Finding top stock picks for 2021 may seem like a daunting task to some investors. The 2020 stock market crash and an uncertain economic outlook mean that the prospects for many companies are difficult to accurately assess.

However, by focusing on companies with solid financial positions and wide economic moats when they trade at low prices, it may be possible to unearth the best shares for 2021. They could produce the strongest performances over the long run.

Assessing financial strength among potential top stock picks

The uncertain economic outlook means that today’s top stock picks may be those businesses with solid financial positions. They may be able to more easily overcome what could prove to be a tough period for many industries and regions over the coming months.

Analysing a company’s financial position can be done by taking a look at its annual report and recent trading updates. They provide information on areas such as its debt levels, how many times its operating profit covered interest costs and the amount of liquidity it has available. All of these areas can make a real difference to its ability to not only survive what could be a volatile 2021, but to also use an uncertain period to its advantage in terms of making acquisitions and innovating.

Analysing a company’s competitive position

Top stock picks for 2021 may also be those companies that can outperform their sector peers as a result of a competitive advantage. For example, they may have a unique product, enjoy strong brand loyalty or have a lower cost base than their rivals. This can make a real difference to their profitability both in difficult economic circumstances and when a period of strong growth takes place.

Therefore, focusing on a company’s competitors could be a sound move. It may highlight the strengths and weaknesses of a business that are not always obvious. They may make an impact on how successful it proves to be from an investment perspective.

Ensuring a margin of safety is obtained

As ever, the top stock picks of today could prove to be those companies that trade at a large discount to their intrinsic values. In other words, their share prices currently undervalue their long-term financial prospects. This may provide them with greater scope to deliver capital appreciation over the coming years.

Therefore, assessing a company’s value, in terms of metrics such as price-to-earnings (P/E) ratio and price-to-book (P/B) ratio, on a standalone and relative basis could be a worthwhile move. It may allow an investor to determine which companies in a specific sector offer the best value for money. They may be among the top performers in 2021 and beyond, and could have the biggest positive impact on an investor’s portfolio.

More reading

• How to get a passive income of $50,000 per year from ASX dividend shares
• Top brokers name 3 ASX shares to sell next week
• 2 ASX dividend shares with generous yields
• $250 a month to invest? Here’s how I’d aim to turn it into $1m
• 3 of the best ASX shares to buy in December

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

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Owning ASX dividend shares can be one of the most rewarding experiences on the share market. In contrast, growth shares like Afterpay Ltd (ASX: APT), which pay no dividend but promise a white-knuckle ride through ups and downs on the market, can be fun (and highly lucrative) in their own way.

But there’s nothing quite like holding a dividend share, and getting paid every three or six months just for the act of not selling. One could even think of the whole process as a reward for laziness. Indeed, many investors invest in ASX shares solely for this purpose. Dividends can provide, or supplement, an income stream that one can use to retire on, or at least support a higher standard of living that one might aspire to.

But just how much do you need to have invested to generate, say, $50,000 a year in dividends – an amount roughly double the current Age Pension rate for a single person?

2 ends of the dividend stick

Well, it depends on your portfolio and the investments you make. You could have everything you own invested in an ASX dividend share like Fortescue Metals Group Limited (ASX: FMG), which currently offers a market-leading, trailing yield of 8.57%, or 12.24% grossed-up with full franking credits. Well, you would only need to invest $408,500 in Fortescue shares today to receive a dividend and franking credit stream worth $50,000 a year.

But that assumes Fortescue keeps its current dividends in place for time immemorial. That is a very flimsy assumption to make given the volatility of the price of iron ore that Fortescue mines. If iron ore hypothetically plummeted from the ~US$135 per tonne level we see today (historically very high) to US$50 per tonne next week, you could bet with near certainty that Fortescue would be slashing its dividends very quickly soon after.

That’s why very few investors (if any) would actually have all of their money tied up in Fortescue (or any other single company for that matter).

So which ASX dividend shares to choose? If you wanted to target reliability instead of large (and volatile) raw yield, you might be drawn to Washington H. Soul Pattinson & Co Ltd (ASX: SOL) instead. Soul Patts has one of the best dividend records on the ASX, having increased its dividend payouts every year since the year 2000 (yes, that includes 2020).

But Soul Patts’ current trailing dividend yield is just 2.09%, or 2.99% grossed-up. That means that instead of $408,500, you would need just over $1.67 million to secure an annual income of $50,000 a year in dividends and franking.

Balance is the key for dividends

Now, these are obviously two extremes. Most ASX dividend investors have a broad portfolio of shares, in order to balance individual company risk and increase diversification. So let’s take a broad market exchange-traded fund (ETF) to use as a substitute for this scenario.

The Vanguard Australian Shares High Yield ETF (ASX: VHY) is an example. This fund holds 65 ASX dividend-paying shares across all sectors of the market, which, for illustrative purposes, is a fair substitute for representing a typical dividend portfolio. Vanguard tells us that this ETF has a forecast, grossed-up yield of 6.3% right now. So let’s just take that number as a representation of this ‘typical dividend portfolio’.

So, for an investment into this fund that would generate $50,000 a year in income, you would need an amount of $794,000 invested at this grossed-up yield figure. Naturally, the yields generated from any diversified portfolio of dividend shares can vary from year to year. 

Of course, diversification is important in this scenario, and an ETF like VHY is not an actual substitute for a portfolio of individual dividend shares. If you think of the $794,000 figure as ~$40,000 invested in 20 different ASX dividend shares, you get the idea.

Foolish takeaway

At the end of the day, whether you’re able to generate $50,000 a year in dividend income will depend on which ASX shares your dividend portfolio consists of. But you should probably ‘aim high’ in this case. And it’s worth considering the old parable ‘build your house on rock, not sand’ when it comes to building your passive income from ASX dividend shares.

More reading

• Top brokers name 3 ASX shares to sell next week
• 2 ASX dividend shares with generous yields
• Are ASX stocks about to get an earnings upgrade boost in the new year?
• Is the Afterpay (ASX:APT) share price in the buy zone after its update?
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen owns shares of Vanguard Australian Shares High Yield Etf and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating and lowly $30.00 price target on this payments company’s shares. This follows the release of its trading update for the month of November. While UBS acknowledges that Afterpay had an impressive month in the United States and surpassed $1 billion in monthly underlying sales for the first time, it has concerns about management’s selective disclosures. It notes that there was no October sales update, nor was there any real customer or bad debt data for November. The Afterpay share price ended the week at $94.50.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Credit Suisse have retained their underperform rating and $58.71 price target on this pizza chain operator’s shares. This follows its investor day update last week. While the company is performing well and its medium term outlook is positive, it isn’t enough for a change of rating. Credit Suisse continues to believe that Domino’s shares are expensive at the current level. Its shares were changing hands for $82.18 on Friday.

Wesfarmers Ltd (ASX: WES)

A note out of Citi reveals that its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $44.00. Citi notes that Wesfarmers has benefited greatly from COVID-related tailwinds this year and looks set to benefit from the housing cycle over the coming years. However, the broker sees far more value in some of its retail peers and has therefore retained it sell rating. The Wesfarmers share price ended the week at $49.44.

More reading

• How to get a passive income of $50,000 per year from ASX dividend shares
• Is the Afterpay (ASX:APT) share price in the buy zone after its update?
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises on Thursday
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With interest rates at record lows and unlikely to go higher for some time, it is increasingly difficult for income investors to earn a sufficient income from traditional interest-bearing assets.

Fortunately, the Australian share market has come to the rescue with a large number of dividend shares offering generous yields.

Two ASX dividend shares with above-average yields are listed below:

BWP Trust (ASX: BWP)

BWP Trust is the owner of 68 Bunnings Warehouse sites across Australia. Thanks to the strength of the Bunnings business, BWP has been able to collect its rent largely as normal during the pandemic. This, combined with an increase in the fair value of its assets, led to the company reporting a 24.4% increase in full year profit to $210.6 million in FY 2020.

It was thanks to this positive form that the BWP board was able to increase its distribution to 18.29 cents per unit. Based on the current BWP share price, this represents a trailing 4.2% yield for investors. Management advised that a similar dividend is expected in FY 2021.

Fortescue Metals Group Limited (ASX: FMG)

Fortescue is one of the world’s leading iron ore producers. Over the last few years the company has generated staggering returns for investors. This has been driven by significant cost reductions, an increase in its grades, production growth, and favourable iron ore prices.

The good news for Fortescue and its shareholders is that the iron ore price climbed well beyond US$130 a tonne and to its highest level since 2013 last week. This compares to Fortescue’s current C1 costs of US$12.74 per wet metric tonne.

Given the margins the company is operating with and its strong balance sheet, Fortescue is being tipped to reward shareholders with bumper dividends in FY 2021. Macquarie, for example, is forecasting a fully franked $1.64 per share dividend over the next 12 months. Based on the current Fortescue share price, this equates to a sizeable 8% dividend yield.

More reading

• Are ASX stocks about to get an earnings upgrade boost in the new year?
• 2 ASX dividend shares with generous 4%+ yields
• Why ASX iron ore stocks like the Fortescue (ASX:FMG) share price are surging today
• Why Flight Centre, Fortescue, Kogan, & Telix shares are racing higher
• ASX 200 up 0.3%: Fortescue rockets, Afterpay sales explode, Westpac APRA update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The 2020 stock market crash may have provided an opportunity to invest in high-quality shares while they trade at low prices. Over time, they could deliver impressive returns that have a positive impact on an investor’s portfolio.

As such, now could be the right time to start buying a diverse range of stocks for the long term. Even a modest monthly investment of $250 could produce a seven-figure portfolio in the coming years.

Invest in high-quality shares at low prices

While many high-quality shares have rebounded after the stock market crash, it is still possible to invest in a wide range of sound businesses at low prices. For example, some companies face challenging near-term operating outlooks that may have caused investor sentiment to weaken. However, their solid financial positions and competitive advantages may mean that they are able to deliver impressive capital returns over the long run.

Clearly, some stocks are priced at low levels for good reason. For example, they may lack the capital to invest in new technology or in changing their business models in a fast-paced global economy. Therefore, it is crucial to invest in businesses only after thorough due diligence. By analysing a company’s annual reports, recent investor updates and assessing competition within an industry, it may be possible to unearth the best stocks that offer the most appealing value opportunities. Buying them could lead to outperformance of the wider stock market.

A long-term strategy

Of course, a strategy that aims to invest in undervalued stocks today may take time to deliver high returns. Risks such as coronavirus continue to affect the world economy’s prospects, as well as investor sentiment. Therefore, in the short run, buying stocks may not necessarily produce positive returns.

However, the long-term track record of indexes such as the FTSE 100 Index (FTSE: UKX) and S&P 500 Index (SP: .INX) shows that they have always recovered from their downturns to produce record highs. In doing so, they have generally produced high single-digit annual returns. Therefore, investors who buy and hold a diverse range of high-quality businesses could benefit from their likely recoveries. This could have a positive impact on a regular investment, and may produce a large nest egg as the global economic outlook likely improves.

Making a million

A plan to regularly invest a modest amount of capital in high-quality businesses at low prices could lead to market-beating performance. However, an investor could still generate a portfolio valued in excess of $1 million if they obtain the stock market’s long-term annual total returns of 8%.

For example, it would take 42 years for a monthly investment of $250 to be worth $1 million at an 8% annual total return. However, by taking advantage of today’s low stock market valuations, it may be possible to reduce that amount of time. In doing so, an investor could outperform the stock market and enjoy greater financial freedom in the long run.

More reading

• 2 ASX dividend shares with generous yields
• 3 of the best ASX shares to buy in December
• Why the ANZ (ASX:ANZ) share price may be a buy
• Top brokers name 3 ASX shares to buy next week
• Got money to invest? Here are 3 ASX dividend shares to buy

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

The post $250 a month to invest? Here’s how I’d aim to turn it into $1m appeared first on The Motley Fool Australia.

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A new month is here, so what better time to look at giving your portfolio a little lift with a few new additions.

Three top ASX shares which have been tipped as potential market beaters over the next few years are listed below. Here’s what you need to know about them:

Kogan.com Ltd (ASX: KGN)

Kogan is one of Australia’s leading ecommerce companies. It has been growing very strongly this year after the pandemic accelerated the adoption of online shopping. Pleasingly, its strong form has continued even after bricks and mortar stores reopened. And with more and more spending expected to shift online in the future, Kogan looks well-positioned to benefit. The company is also looking to accelerate its growth with earnings accretive acquisitions such as Mighty Ape. Last week analysts at Credit Suisse upgraded Kogan’s shares to an outperform rating with a $20.60 price target.

NEXTDC Ltd (ASX: NXT)

NEXTDC is an innovative data centre-as-a-service provider with a growing network of centres in key locations across Australia. It has been a very strong performer this year because of the accelerating shift to the cloud. This has underpinned a significant increase in demand for capacity in its data centre. So much so, the company brought forward capacity expansion plans. Management is also looking to bolster its growth with an expansion into Asia. It has opened offices in a number of key locations and is weighing up its options. Late last month analysts at Morgan Stanley put an overweight rating and $14.60 price target on its shares.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is a leading donor management and community engagement platform provider for the faith sector. It has aspirations to win a 50% share of the U.S. medium to large church market in the future. This represents a US$1 billion market opportunity, which is many times larger than its current revenue. For example, in FY 2020 the company reported a 32% increase in revenue to US$129.8 million. One broker that is very positive on its prospects is Goldman Sachs. Its analysts have a conviction buy rating and $10.35 price target (now $2.59 after its 4-1 share split) on its shares.

More reading

• Got cash to invest? Here’s 3 ASX shares to buy
• 3 reasons why Kogan.com (ASX:KGN) shares could be a buy
• Brokers name 3 ASX shares to buy right now
• Why Cashrewards, Doctor Care Anywhere, Kogan, & Treasury Wine are pushing higher
• How to benefit from the cloud computing boom with ASX shares

James Mickleboro owns shares of NEXTDC Limited. 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 has recommended Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price may be a buy according to fund manager Rhett Kessler from Pengana Capital Group (ASX: PCG).

A quick overview of ANZ

ANZ is one of the biggest banks across Australia and New Zealand. It has a market capitalisation of $65.4 billion according to the ASX.

It’s one of Australia’s biggest banks along with Commonwealth Group of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).

What happened in the latest result?

ANZ reported its FY20 result to investors just over a month ago.

Its profit had a difficult year with (continuing operations) cash profit falling by 42% to $3.76 billion. Statutory net profit after tax fell by 40% to $3.58 billion.

When ANZ excluded certain items, the profit decline didn’t look as steep. Profit before the credit impairments and tax fell by 16% to $8.37 billion. Profit before credit impairments, tax and large notable items only fell by 1% to $10.1 billion.

The ANZ share price has gone up over 20% since the release of the result. But there are have been other major news items since then such as the US election winner and the effectiveness of COVID-19 vaccines.

The major ASX bank explained that the total provision charge in the second half was $1.06 billion and followed the $1.67 billion charge taken at the first half. The bank wanted to strengthen its credit reserves for its retail and commercial customers affected by COVID-19. The collective provision balance increased to $5 billion at 30 September 2020.

ANZ revealed that its gross loans and advances increased by 1% to $622 billion whilst customer deposits grew by 8% to $552.4 million.

Its common equity tier 1 (CET1) ratio declined by 2 basis points to 11.3%.

Why the ANZ share price may be a buy

Mr Kessler from Pengana said there are a few reasons why his fund recently increased its exposure to banks including ANZ shares.

The first point was accelerating home loan growth (supported by low-interest rates and first homeowner support). The second point was a supportive federal budget, improving housing finance approvals and house prices holding up better than expected. The third point was a meaningful reduction in loan deferrals. The final point was lower than anticipated loss provisioning.

What about the dividend?

In FY20 ANZ decided to reduce its dividend by 62.5% to $0.60 per share. Under the Australian Prudential Regulation Authority’s (APRA) guidance, banks were limited to paying dividends of 50% of the statutory profit.

There is now talk that APRA may end those dividend restrictions. According to reporting by ShareCafe, APRA boss Wayne Byers told a Sydney finance conference that:

“We have deliberately never put in place guidance for a long period of time. Obviously we will be minded how the situation has evolved. On the whole, I think the outlook has improved, bank capital has certainly increased, the economic situation looks more positive. I think it is time we look at the issue again.”

At the current ANZ share price it has a trailing grossed-up dividend yield of 3.7%. According to Commsec, it’s valued at 13x FY22’s estimated earnings. By FY23 it’s projected to be paying an annual dividend per share of $1.41, which equates to a forward grossed-up dividend yield of 8.6%.

More reading

• ASX 200 up 0.3%: Premier Investments update, big four banks rise, gold miners tumble
• Here are the ASX bank shares rated as a buy today
• Cashrewards (ASX:CRW) share price lifts on successful IPO debut
• Banks rejoice: House prices to return to 2019 levels
• CBA (ASX:CBA) and the ASX banks just had an amazing month

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Macquarie Group Ltd (ASX: MQG)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $148.00 price target on this investment bank’s shares. This follows the announcement of the acquisition of Waddell & Reed’s asset manager business for $2.3 billion. While the broker doesn’t seem 100% convinced by the acquisition in respect to strategy, it does see it as compelling financially. It is expected to be upwards of 3.5% earnings accretive in FY 2022 pre-synergies. The Macquarie share price ended the week at $141.82.

Metcash Limited (ASX: MTS)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and lifted the price target on this wholesale distributor’s shares to $3.77. The broker believes Metcash has a very positive outlook which is being underappreciated by the market. It notes that reinvestments in the independent food retail sector have been made and traditionally generate a sizeable uplift in sales. It also believes the outlook for its hardware business has improved greatly in the last few months. The Metcash share price last traded at $3.22.

MyDeal.ComAu Pty Ltd (ASX: MYD)

Analysts at Morgans have retained their add rating and $1.70 price target on this ecommerce company’s shares. According to the note, the broker was pleased with its recent update, which saw its gross transaction value almost triple in November. It also notes that it is making stronger than expected progress with its private label offering. As a result, it suspects MyDeal could outperform its forecasts in FY 2021. The MyDeal share price closed the week at $1.26.

More reading

• 5 things to watch on the ASX 200 next week
• The Nuix (ASX:NXL) share price zoomed 69% higher following its IPO
• Goldman says buy the Metcash (ASX:MTS) share price ahead of next week’s results
• ASX 200 rises on Thursday
• MyDeal (ASX:MYD) share price falls despite record November sales

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Do you have some money to invest into ASX dividend shares? There are three ideas in this article.

The official Reserve Bank of Australia (RBA) interest rate is now just 0.1%. That means the interest return from the bank is less than the rate of inflation. 

With that in mind, here are three ASX dividend shares:

Brickworks Limited (ASX: BKW)

Brickworks is biggest brickmaker in Australia and it’s one of the biggest building products businesses in the country. Aside from bricks, it sells things like masonry, paving, roofing and precast. 

It is also the leading brickmaker in the north east of the US after making some acquisitions such as Glen Gery.

Brickworks funds its dividend purely from the cashflow of its investments. It has two main asset segments.

The first segment is its large holding of Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares which it has held for decades. Soul Patts is an investment conglomerate with a diversified portfolio in many sectors. It is invested in telecommunications, building products, property, resources, financial services, agriculture and swimming schools.

Soul Patts itself is an ASX dividend share with a history of growing dividends going back to 2000. Soul Patts pays Brickworks a growing dividend from its investment income.

The other asset that Brickworks owns is half of an industrial property trust joint venture alongside Goodman Group (ASX: GMG).

Industrial properties are in higher demand because of logistics and and e-commerce demands. Brickworks is benefiting from this as the trust is building large distribution warehouses for Coles Group Ltd (ASX: COL) and Amazon. This is expected to send the gross asset value of the trust above $3 billion and increase the rental distributions from the trust by at least 25%.

At the current Brickworks share price it offers a trailing grossed-up dividend yield of 4.25%. 

APA Group (ASX: APA)

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

APA has been one of the most consistent ASX dividend shares. It has been increasing its distribution every year since before the GFC.

The infrastructure giant recently announced that it is going to invest in and construct new pipelines in WA to connect emerging gas fields in the Perth Basin to the resource rich Goldfields region. This new Northern Goldfields Interconnect (NGI) will connect to APA’s Goldfields Gas Pipeline (GGP). APA also expects that this could encourage nearby miners to want to connect to it which could unlock another stage of pipelines.

APA continues to invest in new projects which may unlock more growth of the cashflow and fund higher distributions.

At the current APA share price it offers a trailing distribution yield of 4.9%.

Bapcor Ltd (ASX: BAP)

Auto parts business is an ASX dividend share that is a popular holding of Wilson Asset Management. It’s a holding of both listed investment companies (LICs) WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX).

A recent trading update by Bapcor showed that in the first three months of FY21 (the first quarter), overall revenue went up by 27% with retail revenue growing by 47% and specialist wholesale revenue rising by 45%.

WAM says that Bapcor is benefiting from an increase in domestic travel, reduced usage of public transport and increased second-hand car sales. The fund manager believes it has a strong balance sheet and it’s well placed to make earnings-accretive acquisitions.

Bapcor has been steadily increasing its dividend over the past several years, including during the COVID-19-affected FY20. At the current Bapcor share price, it has a trailing grossed-up dividend yield of 3.5%.

More reading

• Got cash to invest? Here’s 3 ASX shares to buy
• 3 reasons why Brickworks (ASX:BKW) shares are a buy for dividends
• 2 turnaround ASX shares to buy
• 2 turnaround ASX shares rated as buys by leading fundie
• 3 ASX dividend shares to buy in December

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Bapcor, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group and COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It was another positive week for the S&P/ASX 200 Index (ASX: XJO) last week.

The benchmark index continued its strong form and recorded a weekly gain of 33 points or 0.5% to end at 6,634.1 points.

Another busy week is expected next week. Here are five things to watch:

ASX futures pointing higher.

The Australian share market looks set to start the week on a high. According to the latest SPI futures, the ASX 200 is poised to open the week 42 points higher. This follows a strong finish to the week on Wall Street. On Friday night, the Dow Jones jumped 0.8%, the S&P 500 climbed 0.9%, and the Nasdaq rose 0.7%. This led to the Dow Jones reaching a new record high.

Metcash results.

The Metcash Limited (ASX: MTS) share price could be on the move on Monday when the wholesale distributor releases its half year results. According to a note out of Goldman Sachs, its analysts are expecting Metcash to report an 11.5% increase in revenue to $7,011 million. This is expected to be driven by a 7.6% increase in Food sales, a 12% lift in Liquor sales, and a 27.5% jump in Hardware revenue. On the bottom line, Goldman is forecasting an underlying net profit after tax of $116.3 million.

Westpac AGM

The Westpac Banking Corp (ASX: WBC) share price will be on watch on Friday when the banking giant holds its annual general meeting. This annual general meeting looks set to be very different to 2019’s event. A year earlier, the bank was facing the backlash of shareholders who were angry with its handling of the money laundering and child exploitation scandal. Westpac could provide an update on its COVID-19 provisions and current trading conditions.

Bank of Queensland AGM.

The Bank of Queensland Limited (ASX: BOQ) share price will be in focus on Tuesday when it holds its annual general meeting. Shareholders will no doubt be keen to see how the regional bank is faring in the first half of FY 2021. In the last financial year the bank recorded $133 million in COVID-19 collective provisions. They will be optimistic that no further provisions will be necessary.

Dividends being paid.

A number of companies will be paying their dividends next week. This includes banking giant National Australia Bank Ltd (ASX: NAB), which is paying shareholders 30 cents per share. Also paying dividends are building products company CSR Limited (ASX: CSR), which is paying a 12.5 cents per share dividend, and grain exporter GrainCorp Ltd (ASX: GNC), which is rewarding shareholders with a 7 cents per share dividend. 

More reading

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• Are ASX stocks about to get an earnings upgrade boost in the new year?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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