Tag: Motley Fool Australia

Although the market was out of form last week, it didn’t stop some ASX shares from charging higher.

In fact, some even managed to climb to new highs on Friday despite the market weakness.

Three ASX shares that achieved this milestone are listed below. Here’s why they are on a high right now:

Damstra Holdings Ltd (ASX: DTC)

The Damstra share price hit a record high of $1.50 on Friday. Investors were buying the integrated workplace management solutions provider’s shares last week after it announced a takeover offer for Vault Intelligence Ltd (ASX: VLT). Management notes that the two companies have highly complementary product sets and respective client bases. This is expected to lead to synergies of $4 million within 12 months of the acquisition. And on the top line, the merged group will have pro-forma revenue and other income of $33 million to $35 million.

Sezzle Inc (ASX: SZL)

The Sezzle share price rocketed to a record high of $8.25 last week before being placed into a trading halt. The catalyst for this was the buy now pay later provider’s second quarter update. During the quarter, Sezzle’s underlying merchant sales came in at US$188 million (A$272.3 million). This represents a 58% quarter on quarter increase and a 349% year on year increase. This strong performance was driven by stellar growth in active customers, active merchants, and repeat usage. Late in the week Sezzle took advantage of its share price rise to undertake a $86.3 million (US$60 million) capital raising. These funds will be used to accelerate its growth strategy and strengthen its balance sheet.

Xero Limited (ASX: XRO)

The Xero share price continued its positive run and hit a record high of $94.31 on Friday. The business and accounting software provider’s shares have been in demand with investors this year thanks to its strong FY 2020 result. During the 12 months, Xero posted a 30% increase in operating revenue to NZ$718.2 million and a 29% jump in annualised monthly recurring revenue to NZ$820.6 million. Based on its strong share price form since the release, investors appear confident there will be more of the same over the coming years.

More reading

• The market is going long on the Afterpay share price but shorting its weaker rival
• 4 ASX shares to buy and hold forever
• Why the P/E ratio is a flawed metric in 2020
• Here are the top 5 ASX tech shares on the All Tech Index
• What does COVID-19 and the payment revolution mean for Afterpay and Sezzle?

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 Damstra Holdings Ltd and Xero. The Motley Fool Australia has recommended Damstra Holdings Ltd and Sezzle 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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It was a tough week for many ASX 200 shares as the S&P/ASX 200 Index (ASX: XJO) slumped 2.3% lower to 5,919.2 points on Friday.

Last week, I was watching Altium Limited (ASX: ALU), NextDC Ltd (ASX: NXT) and Vicinity Centres (ASX: VCX).

It was a tough week for both Altium (-1.7%) and Vicinity Centres (-8.3%) shares while the NextDC share price (+2.6%) fared considerably better.

After another volatile week on the markets, find out why I’m watching St Barbara Ltd (ASX: SBM) and 2 more ASX 200 shares this week.

St Barbara and 2 more ASX 200 shares to watch this week

St Barbara shares had a bullish run last week, closing up 10.0% for the week at $3.63 per share.

I think that strong share price growth could continue given the current market conditions. Investors are wary that the market has roared back to life despite the coronavirus pandemic weighing on economic growth.

ASX gold shares, in general, have outperformed recently but I like the look of St Barbara. Unlike many resources shares, St Barbara actually produces a significant amount of gold. St Barbara reported 181,728 ounces of gold production in its half-year results for a net profit after tax of $39 million.

With increasing market volatility, investors could flock to St Barbara and look to gold as a ‘safe haven asset’.

It isn’t just St Barbara that’s on my watchlist this week. I also think Metcash Limited (ASX: MTS) shares could be set for a resurgence.

Metcash operates the IGA supermarket chain and was an early outperformer in 2020. That came as Aussies stocked up on supplies and panic buying set in, sending supermarket sales soaring.

With tightening restrictions in Victoria, and other states potentially looking to follow suit, Metcash could be back in the buy zone.

Supermarkets remain an essential purpose for leaving the home. As such, I think sales will remain stable or even climb in July. That could make Metcash an in-demand ASX 200 share in this week’s trade.

Finally, Domino’s Pizza Enterprises Ltd. (ASX: DMP) is on my watchlist this week. The Domino’s share price climbed 1.7% last week and that momentum could be set to continue.

Once again, tightening restrictions could work in the pizza chain’s favour. More deliveries and demand for its services could provide a sales boost in 2020. 

That won’t be reflected in the group’s August earnings result, but I think investors could still be looking to invest.

More reading

• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide
• These ASX growth shares could be market-beaters during the 2020s
• 5 things to watch on the ASX 200 on Monday
• Analysis: is the Woolworths share price a buy?
• Top brokers name 3 ASX 200 shares to buy next week

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 Altium. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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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Rocketing ASX payments and buy now, pay later (BNPL) shares weren’t enough to stop the S&P/ASX 200 Index (ASX: XJO) from going backwards last week with a 2.3% loss.

Last week’s market pessimism was in stark contrast to the prior week of trading, which saw the ASX 200 push past the 6,000 point mark once again. After last week, the index is now firmly back below this psychologically-important milestone. Gloomy sentiment following the reintroduction of coronavirus restrictions in Victoria was the main catalyst pulling shares lower. After a sharp uptick in coronavirus transmissions in Victoria, metropolitan Melbourne and one regional shire are now back under lockdown conditions, which is obviously terrible news for all Victorians and Victorian businesses.

Predictably, ASX travel shares were among the worst hit companies on the ASX boards. Corporate Travel Management Ltd (ASX: CTD) led the ASX 200’s losses last week with a 15.2% slide over the period, but Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN) were also bleeding heavily with 9.58% and 8.12% falls respectively.

But despite the market pessimism over new coronavirus restrictions, it seemed nothing could stand in the way of ASX payments and BNPL shares last week.

Afterpay Ltd (ASX: APT) had yet another phenomenal week, rising 7.13% and printing a new record high of $76.62 on Friday. In fact, at one point, Afterpay shares were up more than 15% in just under 48 hours between Wednesday afternoon and noon Friday.

Zip Co Ltd (ASX: Z1P) was also on fire, rising more than 26% last week and printing a new record high of its own at $7.72 on Friday.

Splitit Ltd (ASX: SPT) joined the party with a 16.55% gain, as did Openpay Group Ltd (ASX: OPY) with a 29.2% bonanza.

In other news, gold was also in the spotlight last week. The yellow metal inched closer to its all-time high of US$1,920 per ounce last week when it hit US$1,817 – a 9-year high. Gold is now up almost 20% in 2020 so far, with only another ~5.5% of appreciation needed to break the all-time record.

How did the markets end the week?

After starting last week at 6,057.9 points, the ASX 200 ended trading on Friday at 5,919.2 points – which gives the index a 2.29% loss for the week. Monday saw a relatively muted 0.43% loss, while Tuesday was a flat day. Wednesday was when investors really hit the brakes and saw a 1.5% selloff. Thursday was a day in the green and investors clawed back some of Wednesday’s lost ground. But sentiment decisively shifted on Friday and saw ASX 200 shares lose another 0.82% to put the index firmly into negative territory for the week.

Meanwhile, the All Ordinaries (INDEXASX: XAO) also had a week to forget, starting off at 6,163.7 points and finishing the week at 6,036.3 points for a 2.1% loss.

Which ASX 200 shares were the biggest winners and losers?

Time to fetch the tea and biscuits while we mull over last week’s best and worst performers. As always, we’ll start with the losers:

Worst ASX 200 losers	% loss for the week
Corporate Travel Management Ltd (ASX: CTD)	(15.2%)
Domain Holdings Australia Ltd (ASX: DHG)	(12.5%)
AP Eagers Ltd (ASX: APE)	(10.7%)
Monadelphous Group Limited (ASX: MND)	(10.6%)

As we discussed, embattled ASX travel share Corporate Travel Management took out this week’s wooden spoon. Investors are clearly fearing that the new coronavirus outbreak in Melbourne could potentially lead to further travel restrictions.

Property lister Domain was also in the firing line last week. Increasing lockdowns means fewer house inspections and property market activity, which is clearly bad news for property classifieds companies like Domain.

Investors were potentially also fretting about these impacts for car sales, which could explain why dealership company AP Eagers was also in investors’ bad books last week.

Now we’ve had a glance at last week’s losers, it’s only fair to check out the winners as well. Remember, whilst the ASX payments and BNPL companies we discussed earlier were standout performers, none (with the exception of Afterpay) have yet to make it into the ASX 200 club.

Best ASX 200 gainers	% gain for the week
Netwealth Group Ltd (ASX: NWL)	18.4%
Perseus Mining Limited (ASX: PRU)	11.5%
Mesoblast Limited (ASX: MSB)	8.9%
Megaport Ltd (ASX: MP1)	8.4%

Netwealth was the clear winner from the ASX 200 last week with an 18.4% gain. The catalyst for this string move appears to have been an exciting update for the wealth platform provider, which reported 35% growth in funds under management for FY2020. Net Bad!

ASX gold miner Perseus is next on the list here. As we earlier discussed, gold prices have been on the march lately, which has left many investors looking for avenues (like gold miners) to profit from this trend.

Medical company Mesoblast was also in investors’ good graces with a promising update of its own, whilst cloud infrastructure provider Megaport moved upwards as investors continue to look for winners in this forward-facing space. 

What is this week looking like for the ASX 200?

It’s likely the ASX will really test investors’ sentiment this week as all eyes remain on Victoria and its dreadful new coronavirus outbreak. As a border state, New South Wales is also on high alert and investors and non-investors alike will no doubt be hoping that further cases don’t hop the border.

The return of lockdowns in Victoria is devastating from both a social and commercial perspective. If other states are forced to join Victoria in returning to lockdown, it will likely have a profound impact on the ASX 200 and the share market overall.

This week, I’ll also be keeping a firm eye on the ASX payments and BNPL winners of last week, as well as the gold price.

So before we once more unto the breach, dear friends, here’s a look at how the major ASX blue-chip shares are looking:

More reading

• Here are the 10 most shorted shares on the ASX
• 5 things to watch on the ASX 200 on Monday
• 3 top ASX dividend shares to buy instead of Westpac
• Strengthen your retirement portfolio with these ASX blue chip shares
• Analysis: is the Woolworths share price a buy?

Sebastian Bowen owns shares of National Australia Bank Limited, Newcrest Mining Limited, and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., MEGAPORT FPO, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Macquarie Group Limited, Telstra Limited, and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, COLESGROUP DEF SET, Netwealth, Transurban Group, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended MEGAPORT 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 ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide appeared first on Motley Fool Australia.

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At the start of each week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

I believe it is worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Myer Holdings Ltd (ASX: MYR) remains the most shorted share on the Australian share market with short interest of 12.4%. Investors appear concerned the pandemic could be accelerating the shift away from department stores to online shopping.
• Speedcast International Ltd (ASX: SDA) has short interest of 11.7%. This communications satellite technology provider’s shares remain suspended as it declares itself bankrupt.
• Webjet Limited (ASX: WEB) has seen its short interest jump to 10.7%. Short sellers may be targeting the online travel agent due to potential delays in the recovery of the domestic travel market because of the outbreak in Victoria.
• Inghams Group Ltd (ASX: ING) has 9.5% of its shares held short, which is up slightly week on week. The poultry company looks set to deliver a disappointing result in FY 2020 due to an unfavourable shift in its sales mix.
• Nearmap Ltd (ASX: NEA) has seen its short interest edge lower again to 8.2%. Short sellers continue to close their positions in the aerial imagery and location data technology company after its resilient performance during the pandemic.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest reduce to 8.1%. Short sellers have been going after the regional bank following a soft half year result and a weak outlook. But they may feel the worst is now factored into its share price.
• Galaxy Resources Limited (ASX: GXY) has 8% of its shares held short, which is down week on week. Short sellers have been targeting Galaxy and fellow lithium miners due to sustained weakness in the price of the battery making ingredient.
• Clinuvel Pharmaceuticals Limited (ASX: CUV) has seen its short interest fall to 7.8%. Short sellers may be going after this biopharmaceutical company due to its lofty valuation.
• Orocobre Limited (ASX: ORE) is back into the top ten with short interest of 7.1%. As with Galaxy, ultra low lithium prices have been weighing on this lithium miner’s performance.
• Freedom Foods Group Ltd (ASX: FNP) is in the top ten with 6.9% of its shares held short. The diversified food company recently suspended its shares until 30 October while it looks through its accounts for potential fraud.

More reading

• ASX 200 Weekly Wrap: Rocketing BNPL shares fail to stop ASX 200 slide
• Vocus and 1 other ASX share to buy in July
• 3 large cap ASX shares primed for expansion and M&A activity
• Why the Freedom Foods share price will be suspended until 30 October
• These ASX shares are the winners and losers in the “new normal”

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Freedom Foods Group Limited and Nearmap 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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If you’re a fan of growth shares, then you’re in luck. The Australian share market is home to a good number of companies growing their earnings at a quicker than average rate.

Two top growth shares that I think investors ought to consider buying are listed below. Here’s why I rate them:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

I think this pizza chain operator could be a top option for growth investors. It is the master franchise holder for Domino’s in Australia, New Zealand, Belgium, France, the Netherlands, Japan, Germany, Luxembourg, and Denmark. While its shares have been strong performers this year, I would still invest due to its positive long term outlook.

Domino’s is aiming to grow its global store network by 7% to 9% per annum for the next 3 to 5 years. At the same time, it is targeting same store sales growth of 3% to 6% per annum over the same period. If the company can deliver on both these targets, then it should lead to strong profit growth over the next five years. This could make the Domino’s share price a market beater over the period.

ResMed Inc (ASX: RMD)

Another growth share to consider buying is ResMed. I’m a big fan of the medical device company due to its focus on the growing sleep treatment market. It is also benefiting from increased demand for ventilators at present because of the pandemic.

In respect to the sleep treatment market, the company has previously suggested that there could be upwards of 1 billion people impacted by sleep apnoea worldwide. With the vast majority of these sufferers undiagnosed, it gives ResMed a very long runway for growth in the future. And given the high quality of its portfolio and its high level of investment in research and development, I believe it is well-placed to capture the growing demand. In light of this, I feel the ResMed share price could be a market beater over the 2020s.

More reading

• Why Domino’s and Nanosonics shares could be fantastic buy and hold options
• Altium and these ASX 200 shares could be quality buy and hold options
• Why it’s time to rotate out of JB Hi-Fi share price and these popular ASX stocks: Macquarie
• Goldman Sachs names the ASX retail shares to buy and the ones to avoid
• 3 high quality ASX 100 shares to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

The post These ASX growth shares could be market-beaters during the 2020s appeared first on Motley Fool Australia.

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On Friday the S&P/ASX 200 Index (ASX: XJO) was out of form and finished a disappointing week with a decline. The benchmark index fell 0.6% to 5,919.2 points.

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

ASX 200 set to surge higher.

The ASX 200 looks set to surge higher this morning after a positive end to the week on Wall Street. According to the latest SPI futures, the benchmark index is expected to open the week 95 points or 1.6% higher. On Wall Street the Dow Jones rose 1.4%, the S&P 500 climbed 1.05%, and the Nasdaq pushed 0.65% higher. Positive data from Gilead’s coronavirus treatment trial boosted markets.

Oil prices drop lower.

The coronavirus treatment news appears to have given oil prices a boost as well, much to the delight of shareholders of energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL). According to Bloomberg, the WTI crude oil price jumped 2.4% to US$40.55 a barrel and the Brent crude oil price climbed 2.1% to US$43.24 a barrel.

Gold price softens.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Monday after the gold price softened. According to CNBC, the spot gold price fell 0.1% to US$1,801.9 an ounce. Improving investor sentiment weighed on the safe haven asset.

Afterpay rated as neutral.

Analysts at Goldman Sachs are calling time on the Afterpay Ltd (ASX: APT) share price rally. According to a note out of the investment bank, the broker has given the payments company’s shares a neutral rating with an improved price target of $70.15. While the broker is very positive on the company’s prospects, it feels its shares are fully valued at the current level.

TechnologyOne short attack.

Hong Kong-based GMT Research is back and is targeting enterprise software company TechnologyOne Ltd (ASX: TNE). According to the AFR, GMT Research claims Technology One is using accounting tricks to pull forward revenue and profits. This is “artificially creating growth and hiding a major slowdown.”

More reading

• Analysis: is the Woolworths share price a buy?
• Top brokers name 3 ASX 200 shares to buy next week
• Top brokers name 3 ASX 200 shares to sell next week
• Is it too late to invest in gold?
• The market is going long on the Afterpay share price but shorting its weaker rival

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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While I think Westpac Banking Corp (ASX: WBC) and the rest of the big four banks would be great options for income investors, not everyone is a fan of them right now.

For those investors I think the dividend shares listed below would be great alternatives. Here’s why I would buy them when the market reopens:

BWP Trust (ASX: BWP)

The first ASX dividend share to consider is BWP. I believe the real estate investment trust can deliver consistent income and distribution growth for the foreseeable future thanks to its high quality commercial assets and blue chip tenant. BWP’s warehouses are predominantly leased to home improvement giant, Bunnings Warehouse. Given how Bunnings is one of the best retailers in the country and government stimulus is supporting the home improvement market, I believe the risk of store closures and rental defaults during the pandemic is extremely low. At present I estimate that its units offer a forward 4.7% yield.

Lendlease Group (ASX: LLC)

Another dividend share to consider buying is Lendlease. Although the international property and infrastructure company has had a very disappointing 12 months, I believe the worst is behind the company now. Furthermore, I feel all the bad news is now built into the Lendlease share price and it could be onwards and upwards from here. Especially given its burgeoning global development pipeline, which appears to have positioned the company for solid earnings growth over the 2020s. I estimate that Lendlease will pay a 57 cents per share dividend next year. This equates to a 5% dividend yield.

Transurban Group (ASX: TCL)

A final dividend share to consider buying is Transurban. Its toll roads were virtually empty at the height of the pandemic, but with restrictions easing, traffic volumes have been recovering and toll revenues are improving. And while the situation in Melbourne could stifle its recovery if it escalates from here, I’m confident that traffic levels will return to relatively normal levels next year. In light of this, I’m optimistic it will be in a position to pay shareholders a 49 cents per unit distribution next year. Based on the current Transurban share price, this equates to a 3.6% distribution yield.

More reading

• ANZ said there will be another wave of Victorian businesses collapsing
• The hidden risk to early superannuation withdrawal that no one told you about
• The embattled ASX 200 stocks that could deliver a dividend surprise
• 3 ASX dividend shares to buy in July
• 3 ASX shares for growth, income, and value investors to buy today

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of Transurban 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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If you’re planning to retire in the coming years, then now might be a good time to start thinking about building a retirement portfolio.

If I were constructing a retirement portfolio, I would want to have a number of quality blue chips in it that have solid growth prospects and pay dividends.

With that in mind, here are three top ASX shares which I think could be part of a retirement portfolio:

Coles Group Ltd (ASX: COL)

I think this supermarket giant could be the perfect share for a retirement portfolio. This is because I believe Coles is well-placed to deliver solid earnings growth over the 2020s thanks to its refreshed strategy, defensive business model, and expansion opportunities. And with the company planning to pay out upwards of 90% of its earnings to shareholders, I feel this bodes well for its dividends in the future. At present I estimate that its shares offer a fully franked 3.7% FY 2021 dividend.

Goodman Group (ASX: GMG)

I think Goodman Group would also be a good option for a retirement portfolio. I believe the integrated commercial and industrial property group is well-positioned for growth over the long term due to the strength of its portfolio. It has a focus on high-quality properties in key locations that it believes will deliver sustainable returns for investors. These include logistics and industrial facilities, warehouses, and business parks. One of the key attractions for me is its exposure to the ecommerce market through relationships with Amazon, DHL, and Walmart. And while its dividend yield may not be the biggest, I’m confident it will grow meaningfully in the future.

Telstra Corporation Ltd (ASX: TLS)

Finally, I think that Telstra would also be a quality option for a retirement portfolio. Although its shares have significantly underperformed the market over the last five years, I’m confident the tide is now turning and that a return to growth is on the horizon. This is because the negative impact of the NBN rollout is close to peaking and its T22 strategy is making very positive progress. Combined with the arrival of 5G internet, I believe Telstra’s earnings and dividend could start growing again from FY 2023. In the meantime, I believe its free cash flows will be sufficient to maintain its current 16 cents per share fully franked dividend until growth returns.

More reading

• Analysis: is the Woolworths share price a buy?
• 3 ASX dividend shares growing their payouts fast
• Why the Telstra share price could be set to soar
• Is the Woolworths share price a buy?
• Is the Telstra share price a buy?

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.

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In this era of COVID-19, it’s hard to find ASX dividend shares that are still increasing their payments to shareholders.

We have seen Ramsay Health Care Limited (ASX: RHC) end its dividend growth record which went back 20 years to 2020. The reduction of elective surgeries really took its toll.

But there are still some businesses out there that are still growing their dividends despite COVID-19.

Here are three ASX dividend shares that are raising their dividend:

Dividend share 1: APA Group (ASX: APA)

APA Group is one of the biggest infrastructure businesses on the ASX.

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.

The ASX dividend share generates reliable cashflow each year, which is why it was able to stick to its distribution guidance of 50 cents per unit this year, this was growth of 6.4% compared to last year. I think that’s solid in this environment.

APA has grown its distribution every year for a decade and a half. At the current APA share price, it offers a FY20 distribution yield of 4.6%.

Dividend share 2: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This business, commonly known as Soul Patts, is one of the best dividend share ideas around in my opinion.

Soul Patts doesn’t have a huge yield, its grossed-up dividend yield for FY20 is 4.3% at the current Soul Patts share price. But it’s the consistency of the dividend growth that is particularly attractive to me about Soul Patts. It has grown its dividend every year since 2000. After Ramsay’s dividend capitulation, Soul Patts has the best dividend growth streak on the ASX.

Indeed, the ASX dividend share has actually paid some sort of dividend every year in its listed history dating back to 1903. That’s great reliability. 

The investment conglomerate is invested in a wide variety of different businesses including telecommunications, building products, property, pharmacies, swimming schools, resources and listed investment companies.

Some of its largest holdings include shares like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), Bki Investment Co Ltd (ASX: BKI) and Milton Corporation Limited (ASX: MLT).

Each year the portfolio sends a stream of investment income to Soul Patts. The investment house pays for its expenses and then pays out most of what’s left as a dividend. In FY19 it kept around 20% of its net operating cashflow to re-invest into more opportunities.

Not only does Soul Patts retain a fifth of its cashflow which will help grow the dividend with new investments, but its current investments will also hopefully grow their own dividends.  

Dividend share 3: Rural Funds Group (ASX: RFF)

Rural Funds is another great ASX dividend share in my opinion.

Each year the farmland real estate investment trust (REIT) aims to increase its distribution by 4% each year. It has grown the distribution every year since it started paying one in 2014.

It’s able to grow the distribution due to two key factors. The first reason is that it has built-in rental increases with all of its farm contracts. That rental indexation is either a fixed 2.5% annual increase or it’s linked to CPI inflation, with market reviews. These rental increases alone will generate pleasing distribution growth for Rural Funds.

The other main contributor for distribution growth is that Rural Funds invests in farm productivity improvements for the benefit of its tenants. Improving the farm increases future rental income, creates a good relationship with the tenant and hopefully improves the value of the farm.

I like the diversification of Rural Funds’ portfolio. It owns farms in the following sectors: cattle, cotton, almonds, vineyards and macadamias. Occasionally it will make an acquisition. 

At the current Rural Funds share price it offers a FY21 distribution yield of 5.6%.

Foolish takeaway

I think each of these ASX dividend shares can continue to grow their dividends throughout the 2020s. At the current prices I’d probably go for Soul Patts because of it how diversified it is and its ability to invest in anything, including farmland and infrastructure if it wanted to.  

More reading

• Why I would put excess funds into ASX dividend shares instead of a savings account
• 4 ASX shares to buy and hold forever
• 3 ASX shares I won’t hesitate to buy in the next market crash
• Forget term deposits and buy these strong ASX dividend shares
• 3 ASX shares I’d buy with $6,000 today

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. 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 3 ASX dividend shares raising their dividend like clockwork appeared first on Motley Fool Australia.

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The Woolworths Group Ltd (ASX: WOW) share price has climbed 6.2% higher this year, but is the ASX 20 share a good buy?

What industry does Woolworths operate in?

Whilst we all basically know what Woolies does, for investment purposes the Aussie supermarket is classified as operating in the Consumer Staples sector. More specifically, its Global Industry Classification Standard (GICS) industry group is Food & Staples Retailing.

That’s largely due to the company’s flagship Woolworths Supermarkets business. I think that’s a pretty fair analysis given the group’s Australian and New Zealand food segments contributed more than 75% of its half-year revenue in FY 2020.

What’s been happening to the Woolworths share price?

As mentioned, the Woolworths share price has climbed 6.2% higher in 2020. Woolies certainly wasn’t immune from the March bear market, but also didn’t rocket higher like some of its competitors’ shares.

I think one big factor contributing to the company’s share price was its large hotels business, ALH Group. Tight coronavirus restrictions have affected patronage in the hospitality industry which has significantly impacted revenues for the group.

I also feel tough conditions for retail have weighed on investors’ minds given the group’s ownership of the Big W chain.

The Woolworths share price has had a bullish run in the last couple of months, however, with the supermarket giant’s shares up 12.7% since 22 May. 

Given the S&P/ASX 200 Index (ASX: XJO) is down 11.4% this year, Woolies has outperformed the benchmark index by 17.6%.

Who are the major competitors?

Obviously, the major competitor that springs to mind is Coles Group Ltd (ASX: COL). Coles is Woolworths’ major supermarket competitor, with the two operating a duopoly of sorts within the industry (albeit with Aldi and IGA snapping at their heels).

However, Woolworths is a conglomerate. As well as food, and the aforementioned hotels and retail businesses, Woolworths has a sizeable liquor business. Endeavour Drinks generated $4,775 million in FY20 half-year revenue with a portfolio of prominent brands like Dan Murphy’s and BWS.

Given its conglomerate status, Wesfarmers Ltd (ASX: WES) is arguably a better comparison to Woolwoths. Wesfarmers sold off another $1.1 billion stake in Coles (leaving it with a 4.9% interest) but has interests in many different businesses.

In fact, Wesfarmers’ current portfolio includes household hardware (Bunnings), retail (Kmart and Officeworks), Chemicals, Industrials and others.

The Wesfarmers share price is up 9.8% this year while the Coles share price has rocketed 18.0% higher.

Is the Woolworths share price a buy?

Whilst devastating for large parts of the economy, overall the COVID-19 pandemic has been positive for ASX supermarkets. With Aussies spending considerably more time at home, the supermarkets are very much an essential part of our economy right now. Naturally, this has been good for earnings.

The Woolworths share price has done well to climb higher but currently trades at a price to earnings (P/E) ratio of 19.2. That’s very similar to Coles (19.9) and cheaper than Wesfarmers (23.6).

Factoring in a conglomerate discount compared to Coles as a pure supermarket play, I don’t think Woolies shares are particularly cheap right now.

More reading

• Top brokers name 3 ASX 200 shares to buy next week
• Top brokers name 3 ASX 200 shares to sell next week
• Is it too late to invest in gold?
• 2 ASX shares for strong retirement income
• Why the P/E ratio is a flawed metric in 2020

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and 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.

The post Analysis: is the Woolworths share price a buy? appeared first on Motley Fool Australia.

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