According to the most recent weekly economic report out of Westpac Banking Corp (ASX: WBC), its team continue to expect the cash rate to stay on hold at 0.25% for some time to come.

It looked at recent comments out of the Reserve Bank and feels confident that rate hikes are a long way off.

Westpac commented: “The Governor is entirely confident that the cash rate will not be increased for three years given the requirement for the Board to be confident that inflation would be sustainably within the 2–3 % band.”

This means income investors are likely to be contending with low interest rates for some time to come.

But don’t worry, because the ASX dividend shares listed below could help you earn an income. Here’s why I would buy them:

Dicker Data Ltd (ASX: DDR)

I think Dicker Data is well-positioned to continue growing its dividend for the foreseeable future. It is a wholesale distributor of computer hardware and software across the ANZ region. While countless companies are struggling in 2020, Dicker Data has been delivering record sales and profits. During the first half of FY 2020, the company reported half year revenue above $1 billion for the first time and a 30.4% lift in net profit before tax to $42 million. As a result, the company is aiming to lift its full year dividend by over 30% to 35.5 cents per share. Based on the current Dicker Data share price, this represents a generous fully franked 4.8% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another company which I think is well-placed to continue growing its dividend over the coming years is Wesfarmers. This is due to the quality of its portfolio and particularly its Bunnings business. The hardware giant is the conglomerate’s biggest contributor to earnings and has been performing very strongly during the pandemic. And thanks to government stimulus which is supporting the home improvement market, I expect this positive form to continue in FY 2021. Overall, I expect this to lead to Wesfarmers paying shareholders a fully franked dividend of $1.46 per share in FY 2021. Based on the current Wesfarmers share price, this equates to a fully franked 3.1% dividend yield.

More reading

• 2 ASX dividend shares with yields over 6% today
• 2 blue chip ASX dividend shares to buy
• If an ASX share announces a demerger, here’s why you should listen
• Is BetaShares Australia 200 ETF the best ASX ETF?
• As CBA slashes its dividend, the brutal reality is bank shares have been dogs for 5 years, with more pain ahead

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

The post Rates on hold until 2023? Buy these ASX dividend shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hagguw

Last week the S&P/ASX 200 Index (ASX: XJO) was on form and recorded a strong gain. The benchmark index rose an impressive 2% to finish the period at 6126.2 points.

Unfortunately, not all shares on the index were climbing higher over the period. Here’s why these were the worst performers on the ASX 200 last week:

Silver Lake Resources Limited (ASX: SLR)

The Silver Lake Resources share price was the worst performer on the index with a disappointing 10.7% decline. This appears to have been driven by a sharp pullback in the gold price after risk sentiment improved. For the same reason, the Northern Star Resources Ltd (ASX: NST) share price came under pressure and fell by 10.4% over the five days.

Breville Group Ltd (ASX: BRG)

The Breville share price wasn’t far behind and dropped 9.1% last week. The appliance manufacturer’s shares came under pressure after the release of its full year results. Although Breville delivered a 25.3% increase in revenue and an 11.2% increase in normalised net profit after tax to $75 million, some investors were betting on an even stronger result. Goldman Sachs believes the Breville share price weakness is a buying opportunity.

AGL Energy Limited (ASX: AGL)

The AGL Energy share price was out of form and tumbled 8.8% lower over the period. Investors were selling the energy company’s shares after the release of its full year results. AGL Energy reported an underlying profit after tax of $816 million for FY 2020. This was a 22% decline on the prior corresponding period but within its guidance range. Unfortunately, another sizeable decline in profits is expected in FY 2021. Management has provided underlying profit after tax guidance of $560 million and $660 million in FY 2021.

Challenger Ltd (ASX: CGF)

The Challenger share price was the next worst performer with an 8.6% decline. The annuities company’s shares were sold off after the release of its full year results. In FY 2020 Challenger posted an 8% decline in normalised net profit before tax to $507 million and a statutory loss after tax of $416 million. In FY 2021 the company expects its normalised net profit before tax to decline again. It provided guidance of between $390 million to $440 million. This represents a 13.2% to 23% decline year on year.

More reading

• 2 ASX dividend shares with yields over 6% today
• Top broker tips the Breville share price to rise beyond $30
• Wage growth is plummeting – here are 3 ASX dividend shares to start a second income
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• AGL share price fall a warning for the LNG sector

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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 were the worst performing ASX 200 shares last week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31SbATR

ASX share reporting season is into the full swing of things. There were a number of interesting FY20 results this week.

Here are three of my favourite ASX share reports/updates of the week:

Class Ltd (ASX: CL1)

Class impressed the market with its result. I like seeing a business managing to turn around sentiment when it seemed as though Class’ SMSF segment may have hit a ceiling.

In FY20 Class reported that operating revenue and other income increased by 15% to $44.1 million and annualised recurring revenue rose by 22% to $46.8 million.

Whilst the bottom line didn’t grow, it was the acquisition and FY21 guidance that was particularly exciting.

In FY21 the ASX share is expecting revenue to grow by another 20% to $53 million with an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin of more than 40%.

The Smartcorp acquisition seems like a great move, it’s a software business which deals with documents and compliance and counts two of the big four accounting firms as clients. Between Smartcorp and NowInfinity, Class will have a 10% market share of that industry.

I think that Class has done well to pivot back to growth. It will have high EBITDA margins with strong recurring revenue.

The Class share price looks more interesting after it dropped back on Friday.

Magellan Financial Group Ltd (ASX: MFG)

Fund manager Magellan reported an impressive result considering all of the market turmoil that occurred in the second half of FY20.

Average funds under management (FUM) rose by 26% to $95.5 million. Net profit after tax (NPAT) rose by 5% and adjusted NPAT grew by 20%. Total dividends paid by Magellan for FY20 increased by 16% to 214.9 cents. It also finished with $925.4 million of net tangible assets at 30 June 2020.

I’ve been impressed how Magellan has managed to grow year after year since the GFC.

I also like that the ASX share is looking to continually innovate. It’s working on a retirement income product for the Australian market. It just obtained a necessary private binding tax ruling from the ATO.

Magellan also revealed the proposed launch of a new series of products.

The new products will use Magellan’s investment philosophy and research to offer investors lower cost, more diversified portfolios of high quality companies. The cost will be 0.5% per annum, which is cheaper than its other equity strategies.

Magellan also announced that it would launch a sustainable investment strategy which will include climate change risk considerations.

These new products should help Magellan grow its FUM further over the coming years.

The Magellan share price has risen strongly since March 2020. It’s more than doubled since the COVID-19 bottom. 

Premier Investments Limited (ASX: PMV)

The final update that I think was really impressive was Premier Investments – the retailer which owns brands like Peter Alexander, Smiggle, Just Jeans and Jay Jays.

It wasn’t actually a complete report from the company, just quite a detailed trading update for the second half of FY20.

I was impressed by the ASX share due to its ability to grow profit despite what is happening with COVID-19.

Premier Retail said that whilst global sales were down 18% to $484.2 million, its online sales and earnings before interest and tax (EBIT) rose to deliver record earnings.

Premier Retail’s online sales of $123.3 million was up 70% compared to the prior corresponding period and contributed 25.5% of its total sales. The ASX share was pleased to report that online sales deliver a significantly higher EBIT margin compared to the retail store network.

Full year FY20 online sales were up 48.8% to $220.4 million and contributed 18.1% of Premier Retail’s total FY20 sales.

Premier Retail now expects FY20 second half EBIT to be up between 9.7% to 11.7% to $58.7 million to $59.7 million. FY20 EBIT is expected to grow by 10.5% to 11% to between $184.8 million to $185.8 million.

The Premier Retail share price has risen about 7.5% since the update. It has recovered strongly since March 2020 as well. 

More reading

• Why the Class share price is up 41% this week
• Is the Premier Investments share price still a buy after yesterday’s gains?
• Is now a good time to buy Magellan shares?
• Why AMP, Premier Investments, QBE, & Treasury Wine shares are storming higher
• Premier Investments share price zooms 12% higher on strong trading update

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Class 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 My favourite 3 ASX share reports of the week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gZPTrc

ASX dividend shares are worth a premium right now. Many Aussie companies are slashing their dividends in the August earnings season as the coronavirus pandemic continues to bite.

However, there are still some companies that are as reliable as ever. One that springs to mind is Telstra Corporation Ltd (ASX: TLS).

Telstra hit its earnings guidance and maintained a 16 cents per share (cps) full-year dividend.

Here’s why I like Telstra and 2 more ASX dividend shares after their latest earnings updates.

Telstra and 2 more ASX dividend shares I like

There’s no doubt these are challenging times for Telstra. The Aussie telco hit earnings guidance on cash flow and underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

However, NBN impacts and the ongoing pandemic are also expected to hit FY21 earnings.

But Telstra’s dividend payout policy has been a real strength in recent years. That looks set to continue with the company’s 16 cps dividend representing a ~5% dividend yield based on the current Telstra share price.

Despite some challenges, I think the potential 5G boom and reliable dividend makes Telstra a top ASX dividend share.

It’s not just the telcos that I’m watching. I like the look of Aussie insurer QBE Insurance Group Ltd (ASX: QBE).

QBE reported a modest 4 cps dividend on Thursday despite reporting a US$712 million net loss.

That doesn’t exactly scream top ASX dividend share but I like QBE’s prospects for FY21.

The Aussie insurer reported minimal exposure to the ongoing pandemic. That includes both in direct insurance and its reinsurance exposures.

That 4 cps dividend would represent a yield of 0.73% on the current QBE share price. However, I think the symbolism of a dividend payment in these times is a vote of confidence in future earnings and balance sheet strength.

Finally, the Charter Hall Social Infrastructure REIT (ASX: CQE) is another ASX dividend share on my watchlist.

Shares in the Aussie real estate investment trust (REIT) climbed 11.3% higher this week. That came after a steady full-year result headlined by a 25% jump in net property income and a 16 cps distribution.

I think the ability to maintain steady earnings and pay a dividend make the Charter Hall Social Infrastructure REIT a strong ASX dividend share.

Foolish takeaway

These are just a few of the ASX dividend shares I like from the August earnings season so far.

I’ll be keeping an eye out for more strong income shares to buy in the coming weeks.

More reading

• Brokers name 3 ASX shares to buy right now
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• Is the Telstra dividend in danger? This leading broker thinks it’s safe
• ASX 200 drops 0.7%, Telstra falls 7.7%
• 2 blue chip ASX dividend shares to buy

Motley Fool contributor Ken Hall 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.

The post Telstra and 2 more ASX dividend shares I like in August appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fZthGa

Warren Buffett is perhaps the world’s most celebrated stock investor, but shares for his company are phenomenally expensive.

The price for Berkshire Hathaway Inc (NYSE: BRK.A), Buffett’s publicly listed investment vehicle, has risen so much over the decades that as of August 14 it sits at an astounding US$318,114 (AU$444,660).

This isn’t exactly an accessible price for mum-and-dad investors.

But there is a neat trick, not available to Australian companies, that can be used to get yourself to the “Buffett” table.

It’s called fractional shares.

“Fractional shares are portions of whole shares of a stock or ETF,” Stake chief operations officer Dan Silver told The Motley Fool Australia.

“This means that you can trade a dollar amount of a stock irrespective of the share price — you have the flexibility to invest what you want.”

So for Berkshire Hathaway, you could buy 0.003 of one share to pay just US$1,000 for a piece of Warren.

Amazon.com Inc (NASDAQ: AMZN) shares, at more than AU$4,000 each, is another example where it might make sense to buy a fraction.

Silver said fractional shareholders have the same rights as full-stock owners.

“Fractional shares are held in your name with our broker and custodian, so you have full beneficial interest,” he said.

“For example, this means that you receive dividends and any other corporate actions on a pro-rata basis.”

Why are fractional shares not available in Australia?

Cultural and systemic differences mean fractional investing is not available for companies listed in Australia.

Silver said in the US, brokerage fees have tended to be on a per-share basis, meaning transaction costs are reduced as the share price climbs.

But in Australia brokerage fees tend to be pegged to the trade value.

“[Australian] share prices are rarely above a couple of hundred dollars. There is more incentive for companies to maintain share prices at a level that does not prevent retail ownership.”

US shares are owned by a custodian (usually an institution) on behalf of the benefiting customer, rather than held directly by the shareholder like in Australia.

This ownership model makes fractional shares easier to implement.

In the US, stock splits and dividend reinvestment plans can also result in part-shares floating around. In Australia, leftover dividends are often held as a credit to be used at the next opportunity.

Fractional shares can be harder to sell

Although fractional stocks are becoming more prevalent, only certain brokers and broking platforms deal in them – meaning they’re not available to the entire market.

This could make it harder to sell later.

The selling brokerage firm would have to join your fraction with other fractions to form a whole share to trade on the open market.

But if they’re popular stocks like Berkshire Hathaway and Amazon, perhaps this hurdle is nothing to worry about.

More reading

• Stock split watch: Could Amazon be next?
• ASX investors have been buying these international shares
• MoneyMe share price surges, but is it sustainable?
• Here’s what a stock split means for investors
• 5 investing tips from Irving Kahn – who called the 1929 stock market crash

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 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.

The post How Aussies can buy Warren Buffett shares without paying $445,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kLthx9

With the Reserve Bank of Australia (RBA) keeping the official cash rate at a record low of 0.25% this month, it’s certainly a tough time to be an income investor. Having a ‘traditional’, conservative income portfolio consisting of a mixture of cash, bonds and ASX dividend shares is no longer viable in 2020. Even top-yielding cash investments like term deposits are yielding less than 2% (or even 1%) these days. Ditto with government bonds.

And to make matters worse, a bevvy of former dividend heavyweights have slashed their shareholder payouts this year. These include the ASX banks like Westpac Banking Corp (ASX: WBC) as well as Ramsay Health Care Limited (ASX: RHC), Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

Luckily, there are still some ASX shares that do offer solid income prospects. So here are 2 ASX dividend shares offering income yields of more than 6% today for your perusal.

AGL Energy Limited (ASX: AGL)

The AGL share price hasn’t been in investors’ good books this week. This energy giant reported its full-year earnings for FY2020 yesterday, and it wasn’t a pretty sight. Largely due to the coronavirus pandemic, AGL reported a 22% drop in profits after tax, which it expects to get worse in FY2021 before it gets better.

The good news was AGL committing to fund healthy dividend payouts over the next few years, vowing to pay out 100% of its earnings if necessary. Despite the pandemic’s negative impact on AGL, power and gas are still relatively inelastic services, making AGL a great defensive share for your portfolio. As such, I think AGL’s current trailing dividend yield of 7.25% is worth a good look today.

WAM Research Limited (ASX: WAX)

WAM Research is another income share that warrants a good look today in my view. It’s a listed investment company (LIC), which means it only invests in other ASX shares for the benefit of its owners. In WAM Research’s case, only small to mid-cap companies form its portfolio. As of 30 June, these included REA Group Limited (ASX: REA), Breville Group Ltd (ASX: BRG) and Adairs Ltd (ASX: ADH).

But what really attracts me to WAM Research in 2020 is its stupendous dividend yield. On current prices, WAM Research shares are offering a trailing, fully franked yield of 6.96% (which grosses-up to 9.94%). Such a robust dividend yield is a very welcome oasis in a year of arid income opportunities.

Foolish takeaway

I would happily buy either of these 2 ASX dividend shares for strong income in 2020. On current pricing, I think AGL is looking cheap (albeit for good reason), but it’s hard to say no to WAM Research’s high yield as well.

More reading

• Top broker tips the Breville share price to rise beyond $30
• Wage growth is plummeting – here are 3 ASX dividend shares to start a second income
• Why I would buy CSL and these ASX 200 blue chip ASX shares
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• AGL share price fall a warning for the LNG sector

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited and WAM Research Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 ASX dividend shares with yields over 6% today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3aAq52N

The FSA Group Ltd (ASX: FSA) share price today surged higher after the company reported better than expected full year results. The FSA share price was up 15.56% to $1.04 by the market’s close.

What FSA Group does

FSA Group is a provider of debt solutions and direct lending services to individuals in Australia. FSA has serviced thousands of Australians for just over 19 years. FSA offers a range of debt solutions and direct lending services. The company says it tailors these services to suit clients’ individual circumstances and to achieve successful outcomes for its clients. FSA has two business divisions which are Services and Consumer Lending.

How did FSA perform in FY 2020?

As stated by FSA, the 2020 financial year has been a year of challenges however it has also presented opportunities. For FY 2020, FSA Group generated $68.2 million in operating income, a 2% decrease on the prior corresponding period (pcp).  

This was largely due to the fact that, during the 2020 financial year, new client numbers for informal arrangements and debt agreements decreased by 5%. Clients for personal insolvency agreements and bankruptcy also decreased by 20% compared to the pcp. FSA Group currently manages $353 million of unsecured debt under informal arrangements and debt agreements. During the 2020 financial year, FSA paid $89 million in dividends to creditors.

Profit after tax was announced to be $16.3 million, a 13% increase compared to the results of 2019. The net cash inflow from operating activities was $19.4 million, a 14% increase. This was aided by home and personal loans growing by 4% from $441 million to $457 million. 

The company announced a fully franked final dividend of 3 cents per share, bringing the full year dividend to 6 cents per share.

What’s next for the FSA share price?

For 2021, FSA will seek to rebrand Azora (finance solutions for small businesses) and focus on growing its home loan and personal loan pools. The company is also aiming to maintain its leading position in a niche market and improve its informal arrangement offering, based on client and creditor feedback. Despite strong cash inflow, FSA will not provide FY 21 earnings guidance until a later date. However, the company advised it expects the FY 21 dividend to be between 6 – 7 cents per share.

On a side note, Sam Doumany is retiring after 17 years as Chairman of the company. He is expected to step down on 2 September, his 83rd birthday.

More reading

• ASX 200 rises 0.6%, Mesoblast soars
• Is the CBA share price a buy?
• ASX cannabis shares continue progress despite pandemic
• Get rich buying and holding these fantastic ASX shares
• 2 fantastic ETFs for ASX growth investors to buy today

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 FSA share price surges 16% thanks to positive annual report appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2POs21V

The S&P/ASX 200 Index (ASX: XJO) rose by around 0.6% today to 6,126 points.

The biggest rise of the day didn’t belong to an ASX share announcing a report:

Mesoblast Limited (ASX: MSB) takes off

A very positive US announcement sent the Mesoblast share price up 39% today.

The ASX 200 company said that Oncological Drugs Advisory Committee (ODAC) of the United States Food and Drug Administration (FDA) voted in favour that the available data supports the efficacy of remestemcel-L (RYONCIL) in pediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD).

Mesoblast chief medical officer Dr Fred Grossman said: “Steroid-refractory acute graft versus host disease is an area of extreme need, especially in vulnerable children under 12 years old where there is no approved therapy. We are very encouraged by today’s outcome and are committed to working closely with the FDA as they complete their review of our submission”.

Pediatric transplant physician Dr Joanne Kurtzberg said: “This devastating condition has an extremely poor prognosis and there are no FDA-approved options for children under the age of 12. The clinical studies I have directed have demonstrated the potential for this treatment to fill a significant unmet medical need.”

National Australia Bank Ltd (ASX: NAB) impresses

NAB released its FY20 third quarter update today.

The big four ASX 200 bank said that its cash earnings of $1.55 billion was down by 7% compared to the third quarter of FY19. Cash earnings before tax and credit impairment charges was up 5%. Unaudited statutory net profit came in at $1.5 billion.

NAB had a common equity tier 1 ratio (CET1) of 11.6% at 30 June 2020. The bank recently raised $4.25 billion from its institutional placement and share purchase plan.

Compared to the FY20 first half quarterly average, and excluding ‘large notable items’, cash earnings increased 24% and cash earnings before credit impairment charges increased 17%. Revenue rose by 10% reflecting higher markets and treasury income which included the reversal of unrealised mark-to-market losses.

NAB’s net interest margin (NIM) was “broadly stable” but fell a little because of the low interest rate environment. Expenses rose 2%.

The percentage of loans that are over 90 days past due increase to 1.06%.

NAB CEO Ross McEwan offered some encouraging words:

“The COVID-19 pandemic continues to challenge our customers and our bank, with varied impacts across industries and communities. The outlook remains highly uncertain, but decisive actions in April to strengthen our balance sheet allow us to support customers, while keeping our bank safe.

“We have a clear plan for NAB and we are getting on with it, including quickly embedding our new operating model and creating clear accountabilities. We are investing in our colleagues and executing fewer, more important projects. This will make a real difference to how well we serve customers and drive sustainable performance.”

ASX 200 share NAB saw its share price rise 1.2% today.

Baby Bunting Group Limited (ASX: BBN) booms

The Baby Bunting share price went up over 10% today after releasing its FY20 report. 

Baby Bunting said that its total sales increased by 11.8% today to $405.2 million with comparable sales growth of 4.9%. Online sales grew by 39.1%.

Its gross margin improved by 120 basis points to 36.2%.

Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 24.1% to $33.7 million and pro forma net profit after tax (NPAT) rose by 34.1% to $19.3 million. Statutory NPAT fell 14% to $10 million – this included business transformation costs and impairment charges.

Baby Bunting confirmed it didn’t qualify for jobkeeper payments.

The retailer announced a final dividend of 6.4 cents per share, bringing the full year dividend to 10.5 cents per share.

In the first six weeks of FY21 the company has seen comparable store sales growth of 20%, which includes the effect of Victoria’s restrictions, though Baby Bunting stores continue to operate. In FY21 Baby Bunting expects to open between four to six new stores.  

More reading

• Why I’d buy today’s CSL share price over Mesoblast
• Waypoint REIT share price gets a boost from financial guidance upgrade
• Why I would buy CSL and these ASX 200 blue chip ASX shares
• Why today is a great day to add to your ASX share portfolio
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher

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.

The post ASX 200 rises 0.6%, Mesoblast soars appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3askU4S

Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?

The major ASX bank released its FY20 result to investors this week which included a number of interesting elements.

The headline figure was that cash net profit after tax (NPAT) was down 11.3% to $7.3 billion. A large part of the reduction was due to the $1.5 billion COVID-19 provision. Clearly COVID-19 is having an effect on CBA’s financials. As a bank it is connected to almost every part of the economy. The CBA share price was already down from the pre-COVID-19 price because of these expected impacts.

CBA was able to keep growing its loan book despite the difficult operating conditions. Business lending grew by 5.1%, or $7 billion in dollar terms. Home lending increased by $18.4 billion, which was 1.3 times more than the system’s growth rate. Household deposits grew by $25 billion, or 9.8% in percentage terms.

Deposit funding is now 74% of total funding, up from 69% because of the deposit growth.

The growth in lending and deposits helped operating income grow by 0.8% to $23.75 billion. Operating expenses grew by 0.7% to $10.9 billion because of higher staff costs and IT costs, offset by lower remediation costs.

I think it’s impressive that CBA is growing its loan book faster than the overall lending sector considering how large it is. The CBA share price can grow faster than other banks if it grows its loan book faster than the other banks in percentage terms.

A key measure for the profitability of a bank is the net interest margin (NIM). Banks lend out money, but it also has to pay someone for that funding – whether that funding is from customer deposits or from other lenders. The CBA NIM declined by 2 basis points to 2.07% for FY20 due to the impact of lower interest rates, partly offset by lower short-term funding costs.

How badly is COVID-19 affecting CBA’s loan book?

As I mentioned CBA has recognised a $1.5 billion COVID-19 provision. CBA also revealed that at 31 July 2020 there were 135,000 home loans that were still being deferred – this is 8% of the total. This is down from 154,000 at the peak.

At 31 July 2020, 59,000 business loans were still being deferred – that’s 15% of the total. It’s down from 86,000 at the peak.

The performance of these deferred loans will have a material impact on CBA’s FY21 profit and the CBA share price.

Hopefully there is a continuing trend over the next few months of fewer borrowers needing to defer repayments. Government stimulus is only going to last for a limited time. Jobkeeper is projected to end in March 2021.

Is CBA’s dividend still great?

CBA announced a final dividend of $0.98 per share. That was a 57.6% cut from the FY19 final dividend. The FY20 full year dividend was $2.98, a 31% cut from the FY19 dividend.

At the current CBA share price it has a FY20 grossed-up dividend yield of 6%. That’s a pretty good yield considering all of the COVID-19 impacts and the low interest world we’re living in.

CBA was able to still pay a decent dividend because of its balance sheet strength. At the end of FY20 it had a CET1 capital ratio of 11.6%. That’s comfortably higher than APRA’s ‘unquestionably strong’ benchmark of 10.5%.

At this share price is CBA a buy?

CBA shares are down 21.6% from the February 2020 high before COVID-19 hit the world. That’s a decent fall and may represent long-term value for income-seekers. The major ASX bank’s recovery is fairly dependent on how the overall national COVID-19 picture looks as well as how the economy rebounds (or .

The CBA share price isn’t cheap, but I’d prefer to buy it compared to most other banks on the ASX. However, banks could be operating in a challenged environment for some time – so there are other sectors I’d rather buy into, like technology.

More reading

• 2 easy ASX shares for a beginner to buy today
• Forget CBA and buy these quality ASX dividend shares
• Top brokers name 3 ASX shares to sell today
• Why AGL, Breville, CBA, & Telstra shares are dropping lower today
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result

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.

The post Is the CBA share price a buy? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kHMSOH

ASX cannabis shares faded from the spotlight in 2020 as the coronavirus pandemic took over. But the Australian medical marijuana companies have been working through COVID-19 disruptions as they look to scale their businesses. Some have been quietly growing patient numbers while others seek additional funding to pursue their strategic agendas. We take a look at how ASX cannabis shares are performing. 

3 ASX cannabis shares in the spotlight

Althea Group Holdings Ltd (ASX: AGH)  

Althea saw growth in patient numbers falter due to COVID-19 disruptions early in the pandemic. Average new patients per business day fell from more than 36 in December to less than 22 in April. But the rate of growth has since rebounded with 583 new patients added in June, meaning Althea finished the financial year with 7,295 patients. Sales, which were lower than expected in April and May, rebounded in June, which became the company’s highest revenue month on record. 

Last month, Althea launched online sales of its medicinal cannabis products. Using the Althea Concierge app, patients can purchase products online and have them delivered directly to their doors, eliminating the need to visit a doctor or a pharmacy. Althea CEO, Josh Fegan, said “The ability for contactless sale is probably the biggest development yet for medicinal cannabis in Australia. You need to have a lot more than just a quality product in the highly regulated prescription cannabis space and Althea’s ongoing investment in technology provides us with a premium value proposition that we believe none of our competitors possess.” 

Interactions with healthcare professionals were fewer during the June quarter due to COVID-19 restrictions. In order to mitigate this, the team pivoted to virtual meetings where possible. The Althea concierge app also continued to play a role in providing virtual training and supporting health care professionals with product information and patient treatment plans. At the end of FY20, close to 600 health care professionals were prescribing Althea products. 

Althea achieved unaudited revenue of $1.59 million for the June quarter. This was a new record and up 5% on the March quarter despite COVID-19 disruptions. Unaudited revenue over the full year was $4.97 million, a 547% increase on FY19. At 30 June 2020, Althea had $10.4 million cash on hand, leaving it fully funded and in a strong position to meet its financial obligations. The strong increases in revenue despite the impacts of the pandemic have seen the Althea share price rebound strongly from its March low. This ASX cannabis share is currently trading at 35 cents, up 118% from its 16 cent low, but still 27% below its high for the year.  

Cann Group Ltd (ASX: CAN) 

Cann Group is in the medical marijuana cultivation and manufacture business. The business faced headwinds in the form of a global oversupply of cannabis earlier in the year. This combined with the coronavirus pandemic caused the Cann Group share price to fall from a January high of $1.69 to a March low of 61 cents. A July capital raising saw the share price fall further, with shares now trading at 49 cents. Cann Group raised $24.3 million of capital at an issue price of 40 cents per share, however the company’s major shareholder, Aurora Cannabis Inc (Canada), did not participate. Nonetheless Cann Group says it believes Aurora remains committed to the strategic relationship. 

The coronavirus pandemic has slowed the company’s progress in obtaining debt financing for the build of its Mildura growing facility. The build also requires engagement with specialist contractors based in Europe who are unable to enter Australia. Cann Group believes demonstrating an established revenue stream will strengthen its position in relation to securing external funding for Mildura. To this end, Cann Group has secured commercial supply agreements for cannabis products and dried flower for sale in Australia and to export markets including the United Kingdom and Europe. A distribution agreement is in place to deliver products to hospitals and pharmacies throughout Australia. An offtake agreement is also in place with Aurora enabling Cann Group to supply Aurora with products through to 2024. 

The ASX cannabis share can supply a broad range of products from specific cultivars in unique finished product formulations. Manufacturing arrangements with IDT Australia Limited (ASX: IDT) ensure products meet standards required for distribution in a range of markets. Cann Group is pursuing additional supply contracts with third parties in Australia and overseas. A growing revenue base and expanding supply arrangements will considerably strengthen the business case for the Mildura expansion, which the company remains strongly committed to. 

Auscann Group Holdings Ltd (ASX: AC8) 

The Auscann share price collapsed in March, falling to a low of 14 cents after trading as high as 36 cents in February. The share price has yet to recover from this fall, with shares currently trading at 15 cents. The company produces controlled dosage THC/CBD capsules and received its first orders during the June quarter. Product was supplied to Australian patients under the special access scheme. 

Recruitment and dosing was also completed during the quarter in a phase one study of the products. The study will provide information to inform dose selection and assist in prescribing the hard shell capsules. CEO, Ido Kanyon, said, “We are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule. This is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis for medical treatment.”

Auscann recorded net cash outflows of $5.5 million during the June quarter, primarily due to product manufacturing and operating costs. $3.1 million was spent securing high-quality raw material for R&D and manufacture. Research and development costs of $1.1 million were also incurred mainly in relation to the clinical trial. At the end of FY20, Auscann had a cash balance of $19.2 million which will support the continued progress of its growth strategy. 

What’s next for ASX cannabis shares?

The coronavirus pandemic has had a mixed impact on ASX cannabis shares. Demand for cannabis products had been growing strongly prior to the pandemic. Experts report that medicinal cannabis products get to about 1% to 2% of the population. Based on current Australian patient numbers, there is still significant growth to be seen. The key for these ASX cannabis shares will be capturing demand, both at home and abroad. 

More reading

• ASX cannabis shares adjust to coronavirus environment
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• Cann Group share price tanks on discounted capital raising

Motley Fool contributor Kate O’Brien 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 ASX cannabis shares continue progress despite pandemic appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3h0P5Cw