Tag: Motley Fool Australia

How to start investing in shares on the Australian stock market?

The first step to invest in shares is setting up a trading account. In this article I will give a beginner’s explanation to what is what and which platform I use to buy shares in Australian companies listed on the ASX.

A stock exchange is a market place where stocks can be exchanged between buyers and sellers. To place orders (buying or selling stocks) on an exchange you need to be registered to a financial institution that is licensed to buy shares on your behalf (a bank trading subsidiary). You need to have an account in a bank to be able to buy shares. It is obvious but it is also why an individual can’t buy shares in an other country so easily. It is not possible for an individual to open a bank account in a country they are not a resident or citizen. Of course Australian banks and brokers offer services to buy international shares but it is a little more paperwork. I have set up an international trading account with the Commonwealth bank of Australia to buy shares in the US and I will explain how in an other article.

Most banks offer services to trade shares. Buying and selling shares is called “placing an order” or “trading”. An order is a set of requirements that list the what, when, who, how much you want to buy or sell. Placing an order cost money. This is the fee a bank or broker will charge to send your order to the stock exchange. Professional traders use brokers or banks with low fees on orders because they place a lot of orders each day. In my case I only place a few orders a month so I don’t mind paying $10 per trade because I invest in the long term.

There is a minimum amount of $500 required to buy shares in Australia. In the US there is no minimum.

My setup: Commonwealth bank of Australia

First I opened a Smart Access account with Commbank. (See all account here) Their standard account is called Smart Access. It costs $4 per month unless you make a deposit of $2000+ on the account. It comes with your typical online services and a mobile app called Commbank.

Commbank Smart Access Account
ACCOUNTSDESCRIPTIONFEES
Netbank AccountTo transfer money in and out of Commbank$10 per month (unless deposit of $2000 per month)
CDIA Account (or trading account)To provision money to buy shares or receive money when selling sharesFree
Commsec Shares AccountTo see the total balance of investmentsFree
Commsec AccountPlace orders on ASXFree
Commsec mobile AppPlace orders ASX$10 per trade

I set up a direct transfer of $1000 per month to provisioned my account. The money can’t be sent directly to the CDIA account but transit through Netbank to CDIA. I make 2 orders per month of roughly $500 each. I explain why I invest in the company I select in the “We bought.”

Where to find inspiration to select Australian stocks?

Market index

The market index website has a great list of companies sorted by broker consensus. It gives a good glance at what’s the overall “sentiment” on ASX top 300 companies. Looking at at the “Strong buy” list and noting them down for future analysis is a good way to find potential candidates for success. https://www.marketindex.com.au/broker-consensus

Motley Fool

Subscribing to “Extreme opportunity” newsletter. They have some good analysis on some company. I only pick one of their stock every 3-4 months as I found their recommendations to not be always good.

Yahoo finance

Still one of the best finance mobile app around. You can add and remove stocks easily to keep an eye on a watchlist. Quite useful for US stocks. Their suggestion of “similar company” when browsing a specific company is great to discover new companies.

At work

Keeping an eye out. Working in big or small companies can give you ideas on useful companies. For example if your company use providers or partners with big names, chances are other companies are using them too. I found that a lot of similar big corporations use the exact same providers. Investing in those company has proven to be a win most of the time.

Reddit

Reddit is great to find inspiration and get the “sentiment” on companies. It is a wild community and its reactivity on some subject can’t be matched by any other media.

Twitter

Some accounts are really good for inspiration.

How much return on investment can you expect?

This varies on a number of thing.

  • The length of your investment
  • The number of companies you invest in
  • The diversification of your portfolio.

In my case +22.42% when I am writing this article. It was +14% in 2019.

I invest in companies for the long term. I don’t care if a company does well over a 6 months period because I rarely sell stocks.

I buy a maximum of $500 worth of shares in companies I select unless I have a really good intuition. So the maximum I can lose is $500 if the company valuation plummet. There is no maximum on the other side of the scale. So the companies with high growth can out balance the company at loss.

As per today, I invested in 48 companies listed on the ASX. 24 are in the green and 24 are in the red. Below are the best and worst companies I own. It illustrates that balancing.

I bought CANN Group at $2.366 4 years ago and is now worth $0.285.

I bought Camplify at $1.437 about 6 months ago and it is now trading at $4.00.

Before that Appen (ASX:APX) was my top stock. I bought it for $9.645 4 years ago. It went to $40 and is now back to $9.5

3 excellent ASX dividend shares you can buy right now

dividend shares

With low interest rates here to stay for some time to come, I believe the share market remains the best place to earn a passive income.

But which dividend shares should you buy? Three ASX dividend shares that I think would be great options are listed below:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust which I believe is well-positioned to the continue its positive form during the pandemic and beyond it. This is because BWP’s warehouses are predominantly leased to home improvement giant, Bunnings Warehouse. I believe this is a fantastic tenant to have, especially given the way Bunnings continues to grow its sales during the crisis. I believe this means the risk of store closures and rental defaults is extremely low and periodic rental increases remain possible. At present I estimate that its units offer a 4.6% FY 2021 yield.

National Storage REIT (ASX: NSR)

I think this storage giant could be a good option for income investors. Although it is inevitable that National Storage will be impacted by the pandemic, I don’t believe this impact will be as negative as some of its real estate peers. This should allow it to continue paying a decent distribution during the crisis and then return to growing it modestly each year once things return to normal. Based on the current National Storage share price, I estimate that it offers a 4.4% FY 2021 distribution yield.

Rural Funds Group (ASX: RFF)

A final ASX dividend share to consider buying is Rural Funds. I think the agriculture-focused property trust is is one of the best income options. This is due to the quality and diversity of its assets and its very positive long term growth outlook. I believe Rural Funds strong portfolio puts it in a position to continue growing its distribution during the pandemic and beyond. In FY 2021 it expects to pay shareholders a 11.28 cents per share distribution. Based on the latest Rural Funds share price, this equates to a 5% yield.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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.

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5 things to watch on the ASX 200 on Thursday

ASX share

On Wednesday the S&P/ASX 200 Index (ASX: XJO) ended its winning streak and dropped slightly lower. The benchmark index fell 0.1% to 6,132 points.

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

ASX 200 expected to jump.

The ASX 200 looks set to jump higher on Thursday after a very positive night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is set rise 43 points or 0.7% at the open. In the United States the Dow Jones rose 1.05%, the S&P 500 climbed 1.4%, and the Nasdaq index stormed 2.1% higher.

Telstra result, dividend on watch.

The Telstra Corporation Ltd (ASX: TLS) share price will on watch today when it releases one of the most eagerly anticipated results of earnings season. The main focus will of course be on its dividend. Opinion is divided on whether the telco giant will be able to maintain its 16 cents per share fully franked dividend. Goldman Sachs expects this dividend to be maintained. It is also forecasting a 22% decline in net profit after tax to $2.4 billion.

Oil prices rebound.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could be on the rise on Thursday after oil prices rebounded. According to Bloomberg, the WTI crude oil price is up 2.2% to US$42.53 a barrel and the Brent crude oil price is 1.8% higher to US$45.31 a barrel. A larger than expected inventory drop in the U.S. supported prices.

Treasury Wine Estates FY 2020 results.

Also on watch today will be the Treasury Wine Estates Ltd (ASX: TWE) share price. This morning the wine company is due to release its FY 2020 results. According to a note out of Goldman Sachs, its analysts expect the company to report group sales of $2.65 billion and EBITS of $538.1 million. The latter is down 21% on the prior corresponding period.

Gold price lower.

Gold miners Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) will be on watch on Thursday after the gold price failed to rebound from yesterday’s heavy decline. According to CNBC, the spot gold price is down 1% to US$1,926.7 an ounce. Better than expected economic data sent bond yields higher and put pressure on the gold price.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

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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 and Treasury Wine Estates 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 5 things to watch on the ASX 200 on Thursday appeared first on Motley Fool Australia.

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2 ASX shares that every investor should own

Buy stock

I think there are a few ASX shares that every investor should own.

Some ASX shares may not be suitable because they don’t pay a dividend. Other ASX shares may disappoint because they don’t have enough growth potential – such as a business like Commonwealth Bank of Australia (ASX: CBA).

I own these two ASX shares in my portfolio and I think every investor would benefit by having them in their portfolio:

Altium Limited (ASX: ALU)

I think Altium, an ASX tech share, has a good chance of becoming one of the ASX’s future large blue chips.

It develops and provides electronic PCB software used to design the devices and vehicles of the future. It’s already being used by many of the world’s leading tech businesses like Amazon, Microsoft, Google, Telsa, Space X, John Deere and Broadcom.

I believe that Altium is a good diversified play on the world becoming increasingly technological. The ‘internet of things’ trend is only going to keep going in one direction in my opinion.

FY20 was a pretty difficult year because of COVID-19. Revenue only grew by 10%. However, there was good progress with its aim of becoming the world’s leading electronic PCB software business by 2025, its subscription base increased by 17% to over 50,000 during the year. Altium is aiming for 100,000 subscribers by 2025. This should help deliver US$500 million of total revenue.

Altium has a number of financial factors that make it a very appealing long-term ASX share. It has no debt. Altium has a growing cash balance. Its operating profit margins are growing over the long-term and its dividend is steadily rising as well – though I wouldn’t expect much growth from the final FY20 dividend.

If Altium can become the clear market leader by FY25 then I think Altium could easily beat the market over the next five years. At the current Altium share price it’s trading at 49x FY22’s estimated earnings.

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

Soul Patts is another ASX share that I think every investor should own.

I think it’s the type of share that you can invest in and not look at for another five or ten years. It’s very long-term focused.

Soul Patts is an investment house that is invested in a variety of industries like telecommunications, building products, property, pharmacies, swimming schools, resources and listed investment companies (LIC). Some of its biggest positions include TPG Telecom Ltd (ASX: TPG) and Brickworks Limited (ASX: BKW).

I think Soul Patts is worth being in every portfolio because it is a long-term market-beater and it’s also a really good dividend share. It has grown its dividend every year for two decades in a row.

In its FY20 half-year result the ASX share showed that over the past 20 years it has outperformed the S&P/ASX All Ordinaries Accumulation Index by an average of 4.6% per annum. Over the past five years it had outperformed the index by an average of 4.4%.

I believe that Soul Patts can continue to outperform the ASX over the long-term from this point as well.

It’s defensively positioned, so I think it can do well even if COVID-19 causes more problems. Two of its largest investments, TPG and Brickworks, have large levers to grow their profit and value over the long-term. TPG is going through a merger with Vodafone Australia whilst Brickworks is expanding in the US and building a large distribution warehouse for Amazon.  I like the growth sectors that Soul Patts is investing in recently such as regional data centres and agriculture.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.1%.

Foolish takeaway

I think both of the above ASX shares are among the best that Aussie investors could buy. At the current share prices I’d probably buy Soul Patts first – I think the next four months could be volatile for a higher-priced share like Altium. I want to see what Altium’s management comments for FY21 are later this month when it releases its FY20 result.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

More reading

Tristan Harrison owns shares of Altium and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company 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 2 ASX shares that every investor should own appeared first on Motley Fool Australia.

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