ASX shares are a great option for both growth and dividend income.

Businesses have the ability to make good profit and pay out some of it in the form a dividend whilst keeping the rest of the profit to re-invest for more growth in the future. 

It’s hard to find businesses with the right mix of income and growth. There are some businesses like Telstra Corporation Ltd (ASX: TLS) that pay out a large proportion of their earnings, but the earnings and share price aren’t growing.

Others have great growth potential but don’t pay a dividend like A2 Milk Company Ltd (ASX: A2M) and Pushpay Holdings Ltd (ASX: PPH).

But there are some businesses that offer a good mix of both growth and dividend income:

Share 1: WCM Global Growth Ltd (ASX: WQG)

This is a listed investment company (LIC) which invests in global shares, not ASX shares. The name ‘WCM’ refers to WCM Asset Management, a manager based in California which was founded in 1976.

WCM looks for two key attributes for companies to make it into its global growth portfolio. The first is an improving competitive advantage, or in other words an expanding ‘economic moat’. The second attribute is a corporate culture that supports the expansion of this moat. WCM believes that the direction of a company’s economic moat is of more importance than its absolute width or size.

The fund manager looks for companies with a rising return on invested capital (ROIC), rather than businesses with a large but static or declining moat. The corporate culture is a key factor for a business’ ability to achieve a constantly growing moat.

So what are some shares that make it into WCM’s portfolio? The ASX share has positions in: Shopify, West Parmaceuticals, MercadoLibre, Visa, Stryker, Tencent, Lululemon Athletica, Taiwan Semiconductor, Crown Castle International and Ecolab.

As you may have noticed, there’s a focus on technology and healthcare businesses. These two sectors offer investors growth and (usually) fairly defensive earnings.

The investment returns have been strong to June 2020. The ASX share said that its portfolio has returned 20.15% per annum after management fees over the past three years – don’t forget this includes the COVID-19 market selloff a few months ago.

The dividend income part comes in with the biannual dividend that the LIC pays to shareholders. At the moment it’s committed to paying a 2 cents per share dividend as its final FY20 dividend, partially franked to 50%. That means the grossed-up dividend yield is currently 3.8%. At the current WCM Global Growth share price, the ASX share is trading at a 14% discount to its pre-tax net tangible assets (NTA) at 17 July 2020.

I believe it looks like a compelling buy today.

Share 2: Brickworks Limited (ASX: BKW)

I think Brickworks is one of the most promising non-technology ASX shares for growth.

There are three sections to Brickworks, each of them look like they have good growth prospects.

One section is its industrial property trust which it owns half of along with Goodman Group (ASX: GMG). The trust has built industrial properties on excess land that Brickworks used to own. Just like other quality real estate investment trusts (REITs), this property trust is generating reliable rental profit each year. Over the next few years the trust will see two large distribution warehouses completed and leased to Amazon and Coles Group Limited (ASX: COL). The completion of these assets should see a pleasing uptick in rental income and valuation uplift for the property trust.

Another section is Brickworks’ large shareholding of investment conglomerate ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). The investment house has been a strong dividend share for a long time and it’s steadily building its asset base with diversified businesses like TPG Telecom Ltd (ASX: TPG), Clover Corporation Limited (ASX: CLV) and Palla Pharma Ltd (ASX: PAL). Soul Patts has been delivering solid total shareholder returns for decades, so Brickworks should be able to keep benefiting here.

The last section may be the most important one. Brickworks owns building product businesses in both Australia and the US. COVID-19 has made it harder for construction businesses in the short-term, but Brickworks has set the foundations for good growth in the future when construction rebounds in both countries. I really like the company’s long-term growth plan in the US to make the operations there more efficient and profitable. I think the best time to buy a somewhat cyclical business is during the downturn. 

At the current Brickworks share price it has a grossed-up dividend yield of 5%. It hasn’t cut its dividend for over four decades.

Foolish takeaway

I think both of these ASX shares are trading at good value, have good growth potential and have decent starting dividend yields. I’d be happy to buy both of them for my portfolio at the current share prices.

More reading

• 4 ASX shares I’d buy with $4,000
• How to create a yearly income of $65,000 in dividends
• Top ASX dividend shares to buy in July 2020
• 2 ASX shares for investors aged 50+
• 3 ASX shares I won’t hesitate to buy in the next market crash

Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited and WCM Global Growth Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended Brickworks, Telstra Limited, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended 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.

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Lewis Hamilton has just won his third Hungarian Grand Prix (GP) in a row and S&P/ASX 200 Index (ASX: XJO) investors should be paying attention.

Why? Because in the words of The Motley Fool Co-founder David Gardner, “winners win”.

For those of you who don’t follow Formula One, Hamilton is one of the most successful drivers ever with 6 world championships under his belt. He currently drives for Mercedes, which has won the last 6 constructors’ championships. Prior to that Sebastian Vettel and Red Bull Racing won 4 championships in a row.

When investing in ASX 200 shares, I think investors can draw inspiration from Hamilton’s Hungarian GP win. Although prior performance is not a guarantee of future returns or success, companies and athletes that win tend to have a competitive advantage. Even if a company’s share price has appreciated faster than the share market in the past, if the total addressable market or optionality of the business allows, that advantage can mean a stock can continue to deliver outsized returns for investors.

2 ASX 200 shares that can keep winning

Altium Limited (ASX: ALU)

If Hamilton has won 3 Hungarian GPs in a row, Altium has won 10, at least. The printed circuit board software company current trades at around 57x earnings and pays a dividend on a yield of 1.16%. That’s quite a lofty valuation, but it is deserved. Over the last decade, the Altium share price has risen at a compound annual growth rate (CAGR) of 64.33% per annum, including dividends.

Just like the book makers had Hamilton on extremely low odds to win, investors have pushed up the valuation of Altium on the expectation it will continue to deliver results. I think this expectation is deserved, as Altium continues to deliver as a business and as an investment. Altium management has a long-term focus on dominating its industry.

NextDC Ltd (ASX: NXT)

As an innovative data centre-as-a-service provider, NextDC has been growing its number of data centres in strategic locations across Australia. The NextDC share price has had a stellar year, going from $6.53 to $10.95 at the time of writing. Look back 5 years, and the stock has grown at a CAGR of 35.66%. 

One reason for the recent NextDC share price growth is that the company has benefitted from the digitisation trend caused by COVID-19. The shift towards digitisation isn’t over though, COVID-19 or not. Over the long-term, the shift towards cloud computing will increase the demand for NextDC data centres. 

Although building data centres can be capital intensive, the strong industry tailwinds should provide investors with strong returns if the business is able to manage its balance sheet and allocate capital well.

Foolish bottom line

These ASX 200 growth shares are slowly maturing. In my opinion, they are still small enough, in large enough addressable markets, to continue growing (and compounding) for years.

More reading

• Is the Super Retail share price cheap today?
• Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
• 3 investing strategies to profit from a second ASX share market crash in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now

Lloyd Prout owns shares of Altium Limited and expresses his own opinions. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium. 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 This is how the Hungarian Grand Prix affects you as an ASX investor appeared first on Motley Fool Australia.

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The BHP Group Ltd (ASX: BHP) share price will be on watch on Tuesday after the release of its fourth quarter and full year production update.

How did BHP perform?

BHP has just completed a solid 12 months with production guidance met for iron ore, metallurgical coal, and operated copper and energy coal assets.

Petroleum production fell a touch short of guidance due to lower than expected demand due to the impact of COVID-19. Whereas production at Antamina and Cerrejon was lower than guidance due to the temporary suspension of operations due to the pandemic. Both operations are now ramping back up.

Here’s a summary of its production for FY 2020 and expectations for next year:

Petroleum production was 109 MMboe, down 10% on the prior corresponding period. This was despite a strong finish to the year thanks to increased production at Bass Strait due to higher seasonal demand. In FY 2021, BHP is forecasting production of 95 to 102 MMboe. This represents a 6% to 13% decline.

Copper production was up 2% in FY 2020 to 1,724 kt. This was despite lower production in the fourth quarter due to the aforementioned temporary operating suspensions. Copper production is expected to decline by 13% to 21% in FY 2021 to 1,480 kt to 1,645 kt. This is due largely to a sharp reduction at the key Escondida operation.

Iron ore production was the highlight of FY 2020 with 248 Mt. This was up 4% on the prior corresponding period thanks to a strong fourth quarter performance at Mining Area C and Yandi. Pleasingly, production costs are expected to be in line with guidance at WAIO and BHP has benefited greatly from a 16% increase in average price realised to US$77.36 a tonne. In FY 2021 production is forecast to be 244 Mt to 253 Mt. This will be a 2% decline to a 2% increase.

Metallurgical Coal production came in a 41 Mt in FY 2020, down 3% year on year. A very strong performance in the fourth quarter prevented a much worse result. Looking ahead, in FY 2021 production is expected to be in the region of 40 Mt to 44 Mt. The low end represents a 3% decline and the high end represents a 7% gain.

Elsewhere, Energy Coal production was down 16% to 23 Mt and Nickel production fell 8% to 80 kt. The latter is expected to rebound with production growth of 6% to 19% in FY 2021. Whereas Energy Coal production guidance for the new financial year ranges from a 5% decline to 4% growth.

What else did BHP announce?

The Big Australian also gave investors an idea of what its finances will look like when it reports its full year results next month.

Management advised that its unit costs are expected to be in line with guidance for its WAIO, Queensland Coal, and NSWEC operations. Whereas Petroleum and Escondida costs are expected to slightly better than guidance.

There will be an increase in closure and rehabilitation provisions for closed mines of US$600 million to US$700 million and impairments of US$450 million to US$500 million to property, plant and equipment at Cerro Colorado.

It also has forecast costs directly attributable to COVID-19 of US$100 million to US$150 million after tax.

Nevertheless, BHP’s net debt is expected to be at the lower end of its target range of US$12 billion to US$17 billion.

BHP Chief Executive Officer, Mike Henry, commented: “Our diversified portfolio and high quality assets, together with our strong balance sheet, make us resilient to the ongoing uncertainty in the markets for our commodities. We expect to continue to generate solid cash flow through the cycle and we remain confident in the outlook for demand for our products over the medium to long-term.”

“We continue to focus on becoming even safer, delivering exceptional operational performance, maintaining disciplined capital allocation, creating and securing more options in future facing commodities and building social value. We have learned new ways of working, both internally and with others, through the COVID-19 pandemic. We will seek to embed these in a way that helps to reinforce these priorities,” he concluded.

More reading

• Why you should buy ANZ and these ASX dividend shares for income
• Why the South32 share price is falling today
• 3 ASX shares to leverage the booming iron ore price
• ASX 200 Weekly Wrap: Blue chip shares pull ASX 200 back over 6,000 points
• Why I would buy a2 Milk and these fantastic ASX 50 shares

Motley Fool contributor James Mickleboro 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 BHP share price on watch after robust FY 2020 update appeared first on Motley Fool Australia.

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If you’re a fan of a particular brand or retail outlet, it can pay to look into the company behind it. Many of the products and services we consume are produced by companies trading on the ASX. As our consumption habits shift, so do the fortunes of the companies catering to them. By monitoring your own consumption you can gain insights into long term trends that can influence the way ASX shares perform.

Here we take a look at 7 ASX shares you probably already buy from. 

Wesfarmers Ltd (ASX: WES) 

Wesfarmers is behind a stable of retail brands including Bunnings, Officeworks, Kmart, and Target. The Wesfarmers share price has recovered strongly from the March downturn and it is now trading on par with February levels, i.e. near record highs.

Bunnings and Officeworks both saw a surge in sales as a result of lockdowns and the move to remote working. Consumers spent time and money setting up home offices and getting stuck into DIY. As a result, Officeworks’ sales grew 27.8% in the second half and Bunnings’ grew 19.2%. 

Coles Group Ltd (ASX: COL)

Spun off from Wesfamers in 2018, Coles is behind 2,500 retail outlets nationally. This includes 800 supermarkets, 900 liquor stores, and more than 700 fuel and convenience retailers. The Coles share price remained relatively robust in the March correction, losing around 17% from peak to trough. Coles shares have now surpassed pre-Covid-19 levels and are trading near all-time highs.

Coles saw significant sales growth in the third quarter as the result of stockpiling and panic buying. Supermarkets sales grew 13.8%, with overall sales revenue up 12.9% to $9.2 billion. 

Woolworths Group Ltd (ASX: WOW) 

If you don’t shop at Coles, there’s a strong chance you shop at Woolworths, Australia’s other major supermarket chain. Woolworths operates some 995 supermarkets across Australia. Including its liquor and Big W brands, Woolworths is behind some 3,000 stores across the country. The Woolworths share price fell 20% in the March dip, but has since recovered somewhat. It is still, however, trading down 10% from its February high.

Woolworths experienced a similar rush in sales to Coles in the third quarter. The Australian food business saw growth of 11.3%, Big W grew sales by 9.5%, and liquor also grew 9.5%. The Hotels business saw a 12.9% drop in sales with the closure of venues. 

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is Australia’s largest home entertainment retailer with almost 200 stores throughout Australia and New Zealand. JB Hi-Fi acquired The Good Guys in 2016, a home appliances retailer with a network of over 100 stores. The JB Hi-Fi share price has recovered strongly from the March downturn and is now just 3% down from its February peak.

JB Hi-Fi also saw a surge in sales in the third quarter as consumers set up home offices and searched for in-home entertainment. Australian JB Hi-Fi sales were up 20% in the half year to June. The Good Guys sales were up 23.5%. JB Hi-Fi New Zealand sales fell 19.3% as a result of closures during lockdowns. 

Kogan.com Ltd (ASX: KGN)

Kogan is an online retailer selling a wide range of products from consumer electronics, to appliances, homewares, hardware, and toys. The company sells its own stock and provides for third party sellers via Kogan Marketplace. The company also owns and operates a suite of private label brands. The Kogan share price has surged since its March low of $4.16 with shares currently trading at $17.34.

The company grew gross sales by more than 100% in April and May with gross profit growing by more than 103% over the same period. Kogan is benefitting from the ongoing shift to ecommerce, which has been hastened by the onset of coronavirus. 

Premier Investments Limited (ASX: PMV)

Premier Investments is the company behind popular brands Peter Alexander, Smiggle, Portmans, Just Jeans, Jay Jays, Jacque E, and Dotti. The company also holds a 28% stake in Breville Group Limited (ASX: BRG). The Premier Investments share price is up 82% from its March low but remains 23% below its February high.

Premier Investments closed stores during the first lockdown and took the hard line with landlords on rental payments. Pleasingly, during temporary store closures the retailer’s online sales surged. Online sales for Peter Alexander during the store closure period were up 295%. Incredibly, during the week ended 2 May, the brand’s online sales alone were up 18% on the previous years total sales across online and the 122 store network. 

Adairs Ltd (ASX: ADH)

Adairs is an omni-channel home furnishings retailer operating in Australia and New Zealand. Its product range includes bed linen, towels, homewares, soft and children’s furnishings, and some furniture. The Adairs share price has recovered strongly from the March downturn and is now close to reaching its pre-Covid-19 peak.

The retailer was forced to close stores during the first lockdown, but its online sales surged. Customers spending more time at home took the opportunity to upgrade home furnishings. Adairs reported a 92.6% increase in online sales in the 24 weeks to 14 June 2020. This led to a 27.4% increase in total sales for the period. Online furniture subsidiary Mocka saw sales growth of 52.1% over the same period. 

Foolish takeaway

Observing your own spending patterns can help you identify trends that will impact ASX shares in both the short and long term. If you’re a believer in the products or services produced by a certain company, you may want to consider investing. That way, you could stand to earn a portion of the money you spend on its products in the form of dividends.  

More reading

• Why you should buy ANZ and these ASX dividend shares for income
• One thing you should be doing ahead of the ASX reporting season
• The Coles share price is flying under the radar
• Why these 9 ASX shares have doubled in value in the past year
• Coles and 2 more ASX 200 shares to watch this week

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Kogan.com 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 You probably shop at these 7 ASX retailers. Should you buy shares in them too? appeared first on Motley Fool Australia.

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The Super Retail Group Ltd (ASX: SUL) share price could be a bargain right now, in my view.

Shares in the Aussie retailer fell 4.8% lower yesterday to $7.80 per share. It was far from the only ASX 200 share falling lower as the S&P/ASX 200 Index (ASX: XJO) closed down 0.5% at 6,001.60 points.

So, after a big share price fall, is Super Retail worth a look right now?

Why the Super Retail share price fell lower

I think the main cause for concern is the rising coronavirus cases across Australia. The pandemic continues to spread in Victoria and somewhat in New South Wales as well.

That could spell trouble for the Aussie economy and lead to tightening restrictions. In turn, a reduction in foot traffic and potentially discretionary income could hit the retail sector hard.

These fears saw investors head for safety on Monday, which pushed the Super Retail share price lower.

Why the Aussie retailer could be a strong buy

There’s no denying there could be some impact on retailers from tightening restrictions a second time round. However, that was also the case in March when the ASX 200 entered a bear market.

But Super Retail has been relatively resilient in the face of these challenges. In fact, after bottoming out at $2.99 per share in March, the Super Retail share price has rocketed 160% higher since then to $7.80 per share. That’s on the back of strong earnings from Super Retail’s online channels, in particular a surge in sales from its Supercheap Auto and Rebel Sport brands.

I don’t see any reason why that trend can’t continue if we see another lockdown. Yes, there will be some customers who have already bought what they needed. But a targeted strategy towards boosting online sales could pay dividends for the Super Retail share price and the group’s investors.

On top of that, shares in the Aussie retailer are now down 25.3% from their 52-week high. That could mean that now is the chance to snap up a bargain.

Leading fundie Paul Xiradis from fund manager Ausbil holds a similar view. According to a recent client memo from Mr Xiradis, Ausbil’s base case for Super Retail is for a quick recovery.

That represents a bullish scenario that could see the Super Retail share price and others like JB Hi-Fi Limited (ASX: JBH) outperform in 2020.

More reading

• Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
• 3 investing strategies to profit from a second ASX share market crash in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%

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

The post Is the Super Retail share price cheap today? appeared first on Motley Fool Australia.

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It wasn’t a good start to the week for Bendigo and Adelaide Bank Ltd (ASX: BEN) shares.

The company’s share price slumped 5.17% as ASX bank shares were hammered in Monday’s trade. The Aussie banks led the S&P/ASX 200 Index (ASX: XJO) 0.5% lower to close at 6,001.60 points.

But is the Aussie bank cheap after yesterday’s slump or does it have further to fall in 2020?

Why Bendigo and Adelaide Bank shares fell yesterday

The big factor in Monday’s trading sessions was, you guessed it, coronavirus concerns.

An increase in cases across Victoria and New South Wales once again spooked investors. There are increasing talks of tighter restrictions that could hurt Australia’s economic rebound.

The banks are exposed to a deteriorating economy. This could be through more home, personal and business loan defaults and lower earnings.

That sent investors heading for the exits with Bendigo and Adelaide Bank shares closing down 5.17% on Monday.

Is the ASX bank a cheap buy?

I think the best way to evaluate Bendigo and Adelaide Bank shares is by benchmarking them against their peers.

Bendigo is the largest Australian retail bank outside of the big four. That means banks like Commonwealth Bank of Australia (ASX: CBA) or National Australia Bank Ltd (ASX: NAB) might be a reasonable benchmark.

Commonwealth Bank shares trade at a price to earnings (P/E) ratio of 13.1 while NAB shares trade at 16.0. However, Bendigo and Adelaide Bank shares have them both beaten with a P/E of just 11.5.

That could mean that the Aussie bank is a good relative buy versus its peers. Unfortunately for us keen-eyed Fools, it’s not that simple.

For one, P/E ratios and dividend yields are a bit unreliable right now. No one knows just how different the next period’s earnings will be from the last period due to the pandemic.

It’s also arguable that Bendigo is in a worse position compared to the big four. Bendigo is a smaller bank and has heavy regional exposure. That could mean more defaults in hard-hit regions and difficulty to compete on pricing with the majors.

On the other hand, Bendigo is looking towards the long-term. The Aussie bank owns neobank Up which leaves it well-placed for any potential shift in the banking sector.

Foolish takeaway

ASX bank shares like Bendigo and Adelaide Bank are hard to value right now. I think it’s too uncertain to be buying in for a marginally lower P/E ratio under the current conditions.

Personally, I would be waiting until the bank’s August earnings result for a better idea of whether to buy or not.

More reading

• Is the Super Retail share price cheap today?
• 3 investing strategies to profit from a second ASX share market crash in 2020
• 5 things to watch on the ASX 200 on Tuesday
• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%

Motley Fool contributor Ken Hall 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 Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy? appeared first on Motley Fool Australia.

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