Over in the United States (US), the distinction between growth shares and dividend income shares is far starker than on our own ASX. Perhaps because they don’t have the same dividend franking system that we enjoy, US shares tend to only start paying a dividend when their growth opportunities begin to narrow.

Apple, for example, only started paying a dividend in 2012 (5 years after the iPhone debuted). Other massive tech companies like Amazon.com, Alphabet (also known as Google) and Facebook still offer no income to their shareholders to this day.

But perhaps fortunately for Aussie investors, no such canyon exists between ‘growth’ shares and ‘dividend’ shares down under. The lure of fully franked dividends is too much for many ASX companies (and their shareholders) to ignore.

So here are 2 ASX share that I believe offer a healthy mix between growth prospects and dividend income potential.

Cleanaway Waste Management Ltd (ASX: CWY) 

On the surface, Cleanaway seems like a pretty boring company. It operates within the rather unappealing waste management sector and basically cleans up our waste and garbage for a crust. But it’s this ‘boring’ nature that makes Cleanaway such an attractive investment opportunity, in my view. No matter our level of societal and commercial sophistication, we’re always going to produce waste of various kinds, through thick and thin, boom and bust.

Waste management used to be a fractured and decentralised market, but Cleanaway has done a phenomenal job of accumulating market share and scale through contracts with local governments all around the country. This has resulted in its share price rising from 70 cents in 2015 to $2.17 at the time of writing.

But Cleanaway has also been quietly growing its dividend payouts as well. Right now, this dividend will net you a yield of 1.80%. Considering Cleanaway has been growing this dividend by an average of 12.13% per annum since 2015, I think it’s a good future dividend bet to make.

WAM Global Ltd (ASX: WGB)

WAM Global is a listed investment company (LIC) that aims to hold a portfolio of undervalued growth shares from around the world (hence the name). It is modelled after WAM Capital Ltd (ASX: WAM), an ASX-focused LIC that has returned an average of 15.7% per annum (after fees and taxes) since its inception in 1999.

Some of the names WAM Global is currently investing in include Tencent Holdings, Costco, Activision Blizzard and HelloFresh. It only started life back in 2018, but since then, WAM Global has already built up a strong track record of dividend payments, the last of which came in at 6 cents per share (annualised).

On current prices, WAM Global shares are offering a dividend yield of 2.58%. Since the last dividend increase came in at 50%, I have high expectations for WAM Global in becoming a dividend heavyweight in the years to come, with plenty of capital growth thrown in.

More reading

• 3 ASX dividend shares growing their payouts fast
• ASX income stalwart WAM Capital announces 8.2% dividend
• Leading brokers name 3 ASX shares to buy today
• How to turn $20,000 into over $200,000 in 10 years with ASX shares
• 3 ASX cleantech shares to consider buying now

Suzanne Frey, an executive at Alphabet, 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 WAMGLOBAL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia has recommended Alphabet (A shares) 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 2 ASX shares I would buy for growth and income appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/303SSHR

The ASX offers investors the opportunity to purchase a growing number of exciting small cap shares with strong growth potential.

Here we examine 2 of my top small cap ASX share picks right now: Bubs Australia Ltd (ASX: BUB) and Bigtincan Holdings Ltd (ASX: BTH).

It’s important to keep in mind that small cap ASX shares can experience high share price volatility over the short term. It is therefore advisable only to purchase them as part of a diversified share portfolio.

Bubs

Goat milk producer Bubs has established a very strong position in the Australian market. It has become Australia’s only vertically integrated producer of goat milk formula, and has been a star performer in terms of revenue growth throughout the coronavirus pandemic.

Bubs delivered a massive 67% increase in revenue to $19.7 million during Q3 FY20 to 31 March 2020, compared to the prior corresponding period. In addition, sales have now pleasingly risen to a point where Bubs is generating positive operating cashflow. This is a significant milestone for a small cap ASX share.

Bubs has now shifted its focus to the massive Asian market – a strategy that is already starting to see results. The company’s Chinese revenues soared 104% higher in the third quarter of FY 2020. Infant formula scandals in China have seen a preference for Australian made products, due to the perception of higher safety and higher quality. In addition, the rising demand for Chinese e-commerce platforms such as JD.com and Alibaba’s TMall is enabling a large and growing number of buyers and sellers to connect with each other.

I believe that Bubs’ Asian growth strategy positions the company well for strong growth over the next 2 to 3 years.

Bigtincan

Small cap technology ASX share Bigtincan operates in an IT software niche commonly referred to as ‘sales enablement’.

Bigtincan’s financial performance continues to be strong. It posted annualised recurring revenue (ARR) of $32.4 million for the first half of FY20, which was a massive 55% increase on the prior corresponding period. Bigtincan also reported a 2% increase in its customer retention rate to 89%.

The Bigtincan share price was hit hard in the early phase of the coronavirus pandemic, up until late March. It fell by more than 70% during that time. Since then, Bigtincan has regained over two-thirds of those share price losses, and is currently trading at $0.83.

Bigtincan continues to win new deals in its quest for further expansion of its customer base. Earlier this month, Bigtincan announced the signing of a major new customer contract with global beverage giant Red Bull.

Despite not yet becoming cash flow positive, I am optimistic about Bigtincan’s long-term future, driven by the fast-growing sales enablement market.

More reading

• 2 fantastic ASX growth shares to buy with $2,000
• 3 ASX shares I’d invest $1,000 into right now
• 5 exciting small cap ASX shares to watch
• 3 ASX shares I’d buy with $6,000 today
• Have $10,000 to invest? I’d pick these ASX shares

Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended BIGTINCAN 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 Bubs and 1 other exciting small cap ASX share to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/306UyjN

The Star Entertainment Group Ltd (ASX: SGR) share price rallied 7.8% in early trade today. This was after the company announced the Queensland Government has ended negotiations surrounding the licensing of a second Gold Coast casino. This came before another announcement surrounding COVID-19 that caused the share price to give back its earlier gains.  

Star is an Australian gambling and entertainment company. It owns The Star Sydney and Gold Coast as well as the Treasury Brisbane. It also acquired the Sheraton Grand Mirage in a joint venture and manages the Convention and Exhibition Centre for the Queensland government. It was formerly known as Echo Entertainment Group. 

End of negotiations

Star Entertainment made an announcement to the ASX prior to this morning’s market open. It advised that the company and the Queensland Government have mutually agreed to end negotiations regarding a second Gold Coast casino licence. Naturally, the company welcomed the decision made by the government. 

The state Tourism Minister, Kate Jones said: “Global market conditions are clearly impacting investment at present and I can confirm that this government has no intention of reviving the market process for a new integrated resort – including a second casino – on the Gold Coast”. The Star Entertainment share price climbed as high as $2.91 before the second announcement came around lunch time.

COVID-19 update

Star Entertainment’s second announcement of the day reported that a patron who visited The Star Sydney on Saturday 4 July has returned a positive test for coronavirus. As a result, the group is working with the relevant authorities and conducting contact tracing which includes staff members. The infection happened soon after the next stage of re-opening at the start of this month. 

With the recent easing of restrictions, attendances at the group’s casinos have increased and trading performance has understandably improved. However, the re-openings are under strict government controls regarding social distancing and the number of patrons. Although the rally in the Star Entertainment share price had already peaked by the time of the second announcement, the bad news accelerated the downward trend.

Foolish takeaway

The Queensland Government’s decision to end negotiations is definitely positive news for The Star Entertainment Group. However, the recent coronavirus case in its Sydney casino has had a negative impact overall on its share price today. The Star Entertainment share price closed at $2.68 which represents a 0.74% fall for the day. 

Additionally, the group’s share price has been hit hard by coronavirus restrictions, falling nearly 35% over the past 12 months. 

With the risks of a second wave of the pandemic and tougher restrictions still looming large, it might not be the end of the rollercoaster ride just yet for the Star Entertainment share price. 

More reading

• Star Entertainment Group shares lift with news of reopenings
• ABS reveals which industries (and ASX shares) may rebound hard after COVID-19
• These 5 ASX shares saw the biggest losses last week
• Why Air NZ, Carsales, Pendal, & Star shares are dropping lower
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor Matthew Donald 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 Star Entertainment share price has been on a rollercoaster today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Oiy2PD

They might be multi-billion companies now, but that wasn’t always the case for Afterpay Ltd (ASX: APT) and Appen Ltd (ASX: APX).

Just a few years ago they were small cap ASX shares flying under the radar of most investors. Anyone that invested in their shares at that point and held onto them today, will have made a small fortune.

With that in mind, I thought I would pick out two small cap ASX shares which I feel could be future stars. Here’s why I think they should be on your watchlists right now:

ELMO Software Ltd (ASX: ELO)

The first small cap ASX tech share to watch is this cloud-based human resources and payroll software company. ELMO provides users with a unified platform that streamlines processes such as recruitment, on-boarding, learning, and payroll.

It has a $2.4 billion market opportunity in the ANZ region and the potential to expand globally in the future thanks to its platform being jurisdiction agnostic. One market the company has its eyes on is the UK, which it estimates to be worth ~$6.8 billion.

Whispir (ASX: WSP)

Another small cap ASX share to add to your watchlist is Whispir. It is a software-as-a-service communications company which provides an industry-leading software platform. This platform allows users to deliver actionable two-way interactions (SMS, voice messages, email) at scale using automated multi-channel communication workflows.

During the first half of FY 2020, Whispir’s annualised recurring revenue grew by an impressive 22% to $36.7 million. The good news is that since then, the pandemic has accelerated demand for its platform due to the work from home initiative. This looks likely to lead to Whispir delivering an even stronger full year result in August.

More reading

• The difficulty of investing in shares right now
• ASX shares tapping into the US market
• Why the RPMGlobal share price could be a bargain buy right now
• The rise and rise of ASX SaaS shares
• Can the Afterpay share price go higher from here?

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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Whispir Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Elmo Software and Whispir 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.

The post Are these small cap ASX shares future tech stars? appeared first on Motley Fool Australia.

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

The TechnologyOne Ltd (ASX: TNE) share price has started the week on a very disappointing note.

The enterprise software company’s shares dropped as much as 8% at one stage before ending the day down 6.8% at $8.15.

Why did the TechnologyOne share price crash lower?

Investors were selling TechnologyOne’s shares on Monday after it became the subject of short attack by Hong Kong based research firm GMT Research.

GMT Research has previously released scathing reports on engineering company Cimic Group Ltd (ASX: CIM) and logistics solutions company WiseTech Global Ltd (ASX: WTC).

According to the AFR, GMT Research claims TechnologyOne used accounting tricks to pull forward revenue and profits. This resulted in the company “artificially creating growth and hiding a major slowdown.”

The company’s analyst, Nigel Stevenson, has suggested that its FY 2019’s net profit before tax of $76.4 million was inflated by more than 200%. It also believes that revenue growth was actually flat in FY 2018 and then up just 1% in FY 2019.

TechnologyOne’s response.

This morning the company admitted that it had met with GMT Research, but that it only spent 30 minutes with its team. It also stressed that it was not contacted about the allegations prior to publishing.

It said: “GMT Research spent only 30 minutes with us, so we are very surprised with their limited knowledge that they would have published a report in the first place, and more importantly without verifying the accuracy of the report with us. TechnologyOne was at no time shown the report.”

Management also confirmed that “the claims made in the AFR by GMT Research are false and misleading.”

Adding: “TechnologyOne unreservedly stands 100% behind our Audited Accounts as being a true and accurate reflection of our business over the last 21 years.” The company advised that it will now refer the matter to ASIC.

It concluded by confirming that it remains on track to achieve its guidance in FY 2020. That guidance is for net profit before tax growth of 8% to 12% year on year.

More reading

• The rise and rise of ASX SaaS shares
• ASX 200 jumps 0.8%: Big four banks storm higher, TechnologyOne sinks
• Why Domain, OceanaGold, Praemium, & TechnologyOne are tumbling lower
• 5 things to watch on the ASX 200 on Monday
• 3 ASX tech shares to buy and hold

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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 TechnologyOne share price sinks lower on short attack appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2Weyym7

Don’t let the recent share market rally fool you in thinking that the COVID-19 blues are fading. If anything, ASX banks are on the cusp of a consecutive multi-year bad debt hit to earnings and dividends.

The warning comes from fund manager Janus Henderson who told the Australian Financial Review that banks will be forced to shore up their capital buffers by cutting capital management programs and dividends.

ASX banks’ dividend threat

This isn’t what ASX bank investors want to hear, especially when investors are looking forward to Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) resume dividend payments.

Both banks suspended the payout at the recent half year profit reporting season, while National Australia Bank (ASX: NAB) slashed its interim dividend by nearly two-thirds.

Investors are nervously watching Commonwealth Bank of Australia (ASX: CBA), which will show its dividend hand next month when it turns in its full year report card. CBA’s financial year end is different from the other three big banks.

Is CBA next to cut dividends?

Experts are divided on what CBA will do. Some believe it will take the conservative approach and defer its dividend decision till November to get a better idea of the earnings impact from coronavirus.

Others are more bullish and believe the worst of the economic impact from the pandemic is behind us and CBA will only cut its dividend by a relatively modest amount. This bullish outcome will likely fire-up the CBA share price.

I was in the more bullish camp, but that was before Victoria was forced into a second lock-down. Now there’re fears that New South Wales may follow suit with community transmission of the virus at Star Entertainment Group Ltd (ASX: SGR) and the Crossroad Hotel.

Start of the bad debt downgrade cycle

“We think that banks will continue to need to shore up capital,” the AFR quoted Janus Henderson’s head of Australian fixed interest, Jay Sivapalan, as saying.

“They will go through a multi-year reporting period and cycle of reporting a higher level of provisioning.”

The provisioning for bad debt will need to rise as the chance of loan delinquencies rise. Around 800,000 mortgagees and small businesses have asked Australian banks for a repayment holiday.

These borrowers are struggling to service their loans due to widespread job losses and a drop in consumer spending from the COVID-19 fallout.

Foolish takeaway

However, the situation on the ground may not be as dire as the number suggests. Many mortgagees have suspended loan repayments as a precaution even though they aren’t impacted by the COVID-19 shutdown.

These customers are starting to commence paying their loans again and I think the circa $6 billion in provisioning set aside by the big four may about enough to see them through.

However, this assumes that the current lockdown in Victoria isn’t as damaging as the first and the rest of Australia continues to stay relatively coronavirus free.

But I will admit, this assumption is starting to look a tat optimistic right now.

More reading

• Why the Domino’s share price gained 30% in the first half of 2020
• Where to invest $10,000 into ASX 200 shares right now
• Will the ASX share price climb higher this year?
• Why the Fortescue share price rallied over 40% to a record high in 2020
• Is the CBA share price a buy?

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. 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 Fund manager warns that ASX bank dividends facing multi-year bad debt hit appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2AQHs1A