Following a slump in new deals during the early months of the COVID-19 pandemic, mergers and acquisitions are showing renewed signs of life.

In the biggest healthcare acquisition to date in 2020, Siemens Healthineers AG (FRA: SHL) will buy Varian Medical Systems, Inc. (NYSE: VAR) for 15.2 billion euros (AU$25 billion).

As first reported by Bloomberg, the acquisition will be financed via a bridge loan from parent company Siemens AG. (Now that’s a nice parental loan!) Healthineers offered $177.5 per share. That was 24% above Varian’s closing price on Friday of US$142.72.

Siemens will not participate in a capital raising that Healthineers has planned for later this year. But the company reported its ownership of the Healthineers branch is expected to drop from 85% to 72%.

The acquisition is expected to benefit both companies. As Bloomberg notes, they “have collaborated for more than a decade in areas such as radiotherapy diagnostics for cancer treatments.”

A snapshot of Siemens Healthineers and Varian Medical Systems

Based in Erlangen, Germany, Siemens Healthineers is a medical technology company with a market cap of $43.3 billion. In March 2020, it reported quarterly revenues of $3.7 billion, up 5.1% year-on-year. Net profits were up 4.0%.

At time of writing, in early morning trade on the German stock exchange, the share price is up 3.1% on the news. After following most shares lower in late February and into March, the share is up 6.0% year-to-date.

As for the new acquisition…

Varian Medical Systems designs and makes radiation oncology treatments and software. The company is based in Palo Alto, California in the United States. Year-to-date, prior to the acquisition, the Varian share price was down 1.4%.

With Varian under its wing, Siemens Healthineers is an international share you may want to look into more closely for your long-term portfolio. And it’s another good reminder of why Australian investors should look beyond the ASX for quality shares to help diversify their portfolios.

More reading

• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• Where to invest $20,000 into ASX shares right now
• Beat interest rate cuts with BHP and this ASX dividend share
• Why I would buy and hold CSL and these ASX healthcare shares
• Is the Wesfarmers or Rural Funds share price a buy for dividend income?

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

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The S&P/ASX 200 Index (ASX: XJO) has ended the day down 0.03% to 5,926 points.

COVID-19 updates

There were a number of announcements relating to COVID-19 and associated impacts today.

South Australia reported two new COVID-19 cases and changed some of its restrictions. The number of people who can be at home gatherings has been reduced from 50 to 10 and at licensed premises only seated consumption will be allowed. NSW reported another 13 cases of COVID-19 today.

Melbourne is entering stage four restrictions this week. Abattoir production will be reduced by a third, most retail stores will be closed except for essentials like supermarkets, post offices, convenience stores, pharmacies, and so on. Construction sites will only be allowed to have a small number of people working there.

SEEK Limited (ASX: SEK) cancels final FY20 dividend

The employment business recently paid its FY20 interim dividend but has decided not to pay its final FY20 dividend to preserve capital so that it can fund its long-term growth strategy in this uncertain environment.

SEEK also announced it has been successful at increasing and extending its debt.

The CEO and co-founder of ASX 200 company SEEK, Andrew Basset, said: “The combination of our debt capital market transactions and the decision not to pay a final FY2 dividend increases our funding flexibility so we can continue to invest for the long term, even in this uncertain economic environment. The dividend decision was not taken lightly but we believe it is the right trade-off to maximise returns for long term shareholders. Once economic conditions improve, we intend to resume payment of dividends.”

The SEEK share price fell 2.25% today.

Tabcorp Holdings Limited (ASX: TAH) announces big asset writedown

Tabcorp announced today that after reviewing its balance sheet, it expects to incur a goodwill impairment charge of between $1 billion to $1.1 billion in FY20.

The ASX 200 share said it relates to the wagering and media business as well as the gaming services business. Tabcorp said the impairment reflects the impact of government and other measures to address the COVID-19 pandemic on business operations. It also reflects the economic uncertainty as well as the competitive intensity and structural changes in the industry.

Tabcorp announced that it expects FY20 earnings before interest, tax, depreciation and amortisation (EBITDA), before significant items, to be in the range of $990 million to $1 billion. This is a decline from FY19’s EBITDA of $1.124 billion.

It also expects FY20 net profit after tax (NPAT), before significant items, to be in the range of $267 million to $273 million – down from $396 million last year.

The Tabcorp share price dropped 1.7%.

Rural Funds Group (ASX: RFF) acquisition

Rural Funds, the farm landlord, has announced an acquisition today.

It said it’s contracted to acquire 5,409 ha of sugar cane farms, with the associated plant and equipment), as well as 8,060 ML of water entitlements from MSF Sugar for $81.1 million, excluding transaction costs.

Rural Funds’ manager said it intends to progressively convert the farms to approximately 2,200 ha of macadamia orchards, with a substantial portion of the remaining area able to be used for cropping. Rural Funds is in discussions with several potential lessees and it will provide further details in the future.

Around a quarter of the MSF farms are leased at rates consistent with Rural Funds’ other natural resource predominant assets. Management will seek to lease the rest of the cane farms.

The transaction includes a two-year off-take agreement for the cane produced on the farms, or a reduction in the purchase price.

Rural Funds said the deal includes an opportunity to buy more water rights. Settlement is expected to occur in October 2020 and will be funded from an increased debt facility.

There are no changes to the forecast FY21 distribution of 11.28 cents per unit.

The Rural Funds share price dropped 0.5% today.

More reading

• Where to invest $20,000 into ASX shares right now
• Is the Wesfarmers or Rural Funds share price a buy for dividend income?
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower
• SEEK share price tumbles after cancelling its FY 2020 final dividend

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At the weekend I looked into how $20,000 investments in a number of popular ASX shares had fared over the last 10 years. You can read about how successful those investments were here.

But that was the last 10 years, what about the next decade?

Listed below are three ASX shares that I believe could be top options for a $20,000 investment in August. Here’s why I think they could be future market beaters:

Pushpay Holdings Group Ltd (ASX: PPH)

I think Pushpay would be a fantastic option for a $20,000 investment. It is growing technology company which provides churches and not-for-profits with a donor management platform. Adoption of the platform has been increasing rapidly over the last few years and looks set to continue doing so during the pandemic. Especially given the rise of the cashless society, which is making it even more important for churches to go digital. Management appears confident that FY 2021 will be another year of strong growth. It recently revealed that it expects to double its operating earnings this year. 

REA Group Limited (ASX: REA)

Another option I would put $20,000 into is REA Group. It is the leading property listings company in the Australia market with its realestate.com.au website. In addition to this, the company has similar real estate websites in Europe, Asia, and the United States. Although REA Group is experiencing a sizeable reduction in listing volumes during the pandemic, it has managed to offset its weaker revenues through cost cutting. I believe this demonstrates the resilience of its business model and positions it perfectly to accelerate its earnings growth when the headwinds finally ease.

SEEK Limited (ASX: SEK)

A final share which I think could be a good option for a $20,000 investment is SEEK. I’m a big fan of the job listings company due to its dominant position in the ANZ market and its growing China-based business. Although times are admittedly hard because of the pandemic, as with REA Group, I believe its growth will accelerate once trading conditions ease. Especially given its rapidly growth Zhaopin business in the massive China market. Later this decade SEEK is aiming to grow its revenue to $5 billion. I’m confident it will achieve this, which will mean a material increase on the revenue of $1,575 million it expects to report in FY 2020.

More reading

• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• Why ANZ, Flight Centre, SEEK, & Tabcorp shares are dropping lower
• SEEK share price tumbles after cancelling its FY 2020 final dividend
• Top ASX Stock Picks for August 2020

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX, REA Group Limited, and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Tomorrow afternoon the Reserve Bank will meet to discuss the cash rate.

At present cash rate futures are pricing in a 57% probability of a rate cut to zero at tomorrow’s meeting.

While I’m not overly convinced the central bank will cut rates again, I am very confident that it will be a long time before we see another rate increase.

In light of this, I think ASX dividend shares will remain the best place to invest your money for income for the foreseeable future.

With that in mind, I have picked out two dividend shares which I think would be great options for income investors:

BHP Group Ltd (ASX: BHP)

If you don’t mind investing in the resources sector, then I think BHP would be a good option for income investors. I believe the mining giant is well-positioned to generate strong free cash flows in FY 2020 and FY 2021 thanks to its low cost operations and favourable commodity prices. Especially given the sky high iron ore price, which currently sits north of US$110 a tonne. This compares to the company’s full year cost guidance of just US$13 to US$14 per tonne, which it recently revealed it expects to beat. Based on the current BHP share price, I estimate that its shares offer investors a forward fully franked ~4.5% dividend yield.

BWP Trust (ASX: BWP)

A second dividend share to consider buying is BWP Trust. It is the largest owner of Bunnings Warehouse sites in Australia with a portfolio of 68 stores leased to the hardware giant. Thanks to the strength of the Bunnings business, BWP appears to have been unaffected by the pandemic and continues to collect rent as normal. In light of this, it recently revealed that it expects to be able to pay its distribution as normal this year. And looking to the future, I believe periodic rental increases mean the trust is well-placed to grow its income and distribution at a consistent and modest rate annually for the foreseeable future. Based on the current BWP share price, its shares currently offer a generous 4.8% distribution yield.

More reading

• These were the worst performing ASX 200 shares in July
• 7 ASX shares to watch this reporting season
• 5 things to watch on the ASX 200 next week
• Buy these ASX ETFs for dividends in August
• The rocketing Aussie is shaping up as a new threat to the profit season

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. 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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Due to favourable long term industry tailwinds, I’m particularly positive on the healthcare industry.

But with so many top shares to choose from in the industry, it can be difficult to decide which ones to buy.

To narrow things down I have picked out three ASX healthcare shares that I believe would be fantastic long term options for investors. They are as follows:

CSL Limited (ASX: CSL)

The first healthcare share I would buy is CSL. It is one of the world’s leading biotherapeutics companies and has a portfolio of life-saving therapies and vaccines. Pleasingly, the company isn’t resting on its laurels and is investing heavily in its research and development. This year I expect CSL to invest somewhere in the region of ~US$900 million into these activities. These annual investments mean the company has a large number of therapies in its pipeline that have the potential to generates significant sales over the next decade. Overall, I believe CSL is well-positioned to continue growing its earnings at a solid rate for the foreseeable future.

iShares Global Healthcare ETF (ASX: IXJ)

Another healthcare option for investors to consider is the iShares Global Healthcare ETF. It provides investors with exposure to companies across a range of sectors including biotechnology, pharmaceutical, and medical devices. This includes many of the world’s biggest healthcare companies such as CSL, Johnson & Johnson, Novartis, and Pfizer. Given the increasing demand for healthcare services globally, I believe this group of companies could outperform the market over the long term. This could make it a quality option for investors.

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care has been battling with tough trading conditions for a couple of years and things are unlikely to get easier in the immediate term. However, I believe this is already factored into the Ramsay share price. As a result, I think now is the time to focus on the long term. Which I believe looks very positive due to the expected increase in demand for healthcare services and its global footprint. In addition to this, Ramsay has a long history of growing through acquisitions. I suspect there could be more coming in the not so distant future, expanding the company’s operations into new geographies.

More reading

• CSL and 1 other ASX 200 growth share to buy for long-term growth
• Top ASX Stock Picks for August 2020
• Top brokers name 3 ASX shares to buy next week
• Is the Woolworths share price in the buy zone?
• Brokers name 3 ASX 200 shares to buy right now

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

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Is the share price of Wesfarmers Ltd (ASX: WES) or Rural Funds Group (ASX: RFF) a buy for dividend income?

I think they could be two of the best dividend shares within the ASX 300.

We have seen the dividends dramatically cut from businesses like National Australia Bank Ltd (ASX: NAB) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

But some businesses could be much better dividend options for a few different reasons:

Earnings reliability

I think both Wesfarmers and Rural Funds have shown they have resilient earnings during this difficult period.

Resilient earnings should mean more resilient share prices for Rural Funds and Wesfarmers.

Wesfarmers boasted of a strong performance during FY20. In the second half of FY20 Bunnings sales were up 19.2%, Officeworks sales were up 27.8%, Catch’s gross transaction value was up 68.7%, Kmart sales were up 4.1% and Target sales were down 1.8%.

A business which generates solid revenue should translate into solid profit and the board can decide to pay a good dividend.

Agricultural real estate investment trust (REIT) Rural Funds reaffirmed its guidance of adjusted funds from operations (its cash net rental) of 13.5 cents per share. I think having no change to your earnings guidance definitely counts as being resilient. It also helps that it has a diverse farming portfolio. 

I think it’s no surprise that the Wesfarmers and Rural Funds share prices are trading at close to their pre-COVID-19 levels.

Growth plans

Shares aren’t term deposits that deliver a flat return year after year. If a business isn’t growing then I think it’s in danger of going backwards and becoming a dud share with a dropping share price.

I like the direction that Wesfarmers is going. It’s trying to diversify its operations with lithium mining and online retail. I like that Bunnings has a national online retail presence. The Catch acquisition was a great buy considering how much ecommerce has exploded due to COVID-19.

For the Wesfarmers and Rural Funds share prices to rise over time, they must grow their profit and business values.

Rural Funds has actually announced some acquisition news today. It’s buying 5,409 ha of sugar cane farms with the associated plant and equipment as well as 8,060 ML of water entitlements for $81.1 million.

The REIT plans to turn approximately 2,200 ha of that into macadamia orchards and a substantial portion of the remaining area able to be used for cropping. This deal will be funded from an increase of the debt facility.

Commitment to shareholder returns

Rural Funds still plans to pay a FY21 distribution per unit of 11.28 cents. Wesfarmers is projected to pay $1.50 of dividends per share in FY21.

Both of these businesses are committed to paying out good levels of profit each year to shareholders.

Rural Funds tries to increase its distribution by 4% each year whilst also retaining some of the cash rental profit each year to invest in growth. Wesfarmers doesn’t have such a specific dividend growth target, but as its earnings grow over time it can fund a higher dividend.

Current dividend yields

Based on the above FY21 dividend expectations, at the current share price Wesfarmers currently has a forward grossed-up dividend yield of 4.7%. At today’s Rural Funds share price it offers a forward distribution yield of 5.6%.

These are not big yields, but considering the RBA interest rate is now just 0.25%, I think those starting yields are pretty good. Don’t forget, those dividends will hopefully grow over time. So the FY21 yield is just the starting yield on cost.

Foolish takeaway

I like both of these ASX shares as potential long-term investments. However, I think the resurgence of COVID-19 may cause a short-term hit to Wesfarmers. Whereas, hopefully, Rural Funds will be largely unaffected. So at the current share prices I think I’d go for Rural Funds first.

More reading

• 3 of the best ASX dividend shares to buy right now
• These ASX dividend shares could be perfect for retirees
• Are ASX travel shares like Webjet cheap enough to buy?
• 2 top ASX dividend shares to buy for income in 2020
• 3 ASX dividend shares with yields over 5%

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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 Viva Energy Group Ltd (ASX: VEA) share price is up by 5.59% to $1.70 at the time of writing, following a business update by the company.

What was in the announcement?

Viva Energy announced that total petrol and diesel sales in Victoria for the month of July 2020 were in line with sales in July 2019. This outcome was achieved despite coronavirus lockdowns in Victoria, with the company citing strong agricultural demand as a driver of sales. Victorian petrol sales alone were down 25% compared to the same period last year. 

The company reported that petrol sales across Australia without the inclusion of Victoria were down 11% in July compared to the same period last year. 

The announcement referred to stage 4 coronavirus lock downs in Victoria, stating: “The company is closely monitoring the situation and assessing any further potential impacts on Victorian fuel sales and refining production as a result of these additional measures.”

About the Viva Energy share price

Viva Energy is the operator of the Geelong Refinery in Victoria. It supplies more than 1,260 service stations in Australia with liquid fuels and lubricants. The company also supplies aviation fuels, marine fuels, bulk fuels and chemicals.

Viva Energy recently bought back 1.93 billion ordinary shares for $4.84 billion. 

For the first half of 2020, Viva Energy released unaudited underlying net profit after tax guidance of $20 million to $50 million. This compared to underlying net profit after tax of $50.9 million in the first half of 2019.

The company sold 833 mega litres of fuel in April and 922 mega litres in May, down from 1,219 mega litres in March.

In the 2019 financial year, Viva Energy had earnings before interest tax depreciation and amortisation of $644.5 million. That financial year saw a record operational performance by the company’s refinery asset.

The Viva Energy share price is up 51.79% from its 52-week low of $1.12, however, it is down 11.46% since the beginning of the year. The Viva Energy share price is down 28% since this time last year.

More reading

• Why Adbri, Domino’s, Event, & Viva Energy shares are dropping lower

Motley Fool contributor Chris Chitty 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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The Kogan.com Ltd (ASX: KGN) share price was an exceptionally strong performer once again on Monday.

The ecommerce company’s shares were up as much as 11% at one stage, before ending the day 9.5% higher at $18.25.

This latest gain means the Kogan share price is now up 430% from its March low of $3.45.

Why did the Kogan share price rocket higher today?

Investors have been fighting to get hold of Kogan’s shares again after the Victorian state government declared a state of disaster and announced a six-week lockdown.

While supermarkets such as Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES) operated Bunnings home improvement stores are likely to remain open as normal, non-essential retailers are expected to close.

As we have seen over the last few months, this has accelerated the shift to online shopping and led to a material increase in sales and customer numbers for ecommerce companies such as Kogan and Temple & Webster Group Ltd (ASX: TPW).

Investors appear confident that this will be the case again with the Victorian lockdown, which could position Kogan for another outstanding quarter of sales and profit growth.

Pleasingly, they may not have to wait long for Kogan to reveal how it is performing. It is scheduled to release its full year results in two weeks on Monday 17 August 2020. I suspect the company will provide investors with an update on trading during the first quarter with its results.  

Is it too late to invest?

I think Kogan’s shares are looking fully valued now, so I wouldn’t buy them if you’re just looking for a quick gain.

However, I would be a buyer of them if you plan to hold on for the long term. Given its positive long term outlook from the shift to online shopping, potential acquisitions, and its expansion into other verticals, I believe Kogan can grow significantly over the next decade.

This could make the Kogan share price a market beater over the 2020s.

More reading

• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• Which shares to watch this ASX earnings season
• Why Alliance Aviation, Cochlear, Kogan, & Netwealth shares are storming higher
• Top ASX Stock Picks for August 2020
• 7 ASX shares to watch this reporting season

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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