Paying off a mortgage is one of the primary financial goals many Australians have – if not the sole one.

A home is often a family’s largest asset, so paying off the mortgage is a big step towards financial freedom and living a comfortable retirement.

Unfortunately, it remains a massive task to accomplish – even with interest rates at their lowest levels in history.

So here are three tips for paying off your mortgage faster, so you can spend your hard-earned money on more important things!

Get a better rate

Even though interest rates are close to zero, many banks haven’t fully passed on these cuts. That’s why (if you haven’t already), you should pick up the phone today and ask Commonwealth Bank of Australia (ASX: CBA), or whichever bank you have your loan through, if you’re getting the lowest rate you can. Even shaving 0.2% off your mortgage rate can save you thousands of dollars over the lifespan of the loan.

Who would you rather have that extra dough – you, or your bank? Exactly!

Pay more than the minimum repayments

A principal-and-interest loan sees interest-dominated repayments required at the start of the loan, which taper over time as you pay off more of the principal. That’s why making extra repayments on top of the minimum amount required can dramatically shave off years (and interest charges) from your loan. It can also help protect you from the possibility of higher interest rates down the road.

If you’re in your first year of a 25-year mortgage, every extra $100 you pay is $100 you won’t pay interest on for 25 years. How’s that for a return?!

Invest alongside your loan

Many people save investing for when the mortgage is paid off, but there’s a better way to do it if you’re careful.

Say you have an interest rate of 2.5% on your mortgage. If you invest in an ASX dividend share that pays you 4% a year in dividends, you can use this extra passive income to help you make additional payments down the road, all whilst holding an income-producing asset.

Of course, this option isn’t for the faint of heart, as ASX investments can fluctuate wildly in value and some won’t always pay consistent dividends. But if used prudently, I think this is a path anyone with a mortgage can use to their advantage.

More reading

• Meet the growing ASX large cap that’s beating the COVID-19 slowdown
• 3 ASX dividend kings to buy and hold forever
• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning
• Reality bites: Broker warns CBA shares to underperform this week
• 3 ASX 200 shares to watch this week

Motley Fool contributor Sebastian Bowen 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’ve been keeping a close eye on what substantial shareholders have been doing recently.

Substantial shareholders are shareholders that hold 5% or more of a company’s shares. These tend to be large investors, asset managers, and investment funds. These shareholders are obliged to update the market when they make any changes to their holdings.

As a result, I feel investors should look to use these notices to their advantage. After all, they show where the smart money is going.

Two notices that have caught my eye are summarised below:

Marley Spoon AG (ASX: MMM)

According to a change of interests of substantial holder notice, Perennial Value Management has been increasing its stake in this meal kit delivery company. The notice reveals that over the last four weeks the fund manager has picked up just over 2 million Marley Spoon shares. This has increased its holding in the company to approximately 12.5 million shares, which is the equivalent of a 7.88% stake.

Marley Spoon is being seen as a big winner from the pandemic due to more eating at home. This has led to a surge in demand for its meal kit subscriptions, sending its shares hurtling higher. Since this time in March, Marley Spoon’s shares have climbed 400%. This fund manager appears to believe its shares can continue climbing higher.

Monash IVF Group Ltd (ASX: MVF)

A notice of initial substantial holder reveals that Challenger Ltd (ASX: CGF) has been buying this fertility treatment company’s shares. Over the last six weeks the annuities company has picked up 20,687,831 shares in Monash IVF. This represents a 5.74% stake in the company.

Challenger may believe that recent share price weakness is a buying opportunity now that lockdowns are easing and fertility treatment services are up and running again. The Monash IVF share price is down 60% from its 52-week high.

More reading

• Is it time to invest in shares or wait on the sidelines?
• ASX shares and investing trends that could boom post COVID-19
• How to build your first ASX share portfolio
• Why this ASX small-cap share should be on everyone’s watchlist
• Is the Challenger share price a buy for the 11% dividend yield?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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 CSR Limited (ASX: CSR) share price has lifted 10% today after the building materials supplier reported a 61% surge in profits. In its results for the year ended 31 March 2020, CSR revealed statutory net profit after tax of $125.3 million, up from $78 million for the year ended March 2019. 

What does CSR do?

CSR is a leading building products brand in Australia and New Zealand. Its products are used in both residential and commercial construction and include Gyprock plasterboard and Bradford insulation.

CSR is a participant in a joint venture aluminium smelter and also generates earnings from a property division that develops surplus former manufacturing sites and industrial land for sale.

CSR’s results 

CSR reported solid full-year results despite an expected decline in residential construction markets. Aluminium division earnings increased 63% to $60 million following a decline in the Australian dollar and lower input costs. 

Revenue was down 6% in building products to $1.6 billion reflecting lower residential construction activity. No material transactions were recorded in the property division during the year. Group earnings were down 18% reflecting the lower building products result and timing of property transactions. 

Statutory net profit after tax (NPAT) from continuing operations declined 10% to $125 million. Total statutory NPAT increased 61% to $125.3 million from $78 million the previous year. The prior year’s figure included impairment charges from the Viridian glass business which was sold in 2019. 

Financial position 

CSR ended the March quarter with net cash of $95 million and total debt facilities of $520 million. It has paused its on-market share buyback, having purchased $69 million of the $100 million planned. No final dividend will be paid for the year ended March 2020. Total dividends of 14 cents were paid during the year, down from 26 cents in the year ended March 2019.

Significant capital expenditure was incurred in the year due to the $75 million expansion of Hebel, CSR’s autoclaved aerated concrete (AAC) business. Hebel is the only manufacturer of AAC panels in Australia and New Zealand. 

Outlook

CSR is managing its liquidity and optimising profitability via cost controls. A prudent approach to cost management is being taken – working hours are being reduced where appropriate and non-essential expenditure ceased or deferred. 

A high degree of uncertainty in the current economic environment means plans have been implemented to adjust to demand changes across the network. CSR is monitoring a range of lead indicators to allow for an adjustment in production and cost profile as early as possible. 

More reading

• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning
• Why CSR, Kogan, Premier Investments, & ResMed shares are storming higher
• Brokers may be upgrading this ASX stock even as it delivered a plunge in profits
• The latest ASX shares to be downgraded by top brokers
• Why you should buy this ASX 200 stock even after it suspended its dividend today

Motley Fool contributor Kate O’Brien 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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Is it time to buy ASX small caps for your portfolio?

Most Aussie investors have a lot of exposure to the large blue chips on the ASX like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS). Whether that’s direct holding, an exchange-traded fund (ETF), a listed investment company (LIC) or in your super fund.

Sadly these businesses have fairly limited growth prospects and don’t look like they’re going to make strong total returns from here.

But ASX small caps offer a different opportunity. It’s much easier for a business to double its revenue from $25 million to $50 million than it is for a business to double revenue from $250 million to $500 million. The law of numbers makes it hard for businesses to keep compounding strongly unless they’re growing globally or have multiple product lines.

Another benefit of ASX small caps is the lower valuation. Not many investors are looking at small businesses. They don’t make the headlines and people may see them as too risky. A lower valuation is obviously attractive for returns, particularly if it’s growing at a good pace.

Once you leave the ASX 200, there’s a large group of small businesses that you wouldn’t ever invest in like the speculative mining shares. But there’s a group of ASX small caps that could be on their way to being the next ASX mid-caps. These are the ones that could make us great returns.

Which ASX small caps are worth buying?

I used to like National Veterinary Care a lot, until it was taken over. I reckon that Pushpay Holdings Ltd (ASX: PPH) and Bubs Australia Ltd (ASX: BUB) are on their way to becoming good success stories. Shares like MNF Group Ltd (ASX: MNF) are seeing a surge in demand due to the coronavirus. Duxton Water Ltd (ASX: D2O) could be another to look into for differentiated returns, a growing dividend and the large discount to net assets. 

Finding those ASX small caps where you can see the profit margins and operating leverage rising over time is very attractive.

You have to do a lot of work to be a proficient small cap investor, but it can be very rewarding. If you’re not sure you have the time or skill then you could perhaps choose quality fund managers to do the ASX small cap investing for you like WAM Microcap Limited (ASX: WMI). In normal times the WAM team can generate impressive returns.

More reading

• Why high yield dividend shares can be detrimental to your wealth
• The Pushpay share price is up 70% in 2020: Why I would still invest
• Top ASX Dividend Stock Picks for May 2020
• 3 ASX growth shares to buy immediately with $3,000
• 3 high quality ASX shares for a retirement portfolio

Tristan Harrison owns shares of DUXTON FPO and WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MNF Group Limited. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, PUSHPAY FPO NZX, and Telstra Limited. The Motley Fool Australia has recommended DUXTON FPO and MNF 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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It certainly is a difficult time to be an income investor. Not only are interest rates at record lows, but many popular dividend shares are deferring or cancelling their payouts due to the pandemic.

While this is disappointing, I believe the selloff of traditional dividend favourites has created an opportunity for income investors that can afford to be patient.

Two top dividend shares which I think will offer generous dividend yields in FY 2021 and beyond are listed below:

Sydney Airport Holdings Pty Ltd (ASX: SYD)

There’s no doubt that Sydney Airport’s terminals are going to be quiet for the next few months. But domestic tourism will pick up in due course and international tourism will follow thereafter. It may take time before its earnings rebound to the same levels as FY 2019, but it will happen gradually.

I expect Sydney Airport to be in a position to pay a 29 cents per share distribution in FY 2021, before lifting it to a more normal 37 cents per share in FY 2022. This represents forward yields of 5.15% and 6.6%, respectively, over the two years. In light of this and the potential capital returns, I think it could prove to be a top long term option for investors.

Transurban Group (ASX: TCL)

Another option for income investors to consider buying is Transurban. Due to the sharp reduction in traffic volumes on its roads during the pandemic, I suspect that it might decide against paying a final distribution in FY 2020. Or if it does pay one, it is likely to be reduced materially from a year earlier.

But I wouldn’t let that put you off investing. I expect its toll roads to start their recovery in the coming months and for traffic volumes to slowly return to relatively normal levels by mid to late 2021. In light of this, I estimate that its shares offer forward distribution yields of 3.4% and 4.5% for FY 2021 and FY 2022, respectively. Once again, I think this makes it well worth being patient with its shares.

More reading

• In a post-COVID world, could Australia be the next superpower?
• Top ASX Dividend Stock Picks for May 2020
• Is this ASX 200 share market recovery “fool’s gold”? This ASX fundie thinks so
• 3 ASX 200 pandemic winners and 3 losers
• Are there any safe havens in ASX aviation shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of 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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The AMCOR PLC/IDR UNRESTR (ASX: AMC) share price is outperforming the market after it upgraded its profit guidance.

Shares in the global packaging giant jumped 0.7% to $13.82 when the S&P/ASX 200 Index (Index:^AXJO) slumped 1.2% at the time of writing.

You will be hard pressed to find another stock that is lifting its full-year forecast and growing earnings in this coronavirus-stricken market.

Profit growth in challenging market

But Amcor is doing just that as management unveiled its quarterly results. Underlying earnings per share (EPS) jumped 13.7% in constant currency terms to 44.7 US cents in the nine months ended March 31.

Underlying earnings before interest and tax (EBIT) lifted 6.9% to US$1.06 billion even as revenue dipped a modest 1.8% to US$9.33 billion over the period.

Earnings guidance upgrade

The good news didn’t stop there. Amcor increased its FY20 for the second consecutive quarter with management now tipping a 11% to 12% increase in EPS from its previous guidance of 7% to 10%.

While Amcor isn’t immune from the global recession due to the COVID-19 lockdown, its business is deemed by governments as an essential service.

This means its 250 plants around the world have largely continued to operate as Amcor services clients in defensive sectors like healthcare, food and beverages.

Further, the group isn’t reporting an increase in operating costs due to disruptions caused by the pandemic.

Impact of COVID-19

Interestingly, management commented that the impact of COVID-19 on its business is unclear. While some parts of its business have slowed, others have benefitted from the crisis.

For instance, Amcor experienced good demand from healthcare globally and most food and beverage end markets were relatively strong in developed countries.

However, the group experienced weakness in emerging markets, including China and India.

Other quality ASX stocks to watch

Amcor’s integration of its recent acquisition of Bemis is also proceeding well. It’s managed to deliver pre-tax cost savings of US$55 million this financial year and expects to achieve US$180 million by end of FY22.

And unlike many other blue-chip ASX companies, including the big banks like Commonwealth Bank of Australia (ASX: CBA), there is no need to worry about dividend cuts from Amcor.

The group declared a quarterly dividend of 11.5 US cents a share (or 17.7 Australian cents) and said it expected to complete its $500 million on market share buyback by the end of this fiscal year.

Amcor isn’t the only defensive growth stock that’s well placed to outperform in this market. I also rate glove maker Ansell Limited (ASX: ANN) and ship builder Austal Limited (ASX: ASB) very highly.

More reading

• 3 ASX healthcare shares to buy now for the long term
• 3 ASX dividend kings to buy and hold forever
• ASX 200 sinks 1.3%: Big four banks drag ASX lower & Altium issues sales warning
• Top ASX Dividend Stock Picks for May 2020
• Reality bites: Broker warns CBA shares to underperform this week

Brendon Lau owns shares of Austal Limited, Ansell Limited and Commonwealth Bank of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of and has recommended Amcor Limited. The Motley Fool Australia has recommended Ansell 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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Is the Westpac Banking Corp (ASX: WBC) share price a buy for future dividends at the current price?

It seems pretty clear that Westpac is in for a rough time in 2020 with a hefty AUSTRAC penalty coming and all of the coronavirus pain.

The Westpac board wisely decided to defer the interim dividend decision. We don’t know how much pain there’s going to be for banks yet. It could be really painful, or perhaps there will just be some pain but not too much – which is what the banks have already provisioned. Investors just can’t know at this stage. 

In the FY20 half-year result Westpac announced an impairment charge of $2.24 billion, which was up $1.9 billion to take into account the potential impacts of the coronavirus.

That Westpac interim report was hard to read for shareholders. There’s a reason the Westpac share price has fallen so much. Cash earnings were down 70% to $993 million and statutory profit was down 62% to $1.2 billion.

Is the Westpac share price a buy for income?

Clearly there’s no dividend at the moment with it being deferred. However, what about when we get through this stage of the coronavirus? Will the Westpac share price be worth buying then?

If Westpac were to go back to paying $0.80 per share every six months in the future then Westpac would have a grossed-up dividend yield of 15%. But even if you were to assume some positive assumptions, how long would that take? Two years, three?

Not only don’t we know how long the economy will take to get back to normal, we don’t even know if the bank boards will go back to those same dividend payout ratios. Westpac could decide to only pay out half of earnings or even just a third going forwards.

Historically, lot of retirees probably paid less attention to the Westpac share price and more to the dividend. I wouldn’t buy Westpac expecting big dividends in the future, it could easily change to a North American bank level of dividends permanently.

The Westpac share price is a lot lower, but it’s only a buy if the economy can rebound quickly. There may be a lot more pain to come, I’m not looking to buy today. I think there are better dividend shares out there.

More reading

• Is it time to invest in shares or wait on the sidelines?
• ASX 200 storms 1.2% higher: Cochlear reports 60% sales decline, Webjet jumps 22%
• How Macquarie Group is vying to unseat CBA
• ASX 200 Weekly Wrap: New ASX bull run continues
• 3 top ASX dividend shares to buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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Buying ASX shares for the long-term can be a smart way to build stable wealth. A diversified portfolio of high-quality companies can be the key to unlocking your retirement dreams. Buying shares is relatively straight-forward, but just how do you choose the shares that will set you up for life? Here’s a couple of my favourite picks below.

2 long-term ASX shares that could set you up for life

Let’s assume you’re a buy and hold investor looking 30 years ahead. That means investing for today won’t help that much, but investing for the next big trends can.

I think Nextdc Ltd (ASX: NXT) could be one ASX share to buy for the future. Nextdc owns and operates a number of data centres around Australia. If we look 30 years into the future, it’s hard to see how data security and storage won’t continue to grow both here and abroad.

That means Nextdc could transform from a growth share to large-cap dividend share in 30 years’ time. As the company matures over time, I think Nextdc could pay some handy dividends by the time you hit retirement age.

I think Kogan.com Ltd (ASX: KGN) could be another ASX share to set you up for life. Kogan has grown from a backyard electronics reseller to a diversified online conglomerate.

Kogan could become Australia’s answer to Amazon, given it already has business operations in credit cards, insurance, mobile phones and travel. With efficient online operations and lower overheads than competitors, Kogan shares could outperform their ASX peers in the decades ahead.

I think Kogan still has a strong growth profile in the years ahead and could become an ASX 50 share within the next decade or so.

Foolish takeaway

Both of these growth shares are on my watchlist at the moment. If you’re investing with a long-term mindset, I think both Nextdc and Kogan are 2 ASX shares that could be a staple in Aussie retirement portfolios in the years to come.

More reading

• Where to invest $10,000 in ASX 200 shares immediately
• Why CSR, Kogan, Premier Investments, & ResMed shares are storming higher
• Kogan share price jumps after doubling its sales in April
• In a post-COVID world, could Australia be the next superpower?
• 5 top ASX shares to buy and hold for a decade

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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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