla Inc (NASDAQ: TSLA) Battery Day event three weeks ago. This was where its founder Elon Musk outlined plans to use less lithium and more recycled inputs to build the next generation of batteries for its electric vehicles.

The news couldn’t have come at a worst time as the lithium market is already oversupplied.

Acquisition risks catching the eye of short-sellers

The second most attacked stock is the Uniti Group Ltd (ASX: UWL) share price. Short interest in the telecom services group surged 247 basis points – taking the total percentage of its shares being shorted to 4.77%.

Short-sellers are probably targeting the stock as it goes into a bidding war for OptiComm Ltd (ASX: OPC).

Uniti put an initial bid in to acquire the network provider but First State Super made a counteroffer for OptiComm.

History shows M&A creates value for shareholders in the target and destroys value for the acquirer. A bidding war only increases the probability that Uniti will overpay.

Drug development setback

Finally, the Mesoblast limited (ASX: MSB) share price experienced the third largest increase in shorts for the month in question. The level of shorts jumped 241 basis points to just over 8% of the total MSB shares on issue.

Short-sellers are increasing their bets against the stock as the biotech suffered a setback with the US Food and Drugs Administration (FDA).

The news was a shock to the market as investors were expecting smooth sailing its remestemcel-L drug, but the FDA asked it to undertake another randomise test.

More reading

• ASX 200 jumps more than 1%, big ASX banks rise
• Top brokers are urging you to buy these ASX stocks today
• 3 ASX 200 growth shares to buy today
• The Unibail (ASX:URW) share price is climbing today. Here’s why.
• Zip and Estrella Resources were among the most traded shares on the ASX last week

Brendon Lau 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 Tesla. 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 Telstra Corporation Ltd (ASX: TLS) share price has had a fantastic day today, soaring 4.32% to $2.90 per share by market close. It’s a welcome turnaround for Telstra shareholders. They have had to watch the telco’s share price drift lower and lower over the past two months, culminating in a new 52-week low of $2.76 that was hit just last week. But even after today’s decisive move, the Telstra share price remains a long way from its 52-week high of $3.94. So why are Telstra shares jumping today? And more importantly, is the telco a buy right now?

Why the Telstra share price surged today

Well, in my view, we can comfortably assume it was all because of the annual general meeting (AGM) notes Telstra released to the market today. The company held its AGM this morning and provided investors with some much-needed certainty around its cherished dividend. 

Telstra is a favourite of ASX dividend investors due to its steady cash flow and relatively high annual payouts. Its 2020 dividends amount to 16 cents per share (cps). That, on current prices, gives Telstra a trailing dividend yield of 5.52% – or 7.89% grossed-up with Telstra’s full franking credits.

In Telstra’s earnings report for the 2020 financial year that was released in August, the company appeared to cast doubt over whether the 16cps payout would be maintained in FY2021. That’s because Telstra has a ‘payout ratio’ policy of aiming to pay out between 70% to 90% of its earnings every year as dividends. In the FY20 earnings report, Telstra forecast that its FY2021 earnings would be insufficient to cover a 16cps dividend. This led investors to sell off Telstra shares ever since in the belief the company would deliver a dividend cut next year.

Dividend back on the table

However, in its AGM notes, Telstra appeared to backtrack on this position. Here’s some of what Telstra Chair, John Mullen, had to say this morning on the topic:

The board clearly understands the importance of the dividend and if necessary is prepared to temporarily exceed our capital management framework principle of paying an ordinary dividend of 70-90% of underlying earnings to maintain a 16c dividend.

In short, this is good news for dividend investors, and why I believe the Telstra share price pushed higher today.

Are Telstra shares a buy today?

I think this position taken by Telstra’s management is extremely good news for Telstra shareholders. In my opinion, it means that dividend investors should reconsider Telstra today. Telstra is still going through some painful restructuring, which has, in large part, been caused by the ongoing NBN rollout.

However, I think the company’s next-generation 5G plans are very exciting. 5G should open up some lucrative growth avenues over the next decade. In the meantime, Telstra’s defensive earnings base should be able to cover a 16cps dividend well into the future. Especially considering what the company has said today. Thus, if a near 8% grossed-up dividend is important for your investing goals, I think Telstra is indeed a solid buy today.

More reading

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• Telstra (ASX:TLS) share price in focus after AGM dividend update
• Telstra share price and 1 other ASX telecom trading near all time lows

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. 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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The iSelect Ltd (ASX: ISU) share price had a few ups and downs today, climbing to 35 cents in afternoon trade before dropping to its opening price of 34 cents. This comes after the company announced a trading update this morning and advised on the appointment of a new permanent CEO.

After a turbulent year, October comes as a welcome reprieve for shareholders, with the iSelect share price up 7% so far this month. Like most ASX shares, iSelect was pummelled by the COVID-19 market panic.

The iSelect share price fell 37% from 21 February through to 23 March and has regained 41% since that low, leaving shares down just 6% year-to-date. That closely mirrors the performance of the All Ordinaries Index (ASX: XAO), also down 6% since 2 January.

What does iSelect do?

Based in Melbourne, iSelect’s services offer Australians the ability to compare and purchase insurance, personal finance products and various utility subscriptions. The company also owns the comparison website, Energy Watch. The company’s stated goal is “to make Australians’ lives easier by saving them time, effort and money”.

Atop its Melbourne operations, iSelect has support offices in Fiji and Philippines. 

Why is the iSelect share price on the move?

This morning iSelect announced the appointment of a new permanent CEO, alongside providing a trading update.

Warren Hebard, the company’s current chief marketing & commercial officer, replaces Brodie Arnhold, who was appointed as interim CEO in April 2018.

iSelect chairman Christopher Knoblanche thanked Mr Arnold for “his hard work and commitment through what has been a challenging period for the company”. He added that the board “believes that the time is now right for Brodie to complete a handover to a permanent CEO”.

Warren Hebard said:

Having worked closely with the entire executive team on the development of the FY21 strategy, I am confident that the plan we have in place is the right one. Brodie hands over a business that is on track to deliver significantly improved profitability in FY21 and is well-placed to return to growth in FY22.

The company also reported that the changes it had made to its operating model in the fourth quarter of 2020 were “showing positive early signs for the business” in the current quarter.

iSelect posted first quarter FY21 earnings before interest, taxes, depreciation and amortisation EBITDA of $8.1 million, compared to $1.7 million in the same quarter last year. The company noted it had received $3.4 million in JobKeeper payments during the past quarter, but that this came to an end in October.

The company’s cash balance at 30 September was $12.5 million, up from $10.5 million on 30 June.

With a new permanent CEO and its Melbourne headquarters slowly emerging from lockdown, iSelect’s share price is one to keep an eye on.

More reading

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• The Azure Minerals (ASX:AZS) share price has rocketed 62%. Here’s why.
• Why the Mount Gibson (ASX:MGX) share price is moving higher today
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
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Motley Fool contributor Bernd Struben 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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I believe the easiest way to create wealth is by investing regularly and with a long term view.

This is because by doing things this way, you can take advantage of the magical power of compound interest.

But which shares should you buy for strong potential long term returns?

Listed below are three hot ASX shares that younger investors might want to consider as buy and hold investments:

Afterpay Ltd (ASX: APT)

The first option is payments company Afterpay. Thanks to its international expansion and the increasing popularity of the buy now pay later payment method with consumers and retailers, Afterpay has been growing its underlying sales at a rapid rate over the last few years. The good news is that I feel confident the company still has a significant amount of growth left in its tank. Especially considering the size of the US market and its recent expansion into Canada and mainland Europe. There’s also the prospect of an entry into Asia in the near future. All in all, if everything goes to plan, I believe Afterpay could become a giant of the payments industry one day.

Kogan.com Ltd (ASX: KGN)

Another ASX share to consider buying is ecommerce company Kogan. While the pandemic hit many bricks and mortar retailers hard, it accelerated the shift to online websites like Kogan.com. This led to the company delivering incredible sales and profit growth during the second half of FY 2020. Pleasingly, the company’s strong form has continued in FY 2021, with both its sales and earnings more than doubling in August. In addition to this, it added 152,000 new customers to its platform during the month. This was a record monthly increase and took its total to 2,461,000. While its growth will inevitably moderate in 2021, I believe it is well-positioned to deliver above-average earnings growth throughout the 2020s.

Pushpay Holdings Ltd (ASX: PPH)

A final option is this donor management and community engagement provider. As with the others, it was a very strong performer in FY 2020 despite the pandemic. Over the 12 months, Pushpay reported a 42% increase in customer numbers to 10,896 and a 1,506% increase in operating earnings to US$25.1 million. This strong growth is expected to continue in FY 2021, with management expecting to more than double its operating earnings to between US$50 million and US$54 million. Pleasingly, this is still only scratching at the surface of its lucrative market opportunity.

More reading

• 3 reasons I don’t use stop-loss orders for ASX shares
• Why the Afterpay (ASX:APT) share price has hit a new record high
• Zip and Estrella Resources were among the most traded shares on the ASX last week
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs
• Why Afterpay, HUB24, NEXTDC, & Telstra shares are storming higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd 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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The S&P/ASX 200 Index (ASX: XJO) went up by more than 1% today to 6,196 points.

Big banks on the rise

The share prices of the big ASX banks all rose today.

The National Australia Bank Ltd (ASX: NAB) share price went up 2%, the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price grew 3.2% and the Westpac Banking Corp (ASX: WBC) share price climbed 2.5%.

Commonwealth Bank of Australia (ASX: CBA) saw its share price go up 1.7% today after holding its annual general meeting (AGM). The major ASX 200 bank highlighted that it’s in a strong position and continues to be a good option for dividends.

Telstra Corporation Ltd (ASX: TLS) commits to its dividend

The ASX 200 telco giant also held its AGM today. It gave out some commitments and also shared some interesting information.

It said that it aspires that all calls from its consumer and small business customers will be answered in Australia by the time the T22 strategy is completed. Telstra also said that its 5G network now covers 40% of the Australian population.

Telstra said that with the establishment of Telstra InfraCo, it is positioned to be able to make a play for involvement in the privatisation of the NBN, if that happens.

The board of Telstra said it was acutely aware of the importance of dividends to shareholders. It said that it’s prepared to temporarily exceed its capital management to continue paying a $0.16 annual dividend per share, though that’s not guaranteed.

The ASX 200 share’s dividend will depend on whether the free cash flow would support the dividend and whether underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $7.5 billion to $8.5 billion is achievable after the rollout of the NBN.

However, Telstra said that it won’t be able to meet a target of earning a return on invested capital (ROIC) of more than 10% by the end of FY22. It’s aiming for ROIC of more than 7% by FY23.

Service Stream Limited (ASX: SSM)

Service Stream announced today that it has extended its operations and maintenance master agreement (OMMA) with the NBN for an additional six months from the end of December 2020, with an option to extend for a further six months to December 2021.

The ASX 200 company will continue to be responsible for performing operations and maintenance field services for the NBN including service activations and service assurance activities.

Revenue generated for Service Stream will be dependent on the work volumes. Under the existing agreement, the ASX 200 company generated $330 million of revenue in FY20 and $280 million in FY19.

Another strong quarter from Hub24 Ltd (ASX: HUB)

Financial technology business Hub24 released a strong quarterly update today for the three months to 30 September 2020.

It said that its funds under administration (FUA) of $19 billion was up 32% compared to the prior corresponding period.

Hub24 achieved record net inflows for a September quarter of $1.36 billion, up 10% compared to the first quarter of FY20. That record inflow was up $260 million compared to the June quarter.

Management boasted that the Hub24 platform’s market share increased to 2.1% in the quarter.

The ASX 200 share maintained second place for both quarterly and annual net inflows.

Hub24’s new business pipeline continues to grew with 27 new licensee agreements signed during the quarter and 101 new advisers using the platform.

The company believes that the new business pipeline will continue to grow as additional opportunities emerge given adviser movement from institutional licensees and further industry consolidation.

More reading

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• 3 reasons I don’t use stop-loss orders for ASX shares
• 3 ASX 200 growth shares to buy today
• The Unibail (ASX:URW) share price is climbing today. Here’s why.
• ASX 200 up 0.9%: Telstra dividend update, Afterpay & Xero hit record highs

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 Hub24 Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Hub24 Ltd and Service Stream 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 ASX 200 jumps more than 1%, big ASX banks rise appeared first on Motley Fool Australia.

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The Dug Technology Ltd (ASX: DUG) share price is climbing today after the company announced a deal with an oil and gas supermajor. The Dug share price has been on a rocky ride since listing in early August. Dug shares are trading 2.44% higher at $1.26 at he time of writing.

What Dug does

Dug is an Australian supercomputing company based in Perth. The company has a rags-to-riches story with its first office built in co-founder Matthew Lamont’s backyard. Since then, Dug has grown at an astounding rate to now operate four major international offices in Perth, London, Houston and Kuala Lumpur.

Dug makes its money through high performance computing as a service (HPCaaS). Its computers are typically used to analyse large datasets in the mining industry. However, in 2019 Dug launched its fully integrated Dug McCloud platform. This enabled the company to offer HPCaaS, scientific data analysis services and software solutions to a range of scientific sectors outside the resources industry.

Its computers are among some of the world’s most powerful and green supercomputers.

Supermajor deal

The Dug share price went up on news the company had signed a deal with a large oil and gas supermajor. The deal is expected to generate more than US$1 million in revenue over the next 12 months.

A supermajor is the name used to describe the world’s six or seven largest publicly traded oil and gas companies. Some of the supermajors include BP plc (NYSE: BP), Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX). 

Dug managing director Dr Matt Lamont said the deal was “a great endorsement of our technology and reliability to receive ongoing work from one of the largest and most technically savvy companies on the planet”.

Foolish takeaway

Dug is the first supercomputer company ever to list on the All Ordinaries Index (ASX: XAO). The Dug share price has fallen since its initial public offering (IPO) at $1.50 but shareholders will be hoping the news can spark a turn around in the share price.

More reading

• Investing $1,000 in these 3 ASX shares could be a very smart move
• Here’s why the Codan (ASX:CDA) share price hit a record high today
• Top brokers are urging you to buy these ASX stocks today
• 3 reasons I don’t use stop-loss orders for ASX shares
• Could these ASX 200 tech shares at 52-week highs go higher? 

Motley Fool contributor Daniel Ewing 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.

The post Why the Dug (ASX: DUG) share price is climbing higher today appeared first on Motley Fool Australia.

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