The S&P/ASX 200 Index (ASX: XJO) was out of form last week and tumbled notably lower. The benchmark index lost 2.5% over the shortened week to end at 5847.8 points.

A number of shares on the index fell more than most. Here’s why these ASX 200 shares were the worst performers over the period:

The Unibail-Rodamco-Westfield (ASX: URW) share price was the worst performer on the index last week with a 14.1% decline. On Friday the shopping centre operator was dumped out of the ASX 100 index along with coal miner Whitehaven Coal Ltd (ASX: WHC). They are being replaced with data centre operator NEXTDC Ltd (ASX: NXT) and gold miner Saracen Mineral Holdings Limited (ASX: SAR) in the index from 22 June.

The Estia Health Ltd (ASX: EHE) share price wasn’t far behind with a decline of 13.7% last week. The majority of this decline occurred on Friday when the aged care operator’s shares crashed notably lower. This followed news that it was being kicked out of the ASX 200 index at the next rebalance on 22 June. Though, given the material decline in its share price over the last 12 months, this news shouldn’t have come as a big surprise to investors. Also falling heavily for the same reason was the Mayne Pharma Group Ltd (ASX: MYX) share price.

The Southern Cross Media Group Ltd (ASX: SXL) share price was out of form last week and fell 13%. This was despite there being no news out of the media company. However, with its shares up a massive 70% in May, there could have been some profit taking happening last week. Southern Cross Media’s shares are still down 86% from their 52-week high.

The Orocobre Limited (ASX: ORE) share price dropped a sizeable 12.9% lower last week. Investors have been selling the lithium miners after the price of the battery making ingredient sank lower again in 2020. Unfortunately, with demand remaining extremely subdued, a rebound in prices looks unlikely to happen in the near term.

More reading

• ASX 200 falls 1.9%, big 4 ASX banks retreat
• ASX 200 down 2.2%: Westpac tumbles, TPG reveals special dividend plans
• Estia Health share price tumbles after being cut from the ASX 200
• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• ASX 200 Weekly Wrap: ASX bulls crash through 6,000 points

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. 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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ASX growth shares can be a little more volatile than the market as a whole. They often experience considerable swings in value created largely by market sentiment. However, I believe it’s important to focus more on business fundamentals rather than short-term share price movements. This is because in the short term, a company’s share price is often not representative of the value of its underlying business. However, I believe this changes over longer-term holding periods.

With this in mind, following are 2 ASX growth shares I currently own but would be happy to double down on next week, based on today’s prices.

The Nearmap Ltd (ASX: NEA) share price

Despite Nearmap being one of the 10 most shorted shares in June, I would still place this ASX growth share on my buy list. The Nearmap share price has soared more than 150% since its March lows. This is despite it recently pulling back along with the rest of the S&P/ASX 200 Index (ASX: XJO) amid concerns over a second wave of coronavirus.  

In fact, the Nearmap share price has been on a crazy rollercoaster over the last two years. However, its business has been growing strongly. Both here in Australia and New Zealand (ANZ), as well as in North America (NA). The company’s NA market includes both the United States and Canada. Not only has Nearmap’s subscription base been growing at an 11% compound annual growth rate, but its average revenue per subscription (ARPS) has also been growing at a compound annual growth rate of 22% in NA and 12% for the more mature ANZ region. Combining these for its most recent half, the group achieved growth in its annualised contract value of 23% over the prior corresponding period. 

In addition, the company has recently launched ‘Nearmap AI’ which should help to drive ARPS growth in the future. It also has a massive total addressable market (TAM). Nearmap’s TAM is estimated to be around $1.6 billion to $2.75 billion. Moreover, these figures only represent markets the company currently operates in. On this note, Nearmap’s CEO Rob Newman has expressed a desire to become a global leader and believes the company’s unique business model has the potential to scale to multiple geographies around the world.

I believe Nearmap’s business model has proven itself in ANZ and shown scalability in the NA market. Additionally it is on track to reach cash flow breakeven by the end of June 2020. Nearmap’s closing cash balance is expected to be between $32 million and $35 million by the financial year’s end. I believe the company will continue to grow in its current markets and push into new ones. In my eyes, this makes today’s Nearmap share price a very compelling buy. 

The Medical Developments International Ltd (ASX: MVP) share price

You’ve probably heard of Medical Developments’ flagship product, the ‘green whistle’. The green whistle is used by medical practitioners, paramedics, life savers and others to administer emergency pain relief. It contains the drug Penthrox and is advocated by many as superior to other pain relief medications. This is thanks to it being fast-acting, non-addictive and able to be self-administered. Uptake of the green whistle has exploded, with the number of countries around the world selling it rapidly increasing over the past decade. This is reflected in the company’s sales which have increased 42% for its UK market and 35% for the European market for H1FY20.

However the Medical Developments business doesn’t start and end with the green whistle. In fact, the green whistle only accounts for a little over half its revenue. A stat which may soon change. The remaining majority of the company’s revenue comes from its medical devices segment, followed by a much smaller veterinary segment. The medical devices segment includes space chambers, masks and other devices and was the company’s fastest growing segment in H1FY20. Total sales in this segment grew 49% compared to the prior corresponding period, with US sales up 49% and UK/Europe sales climbing by 73%.

Medical Developments also noted an increase in R&D investment. I believe this should also bode well for this ASX growth share’s future. While I don’t think today’s prices are necessarily ‘cheap’, thanks to its future growth prospects as it increases sales and enters more markets, I would be happy making a long term investment in Medical Developments next week.

More reading

• These were the best performing shares on the ASX 200 last week
• Got $20,000? These are the ASX shares I’d buy during COVID-19
• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• ASX 200 falls 1.9%, big 4 ASX banks retreat

Michael Tonon owns shares of Medical Developments International Limited and Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Medical Developments International Limited and Nearmap Ltd. The Motley Fool Australia has recommended Medical Developments International Limited and Nearmap 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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Warren Buffett has an exceptional track record of outperforming the share market over a long time period. Buffett’s investing strategy aims to buy high-quality companies when they offer wide margins of safety, and hold them over the long term.

As such, it could be a useful strategy for investors to adopt as a means of benefitting from the recent market volatility. It may not produce high returns in the short run, but could significantly improve your financial prospects over the coming years.

Warren Buffett’s investing strategy

One of the most notable aspects of Warren Buffett’s investing strategy is its simplicity. He does not use a plethora of complicated formulas in deciding when or where to invest. He simply seeks to buy stocks when they are trading at attractive prices. This method allowed him to buy a range of companies following the last global recession in 2008/09. Many of those holdings produced high returns as the world economy recovered.

With many stocks currently trading on low valuations, using a value investing strategy could improve your long-term returns. It may enable you to take advantage of the cyclicality of the stock market, and generate high returns during its likely recovery.

Economic moats

As well as seeking to buy stocks when they offer wide margins of safety, Warren Buffett also seeks to purchase companies with economic moats. An economic moat is essentially a competitive advantage that one company has over its sector peers. Examples include a lower cost base, a unique product or strong customer loyalty. These help to protect a company’s financial performance during a downturn and deliver relatively high profitability during economic growth.

At the present time, a number of companies with wide economic moats are trading on low valuations. Therefore, investors have a significant amount of choice. Choice in building a diverse portfolio of companies that produce relatively high returns in the long term.

Holding period

Warren Buffett’s investment strategy also seeks to hold stocks for the long term. In fact, his favoured holding period is apparently ‘forever’.

This attitude could be beneficial given the current outlook for the world economy. A global recession seems highly likely this year. And it could take place over a sustained time period depending on monetary policy, fiscal policy and whether there is a second wave of the coronavirus.

As such, investors who are able to take a long-term view of their holdings could be among those who generate the highest returns. They may be able to overcome short-term market volatility to benefit from the eventual recoveries of their holdings.

Although this may not lead to a portfolio size which rivals Warren Buffett’s, it could, nevertheless, boost your returns in the long run.

More reading

• These were the best performing shares on the ASX 200 last week
• These were the worst performing shares on the ASX 200 last week
• Why the Nearmap share price and one other are on my buy list
• 2 defensive ASX shares to protect your portfolio
• 3 ASX dividend kings to buy and hold forever

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

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I think that defensive ASX shares could be the best way to protect your portfolio.

Businesses with robust business models should hopefully not see much of a hit to their earnings during this COVID-19 period. If the earnings don’t fall much then theoretically the share prices shouldn’t drop too much compared to a riskier cyclical share.

I believe the best defensive ASX shares are the ones that won’t see much of a change in demand for their product or service.

Here are two of the most defensive ASX shares:

Share 1: APA Group (ASX: APA)

APA Group is one of the biggest infrastructure businesses on the ASX.

It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

APA delivers an essential service for Australia. The nation needs its natural gas.

I think APA is a defensive ASX share because the demand for gas remains robust. The energy infrastructure giant recently said that there hasn’t been a material change because of COVID-19. It also has $1.2 billion of available liquidity to get through this period if needed.

The business has grown its distribution every year for a decade and a half. It offers a FY20 distribution yield of 4.4%. The distribution can keep growing because APA funds it from its annual cashflow. That cashflow is growing because APA continues to complete new energy projects.

Share 2: Rural Funds Group (ASX: RFF)

I think Rural Funds is another great defensive ASX share. It’s a farmland real estate investment trust (REIT).

COVID-19 caused many other REITs to be sold off. Shopping centres like Scentre Group (ASX: SCG) were hurt as shoppers stayed away and shops were shut. Office property REITs like DEXUS Property Group (ASX: DXS) were sold down as workers stayed home.

But Rural Funds hasn’t faced the same problems. Its agricultural tenants continue to grow produce at the farms. Some of its tenants include Olam, Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).

I think Rural Funds is a really good defensive ASX share for several reasons. It has high-quality tenants like the ones I just mentioned. Rural Funds’ farms are diversified geographically and by farm type – it owns cattle, cotton, vineyard, almond and macadamia properties.

One of the best reasons to like Rural Funds is that it has a weighted average lease expiry (WALE) of more than 10 years. That means the rental income is locked in for more than a decade.

That rental income is rising as each rental contract has built-in rental indexation. The rental indexation is either a fixed 2.5% increase or linked to CPI inflation, with market reviews. This helps the management of the defensive ASX share forecast that the distribution can grow by 4% per annum. I think that’s a good growth rate, it’s comfortably higher than inflation.

Another factor helping distribution growth is productivity investing. Rural Funds retains around 20% of its annual cash rental profit. The official term its cash rental profit is ‘adjusted funds from operations’ (AFFO). Rural Funds re-invests 20% of AFFO into productivity improvements at its farms for its tenants benefit. This increases the value of the farms and grows rental income.

Occasionally the defensive ASX share will acquire a new farm that will add to earnings. It has been focusing on buying cattle properties in the last couple of years.

It currently offers a FY21 distribution yield of 5.7%.

Foolish takeaway

I think both businesses are defensive ASX shares. At the current prices I’m more drawn to Rural Funds because of its consistent growth and higher distribution yield. However, I’d be happy to have both businesses in my portfolio for reliable income.

More reading

• The pros and cons of investing in high yield dividend shares
• 12 top ASX dividend shares to buy in June 2020
• 3 high yield ASX dividend shares for income
• Not keen on Westpac? Then buy these top ASX dividend shares instead
• 2 strong ASX dividend shares to bolster your income

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Scentre 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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I believe there are a few ASX dividend kings that can fit nicely into almost any share portfolio. Especially in the current market, dividend shares can be like gold in providing a steady income stream.

Here are a few of my favourite dividend picks that are worth holding for the long term.

3 ASX dividend kings to buy and hold forever

It’s hard to look past Harvey Norman Holdings Limited (ASX: HVN). The Harvey Norman share price has fallen 13% lower in 2020 but that’s not what caught my eye.

The Aussie retailer recently announced a special dividend for shareholders. The 6 cents per share distribution comes following strong sales during the coronavirus pandemic. The retailer had previously scrapped its planned 12 cents per share distribution in April.

Harvey Norman isn’t the only ASX dividend king on my watchlist. I also like the look of Commonwealth Bank of Australia (ASX: CBA) right now.

CommBank announced an interim dividend of $2.00 per share in February in the pre-COVID-19 market. The largest of the Aussie banks reports its earnings before the other majors and paid investors prior to APRA calling on banks to defer or reduce dividends in April.

However, I think CommBank will bounce back strongly. The ASX bank share is down 15.7% in 2020 but has some strong momentum behind it. If you’re willing to buy and hold forever, I think Commonwealth Bank remains a strong ASX dividend share.

I also like some of the ASX real estate investment trusts (REITs) for the long term. In terms of ASX dividend kings, it’s hard to look past Scentre Group (ASX: SCG) right now.

Scentre shares are currently yielding 8.39% but I don’t know if this will remain the case in the short term. Aussie retail is doing it tough even with considerable government stimulus measures in place.

However, if you’re buying and holding forever, what happens today or tomorrow isn’t too important.

With a strong balance sheet and significant real estate holdings, I think Scentre can remain a strong ASX dividend share for decades to come.

Foolish takeaway

These are just a few ASX dividend kings that I like the look of right now but there are plenty of good options on the market.

More reading

• How I would build a balanced portfolio worth $100,000 with 10 ASX shares
• 12 top ASX dividend shares to buy in June 2020
• Why the Lovisa share price is at risk of falling further over the coming weeks
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• The latest ASX shares to be hit by broker downgrades to “sell” today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre 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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Building a truly well-balanced and diversified $100,000 ASX portfolio is a daunting task – and one that can take years. But the rewards are lucrative enough that I think all ASX investors should aspire to hit the 6-figure mark – whether that takes 5 years or 20.

But choosing the right shares across the right sectors is equally important. Here at the Fool, we are always preaching the benefits of diversification, of not having all of your eggs in one basket.

So in saying that, here are 10 ASX shares that I think would make the perfect (in my eyes, anyway) balanced portfolio with $10,000 invested in each.

Vanguard Australian Shares Index ETF (ASX: VAS) 

As a starter, I think this exchange-traded fund (ETF) forms a solid bedrock of an ASX portfolio. By having the largest 300 companies as holdings, VAS gives us instant diversification and a well-rounded foundation for our other companies to sit upon.

CSL Limited (ASX: CSL) 

The big dog of the ASX, I think it would be amiss to exclude CSL from any ASX-based portfolio. CSL is one of the best blue chips money can buy in my view. It’s a diversified healthcare giant that’s active on the global stage. It’s also the most growth-orientated ASX blue chip in my view and has been quietly building its dividend over the last few years. Therefore, I think an investment in CSL is a great place to have your money over the coming decade.

Woolworths Group Ltd (ASX: WOW)

A stalwart of ASX consumer staples and a highly defensive, mature business, Woolworths earns a place in our balanced portfolio today. It’s dominance of the Aussie groceries market and its familiar and powerful brand give this company an edge in my view and one that can protect your portfolio in any kind of downturn.

Telstra Corporation Ltd (ASX: TLS) 

Telstra is the dominant telco in Australia and commands a healthy market share across both fixed-line internet and mobile. Its mobile network is inarguably the best in the country and leaves its rivals like Optus and Vodafone/TPG Telecom Ltd (ASX: TPM) in the dust in my view. It’s also a healthy dividend payer, and I’m excited about its foray into 5G technology.

Macquarie Group Ltd (ASX: MQG) 

I’m not too excited about the ASX banks like Commonwealth Bank of Australia (ASX: CBA) right now, and so I think Macquarie is a great alternative. It does do traditional banking services like mortgages, but most of its business these days is in asset management and investment banking. Macquarie also pays a healthy dividend, but I think of this company as more a growth stock compared with the major ASX banks.

Wesfarmers Ltd (ASX: WES)

I don’t think we can have a balanced portfolio without including this conglomerate. Wesfarmers is already a highly diversified company. It owns the Bunnings, Target, Kmart and Officeworks chains, as well as a plethora of other businesses across different sectors of the economy. Most recently, it’s expanded into the lithium space with its acquisition of Kidman Resources. As such, I think Wesfarmers is one of the best blue chips on the ASX and a must for our portfolio.

BHP Group Ltd (ASX: BHP)

This year has already well and truly proved the value of holding ASX resources shares in my view. Big miners like BHP have held up remarkably well in the face of the coronavirus crash we saw earlier in the year. Commodity prices can be volatile, but they can also act independently of the rest of the economy, which can be a very handy cushion for a portfolio to have. BHP is one of the largest miners in the world, but also one of the most diversified. It has operations across the coal, oil, copper and iron ore spaces.

As such, I think the ‘Big Australian’ is a great stock to have in our $100,000 portfolio.

Altium Limited (ASX: ALU)

Altium is more of a high-growth, high-volatility share, but that’s why I think its a great inclusion in our portfolio. This company provides software that assists with the design of printed circuit boards – which are an essential component of most electronic devices. It’s been growing rapidly and has a very scalable software as a service business (SaaS) model to boot.

Afterpay Ltd (ASX: APT)

I would feel amiss if I didn’t include this superstar of an ASX company in our $100,000 portfolio. Yes, Afterpay is one of the most volatile shares on the ASX. We’re talking about a company that has had a ~470% swing in value over the last 3 months, after all. But I think Afterpay’s potential is too great to ignore and anyone who has ever bet against this company has always lost. As such, it joins our portfolio with aplomb.

Magellan Global Trust (ASX: MGG)

Our last share to finish off our portfolio is actually a listed investment trust (LIT). MGG invests in a basket of global shares, which include quality names like Microsoft, Alphabet and Tencent. I think all ASX portfolios should have at least some international exposure thrown in, and here MGG is a great candidate for the job in my view. It has a stellar track record of delivering for its investors and also has a top-notch fund manager in Magellan Financial Group Ltd (ASX: MFG)’s Hamish Douglass.

As such, I think this trust is a great stock to round out our $100,000 portfolio.

More reading

• 3 ASX dividend kings to buy and hold forever
• Got $20,000? These are the ASX shares I’d buy during COVID-19
• Here’s how you invest in super to get a free $500
• 12 top ASX dividend shares to buy in June 2020
• 3 ASX shares I’d buy if the market hits 23 March levels again

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Altium, and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares). 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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Do you have $20,000? There are some ASX shares that I’d love to buy for my portfolio to take advantage of the market selloff.

The ASX has fell quite hard over Thursday and Friday. Yesterday the S&P/ASX 200 Index (ASX: XJO) dropped by 1.9%. In morning trading it was down over 3%. Ouch.

This second selloff seems to have been caused by the comments made by US Federal Reserve boss Jerome Powell. He suggested that the US economy is going to take a while to recover. Some people may not be able to find jobs as quickly as they’d like to.

I think that the market declining is throwing up another opportunity to buy ASX shares at cheaper prices again. If I had $20,000 to invest, I’d go for these ASX shares:

Magellan Global Trust (ASX: MGG) – $6,000

I think Magellan Global Trust is one of the best listed investment businesses on the ASX. It aims for companies it thinks are the highest-quality in the world. These are businesses with excellent economic moats, coronavirus-resistant business models and strong balance sheets. It’s rare to find ASX shares that are as large and powerful as the businesses this listed investment trust (LIT) goes for.  

Some of the shares that it owns are: Alibaba, Alphabet, Microsoft, Tencent, Facebook, Visa, Mastercard, Reckitt Benckiser and Novartis. Many of these names offer digital services which can still be used even during lockdowns. A business like Reckitt Benckiser is a great idea today because it owns cleaning product brands like Dettol and Lysol.

The Aussie dollar is quite strong right now, making it cheaper to buy international shares. Magellan Global Trust is currently priced at a 5% discount to its net asset value (NAV).

Pushpay Holdings Ltd (ASX: PPH) – $4,000

Pushpay is one of my favourite small cap ASX shares. It’s an electronic donation business. Digital giving is in higher demand these days, particularly because of COVID-19 social distancing. We can see this change in demand from the growth that Pushpay is reporting. The fact that Pushpay offers a livestreaming option is very useful for its US church client base.

In the recent FY20 result Pushpay reported that its operating revenue increased by 28% to US$123.1 million, which excludes the Church Community Builder acquisition.

One of the most attractive things to me about this ASX share is that it continues to see improvement with its gross margin. FY20 saw an increase of five percentage points from 60% to 65% for the gross margin. This means that more of the revenue turns into profit for Pushpay.

In FY21 the company is expecting to approximately double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to between US$48 million to US$52 million.

Over the long-term Pushpay is targeting a market share of over 50% of the medium and large US church segments, which the company thinks is an annual revenue opportunity of more than US$1 billion. I think this ASX share has a long growth runway.

Future Generation Global Invstmnt Co Ltd (ASX: FGG) – $6,000

Future Generation Global is one of my favourite listed investment companies (LIC). It doesn’t charge any management fees or performance fees.

It invests in the funds of Australian fund managers who invest in overseas shares. These fund managers work for free. Why? So that the LIC can donate 1% of its net assets to youth mental health charities each year.

The LIC’s gross investment performance has beaten its MSCI AC World Index (AUD) benchmark over the past year, three years and since inception in September 2015. Some of the fund managers delivering this performance include Magellan Financial Group Ltd (ASX: MFG), Cooper Investing and Marsico Capital Management.

At the moment we can buy this ASX share at a 22% discount to the net tangible assets (NTA) at 31 May 2020.

Bubs Australia Ltd (ASX: BUB) – $4,000

Bubs is another exciting small cap ASX share in my opinion.

It has a range of goat milk products which are proving popular with consumers. Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL) and Baby Bunting Group Ltd (ASX: BBN) have all recently expanded their distribution footprint of Bubs products.

In the third quarter of FY20 Bubs achieved revenue of $19.7 million. This was 36% higher than the December 2019 quarter and 67% better than the March 2019 quarter.

The ASX share achieved a positive operating cashflow of $2.3 million last quarter and ended with a solid cash balance of $36.4 million. Positive operating cashflow makes Bubs a safer choice in my opinion. 

I think Bubs is definitely one to watch for its international growth. The last quarter showed Chinese revenue rose by 104%. It’s also growing strongly in Vietnam.

Foolish takeaway

I believe all four of these ASX shares can beat the ASX 200 over the next three to five years. I like the diversification that Magellan Global Trust and Future Generation Global bring. But I also think that Pushpay and Bubs are two of the brightest prospects on the ASX today.

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• Leading fund manager names 4 ASX stocks set to benefit from a faster re-opening of the Australian economy
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• Down 20% in 7 trading hours… Worse to come?
• 3 fantastic ASX shares to buy and hold to make you wealthy

Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended BUBS AUST FPO and PUSHPAY FPO NZX. 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 Got $20,000? These are the ASX shares I’d buy during COVID-19 appeared first on Motley Fool Australia.

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We’re nearing 30 June, which means it could be time to invest in your super. The Federal Government may make a co-contribution to your retirement account up to a maximum amount of $500.

It may sound too good to be true, but it’s really not. Here’s how to receive a handy boost to your retirement accounts today.

How to invest in super and receive $500

The basic premise of the scheme is to encourage Aussies to support their own retirement. More self-funded retirees are good for the government as it reduces the burden on Australia’s social security.

It’s important to note that this co-contribution is only available for ‘low or middle-income earners’ who invest in super. That’s a little bit vague, so let’s dive into exactly who fits this category.

To be eligible for the contribution, you must have made at least 1 after-tax super contribution during the financial year (i.e. 23 before June), be less than 71 years old, not hold a temporary visa, lodge your tax return and have a total superannuation balance less than $1.6 million.

There’s also the income test which is key to this. To be eligible for a co-contribution, you must have total income (i.e. all income before salary packaging) of less than $53,464.

If you earn less than $38,564 and invest $1,000 in super, you may be eligible for a 50% match or $500. According to the ATO, “if your total income is between the two thresholds, your maximum entitlement will reduce progressively as your income rises.”

That means a $1,000 investment could get matched with an instant $500. It’s hard to beat an instant 50% return on investment right now.

What’s the catch?

There really is no catch to this if you want to invest in super. Of course, that money is locked away until the preservation age and is subject to potential liquidity or regulatory issues.

If you really want to invest in Afterpay Ltd (ASX: APT) shares or other ASX shares then maybe the co-contribution scheme isn’t for you.

However, savvy investors could do well to invest in super and cash in on the Federal Government’s retirement boost.

More reading

• 3 ASX shares I’d buy if the market hits 23 March levels again
• ASX 200 falls 1.9%, big 4 ASX banks retreat
• Tech shares! Should we even invest in anything else?
• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• All Technology Index sees stunning comeback

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. 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 Here’s how you invest in super to get a free $500 appeared first on Motley Fool Australia.

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Investing in high yield dividend shares has both pros and cons.

The Reserve Bank of Australia (RBA) interest rate is now very low at just 0.25%. I think ASX dividend shares are the best way to solve this income problem. But are high yield dividend shares a good idea? To answer that, I’m going to tell you about franking credits first.

Franking credits

Australia gives dividend investors a unique advantage compared to the rest of the world. The Australian taxation system generates franking credits for companies.

According to the ATO: “dividends paid to shareholders by Australian resident companies are taxed under a system known as imputation. This is where the tax the company pays is imputed, or attributed, to the shareholders. The tax paid by the company is allocated to shareholders as franking credits attached to the dividends they receive.”

This is really helpful in making the high yield dividend share’s yield even bigger.

For example, a large company could generate $100 of net profit. The ATO will tax it at rate of 30%. Then there’s $70 left in the company’s hands and $30 in tax is paid to the ATO. If the company pays out that $70 as a dividend it will attach the $30 as franking credits for the shareholder.

Franking credits can turn a fully franked dividend yield of 7% into a grossed-up dividend yield of 10%.

The pros of high yield dividend shares

Get more income from your capital 

We only have so much money at our disposal. Depending on your needs, you may want to generate a certain amount of investment income each year. High yield dividend shares could allow you to achieve the required income from a smaller capital balance. For example, a 10% grossed-up dividend yield would generate $10,000 of income from $100,000 of capital. You’d need $200,000 of capital to make $10,000 with a 5% yield.

Don’t have to sell shares to be rewarded 

Some shares like Berkshire Hathaway are famous for not paying a dividend. However, if you need money to live then you’d have to sell shares to get money. I wouldn’t want to be worrying about when I should be selling shares. High yield dividend shares allow you to regularly benefit from the profit they’re making as they pay out those nice dividends.

The cons of high yield dividend shares

Tax

If you’re earning income from your work you’re probably paying tax. Dividends count as taxable income. The more you receive in dividends the more you have to pay in tax.

If you’re in one of the highest tax brackets then high yield dividend shares could mean handing over a lot of your annual return over to the ATO each year.

Low re-investment

If a business makes $10 million of profit and pays out $9 million of it as a dividend then it’s only retaining 10% to re-invest back into the business. It might be better for the long-term returns of the business to keep $2 million or even $5 million to re-invest.

We should want our shares to invest back into the business if it’s possible to earn a decent return on that money. Dividends are important, but capital growth is also an important part of total returns.

A high yield could indicate a risky share

Some high yield dividend shares have a yield simply because they pay out most of their profit each year.

However, other shares could have a high yield because the market doesn’t price the company’s earnings very highly.

For example, two businesses could have the same dividend payout ratio of 50%. One could have a price/earnings (p/e) ratio of 10, which would equate to a dividend yield of 5%. The other could have a p/e ratio of 20, which would equate to a dividend yield of 2.5%.

The lower p/e business may be valued lower because it’s riskier and there may be more of a chance of a dividend cut. Dividends are not safe like term deposits. We’ve already seen some dividend cuts in this COVID-19 era. 

Foolish takeaway

High yield dividend shares can be a good way of getting more income for your money. However, I’d only be interested in some of the more reliable dividend shares out there like WAM Research Limited (ASX: WAX), Naos Emerging Opportunities Company Ltd (ASX: NCC) and Rural Funds Group (ASX: RFF).

More reading

• 12 top ASX dividend shares to buy in June 2020
• 3 ASX shares I’d buy if the market hits 23 March levels again
• Get paid huge amounts of cash to own these ASX dividend shares
• 3 high yield ASX dividend shares for income
• Not keen on Westpac? Then buy these top ASX dividend shares instead

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended 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 The pros and cons of investing in high yield dividend shares appeared first on Motley Fool Australia.

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