The 2020 ASX share market crash has caused a lot of pain for many S&P/ASX 200 Index (ASX: XJO) investors. In the short run, further declines could happen from a second wave of coronavirus and its potential impact on the world economy.

Here are 3 investing strategies to profit from a potential second ASX share market crash in 2020:

Hold alternative assets

ASX 200 shares are by no means the only asset class you should hold in a diversified portfolio during a share market crash. Two “safer” options are gold and cash. 

Investors looking for exposure to gold could consider miners like Northern Star Resources Ltd (ASX: NST), physical gold, or an ETF like Perth Mint Gold (ASX: PMGOLD).

Perth Mint Gold has a very low management fee of just 0.15%. Another great feature is that unlike many gold exchange traded products, PMGOLD can be physically redeemed for any of The Perth Mint’s bullion coins and bars.

If you’re particularly bullish on the safe-haven metal during a 2020 share market crash, investing in a gold miner should provide you with additional leverage to the gold price, meaning that you could have greater upside potential. However, with greater potential comes greater risk.

Cash is a great asset to hold for both optionality and peace of mind. More risk averse investors should hold some cash to give them the confidence to hold their growth stocks through any stock market turbulence. More aggressive investors can use cash to “buy the dip”, which I explain in more detail below.

Buy a bear fund before the crash

Shorting stocks or the share market is my least favourite option to profit from a pull back. Why? Because it requires you to successfully time the market. Maybe you can, but I know that I certainly can’t do that.

With that being said, if you have a sound understanding of economics or investor sentiment, this strategy can make you money. The easiest way to take a position like this is through an ETF like BetaShares Australian Equities Bear Hedge Fund (ASX: BEAR).

Buy quality ASX 200 shares during the crash

You’ve heard my least favourite way to invest during a share market crash, now here is my favourite. Buy ASX 200 shares! If you remain fully invested, I would recommend dollar cost averaging a portion of each paycheck into the market. If you have cash waiting to be deployed, I still think that you should stage it into shares to avoid missing out on depressed prices.

In my view, you should look for high quality, profitable companies with strong balance sheets, and growth companies that have seen their lofty valuations cut more than their fundamental business. Perfect examples of these are CSL Limited (ASX: CSL) and ETFS FANG+ ETF (ASX: FANG).

Foolish bottom line

Over the long-term, high quality ASX 200 shares should continue to be a life changing asset to own. Potential share market crash or not, continuing to invest in the right businesses will stand you and your family in good stead.

More reading

• Is the Super Retail share price cheap today?
• Down 5% in 1 day: Are Bendigo and Adelaide Bank shares a buy?
• 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%

Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. 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 believe that ASX dividend shares are great options for income.

The official RBA interest rate is now just 0.25%. You won’t get much interest from a bank account. I’d want to make my money work harder than that, so I’d go for ASX shares that will be good dividend picks.

However, I don’t think that most ASX blue chips are the answer. We have seen dividend cuts from shares like National Australia Bank Ltd (ASX: NAB) and Sydney Airport Holdings Pty Ltd (ASX: SYD) during this COVID-19 era.

I think these ASX dividend shares could be much better ideas for long-term income:

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a listed investment company (LIC). The job of a LIC is to invest in other assets on your behalf. LICs are good options to be ASX dividend shares because they can turn investment returns (including capital growth) into a consistent dividend for their shareholders.

This LIC is quite different to most other LICs on the ASX. It doesn’t charge any management fees or performance fees. Instead, it donates 1% of its net assets each year to youth charities. Future Generation invests in the funds of fund managers who invest in ASX shares. These fund managers don’t charge any fees so that Future Generation can make those donations to youth charities.

Its investment returns are compelling. At the end of June 2020 it reported that over FY20 its gross portfolio performance showed a decline of just 1.2%, outperforming the S&P/ASX All Ordinaries Accumulation Index by 6% (which fell 7.2%).

At the current Future Generation share price it offers a grossed-up dividend yield of 7%. The share price is trading at an 11.5% discount to the June 2020 net tangible assets (NTA) per share. That means you’re buying $1 of assets for less than $0.90.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts has one of the best ASX share dividend records around. It has grown its dividend every year since 2000. It has actually been listed since 1903 and it has paid a dividend every single year including through world wars, recessions, the Spanish Flu and any other disaster you can name over the past century.

It’s an investment house that’s invested in a variety of listed and unlisted businesses. Some of its main ASX share investments are: TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), Palla Pharma Ltd (ASX: PAL) and Clover Corporation Limited (ASX: CLV).

Some of its unlisted assets include swimming schools, agriculture, luxury retirement living and soon it will be involved in regional data centres.

Soul Patts has defensive assets which are well diversified. The investment conglomerate continues to diversify its portfolio and it has a strong focus on cashflow. Each year it tells investors what its regular operating cashflows are – this is the investment income minus operating expenses (and a few other small items). Soul Patts funds its dividend from its annual net cashflow. In FY19 it only paid out 80% of its net cashflow.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.2%.

APA Group (ASX: APA)

I think APA is a high-quality ASX dividend share. It has increased its distribution every year for the past decade and a half.

The business 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.

It generates a reliable source of cashflow from its national customer base. This allows APA to pay a dependable distribution to shareholders each year. That’s why it was able to stick to its annual FY20 guidance of 50 cents per unit.

Using the FY20 annual distribution, at the current APA share price, it’s trading with a 4.5% distribution yield. I think it’s very likely that FY21 will see another increase for investors.

Foolish takeaway

I really like all three of these ASX dividend shares. At the current prices I think Future Generation looks like the best value, but Soul Patts has a great dividend history and it’s the one that I’d rely on for my investment income in retirement because of its reliability.

More reading

• 2 quality ASX 200 shares to buy and hold beyond 2027
• How to create a yearly income of $65,000 in dividends
• Fund managers have been buying these ASX shares
• Top ASX dividend shares to buy in July 2020
• What I’m looking for in dividend shares during COVID-19

Tristan Harrison owns shares of FUTURE GEN FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA 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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Fortunately for income investors in this low interest rate environment, there are a good number of shares on the ASX paying shareholders generous dividends.

Three which I think are quality options right now are listed below. Here’s why I would buy them:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

I think ANZ could be a good option for income investors. I believe the selloff of its shares has been overdone and has left them trading at an attractive price of just 13x estimated FY 2021 earnings and 0.9x FY 2021 book value. And while dividend cuts are inevitable, I’m expecting the banking giant to still pay one which provides a very generous yield next year. I’m forecasting a partially franked dividend of $1.05 per share in FY 2021. Based on the current ANZ share price, this will provide investors with a very generous forward 5.7% yield.

BHP Group Ltd (ASX: BHP)

Another dividend share to consider buying is BHP. I believe the Big Australian is well-positioned to generate strong free cash flows in FY 2020 and FY 2021 thanks to its low cost operations and favourable commodity prices. This is particularly the case for its iron ore operations, which are benefiting from spot prices of ~US$110 a tonne. This compares to its full year cost guidance of just US$13-14 per tonne for the Western Australia Iron Ore operation. Based on the latest BHP share price, I estimate that its shares offer investors a forward fully franked ~4.9% dividend yield.

Woolworths Limited (ASX: WOW)

A final ASX dividend share to consider buying is Woolworths. I think the conglomerate would be a good option for income investors due to its quality brands, their defensive qualities, and their positive long term outlooks. Combined with its supply chain improvement plans, I believe the company is well-positioned to continue growing its earnings and dividend at a solid rate over the next decade. Based on the current Woolworths share price, I estimate that its shares provide investors with a fully franked 3% FY 2021 dividend yield.

More reading

• 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
• Cedar Woods share price edges higher on announcement
• Are our ASX bank shares expensive by global standards?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths 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 S&P/ASX 200 Index (ASX: XJO) was out of form and started the week on a disappointing note. The benchmark index fell 0.5% to 6,001.6 points.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 expected to rebound.

It looks set to be a positive day of trade for the ASX 200 index on Tuesday. According to the latest SPI futures, the benchmark index is expected to open the day 45 points or 0.75% higher at the open. This follows a positive start to the week on Wall Street which saw the Dow Jones edge higher, the S&P 500 rise 0.85%, and the Nasdaq jumped 2.5% higher. The S&P 500’s gain means it is now in positive territory for 2020.

Tech shares on watch.

Tech shares including Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) could be on the rise today after an incredibly positive night of trade for their U.S. counterparts. The tech-focused Nasdaq index jumped 2.5% overnight thanks to strong gains by the likes of Amazon, Apple, Microsoft, and Google parent, Alphabet. Amazon was the star of the show with a gain of almost 8%.

Oil prices edge lower.

It could be a positive day for energy producers such as Oil Search Limited (ASX: OSH) and Santos Ltd (ASX: STO) on Tuesday after oil prices pushed higher. According to Bloomberg, the WTI crude oil price rose 0.3% to US$40.71 a barrel and the Brent crude oil price climbed 0.2% to US$43.22 a barrel. Coronavirus vaccine hopes supported oil prices.

Gold price rises.

Gold miners including Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could be on the rise again on Tuesday after the gold price strengthened further. According to CNBC, the spot gold price rose 0.45% to US$1,818.5 an ounce. Overnight the price of the precious metal hit its highest level since September 2011.

Commonwealth Bank given sell rating.

Analysts at Goldman Sachs believe the Commonwealth Bank of Australia (ASX: CBA) share price could be going lower from here. Ahead of its full year results release next month, the broker has retained its sell rating and $65.00 price target on the banking giant’s shares. This price target implies potential downside of over 10%.

More reading

• Where to invest $5,000 into ASX shares right now
• Market close: ASX 200 falls 0.5%
• ASX investors were buying these 5 international shares last week
• Why the BlueScope share price is outperforming today
• Are you a ‘risky’ investor in ASX 200 shares?

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 Altium. The Motley Fool Australia owns shares of Appen 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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