The month after reporting season in August can be a great time to choose which companies to invest in. Trawling through half-year and full-year reports will give you a good financial snapshot of the company you may be looking to buy in.

As Warren Buffett once said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Here are my top 2 dividend shares that I would be happy to pick up today.

Dicker Data Ltd (ASX: DDR)

This leading Australian wholesale and distributor of computer hardware and software has been a great option for investors looking for frequent and reliable dividends.

The company has defied market conditions and soared during COVID-19 thanks to the ongoing demand for its products and services. Since March, the Dicker Data share price has jumped from $3.90 to $7.36 at the time of writing. That’s a return of 88% in the last 6 months, not including the quarterly dividend the company pays.

For the past 12 months, Dicker Data has paid out 38 cents for every 1 share held to its investors. That represents a fully-franked 5.1% dividend yield.

The company has been growing its vendor agreements while at the same time diversifying its revenue by reducing the reliance on its tier 1 clients. Last month, Dicker Data booked more than $1 billion in revenue, a record for the wholesale and distributor business.

To support further growth, the company’s new distribution centre is expected to be completed at the end of the year. The warehouse space will increase 80% to 23,500 sq metres in the first stage, with an additional 20,000 sq meters approved  in a second stage.

I think that Dicker Data is a great dividend share to add to your portfolio.

Fortescue Metals Group Limited (ASX: FMG)

As one of the world’s largest iron ore producers, the Fortescue share price has skyrocketed in recent times. In 2016, Fortescue hit a multi-year low of $1.62 amid an oversupply of iron ore that dragged market prices down.

Today, the Fortescue share price is fetching $17.53, at the time of writing. This year alone, Fortescue rewarded shareholders with dividends of $1.76. That’s a 108% pay-out of an initial investment in just 12 months had you invested 4 years ago.

Of course, the record share price and dividends handed to investors come on the back of the rising spot price of iron ore. However, the company has made inroads in amplifying its profit through cost cutting measures and debt reduction.

I believe that the iron ore mine still has a lot of runway left. The company boasts the worlds’ lowest cost position on extracting and refining iron ore, and has invested in its expansion plans on the Eliwana Mine and Rail project, and Iron Bridge Magnetite project.

Thus, with a dividend yield of 11.1%, the Fortescue share price is a solid buy for investors seeking shareholder value and dividend growth.

More reading

• Insiders have been buying Fortescue and this ASX share
• Fortescue share price drops lower despite positive update
• Why you should buy ASX copper miners in this market meltdown
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• The one type of ASX company that outperforms all others

Motley Fool contributor Aaron Teboneras owns shares of Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data 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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2020 has been a tough year to choose shares as a beginner investor. We had one of the worst S&P/ASX 200 Index (ASX: XJO) market crashes in history this year in March, followed by one of the strongest bull markets the ASX has seen. You might be painfully put off investing or delusionally exuberant in equal measure.

Rather than chasing ‘hot stocks’ like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), I think beginner investors are far better buying steady, long-term focused shares instead. These might not be as exciting as some other options on the ASX menu, but I think there’s less chance of getting heartburn all the same. On that note, here are some ASX shares I think are perfect for beginner investors to ‘cut their teeth’ on.

2 ASX shares perfect for beginners

Argo Investments Limited (ASX: ARG)

Argo is a listed investment company (LIC) that is one of the oldest on the ASX, having started life back in 1946. Since then, Argo has honed a reputation as a solid, reliable company with its shareholders’ interests at heart. It invests in a large and diversified portfolio of ASX blue chip shares and pays out a sturdy and substantial dividend. Some of its top holdings include CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP) and Wesfarmers Ltd (ASX: WES). On current prices, Argo’s dividend equates to a trailing yield of 4%, or 5.71% grossed up with Argo’s full franking. With such a robust history, diversified portfolio and substantial dividend yield, I think Argo is a perfect share for a beginner in 2020.

2) iShares Global 100 ETF (ASX: IOO)

This exchange-traded fund (ETF) is another ASX investment that I think would make a perfect share for a beginner. Its premise is relatively simple: IOO holds 100 of the largest companies in the world, all hailing from advanced economies like the United States, Canada, the United Kingdom and Japan. Some of its top holdings include the FAANG stocks like Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN), as well as other famous names like Toyota, Nike Inc. (NYSE: NKE), Microsoft Corporation (NASDAQ: MSFT) and Nestle.

I think this ASX share is perfect for a beginner as it is highly diversified and only holds robust, large companies with global presences and powerful brands. IOO has returned an average of 13.1% per annum over the past 10 years and offers a trailing dividend yield of 1.47% as well.

Foolish takeaway

Both of these shares, I believe, would make perfect shares for a beginner investor. Argo focuses exclusively on Australian shares, whereas IOO is a globally focused fund. You could choose your preference or hold both in your beginner portfolio with no trepidation at all, in my opinion.

More reading

• Argo share price rises following profit slump

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers Limited. The Motley Fool Australia has recommended Amazon, Apple, and Nike. 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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Every so often, I like to take a look to see which shares have experienced meaningful insider buying.

This is because insider buying is often regarded as a bullish indicator, as few people know a company and its intrinsic value better than its own directors.

A number of shares have reported meaningful insider buying this week. Here are a couple which have caught my eye:

Fortescue Metals Group Limited (ASX: FMG)

A change of director’s interest notice reveals that one of this iron ore producer’s non-executive directors has been buying shares recently. According to the notice, Ya-Qin Zhang picked up 12,000 shares through an on-market trade on 27 August. The director paid a total of $230,040 for the shares, which equates to an average of $19.17 per share.

This was just a fraction short of its record high of $19.56, which appears to indicate that the director is confident in Fortescue’s future and sees value in its shares at the current level. And with the spot iron ore price currently fetching ~US$126 a tonne, I would have to agree. Fortescue looks likely to generate bumper free cash flows again in FY 2021. This could mean more generous dividends for shareholders. As a result, I think this could make it a great option for income investors.

Inghams Group Ltd (ASX: ING)

This poultry producer has experienced a large amount of insider buying this month. According to a series of notices, no less than five of the company’s directors have been increasing their holdings through on-market trades. The two largest purchases came from non-executive director Michael Ihlein and chairman Peter Bush.

Mr Ihlein picked up 45,455 shares on 1 September for an average of $3.29 and Mr Bush paid an average of $3.21 for 50,000 shares a day later. This represents total considerations of $149,546.95 and $160,500, respectively. Judging by these purchases, it would appear as though Inghams’ directors believe the worst is over for the company after a difficult 12 months.

More reading

• The best dividend shares to buy today
• Fortescue share price drops lower despite positive update
• Why you should buy ASX copper miners in this market meltdown
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• The one type of ASX company that outperforms all others

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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The Redbubble Ltd (ASX: RBL) share price has soared an astounding 759% from its low in late March. But, like much of the wider share market, the Redbubble share price is today falling sharply lower.

Redbubble is an online marketplace that allows independent artists to connect with customers and fulfil orders through print on demand technology. 

The online retailer has been a clear winner during the COVID-19 pandemic. With consumer spending patterns changing, Redbubble has seen enormous growth in its online marketplace.

This growth has been reflected in the Redbubble share price. However, given its meteoric rise, many investors may now be questioning the sustainability of such a run.

How has Redbubble performed?

In late August, the company reported an impressive performance for FY20 which resulted in the Redbubble share price edging higher.

The company’s annual report was highlighted by a 36% lift in sales revenue for the full-year of $416 million. Redbubble also reported operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $5.1 million. This represented a $7 million turnaround from the company’s $2 million deficit in FY19.

According to Redbubble, the surge in sales revenue was attributed to consumer demand for face masks. Mask sales accounted for $12.1 million in revenue.

Redbubble was also a haven for artists and small-businesses impacted by the pandemic. As a result, the company doubled its number of selling artists to 511,000 for FY20.

Is Redbubble’s growth sustainable?

As a result of securing more independent artists, Redbubble believes that more customers will be attracted to the platform. The company has a global supply chain, with over 60 product offerings including stickers, t-shirts, art and home décor.

In FY20, Redbubble also managed to improve its marketing efficiency and reduce operating expenditure. If the company is able to retain artists and drive repeat customers, it should be able to retain its rate of growth.

In addition, Redbubble has a few structural tailwinds in its favour. These include the emergence of the ‘stay at home’ economy and irreversible shift to online shopping. A recent note from broker Morgan Stanley has reiterated this outlook for Redbubble.

Is today’s Redbubble share price a buy?

The Redbubble share price has, historically, been correlated with an accelerating and decelerating growth profile.

Despite reporting substantial growth, the company still reported a net loss for FY20. As a result, I can’t justify Redbubble’s current share price based on its recent performance. This is despite the Redbubble share price falling 9.6% lower to currently trade at $3.95, at the time of writing.

The fact that mask sales were a key driver in sales revenue also makes me question how sustainable the company’s future growth is. No doubt, Redbubble does have the opportunity to take advantage of structural tailwinds post-pandemic. However, I believe the company needs to see repeat business consistently in order to justify its current valuation.

More reading

• Why the Afterpay share price crashed 9% lower today
• Why Redbubble and this ASX share just stormed to record highs
• Why Afterpay, IOOF, Redbubble, & Zip shares are dropping lower
• Why it makes sense to invest in ASX tech shares
• Why Lendlease, Redbubble, SeaLink, & Starpharma shares are pushing higher

Motley Fool contributor Nikhil Gangaram 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 $50 billion market wipe-out is the buying opportunity many late-to-the-party investors have been hoping for. And top brokers have a few recommendations on the ASX stocks you should be putting on your shopping list.

The S&P/ASX 200 Index (Index:^AXJO) crashed close to 3% in the last hour of trade and every sector is wallowing in red ink.

This is how I know the market plunge is a buying opportunity as the selling is indiscriminate. Take the Graincorp Ltd (ASX: GNC) share price as an example.

ASX stock to buy on expected upgrade

Shares in the grain handler capitulated 2.9% to $4.38 at the time of writing even though Macquarie Group Ltd (ASX: MQG) believes its cum-earnings upgrade.

The defensive stock isn’t driven as much by economic cycles or COVID-19 as it is by weather. On that front, investors have reason to be excited. The Australian Bureau of Agricultural and Resource Economics (ABARES) estimated the winter 2020/21 crop was 21.5 million tonnes (mmt).

“We have been expecting a much stronger 2020/21 winter crop vs pcp of 11.4mmt given the turnaround in seasonal conditions over the past eight months,” said the broker.

“Industry feedback suggests that ABARES first crop production estimate of 21.5mmt is conservative.”

Raining cash

Macquarie thinks the crop could be as much as 27.3mmt and that would translate to around $50 million extra for Graincorp.

The stock is the broker’s top pick for the sector and Macquarie reiterated its “outperform” rating and 12-month price target of $4.79 a share.

Competitive edge

Another stock to buy in the sell-off is the James Hardie Industries plc (ASX: JHX) share price. Shares in the building materials supplier was demolished by 3.8% to $30.12 in late trade.

But Credit Suisse reiterated its “outperform” recommendation on the stock as it’s well placed to not only outpace the market but its rivals.

“JHX’s internal initiatives (manufacturing, supply chain) have given the co a clear advantage, outperforming peers in the [June quarter],” said the broker.

“JHX issued FY21 guidance, unlike many building product peers, a good sign of operating performance.”

Faster pace of growth

This advantage will allow James Hardie to capture market share at a time when US housing is booming, despite the pandemic.

“We believe JHX’s market share growth can continue, with industry discussions suggesting JHX has been able to meet the unprecedented demand, whilst competitors have been struggling to keep up, particularly as industry inventories remain low,” explained Credit Suisse.

The broker’s 12-month price target on James Hardie is $34.90 a share.

More reading

• I love volatile ASX share market days like today
• Why the Transurban share price is outperforming today
• Why ASX investors shouldn’t fear a market crash
• ASX 200 down 2.75%: Afterpay & Appen sink lower, SKYCITY pushes higher
• Why you should buy ASX copper miners in this market meltdown

Motley Fool contributor Brendon Lau owns shares of James Hardie Industries plc and Macquarie Group Limited. Connect with me on Twitter @brenlau.

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

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If you’re looking for market beating returns over the 2020s, then I think the three ASX growth shares listed below would be worth considering.

Especially after today’s market selloff dragged them down to much lower levels.

I believe that all three are well-placed to grow their earnings at a rapid rate over the coming years. Here’s why I would buy them after the selloff:

ELMO Software Ltd (ASX: ELO)

ELMO provides a unified software platform which allows businesses to streamline a range of processes. It has been growing at a strong rate over the last few years, leading to stellar recurring revenue growth. Pleasingly, this growth continued during the pandemic and is expected to be sustained in FY 2021. Management recently provided annual recurring revenue (ARR) guidance of $65 million to $70 million this year. This represents year on year growth of 18% to 27%. Importantly, this guidance is all organic and doesn’t include the benefits of potential acquisitions. ELMO has upwards of $140 million in cash that can be used for value accretive acquisitions in the future.

NEXTDC Ltd (ASX: NXT)

Another growth share to consider buying is NEXTDC. I think the data centre operator is perfectly positioned to capitalise on the cloud computing boom. While the pandemic has certainly accelerated the shift to the cloud, it still has a long way to go. Last year research firm Gartner predicted that 80% of all organisations will shift their workloads to third-party data centres by 2025. That compares to an estimated 10% that had already done so in 2019. I believe this bodes well for NEXTDC and expect it to lead to increasing demand for its innovative data centre outsourcing solutions. This should underpin solid earnings growth as the company scales.

Xero Limited (ASX: XRO)

A final growth share to consider buying is this cloud-based business and accounting software provider. Xero may have been growing at an explosive rate over the last few years, but I believe it still has a long runway for growth over the next decade. At its recent annual general meeting, the company advised that it estimates that less than 20% of its global English-speaking target market is using cloud-based accounting software currently. This compares to 50% in the ANZ market. Clearly, Xero still has a massive market opportunity to grow into over the coming years. And given the quality of its platform, I expect it to capture a growing slice of this market over the 2020s. This could make the Xero share price a market beater over the long term.

More reading

• After the crash, is it time to buy this Nasdaq ETF?
• Why the Afterpay share price crashed 9% lower today
• 5 things to watch on the ASX 200 on Friday
• ASX 200 up 1%: Big four banks charge higher, SKYCITY impresses, Xero tumbles
• Why Bubs, Perseus, WiseTech, & Xero shares are dropping lower

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has recommended Elmo Software. 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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I love volatile ASX share market days like today.

It’s been quite a while since there was a drop as heavy as this, though there was a bit of volatility earlier this week too.

Cheaper opportunities

Volatile days for the share market are attractive because it provides opportunities to buy ASX shares at cheaper prices than before. On single days like today it means some shares will drop by a few percent.

Volatility can also lead to extended periods of declines. This can give us once-a-year or once-in-a-generation opportunities to buy shares at much cheaper prices like we saw in March 2020 when COVID-19 caused a major share market crash.

It’s unlikely that today’s fall – as heavy as it is – will be the start of the S&P/ASX 200 Index (ASX: XJO) falling 30% again. The Australian economy has already seen through the worst of COVID-19 spread and the country is aiming to open up by Christmas, except perhaps Western Australia.

‘Buying the dip’ seems like simple advice. It might be detrimental to your returns to wait entirely for dips before buying anything, but adding extra cash to your ASX share portfolio to buy on days like today can be a smart move.

I decided to invest in something today. I can’t tell you what it is due to trading rules, but I thought my choice was worth buying with today’s volatility. During the crash in March 2020 I bought shares like WAM Microcap Limited (ASX: WMI) because I liked the diversification, the long-term outperformance and the widening discount between the share price and the net tangible assets (NTA).

There are plenty of high growth ASX shares that have sank today like Appen Ltd (ASX: APX), Nearmap Ltd (ASX: NEA) and A2 Milk Company Ltd (ASX: A2M). These growth names may fall further next week, but they’re probably not going to be lower forever. It could be a good time to consider BetaShares NASDAQ 100 ETF (ASX: NDQ) too.

It’s meant to be volatile

I’m also glad for volatile ASX share market days because shares are meant to be volatile. A 3% drop in one day is a probably bit steep. But shares are meant to go up and down over the shorter-term. Each day the market is made up of different buyers and sellers. Participants should have differing views about what price they’re happy to transact at. The market isn’t just going to go higher and higher. 

The recovery over the past six months has been surprisingly strong. Some people may think it has been too strong.

If you believe the ASX share market was too expensive last week, then I think it’s worth thinking about investing today (or next week). Investors seem to be able to quickly let go of their fear. The opportunity to buy at a lower price probably isn’t going to hang around.

I’m not saying go ‘all in’ if you have been saving up cash for a while. But the best time to buy and be greedy is when there’s fear, like today.

At some point COVID-19 will fade into the history books, as bad as it has been, like the Spanish Flu did. Hopefully an effective healthcare solution can be found sooner rather than later. But it’s important not to let shorter-term concerns stop you from investing in anything for the long-term.

Foolish takeaway

Who knows why people are suddenly happy to accept ASX share prices substantially less than yesterday? Perhaps some investors didn’t have much conviction in their ideas. That’s why I think you should only invest in something robust enough that you’d be comfortable to hold through a hefty market crash. If you sell during a market crash then you’re just crystallising a decline and permanently hurting your wealth.

If the market keeps falling next week then I’ll be putting more of my reserve cash to work.

More reading

• Top brokers are urging you to buy these ASX stocks in this market meltdown
• Why the Transurban share price is outperforming today
• Why ASX investors shouldn’t fear a market crash
• Why Appen, Kogan, OZ Minerals, & ResMed shares are dropping lower
• After the crash, is it time to buy this Nasdaq ETF?

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and Nearmap Ltd. The Motley Fool Australia owns shares of A2 Milk and Appen Ltd. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and Nearmap 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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I’m a big fan of exchange traded funds (ETFs) and believe they are a great way for investors to both diversify their portfolios and gain exposure to areas that are not represented on the ASX.

But which ones should you buy? Two high quality ETFs that I like are listed below:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

I think the BetaShares Asia Technology Tigers ETF could be a great option for investors. This is because it gives investors a way to invest in the biggest and brightest technology and ecommerce companies that have their main area of business in Asia. BetaShares notes that through a single trade, this ETF provides diversified exposure to a high-growth sector that is under-represented in the Australian share market.

Which shares are included in the fund? There are 50 companies included within the ETF. These include industry giants such as Alibaba, Baidu, JD.com, and Tencent Holdings. Given the very positive outlooks of these companies, I believe this ETF has the potential to generate market-beating returns for investors over the next decade and beyond.

iShares Global Healthcare ETF (ASX: IXJ)

Another ETF to consider buying is the iShares Global Healthcare ETF. This fund gives investors a slice of some of the largest players in the global healthcare industry such as Johnson & Johnson, Novartis, Pfizer, Roche, and Sanofi. It also includes locally listed healthcare stars CSL Ltd (ASX: CSL), Ramsay Health Care Limited (ASX: RHC), and Sonic Healthcare Limited (ASX: SHL).

Due to the positive outlook for the healthcare sector globally over the next couple of decades because of ageing populations and increased chronic disease, I believe it could provide strong returns for investors over the long term. Overall, I feel this could make it a top pick for investors right now.

More reading

• 3 of the best ASX tech shares to buy in September
• 2 ASX ETFs to buy for instant portfolio diversification
• These ASX ETFs will give you exposure to China’s growing middle class
• ETF provider VanEck to launch 4 new ASX ETFs
• 3 ASX growth shares to buy in September

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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 Praemium Ltd (ASX: PPS) share price is falling today despite news out of Powerwrap Ltd (ASX: PWL) that it will accept Praemium’s latest takeover offer. The Praemium share price is currently trading 4.67% lower to 51 cents.

The decrease in share price is likely to be as a result of the heavily falling All Ordinaries Index (ASX: XAO) more broadly.

A closer look at Praemium and Powerwrap

Praemium is global provider of technology platforms for managed accounts, investment administration and financial planning. Its fully integrated account management platform is suitable for both small and large account holders, enabling clients to see all their portfolios in one place.

Powerwrap, simply put, is a smaller version of Praemium and in the past has acted as a smaller rival. Powerwrap is also involved in development and execution of investment portfolio administration services.

What happened

The takeover bid of Powerwrap first came to light in early July as Praemium placed an offer for their longstanding partner and competitor. The companies initially entered into a bid implementation agreement, under which Praemium would make an off-market conditional takeover bid for all of the Powerwrap shares it does not presently hold.

However despite the Powerwrap board of directors unanimously deciding that its shareholders should accept the offer, powerful players stood against the offer. A pair of ‘Rich Listers’ and other Melbourne players teamed up to try to get Praemium to increase its bid for their smaller wealth platform play, Powerwrap. They were ultimately unsuccessful, which meant that the offer stood at 7.5 cents per Powerwrap share in cash and 1 Praemium share for every 2 Powerwrap shares. 

Two days ago, the offer went unconditional.

What now?

With the offer to be concluded on 21 September, Powerwrap’s directors are urging shareholders to accept the offer as quickly as possible.

Praemium already controls 56.01% of the company and thus has the majority of votes at any general meeting of Powerwrap shareholders. However, it must be noted that it needs 75% if it is to continue with its plans to delist Powerwrap.

The Powerwrap share price is currently trading 4.67% lower, with it having made no gain or loss overall this year.

More reading

• Praemium share price edges higher after Powerwrap offer goes unconditional

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia has recommended Praemium 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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There’s blood on the street but one ASX stock that’s holding up better than most today is the Transurban Group (ASX: TCL) share price.

Shares in the toll road operator is holding steady at $14.31 during lunch time trade when the S&P/ASX 200 Index (Index:^AXJO) crashed by around 3%.

The big sell-off on Wall Street that was led by high-flying tech stocks are to blame for the carnage on the ASX. This is why our tech darlings like the Afterpay Ltd (ASX: APT) share price and Appen Ltd (ASX: APX) share price are among the worst performers.

Transurban share price upgraded to “buy”

It looks like investors are rotating out of these expensive growth stocks and into relatively more stable businesses that have suffered a big de-rating during COVID-19.

This partially explains the outperformance of Transurban, although a broker upgrade is also helping.

UBS lifted its recommendation on the stock to “buy” from “neutral” as it thinks too much bad news is factored into the stock.

Boring stocks suddenly looking exciting

It also believes that Transurban will rebound strongly as Melbourne emerges from its stage four lockdown.

Most of Transurban’s toll roads are in that state, which explains why the stock was hit particularly hard by the second wave of COVID-19 infections in that state.

“We see the stock as highly leveraged to recovery in that network given Melbourne accounts for one-third of group EBITDA [earnings before interest, tax, depreciation and amortisation],” said UBS.

“Further the market continues to seek out quality growth names in a structurally lower growth environment.”

Big dividend growth ahead

But this these aren’t the only reasons to be excited. The broker reckons Transurban’s annual dividend yield could double to around 13% from FY22 to FY25.

The big dividend increase will be funded by the completion of a number of big development projects in its pipeline.

“Our strong 13% pa growth from FY22-25E relies on completion of WestConnex Stage 3 in Sydney, WestGate Tunnel in Melbourne, and a number of Washington projects,” explained UBS.

“These are all expected to complete in 2023 and 2024. The largest risk remains the contractual dispute over the WestGate Tunnel project.”

What Transurban shares are worth

Other risks to the lofty dividend assumption are a slower than expected easing of the lockdown in Melbourne and the underperformance of its Washington asset.

The broker lifted its 12-month price target on the stock to $15.50 from $14.70 a share.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, 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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