With the base interest rates on savings accounts as low as 0.05%, it is almost impossible to generate a sufficient income from them.

But don’t worry, because there are a number of quality dividend shares on offer on the Australian share market to save the day.

Two that I would buy are listed below:

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to consider buying is Dicker Data. I think the leading wholesale distributor of computer hardware and software across the ANZ region is a great option. This is due to its strong market position, growing vendor agreements, positive tailwinds, and new distribution centre. The latter gives the company significant room to expand its operations and boost its revenue growth once complete. 

Another positive is the way the company has been able to continue its growth during the pandemic. At a time when many companies are struggling, Dicker Data recently reported half year profit before tax growth of 30.4% to $42 million. This puts it on course to deliver on its target of lifting its dividend by 31% to 35.5 cents per share this year. Based on the current Dicker Data share price, this represents a generous fully franked 4.75% dividend yield. It is also worth noting that an insider has been buying shares this week. The company’s COO, Vladimir Mitnovetski, picked up $37,500 worth of shares on Monday. Judging by this purchase, he sees value in its shares at this level.

Rural Funds Group (ASX: RFF)

Another ASX dividend share I would buy is Rural Funds. This agriculture-focused property group has been growing its distribution consistently each year for some time. Pleasingly, it looks well-positioned to continue doing so for the foreseeable future. This is thanks to its high quality portfolio of assets that have long term tenancy agreements and built in rental increases.

At the last count the company’s weighted average lease expiry was almost 11 years. I believe this gives it great visibility on its future earnings and means its distribution growth looks very secure. In FY 2021 management is intending to grow its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 5.2% yield.

More reading

• Buy these ASX dividend shares if the RBA cuts rates
• Beat low interest rates with Coles and this ASX dividend share
• Are ASX banks or miners buys for dividends?
• This ASX-listed company makes $5.7 million per employee
• Will the RBA keep the cash rate on hold for 3 more years?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and 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.

The post 2 high quality and growing ASX dividend shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2ELBwZG

The Australian share market has been out of form for the last few days and has pulled back from recent highs.

While this is a touch disappointing, spare a thought for shareholders of the three ASX shares listed below.

These shares have just fallen to 52-week lows or worse. Is this a buying opportunity?

Insurance Australia Group Ltd (ASX: IAG)

The Insurance Australia share price dropped to a multi-year low of $4.68 on Tuesday. The insurance giant’s shares have been sold off in recent months due to the impact of the pandemic on its business. For the 12 months ended 30 June 2020, IAG reported a 5.2% increase in revenue to $18,576 million but a 49.6% decline in net profit from continuing operations to $439 million. Management advised that a material narrowing in its insurance margins was responsible for the profit slump. In light of this poor form, no final dividend will be paid to shareholders. I’m not convinced that the worst is over for the company, so won’t be in a rush to invest.

Orora Ltd (ASX: ORA)

The Orora share price was out of form and dropped to a multi-year low of $2.20 yesterday. Investors have been selling the packaging company’s shares following a poor FY 2020 result and its weak outlook. In FY 2020 the company posted a 22.8% decline in net profit after tax to $127.7 million. Looking ahead, management warned that it expects challenging and uncertain market conditions to persist for the foreseeable future. In light of this, I would stay clear of Orora until conditions improve.

Telstra Corporation Ltd (ASX: TLS)

The Telstra share price tumbled to a 52-week low of $2.83 on Tuesday. Investors have been selling the telco giant’s shares amid concerns that it won’t be able to sustain its 16 cents per share dividend in FY 2021. This follows the release of its guidance in August which revealed a greater than expected impact from the pandemic. I’m optimistic a change in dividend policy will allow for this dividend to be maintained. As a result, I think the Telstra share price weakness is a buying opportunity.

More reading

• The Telstra share price just hit a 52-week low: Is it time to buy?
• Here’s why the Telstra share price fell 15% in August
• Zip and Brainchip were among the most traded shares on the ASX last week
• Why I’d buy Wesfarmers and 1 other quality ASX dividend right now
• Telstra and 1 more hot ASX dividend share to buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

The post Should you buy Telstra and these beaten down ASX shares? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3jFy9lN

On Tuesday the S&P/ASX 200 Index (ASX: XJO) continued its disappointing run and tumbled notably lower. The benchmark index fell 1.8% to 5,953.4 points.

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

ASX 200 to rebound.

The ASX 200 looks set to end its losing streak on Wednesday. According to the latest SPI futures, the benchmark index is expected to rise 28 points 0.5% higher at the open. This follows a positive night of trade on Wall Street which saw the Dow Jones rise 0.75%, the S&P 500 climb 0.75%, and the Nasdaq storm 1.4% higher.

Tech shares on watch.

The Australian tech sector was out of form on Tuesday and weighed heavily on the ASX 200. Pleasingly, it looks set to be a better day of trade for the likes of Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) on Wednesday after their US counterparts stormed higher. The local tech sector has a tendency to follow the lead of the tech-heavy Nasdaq index, which rose by a sizeable 1.4% overnight.

Oil prices charge higher.

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could be on the rise today after oil prices charged higher overnight. According to Bloomberg, the WTI crude oil price is up 0.8% to US$42.96 a barrel and the Brent crude oil price has jumped 1.1% to US$45.78 a barrel. Improving economic data drove oil prices higher.

Gold price edges lower.

The shares of Evolution Mining Ltd (ASX: EVN) and Resolute Mining Limited (ASX: RSG) will be on watch today after the spot gold price edged lower. According to CNBC, the spot gold price fell 0.1% to US$1,976.50 an ounce. Robust US economic data weighed on the precious metal.

Shares trading ex-dividend.

Another group of shares will be going ex-dividend this morning and could trade lower. These include packaging company Amcor PLC (ASX: AMC), fintech Iress Ltd (ASX: IRE), health insurance giant Medibank Private Ltd (ASX: MPL), and wine company Treasury Wine Estates Ltd (ASX: TWE).

More reading

• A strange thing is happening with index funds…
• ASX 200 falls 1.8%, Afterpay drops 8%
• The Cleanaway share price soared 22% in August. Time to buy?
• 3 ASX blue-chip shares I would buy at today’s prices
• Why it makes sense to invest in ASX tech shares

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 and recommends Altium. The Motley Fool Australia owns shares of and has recommended Amcor Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended IRESS 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.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/32PsHGr

The IDP Education Ltd (ASX: IEL) share price was one of the best performers on the S&P/ASX 200 Index (ASX: XJO) in August.

The student placement and language testing company’s shares recorded a stunning 50% gain over the month.

Why did IDP Education rocket higher in August?

Investors were fighting to buy IDP Education shares in August after the release of a surprisingly strong full year result.

Although the company was hit hard by the pandemic, it was still able to deliver strong profit growth.

For the 12 months ended 30 June 2020, IDP Education reported a 2% decline in revenue to $587.1 million but an impressive 29% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $148.6 million.

This profit growth was driven by a material reduction in both direct and overhead costs. Management revealed that direct costs fell 8% to $241.9 million and overhead costs were reduced by 10% to $196.2 million.

The company’s CEO, Andrew Barkla, commented: “Our results reflect strong momentum in the first of the half year, followed by a pivot towards disciplined capital management and product innovation in the second half.”

What were the drivers of its results?

Thanks to a strong performance from the multi-destination side of the company’s Student Placement business, this key business reported a 12% increase in revenue to $190.6 million.

This was supported by its English Language Teaching and Digital Marketing & Events businesses. They both grew revenue by 4% year on year.

However, the company’s biggest segment was out of form and offset these gains. IDP Education’s English Language Testing business reported a 9% decline in revenue to $325.5 million in FY 2020.

Is it too late to invest?

While it isn’t the bargain buy that it was a few months ago, I still believe IDP Education would be a great long term option for investors.

Especially given its strong balance sheet, growing footprint, strong online offering, and favourable tailwinds.

Another positive is that management notes that student intentions are strong. Its research is showing that only 7% of students no longer intend to commence study as planned. This could mean demand for its services grows strongly once trading conditions return to normal.

More reading

• These were the best performing ASX 200 shares in August
• How to become rich by investing $1,000 into ASX shares
• These ASX shares were top performers last week
• ASX 200 Weekly Wrap: Blue chips, earnings drag ASX lower
• These were the best performing ASX 200 shares last week

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 Idp Education Pty Ltd. 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.

The post Why the IDP Education share price rocketed 50% higher in August appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3lPfNku

I think September is a great time to buy ASX dividend shares.

We’ve just seen most of the results in the August 2020 reporting season. So we now have good idea about how businesses performed through the tough COVID-19 period.

Businesses that can grow (or maintain) the dividend during these times are truly great ASX dividend shares. But they also need to be at a good price to buy them today.

That’s why I’m personally interested in these two ASX dividend shares in September:

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a listed investment company (LIC). I think it’s a special LIC because it doesn’t have any management fee costs and instead it donates 1% of its net assets to youth charities each year.

What does it invest in? Future Generation invests into the funds of other fund managers which buy ASX shares. Those fund managers work for free to enable the donations to be paid.

The useful thing about LICs is that they can generate investment returns and then pay out those profits as a steady (and growing) dividend.

Looking at Future Generation’s gross portfolio performance over the past five years, it has outperformed the S&P/ASX All Ordinaries Accumulation Index by 2% per annum.

It has increased its dividend every year since 2015 when it first started paying a dividend. It hasn’t been fast growth, but the steady income growth has been attractive.

At the current Future Generation share price the ASX dividend share has a grossed-up yield of 6.9%. Aside from the nice yield, I also like Future Generation because it’s trading at a 8.3% discount to the net tangible assets (NTA) at July 2020. Buying a LIC at a discount with long-term outperformance is attractive to me.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I think that Soul Patts is the gold standard for dividends on the ASX. I believe that every Aussie income investor should have Soul Patts in their portfolio.

It’s the only business on the ASX to have increased its dividend every year over the past two decades.

How has it managed that? Well, it’s an investment conglomerate with a diverse portfolio with largely defensive businesses. Its holdings like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC) send dividends to Soul Patts which it can then pay to shareholders, whilst retaining a portion for investing in new opportunities.

The ASX dividend share’s annual cashflow benefits compounding from both the retained net cashflow it invests into new businesses as well as its existing holdings growing their dividends.

Soul Patts has paid a dividend every single year since it listed in 1903. That means dividends have continued to flow to shareholders through world wars, the Spanish Flu, the 1930s depression and so on.

I like that Soul Patts tries to identify investment opportunities that can keep growing profit whether times are good or bad. For example, I think swimming schools – one of Soul Patts’ private investments – would be a reliable business even during a non-pandemic recession because parents would still want their children to learn how to swim.

Over time, I think Soul Patts can grow its dividend for many years into the future because it makes long-term investments itself. The ASX dividend share can steadily shift its portfolio to new opportunities as they arise. It will seemingly soon be invested in regional data centres, which is a great long-term growth area.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.15%.

Foolish takeaway

I really like both of these ASX dividend shares, that’s why I own them in my portfolio. They offer solid starting dividends yields, they have a history of dividend growth and have good portfolio diversification. Future Generation is probably better for people who want a higher starting yield, but I’d rather buy Soul Patts for its long-term growth record and steady capital growth.

More reading

• Beat low interest rates with these ASX dividend shares
• Are ASX banks or miners buys for dividends?
• This is the ASX share I’d buy this week
• Where I’d invest $10,000 right now in ASX shares
• 5 top ASX dividend shares you should never sell

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and Washington H. Soul Pattinson and Company 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.

The post 2 ASX dividend shares I’d buy in September appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/34RPwvR

A strange thing is happening in share markets right around the world. Normally, the performance of an individual share market is measured using an index. An index works by taking a basket of the largest companies listed on an exchange and giving each a weighting based on their market capitalisation.

For example, the most popular index in Australia is the S&P/ASX 200 Index (ASX: XJO). The ASX 200 takes the top 200 companies listed on the ASX and weights them according to their market cap. Right now, the largest share in the ASX 200 is CSL Limited (ASX: CSL), which makes up 7.83% of the entire index. Thus, an ASX 200 index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) will hold ~7.3% of its funds in CSL shares.

Index funds like IOZ have become very popular with investors over the past decade precisely because of the diversification that they can bring with one easy share. This largely holds true with ASX index funds. Currently, the next four shares after CSL in the ASX 200 are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB). These four companies add another 7.28%, 6.62%, 3.77% and 3.41% respectively to the ASX 200’s total weighting, on top of CSL’s 7.83%. In other words, the top five ASX companies command a 28.91% share of the entire ASX 200 right now.

But an interesting thing is happening in other markets and their indices around the world.

Index concentration

Let’s take the flagship S&P 500 Index from the United States. The S&P 500 is the closest equivalent the ASX 200 has over in America, but rather than 200 companies, it holds… you guessed it, 500.

Now, you would think that an index with 500 companies would be a little less concentrated than our ASX 200. So let’s have a look.

Right now, the largest company on the S&P 500 is Apple Inc (NASDAQ: AAPL), with a weighting of 6.98%. Next up is Microsoft Corporation (NASDAQ: MSFT) with 5.96%, then Amazon.com, Inc (NASDAQ: AMZN) at 4.89%. Following that, we have Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) at 3.34% and rounding out we have Facebook Inc (NASDAQ: FB) at 2.42%. So collectively, the S&P 500 has 23.59% of its entire index in just five companies.

That might look like less than our own ASX, but we only have 200 companies in the ASX 200 compared to the 500 in the S&P 500. Let’s switch some numbers around to demonstrate. On the ASX 200, 2.5% of the companies control 28.91% of the index, whereas on the US markets 1% of the companies controls a 23.59% weighting.

It gets even better if we look to another market: China. According to reporting in the Australian Financial Review, just three companies — Alibaba Group, Tencent Holdings and Meituan Dianping — make up more than 38% of the MSCI China Index, which has more than 600 holdings.

Alibaba and Tencent are both tech giants, while Meituan Dianping specialises in food delivery.

What does this mean for investors in index funds?

This uber-concentration of indices around the world is worrying in my view. It means that the fortunes of anyone who is investing in index funds for supposed ‘diversification’ is really relying on a handful of big tech companies (or in Australia’s case, mining and banking companies). So if you invest in index funds for this purpose, you might want to take a look at what you’re really holding in your portfolio. You might not be as happily diversified as you think.

More reading

• ASX 200 falls 1.8%, Afterpay drops 8%
• The Cleanaway share price soared 22% in August. Time to buy?
• Apple and Tesla are in the top 5 US shares bought by ASX investors this week
• 3 ASX blue-chip shares I would buy at today’s prices
• What you need to know about the RBA’s rate decision today

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, 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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd 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 has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. 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.

The post A strange thing is happening with index funds… appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31J4uCj

Are you looking for some exposure to the small side of the market? If you are, then the three ASX small cap shares listed below could be worth a closer look.

Here’s why I think they have bright future ahead of them:

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a $450 million provider of sales enablement software. This clever software provides businesses with the information, content, and tools that help sales teams sell more effectively. The company has experienced very strong demand for its platform in recent years from a number of major companies. These are spread across over 50 countries and a diverse range of industries and sectors. In FY 2020 the company delivered a 53% increase in annualised recurring revenue (ARR) to $35.8 million. Pleasingly, it expects more of the same this year. Management is forecasting 36.9% to 48% year on year ARR growth.

ELMO Software Ltd (ASX: ELO)

ELMO is a $490 million cloud-based human resources and payroll software company. It provides a unified software platform which allows businesses to streamline a range of processes. I like the company due to its massive opportunity in the ANZ market and its option to expand internationally in the future. This is thanks to its jurisdiction agnostic platform. Another positive is that ELMO undertook a capital raising this year to fuel its future growth. Management intends to use these funds to acquire complementary businesses. But even without these acquisitions, ELMO is forecasting further strong organic growth in FY 2020. It has provided guidance for ARR of $65 million to $70 million, which represents year on year growth of 18% to 27%.

Mach7 Technologies Ltd (ASX: M7T)

A final small cap to watch is Mach7. It is a $265 million medical imaging data management solutions provider. Mach7 offers software that creates a clear and complete view of the patient. This helps users with diagnoses, reduces care delivery delays and costs, and improves patient outcomes. Management estimates that its total addressable market is worth approximately US$2.75 billion per annum. This compares to the revenue of $18.9 million it posted in FY 2020, which was more than double year on year. I feel this gives it a long runway for growth over the next decade.

More reading

• Top ASX Stock Picks for September 2020
• 4 fantastic ASX growth shares to buy in September
• Mach7 Technologies share price is up 5% on first full year profit result
• Why Bigtincan, Cleanaway, Worley, & Zip Co shares are storming higher
• Bigtincan share price storms higher on strong FY 2020 result and guidance

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 and recommends Elmo Software and MACH7 FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended Elmo Software and MACH7 FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 exciting ASX small caps to put on your watchlist appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gH1P08

The S&P/ASX 200 Index (ASX: XJO) fell by around 1.8% to 5,953 points.

Here are some of the highlights from today’s ASX trading:

Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) hit by Paypal

The share prices of Afterpay and Zip fell by 8% and 12.8% respectively today. Shareholders sold them off after payments giant Paypal announced a product called ‘Pay in 4’. As you may be able to guess, it’s an instalment option for consumers.

It provides an interest-free option for people to pay for things with a value of between $30 and $600.

The new service is included in the merchant’s existing Paypal pricing, meaning merchants won’t need to pay any additional fees to enable it for their customers.

PayPal’s SVP of Global Credit, Doug Bland, said: “In today’s challenging retail and economic environment, merchants are looking for trusted ways to help drive average order values and conversion, without taking on additional costs. At the same time, consumers are looking for more flexible and responsible ways to pay, especially online.

“With Pay in 4, we’re building on our history as the originator in the buy now, pay later space, coupled with PayPal’s trust and ubiquity, to enable a responsible and flexible way for consumers to shop while providing merchants with a tool that helps drive sales, loyalty and customer choice.”

Afterpay was the worst performer in the ASX 200. But there were also heavy falls for other buy now, pay later providers. The Sezzle Inc (ASX: SZL) share price fell 14.7%, the Splitit Ltd (ASX: SPT) share price dropped 7.25% and the FlexiGroup Limited (ASX: FXL) share price declined 6.2%.

Zip finalises its acquisition

Zip announced it has completed its acquisition of QuadPay yesterday. It also issued $200 million of convertible notes and warrants today.

Zip recently released a trading update for QuadPay which included launching partnerships with Fiserv and MasterCard Vyze as well as retailers like Fanatics and Mercari.

Larry Diamond, CEO and co-founder of Zip, said: “We are thrilled to welcome QuadPay to the Zip family. The US is a critical part of our global strategy as merchants increasingly demand global payment solutions. The QuadPay business has continued to deliver strong results, driven by the flight to online and a move away from the outdated and unfair credit card. We are already working closely with the QuadPay team and expect to drive significant synergies as we come together to capitalise on the global opportunity. We are also delighted to welcome Susquehanna Investment Group onto the register and thank them for their support as we turbocharge our growth into new products and geographies.”

QBE Insurance Group Ltd (ASX: QBE)

Another of the biggest drops in the ASX 200 today was QBE. The QBE share price fell 6.3% after it announced the departure of its CEO, Pat Regan.

Mr Regan is leaving after three years in the role. This came after the outcome of an external investigation about workplace communications that the board concluded did not meet the standards of the company.

QBE chair Mike Wilkins said: “We are committed to having a respectively and inclusive environment for everyone at QBE. The Board concluded that he had exercised poor judgement in this regard.

“While these are challenging circumstances the Board recognises and thanks Mr Regan for his hard work and contribution to strengthening QBE. However, all employees must be held to the same standards.”

Mr Wilkins will assume the role of executive chair, taking on the day-to-day oversight of QBE. A search for a new CEO is underway.

The executive chair said that the fundamentals of QBE are strong and it continues to invest in its data and digital capabilities. He also said that the external pricing environment has greatly improved for QBE.

More reading

• The Cleanaway share price soared 22% in August. Time to buy?
• 3 ASX blue-chip shares I would buy at today’s prices
• What you need to know about the RBA’s rate decision today
• How the rising Aussie dollar could drive the Carsales share price to new all-time highs
• Revealed: Risk-reward myth shattered

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

The post ASX 200 falls 1.8%, Afterpay drops 8% appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3jyOXuK

The Oil Search Limited (ASX: OSH) share price hasn’t been a shining star this year, to say the least. Like most energy shares, the Oil Search share price was hit particularly hard by the wider COVID-19 panic selling that gripped the markets earlier this year.

Already feeling pressure from falling oil and gas prices, Oil Search shares plummeted 76% from 15 January through to 23 March. The Oil Search share price has, however, rebounded strongly since then, in fact gaining 76% from its March low.

But it takes a lot more than a 76% gain to offset a 76% loss, which leaves Oil Search’s share price down 58% from its 15 January highs and down 54% year to date.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 11% over that same time.

What does Oil Search do?

Oil Search was established in Papua New Guinea in 1929 and began trading on the ASX in 1999. The company operates all of PNG’s oil fields. It owns 29% of the ExxonMobil-operated PNG LNG Project, a major exporter to Asian markets. The company also holds interests in the Elk-Antelope and P’nyang gas fields.

Oil Search counts some of the most successful oil and gas operators in the world as its joint venture partners. With PNG’s world class fossil fuel assets, the company is well-positioned to expand its LNG capacity.

Why could the Oil Search share price be in for big gains?

The Oil Search share price has been pushed sharply lower due to two related factors. First, the world has been producing oil, and to a lesser extent LNG, at a record pace. Second, the demand side for oil and gas collapsed following the coronavirus global lockdowns, which saw air and passenger vehicle travel virtually grind to a halt.

Now there’s still no shortage of oil and LNG waiting to be pumped from the earth. But the demand side is almost certain to rocket higher once the virus is eradicated or effectively controlled.

JPMorgan Chase & Co, for one, has been turning its attention towards shares in the beaten down energy sector. In a note on 26 September, which whilst nearly one year ago is still highly relevant, JP Morgan’s Dubvrako Lakos-Bujas wrote (as quoted by Bloomberg):

Investor complacency toward energy is perplexing. The market should assign a structural premium to the equity-oil complex with the Middle East currently a geopolitical tinderbox…

Favorable technicals, improving fundamentals with stabilizing business cycle, and ongoing geopolitical tensions in the Middle East could help redirect flows into this universally hated and cheap sector.

In its interim result for the half year to 30 June 2020, released on 25 August, Oil Search offered production guidance of 27.5 million to 29.5 million barrels of oil in 2020. This follows on it pumping 14.7 million barrels of oil in the first half of the year, its best production figure since 2018.

With that said, the Oil Search share price isn’t one that’s likely to rocket higher in the short term. But if you have an investment horizon of 2-3 years, I think today’s price of $3.22 per share could present a great bargain.

More reading

• Where to now for the ASX energy shares?
• Oil Search share price rises after interim half year result

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

The post Why the Oil Search share price is a great opportunity for long-term investors appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/34MBefU

Cleanaway Waste Management Ltd (ASX: CWY) has just capped off a stellar month for shareholders. Over the month of August, the Cleanaway share price went from $2.12 to $2.58 on yesterday’s closing price. That represents a gain of 21.7% with the Cleanaway share price now up 26.4% in 2020 so far. The shares have pulled back slightly on the first day of the new month today and are going for $2.54 at the time of writing.

Why did Cleanaway clean up in August?

The Cleanaway share price had a top month in August for one big reason: the company’s impressive earnings report for the 2020 financial year. Cleanaway released its earnings report last week, and investors were very pleasantly surprised.

Cleanaway managed to deliver a 2.1% increase to revenue and an 8.7% increase to its earnings per share (EPS). Free cash flow was also up an impressive 11.5%.

That enabled Cleanaway to announce a 2.1 cents per share fully franked final dividend, which represents a 10.5% increase on FY19’s final payout. For FY20, the company will pay out a total of 4.1 cents per share, which is a 15.5% increase on FY19’s 2.55 cents per share.

Companies that have the capacity to not only keep steady but increase their dividends in 2020 have been very few and far between. Most ASX shares have been going in the other direction. Thus, I think this is the primary reason why investors have been clambering to buy Cleanaway over the past month.

Is the Cleanaway share price a buy today?

There’s a lot to like about this company in my view. It is growing at a healthy (if uninspiring) rate and has proven to be highly resilient and defensive in these tough economic times. Garbage and waste collection is something we all need and expect and this isn’t going to change anytime soon. It’s as future-proof a sector as you can get.

Saying that, the market is certainly putting a premium on the Cleanaway share price that, in my opinion, more than reflects this reality. On current prices, Cleanaway is trading on a price-to-earnings (P/E) ratio of 46.37. The current average for the S&P/ASX 200 Index (ASX: XJO) is 18.34.

I’m not too sure a company growing revenues at 2.1% deserves such a multiple. Therefore, I’ll be staying away from Cleanaway shares at these prices. It’s a great company, but as Charlie Munger once said, “No company, no matter how great, is worth an infinite price”. Over the past year, the Cleanaway share price has fluctuated between $1.40 and $2.59. With such a volatile stock, I’d be far more comfortable waiting for a dip than buying at today’s prices.

More reading

• ASX 200 falls 1.8%, Afterpay drops 8%
• 3 ASX blue-chip shares I would buy at today’s prices
• What you need to know about the RBA’s rate decision today
• How the rising Aussie dollar could drive the Carsales share price to new all-time highs
• Revealed: Risk-reward myth shattered

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.

The post The Cleanaway share price soared 22% in August. Time to buy? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31Ny6P3