Bubs Australia Ltd (ASX: BUB) is looking to follow in the footsteps of Blackmores Limited (ASX: BKL) as the infant formula company expands into the vitamins sector. What could this mean for the Bubs share price?

Expanding into vitamins

In an announcement to the market earlier this week, Bubs informed investors that the company will be entering into the vitamin and mineral supplements (VMS) category. Through an agreement with Chemist Warehouse, the company will be launching a new VitaBubs infant and children’s VMS range.

According to the company’s management, expanding into the lucrative VMS sector will allow Bubs to leverage its unique brand awareness, consumer base and marketing coverage. By tapping into Australia’s $2.3 billion VMS sector, Bubs will be able to maintain its strategy of evolving into high margin categories. In addition, the company’s launch partner, Chemist Warehouse, accounts for more than 50% of the VMS products retailed in Australia.

Bubs will be launching 40 retail products into the VMS sector that will be available in both child-friendly chewable tablets and single-serve powder sachets. The product range will tailor for new-borns through to 12-year-olds and cater for various growth and development matters.

How has Bubs performed?

In addition to its announcement to expand into the VMS sector, Bubs also released its activities report for the fourth quarter of FY20. The report indicated that the core Bubs range of goats milk infant formula products had seen a slowdown with Australian sales falling 15% during the June quarter. The fall in demand was attributed to disruptions in the logistics of the daigou trade into China as well as panic buying in the months prior sapping sales.

Despite the fall in Australian sales, the company reported a 32% increase in gross revenue of $62 million for FY20. In addition, Bubs saw China Direct sales for the fourth quarter increase 26% on the prior corresponding period. Although the company reported a negative operating cash flow of $6.9 million for the quarter, Bubs assured shareholders of its robust balance sheet, boasting $26 million in cash reserves.

Will the Bubs share price become the next Blackmores?

In my opinion, Bubs is still in the early stage of expansion in its core products of goats milk infant formula. This is because revenue is still driven by the company’s expansion into different markets, different sectors and higher margin products. By moving into the VMS sector, the company is following its growth blueprint, however it is yet to produce consistent operating and free cashflow.

Instead of jumping the gun and buying in at today’s Bubs share price, I think a more prudent strategy would be to wait until the company reports its full-year results or perhaps take a longer view and wait for the company to show signs of sustainable cash flows.  

More reading

• 3 coronavirus ASX shares to buy right now
• Why Bubs, PointsBet, Perpetual, & Waypoint shares are dropping lower
• Got $1,500? Here are 3 ASX shares I’d buy
• 2 top ASX growth shares to buy for long-term growth
• Why I would buy Pushpay and these ASX growth shares in August

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited and BUBS AUST FPO. 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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In this article I’m going to talk about three ASX dividend shares with income yields of more than 5%.

I think that ASX dividend shares are the only answer for people looking for income. The RBA interest rate is almost at 0%. That’s not going to generate much interest from a bank account.

These three ASX dividend shares offer yields that are at least 5% better than the RBA rate and I think they’re trading at pretty good value:

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns agricultural land and leases it to high-quality operators. Some of its tenants include Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE), Olam and JBS. It owns various farm types including cattle, cotton, macadamias, vineyards and almonds.

The resilience of farmland has shown through during this difficult COVID-19 period. We all need to eat, so Rural Funds and its tenants can still expect demand for the produce. Rural Funds was able to stick to its 4% distribution growth guidance in FY20 and FY21. The farmland REIT tries to grow its distribution by 4% every year.

The ASX dividend share has increased its distribution every year since it started paying one several years ago. The distribution can grow because of the built-in rental indexation that is included in Rural Funds’ rental contracts. The rental income increases by either a fixed 2.5% per annum or it’s linked to CPI inflation, plus market reviews.

At the current Rural Funds share price it offers a FY21 yield of 5.6%.

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a listed investment company (LIC) that invests in large cap ASX shares on behalf of its shareholders.

It’s not just a passive holder of shares. It actively trades, so it’s possible to make good returns even in volatile (mostly negative) periods. FY20 is a great example of WAM Leaders’ capability to outperform. In the year to 30 June 2020 WAM Leaders’ investment portfolio returned 2.7% (before expenses, fees and taxes), outperforming the S&P/ASX 200 Accumulation Index by 10.4% which returned a negative 7.7%.

The ASX dividend share can turn its investment returns into a smoothed dividend for shareholders. That dividend has grown every year since FY17 when it started paying a dividend.

At the end of June 2020 some of its largest positions included shares like Newcrest Mining Limited (ASX: NCM), OZ Minerals Limited (ASX: OZL), Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW), CSL Limited (ASX: CSL), Goodman Group (ASX: GMG), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

Thankfully it’s trading at a discount to its net tangible assets (NTA) of $1.176 per share at 30 June 2020. At the current WAM Leaders share price of $1.16, the ASX dividend share offers a grossed-up dividend yield of 8%.  

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is another agriculture-related REIT. At the moment it owns some of the largest berry and citrus farms in the country, which are leased to Costa Group Holdings Pty Ltd (ASX: CGC). The ASX dividend share has a profit share agreement with Costa, so it also suffers in bad years and benefits in good years.

I think Costa and Vitalharvest are likely to report improving operating profit numbers over the next 12 months. Despite a difficult period, at the current share price Vitalharvest still offers a distribution yield of 6.1%. A return to 2019’s profitability could mean a distribution of 5.65 cents per unit, equating to a yield of 7.2%.

I think Vitalharvest’s distribution outlook and share price could improve over the next 12 months as the new manager shifts the REIT towards assets that are used in the food supply chain process.

Primewest Group Ltd (ASX: PWG) is looking for assets that are used for food processing and food storage, on top of the usual farmland targets.

At 31 December 2019 it had a net asset value (NAV) of $0.95 per share. That means the Vitalharvest share price is trading at an 18% discount to the NAV, assuming the NAV hasn’t changed since then.

Foolish takeaway

I like all three of these dividend shares for income. Rural Funds has the most reliable distribution in my opinion. WAM Leaders has proven to be a solid performer. Vitalharvest could be the best value buy as it’s trading cheaply compared to its assets. I don’t think the market is appreciating how much value Vitalharvest offers investors at the moment.  

More reading

• 3 quality ASX dividend shares to buy in August
• 2 ASX shares I would buy for growth and income today
• Why I would buy Coles and these ASX dividend shares today
• Beat low interest rates on savings accounts with these ASX dividend shares
• Where I’d invest $9,000 in ASX shares

Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO, RURALFUNDS STAPLED, and Treasury Wine Estates 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.

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Are ASX tech shares the only way to protect your portfolio against the coronavirus?

2020 has seen something akin to what Ray Dalio might call a ‘paradigm shift’ for investors right around the world. With a rampaging pandemic, the way we spend money has changed, and fast. And when we change how we spend money, it changes the manner in which every company on the ASX receives revenue. As the old adage goes, one person’s spending is another person’s income.

One massive facet of this ‘paradigm shift’ has been an acceleration of the trend towards all things digital. As most of us could barely leave the house over March and April, we had to change how we ate, how we shopped, how we worked and how we entertained ourselves. So it’s no surprise that US tech companies like Slack, Microsoft, Amazon and Netflix have seen their share prices balloon over the course of the year so far.

But what of ASX shares?

Comparatively speaking, the ASX doesn’t have as much exposure to the tech space as our friends over in the US. Lacking big names like Alphabet or Microsoft, our largest companies are still mostly banks and miners. Even the home-grown Atlassian now counts itself as a US tech company — our loss, their gain.

ASX tech shares on fire

But this hasn’t stopped ASX tech shares from receiving a lot of investor attention since March. Just think of Afterpay Ltd (ASX: APT). Its share price is up an astonishing 670% since 23 March. Or Appen Ltd (ASX: APX), up more than 100%. Maybe Seek Ltd (ASX: SEK) with 87%. Or Xero Limited (ASX: XRO) with 57%.

Meanwhile, a blue chip share like Westpac Banking Corp (ASX: WBC) is ‘only’ up a touch over 20% over the same period. Woolworths Group Ltd (ASX: WOW) shares haven’t offered too much relative upside either, with a 6.4% gain. And our largest company CSL Limited (ASX: CSL)? It’s gone backward since 23 March.

So are ASX tech shares (or US tech shares if you’re so inclined) the only way to protect your portfolio against the coronavirus pandemic?

Well, I do think the investing landscape has changed, and semi-permanently so. There’s no question that the pandemic has accelerated technological adoption. But I don’t think ASX tech shares are the only way to protect a portfolio.

Just this week, ASX gold miners like Newcrest Mining Limited (ASX: NCM) have been in the spotlight due to the price of gold breaking its all-time high. That’s one avenue of exploration to consider (no pun intended) for portfolio protection. Ditto with waste companies like Cleanaway Waste Management Ltd (ASX: CWY), which is about as far from an exciting tech stock as you can get.

It may be morbid to consider, but funeral provider InvoCare Limited (ASX: IVC) benefits from the former of the two certainties of life.

Foolish takeaway

Whatever happens with the coronavirus, companies like Cleanaway, InvoCare and Newcrest are going to have solid markets with solid demand. Thus, I don’t think you need to solely chase ASX tech shares for your portfolio if you don’t wish. There’s plenty of fish in the sea!

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Is the Newcrest share price a buy?
• What would deflation mean for your ASX shares?
• WAAAX shares see mixed recovery from COVID-19
• Top broker warns earnings expectations for the ASX reporting season are too high

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Newcrest Mining Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares), InvoCare 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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If you’re looking for some dividend shares to buy in August, then I think it would be worth considering the three listed below.

Here’s why I think they are in the buy zone:

BWP Trust (ASX: BWP)

The first ASX dividend share I would buy is BWP. I’m a big fan of the real estate investment trust due to my belief that it is well-positioned to continue growing its income and distribution throughout the pandemic and beyond it. This is because BWP’s warehouses are predominantly leased to home improvement giant, Bunnings Warehouse. Given how Bunnings is one of the best retailers in the country and government stimulus is supporting the home improvement market, I believe the risk of store closures and rental defaults is extremely low and periodic rental increases remain possible. At present I estimate that its units offer a FY 2021 4.7% yield.

Lendlease Group (ASX: LLC)

Another dividend share that I would suggest income investors consider buying is Lendlease. The international property and infrastructure company had a tough time in FY 2020 and reported a material drop in profits. However, I believe the worst is now behind the company and it is well-placed to return to growth. Especially given its burgeoning global development pipeline, which includes a mega project with Google. I estimate that the company will pay a 57 cents per share dividend next year. Based on the current Lendlease share price, this equates to a 4.9% dividend yield.

Rural Funds Group (ASX: RFF)

A final ASX dividend share to consider buying is Rural Funds. I think the agriculture-focused property group is one of the best income options due to the quality and diversity of its assets and its very positive long term outlook. This is thanks to its long tenancy agreements with some of the biggest players in the industry and their periodic rental increases. I believe this puts Rural Funds in a position to continue growing its distribution during the pandemic and beyond. In FY 2021 it expects to pay shareholders a 11.28 cents per share distribution. Based on the latest Rural Funds share price, this equates to a 5.6% yield.

More reading

• 2 ASX shares I would buy for growth and income today
• Why I would buy Coles and these ASX dividend shares today
• Beat low interest rates on savings accounts with these ASX dividend shares
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• 2 of the best ASX dividend shares to buy now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) gave back its strong morning gains to finish the day lower. The benchmark index fell 0.4% to 6,020.5 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to drop lower.

The ASX 200 is expected to drop lower again on Wednesday after a poor night of trade on Wall Street. According to the latest SPI futures, the benchmark index is expected to fall 24 points or 0.4% at the open. On Wall Street the Dow Jones fell 0.8%, the S&P 500 dropped 0.65%, and the Nasdaq tumbled 1.3% lower.

Rio Tinto half year results.

The Rio Tinto Limited (ASX: RIO) share price will be one to watch on Wednesday when it releases its half year results. According to a note out of Goldman Sachs, it expects the mining giant to report underlying earnings of US$4 billion and underlying EBITDA of US$9.1 billion. In respect to its dividend, Goldman is expecting Rio Tinto to declare a US$1.51 per share interim dividend.

Virgin Money UK Q3 update.

The Virgin Money UK PLC (ASX: VUK) share price could be on the rise today following the release of its third quarter update after the market close on Tuesday. The UK-based bank reported a 4.8% increase in customer deposits to £67.7 billion and a 5.7% increase in Business lending growth to £8.8 billion. Over in the UK, the Virgin Money share price rose 2.5% overnight.

Oil prices pull back.

Energy producers including Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) could come under pressure today after oil prices pulled back. According to Bloomberg, the WTI crude oil price fell 1.3% to US$41.06 a barrel and the Brent crude oil price dropped 0.35% to US$43.26 a barrel. Oil prices tumbled after rising coronavirus cases sparked demand fears.

Gold price jumps again.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could be on the rise again on Wednesday after the gold price continued its ascent. According to CNBC, the spot gold price rose 1% to US$1,950.30 an ounce. This could be the start of even greater rises, with some analysts tipping the price of the precious metal to go materially higher from here.

More reading

• Are ASX tech shares the only way to protect your portfolio against the coronavirus?
• Is the Newcrest share price a buy?
• ASX 200 down 0.4%, Credit Corp and Temple & Webster impress
• Will Rio Tinto pay a special dividend tomorrow?
• Virgin Money UK share price on watch after Q3 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. 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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