Leading fund manager Janus Henderson has reported a sharp fall in global dividends declared in the June quarter. Australia was reported to account for a significant amount of the decline in the Asia Pacific region.

Global dividends fall by 24% in June quarter

According to a study undertaken by Janus Henderson, global dividends fell by $129.02 billion to $527.8 billion in the June quarter. The 24% decline (in AUD) was the worst since Janus Henderson first launched the dividend study back in 2009.

Janus Henderson found that 27% of companies that paid a dividend during the June quarter cut their dividends. And of this subset of companies, more than half made the decision to totally cut any dividend payment at all.

Financial services and consumer discretionary were the most impacted industries. Within Europe and the UK, some financial companies were impacted by regulatory bans on dividends. In Australia, the industry was subject to regulatory pressures.

In contrast, companies in the healthcare and communications sectors displayed a much higher degree of resilience to any dividend cut due to COVID-19.

Janus Henderson anticipates headline global dividends to fall by around 17% in a best-case scenario in 2020. A worst-case scenario could see them drop by 23%.

Australia heads the Asian dividend decline

Australia suffered the greatest impact within the Asian region, and more dividend cuts are anticipated in Australia in the September and December quarters. In comparison, the Japanese market was relatively insulated from any dividend cuts.

The decision of Australian retail bank giant Westpac Banking Corp (ASX: WBC) to scrap its interim dividend accounted for a staggering 60% of the entire dividend decline across the APAC region. Westpac did, however, note in its third quarter results that it would consider issuing a dividend when finalising its annual results. Westpac’s financial year ends 30 September 2020.

The dividends decision was made under new APRA guidelines to provide a buffer to banks from any excessive COVID-related impact. Meanwhile, Commonwealth Bank of Australia (ASX: CBA) cuts its dividend by 50%

Rio Tinto leads the list of top Aussie dividend payers

Janus Henderson also noted the top the top 6 dividend payers in Australia, with Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG)  and Woolworths Group Ltd (ASX: WOW) topping the list. They were followed by CSL Limited (ASX: CSL), QBE Insurance Group Limited (ASX: QBE) and Brambles Limited (ASX: BXB).

Jane Shoemake, investment director, global equity income for Janus Henderson, said:

Despite it being a quiet period for Australian dividends, our most recent report shows the lower payouts in Australia made a significant impact. This is where the benefits of taking a globally diversified approach to income investing becomes clearest. Some payments were just deferred, and we have already seen some returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.

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• The Westpac share price is on the slide today. Here’s why
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Phil Harpur owns shares of CSL Ltd. and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Woolworths 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 Australian Ethical Investment Limited (ASX: AEF) share price holds the unfortunate title of being the worst performer on the S&P/ASX 300 Index (ASX: XKO). Down 1.8%  at the time of writing, Australian Ethical’s share price has dropped 32% so far in August. That compares to a 3% gain for the ASX 300.

Like most shares trading on the ASX, Australian Ethical was savaged by the COVID-19 driven market rout. Australian Ethical’s share price tumbled 59% from February 18 to March 23. From that low, shareholders enjoyed meteoric rise through June 19. The share price gained 316% to reach an all-time high of $9.07 per share. Shares have dropped 54% since that high, but the Australian Ethical share price is still up 5% year-to-date.

What does Australian Ethical do?

The company is one of Australia’s leading ethical wealth managers. It has provided investors with ethical wealth management products since 1986. Its investments are guided by the Australian Ethical Charter which underpins the company’s culture and vision.

As at June 30 2020, Australian Ethical had more than $4 billion in funds under management, across superannuation and managed funds.

The company listed on the ASX in 2002.

Why is the share price down 32% in August?

Australian Ethical’s share price began its slide in late June, after the fund manager released its guidance for FY 2020. While still forecasting an increase in underlying profit after tax before performance fees, the forecast profit growth was less than half the 38% delivered in its first half.

The selloff continued after financial services company IOOF Holdings Limited (ASX: IFL), announced on August 7 that it had sold approximately 14.2 million shares or 72% of its holdings in Australian Ethical. At a total consideration of $74.5 million, IOOF received an average of $5.25 per share. That’s well above the current share price of $4.14.

Atop its reduced forward guidance and IOOF’s major divestment, it’s worth noting that momentum works in both directions. When a company’s share price is falling, it may trigger investor’s pre-set stop losses. It will also likely raise red flags for other shareholders, who may be drawn to the companies making headlines, like gold and technology shares.

While Australian Ethical’s share price kept climbing in the first months of the global pandemic, it’s also possible that investors have temporarily shifted their ethics to the backburner.

More reading

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• Australian Ethical share price crashes 15% lower after IOOF selldown

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment 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 Santos Ltd (ASX: STO) share price goes ex-dividend tomorrow. This when shares start selling without the value of its dividend payment. But before you rush out to buy at today’s Santos share price, let’s look a little closer at what the the natural gas producer’s dividend offers.

What’s the dividend yield on today’s Santos share price?

Santos announced a disappointing half year result last week on the back of tumbling oil prices. The interim dividend was similarly disappointing, slashed by 65% on the same period last year to just US 2.1 cents per share (cps).

This means that Santos shares currently yield around 1.8% at the current exchange rate, fully franked. Although I wouldn’t be lining up for a 1.8% dividend yield, there are some positive signs for the Santos dividend going forward.

Are good things coming for the Santos dividend?

As the major global economies start to spool up again following their COVID-19 forced holding patterns, it is fair to assume that demand for energy, and energy prices, will continue to recover. The price of brent crude oil has been steadily ticking upwards over the last few months and currently sits around US$44 per barrel.

In addition, guidance provided by Santos has the company targeting record production for the full 2020 year of up to 88 million barrels of oil equivalent (mmboe). Year on year, this would be production growth of up to 16.5%.

Because Santos offers a ‘sustainable’ dividend policy which aims to pay out between 10% and 30% of free cash flow, if these factors can drive higher sales revenue going forward, investors may be in for a jump in the dividend pay-out.

A history of poor dividend returns

Still, 10% to 30% of free cash flow seems to me like poor recompense for investors who have helped to fund billions of dollars in risky capital expenditure. In fact, since 2016, Santos has paid out just US$459 million in dividends and has written down its assets by a staggering US$3.4 billion. In this light, Santos looks like little more than a fiery furnace of capital destruction.

Commodity producers are often prone to cyclical earnings fluctuations which can make dividends unpredictable and Santos is no exception. There may be good things coming for the company, but I won’t be rushing to add Santos to my dividend portfolio today.

Fortunately, there are several other big companies going ex-dividend on 25 August to consider, including:

• Domino’s Pizza Enterprises Ltd. (ASX: DMP)
• InvoCare Limited (ASX: IVC)
• Netwealth Group Ltd (ASX: NWL)

More reading

• 5 things to watch on the ASX 200 on Monday
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• Why CSL, Iress, Santos, & Webjet shares are dropping lower
• Santos share price slumps as interim dividend slashed

Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests. 

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Netwealth. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and InvoCare 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 RPMGlobal Holdings Ltd (ASX: RUL) share price is charging higher on Monday after the release of its full year results.

In fact, at one stage today the mining software company’s hit a multi-year high of $1.34.

At the time of writing they have given back some of these gains but are still up a solid 4% to $1.30.

How did RPMGlobal perform in FY 2020?

For the 12 months ended 30 June 2020, RPMGlobal delivered a $1.2 million or 1.5% increase in revenue to $80.7 million.

This was driven by a 317% increase in software subscription revenue during FY 2020, which offset declines in perpetual licence revenue, maintenance revenue, and advisory & consulting services revenue.

This strong demand for software subscriptions led to the company’s total contracted value (TCV) of software subscriptions sold increasing by $24.2 million or a massive 235% to $34.5 million during the year. Of this, only $6.1 million was recognised in this year’s financial accounts, with $28.4 million from this year plus $6.3 million from prior years ($34.7 million in total) to be recognised across the remaining duration of the committed term customer contracts. In most cases this is a period of 3 years.

RPMGlobal’s operating contribution (EBITDAR before Foreign Exchange and one-off COVID-19 costs/provisions) came in at $8.4 million. This was down slightly from $8.5 million in FY 2019.

And while the company made another loss this year, it was a big improvement year on year. RPMGlobal posted a loss after tax of $0.7 million for FY 2020, compared to a $5.2 million loss in FY 2019. Last year’s result included a sizeable tax expense.

Strong balance sheet.

Another positive was the company’s strong balance sheet. RPMGlobal had a cash balance of $40 million with no debt at the end of June.

This includes the final acquisition earnout payments of $2.6 million for the iSolutions and MinVu acquisitions during the year. Pleasingly, this means the company will no longer be required to share revenues from these products going forward.

Outlook.

The company is expecting challenges in FY 2021 because of the pandemic, but remains very positive on its longer term prospects.

Management notes that at the end of FY 2020 the annual recurring revenue (ARR) from software subscriptions reached $12.7 million and the ARR from perpetual maintenance revenue stood at $20.5 million. This means RPMGlobal starts the year with total ARR of $33.2 million.

It commented: “This $33.2m in TARR for FY2021 represents 68% of all software revenue reported by the company in FY2020 delivering revenue certainty and resilience for the company even during uncertain times.”

It added: “We continue to see solid growth in the software sales pipeline however currently we are experiencing delays in finalising deals as miners reprioritise both their capital and operating expenditure in response to COVID-19. While these delays are understandable, we believe these deals will be concluded in the fullness of time.”

Nevertheless, management remains confident in its future prospects and expects its investment in software development to help it win market share in the coming years.

It explained: “The continued heavy investment in our products now (when it may be hard for others to do the same) will we expect result in strong market share growth over the next three to four years.”

“With $33.2m already in TARR for FY2021, $40m in cash (and no debt) and $15.8m in operating cashflow in FY2020 the Board has very few concerns about the company’s financial viability and will continue investing in the company’s products while making value accretive acquisitions where strategic opportunities present themselves,” it concluded.

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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 RungePincockMinarco Limited. The Motley Fool Australia has recommended RungePincockMinarco 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 oOh!media Ltd (ASX: OML) share price is surging higher following the release of the media company’s half-year (H120) results this morning.

At the time of writing, the oOh!media share price is up by 10.4% to 98 cents per share.

oOh!media’s half-year results 

For the half-year ended 30 June 2020, oOh!media delivered revenue of $205 million. This was down by 33% on the $304.9 million recorded in the prior period, driven by the economic fallout from the coronavirus pandemic.

The company reported a net loss after tax of $23 million, a staggering fall of 355%.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $10.8 million, down 81% on the prior period.

oOh!media’s operating cash flow before financing increased for the first-half to $77.8 million, while underlying earnings per share fell 257% to 5.7 cents.

Cash on hand was $125.1 million at 30 June 2020, a 104% increase complemented by the company’s recent capital raising in March. Further facilities of another $232 million is available, should oOh!media need to access these funds.

The company unsurprisingly decided against declaring an interim dividend in H120. The board will revisit this decision in future periods based on the prevailing market conditions.

COVID-19 impact

Difficult trading conditions have severely affected the company’s revenue in the first half of 2020.

oOh!media reports that a reduction in passenger numbers and CBD audiences caused a decline across all its segments, most noticeably in the locate, fly and commute sectors.

Retail was mixed, with smaller grocery and weighted shopping centres performing better than major centres like Westfield.

In New Zealand, where oOh!media’s presence is mostly represented by bus shelters, revenue accelerated to 80% of the prior period, after initial lockdown.

Although new waves of the virus could result in recurring restrictions complicating recovery plans, management reports it has achieved $80 million in cost savings to see the business through. This has come from savings in fixed rent expenses, operating expenditure, and capital expenditure reductions.

FY20 outlook

oOh!media advised that due to trading conditions remaining uncertain, no forecast for FY20 could be given.

The company reported that business is slowly starting to return to normal levels with Q3 building on the momentum from Q2, pacing at 60% of the prior period compared to 25% for the month of May.

oOh!media will continue to manage costs and liquidity to preserve business expenditure when growth cycles bounce back.

Commenting on oOh!media’s H120 results, CEO Brendon Cook said:

We have maintained market share while strengthening our balance sheet, having responded quickly to the challenges presented by COVID-19. While revenue and profits predictably declined, our decisive early action to raise additional equity, reduce costs and capital expenditure and manage cash flows has reduced debt by 67 per cent and positioned the company well for the future.

About the oOh!media share price

oOh!media shares have recovered somewhat since their March lows of 55 cents, lifting 78% since then.  However, the oOh!media share price is still trading 67% lower, year-to-date, and 60% down on this time last year.

More reading

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• Is the oOh!Media share price set to run higher?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended oOh!Media 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 Aventus Group (ASX: AVN) share price has been fluctuating in morning trade today, after the company released solid results for FY20.

How did Aventus perform in FY20?

Earlier today Aventus released its results for the full year ended 30 June 2020.

The property group reported a solid performance for FY20, despite the impacts of the COVID-19 pandemic. Aventus highlighted a 4.2% increase in funds from operations (FFO) of $100 million for FY20. However, the company flagged a 48.6% decline in net profit for the full year of $56.7 million. Aventus attributed the fall in net profit to a decline in net fair value adjustments in its investment properties.

Aventus also reported that the valuation of its property portfolio had declined $37.3 million for FY20. The company attributed two-thirds of the fall to impacts of the COVID-19 pandemic. Despite the fall in property valuation, Aventus noted that the company has seen valuation uplift of $181 million over the past 3 years.

In addition, the company recorded a statutory profit of $57 million for FY20. Aventus also cited solid rent collections of 87% during the COVID-19 period and maintained a high occupancy rate of 98%. The company also noted that it had provided $6 million in rent relief to impacted tenants and was able to renegotiate 90 leases.

The company’s management noted that Aventus had looked to preserve investor value during the pandemic by managing costs and delaying non-essential capital expenditure.

What is the outlook for Aventus?

Aventus cited its diverse and robust tenancy mix for its stolid performance for FY20. The company boasts notable names and brands such as The Good Guys and Bunnings as tenants. Excluding Victoria, Aventus noted that traffic has increase around 9% above COVID-19 levels since June.

The company’s management also highlighted that Aventus was well positioned to benefit from changes to household spending patterns. As a result, Aventus reassured investors that the company would be able to weather community and economic challenges given its solid balance sheet and liquidity.

However, due to the uncertain nature of the COVID-19 pandemic, Aventus was unable to provide financial guidance for FY21.

Foolish Takeaway

At the time of writing, the Aventus share price is relatively flat for the day. Shares in Aventus have bounced strongly from their lows in March, but remain more than 22% lower for 2020.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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ASX earnings season is in full swing. Many ASX blue chips have already reported to their investors and this is set to continue this week, with companies like Woolworths Group Ltd (ASX: WOW) and Ramsay Health Care Limited (ASX: RHC) in line to deliver their results. A lot of companies have surprised to the upside (such as WiseTech Global Ltd (ASX: WTC)) and have subsequently been rewarded with their share prices racing higher. Others have had less fortune.

Two such shares in the latter group are the private health insurance providers Medibank Private Ltd (ASX: MPL) and NIB Holdings Limited (ASX: NHF).

Medibank shares plunged more than 5% last week when the company announced a 30% drop in profits.

Similarly, the NIB share price is down more than 8% today after the company reported its own earnings this morning. It also told investors profits were down more than 25% year on year, which doesn’t elicit a lot of confidence.

But these results (and subsequent share price movements) have also highlighted these two companies’ valuations today. On current prices, Medibank shares are more than 20% down from the all-time highs the company was commanding around this time last year. Similarly, the NIB share price is down more than 44% from its own highs around a year ago as well.

Considering the S&P/ASX 200 Index (ASX: XJO) is itself ‘only’ down around 14% from its all-time high today, does this mean private health insurers are undervalued right now?

Why private health shares have been punished in 2020

Well, as you might suspect, it has a lot to do with the coronavirus pandemic. The public health crisis has had a deleterious impact on the private health industry. Elective surgeries have had to be postponed or deferred as space in the hospital system has been prioritised towards the pandemic in recent months. That, in theory, should have led to a boon for private health insurers, who now don’t have to fork out for these operations. But what has happened is that many customers have ditched their cover altogether in recent months, not willing to pay premiums for care that isn’t available.

In its earnings report, Medibank told investors that more than 28,000 customers suspended their policies between 23 March and 30 June 2020. Further, both Medibank and NIB have delayed the annual premium increases for their customers that they were entitled to pass on. That has been great for consumers, but not for these companies’ bottom lines. Medibank alone estimates this move cost the company around $80 million.

But here’s why I’m still bullish on these private health insurers and why I think the current Medibank and NIB share prices are looking attractive.

A bull case for NIB and Medibank shares

Private health is here to stay. The government simply can’t afford for everyone currently using private health to ditch it and solely rely on the publicly-funded Medicare. That’s why there are numerous tax incentives and rebates to encourage private health insurance. There are also sticks as well as carrots. If you earn above a certain threshold, most people will pay a Medicare Levy Surcharge if you don’t have private health cover.

I like the idea of investing in companies that benefit from government policy shepherding in new customers and taxing anyone who walks away. And I’m confident there will be more ‘carrots and sticks’ employed if things don’t go back to normal for private health insurers soon. We have an ageing population people! It’s in the government’s interests to grow this industry. And that’s why I think the NIB and Medibank share prices are going hot today.

More reading

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Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of Woolworths Limited. The Motley Fool Australia has recommended NIB Holdings Limited and Ramsay Health Care 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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Six of the largest ASX-listed companies have now dished up $1.05 billion of compensation to ripped-off financial advice customers.

AMP Limited (ASX: AMP), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking GrpLtd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG) were forced to compensate financial advice clients for 2 violations.

An Australian Securities and Investments Commission investigation had previously found that customers were charged fees while not receiving anything in return. 

For example, some cases saw the companies fail to switch off ongoing fees for clients that no longer had a financial adviser, or for customers that had died.

All 6 except for Macquarie were also found to have failed to identify “non-compliant advice”, such as not acting in the best interests of the client.

Both topics received widespread attention during the Royal Commission into the finance industry 2 years ago.

The corporate regulator revealed Monday the reparation bill had now topped the $1 billion mark, after the companies put up $295.9 million in the half-year to 30 June.

NAB topped the league table for fees-for-no-service misconduct, paying or offering more than $368 million to customers. The Commonwealth Bank was a distant second, with $167.1 million.

NAB also topped the charts for non-compliant advice, having to compensate to the tune of $52.2 million. ANZ wasn’t far behind, dishing up more than $39 million.

Fees-for-no-service compensation

Company	Compensation paid or offered	Number of customers	Avg $ per customer
NAB	$368,075,052	626,863	$587.17
CBA	$167,131,529	54,826	$3,048.40
AMP	$145,719,911	199,425	$730.70
Westpac	$130,508,318	28,350	$4,603.47
ANZ	$66,653,885	26,461	$2,518.95
Macquarie	$3,970,000	983	$4,038.66
Total	$882,058,695	936,908	$941.46

Source: Australian Securities and Investments Commission, table created by author

Non-compliant advice compensation

Company	Compensation paid or offered	Number of customers	Avg $ per customer
NAB	$52,185,609	1,623	$32,153.79
ANZ	$39,182,569	1,920	$20,407.59
Westpac	$34,197,446	1,647	$20,763.48
AMP	$28,647,008	2,043	$14,022.03
CBA	$9,354,027	626	$14,942.54
Total	$163,566,659	7,859	$20,812.66

Source: Australian Securities and Investments Commission, table created by author

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

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The Super Retail Group Ltd (ASX: SUL) share price initially bounced as high as $10.97 in early trade, following release of the company’s FY20 results. At the time of writing, however, the Super Retail share price has fallen back to $10.67, representing a modest 1.04% gain for the day so far. 

The retail powerhouse has clawed its way back from as low as $3.54 when it bottomed out in March this year, providing those who got it at the bottom with a whopping 201% gain in just 5 months.

Let’s take a look at the specifics of the company’s FY20 performance.

What’s moving the Super Retail share price? 

In case you were unaware, Super Retail is one of Australia’s largest retail operators, boasting household brand names such as Rebel Sport, Supercheap Auto, and Boating Camping and Fishing.

According to this morning’s release to the market, total revenue for the group increased by over 4% to $2.83 billion. This was largely assisted by a boost to online sales of $290 million, which represented an increase of 44%. Likewise, earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 4.3% to $328 million.

In addition, underlying net profit after tax for FY20 increased by 1% to $154 million, and Super Retail will pay out a final dividend (fully-franked) of 19.5 cents per share. The group decided not to give its shareholders a pay day earlier in March due to the uncertainty proliferated by COVID-19

Notably, the FY20 fourth quarter saw an impressive rebound in consumer demand for Super Retail’s products, leading to a 27% rise in group like-for-like sales in May and June.

This trend appears to be emblematic of the retail industry more broadly, with the Australian Financial Review reporting last week that Australians had spent 30% more on household goods in July this year compared to 2019. The timing is hardly a coincidence, with tailwinds including the extension of JobKeeper and other government programs, the processing of FY20 income tax returns, and the extra money saved from possible mid-year overseas holidays all benefitting the retail sector.

In commenting on the company’s outlook for FY21, Super Retail’s CEO said, “We are well positioned to benefit from consumer trends emerging from the pandemic, including the channel shift to online, uptake in DIY auto repairs and household projects, increased focus on personal health and wellbeing, and greater demand for domestic travel and outdoor leisure activities.”

Foolish takeaway

A key question for Super Retail relates to whether Australia’s latest retail shopping spree is sustainable. Having said that, today’s results reflect a strong performance considering the circumstances of the past 12 months. The ease with which Super Retail has pivoted to online sales has also helped to bolster the company’s FY20 results. 

More reading

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• Super Retail and 2 other ASX retail shares to watch in August
• Why you should buy ASX shares in this resilient market

Motley Fool contributor Toby Thomas has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail 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’s been a great year for precious metals. One that’s delivered a huge boost to most ASX gold shares.

On the flip side, the year dominated by lockdowns and social distancing put in place to battle COVID-19 has been less than stellar, to say the last, for the share prices of companies in the travel and hospitality industries.

The Flight Centre Travel Group Ltd (ASX: FLT) share price, as one example, is down 68% since 2 January (at the time of writing). And that’s still after a 41% rebound from its 19 March low.

The coronavirus has been a big financial drag on companies like casino giant Crown Resorts Ltd (ASX: CWN), too. Crown’s share price is down 20% year-to-date. And, as with Flight Centre, that loss comes despite Crown’s 60% share price surge since 19 March.

Okay, those are 2 representatives of the beaten-down shares. The ones many investors are still fearful to sink their hard-earned money into.

The greedy money is still pouring into surging gold and technology shares.

Today, we’ll take a look at the gold sector…

Gold’s up 27% in 2020, many gold shares are up even more

The ASX gold shares have received a big boost this year from the fast-rising price of bullion.

Gold kicked off the year trading for US$1,517 per troy ounce. Today it’s trading for US$1,934 (AU$2,705) per ounce, after peaking on 6 August at US$2,063 per ounce. But even after that small retracement, the yellow metal is still up over 27% since 1 January.

And gold shares, as you may have heard, are leveraged to the price of gold. That’s because a miner’s fixed costs don’t change. So, when the price of gold rises, most of that gain goes right to the bottom line…and results in rising share prices.

Just look at Northern Star Resources Ltd (ASX: NST). The Northern Star share price is up 25%, year-to-date.

And the Saracen Mineral Holdings Limited (ASX: SAR) share price is up 64% since 2 January. That’s well over double the price gains of bullion itself.

Why ASX gold shares are running higher

The gold miners owe much of the thanks for their bull run to global government policies. Ones that have seen interest rates hit record lows and pumped trillions of dollars of stimulus into world economies. Add in geopolitical tensions between the US and China and the wave of uncertainty unleashed by the coronavirus, and gold’s ‘safe haven’ status has proven a strong draw.

And mum and dad investors look to be catching gold fever at a record pace.

From the Australian Financial Review:

Annual report disclosures that break down the composition of investors by shares held reveals a boom in those owning small parcels of 1000 shares or less. The biggest increases tend to be linked to gold, where the commodity price hit a record this month, and tech stocks.

“This happens in every cycle. Retail investors tend to gravitate towards the stocks doing well and the stocks that are being talked about a lot,” said Chris Brycki, founder and chief executive of online investment adviser Stockspot.

The annual report disclosures revealed that small positions in Saracen have risen from 26.6% in the 2019 financial year to 37.2% for 2020. Retail investor interest in Northern Star has increased even more, up 50%.

Gold shares should continue to perform well, as long as the price of the yellow metal itself remains high.

At the moment, soaring demand via physical-gold backed exchange-traded funds (ETFs) is helping drive the market higher. And this comes at a time when new gold supplies have been hindered due to impacts from the coronavirus.

According to Bloomberg, ETFs “now hold more gold than every central bank with the exception of the Federal Reserve”.

“At these times, it’s a very good business to be in,” said George Milling-Stanley, chief gold strategist at State Street Global Advisors, the marketing agent for the largest gold ETF, SPDR Gold Shares or GLD. “There’s no question in my mind that ETF demand is driving gold right now.”

With demand for physical gold booming and gold miners frequently dominating the financial headlines, you can see why so many retail investors are still gravitating towards ASX gold shares.

Those may still have some big gains ahead of them. But it does bring the advice of legendary investor Warren Buffett to mind.

Keep your goals modest

You’ve probably heard some snippet or other of Buffett’s famous fear and greed quote. Here’s the full excerpt, from a letter he wrote to Berkshire Hathaway shareholders in 1986.

Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

If the Oracle of Omaha – who recently invested in Barrick Gold Corp (NYSE: GOLD) – won’t speculate on the duration or degree of the current gold fever, I certainly won’t put my neck out there.

But in the gold space today greed is certainly dominating. And with so much gold held by ETFs, which are liable to rapid reversals, I wouldn’t put too many eggs in today’s shiny basket.

More reading

• Meet the group reaping the biggest profit from the gold bull run
• 5 things to watch on the ASX 200 on Monday
• Retail investors are flocking to buy ASX gold stocks Saracen Mineral and Northern Star Resources, and they look to have made a killing
• 3 ASX results you might have missed on Wednesday
• Northern Star share price drops lower despite record profit and special dividend

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited and Flight Centre Travel 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.

The post Is it still the time to be greedy for ASX gold shares? appeared first on Motley Fool Australia.

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