The S&P/ASX 200 Index (Index:^AXJO) is surging higher on encouraging news of a possible vaccine for COVID-19 and comments from US Federal Reserve head Jerome Powell on more stimulus.

It seems the Fed is not running out of juice to liquor-up financial markets, while Boston-based biotech Moderna announced better than expected early trial results.

If the bulls are right about the worst being over, it will have implications for the performance of the big four ASX banks.

Passing the baton

During the meltdown, it’s the Commonwealth Bank of Australia (ASX: CBA) share price that held up better than its peers. That’s understandable as investors are willing to cough up a premium during a crisis to hold the highest quality and safest domestic bank.

But if animal spirits are running wild, the tide will turn. Investors will be more aggressively turning to value buys and this means beloved CBA is likely to be left behind in the rebound.

The question then is which of the other three big banks will take the crown? There isn’t much difference in valuations of Australia and New Zealand Banking GrpLtd (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX:NAB).

Best bank for the COVID-19 rebound

But NAB seems to be a hot favourite among some leading brokers. For instance, Goldman Sachs put the stock in its “conviction” buy list as NAB is its top pick in the sector.

The broker is bullish on the bank due to its dramatic improvement in operational performance in recent years and it sees better revenue potential given NAB’s bigger exposure to small and medium sized business lending.

Meanwhile, JP Morgan is also backing NAB in the four-horse race. While the bank reported a disappointing first half profit result recently, the broker believes it displayed the most resilient top-line if you excluded the bank’s underperforming Markets division.

Don’t discount CBA just yet

Coincidentally, both brokers rate CBA a “sell” due to its lofty valuation. I own shares in all the big four banks but remain overweight on CBA as I don’t believe we have seen the last of the coronavirus volatility.

Let’s not forget that CBA also continues to win market share for home loans despite its dominance in the sector.

Just as importantly, my experience tells me that its seldom premium valuations that really hurt my share portfolio performance. The real culprits are balance sheet and governance issues – factors that weigh more heavily on the other three.

Buy into NAB’s SPP

But I agree that NAB is likely to pull ahead of its peers if the skies are as blue as it appears today. If you share my belief that we have seen the worst of the coronavirus market meltdown and are happy to stomach the volatility, NAB looks enticing.

This is why I plan to participate in NAB’s share purchase plan, which closes this Friday. I doubt you can buy NAB shares lower than the $14.15 a share offer price again for a long time.

Just remember not to put all your eggs into one basket. It’s better to hold a few bank stocks for diversification.

More reading

• Should you throw $3,000 into Altium shares today?
• Cochlear share price edges lower on patent infringement news
• 3 ASX shares to instantly diversify your portfolio
• Leading brokers name 3 ASX shares to sell today
• 5 ASX 200 dividend shares for an economic recovery

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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 The ASX big bank stock most likely to outperform in the COVID-19 recovery appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2z9VyKK

I think Warren Buffett is one of the world’s best investors. Berkshire Hathaway doesn’t pay a dividend, but he likes to invest in shares that do pay a dividend. I think there are some ASX dividend shares that could be worth buying.

Here are some great income ideas that could be worth buying during these coronavirus times:

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

Soul Patts is often described as the Australian version of Berkshire Hathaway. It invests in both listed and unlisted businesses & assets.

Some of the ASX shares that it’s invested in include TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and Clover Corporation Limited (ASX: CLV). Some of its unlisted investments include swim schools and agriculture.

Warren Buffett’s preferred holding period for shares is forever. I think Soul Patts is well placed to keep growing for decades to come and it has already been around for over 100 years.

As a bonus it has a grossed-up dividend yield of 4.7%. This dividend has increased every year since 2000. The dividend is purely funded by the investment income it receives, less expenses.

APA Group (ASX: APA) 

APA Group is an ASX energy infrastructure giant. I think Warren Buffett would really like this share because Berkshire Hathaway Energy is one of the US business’ biggest divisions.

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 is actually looking for opportunities in the US which would be a good way to strengthen and diversify earnings further.

The energy giant currently offers a distribution yield of 4.4%.

Duxton Water Ltd (ASX: D2O) 

I think Warren Buffett’s share choices and his previous comments show he likes investing in businesses that are ‘essential’ for western life like Apple, energy and insurance.

Water is an integral part of the agriculture process for farmers. Duxton Water provides access to water entitlements which can either be leased for multiple years or it can provide short-term access.

The amount of water that is now leased means Duxton Water’s board has been confident enough to project growing dividends for the next two years.

I calculate that based on the next 12 months of dividends the forward grossed-up dividend yield is 6.25%.

Which Warren Buffett ASX dividend share is best?

I think APA looks fairly priced now, so I wouldn’t call it a buy. Soul Patts is the one with the best dividend record and I believe it’s the one that’s most like Berkshire Hathaway. So Soul Patts would be the one I’d go for as a Warren Buffett ASX dividend share.

More reading

• 3 ASX shares to instantly diversify your portfolio
• 3 ASX 200 dividend shares I’d buy today
• These mid cap ASX shares could grow into large caps in the future
• 2 ASX dividend shares to rescue your income hopes
• Why I think it’s time to buy this ASX 200 share

Tristan Harrison owns shares of DUXTON 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. The Motley Fool Australia has recommended DUXTON 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 3 Warren Buffett ASX dividend shares to buy right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3g8qMTl

If you’re in retirement then you’ll no doubt be well aware of how difficult it has become to generate an income from term deposits and savings accounts.

Unfortunately, I suspect it could be many years before we see interest rates at levels that are sufficient to generate a liveable income from.

But don’t worry because there are a large number of shares on the ASX which I believe could be part of a successful retirement portfolio.

Two top dividend shares I think retirees ought to consider are listed below. Here’s why I like them:

Coles Group Ltd (ASX: COL)

I would argue that Coles is the best share for a retiree to own right now. This is due to its solid long term growth potential, generous dividend policy, and defensive qualities. The supermarket giant has displayed the latter this year with its strong sales growth during the pandemic. I’m not the only one that thinks Coles is a buy. A recent broker note out of Goldman Sachs reveals that it has Coles on its conviction buy list with an $18.60 price target. This implies potential upside of approximately 21% for its shares over the next 12 months. But just as good, the broker is forecasting a 65 cents per share fully franked dividend in FY 2021. This represents a 4.25% forward dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another top option for retirees to consider buying is Telstra. Like Coles, I think the telco giant has a lot of the qualities required for a spot in a retirement portfolio. It has defensive earnings, a generous dividend yield, and decent growth prospects. While the latter may be a couple of years away, I think Telstra could return to growth potentially as soon as 2022 when the NBN headwinds ease and its cost cutting takes full effect. In the meantime, I’m optimistic that its free cash flow will be sufficient to maintain its current dividend of 16 cents per share. Though, if a much-speculated cut to 14 cents per share is made in response to the pandemic, its shares will still provide an above-average yield. 16 cents per share equates to a fully franked 5.1% yield, whereas 14 cents per share would be a 4.5% yield.

More reading

• Is the Bega Cheese share price a strong ASX buy today?
• Forget term deposits and buy these top ASX dividend shares
• 2 ASX shares I would buy for growth and income
• Latest ABS data reveals how Australians are responding to COVID-19
• Why Macquarie, Telstra, United Malt, & Westpac are dropping lower

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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 2 ASX 50 shares for retirees to buy right now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3g8qLPh

The Altium Limited (ASX: ALU) share price is trading higher today – up 0.26% at the time of writing to $34.96 a share.

Although Altium is trailing the performance of the broader S&P/ASX 200 Index (ASX: XJO) today (which is up over 2%), it’s still been a fantastic few weeks to hold Altium shares. Remember, this is a company that was asking almost $23 just eight weeks ago – meaning an investor that bought in then would be sitting on a healthy gain of almost 50% today.

But is there still room for Altium shares to run?

Here’s why you might (or might not) want to throw $3,000 into Altium shares today.

Are Altium shares a good deal today?

Altium is one of the ASX’s most exciting tech stocks. It’s even part of the most-exclusive WAAAX club of tech market darlings that have captured investors’ attention over the past couple of years.

The company makes and markets software (creatively called Altium Design) that aims to assist electrical engineers with designing and producing printed circuit boards. It sells this software through the highly lucrative Software-as-a-Service (SaaS) model as well, which sets the company up very well for strong recurring revenue streams.

Printed circuit boards (PCBs) are an essential component of every mildly complex modern electronic device you can think of. Everything from smartphones and TVs to refrigerators and cars are full of PCBs and each one requires a different and unique design. The future possibilities are truly endless, in my view.

Altium has found a brilliant way to exploit this niche with its Design software, which has proved remarkably popular in its field. Altium has long had a goal of hitting 100,000 subscribers by 2025 (for its software, not its YouTube channel), which it looks well on the way to achieving.

But one of the best things about Altium shares in 2020? Its management doesn’t see too much of an impact on its core business from the outbreak of the coronavirus, and subsequent economic shutdowns. In a recent ASX release, the company’s CEO stated:

“At an industry level, electronic design is holding up relatively well in the new environment as engineers use excess time and capacity from the slowdown in manufacturing and supply chain to revert back to prototype designs.”

Although Altium did withdraw its 2020 guidance at the same time, I think the move was more precautionary that foreboding, judging by the above statement.

Foolish takeaway

Altium is a high-growth company that I believe has a bright future ahead of it. It’s a company sitting in a powerful tailwind that should last well into the decade and beyond.

On current prices, I think Altium is a little expensive (with a price-to-earnings ratio of 56.5). But, if you’re a true believer in Altium and have a long time horizon, it still has the potential to be a good investment today, in my view.

More reading

• The ASX big bank stock most likely to outperform in the COVID-19 recovery
• Cochlear share price edges lower on patent infringement news
• 3 ASX shares to instantly diversify your portfolio
• Are ASX 200 travel shares in the buy zone?
• Is the Bega Cheese share price a strong ASX buy today?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. 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 Should you throw $3,000 into Altium shares today? appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2WKtQ05

So far, Australia’s ability to effectively combat the spread of coronavirus, minimise the impact on our healthcare system and begin rolling back social distancing measures has given the market cause for optimism. This is all great news and gives the Australian economy the best possible chance of rebounding from the crisis as quickly as possible. However, there is still a fair amount of uncertainty on the horizon. The underlying financial impact the coronavirus crisis has had on many companies may not be fully known until they start reporting their results in a few months’ time.

Given all this, it could be a good idea to start fortifying your portfolio with some solid defensive companies, including ASX 200 healthcare shares.

ASX 200 healthcare shares I’d buy today

Healthcare shares tend to perform well even in a crisis, as demand for their products remains robust. And in a healthcare crisis such as the one we are facing, many of these companies see demand for their products surge. Here are 3 companies I believe will deliver strong FY20 results and could insure your portfolio against potential market volatility later this year.

Sonic Healthcare Limited (ASX: SHL)

As a global healthcare company specialising in laboratory medicine, including diagnostics and pathology, Sonic Healthcare has been heavily involved in the international fight against coronavirus. It operates in many of the regions hit hardest by COVID-19, including the USA, Germany, the UK and Belgium.

The company officially withdrew its FY20 earnings guidance in late March, citing the uncertain economic conditions caused by the coronavirus across many of its markets. However, in the same update, the company noted that so far this year it has been performing in line with its previously issued guidance. It also acknowledged the frontline role it was playing to combat the pandemic. This includes by testing thousands of patients for COVID-19 as well as continuing to increase its testing capacity in many markets.

Sonic’s share price has rallied strongly since plunging to a 52-week low of $20.06 in late March. Currently trading at a little over $27, however, it is still well short of its pre-coronavirus high of $32.07.

ResMed Inc (ASX: RMD)

The share price of ASX 200 healthcare company ResMed was also savaged during the mid-March panic-selling spree. However, after plunging below $20 for the first time since October last year, the ResMed share price rebounded just as quickly. It is currently still up over 15% for 2020 and within touching distance of the 52-week high of $26.66 it recorded prior to the crash.

Based out of San Diego, ResMed specialises in the development of medical devices for the treatment of respiratory illnesses. It ramped up production of its ventilators threefold in the March quarter in order to help treat the mass influx of patients suffering with COVID-19. The company has won contracts with both the US and Australian governments to supply thousands of ventilators.

In its March quarterly update, ResMed reported revenue growth of 16% over the prior year’s comparative period to US $770 million, while net operating profit was up by 39%.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

Like ResMed, Fisher & Paykel Healthcare specialises in medical devices for the treatment of acute respiratory conditions. However, unlike ResMed, the company does not produce ventilators. Instead, it manufactures other equipment, including humidifiers, which are still required for the treatment of COVID-19 patients. Like ResMed, Fisher & Paykel has ramped up production in order to meet the increased demand brought about by the pandemic.

Fisher & Paykel’s share price has been largely unaffected by the coronavirus pandemic. While most other share prices were plummeting in March, the company’s shares raced to a 52-week high of $31.47. Investors were buoyed by the fact that, in the midst of all the panic-selling, the company upgraded its full year operating revenue guidance to NZ$1.24 billion. Fisher & Paykel also advised its net profit after tax is expected to be in the range of NZ$275 million to NZ$280 million.

More reading

• Why Fisher & Paykel Healthcare, Mesoblast, Northern Star, & TechnologyOne are tumbling lower
• I would reinvest my Macquarie dividends in these top ASX shares
• 3 ASX healthcare shares to buy for strong long-term growth
• The next ASX sector in a post COVID-19 earnings upgrade cycle
• How can the ASX 200 soar with rising unemployment?

Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. and Sonic Healthcare 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 3 ASX 200 healthcare shares I’d buy today appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2AK82JD

I’ve been looking at initial public offerings (IPOs) recently to see how you would have fared if you invested in them.

The last one I looked at was Altium Limited (ASX: ALU), which has rewarded its IPO investors handsomely over the last couple of decades. This is even after a few major hiccups over the years.

Today I thought I would take a look at private hospital operator Ramsay Health Care Limited (ASX: RHC).

Ramsay Health Care.

Ramsay Health Care came into existence in 1964 when founder Paul Ramsay purchased a guesthouse on Sydney’s North Shore called Warrina House and converted it into a psychiatric hospital.

Over the next decade and a half the company expanded its psychiatric hospital business before diversifying into medical and surgical businesses. In 1978 the company built its first surgical hospital – the Baringa Private Hospital in Coffs Harbour.

Fast forward to today and Ramsay is one of the largest healthcare companies in the world with a total of 480 facilities across 11 countries.

The Ramsay IPO.

In September 1997 Ramsay Health Care floated on the Australian Stock Exchange.

Details of the IPO are surprisingly limited, but according to Yahoo Finance, Ramsay’s shares were trading at an adjusted price of $1.15 on September 30 1997.

This means that $10,000 invested into Ramsay’s shares on that date would have yielded you 8,696 shares.

This afternoon Ramsay’s shares are changing hands at $67.22. Which means those 8,696 shares have a market value of almost $585,000 today.

In addition to this, although Ramsay has deferred its dividend for FY 2020 due to the pandemic, in time I expect its dividend to return to normal and then begin its growth trajectory again.

This will be good news to long term investors, because in FY 2019 the company paid dividends of $3.30 per share.

This means those 8,696 shares generated total dividends of $28,700 in FY 2019. Not bad for a $10,000 investment back in 1997!

More reading

• ASX 200 climbs 1% in positive start to the week
• Why the Ramsay share price is climbing
• How to invest $5,000 in ASX 200 healthcare shares today
• 5 ASX 200 winners and 5 losers of the week
• These small cap ASX shares could be stars of the future

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Ramsay Health Care 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 If you invested $10,000 in the Ramsay Health Care IPO, this is how much you’d have now appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/2X3HaM0

The Cochlear Limited (ASX: COH) share price is edging lower today as the company announced it has been denied an appeal rehearing in its US patent infringement case.

While the S&P/ASX 200 Index (ASX: XJO) is currently storming 1.92% higher on the back of COVID-19 vaccine news, the Cochlear share price is down 2.54% for the day at $184.21.

Previous developments

This morning’s announcement relates to Cochlear’s ongoing court battle with Alfred E. Mann Foundation for Scientific Research (AMF) and Advanced Bionics (AB).

In November 2018, the US District Court in Los Angeles ruled against Cochlear and awarded damages totalling approximately US$268.1 million to AMF and AB. The company appealed this decision soon after.

Prior to this, the case had been dragging on for years. Back in 2014, a jury found that a group of Cochlear’s implants, sound processors, and software infringed 2 of AMF’s patents. Since then, there have been numerous rulings in favour and against Cochlear.

The result of the appeal of the November 2018 decision was finally handed down in March this year, with the US Court of Appeals for the Federal Circuit in Washington D.C. affirming the previous decision. As such, the court ordered the Cochlear to pay the US$268 million of damages to AMF and AB.

At the time of the announcement, the company stated in an ASX release it would “seek an en banc review by the full Court of Appeals in a petition for a rehearing”.

What did Cochlear announce today?

This morning, the company revealed that the US Court of Appeals had denied its petition for a rehearing of the appeal.

The judgement will become final on 26 May 2020 and Cochlear will now pay approximately US$280 million, which includes post-judgment interest. The company noted that it has committed loan facilities available to fund the payment.

Meanwhile, a decision is still pending in the US District Court on AMF and AB’s application for pre-judgment interest of US$123 million and attorney fees of $15 million. Cochlear has opposed both applications and the associated calculation methodology for the amounts.

As there is significant uncertainty over whether Cochlear will be forced to make these payments, the company is treating this exposure as a contingent liability on its balance sheet.

More reading

• The ASX big bank stock most likely to outperform in the COVID-19 recovery
• Should you throw $3,000 into Altium shares today?
• 3 ASX shares to instantly diversify your portfolio
• Are ASX 200 travel shares in the buy zone?
• Is the Bega Cheese share price a strong ASX buy today?

Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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 Cochlear share price edges lower on patent infringement news appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3bL7b8e