Earlier today Insurance Australia Group Ltd (ASX: IAG) became the latest company to cancel its final dividend because of the tough trading conditions it is facing.

I suspect this could become a common occurrence during earnings season in August.

In light of this, if you’re looking for dividends in the immediate term, you may want to consider buying the dividend shares listed below.

Due to the strength of their business models, I believe these companies are well-positioned to continue paying their dividends as normal during the pandemic.

They are as follows:

Coles Group Ltd (ASX: COL)

This supermarket giant is arguably the safest dividend share to buy. It is one of only a handful of blue chip shares which has accelerated its growth during the pandemic. While not all of its sales growth is likely to flow through to the bottom line, I still expect Coles to report strong earnings and dividend growth next month. Looking ahead, I feel confident that its growth can continue thanks to its defensive earnings, refreshed strategy, and strong market position. Based on the current Coles share price, I estimate that its shares offer a fully franked 3.5% FY 2021 dividend.

Telstra Corporation Ltd (ASX: TLS)

Another safe option for investors to consider buying is Telstra. While it hasn’t been a successful investment for income investors over the last five years, I’m optimistic that its dividend cuts have now bottomed. This is because even when accounting for the end of the NBN compensation, Telstra’s forecast free cash flow looks sufficient to maintain its 16 cents per share dividend. Furthermore, once the NBN headwind is gone, I believe the new and improved Telstra operating model will be positioned for growth once again. As a result, I think now would be an opportune time to make a patient investment in its shares. Based on the current Telstra share price, it offers investors a fully franked 4.8% dividend yield.

More reading

• 3 ASX shares to benefit from huge growth in streaming subscriptions during lockdown
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Why Afterpay, Evolution, IAG, & Vicinity Centres shares are dropping lower
• Insurance Australia Group share price sinks 4% lower after cancelling final dividend
• How are 2019’s tech IPOs performing?

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. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 shift to eCommerce was given a shove by the onset of coronavirus. Consumers are increasingly moving their shopping activities online, including for necessities such as groceries. According to Ibis World, online shopping grew by 15.5% per year in the five years to 2020. It was forecast to continue growing strongly, but the pandemic has fueled that growth, pushing even more customers online. We take a look at 2 ASX shares leveraged to this trend. 

Kogan.com Ltd (ASX: KGN)

The Kogan share price has more than quadrupled from its March low with the online retailer reporting record sales. Kogan benefitted from a spike in sales during the first lockdown while many bricks and mortar stores were forced to close. Gross sales increased 103% year on year in April and May. This drove a 130% increase in gross profit across the period. 

Kogan added 126,00 active customers in May, growing active customer numbers to 2,074,000 at the end of the month. Sales then almost doubled in June, rising 95% to more than $94 million. Kogan’s online success has pushed the company’s share price well up with its current price-to-earnings (P/E) ratio sitting at 89.95. 

Nonetheless, Kogan stands to benefit from the long-term shift to eCommerce which has been accelerated by current events. As founder Ruslan Kogan told the Australian Financial Review, “our business is booming as more customers than ever choose Kogan.com”.

Temple & Webster Group Ltd (ASX: TPW)

Online home furnishings retailer Temple & Webster has seen both sales and its share price rise as consumers eschew physical shopping. The Temple & Webster share price has climbed nearly 400% from its March lows. The company traded strongly in the second half with revenue growing by 90% compared to the prior corresponding period. 

In the financial year to 31 May, Temple & Webster reported year to date revenue of $151.7 million which was up 68% on the prior corresponding period. Active customer numbers increased by the same percentage to 440,257. The company is well placed to take advantage of the structural shift to online in the furniture and homewares market. 

CEO and co-founder Mark Coulter said, “we remain bullish about the longer-term shift from offline to online driven by changing consumer preferences and demographics. Customers are experiencing the benefits of our channel, including range, convenience, and value”. 

More reading

• Extended jobkeeper: Which ASX shares to buy?
• Kogan share price up 360% since March. Is it too late to buy?
• 3 ASX growth shares that could be long term market beaters
• What to do if your ASX shares hit a record high
• 4 trends to invest in before August earnings season

Kate O’Brien 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 and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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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Earlier today I picked out three small cap shares which I think have very bright futures. You can read about them here.

Now I thought I would focus on a couple of shares which are a little larger in size. With market capitalisations approaching $1 billion, I would class these as mid cap ASX shares.

Though, this might not be for long, as I feel these companies have the potential to grow into much larger entities in the future. This could make them great long term investment options.

Here’s why I like them:

Electro Optic Systems (ASX: EOS)

The first mid cap share to look at is Electro Optic Systems. It is an aerospace company and the largest defence exporter in the Southern Hemisphere. It has a highly experienced team, high quality portfolio of products, and long-established partnerships with major global aerospace giants.

I believe a testament to the quality of its offering is a recent announcement by Electro Optic Systems. That announcement revealed that it has entered into contract negotiations with the Australian Government for 251 Remote Weapon Stations and related materiel. Together with its massive backlog of work, I believe this puts the company in a strong position to deliver solid earnings growth over the next few years.

Objective Corporation Limited (ASX: OCL)

Another mid cap ASX share to consider buying is Objective Corporation. It has a suite of software products that help government agencies and financial services organisation respond to information requests, provide secure file sharing, streamline and improve processes, and strengthen corporate governance practices. Given the nature of its offering, demand has remained strong during the pandemic and allowed it to deliver a very strong full year result.

Last week Objective revealed a 22% increase in unaudited net profit after tax to $11 million for FY 2020. This was driven by a 21% lift in annual recurring revenue to $56.6 million, which now represents 75% of total revenue. Next year the company’s growth looks set to continue and be given an additional boost from the recent acquisition of government regtech solution specialist Itree for $18.5 million. Management certainly believes this will be the case and expects “a material lift in revenue and profitability.”

More reading

• 2 ASX shares I’d buy if the market crashes again
• Where to invest your first $500 into ASX shares
• Why the Electro Optic Systems share price fell 16% in June
• 3 ASX shares that could benefit from Australia and Japan deepening ties
• 3 ASX shares for the $270 billion defence plan

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 Electro Optic Systems Holdings Limited and Objective Limited. The Motley Fool Australia has recommended Electro Optic Systems Holdings 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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I have always been fascinated by ASX retail shares. Good retail companies have an energy to them. An energy you can feel when you visit their stores. Moreover, to be successful in retail, it takes a set of skills that are hard to find. Things like store layouts, location, inventory management, customer focus, and product selection to name a few.

I recall being very impressed by JB Hi-Fi Limited (ASX: JBH) when I first discovered the place years ago. I remember thinking it would be cool to have worked there in my late teens and early twenties. Similarly, I really enjoyed the Apple stores when they first appeared.

If I had acted on my impulses about JB Hi-Fi and invested at the start of 2010, I would have doubled my initial investment by today. That takes a compound annual growth rate (CAGR) of approximately 7.3%. Far more than what I would have received from any cash savings account, and more than real estate returns where I live. 

Most retail stores were closed for several months during the early phase of the coronavirus pandemic. In addition, many of them are again closed in Victoria. Consequently, the share prices of many retail companies have dropped significantly. I think that makes this a great time to invest in the right ASX retail shares.

An ASX share for fashion

My teenage daughter absolutely loves the Platypus sneaker store. It has a great range, there is always good contemporary music, it is filled with other kids around her age, and the staff there either really enjoy their work or they are great at pretending. Platypus is one of the brands run by Accent Group Ltd (ASX: AX1). Some of its other well known brands include Vans, Skechers, Hype DC, Athlete’s Foot and Dr Martens.

On 25 June, Accent Group released a business update covering the lockdown period. This is unaudited and may change, however it was surprisingly positive. The company expects to announce earnings before interest, taxes, depreciation and amortisation (EBITDA) around 10% higher than FY19. This has been helped by surging digital sales, with online sales accounting for 23% of all sales in June. 

I have long been impressed with CEO Daniel Agostinelli’s financial acumen. In particular, because he acts quickly on underperforming stores. The update includes the commitment to close stores where landlords were not willing to negotiate in the spirit of the government code of conduct surrounding leases.

The price of this ASX share is still 29% lower than it was at the start of the year. At the time of writing, it is trading at a price-to-earnings ratio (P/E) of 13.38 and has a respectable trailing 12 month dividend yield of 6.87%. The company has grown its share price by around 7% per annum on average over 10 years.

Jewels and high fashion

At first glance, the market for jewellery and watches appears to be very crowded. When you go into any major mall there are numerous jewellery stores, normally located next to one another. However, on closer inspection, the market is far more segmented than it appears. Companies like Lovisa Holdings Ltd (ASX: LOV) and the Danish chain Pandora compete for the fast fashion market. 

However, Michael Hill International Ltd (ASX: MHJ) pitches itself as slightly more upmarket. While its stores offer items under $500, generally they sell premium jewellery to a premium clientele. Consequently, the company has fewer competitors than it appears. Mazzucchelli’s sells to an even wealthier clientele while Smales Jewellers, Goldmark and Sheils carry more jewellery in the under $500 range. 

I’m drawn to Michael Hill shares by three of their metrics. First, they have a four year average return on equity (ROE) of 15.1%. This means that for every $1.00 of net assets the company earns $0.15. This tells me it invests in the right assets and is able to use them effectively to generate profits. Second, at the current share price, Michael Hill is paying a trailing 12 month dividend yield of 7.97%.

Lastly, in a recent update, the company reported a Q4 FY20 increase in digital sales of 193% against the prior year. However, across FY20 total sales were down by 13.7% due to the coronavirus pandemic. As a result, this share isn’t going to get a lot of love during the earnings season. However, it is setting itself up for a very profitable future via a digital first sales strategy.

Foolish takeaway

When the market moves all together there are always many profitable opportunities. In the case of these two companies, the underlying business model works and both are successfully transitioning to online sales, albeit a little later in the case of Michael Hill. In my opinion, both of these companies are undervalued, have a solid dividend payment history, and operate well in competitive markets. 

I am personally very interested of both of these ASX shares and think they deserve a place on your wishlist. 

More reading

• Extended jobkeeper: Which ASX shares to buy?
• 4 trends to invest in before August earnings season
• How you can take advantage of the surging Australian dollar
• Should you buy ASX retail shares in July?
• Are ASX 200 shares overvalued right now?

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent 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 Challenger Ltd (ASX: CGF) share price is dropping lower on Friday following the release of an update on its share purchase plan.

At the time of writing the annuities company’s shares are down almost 3% to $4.53.

What did Challenger announce?

This morning Challenger announced that its retail share purchase plan has now closed and has raised a total of $35 million.

This was more than the company was aiming to raise and was upsized from $30 million due to strong demand from retail shareholders.

Combined with its $270 million institutional placement, which completed in late June, Challenger has now raised a total of $305 million.

It could have raised even more from retail shareholders, but decided to scale back valid applications. The scale back was made on a pro-rata basis to eligible shareholders.

Nevertheless, all participating shareholders will receive an amount of shares that at least maintains the percentage holding after the equity raising that they held before, or their application amount if that was lower.

This excludes approximately 0.5% of participating shareholders that were restricted from applying for the amount that would maintain their percentage holding due to the $30,000 maximum application amount.

These shares will be issued at a price of $4.32 per new share, which represents a 2% discount to the five-day volume weighted average price of Challenger shares up to, and including, Tuesday 21 July 2020.

Why is Challenger raising funds?

Challenger’s Managing Director and Chief Executive Officer, Richard Howes, was pleased with the response and explained how the funds will be utilised.

He commented: “We are very pleased with the strong response shown by shareholders, allowing us to increase the size of the SPP. Together with our recent successful institutional placement, the capital raised will enable our business to remain strongly capitalised through this period of ongoing market uncertainty and provide flexibility to take advantage of selective investment grade opportunities to enhance earnings.”

Shareholders will no doubt be hoping that these funds do indeed enhance its earnings. The Challenger share price is well off its March lows, but still down by almost 50% from its February highs.

More reading

• 2 ASX shares leveraged to the eCommerce shift
• 2 fast-growing mid cap ASX shares that could be destined for big things.
• 2 off the grid ASX retail shares for higher returns
• 3 ASX shares to benefit from huge growth in streaming subscriptions during lockdown
• Here’s why the A2B share price is on the move today

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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I believe it is fair to say streaming providers such as Netflix have changed the entertainment industry. After eliminating the old Blockbuster video stores I went to as a kid on weekends, the growth in streaming subscriptions has been phenomenal. This growth has been even more pronounced in 2020 as a result of the coronavirus pandemic and associated lockdowns.

There are a number of ASX shares that are benefiting from the rise of this trend in Australia, including News Corp (ASX: NWS) and Telstra Corporation Ltd (ASX: TLS), which share ownership of Foxtel, and Nine Entertainment Co Holdings Ltd (ASX: NEC), which owns streaming service Stan.

Subscriptions surge in lockdown

According to a press release by Roy Morgan, subscriptions to streaming services have soared during lockdown, with providers such as Netflix, Foxtel, Stan, Disney+ and Amazon Prime all showing increases in subscribers.

There are now almost 15.74 million Australians with access to a service, which is an increase of 5.9% or 878,000 in just three months.

Netflix still has a market-leading position in the streaming services space, with 13.28 million Australians subscribed.

However, Foxtel also saw strong growth, with 658,000 new subscriptions since lockdown period commenced, representing a 13.6% increase and bringing total subscriber numbers to 5.5 million. I believe this growth was assisted by the return of sport on Foxtel’s Kayo Sports and the release of its new streaming service, Binge. Foxtel ownership consists of News Corp, with a 65% interest, and Telstra, with a 35% interest.

Nine Entertainment’s Stan also grew strongly during the period, increasing subscriptions by 729,000 to 4.43 million, which is a 19.7% increase in 3 months.

Roy Morgan insights

Commenting on the numbers, Roy Morgan CEO Michele Levine said:

The rate of growth is astonishing with Netflix gaining more viewers in this three month period than they gained over the previous twelve months and Foxtel experiencing its strongest growth in many years despite the lack of sporting content during this period….

After a bumper few months, the challenge now becomes retaining these new customers in the period ahead as Australia gradually re-opens – although Victorians still have some time to wait on that front. Foxtel launched Binge, its competitively priced alternative to Netflix and Stan, at the end of May and this new offering will be a key part of Foxtel’s strategy to attract new viewers in the months and years ahead.

Foolish takeaway

It will be interesting to see if these subscription numbers can be maintained and continue to grow, post-lockdown, for the streaming service companies.

In my view, Foxtel through its Kayo and Binge offerings may see continued growth, as customers explore the new content on Binge and tune in to the return of sport. I believe News Corp will benefit more from this exposure than Telstra, simply due to its larger share of ownership.

Additionally, embattled media share Nine Entertainment could potentially offset some of the coronavirus-induced decline in its advertising revenue with the strong growth in its Stan offering.

More reading

• How are 2019’s tech IPOs performing?
• Vocus and 1 other top quality ASX share to buy right now
• Why this leading fundie thinks ASX bank shares are undervalued
• 2 of the best ASX dividend shares to buy now
• 3 of the best ASX blue chip shares you can buy right now

Motley Fool contributor Matthew Donald has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Nine Entertainment Co. Holdings 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 A2B Australia Ltd (ASX: A2B) share price has risen by 1.89% at the time of writing. A2B was previously known as Cabcharge and is a leading provider of mobile payment processing technology and consulting, specifically to the taxi and limousine industries in Australia and internationally. In addition, the company provides taxi services and despatch management services.

What’s moving the A2B share price?

The A2B share price is on the move after the company announced a new partnership with Transport for NSW to provide a smartcard solution for the NSW Taxi Transport Subsidy Scheme (TTSS). The TTSS supports the mobility of 41,500 NSW residents who have a qualifying severe and permanent disability. The scheme is integral in supporting the independence of its members and their participation in the life of their communities.

A2B has been appointed to deliver a smartcard solution to replace the paper docket payment system currently in use. Consequently, A2B’s payment and data services will bring the TTSS into the digital age. 

The solution will provide new and useful insights through data, enabling Transport for NSW to better serve TTSS participants, an aspect of the partnership that A2B highlights as being particularly exciting.

Management commentary

Commenting on the new partnership, A2B CEO Andrew Skelton said:

Our team is happiest when the technologies we build are leveraged to provide accessible, dependable and equitable transport. The efficiencies and data insights that A2B’s technologies provide will enable Transport for NSW to continuously improve the TTSS for the benefit of communities throughout NSW… This partnership with A2B brings world class technology and data to the Taxi Industry component of the transport mix, and it’s an added bonus that the technology is being provided by an Australian payments company headquartered in Sydney.

The A2B share price

The A2B share price is currently trading up 1.89% on the back of this announcement, yet remains down by approximately 47% in year to date trading. This values the company at $97.55 million with a trailing 12-month dividend yield of 9.88%. After payment of its H1 FY20 dividend, A2B has a total liquidity position of ~$74 million. This includes $24.2 million of free cash.

More reading

• A2B share price jumps 5% on strong growth

Motley Fool contributor Daryl Mather 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX 200 shares are in the buy zone:

Altium Limited (ASX: ALU)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $40.00 price target on this electronic design software company’s shares. The broker has been looking through the second quarter update by its rival Cadence Designs. While it sees potential near term risks from the tough trading conditions the industry is experiencing because of the pandemic, it remains very positive on its long term outlook. I agree with Morgan Stanley and would be a buyer of its shares.

Nanosonics Ltd (ASX: NAN)

A note out of Morgans reveals that its analysts have upgraded this infection prevention company’s shares to an add rating with a $6.92 price target. The broker made the move on valuation grounds after a pullback in the Nanosonics share price. While the broker suspects that its full year results could be softer than expected due to the tough operating environment caused by the pandemic, it believes it is worth sticking with the company. Morgans believes Nanosonics is well-placed for long term growth thanks to its highly regarded trophon technology, upcoming product launches, and the growing importance of high level disinfection. I completely agree with Morgans and feel the recent share price weakness is a buying opportunity.

Newcrest Mining Limited (ASX: NCM)

Analysts at UBS have retained their buy rating and lifted the price target on this gold miner’s shares to $38.40 following its quarterly update. According to the note, Newcrest’s production for the June quarter came in ahead of its expectations and its costs were in line with its estimates. The broker also notes that drilling results at Haverion have been positive and the probability of the site being mined has increased. UBS doesn’t believe the market is factoring this into its valuation at present. I think UBS makes some good points and Newcrest could be a decent option if you’re wanting exposure to gold.

More reading

• Will the iron ore price crash by half by the end of 2020?
• ASX 200 sinks 1%: IAG cancels final dividend, tech shares tumble, IGO jumps
• Value stocks to rise on strong A$ and broker picks the cheapest ASX stocks to buy today
• Up 38% in July! Is the Orocobre share price a buy?
• Why the Polynovo share price could climb in August

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’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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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