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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye today are summarised below. Here’s what these fund managers have been buying:

Estia Health Ltd (ASX: EHE)

A notice of change of interests of substantial holder shows that Perpetual Limited (ASX: PPT) has been topping up its position in this aged care operator during the pandemic. The fund manager has been buying shares over the last three months, but particularly at the height of the pandemic. Perpetual bought as low as 91 cents in March and has been buying as recently as last week for $1.59 per share.

In total the fund manager picked up almost 3.5 million shares, increasing its holding to 35,259,135 shares. This equates to a 13.49% stake in the company. It appears to see value in Estia Health’s shares after a 40% pullback over the last 12 months.

Viva Leisure Ltd (ASX: VVA)

A notice of initial substantial holder reveals that WAM Capital Limited (ASX: WAM) has been buying this health club operator’s shares since the middle of May. This follows a significant sale of shares during March and April when Viva Leisure’s future looked bleak because of the pandemic.

But with gyms now reopening and social distancing restrictions easing rapidly, the fund manager appears confident in the future. The notice reveals that WAM owns a total of 3,764,233 shares across its funds, which represents a 5.25% stake in the company. Earlier this month Viva Leisure raised $25 million to strengthen its balance sheet and pursue future acquisitions. Judging by its shareholding, WAM appears to believe this is a good strategy for the company to take.

More reading

• My 3 high-yield ASX dividend shares to buy now
• These are the 10 most shorted ASX shares
• Short-sellers are stepping up their attack against these popular ASX shares
• ASX 200 up 0.9%: Big four banks rebound, Appen hits record high
• Fund managers have been buying these ASX shares

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

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Finding quality ASX dividend shares in 2020 is a difficult task. And finding such shares offering a sustainable dividend yield above 8% is even harder. Dividend streams from former ASX dividend heavyweights like Ramsay Health Care Limited (ASX: RHC), Westpac Banking Corp (ASX: WBC), Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) have all but dried up in 2020. In my view, we will probably see more dividend deferrals, suspensions and cancellations over the remaining course of the year.

But don’t despair, income investors! I’ve found 2 ASX dividend shares currently offering trailing, grossed-up dividend yields above 8% today. What’s more, I think that these 2 shares will be able to sustain and grow their payouts going forward.

An iron-fuelled, ASX dividend giant

Fortescue Metals Group Limited (ASX: FMG) is my first ASX dividend share to consider today. Unlike most other ASX companies, Fortescue’s earnings in 2020 have been turbocharged by a pricing boom in its primary commodity of iron ore. According to its last annual report (2019), Fortescue’s average cost of extracting one tonne of iron ore was between US$12-13. Considering iron ore is today selling for around US$101 per tonne, there’s a lot of cash flowing into Fortescue’s coffers right now. Today, Fortescue shares are offering a trailing yield of 7.14%, or 10.2% grossed-up with franking. I also fully expect this yield to increase going forward if iron ore prices remain near their current levels.

An ASX energy stalwart

AGL Energy Limited (ASX: AGL) is my second ASX dividend share to consider today. AGL is the largest generator and supplier of electricity and gas in the country. Utility shares like AGL aren’t normally known for their growth prospects, but then that’s not why we’re here today!

AGL’s last interim dividend, which was paid in March this year, came in at 47 cents per share. Its last final dividend, paid in September 2019, was 64 cents per share. Putting these two together, we get a trailing dividend of $1.11 per share. That, in turn, gives us a yield on today’s share price of 6.63% or 8.9% grossed-up with AGL’s 80% franking. Electricity and gas are highly inelastic goods that don’t tend to see dips in demand during economically tough times. This leads me to conclude that AGL’s dividend payments should continue around their current levels in 2020 and beyond. The company has also been buying back its own shares in recent weeks, which I think is a further indication that AGL’s dividend will be safe in 2020.

Foolish takeaway

Both AGL and Fortescue are strong companies that I think will continue to provide investors with robust dividends throughout 2020 and beyond. With the carnage that coronavirus has wreaked on the ASX dividend scene, I think having strong companies like these in one’s portfolio today would deliver massive benefits for an income investor.

More reading

• Here are 5 rebound shares to buy with $5,000
• These top ASX dividend shares could be great option for income investors
• Transurban Group and 1 other ASX share I’d buy in another share market crash
• Where to invest $10,000 in ASX 200 shares for 2030
• Is a Fortescue Metals mega-merger on the cards?

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia owns shares of Transurban 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.

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ASX dividend shares are a great place to generate income from your money.

Cash in the bank just isn’t making enough money these days. Savings accounts are still the best place to protect your capital from harm in the short-term, but a return of 2% isn’t going to cut it for the long-term.

But I wouldn’t just go for any ASX dividend share that has a decent dividend yield. There are positives and negatives to high dividend yields.

I’d only want to go for shares that look like they can sustainably maintain and increase the dividend:

Share 1: WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a listed investment company (LIC) which invests in the larger businesses on the ASX.

However, it doesn’t behave like a passive exchange-traded fund (ETF). It actively changes its holdings so that it can try to outperform the market. At the end of May 2020 it had outperformed the S&P/ASX 200 Accumulation Index since inception by 3.8% per annum before fees, expenses and taxes.

The ASX dividend share is able to turn that strong performance into smoothed dividends for shareholders. WAM Leaders has grown its dividend every year since FY17. It was only launched in May 2016.

Some of the shares that it owned in its portfolio at 31 May 2020 were: Amcor Plc (ASX: AMC), CSL Limited (ASX: CSL), Downer EDI Limited (ASX: DOW), Fortescue Metals Group Limited (ASX: FMG) and Wesfarmers Ltd (ASX: WES).  

It currently has an annualised grossed-up dividend yield of 8.8%.

Share 2: Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT). It owns a variety of farm types including cotton, cattle, almonds, macadamias and vineyards.

The REIT has rental indexation built into all of its rent contracts. The rent is contracted to grow by a fixed 2.5% per annum or by CPI inflation, plus market reviews.

It’s largely this built-in rental growth that allows management to forecast that the distribution can grow by 4% per annum.

Another factor for the growth is that Rural Funds invests in productivity improvements at its farms to help the tenant, whilst also boosting the rental income potential and value of the farm. The ASX dividend share only pays out about 80% of its net rental profit each year, allowing the other 20% to be utilised for the farm improvements.

Rural Funds has forecast that the FY21 distribution will be 11.28 cents per unit, which equates to a forward yield of 5.5%.

Share 3: Brickworks Limited (ASX: BKW)

Brickworks has paid a dividend every year that it has been listed on the ASX. It also hasn’t cut its dividend for 40 years. I think that’s a great wonderful record.

The diversified property business has a number of interesting elements which should support the current dividend and enable future dividend growth.

It owns a large chunk of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. The investment conglomerate itself provides Brickworks with a consistently-growing dividend.

Brickworks also owns a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG). Amazon may soon be a tenant at the Oakdale West Estate in Kemps Creek with one of the largest online fulfilment warehouses in the country.

The ASX dividend share is probably best known for being the market-leading brickmaker in Australia. It also sells plenty of other products including roofing, precast, paving and masonry. I think this division will continue to perform well once the economy returns to normal.

Finally, Brickworks recently expanded into the US by making three targeted acquisitions. It’s now the market leader in the north east of America.

Brickworks currently has a grossed-up dividend yield of 5.4%.

Foolish takeaway

Each of these ASX dividend shares have very attractive dividend yields. They also have a history of dividend growth. At the current prices I think it makes sense to go for WAM Leaders and Brickworks the most because they are trading at very good value compared to their pre-tax net tangible assets (NTA).

More reading

• Why I think Telstra and these ASX dividend shares are strong buys
• ASX 200 down 1.8%: CSL announces new acquisition, Qantas to raise $1.9bn
• 3 safe and strong ASX dividend shares for retirees to buy
• 2 ASX shares I plan to hold til I’m 100
• 3 dividend shares I’d buy to boost my income

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended Brickworks and 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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The market may be bouncing back from yesterday’s steep losses. But not all stocks have been invited to the rally as brokers downgraded their recommendations on a handful of ASX shares.

The S&P/ASX 200 Index (Index:^AXJO) jumped by more than 1.5% in after lunch trade as every sector bar healthcare made gains.

Clipped wings

However, there are two notable ASX stocks that’s left behind and one of them is the Qantas Airways Limited (ASX: QAN) share price.

The flying kangaroo dived 7.8% to $3.86 at the time of writing and it isn’t only it’s discounted $1.9 billion capital raising that’s dragging on the stock.

Citigroup cut its rating on Qantas to “hold/high risk” from “buy/high risk” in the wake of the new share sale to pad its balance sheet during the unpredictable COVID-19 storm.

“We model a ramp-up in earnings and capacity from FY21e as the Australian Domestic market opens-up (2Q21e) and cost benefits are realized,” said the broker.

“However, the longer-term outlook remains considerably uncertain and extremely difficult to forecast.”

Uncertain flight path

Despite the downgrade and the dilution from the new share offer, the broker’s price target on Qantas jumps to $4.60 from $3.70 a share.

What’s interesting is that the new price target represents a near 20% upside from Qantas’ current share price.

But Citigroup warned that its forecasts (and by extension, its valuation) is subject to change as predicting when international travel will return is difficult in the current environment.

Running ahead of fundamentals

Another laggard today is the Western Areas Ltd (ASX: WSA) share price after UBS cut its recommendation on the stock to “neutral” from “buy”.

This is despite the broker’s favourable outlook for nickel – a key commodity produced by the miner.

But there may be too much good news already priced in. The Western Areas share price bounce by 62% since the market hit its bear market low point in March.

Waiting for new catalyst

The rebound is partly driven by an encouraging drilling result at the Western Gawler project, which was announced to the market this week.

“In response, we have chosen to lift our estimate of the value of exploration assets by $100m to $150m,” said the broker.

“This exploration result while encouraging is 1 drill hole and does not yet show results from assays with nickel grades. We would look for further detail before assigning more value here.”

UBS’s price target on Western Areas is $2.85 a share.

More reading

• Brokers name 3 ASX 200 shares to buy today
• Why Kogan, Myer, Orocobre, & Qantas shares are dropping lower
• ASX 200 rebounds 1.1%: Big four banks charge higher, Qantas sinks after raising $1.4bn
• REA Group share price has charged 60% since the market bottomed
• Share price winners and losers of the pandemic

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

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The AMP Limited (ASX: AMP) share price is up 5.37% on Friday following an article published by The Australian last night. The article suggests that AMP, which has recently been flagged as a potential takeover target for Macquarie Group Ltd (ASX: MQG) and other financial services giants, is being watched by private equity. This comes as the AMP share price has seen dismal performance over the last few years.

What will a private equity takeover mean for AMP shareholders?

If a private equity takeover goes ahead, it will most likely mean that AMP shareholders will receive a cash payment for their shares. This would usually come at a premium to the market price, which currently sits at $1.87. Given that there is currently more than one suitor, this could suggest that potential buyers may need to bid higher in order to gain approval from AMP shareholders.

Currently, AMP appears to be preparing a defence. It has used an exemption to the Corporations Act 2001 to buy up AMP shares through a subsidiary. Previously, it had been disposing shares. If a takeover offer is mounted, this subsidiary’s voting power could reduce the likelihood of success. 

How has AMP performed lately?

In March, AMP withdrew its guidance for the 2020 financial year. However, it did announce that its liquidity and capital position remained strong. In 2019, AMP experienced a net loss of $2.5 billion as it wrote down the value of  assets and some of its investments. Underlying profit in 2019 was $464 million. 

AMP is soon to sell its life insurance business. As reported at the company’s annual general meeting last month, the proceeds from this will be used to fund the company’s strategy with surplus funds potentially being distributed to shareholders if conditions are favourable. Currently, AMP appears to be focused on its current strategy of creating a leaner business while improving its wealth management and AMP Capital businesses.

About the AMP share price

The AMP share price has recovered 73% from its 52 week low of $1.08, however, year to date it is still down by around 3%. AMP shares are down 10% since this time in 2019, reflecting the tough economic conditions as a result of the coronavirus pandemic. Longer-term, its share price has dropped 70% since 2015.

However, as takeover speculation mounts there is likely to be upward pressure on the share price. If media reports are correct, AMP is becoming the latest takeover target for 2020. 

More reading

• Why AMP, IOOF, Redbubble, & Westpac shares are charging higher
• Why AMP, Qantas, Qube, & Transurban shares are dropping lower
• ASX 200 finishes higher, Woolworths gives update
• Why the AMP share price is up 9% today
• Why AMP, FlexiGroup, Harvey Norman, & Qube shares are charging higher

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

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The Kogan.com Ltd (ASX: KGN) share price is having a rare off day on Friday and is trading lower this afternoon.

At the time of writing the ecommerce company’s shares are down 3% to $14.51.

Why is the Kogan share price tumbling lower?

With no news out of Kogan or any relevant broker notes that I’m aware of, I suspect that today’s decline is likely to be down to profit taking.

After all, there have been very few shares performing as strongly on the ASX this year as Kogan.

Prior to today, the Kogan share price was up a whopping 100% since the start of the year and 334% from its March low.

Why is the Kogan share price on fire in 2020?

Investors have been scrambling to buy the company’s shares after the pandemic accelerated the shift to online shopping and put a rocket up its sales and profit growth.

During the third quarter Kogan reported a 30% lift in sales and a 23% lift in gross profit. This was driven largely by a 50% jump in sales and gross profit in March following the closure of retail stores nationally.

While this was strong, it soon turned out that Kogan’s growth was just warming up.

Its strong form continued into April, with the company growing its sales by more than 100% and its gross profit by more than 150%. The latter was despite the company investing heavily in building its brand and growing its active customers.

Those investments definitely paid off. Kogan grew its active customers by 139,000 during April to 1,948,000 customers.

But it doesn’t stop there. Even though retail stores have now opened again, Kogan has continued to deliver rapid sales growth.

At the start of June, quarter to date, the company’s sales were up over 100% and its gross profit was up over 130%. In addition to this, its adjusted EBITDA had increased by more than 200% quarter to date and its customer numbers had climbed by a further 126,000 to 2,074,000.

What else has been happening?

The company has taken advantage of its strong share price performance to undertake a $115 million capital raising.

Kogan decided to raise the funds to provide it with the financial flexibility to act quickly on future value accretive opportunities.

These opportunities are ones that it feels broaden its offering, expand its customer base, or enhance its operating model. Much like its acquisition of replica furniture and homewares retailer Matt Blatt for $4.4 million in May.

Is it too late to invest?

While I think the short term gains are gone now, I believe there is still an opportunity to invest with a long term view.

I think Kogan has the potential to grow materially in the future thanks to the shift to online, its strong market position, and expansion/acquisition opportunities.

Overall, I would class it as one of the best buy and hold options on the ASX today.

More reading

• Why Kogan, Myer, Orocobre, & Qantas shares are dropping lower
• Share price winners and losers of the pandemic
• Why Accent, CSL, Kogan, & Redbubble shares are pushing higher
• 3 high quality ASX shares I would buy if there were another market crash
• Coronavirus second wave potential could drive investment portfolio changes

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 Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A spike in coronavirus cases in Victoria has triggered fears of a potential ‘second wave’ of infections. As a result, some supermarkets have re-introduced purchase limits on certain items as panic buyers swoop in. The fear has not only been restricted to shoppers, with global financial markets also seeing an increase in volatility.

Here are 2 ASX shares that could help your portfolio ride out a second wave of coronavirus infections.

Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare is the 3rd largest provide of clinical laboratory services in the world, with pathology and radiology services in Australia and 7 other countries. The coronavirus pandemic saw a drastic fall in pathology testing volumes as a result of reduced referrals from doctors and government-imposed restrictions.  

The Sonic share price has surged more than 48% from its low in late March and could be poised to go higher following a recent announcement from the company. Earlier this week, Sonic released a better than expected trading update with the company now expecting full-year 2020 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in-line with last year.

With fears of a second wave growing, Sonic could see a further recovery in volumes and revenue as the company continues coronavirus testing. Sonic currently plays a crucial front-line role in Australia, the US and Europe by testing thousands of patients each day for COVID-19.  

ResMed Inc (ASX: RMD)

The ResMed share price is currently trading at all-time highs following a surge in demand for the company’s ventilators. In the 3 months to 31 March 31, ResMed tripled its ventilator production, producing more than 52,000 units in order to fulfil an urgent contract from the Australian Government.

ResMed went on to provide around 5500 invasive and non-invasive ventilators to Australia’s national stockpile. In addition, ResMed was one of the 6 companies named to help facilitate the production and supply of ventilators as the US after the country initiated its Defence Production Act.

With fears of a second wave of coronavirus infections emerging, the ResMed share price could see further upside as demand for ventilation treatments and respiratory humidifiers increase.

Should you buy?

In my opinion, Australia has managed the coronavirus pandemic well thanks to its lockdown procedures and effective testing capabilities. However, with restrictions easing, there is a possibility of a second wave of infections. As a result, I think that both Sonic Healthcare and ResMed would be 2 ASX shares that could provide your portfolio with resilience if volatility picks up.

More reading

• Top brokers recommending you buy these ASX shares in this market sell-off
• Top brokers name 3 ASX shares to sell right now
• 5 things to watch on the ASX 200 on Thursday
• Consider these 3 quality ASX healthcare shares to buy now
• ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote

Motley Fool contributor Nikhil Gangaram 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.

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The Spirit Telecom Ltd (ASX: ST1) share price is finishing the week with a bang after the small-cap ASX telco announced an acquisition.

At the time of writing, Spirit Telecom shares have jumped 12.2% to 23 cents after rallying as much as 17.1% in early morning trade.

Spirit Telecom considers itself a disruptor in the IT&T (information technology and telecommunication) industry. The company has developed its own advanced fixed wireless network, through which it provides Australians with ‘Sky-Speed Internet’.

Along with providing internet access, Spirit offers a full range of managed IT services and cloud-based business solutions. It also offers internet products from ASX-listed telcos TPG Telecom Ltd (ASX: TPM), OptiComm Ltd (ASX: OPC), and Vocus Group Ltd (ASX: VOC).

What’s the deal?

Spirit is acquiring Gold Coast-based Voice Print Data Group (VPD). VPD will become Spirit’s new wholesale business arm, selling a range of cloud, internet and voice services via its Spirit X sales platform.

Consideration for the acquisition has been split into three tranches. Firstly, the gross purchase price is $14 million, comprising a combination of $7 million cash and $5.8 million of Spirit shares. This prices VPD at around 4 times normalised earnings before interest, tax, depreciation and amortisation (EBITDA).

Tranches 2 and 3 relate to future payments when EBITDA performance exceeds targets for FY21 and FY22. All up, the total maximum purchase price is $27.5 million.

Why is Spirit Telecom acquiring VPD?

In an investor presentation released this morning, Spirit summarised the transaction rationale into 4 primary factors.

Firstly, the acquisition expands Spirit’s reach further into the New South Wales and Queensland markets.

Secondly, it provides the company with access to new data-hungry verticals of mining, industrials and aged care.

Thirdly, the transaction increases Spirit’s scale and adds new high-margin product bundles to its arsenal.

And finally, the VPD acquisition adds a wholesale dealer sales channel for Spirit X, the company’s business-to-business digital sales platform. 

What now?

Completion of the acquisition is subject to normal closing conditions and is expected to occur on 1 July 2020.

Following completion, Spirit will have a combined FY21 revenue run rate of between $70 million and $75 million.

Commenting on the acquisition, managing director Sol Lukatsky said:

“This is a game changer for Spirit and through the acquisition of VPD Group, Spirit will build and strengthen its cloud, security, data and managed IT services capabilities whilst providing entry into expanded geographies in QLD and NSW for verticals such as Mining, Industrials and Aged Care.”

More reading

• Spirit Telecom share price charges higher as the ASX telco launches new NBN service

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SPIRIT TC 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

A2 Milk Company Ltd (ASX: A2M)

According to a note out of Citi, its analysts have retained their buy rating and $21.50 price target on this fresh milk and infant formula company’s shares. The broker believes that a2 Milk performed strongly during the 18 June Mid-Year Shopping Festival in China. It expects this to have helped shift any excess inventory. I agree with Citi on a2 Milk and would be a buyer of its shares. Especially now it appears to be planning to put its sizeable cash balance to work with new product launches or acquisitions.

CSL Limited (ASX: CSL)

Analyst at UBS have retained their buy rating and $335 price target on this biotherapeutics company’s shares following its acquisition of uniQure’s AMT-061 gene therapy. UBS appears supportive of the acquisition. And while it notes that it is likely to cannibalise the sales of its current haemophilia B therapy (Idelvion) in the future, it doesn’t expect it to be used in children. This could mean both therapies have a place in the market. I agree with UBS and feel CSL would be a great long term investment option.

Qantas Airways Limited (ASX: QAN)

A note out of Morgan Stanley reveals that its analysts have retained their overweight rating and lifted the price target on the airline’s shares to $5.30. The broker appears pleased with its decision to raise capital to create an extra financial buffer over the medium term and support its cost cutting plans. And although it doesn’t expect the airline to be profitable again until FY 2022, it still believes it is a buy today. I think Qantas could prove to be a good investment option if domestic tourism markets recovery in 2021.

More reading

• Why Kogan, Myer, Orocobre, & Qantas shares are dropping lower
• ASX 200 rebounds 1.1%: Big four banks charge higher, Qantas sinks after raising $1.4bn
• REA Group share price has charged 60% since the market bottomed
• Here’s everything you need to know about CSL’s latest acquisition
• Share price winners and losers of the pandemic

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 CSL Ltd. The Motley Fool Australia owns shares of A2 Milk. 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 beginner investor, someone who has recently decided to begin your journey of wealth creation, congratulations!

Investing is (in my opinion anyway) one of the best things you can do with your time and money. But, investing can also be scary and financially dangerous. If you don’t know what you’re doing, or you try and master complex trading strategies straight out of the gate, it can lead to permanently losing you capital (which, from experience, is very painful).

So here are 2 ASX shares that I think would be great candidates for an investor who’s just starting out. They shouldn’t be where your investing journey ends, though. I think both of these ASX shares are a great foundation to build wealth from for a lifetime.

Coles Group Ltd (ASX: COL)

I’ve picked Cole because I think almost everyone in the country would be familiar with this company, how it works, how it attracts customers and how it makes money. Being able to understand the companies you own is a vital part of investing, and I think Coles is a great place to start learning as a newbie investor. It’s also a relatively ‘safe’ investment, in my view. Coles operates in a very defensive business that (in my view) faces very little prospects of being significantly disrupted or made redundant in the future (we all need to eat, after all).

Coles has also been moving to automate its supply chains and improve its home delivery options as well, which I think will lead to long-term value for shareholders. Coles also pays a robust and fully franked dividend, which on recent prices is worth a trailing 2.51% per annum.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This investment isn’t an individual company, rather an exchange-traded fund (or ETF). ETFs work by holding a basket or collection of different companies all in one place. In Betashares’ case, the basket consists of the largest 100 companies on the United States’ Nasdaq exchange. And that’s why I think it’s a great choice for a beginner investor.

The Nasdaq is a modern rival to the old New York Stock Exchange and houses most of the newer, exciting tech companies. You would probably be familiar with its top 5 holdings, which in order, are: Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) and Facebook, Inc. Common Stock (NASDAQ: FB).

The other well-known companies within this ETF include Netflix Inc (NASDAQ: NFLX), Adobe Inc (NASDAQ: ADBE), Tesla Inc (NASDAQ: TSLA), and Paypal Holdings Inc (NASDAQ: PYPL).

Betashares also pay a healthy trailing dividend of 1.9%. Many Aussie investors don’t ever venture beyond the companies on the ASX for investing. But I think this ETF is a great way to invest in companies that actually dominate our lives. Plus, you can tell your friends you own shares in Tesla, Apple and Facebook, which is pretty cool!

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Microsoft, Netflix, PayPal Holdings, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Facebook, Netflix, and PayPal Holdings. 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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