2020 has been a good year for investors in ASX gold shares.

The Saracen Mineral Holdings Limited (ASX: SAR) share price has rocketed 83.1% higher this year. Similarly, shares in St Barbara Ltd (ASX: SBM) and Northern Star Resources Ltd (ASX: NST) are 26.0% and 39.8% higher, respectively.

That’s largely been driven by gold prices rocketing to new record highs in 2020. Market volatility and economic uncertainty have created a surge in demand for the precious metal.

Many investors would think this means the buying opportunity and bull market are over. However, one leading fund manager says it’s just beginning.

Why one leading fundie sees an ASX gold share boom

That fundie is Paragon Funds Management Chief Investment Officer, John Deniz.

In a market update yesterday, Mr Deniz pointed to 6 key factors supporting a further ASX gold share boom. These were:

1. Low US 10-year bond yields
2. Low US real rates
3. A ballooning US budget deficit
4. Strong US fiscal and monetary stimulus
5. Deep global liquidity and money supply
6. A weakening US dollar

Mr Deniz says that all of these signs point to a further increase in demand for gold. For context, gold is often seen as a ‘safe haven’ asset with good inflation hedging properties.

But rather than stick to the qualitative factors, Mr Deniz backed up the ASX gold share bull case with some numbers.

In particular, he highlighted some of the biggest gold bull cycles in recent years. Notably, the most significant one occurred when US real interest rates went negative and gold exchange-traded funds (ETFs) saw strong inflows (shown in dark blue below).

How should I position my portfolio?

Before you go all-in on ASX gold shares, it’s important to take a step back. While this paints a convincing picture, there’s no such thing as a free lunch in investing.

There is still the risk that we’ll see a strong economic bounce back in 2020. That could ease the demand for gold and mean the S&P/ASX 200 Index (ASX: XJO) surges higher.

Given the strong gains in ASX gold shares already this year, much of this growth may also have already been priced in.

More reading

• Coronavirus: What does lockdown mean for ASX retail shares like JB Hi-Fi?
• 5 things to watch on the ASX 200 on Wednesday
• This is the only ASX sector tipped to report earnings growth this reporting season
• Should you buy ASX gold shares or FAANG stocks in August?
• 3 high quality blue chip ASX 200 shares to buy

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

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Investors expect JB Hi-Fi Limited (ASX: JBH) to deliver strong results this reporting season. In fact, in the company’s most recent guidance on 11 June, it estimated FY20 revenue of $7.86 billion. This is an 8.4% increase on the initial FY20 revenue forecast. Clearly this is an an outstanding result if accurate.

The company attributes much of the increase to the work-from-home period necessitated by coronavirus lockdowns during which consumers flocked to create home offices and purchase home furnishings. Moreover, in the company’s Q3 update, it also mentioned increased volumes through online sales and the introduction of contactless delivery. However, no quantified figures have yet been provided.

While it may be a bit much to say there are dark clouds on the horizon, there are definitely a few metrics worth watching to see if the company’s performance is sustainable.

Issues impacting reporting season

Notably, JB Hi-Fi’s New Zealand stores reported a 19.3% reduction in sales for 2H20. The company was at pains to point out the small revenue contribution of the NZ operations, and rightly so. However, the NZ lockdown for JB Hi-Fi was from 28 April until 14 May. A period of about 2 – 3 weeks impacting 14 stores. The Victorian closure is for 46 JB HI-FI stores and 21 The Good Guys stores for a full 6 weeks, at least.

Any guidance the company provides on 17 August, its nominated reporting date, will need to balance this against other factors likely to impact sales and net profits.

Online sales

The absolute impact of the 6 week lockdown in Victoria may be tempered by a large-scale increase in online sales. FY19 saw growth of Australian online sales by 23% to reach 5.5% of total sales. We know that the move to online shopping has been accelerated by the coronavirus pandemic. In fact, Australia Post data shows that eCommerce growth rose by 80% in the 8 weeks following the World Health Organization’s (WHO) initial announcement regarding the pandemic. Australia Post believes that this year, online sales will reach 15% of all retail sales. That is 3–5 years ahead of previous forecasts.

JB Hi-Fi doesn’t provide a revenue breakdown per state within Australia. Nevertheless, it is safe to assume the 6 week lockdown will have a large impact. A figure currently floating around quotes Victoria as contributing just under 25% of Australia’s GDP. Using that broad brush, if JB Hi-Fi is to counteract the impact of the Victorian closures, then online sales will have to at least double.

JB Hi-Fi does not report on active users or engagement statistics like pure online companies such as Kogan.com Ltd (ASX: KGN). So we are left only with the growth in online sales. In addition, look for any phrasing that may imply repeatability. If the online sales boost is purely due to the work-from-home phenomenon, then that will have a shelf life. There are only so many desks and filing cabinets a person needs.

Financial statistics

While JB Hi-Fi’s total net profit will rise with revenues, the net profit margin declared in reporting season will say a lot about future sustainability.

I am expecting the company to see an increase in its cost of doing business, or CODB. In FY19, this increased by 0.03% due to the sale of lower margin products. For example, when the company sells a lot of software, the cost of doing business is less due to the high margins. I am expecting most products sold to have relatively lower margins this FY. These include white goods from The Good Guys and laptops and accessories from JB Hi-Fi.

Lastly, I will be looking to see if there will be a lingering impact from a lower depreciation percentage on the net profits after tax (NPAT). The company saw a 23.5% reduction in depreciation after a significant pre-acquisition IT investment became fully amortised.

Foolish takeaway

The factors above may show a squeezing effect on FY21 earnings during this reporting season for JB. First, forced closure of 22.9% of Australian stores across both brands for 6 weeks. Moreover, this doesn’t include stores already closed in low traffic areas like airports. Second, a likely increase in CODB due to higher percentage of lower margin sales, and increased cleaning. Third, the potential impact of ongoing reductions in depreciation.

The ability for JB Hi-Fi to lessen this blow will predominantly come from the the growth of Australian online sales. In addition, investors should look for any indications as to the repeatability of that performance, or whether this was a one-off event. This information, as well as the above metrics, is likely to weigh on the JB Hi-Fi share price in the months following reporting season.

Lastly, the company saw a growth in its dividend per share by 7% in FY19. I will be very interested to see what happens with the dividend this year given the uncertainty in the national economy.

More reading

• This is the only ASX sector tipped to report earnings growth this reporting season
• ASX 200 jumps 2% higher, Afterpay soars
• How will Victoria’s stage 4 lockdowns impact ASX shares?
• Why Crown, Fortescue, Kogan, & Nearmap shares are storming higher
• Why the JB Hi-Fi share price is dropping lower today

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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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If you don’t have the funds required to invest across a large number of different shares in order to maintain a diverse portfolio, then exchange traded funds (ETFs) could be the answer.

This is because ETFs give investors the option to invest in anything from tens to thousands of companies through just a single investment. This includes investing in themes, indices, countries, and industries.

While there are countless ETFs to choose from, two which I would buy are listed below. Here’s why I think they are among the best on offer:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

One of my favourites ETFs is the BetaShares Asia Technology Tigers ETF. Given how quickly the Asian economy is expected to grow over the next decade, having exposure to this side of the world seems like a particularly good idea to me. And what better group of shares to invest in than the 50 largest technology and ecommerce companies that have their main area of business in the region. These companies are among the fastest-growing in the region and look exceptionally well-positioned to be market-beaters over the next decade. Among its biggest holdings you’ll find the likes of ecommerce giant Alibaba, search engine Baidu, online retailer JD.com, and WeChat owner Tencent.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another of my favourite ETFs is the BetaShares NASDAQ 100 ETF. This fund gives investors exposure to the 100 largest non-financial businesses on Wall Street’s technology-focused NASDAQ index. This means that through a single investment, investors will be getting exposure to some of the biggest and well-known companies in the world. This includes the likes of Amazon, Alphabet, Apple, Facebook, Microsoft, and Netflix, Tesla, and Zoom. Given the very positive long term outlooks of the majority of shares in the ETF, I believe it has the potential to provide investors with strong returns over the next decade.

More reading

• Should you buy ASX gold shares or FAANG stocks in August?
• I don’t normally buy ETFs, but I would invest in these 2
• 3 ways to play the skyrocketing tech shares
• Top ASX Stock Picks for August 2020
• 1 ASX share to take advantage of the strong FAANG shares

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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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With interest rates at their lowest levels in history and unlikely to move higher for some time, I believe dividend shares remain the best place to earn an income.

But which ASX dividend shares should you buy? I think these would be top options right now:

Aventus Group (ASX: AVN)

Aventus is a retail property company which specialises in large format retail parks. It currently has a total of 20 centres which are home to a diverse tenant base of 593 quality tenancies. This includes major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys. I like Aventus due to the way its portfolio is weighted heavily towards everyday needs. I believe this means it is better positioned than many property companies to ride out the pandemic. Goldman Sachs is very positive on the company and has forecast a sizeable ~17.3 cents per unit distribution in FY 2021. Based on the current Aventus share price, this equates to a very generous forward 8.2% distribution yield

Coles Group Ltd (ASX: COL)

Another option to consider buying is Coles. I think the supermarket giant is well-positioned to grow its earnings and dividend at a solid rate over the next decade. This is due to its defensive qualities, positive sales growth outlook, and potential margin expansion from its refreshed strategy. Based on the latest Coles share price, I estimate that it provides investors with a fully franked ~3.4% FY 2021 dividend yield.

Lendlease Group (ASX: LLC)

A final dividend share to consider buying is Lendlease. It hasn’t been a great 12 months for the international property and infrastructure company. However, I’m feeling confident that the worst is behind it. In light of this and its burgeoning global development pipeline, I believe now could be an opportune time to invest. Especially for income investors. I estimate that it will pay a 57 cents per share dividend next year. Based on the current Lendlease share price, this equates to a 5.1% dividend yield.

More reading

• 3 high quality blue chip ASX 200 shares to buy
• Will the Coles share price rocket higher again in August?
• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• Why I would buy Coles and this ASX dividend share right now
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 coronavirus situation in Victoria seems to be worsening by the day. With a nightly curfew and even tighter lockdown laws taking effect at midnight tonight, the state appears to be under siege. Some ASX shares are actively playing a part in the fight against the virus and the treatment of patients. As the battle against the pandemic increasingly becomes a war, we take a look at two ASX shares involved in the fight against COVID-19. 

2 ASX shares fighting against coronavirus

Mesoblast Limited (ASX: MSB)

Mesoblast is a regenerative medicine company seeking to provide treatments for inflammatory illnesses. The company has a portfolio of phase 3 product candidates including remestemcel-L, which is being trialed in the treatment of severe acute respiratory distress syndrome (ARDS) due to COVID-19 infection. 

Interim analysis of the phase 3 trial of remestemcel-L in COVID-19 patients is set for early September. The trial’s first 90 patients will complete 30-day follow ups in August. After this, the Data Safety Monitoring Board will assess the interim data and determine whether the trial should proceed or stop early. There are currently no approved treatments for ARDS in COVID-19 patients, so if Mesoblast’s treatment is approved it would be a first. With ARDS the primary cause of death in COVID-19 patients, demand for an effective treatment is high. 

Remestemcel-L was originally developed to treat acute graft versus host disease (GVHD). An application for the use of the treatment in children with the disease is being assessed by the United States FDA (Food and Drug Administration). If approved, Mesoblast plans to launch in the US this year with product inventory in place. 

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) 

Fisher & Paykel Healthcare manufactures products used in respiratory and acute care. In the respiratory market since 1971, Fisher & Paykel Healthcare’s products are now being used in the treatment of coronavirus patients. The company’s respiratory humidifiers and consumables are directly involved in COVID-19 treatment. Fisher & Paykel has seen an increase in demand globally since the start of the pandemic and has ramped up production accordingly. 

A weaker New Zealand dollar also contributed to Fisher & Paykel’s strong result for the year ended 31 March 2020. Operating revenue increased 18% over the previous year to $1.26 billion. This increase was driven by demand for products to treat COVID-19 patients and strong hospital hardware sales throughout the year. Revenue grew 25% in the hospital group, which includes respiratory and acute care products. Sales of consumables were up 23% over the previous year. This added up to a 37% increase in net profit after tax, with a final dividend of 15.5 cents per share declared. 

Foolish takeaway 

These two ASX shares provide products and treatments used to combat the coronavirus in those afflicted. Until a vaccine is found, these ASX shares should see steady demand. 

More reading

• Here’s how to start investing with $5k
• Why this broker thinks Mesoblast shares are a strong buy
• Mesoblast share price pushes higher ahead of the “most significant period in its history”
• Does the second wave of COVID-19 make these ASX 200 healthcare shares a buy?
• 3 junior ASX healthcare shares with explosive growth potential

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.

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ASX dividend shares could be the only way to make good income from your money at the moment.

I’m not talking about some blue chip shares like Westpac Banking Corp (ASX: WBC) or Transurban Group (ASX: TCL). Income investors haven’t been able to rely on reliable dividend payments from them in 2020.

I’m talking about ASX dividend shares with reliable business models that continue to increase their income payments to shareholders even through COVID-19.

A business that can increase its dividend during this period is definitely worth considering for an income portfolio:

Dividend share 1: APA Group (ASX: APA)

APA is my preferred infrastructure ASX dividend share. It doesn’t require a certain number of air passengers or cars to generate its earnings.

APA owns a large network of pipelines across Australia, it’s about 15,000 km in size. It actually delivers around half of Australia’s natural gas.

The energy asset giant also owns (or has interests in) gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar).

APA has grown its distribution every year for a decade and a half. It funds that distribution from its annual cashflow, which is regularly growing. As more projects and investments are completed, that cashflow increases and this will fund higher distributions over time.

Based on the FY20 distribution, at the current APA share price, it offers a distribution yield of 4.5%. Not a bad starting yield for an ASX dividend share.

Dividend share 2: Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). It owns a variety of farm types including almonds, macadamias, cattle, cotton and vineyards.

As a farmer there are commodity risks, just like there are with miners. However, as a landlord Rural Funds isn’t exposed to those sorts of risks. It’s the tenant that takes on the operational risks.

The farms are spread across states and climactic conditions, so Rural Funds is well diversified. It recently announced an $81.1 million sugar cane farm acquisition which it plans to progressively turn into macadamia orchards and the rest will be able to be used for cropping.

The ASX dividend share aims to increase its distribution by 4% per annum, which it has been successful at doing since it first listed and started paying a distribution several years ago.

We all need to keep eating food, so Rural Funds’ rental income should keep flowing from its quality tenants like JBS and Olam. That rental income is steadily growing thanks to contracted rental indexation of either a fixed 2.5% increase or it’s linked to CPI inflation, plus market reviews.

Rural Funds has provided guidance of a FY21 distribution of 11.28 cents per share, which equates to a 5.4% yield at the current Rural Funds share price.  

Dividend share 3: WAM Microcap Limited (ASX: WMI)

WAM Microcap could be one of the best ASX dividend shares on the ASX in my opinion. It’s a listed investment company (LIC) run by Wilson Asset Management which invests in small cap ASX shares. Generally, those targets have market caps under $300 million.

ASX small caps have the potential to make the biggest returns for investors because they’re not followed by many investors, so they’re priced lower. Those small businesses also have a lot of growth potential. It’s much easier growing a company’s market cap from $200 million to $400 million than it is to go from $20 billion to $40 billion.

WAM Microcap can turn the investment returns it generates into a big, growing dividend for its shareholders. The WAM Microcap board have an aim of growing the dividend, assuming it makes sense to do so and it has sufficient profit reserves and franking credits.

Since inception in June 2017, the WAM Microcap portfolio has returned 15.9% per annum before fees, expenses and taxes. That’s a very strong performance and allows it to fund a solid dividend.

The ASX dividend share recently announced a bigger ordinary dividend, a special dividend and a capital raising. I am very likely to participate in that capital raising, even if I just do a fairly small purchase.

At the current WAM Microcap share price, using the FY20 annual ordinary dividend of 6 cents per share, it has an ordinary grossed-up dividend yield of 5.9%.

Foolish takeaway

I really like each of these ASX dividend shares. Right now I think WAM Microcap could be the best pick. It has the highest yield and may it generate the strongest total returns over the long-term. But I think both APA and Rural Funds are likely to deliver very reliable cashflow over the next 12 months and beyond. 

More reading

• Buy these ASX dividend shares if the RBA cuts rates
• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• Is the Wesfarmers or Rural Funds share price a buy for dividend income?
• WAM Microcap share price rises on big special dividend
• 3 of the best ASX dividend shares to buy right now

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and WAM MICRO FPO. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of APA Group and 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.

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