The Australian Foundation Investment Co.Ltd. (ASX: AFI) or “AFIC” share price could be a cheap buy today.

AFIC is a listed investment company (LIC) that has a $7.6 billion market capitalisation right now. The Aussie company is perhaps best known for being a tried and true dividend share, even when times are tough.

But after slumping 12.8% lower in 2020, is the Aussie LIC in the buy zone?

Why the AFIC share price could be cheap today

AFIC invests in a diversified portfolio of 8 to 100 companies across a range of industries. Given the scope of its investments, I like to compare the Aussie LIC to the S&P/ASX 200 Index (ASX: XJO).

While the AFIC share price is down in 2020, the benchmark ASX 200 index has also fallen 10.9%.

That could mean the Aussie LIC is in the buy zone but it may not be enough. One of the big advantages of LICs like AFIC is their historical dividend performance.

Even during the GFC, AFIC managed to still pay a strong dividend to investors. That’s impressive and one of the many reasons AFIC is a staple in a lot of Aussie portfolios.

Let’s consider an exchange-traded fund (ETF) as an alternative to AFIC. The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the ASX 300 and is down 10.5% this year.

This Vanguard ETF is yielding 4.34% right now while AFIC is paying 3.84%. That could mean the AFIC share price isn’t as cheap as it initially looks.

However, it’s not that simple. If AFIC manages to maintain its dividends even as we see more ASX shares slash distributions later this year, that could be worth more than capital stability for many investors.

Foolish takeaway

I think AFIC is a solid ASX share in most portfolios. The Aussie LIC provides diversified exposure and its management fee is a lowly 0.13% per annum.

Whether the AFIC share price is cheap or not remains to be seen in 2020 but it could be a good buy after its 12.8% fall.

More reading

• 3 ASX 200 shares to buy and hold for decades
• Is ‘sell’ really a dirty word? How to know when to let go of your ASX shares
• Woolworths facing fresh threat from Amazon.com
• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?

Motley Fool contributor Ken Hall owns shares of Vanguard Australian Shares Index. 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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The ASX is facing a big indiscriminate sell-off this morning but the Woolworths Group Ltd (ASX: WOW) share price might have another headache to deal with.

On-line shopping titan Amazon.com, Inc. started selling alcohol online with free delivery for Amazon Prime subscribers, reported Nine News.

The move was to capitalise on strong demand for alcohol during the COVID-19 lockdown with Aussies flocking to online platforms for contactless delivery.

Demerger under a cloud

The launch of alcohol on Amazon poses a fresh challenge to Woolworths on a few fronts. Our supermarket giant is looking to demerge its Endeavour Drinks business, which houses Dan Murphy’s and BWS, among others.

The coronavirus pandemic is complicating the process and news that the world’s largest retailer is muscling in on the lucrative market will cast a further cloud over the demerger.

How prices compare

The drinks sold on Amazon is priced favourably to Dan Murphy’s. According to Nine News, a case of VB beer on Amazon costs $51.90 for 30 cans.

Dan Murphy’s price is a tat cheaper at $51.85 – but Dan Murphy’s charges between $6.90 and $15 for delivery while Amazon’s delivery free with its $6.99 per month Prime subscription.

A case of Jacob’s Creek Double Barrel Chardonnay at Dan Murphy’s is $119.70 plus delivery. Amazon is selling the same for $108 – again with free delivery for Prime members.

Amazon competing with our supermarkets

Woolies shareholders are hanging out for the Endeavour spin-off given that stocks which undertake such a separation tend to outperform the S&P/ASX 200 Index (Index:^AXJO).

But Woolworths is facing more than one battle front with Amazon. Experts believe it’s only a matter of time before Amazon starts selling fresh produce online and in physical stores, just as it’s doing in the US.

It isn’t only Woolworths that is facing the Amazon challenge. Archrival Coles Group Ltd (ASX: COL) is also vulnerable to losing market share to the US retailer, while grocery distributor Metcash Limited (ASX: MTS) is another that will be impacted.

Can ASX supermarket stocks keep outperforming?

These stocks have held up very well through the COVID-19 bear market thanks to their defensive income and the grocery panic buying .

The Metcash share price is up 12.5% since the start of 2020, while the Cole’s share price is ahead by nearly 7% and the Woolworth share price is 2% in the black.

This stands in contract to the 11% loss on the ASX 200.

Shareholders will be hoping they can keep outperforming during these uncertain times even with Amazon nipping at their heels.

More reading

• Is this the start of a second COVID-19 share market crash?
• Is this why the NAB share price could be cheap today?
• ASX 200 to sink lower after Wall Street crashes on second wave concerns
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 3%, Webjet share price sinks

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. BrenLau 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 Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Amazon. 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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While the S&P/ASX200 (ASX: XJO) closed down 3.1% on Thursday, gold mining share prices rallied. Among the high-performers were Newcrest Mining Limited (ASX: NCM), Saracen Mineral Holdings Limited (ASX: SAR) and St Barbara Ltd (ASX: SBM).

These company shares have reacted positively to a rising gold price this week. The commodity was up 0.18% on Thursday. In addition, the uncertainty facing markets and the easing restrictions around the world is likely to have added a positive sentiment to gold mining share prices. Gold can be a popular investment during times when economies become volatile, and the current situation appears no different.

While share prices around the world have recovered considerably, the US Federal Reserve flagged concerns about the negative effect of the coronavirus on the US economy. This uncertainty, along with the fact the Federal Reserve will continue printing money, has likely contributed to the current rally for gold miners.

Newcrest Mining

The Newcrest Mining share price rose 5.67% on Thursday and was supported by positive exploration results. Newcrest Mining has been listed on the ASX since 1987 and trades on a fully franked dividend yield of 1.15%. Like most companies, Newcrest has experienced volatility as a result of the coronavirus crisis but its share price has since recovered to above its price at the beginning of 2020.

Saracen Minerals 

The Saracen Minerals share price is up 4.57%, showing a positive reaction to gold prices in line with its peers. Saracen Minerals has two operations in Western Australia and late last year it acquired a 50% stake in the Kalgoorlie Super Pit. Saracen produced a record 355,000 ounces of gold in 2019. The gold mining company’s share price is up 71% from its 52 week low of $2.81. It has risen 45% since the beginning of the year.

St Barbara

The St Barbara share price is up 5.33% at a price of $3.16 at the time of writing. The company provided guidance for the 2020 financial year in a presentation released yesterday. It expects production to be up 6.35% on last year to 385,000 ounces. The gold miner will also be cutting costs at its Western Australia operations. The St Barbara share price is up 22% since this time last year. 

More reading

• S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100
• 5 things to watch on the ASX 200 on Friday
• Why the Newcrest share price is up today
• ASX 200 drops 2%: Big four banks sink lower, JB Hi-Fi to deliver strong profit growth
• Why Aventus, Kogan, Newcrest, & Northern Star are pushing higher

Motley Fool contributor Chris Chitty 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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Luckily for income investors in this low interest rate environment, there are plenty of dividend shares that offer superior yields to those that you’ll find with term deposits and savings accounts.

Three fantastic ASX dividend shares that I would buy today are listed below. Here’s why I like them:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust which has close ties with Wesfarmers Ltd (ASX: WES). Not only are the majority of its warehouses leased to Wesfarmers’ Bunnings business, the conglomerate is also a major shareholder in the trust. I think this is a big positive as the Bunnings owner is unlikely to do anything that would have a negative impact on BWP’s performance and ultimately its investment. Overall, I believe this leaves it well-placed for modest and consistent income and distribution growth over the next decade. At present I estimate that it offers investors a forward 5.1% yield.

Rio Tinto Limited (ASX: RIO)

Another dividend share to look at buying is this mining giant. I think Rio Tinto could be a great option due to its world class operations and the high levels of free cash flow it is generating. Especially given how high iron ore prices have been trading this year. And with many tipping prices to remain strong in 2021, Rio Tinto looks well-positioned to reward shareholders handsomely with dividends over the next couple of years. I estimate that its shares offer a forward dividend yield of at least 5%. But this could be much higher if special dividends are paid next year.

Transurban Group (ASX: TCL)

A final dividend share to consider buying is Transurban. It is a toll road operator with a number of key roads in Australia and North America. While its performance is likely to disappoint in the near term because of the pandemic, I expect traffic volumes to normalise as restrictions ease. So with its shares still down 12% from their high (and likely to go lower today), I believe it could be a great time to consider a long term and patient investment. I estimate that its shares offer a 3.3% FY 2021 distribution yield.

More reading

• 2 top ASX dividend shares you can buy right now
• Is the Wesfarmers share price good value?
• 2 top ASX dividend shares for income in 2020
• Why I think Wesfarmers is the best ASX blue chip
• Leading brokers name 3 ASX 200 shares to sell today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group and Wesfarmers 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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This morning S&P Dow Jones Indices announced the June 2020 quarterly rebalance of the S&P/ASX Indices.

This is when a number of shares are added or removed from particular indices. Which can be a bigger deal than you might think, as billions of dollars are invested into funds which track indices like the S&P/ASX 200 Index (ASX: XJO).

In addition to this, fund managers often have mandates that allow them to only buy shares on a certain index. This can lead to them dumping shares which are removed from indices and buying shares which are added.

What changes have been made?

Given that S&P Dow Jones Indices skipped the March quarterly rebalance because of the market volatility, there have been a larger than normal amount of changes today.

Here’s a summary of some key changes that will be effective at the open on 22 June 2020.

S&P/ASX 20 Index

Gaming technology company Aristocrat Leisure Limited (ASX: ALL) has been added to the ASX 20 index at the expense of packaging company Amcor PLC (ASX: AMC).

S&P/ASX 50 Index

Infant formula and fresh milk company A2 Milk Company Ltd (ASX: A2M) will join the ASX 50 index later this month. It will take the place of embattled financial services company AMP Limited (ASX: AMP). Payments company Afterpay Ltd (ASX: APT) had been tipped for inclusion in the index but appears to have fallen just short.

S&P/ASX 100 Index

The shares of data centre operator NEXTDC Ltd (ASX: NXT) and gold miner Saracen Mineral Holdings Limited (ASX: SAR) have been strong performers in 2020. This has led to them being included in the ASX 100 index at the expense of shopping centre operator Unibail-Rodamco-Westfield (ASX: URW) and coal miner Whitehaven Coal Ltd (ASX: WHC).

S&P/ASX 200 Index

The benchmark index will welcome five new shares later this month. Centuria Industrial REIT (ASX: CIP), Megaport Ltd (ASX: MP1), Mesoblast limited (ASX: MSB), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) will join the illustrious index.

Making way for them will be Estia Health Ltd (ASX: EHE), Hub24 Ltd (ASX: HUB), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), Pilbara Minerals Ltd (ASX: PLS), and Pinnacle Investment Management Group Ltd (ASX: PNI).

You might have noticed that there are five in and six out. This is because there has actually been 201 shares on the ASX 200 over the last few months. This was the result of Graincorp Ltd (ASX: GNC) spinning off its United Malt Group Ltd (ASX: UMG) business earlier this year.

Two surprising omissions from the new additions were Kogan.com Ltd (ASX: KGN) and Zip Co Ltd (ASX: Z1P). Both looked like strong candidates for inclusion after their remarkable share price gains this year. It looks like they will have to wait until September now.

More reading

• 3 gold mining shares that may be a buy today
• 5 things to watch on the ASX 200 on Friday
• Why is the A2 Milk share price underperforming?
• All Technology Index sees stunning comeback
• Why Afterpay, Amcor, Computershare, & Westpac shares are dropping lower

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 Jumbo Interactive Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Hub24 Ltd, MEGAPORT FPO, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Hub24 Ltd, Jumbo Interactive Limited, and MEGAPORT 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 S&P quarterly rebalance: A2 Milk added to ASX 50 & NEXTDC in the ASX 100 appeared first on Motley Fool Australia.

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Could this be the start of the second COVID-19 share market crash?

The S&P/ASX 200 Index (ASX: XJO) fell 3% yesterday and it’s expected to fall another 3% at the open. Who knows where it will finish by the end of today?

A second wave of COVID-19 was always a risk to the share market recovery. Countries like Australia, New Zealand, Taiwan and Vietnam have done a good job at controlling the spread of the virus. The north east of the US took the brunt of the initial wave. Now a lot of other US states are seeing rising numbers.

We’ve already seen that many places in the US can’t uniformly follow restriction rules, so this second wave could be harder to control. Although, the first wave didn’t really end.

Is this the second COVID-19 share market crash?

It certainly could be. A second wave was one of the key reasons that could start another share market fall. I don’t think the market was pricing in the high chance of a second wave. So if you’ve been saving your cash for another COVID-19 share market crash, this period is probably your chance.

But there’s a fair chance that this fall won’t be as bad as the first for a few reasons.

First, all of the central bank support is still there. Interest rates are still incredibly low in Australia, the US and Europe. It was seemingly the central banks stepping in that halted the crash in March.

Second, the US may be bad at controlling COVID-19 but many other places have gotten on top of it. Europe was in bad shape, but now daily case numbers are a lot lower. Several important countries in Asia are in control. We’re not looking at every developed country being in trouble. 

Third, people will expect a recovery. The first COVID-19 share market crash was only three months ago. There’s a good chance that once the market stops falling it will recover nicely again as people see value in lower prices.

Foolish takeaway

I’m going to be scanning the market today and next week to see if I can find any great opportunities. Be greedy when others are fearful. A 6% fall over 24 hours would certainly suggest that a COVID-19 share market crash may be starting. But it may be quicker and not as bad as the first. 

More reading

• Woolworths facing fresh threat from Amazon.com
• Is this why the NAB share price could be cheap today?
• ASX 200 to sink lower after Wall Street crashes on second wave concerns
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 3%, Webjet share price sinks

Motley Fool contributor Tristan Harrison 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 Is this the start of a second COVID-19 share market crash? appeared first on Motley Fool Australia.

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