If you have cash sitting idle in a bank account, you will likely be disappointed at the low interest rates that appear to be sticking around for some time to come. A better strategy could be to invest in ASX shares.

The ASX share market has consistently moved higher since the lows we saw in March when COVID-19 shut down economies all over the world. In spite of the setbacks, many companies are evolving with new ways of working and pushing forward with growth strategies.

Investor confidence appears to be returning amidst a range of government stimulus measures and hopes of a vaccine. I believe there is no time like the present to invest. So, how should you invest your money? If we take a hypothetical $10,000, here is how I would invest it right now:

How I’d invest $10,000 in ASX shares

$2,000 | Xero Limited (ASX: XRO)

Xero is a leading provider of cloud-based, business software. It essentially helps organisations to run their businesses. In an ever-changing world, more and more companies are relying on Xero to manage their operations. The Xero share price has a history of strong performance, rising a staggering 2,000% since listing on the ASX. In my view, investors thinking they have missed out on all the growth don’t need to worry. The Xero share price is still currently growing strongly, increasing by more than 70% since the March bear market.

With more than 2 million subscribers, Xero maintains a substantial customer base by any measure. At its recent AGM, Xero announced an additional 96,000 subscribers were added to the platform from April to July. One thing I love about Xero is its mission to make life easier for business owners. In my experience, a business owner needs to focus on ‘keeping the main thing, the main thing’. As such, relying on software that simplifies management and operations is essential to business growth.

Xero software integrates with many common business expenses, such as those generated by fuel providers Caltex and BP, and even transport providers such as Uber for Business. For banking integration, Xero accesses bank feeds daily to save time with cash flow and reconciliation. All major Australian banks are supported by the platform including National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Limited (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and also Bendigo and Adelaide Bank Ltd (ASX: BEN).

The business landscape is changing rapidly and often the only way to survive is to adapt. Xero enables businesses to do just that. 

$5,000 | BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

This ASX ETF aims to track the performance of the S&P/ASX All Technology Index (ASX: XTX) (before fees and expenses). By investing your money here, you are effectively getting exposure to many leading Australian companies in the technology space. Sectors covered include information technology, consumer electronics, online retail, and medical technology. 

The top ten holdings inside this ETF consists of 

• Afterpay Ltd (ASX: APT) at 18.1% 
• Xero Limited (ASX: XRO) at 10.8%
• Computershare Limited (ASX: CPU) at 7.4%
• Seek Limited (ASX: SEK) at 7.2%
• REA Group Limited (ASX: REA) at 6.0%
• Nextdc Ltd (ASX: NXT) at 5.8%
• Carsales.com Ltd (ASX: CAR) at 5.0%
• Altium Limited (ASX: ALU) at 4.5%
• Appen Ltd (ASX: APX) at 4.3%
• WiseTech Global Ltd (ASX: WTC) at 3.1%

Technology companies are thriving amidst the COVID-19 pandemic as the world goes through a digital evolution. Buying this ASX tech ETF can help to give your portfolio broad exposure, while maintaining your investment in Australian companies.

$3,000 | CSL Limited (ASX: CSL)

Who better to tackle the COVID-19 pandemic than a company with a 100 year history of successfully delivering biotherapies and vaccines? CSL is at the forefront of healthcare development. I feel it is one of the highest quality companies available on the ASX. If you’re looking to invest in ASX shares, I definitely think it should feature in your portfolio. 

The federal government is backing this biotech superstar to help produce COVID-19 vaccines for all of Australia. On top if this, CLS recently announced it had entered into a strategic partnership with the Coalition for Epidemic Preparedness Innovations (CEPI) and the University of Queensland to help with fast tracking of a vaccine. 

The CSL share price is up more than 800% over the last decade, or around 80% per year. Currently it’s trading at a 14% discount to its pre-COVID highs, representing a good buying opportunity.

Foolish takeaway

If I’m employing a common sense approach to investing, I’m looking for companies and funds that stand to gain the most from real world events. The economy is still suffering through the pandemic which can make you feel uneasy as an investor.

Despite this, I believe one thing is for sure; technology and healthcare are both going to be prominent growth industries moving forward. If we continue to struggle with this pandemic longer term, tech and health will continue to thrive. If we recover more quickly, these industries are still critical aspects of everyday life. Personally, if I was to invest $10,000 into ASX shares right now, it would definitely be in the tech and healthcare sectors.

More reading

• These 2 exciting ASX 200 shares soared higher today
• Tech shares race to record highs as Bank of America tips BHP and Rio shares
• Nextdc and 2 other thriving ASX tech shares to buy
• Buy and hold these fantastic ASX blue chip shares
• The Starpharma share price jumps on new partnership deal

glennleese has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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 WiseTech Global. The Motley Fool Australia has recommended carsales.com Limited, 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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Overall, it was a positive day for the S&P/ASX 200 Index (ASX: XJO). The index recouped nearly all of yesterday’s losses, closing out the day 0.77% higher at 6,123.40 points. But as always, there were some ASX 200 shares that significantly outperformed the index. Let’s take a look at what drove these two high-profile shares higher today. 

2 ASX 200 shares that climbed higher today

CSL Limited (ASX: CSL)

The second largest company on the ASX by market capitalisation, this blue-chip biotech is involved with the research and development of blood medicines as well as vaccinations.

CSL’s major strength is its plasma products – made from human blood. In Australia, the company relies on blood donated through the Red Cross. However, a majority of the company’s source material comes from donors in the United States. US donors are paid each time they donate blood which represents a strong monetary incentive for people, particularly in the current climate.

CSL holds around 20% share of the global plasma market.

Financial Outlook

Over the past few months, there have been concerns regarding the impact coronavirus will have on plasma collections for CSL as these are considered the lifeline of the company. However, CSL has actually stockpiled enough blood plasma to see it through until next year.

CSL will be releasing its FY 2020 results tomorrow. The ASX share market is expecting the biotech giant to post a net profit after tax of US$2.11 – $2.17 billion and a capital position of around US$1.1 billion in liquidity. All eyes will be on management’s outlook statements for FY2021. If today’s CSL share price is anything to go by, clearly investors are expecting good news. 

By the close of trade today, the CSL share price was up 4.5% to $293.29. It will be interesting to see whether the Aussie biotech can keep up this momentum following Wednesday’s update. 

Nearmap Ltd (ASX: NEA)

A leading specialist in high-resolution aerial imagery technology and location data, Nearmap provides geospatial map technology for business customers across Australia, New Zealand, the US, and Canada.

The company’s subscription-based service is used by a diverse range of customers in industries such as government, architecture, construction, engineering, insurance, real estate, and a host of others.

Financial Outlook

Nearmap has been growing its sizeable recurring revenue at a strong rate due to increasing demand for its services. Management expects the global imagery market to be worth US$10.1 billion this year. This is extremely positive given Nearmap operates in a highly fragmented market.

In April, the company released a business update to the market advising it had not seen any material impact from the current trading conditions. However, a number of cost-saving measures were implemented to preserve cash and maintain a healthy balance sheet without the need for capital raising.

Last week, a positive note out of broker, Citi, raised Nearmap’s shares to a target price of $2.75.

Like CSL, Nearmap will be releasing its FY 2020 results to the market on Wednesday this week. And, once again, it would appear that investors are expecting good things. By the end of the day, the Nearmap share price was up 6.3% to finish Tuesday’s session at $2.68. The Nearmap share price has risen a staggering 212% from its March low and is 6.8% up in year-to-date trade.

Foolish takeaway

The share market is clearly anticipating good things to come from both these ASX 200 shares. Both the CSL and Nearmap share prices have finished the day in positive territory – outperforming the ASX 200 less than 24 hours before the release of their FY20 results.

Although tomorrow will be an active day for investors as they digest the hotly anticipated results, regardless of this, I think that both CSL and Nearmap shares are great, long-term hold options.

More reading

• Why I would buy Nearmap and this ASX mid cap share right now
• Buy and hold these fantastic ASX blue chip shares
• The Starpharma share price jumps on new partnership deal
• 5 things to watch on the ASX 200 next week
• Get rich buying and holding these fantastic ASX shares

Aaron Teboneras owns shares of CSL Ltd. and Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Nearmap Ltd. The Motley Fool Australia has recommended 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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The Service Stream Limited (ASX: SSM) share price will be on watch on Wednesday following the release of its full year results after the market close.

How did Service Stream perform in FY 2020?

For the 12 months ended 30 June 2020, the essential network services provider delivered a 9% increase in revenue to $929.1 million.

This was driven by a strong performance from its Utilities segment, which recorded a 45.3% or $119.8 million increase in revenue to $384.1 million. This was largely the result of the inclusion of a full year of revenue from Comdain Infrastructure. Revenue from Metering Services and New Energy activities was largely flat. This was due to a suspension across gas and electricity disconnections and delays in contract awards due to COVID-19.

The strong growth in Utilities revenue offset a weak year from the Telecommunications segment. It recorded a 7.7% or $45.2 million decline in revenue to $544.2 million. This was due to the successful conclusion of its NBN D&C operations in addition to clients delaying the start of a number of wireless projects due to the pandemic. This offset revenue associated with fixed-line activation and maintenance services, which increased during the year despite reductions across some O&M activities.

Improved margins led to Service Stream’s earnings before interest, tax, depreciation, and amortisation (EBITDA) from operations growing 15.9% to $108.1 million.

And on the bottom line, the company’s statutory net profit after tax came in at $49.3 million, down 1.1% year on year. This statutory result includes the impact of one-off non-operational costs and charges totalling $11 million.

Dividend.

Service Stream’s operating cash flows before interest and tax (OCFBIT) came in at $86.4 million, with profit to cash conversion exceeding 80% for the year.

This allowed the company to declare a final fully franked dividend of 5 cents per share despite the pandemic. This brought its full year dividend to 9 cents per share, which was flat on the prior corresponding period.

Chairman, Brett Gallagher, commented: “The Board is delighted to report a further year in which Service Stream has delivered another strong result. It’s especially pleasing that the fundamentals of our business have provided a position of strength, enabling dividend payments to be maintained, particularly at a time when many organisations have come under considerable pressure due to COVID-19.”

“The Board remains confident of continued demand for our essential services through these uncertain times, and that the business is uniquely positioned with a strong base of contracted revenues across a stable and dependable client base of utility and telecommunications asset owners and operators,” he added.

Nevertheless, given the current environment, no guidance has been provided for the year ahead. However, management stated that its “earnings are expected to remain resilient” in FY 2021, supported by long term contracts.

More reading

• These 2 exciting ASX 200 shares soared higher today
• ASX 200 rises 0.8%, Treasury Wine Estate shares turn sour
• Should you buy the beaten down shares of Bubs and Webjet?
• Kogan share price rockets 12% to a record high: Is it too late to invest?
• Estia Health share price jumps 4% following annual results

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Service Stream 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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The S&P/ASX 200 Index (ASX:XJO) went up by 0.8% today to 6,123 points.

There were a number of important announcements today. I’ll start with the biggest movers:

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine Estates share price fell 14.3% after news from China.

According to the company’s announcement, the Chinese Ministry of Commerce has initiated an anti-dumping investigation into Australian wine exports into China.

The ASX 200 business said that it will co-operate with any requests for information received from Chinese or Australian authorities.

China is one of Treasury Wine Estates biggest export markets and the company thinks of China as a priority market.

Monadelphous Group Limited (ASX: MND)

At the other end of the performance table the Monadelphous share price rose by 19%.

It released its FY20 result showing that revenue increased by 2.6% to $1.65 billion.

The ASX 200 company achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of $92.1 million with net profit after tax (NPAT) of $36.5 million.

The engineering businesses finished with a cash balance of $208.3 million. Management said this balance sheet will allow the company to invest in suitable business opportunities aligned to its new markets and growth strategy as they arise.

Management believe that the resources sector is expected to provide a steady flow of opportunities over the coming years.

Cochlear Limited (ASX: COH)

The Cochlear share price went up by almost 10% today after reporting its FY20 result.

Cochlear announced that its FY20 sales revenue was down 6% to $1.35 billion. Underlying earnings before interest and tax (EBIT) dropped 42% to $206.9 million due to the rapid fall in sales in the second half which was a consequence of COVID-19-related surgery deferrals.

The underlying net profit also fell by 42%, to $153.8 million.

However, Cochlear announced a statutory net loss of $238.3 million for the year due to $416.3 million of patent litigation expenses and $24.2 million in innovation fund gains after tax.

The ASX 200 company’s management couldn’t provide a forecast for FY21 revenue due to COVID-19 uncertainty.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price went up by 8.5% today after reporting its FY20 result.

Netwealth reported that its total income rose by 25.5% to $123.9 million. Netwealth’s EBITDA grew by 24.8% over the year to $64.8 million. Underlying net profit after tax grew by 21.7% to $43.8 million. Statutory profit came in at $43.7 million.

The board of Netwealth decided to declare a final dividend of 7.8 cents per share.

A major part of the growth this year came from the increase of funds under administration (FUA). The FUA rose 35% to $31.5 billion. There was record FUA net inflows of $9.1 billion over the year.

In FY21 the ASX200 company expects to continue to benefit from the significant changes currently reshaping the industry and it remains positive about the future and market share growth.

Netwealth is estimating that FY21 FUA net inflows will be $8 billion.

Westpac Banking Corp (ASX: WBC)

The big ASX bank released its FY20 third quarter update today.

It said that it generated unaudited statutory net profit of $1.12 billion for the quarter to 30 June 2020. That was up from the quarterly average profit of $595 million from the FY20 first half.

Unaudited cash profit was $1.32 billion. Again, this was up from the FY20 first half quarterly average of $497 million.

During the quarter Westpac recognised an impairment charge of $826 million, further increasing its provisions and provisioning cover. The net interest margin fell to 2.05% for the third quarter because of lower interest rates and the common equity tier 1 (CET1) capital ratio was 10.8% at 30 June 2020.

In a blow to income-focused investors, the Westpac board decided not to pay a dividend for the first half of FY20. The bank wants to retain a strong balance sheet amid the ongoing uncertainty.

More reading

• 3 fantastic ASX 200 shares for retirees to buy
• The latest 3 ASX stocks to be hit by a broker downgrade today
• Top brokers are urging investors to buy these ASX stocks today
• Why Fortescue’s share price has surged 72% in 2020
• US markets at record highs! Here’s what it means for ASX investors

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Cochlear 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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Although the likes of JB Hi-Fi Limited (ASX: JBH) and Kogan.com Ltd (ASX: KGN) have just seen their shares hit record highs, not all ASX shares are faring as well.

Two ASX shares that are still trading materially lower than their 52-week highs are listed below. Are they in the buy zone?

Bubs Australia Ltd (ASX: BUB) 

I became bullish on Bubs earlier this year when it finally became cash flow positive. This appeared to indicate that the infant formula and baby food company had reached an inflection point and the days of dilutive capital raisings were finally over. However, this positive financial performance was only very brief and Bubs was burning through its cash again in the fourth quarter. Bubs reported an operating cash outflow of $6.9 million for the quarter which, combined with other costs, led to the company burning through $10.3 million of cash. This left it with a cash balance of $26 million.

If it continues to burn through cash at this rate then it will not be long at all until it needs to tap the market with yet another dilutive capital raising. And given how the company has just announced its entry into the children’s vitamins market, I suspect that its cash burn could remain high because of the increased investment. In light of this, although the Bubs share price is down 31% from its high, I wouldn’t be in a rush to invest just yet. I would suggest investors wait for clear signs that the cash burn is over before stepping in.

Webjet Limited (ASX: WEB) 

The Webjet share price is down a massive 77% from its 52-week high. Investors have been selling the online travel agent’s shares this year after the pandemic brought travel markets to a standstill. In addition to this, a highly dilutive equity raising has also weighed heavily on the Webjet share price.

While I am a big fan of Webjet as a company, I’m still not ready to make an investment. With a market capitalisation of $1.15 billion, I don’t believe it offers a lot of value for money even after its heavy decline. I would suggest investors wait for travel markets to return to relatively normal before parting with your hard-earned cash.

More reading

• Why Tyro, Virtus Health, Webjet, & Westpac shares are dropping lower
• 2 five-star ASX growth shares to buy in August
• These are the 10 most shorted shares on the ASX
• 5 things to watch on the ASX 200 next week
• 2 ASX shares you could invest $500 into

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

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One of the best performers on the Australian share market on Tuesday was the Kogan.com Ltd (ASX: KGN) share price.

The ecommerce company’s shares rocketed a sizeable 12% higher to finish the day at a record high of $22.99. This means that the Kogan share price is now up 566% from its March low of $3.45.

To put that into context, if you had invested $20,000 into Kogan’s shares at its low, it would now be worth over $133,000.

Why did the Kogan share price rocket higher today?

Investors appear to have been fighting to get hold of Kogan’s shares following a delayed response to its impressive full year results release on Monday.

For the 12 months ended 30 June 2020, Kogan reported a 39.3% increase in gross sales to $768.9 million. A key catalyst for this growth was a 35.7% increase in its active customer base to 2,183,000.

Another positive was its 4.7 percentage point increase in its gross margin to 25.4%. This was underpinned by the growth in commission-based and seller-fee-based revenue across new verticals and Kogan Marketplace.

As a result of this margin expansion, Kogan’s earnings grew at an even quicker rate. Despite a big investment in marketing, Kogan reported a 57.6% increase in adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) to $49.7 million.

This strong form allowed Kogan to declare a fully franked final dividend of 13.5 cents per share. This was up 64.6% on the prior corresponding period and brought its full year dividend to 21 cents per share. Which means that investors that bought shares at $3.45 in March will receive a 6% yield on cost.

Positive start to FY 2021.

Also getting investors excited was Kogan’s strong start to FY 2021.

In July, Kogan achieved unaudited gross sales growth of over 110% and gross profit growth of over 160%. It also revealed that its monthly adjusted EBITDA was more than $10 million during the month.

Annualised, this equates to more than $120 million of adjusted EBITDA, which is over 140% greater than FY 2020’s adjusted EBITDA of $49.7 million.

Is it too late to invest?

Kogan’s shares are now trading at a significant premium to the market average. This means they carry higher than average risk, which may make them unsuitable for many investors.

However, if your risk profile allows it, I feel Kogan could be an excellent long term investment. Though, better entry points may present themselves in the coming months, so it could pay to be patient.

More reading

• Why Cochlear, Kogan, Megaport, & Northern Star shares are charging higher
• New investors should do this before investing in ASX shares
• Why Kogan and these ASX shares just hit record highs
• ASX 200 drops 0.8%, JB Hi-Fi jumps 4.5%
• What recession? These ASX retail shares are raking it in

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

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The Estia Health Ltd (ASX: EHE) share price jumped 4.2% today to close at $1.48 after the company released its full year financial results to 30 June 2020.

Estia Health operates aged care homes in Australia. It listed on the ASX in 2014.

In July, Estia Health announced it was working with authorities in relation to outbreaks of coronavirus at its homes in Heidelberg West and Ardeer, Victoria.

How did Estia Health shape up this year?

Estia Health reported a loss after tax of $116.9 million in FY20. This was after a non-cash impairment charge of $144.6 million. The company said the loss reflected funding and financing challenges faced by the residential aged care sector.

The company reported profit after tax before the non-cash impairment was $25.2 million, which represented a 39.5% decline compared to the 2019 financial year. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) were $79.3 million, down 18.2% on 2019 figures. According to the company, it had cash conversion of greater than 100% of EBITDA.

Estia Health reported average occupancy for FY20 was 93.2%. The company had occupancy of 92.7% at 30 June. Its new 110-bed aged care facility at Southport in Queensland reached 100% occupancy in February 2020 and its new home in Maroochydore, Queensland, reached 81.7% occupancy this month. 

The company invested $80.6 million of capital during the year in new homes, refurbishments, sustainability, asset replacement and improvements.

Coronavirus challenges

At 30 June 2020, Estia Health had net debt of $99.4 million, representing 1.3x EBITDA. It had net liquidity of $226.6 million available at 30 June.

The board chose not to declare a final dividend for FY20 as a result of the net loss for the year and “as a prudent measure in uncertain times”.

Estia Health CEO Ian Thorley said:

COVID-19 will remain a challenge for the foreseeable future. We believe that by continuing to work closely with State and Federal authorities and regulators we will get through this difficult period by providing the best possible care to our residents and support for our staff.

About the Estia Health share price

The Estia Health share price has climbed 66.67% from its 52-week low of 90 cents. However, it is down 37.76% since the beginning of 2020 and down 42.97% since this time last year. The share price closed at $1.48 today after climbing 4.2%.

More reading

• Here’s how to start investing with $5k
• Estia Health share price sinks lower on coronavirus update

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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I think that Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is the best ASX dividend share for income-seeking investors. It’s commonly called Soul Patts.

A quick overview of Soul Patts

Soul Patts is an investment conglomerate that has been listed in Australia since 1903. It’s one of the oldest businesses on the ASX.

Everything about Soul Patts is set up to be thinking for the long-term. A great example of that is the long-term loyalty of the employees. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families. Soul Patts can point to continuing family leadership: Lewy Pattinson, Fred Pattinson, Jim Millner and current chair, Rob Millner.

The ASX dividend share aims to hold a diversified portfolio of mostly uncorrelated investments across listed shares, private equity, property and loans.

Current investment portfolio

I really like Soul Patts’ portfolio. It owns large positions in shares such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI), Milton Corporation Limited (ASX: MLT) and Clover Corporation Limited (ASX: CLV).   

It also owns positions in a number of unlisted businesses like swimming schools, agriculture and resources. Soul Patts will soon be investing into regional data centres which seems to be a long-term growth trend.

The ASX dividend share doesn’t just own private businesses outright. It also has large stakes in unlisted businesses such as Ampcontrol, which is a leading international supplier of electrical and electronic products with a strong presence in providing products and services to the mining sector.

Why the ASX dividend share has a good dividend reputation

Soul Patts has two of the most pleasing dividend record attributes. The company has paid a dividend every year since it listed in 1903. It has increased its dividend every year since 2000, the only ASX share to have done that.

I think it’s critical that any ASX dividend share you consider must be able to continue to deliver reliable dividends.

There are plenty of valid argument points to say investors may as well invest for total returns rather than specifically dividends.

If someone is investing for dividends then that suggests to me that the income provided is important to fund their life expenses. If you’re investing for dividend income then I think that dividend needs to be consistently reliable. An ASX dividend share needs to deliver income through all economic conditions. I think Soul Patts is the best ASX dividend share for its reliability. 

It’s no use having a big dividend one year and then getting no dividend income the next year if there’s a recession. The global COVID-19 pandemic was clearly unexpected. But I think it has shown how some businesses which had a reputation for dividends – such as Westpac Banking Corp (ASX: WBC) and Sydney Airport Holdings Pty Ltd (ASX: SYD) – were unable to continue paying a dividend. They weren’t very defensive.

Soul Patts has delivered consecutive dividend growth over the past 20 years and it has provided dividend guidance for growth in the next result.

Two of Soul Patts’ biggest holdings, TPG and Brickworks, have indicated they are aiming for higher dividends over the next 12 months which should help Soul Patts fund a higher dividend too.

Future growth

You shouldn’t buy an ASX share for dividends alone. It needs to have growth potential over the longer-term. Soul Patts’ holdings are aiming for growth. TPG has merged with Vodafone Australia to create profit growth. Brickworks is expanding in the US and it’s growing the industrial property trust.

Soul Patts is steadily putting money to work into new investment ideas. As I’ve mentioned, the ASX dividend share is investing into regional data centres. In FY20 the company retained around 20% of its net operating cashflow which can be put towards future growth opportunities.

I like Soul Patts as a dependable ASX dividend share. Other investments may deliver more capital growth over the coming years, but Soul Patts could be the most dependable option for dividends. At the current Soul Patts share price it has a grossed-up dividend yield of 4.2%. 

More reading

• 4 ASX shares to profit from booming ecommerce
• 2 ASX shares that every investor should own
• Investors wanting safe income should own these 3 ASX shares
• 3 quality ASX shares to buy in August
• Beat low interest rates with these ASX dividend shares

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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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With the cash rate likely to remain on hold until as late as 2023 and then take several years before reaching “normal” levels, if I were a retiree, I would look to the share market to grow my wealth and generate a source of income.

With that in mind, here are three fantastic ASX 200 shares that I believe would be suitable for retirees:

BWP Trust (ASX: BWP)

I think this real estate investment trust would be a great option for retirees. This is due to the quality of its property portfolio, which is predominantly leased to home improvement giant Bunnings Warehouse. Given how Bunnings is arguably one of the best retailers in the country, I believe the risk of store closures and rental defaults is extremely low. Especially given how its sales have been exceptionally strong during the pandemic and government stimulus is supporting the home improvement market.  Combined with periodic rental increases, I believe BWP is well-positioned to deliver consistent income and distribution growth over the next decade. At present I estimate that its units offer a forward 4.5% yield.

Goodman Group (ASX: GMG)

I think Goodman Group would be a fantastic long term option for retirees. This property company owns, develops, and manages industrial real estate across several countries. These include properties with exposure to markets with very favourable outlooks such as ecommerce. In fact, the company has agreements with giants such as Amazon and DHL, which are at the forefront of the ecommerce boom. Given how these assets are likely to be in demand for a long time to come, I feel it bodes well for income and distribution growth in the future.

Rural Funds Group (ASX: RFF)

Another option for retirees to consider buying is agriculture-focused property group Rural Funds. I’m a big fan of the company due to the quality of its portfolio and its long term tenancy agreements. At the last count its properties had a weighted average lease expiry of approximately 11 years. Furthermore, these agreements have rental increases built into them in a way that positions Rural Funds to consistently grow its income and therefore its distribution each year. Rural Funds intends to grow its distribution by 4% to 11.28 cents per share in FY 2021. This equates to a generous yield of 5.2%.

More reading

• The latest 3 ASX stocks to be hit by a broker downgrade today
• Top brokers are urging investors to buy these ASX stocks today
• Why Fortescue’s share price has surged 72% in 2020
• US markets at record highs! Here’s what it means for ASX investors
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses

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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The market may have closed at a high on Tuesday but not all stocks enjoyed a good day as they got slapped by broker downgrades.

So while the S&P/ASX 200 Index (Index:^AXJO) is on track to close near its intraday high of 0.7% today, the same can’t be said for the JB Hi-Fi Limited (ASX: JBH) share price and two other stocks in the index.

The JBH share price slumped 3.4% to $47.93 in the last hour of trade after Bell Potter downgraded the stock to “sell” from “hold”.

Past its peak

While the electronics retailer posted a solid full year profit result that saw underlying net profit surge 33.2% to $332.7 million and double-digit like-for-like sales at Good Guys and JB Hi-Fi’s chain, this could be as good as it gets for the group.

“The 2H20/July sales surge is clearly not sustainable, so the question is what is being priced in for a more normalised sales outlook in FY22,” said the broker.

“On the back of recent share price strength, our BPe FY22 PE has increased to ~20x which we believe is excessive.”

While Bell Potter cut its rating on the stock, it lifted its 12-month price target to $44 from $38.50 a share.

From upgrade to downgrade

Another stock to suffer a sell-off today is the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price. The bank stock lost 1.7% at the time of writing to trade at $6.43 after JPMorgan changed its recommendation to “neutral” from “overweight”.

The broker only upgraded the stock in June but conceded that the tailwinds that drove its bullish change of heart were short-lived.

These tailwinds were the belief that Bendigo Bank had a funding cost advantage over its peers, a defensive loan book that’s better protected from bad debts and less pro-cyclicity of capital.

Can’t bank on tailwinds

However, these bullish assumptions have lost their puff. The bank may have enjoyed an edge when it came to funding cost, but its waning more quickly than expected. This means Bendigo Bank’s net interest margin is likely to come under significant pressure over the medium-term.

The strict second lockdown in Victoria is also posing a big threat as 50% of the bank’s commercial loan deferrals are from that state.

“With BEN’s CET1 ratio sitting at just 9.25%, we think it will struggle to grow its loan book fast enough to offset margin pressures,” said JPMorgan.

The broker’s price target on the stock is $6.70 a share.

In need of topping up

The third stock to fall out of favour today is the Viva Energy Group Ltd (ASX: VEA) share price, which tumbled 6% to $1.70 ahead of the market close.

The weakness may have been triggered by Morgans downgrade of the petrol station operator to “hold” from “add” in the wake of its profit results.

Viva’s profit performance actually wasn’t bad at all given the challenging COVID-19 environment and shareholders were showered in cash from its $500 million plus capital return and special dividend.

Victoria poses a risk

“VEA earnings remain sensitive to a continued recovery in Australian travel, and eventual reopening of Victoria,” said Morgans.

“Although trading near 5x FY21F EBITDA we view this upside as starting to be factored into VEA after recent share price strength.”

The broker’s price target on the stock is $1.95 a share.

More reading

• 3 fantastic ASX 200 shares for retirees to buy
• Top brokers are urging investors to buy these ASX stocks today
• Why Fortescue’s share price has surged 72% in 2020
• Leading brokers name 3 ASX shares to sell today
• US markets at record highs! Here’s what it means for ASX investors

Motley Fool contributor Brendon Lau 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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