The BWP Trust (ASX: BWP) share price will be on watch this morning following the release of its full year results.

How did BWP perform in FY 2020?

During the 12 months ended 30 June 2020, the Bunnings Warehouse landlord reported a 0.3% decline in revenue to $155.8 million. Over the period, the company reported like-for-like rental growth of 2.4% and an occupancy rate of 98%.

On the bottom line, thanks partly to lower finance costs, the property company delivered a 1% increase in profit before gains on investment properties to $117.1 million.

Including property gains, BWP’s profit was up 24.4% to $210.6 million. This was driven by a 75.1% or $93.6 million increase in the gains in fair value of its investment properties. Management notes that this reflects the continuing strong market support for Bunnings Warehouse properties from an investment and risk perspective.

In light of this positive form, the company is in a privileged position to be able to increase its distribution in FY 2020 despite the pandemic.

The BWP board has declared a final distribution of 9.27 cents per unit, which brings its full year distribution to 18.29 cents per unit. This represents a 1% increase on FY 2019’s distribution. Shareholders will be paid this final distribution on 21 August 2020.

What were the drivers of this result?

Management notes that its main tenant, Bunnings Warehouse, was able to operate on an unrestricted basis during the financial year. As did the significant majority of its other tenants.

This meant that just $435,886 of rent abatements were granted during the period, which means 98.8% of rent was collected as normal during the months of March to June. This is likely to be materially better than what the likes of Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX) will report later this month.

FY 2021 outlook.

For the year ahead, the trust’s primary focus is on filling any vacancies in the portfolio, progressing store upgrades, extending existing leases with Bunnings through the exercise of options, completion of market rent reviews, and the continued rollout of energy efficiency improvements at its properties.

CPI reviews will apply to 48% of the base rent, with leases subject to a market rent review comprising 19% of the base rent, and with the balance of 33% reviewed to fixed increases of 3% to 4%.

However, due to the uncertain economic environment, management is being cautious with its distribution guidance. At this stage it expects its FY 2021 distribution to be in line with the one it has paid in FY 2020.

Though, it warned that the distribution may be reviewed in the event that COVID-19 impacts are more severe or prolonged than anticipated.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Beat interest rate cuts with BHP and this ASX dividend share
• 5 things to watch on the ASX 200 next week
• These ASX dividend shares could be perfect for retirees
• 3 quality ASX dividend shares to buy in August

Motley Fool contributor James Mickleboro 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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I’ve got my eye on the Reliance Worldwide Corporation Ltd (ASX: RWC) share price today. This comes after a key ASX announcement from the Aussie manufacturer regarding coronavirus restrictions in Victoria.

What was in the ASX announcement?

The manufacturer said it was assessing the impact that Victorian government restrictions may have on its manufacturing and distribution facilities.

Reliance Worldwide manufactures products in its 4 Melbourne plans to supply into the Australian and Asia-Pacific region. There are also some products that are exported to the company’s North American operations.

These products are key to the maintenance and construction of hot and cold water sanitary systems, particularly for domestic housing.

The Reliance Worldwide share price will be one to watch in early trade following the announcement.

What is this in response to?

This comes after the Victorian Government introduced sweeping Stage 4 lockdowns for the Melbourne region until at least 13 September.

That means an estimated further 250,000 Victorians could lose their jobs under the latest restrictions.

Positively, the company said it maintains “sufficient” inventory levels that will substantially mitigate any supply disruptions. Reliance Worldwide does not anticipate any short-term impact on its North American sales.

How has the Reliance Worldwide share price performed this year?

Shares in the Aussie plumbing and heating company fell off a cliff in mid-February.

That coincided with the start of the recent bear market as the Reliance Worldwide share price fell 63.0% in the space of one month.

However, Reliance Worldwide shares have climbed 48.9% since March 24 to coincide with a rise in the S&P/ASX 200 Index (ASX: XJO).

The company’s market capitalisation currently sits at $2.1 billion with a price-to-earnings (P/E) ratio of 17.4.

The manufacturer is set to report its full-year results on Monday 24 August. I think that’s another day to watch the Reliance Worldwide share price, given the current uncertainty.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• The ASX stocks hit by Victoria’s stage 4 forced shutdowns
• ASX stock of the day: Catapult share price leaps 15% on US college football contract
• The ASX small cap benefitting from COVID that you’ve probably never heard of
• My top retail ASX 200 share to gift right now

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 Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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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On Monday, the Monadelphous Group Limited (ASX: MND) share price plummeted 10.33% to $7.99 after the company announced that it was the subject of a legal claim by Rio Tinto Limited (ASX: RIO).

What was in the announcement?

The claim was related to a fire which occurred on 10 January 2019 at a Rio Tinto iron ore processing facility at Cape Lambert, Western Australia. A wholly owned subsidiary of Monadelphous was contracted to perform shutdown maintenance services prior to the time the fire occurred. Rio alleged that the Monadelphous subsidiary was in breach of its maintenance contract and that this breach was the cause of the fire. 

Rio Tinto have informed Monadelphous that they intend to make a claim for $493 million in loss and damages. This is comprised of $458 million from the cost of finding a temporary operating solution and business interruption arising from an alleged inability for Rio to process iron ore at the facility during the disruption. The additional $35 million of the claim was for material damage associated with reconstruction at the processing facility affected by the fire. 

According to the announcement, the Monadelphous subsidiary that is facing the allegation denies Rio Tinto’s claim and the losses claimed, which according to the subsidiary have not been substantiated.

Mondelphous intends to defend the claim and states that the contract between Rio Tinto and its subsidiary, which was allegedly breached, contains exclusions and limitations of liability which the subsidiary would rely on in its defence.

The announcement set out that the subsidiary, referred to as MEA, which is facing the allegations has public liability insurance in place with a total limit of $150 million. This insurance provides cover for property damage claims and associated losses. Monadelphous stated that it is “unaware of any reason why the insurance policies would not respond to indemnify MEA for liability it may have to Rio Tinto.”

About the Monadelphous share price

A joint venture in which Monadelphous owns a 55% stake announced on Monday that it had secured a contract with General Electric International Inc. The contract relates to the construction of a wind farm in Victoria with the joint venture expecting to receive around $80 million from the works to be completed.

In the half year to December 2019, Monadelphous had revenue of $852 million and a net profit after tax of $28.5 million. 

The Monadelphous share price is up 0.5% from its 52 week low of $7.95, however, it has fallen 51.98% since the beginning of the year. The Monadelphous share price is down 55.31% since this time last year.

More reading

• ASX 200 up 0.1%: Big four banks tumble, Flight Centre sinks, SEEK cancels final dividend
• These were the worst performing ASX 200 shares in July
• Reliable ASX dividend shares still exist
• 3 latest ASX 200 stocks to be downgraded by top brokers today
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments

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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

On Wednesday afternoon, Apple (NASDAQ: AAPL) made a surprise announcement alongside its second-quarter results. On Aug. 24, the company will execute a 4-for-1 stock split.

Some investors may be wondering: Is the stock a buy ahead of its stock split next month? After all, more investors will be able to afford Apple stock, and shares will be more liquid since they can be bought and sold at a lower price.

While shares of Apple may be attractive today, an upcoming stock split isn’t the reason why.

Understanding Apple’s 4-for-1 stock split

Apple’s upcoming stock split will be its fifth since going public. The tech company split its stock on a 2-for-1 basis in 1987, 2000, and 2005. Then it split its stock on a 7-for-1 basis in 2014. Its 2020 split will occur on a 4-for-1 basis, meaning every investor will receive four shares for every one share they own. Those shares will each be equal to one-fourth of the value of the former share.

Apple’s 2020 4-for-1 stock split will occur on Aug. 28.

The reason for the stock split? To make the stock available to a large base of shareholders, Apple says.

A timely opportunity?

While on the surface it might seem like Apple stock may be a buy because of a planned share split, this doesn’t make sense upon closer examination. For instance, even if there is increased demand for the stock because of its lower price after the split, other investors may capitalize on an irrational move higher in the stock price and sell their shares just as quickly as new demand arises.

Furthermore, no one knows what news could drop on a given day. There’s no telling how Apple stock will trade between now and the stock split, as economic or company-specific news could have more influence on supply and demand for the stock than the stock split itself.

In short, investors should never buy a stock simply because it is about to be split.

The real reason Apple stock is a buy

Nevertheless, Apple stock does look compelling today. But the reason it looks like a good stock to buy has nothing to do with the upcoming stock split. Instead, it has to do with the company’s impressive resilience during uncertain times.

Apple’s fiscal third-quarter revenue rose 11% year over year and its earnings per share climbed 18%. Analysts, on average, were expecting revenue to fall 3% and earnings per share to decline 6% over this same timeframe, respectively.

“Our June quarter was a testament to Apple’s ability to innovate and execute during challenging times,” said Apple CFO Luca Maestri in the company’s fiscal third-quarter earnings call on Wednesday. “Our results speak to the resilience of our business and the relevance of our products and services in our customers’ lives.”

Posting growth across every segment, the company’s fiscal third-quarter results during these challenging times speak to the company’s upside potential when the economy recovers. It’s this strong business — not the tech company’s upcoming stock split — that makes Apple stock a buy for investors willing to hold for the long haul.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why you should own a piece of the world’s biggest company
• Apple smashes revenue forecasts
• US tech shares deliver massive results – what does it mean for ASX tech shares?
• Are the big US tech companies about to be broken up?
• ASX investors have been buying Tesla and these international shares

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple. The Motley Fool Australia has recommended Apple. 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Looking to add some growth shares to your portfolio this week? Then I think the three ASX growth shares listed below would be worth considering.

Here’s why I think they could generate strong returns for investors over the long term:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

The first ASX growth share to consider buying is Domino’s. I think the pizza chain operator would be a great long term option for investors due to its strong brand, popular product, and its positive long term growth outlook. The latter is thanks partly to management’s bold expansion plans. Over the next five years Domino’s is aiming to deliver annual organic new store additions of 7% to 9%. It is also targeting annual same store sales growth of 3% to 6% over the same period. It if achieves both and at least maintains its margins, this will underpin strong earnings growth for many years to come.

NEXTDC Ltd (ASX: NXT)

Another growth share to consider buying is NEXTDC. I’m a big fan of the data centre operator and believe it is perfectly positioned to capitalise on the cloud computing boom. A boom which has accelerated because of the pandemic. This could mean technology research firm Gartner’s prediction that 80% of all organisations will shift their workloads to third-party data centres by 2025, happens even sooner. Overall, I expect this to lead to increasing demand for its innovative data centre outsourcing solutions and underpin solid earnings growth as the company scales.

ResMed Inc. (ASX: RMD)

A final ASX growth share I would buy is ResMed. The medical device company has been growing at a strong rate over the last decade and I’m confident this will continue in FY 2021 and beyond. This is due to its focus on the sleep treatment market and the proliferation of obstructive sleep apnoea, which is driving increasing demand for its masks and software solutions. In addition, a second wave of coronavirus in a number of key markets looks likely to lead to strong ventilator sales in the near term.

More reading

• Why the Domino’s share price has my attention
• 7 ASX shares to watch this reporting season
• I would buy ResMed and these ASX blue chip shares in August
• Why I think Megaport shares offer enormous long-term growth potential
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and ResMed Inc. 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 afternoon the Reserve Bank will hold its August meeting and make a decision on the cash rate.

Although there is a small chance of a rate cut to zero, it looks reasonably unlikely based on the latest cash rate futures.

While this is a small win for income investors, it doesn’t make much of a difference in the grand scheme of things. Whether or not there is a cut today, interest rates will still be at ultra-low levels.

In light of this, I would suggest income investors continue to look beyond savings accounts and term deposits. Instead, I think they should be focusing on some of the quality dividend shares trading on the Australian share market.

Two ASX dividend shares that I would buy are listed below.

Dicker Data Ltd (ASX: DDR)

The first ASX dividend share to consider buying is Dicker Data. It is a leading wholesale distributor of computer hardware and software across the ANZ region. Dicker Data has been a very positive performer over the last few years and this has continued in FY 2020. It recently reported stellar growth during its recently completed first half. Dicker Data reported half year revenue above $1 billion for the first time and a 30.4% lift in net profit before tax to $42 million. In light of this, the company is on course to increase its dividend by 31% to 35.5 cents per share this year. Based on the current Dicker Data share price, this represents a generous fully franked 4.75% dividend yield.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to consider buying is Rural Funds. I think the agriculture-focused property group is a great option for income investors due to the quality and diversity of its portfolio. Another positive is the long tenancy agreements of its assets, which I believe puts Rural Funds in a position to continue growing its distribution during the pandemic and for many years to come. The company recently reaffirmed its distribution guidance of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. Based on the latest Rural Funds share price, the latter equates to a 5.5% yield.

More reading

• ASX 200 edges lower, Melbourne enters stage 4 lockdown
• Is the Wesfarmers or Rural Funds share price a buy for dividend income?
• Top ASX Stock Picks for August 2020
• Buy these ASX dividend shares before the RBA meeting
• 3 of the best ASX dividend shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and 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 Buy these ASX dividend shares if the RBA cuts rates appeared first on Motley Fool Australia.

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The big four Australian bank shares enjoy a unique space in our economy. In part, this is due to Paul Keating’s 4 Pillars policy, originally 6 Pillars. A policy that prevents them from taking over one another.

However, a foreign bank or company could take over any one of them. One of the results of this policy is that they are all in the top 30 of the world’s largest banks by market capitalisation. In fact, the price of  Commonwealth Bank of Australia (ASX: CBA) shares makes it the 13th largest bank in the world by market cap.

As the coronavirus pandemic rages on, it has become clear just how important our banks are. They have proven to be one of the nation’s great economic weapons. When used in conjunction with our superannuation system, they have cushioned the short term blow of the pandemic. In fact, to an outsider, the banks must appear as if they were an arm of government. 

Given their intrinsic importance to the economic well-being of the country, I wonder if they are still a good investment. Or, does their national role prevent that?

Banks and the pandemic

The banks are regulated by the The Australian Prudential Regulation Authority (APRA). This regulator is charged with maintaining a “stable, efficient and competitive financial system” via prudential standards and practices. This is where it all gets interesting for me. Moreover, we saw this in action during the early stages of the lockdown.

APRA allowed the banks to provide a range of assistance. First, it allowed a loan repayment deferral period of up to 6 months without being in arrears. This is part of the support available to small business also.

Second, it allowed banks to extend or change the type of loan without serviceability assessments. For example, a mortgage change from principal and interest, to interest only. Under the APRA guidelines, this can happen without having to prove it can be paid for.

To help the banks further, the regulator requested that they “limit discretionary capital distributions in the months ahead”. Instead, asking them to maintain a buffer to potentially support the economy. This meant no dividend payments. 

At the time of writing, APRA has extended this from 6 months to 10 months, or until 31 March 2021, whichever comes first.  In addition, it has changed its advice on dividends. Effectively capping them at a maximum of 50% of profits. I think these factors are holding down the price of Commonwealth Bank shares.

The impact on Commonwealth Bank shares

The basic business model of a bank is arbitrage. That is, take in funds at a specific short-term interest rate, and then loan it out for longer terms at higher interest rates. Banks have already agreed to a 6-month deferral of loan repayments, and are likely to be under massive pressure to extend for the full 10 months. This is a major hole in revenues.

Additionally there is the risk of loan defaults. Over the past 5 years, the average number of companies to declare themselves insolvent is about 600 per month. However, according to TradingEconomics.com, only slightly more than 400 companies have become insolvent during April and May.

Moreover, we can see rising unemployment and the gradual winding down of JobKeeper. It is clear to me that there is going to be a tidal wave of defaults in both business and personal loans.

CommBank is the largest provider of home loans and business loans in Australia, therefore likely carrying the most risk of defaults. This is just one of the potential consequences of the interests of the nation overriding the interest of the shareholders. It may well be the right thing to do, or even the ethical thing to do. Nonetheless, that doesn’t make it in the best interests of the shareholders.

Could Commonwealth Bank shares grow?

There is a reason why banks are often seen as lumbering, overly cautious enterprises. Of the four major banks, only CommBank has a large, successful international operation. In addition, unlike the other banks, it is the only one to make a move into the buy now pay later (BNPL) sector via its deal with Swedish bank Klarna. However, across all of the bank’s traditional verticals there are piranhas nipping at its heels. 

For example, CommBank is the nation’s largest provider of digital payments services. Nevertheless, companies like Tyro Payments Ltd (ASX: TYR) are making solid inroads into national market share. Tyro has set itself up as the largest EFTPOS provider among all authorised deposit taking institutes (ADI) outside of the big four banks. Moreover, credit cards are under fire by other BNPL companies such as  Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).

In loans, the bank is under fire from start ups like WISR Ltd (ASX: WZR), as well as a range of neo-banks mostly dedicated to having only an online presence. Companies like Moneyme Ltd (ASX: MME) or the private Judo Bank. In addition, debtor finance is becoming more of a respectable mechanism to access short term funds. This includes companies like CML Group Ltd (ASX: CGR).

Foolish Takeaway

I strongly believe that if the 4 Pillars policy didn’t exist, at least one, maybe more, of the large banks would have disappeared. Therefore, if I had to invest in any bank equities, it would be in Commonwealth Bank shares. However, it would be primarily for the possibility of moderate share price growth. Nevertheless, there is no way I am going to invest in any banks at present.

The ability of the regulator to direct a bank to take actions potentially detrimental to shareholders adds a level of risk. Moreover, the banks now have their dividends effectively capped. So the main reason why many investors held them in the first place has disappeared.

Lastly, as we emerge from coronavirus, it is clear that the banks still have a lot of bad news ahead of them. Meanwhile, competitors are actively slicing away market share in various areas. There are many other opportunities on the ASX if you are willing to do the work to find them. 

More reading

• CML share price surged 13% last week
• Which shares to watch this ASX earnings season
• Why ASX bank stocks are the worst performing group today
• Is the Afterpay share price a boom or bust?
• How these ASX investors made 60% in three months

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T 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.

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