Tag: Motley Fool Australia

China has been a huge avenue for growth for many ASX shares over the past decade or two. The country’s burgeoning middle-class has been fertile ground for many ASX companies to expand into, selling ‘Brand Australia’ products that have proved highly popular for millions of Chinese customers.

But with geopolitical tensions on the rise in recent weeks, could this avenue be shut off?

According to reporting in the Australian Financial Review (AFR), China is turning the screws on Australian foreign policy, angered by moves from the Morrison government to support an independent international inquiry into the origins of the outbreak of the coronavirus pandemic.

As reported by the AFR, China has sounded out replacing Australian barley and beef exports with those from the USA and Russia in retaliation.

So what if these tensions escalate? There’s a lot of very successful Australian exporters that would euphemistically be put in a right pickle.

Some ASX shares that might be in the firing line

Take Treasury Wine Estates Ltd (ASX: TWE). Treasury has put a lot of time and effort into building a market for its quality Aussie wines in China. Its high-quality and high-margin brands like Penfolds have proven a hit for the Chinese middle-class – so much so that Treasury generated around 40% of its earnings in Asia during FY19.

Australian dairy has also proved very popular in China. The A2 Milk Company Ltd (ASX: A2M) and Bubs Australia Ltd (ASX: BUB) have been exploiting this to ruthless effect, particularly in the infant formula market. This partly explains why the a2 Milk share price has ballooned by 3,700% over the past 5 years and Bubs by over 1,400%. We could see this unwind if China really wants to play hardball with the Australian government.

There’s also the iron ore exporters Fortescue Metals Group Limited (ASX: FMG), Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP). China’s demand for our iron ore is famously insatiable and helped us get out of the quagmire of the GFC last decade. BHP also exports thermal and metallurgical coal to China. I think it’s unlikely, but if China really wanted to send a message, this would hit where it hurts.

What can we take from these risks?

I think the best lesson to draw from these events and their possibilities is how unpredictable investing can be. Most companies are influenced by how much money they can make, but other factors (like geopolitics, in this instance) can also have a tangible effect on your investments. The best investors try and make contingencies for the worst possible outcomes. It’s not a bad way to go, judging by the things we are seeing play out on the international stage in 2020.

More reading

• Brokers name 3 ASX 200 shares to buy today
• Get paid huge amounts of cash to own these ASX dividend shares
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• 4 top ASX 200 shares for blue chip investors
• Goldman Sachs names 5 reasons iron ore prices won’t crash

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended BUBS AUST 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 Are these China-exposed ASX shares in danger in 2020? appeared first on Motley Fool Australia.

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Listed medical and diagnostic facilities operators are outperforming the market today as the floodgates to elective surgeries are swung open.

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price and Sonic Healthcare Limited (ASX: SHL) share price jumped 2.7% each in the last hour of trade to $63.80 and $27.09, respectively.

The Healius Ltd (ASX: HLS) is trailing behind with a 1.9% increase to $2.40, but that’s still ahead of the 1.3% gain by the S&P/ASX 200 Index (Index:^AXJO).

Consensus earnings upgrade candidates

These companies could see a big boost to earnings as the Australian Financial Review reported on the upcoming “hidden wave” or elective surgeries and tests.

The federal government announced that it was loosening restrictions on elective surgeries as the country appears to have the COVID-19 pandemic under control.

The clampdown on non-life-threatening procedures was to ensure that our hospital system had the capacity to cope with the potential spike in emergency coronavirus patients.

Pent-up demand to hit

The warnings and response from the government to COVID-19 had another unintended consequence. Australians started putting off regular check-ups as they were worried about clogging up our health system and putting themselves in close proximity with possible COVID-19 patients.

The big drop in attendances and elective surgeries pressured the earnings of private hospitals and clinics, while falling demand for diagnostic tests (other than for coronavirus) impacted on Sonic.

However, that’s about to change and shares in Ramsay, Sonic and Healius could regain the lost ground from February.

Six-month backlog

Pent-up demand from deferred medical checks and minor procedures are likely to force medical facilities to operate overtime over many months.

The six-week clampdown on elective surgeries created a backlog of nearly 400,000 cases, according to consultant surgeon and senior lecturer at the University of Newcastle, NSW, Dr Peter Pockney.

He co-authored a major study on the return of elective surgery in 190 countries and he was reported in the AFR as saying that “it would take 22 weeks to clear if hospitals increase the number of surgeries performed each week by 20 per cent compared to pre-pandemic activity”.

Counting the costs

Elective surgeries are only one side of the problem. Australians have also put off cancer screening. The AFR also quoted the chief executive of Cancer Council Australia, Professor Sanchia Aranda, estimating that one in 10 people may have delayed checks during the lockdown.

If these delays lasted for six months, Professor Aranda believes 7,000 cancers will be picked up later. The later a cancer is detected, the higher the chance of death.

The only potential problem I see now is the waiting time to get in to see your doctor.

Not taking drastic action on COVID-19 costs lives, but acting aggressively to contain the pandemic is likely to be just as, if not more costly.

More reading

• These 4 ASX shares are at 52-week highs. Time to invest?
• Brokers name 3 ASX 200 shares to buy today
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares

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

The post The next ASX sector in a post COVID-19 earnings upgrade cycle appeared first on Motley Fool Australia.

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The Graincorp Ltd (ASX: GNC) share price was up as much as 10.9% today after the grain operator announced an after-tax half-year profit of $388 million. It marked a return to profitability for the company which recorded a net loss after tax of $59 million in H1FY19. 

The result reflects a significant repositioning of GrainCorp’s portfolio. During the half year ended 31 March, GrainCorp sold the Australian Bulk Liquid Terminals business and demerged United Malt Group Ltd (ASX: UMG). 

What does GrainCorp do?

GrainCorp is a food ingredients and agribusiness providing services to the grain industry. It is involved in storage and logistics, marketing and processing of grains and oilseeds. Activities are focused on 4 main grains – wheat, barley, canola, and sorghum. 

GrainCorp operates globally, managing grain pools and the import, export, and marketing of grain. It also processes and crushes oilseeds and provides edible oils. The malt business, which produced malt products and brewing inputs, was demerged in March 2020. 

Business performance 

In the half year ending 31 March 2020, each of GrainCorp’s business segments was up substantially on the prior corresponding period. The Agribusiness segment performed well, notwithstanding a third year of drought in Australia. 

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $183 million in the March half and underlying net profit after tax (NPAT) was $55 million. Both were a substantial improvement on the prior period.

While COVID-19 presents challenges, food and agriculture are considered an essential service. GrainCorp plays a role in supporting the food and grain supply chain. Market conditions have improved considerably, with widespread rainfall across eastern Australia providing hope for a larger crop later this year. GrainCorp is well progressed in harvest readiness, including recruitment and training of seasonal workers. 

The company revised its capital structure during the half year to ensure minimal core debt. At the end of March, GrainCorp had zero core net debt. Its 10% minority stake in United Malt was valued at $112 million, providing additional financial flexibility. 

Outlook

GrainCorp is planning for higher grain exports in 2H20 with expectations of a higher crop in FY21. Favourable soil conditions across large parts of eastern Australia has supported widespread planting for the FY21 crop. Oilseed crush margins are expected to remain favourable in the second half due to prevailing canola and meal values. 

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• ASX 200 down 0.9%: Xero posts strong growth & Australian economy loses 594,300 jobs
• Why Breville, Graincorp, Mesoblast, & Newcrest shares are charging higher

Motley Fool contributor Kate O’Brien 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.

The post ASX stock of the day: This ASX food share surged 11% today following a jump in profitability appeared first on Motley Fool Australia.

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As a big fan of buy and hold investing, I’ve been looking at how investments in many popular shares have fared if you’d bought in at their IPOs.

I recently looked at payments company Afterpay Ltd (ASX: APT) and biotech giant CSL Limited (ASX: CSL). If you’re interested in seeing how they’ve fared, you can read here and here.

Today I thought I would look at another market darling, electronic design software company Altium Limited (ASX: ALU).

While Altium might seem like it has appeared out of nowhere over the last few years, its IPO was actually a lot further back than you would imagine.

The Altium IPO.

On August 4 1999, Altium, then known as Protel Systems, completed its IPO and its shares were listed on the Australian Stock Exchange. The company raised $30 million at $2.00 per share, with the funds being used to assist in financing its growth strategies.

This means that if you invested $10,000 in Altium at its IPO, you would have ended up with 5,000 shares.

It hasn’t been a smooth ride for the company and its shareholders since the IPO to say the least. In fact, no doubt many early investors gave up on the company and sold off their shares after a series of missteps eventually led to its shares falling as low as 9 cents in 2011.

But those investors that were patient have certainly been rewarded. Thanks to the emergence of the Internet of Things (connected devices) and its award-winning printed circuit board design software, Altium’s shares have not looked back since hitting that low.

Prior to the coronavirus crash, the company’s shares were trading at an all-time high of $42.76. Whereas, today they are changing hands for $35.00. This means that those 5,000 shares you picked up at the IPO are now worth a cool $175,000.

But given its strong long term growth potential, I wouldn’t be selling these shares any time soon. As I mentioned earlier here, I think Altium’s shares could easily double in value again over the next decade.

More reading

• Double your money with these high quality ASX shares
• 3 top ASX 200 shares every investor should buy
• Top brokers name 3 ASX 200 shares to buy right now
• Is the Altium share price a buy?
• ASX 200 drops over 1% at the market close

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

The post If you invested $10,000 in the Altium IPO, this is how much you’d have now appeared first on Motley Fool Australia.

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The Australian tech sector is still relatively immature compared to the much larger US tech market. However, a broad range of interesting ASX tech shares is now emerging.

Here are 2 ASX tech shares that I think have strong long-term growth potential, and both of which have a fast-growing international focus.

Bravura Solutions Ltd (ASX: BVS)

Bravura is a locally-based fintech company that provides mission-critical enterprise software solutions to both the wealth management and funds administration industry.

The company has 2 operating segments: wealth management and funds administration. These divisions are supported by software solutions for a range of financial products such as superannuation, life insurance, investment products, and portfolio administration.

Bravura’s portfolio of offerings has been further diversified by 2 recent acquisitions in late 2019: financial planning services software provider Midwinter and software company FinoComp. Midwinter’s tools enable financial advisers to provide more comprehensive face-to-face consultations, while FinoComp adds further software functionality to Bravura’s extensive product range and provides more cross-selling opportunities.

Recurring revenue is high due to the long-term nature of Bravura’s client contracts. In 1H20, recurring revenue increased significantly by 17% to 78% of total revenue, as a growing number of new clients broadened their use of functionality. This high level of recurring revenue provides more predictable future earnings growth and cash flow expectations.

Bravura has also pleasingly not seen a material drop-off in demand during the coronavirus pandemic. The company recently confirmed that its earnings guidance for FY 2020 remains unchanged, expecting net profit after tax growth in the mid-teens excluding the benefits of the 2 recent acquisitions.

I believe Bravura is well-positioned to continue to achieve above-average market growth for a number of years to come, driven by its broadening product set and market-leading position.

Nearmap Ltd (ASX: NEA)

Nearmap is a fast-growing Australian aerial imagery and specialist location data company. It provides geospatial map technology for enterprise and government customers across Australia, New Zealand, the US, and Canada.

The company has seen a downward trend in its share price since mid-2019 due to a number of issues including the loss of a major contract. However, the company now appears to have essentially sorted those issues out and looks to be on track with its expansion plans.

According to a market update in late April, the company pleasingly revealed that its regular sales and activities hadn’t been significantly impacted by the coronavirus crisis.

Nearmap continues to deploy cost management initiatives in order to maintain a strong balance sheet and maximise flexibility without the need to raise additional capital. This includes a 30% reduction in operating and capital costs, and it has the goal of becoming cash flow breakeven by the end of FY 2020. Importantly, this cost reduction is not expected to impact its product expansion strategies.

With regard to its FY 2020 guidance, Nearmap appears to be still on track to obtain annualised contract value in the range of $102 million to $110 million in FY 2020.

More reading

• 30% off: 3 ASX 200 shares to buy on the cheap
• Got $3,000 to invest? Here are 2 fantastic ASX 200 shares to buy right now
• 5 top ASX shares to buy and hold for a decade
• These mid cap ASX shares could be long term market beaters
• How to build your first ASX share portfolio

Phil Harpur owns shares of Nearmap Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 ASX tech shares to buy with stellar growth prospects appeared first on Motley Fool Australia.

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When you’re young and first start investing you might focus more on growth shares that offer strong potential returns like Afterpay Ltd (ASX: APT) or Zip Co Ltd (ASX: Z1P).

This is because if things don’t go to plan with these investments, you have plenty of time to recover from your losses.

But as you enter retirement, I feel the prudent thing to do is to limit these investments to just a very small part of your portfolio and focus on shares that offer income and capital preservation.

With that in mind, two shares which I think are great for retirees right now are as follows:

Goodman Group (ASX: GMG)

I think Goodman Group could be a good option for retirees. It is an integrated commercial and industrial property group which owns, develops and manages industrial real estate in 17 countries. This includes warehouses, large scale logistics facilities, and business and office parks.

Goodman Group has made some very smart investments over the last decade. This was particularly the case with its decision to gain exposure to the structural tailwinds of the ecommerce market. It has direct relationships with some of the biggest operators such as Amazon and Walmart. Given how quickly online shopping is growing, these assets are likely to be in demand for a long time to come and should underpin solid earnings and distribution growth over the next decade.

Telstra Corporation Ltd (ASX: TLS)

Telstra is the undisputed leader in the telco sector with a massive 18.5 million retail mobile services and 3.7 million retail bundle and data services. While the last few years have been difficult for the company because of the NBN rollout, it is making very strong progress with its T22 strategy. Based on its half year update, the company is well on its way to simplifying its business, cutting costs materially, and carving out a leadership position in 5G.

And with FY 2021 expected to be the peak year of the NBN headwind, I feel that a return to growth is on the card in the near future. In the meantime, I’m optimistic that its dividend is sustainable at 16 cents per share and no further dividend cuts are necessary. If this proves accurate, then Telstra’s shares offer a generous fully franked forward 5% dividend yield at present.

More reading

• 4 top ASX 200 shares for blue chip investors
• Why I’d buy and hold Telstra shares for a decade
• Does 5G’s potential make the Telstra share price a long-term buy?
• 3 blue chip ASX dividend shares to buy right now
• Why high yield dividend shares can be detrimental to your wealth

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.

The post 2 ASX 50 shares to buy for your retirement portfolio appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) is back in the green today, posting a rise of 0.81% at the time of writing to 5,371 points.

We have now put the lows we saw for the ASX 200 in March (under 4,500 points) well and truly in the rear-view mirror but even so, we remain a long way from the all-time highs we saw in February where the ASX 200 was above 7,150 points. It will take a lot to get back to those levels.

Even though the broader market is still significantly down, there are some ASX shares sitting at 52-week highs as we speak. Here are 5 of them:

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is a payments company that is developing digital solutions to adapt the old ‘pass the hat around’ fundraising models that many organisations (like churches and charities) still rely on. One of the consequences of the coronavirus pandemic is a decisive move away from physical cash payments and clearly the market is viewing Pushpay as a winner here. Its shares made a new all-time high of $6.63 earlier today.

Evolution Mining Ltd (ASX: EVN)

Gold often goes up in value when there is a lot of uncertainty in the markets and investors have an increased appetite for ‘safe-haven’ assets. As a physical, rare and precious metal, the tangibility of gold is proving a massive drawcard for investors right now as money printing and quantitative easing become a seemingly permanent fixture of US monetary policy.

As such, the gold price is approaching record highs in US dollar terms and is at record highs in Aussie dollar terms, which is why miners of the yellow metal are in high demand right now. Evolution is one of those miners and today, Evolution shares are asking a fresh 52-week high of $5.70.

Saracen Mineral Holdings Limited (ASX: SAR)

Saracen is another ASX gold miner and has been rising for the same reasons discussed above for Evolution. Today, Saracen shares made a new 52-week and all-time high of $4.98.

Ramelius Resources Limited (ASX: RMS)

Ramelius is yet another gold miner that is benefitting from the high price of the yellow metal. Its shares hit a new 52-week high of $1.54 today. It’s not quite an all-time high for Ramelius, but its certainly the highest share price seen for this gold miner since at least 2011.

Foolish takeaway

Just because a company is at a 52-week high doesn’t mean it’s a good buy today. It could well be the start of a long journey upwards for a particular ASX share, but on the other hand, it could be the peak before a decline – it can be hard to know. If you’re thinking of buying any one of these shares, just be careful that you are making a prudent investment and not just jumping on a bandwagon.

More reading

• Brokers name 3 ASX 200 shares to buy today
• Leading fund manager sees good ASX buying opportunities
• 6 ASX shares driving the Australian gold boom
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 4 ASX shares are at 52-week highs. Time to invest? appeared first on Motley Fool Australia.

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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:

BHP Group Ltd (ASX: BHP)

According to a note out of UBS, its analysts have upgraded this mining giant’s shares to a buy rating with a $38.00 price target. The broker made the move largely on valuation grounds after a sizeable decline in its share price over the last three months. It believes this is a buying opportunity and notes that BHP is well-placed to continue paying strong dividends through the pandemic. The broker also sees the easing of lockdowns globally as a big positive. I agree with UBS on BHP and would be a buyer of its shares.

Commonwealth Bank of Australia (ASX: CBA)

Analysts at Citi have retained their buy rating and $68.75 price target on this banking giant’s shares following its third quarter update. Commonwealth Bank’s profits are running short of the broker’s expectations for the second half. However, it notes this is due to a $1.5 billion COVID-19 provision. And while the broker appears doubtful on its final dividend and has downgraded its CET1 ratio forecast, it still sees value in its shares at this level. I think Citi is spot on with this assessment and feel Commonwealth Bank’s shares are very attractively priced.

Xero Limited (ASX: XRO)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and lifted the price target on this business and accounting software provider’s shares to $88.00. Credit Suisse was pleased with Xero’s performance in FY 2020 and notes that it delivered a quality full year result. And while it has downgraded its estimates for FY 2021 slightly to reflect the impact of the pandemic, it remains very positive on its long term growth prospects. I would have to agree with Credit Suisse and feel its recent share price weakness is a buying opportunity.

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Why the best performing ASX stock might have more room to run higher
• ASX 200 up 0.8%: Big four banks push higher but Xero tumbles lower
• Where growth, income, and value investors can invest $5,000 today
• Want to invest like Warren Buffett? Buy and hold these ASX 200 shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. 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 Brokers name 3 ASX 200 shares to buy today appeared first on Motley Fool Australia.

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You can be paid huge amounts of cash to own the ASX dividend shares in this article in your portfolio.

If you’re trying to generate income then the RBA’s official interest rate of 0.25% isn’t going to do much for you unless you’re just protecting capital though the coronavirus crisis.

But there are some ASX dividend shares which will handsomely reward you for owning them over the years:

WAM Research Limited (ASX: WAX) 

WAM Research has a grossed-up dividend yield of 11.1%. It has increased its dividend every year since the GFC. There are few shares that could have provided as much dividend income to investors over the past 10 years. I think it’s one of the best ASX dividend shares.

It’s a listed investment company (LIC) that invests in undervalued small and medium businesses. It has generated lots of profit in the past, which allows the LIC to steadily pay out a growing fully franked dividend.

One pleasing factor is that it usually holds a high cash balance for downside protection and opportunities.

Naos Emerging Opportunities Company Ltd (ASX: NCC) 

Naos Emerging Opportunities Company has a grossed-up dividend yield of 13.8%. It hasn’t decreased its dividend in its fairly short existence. Recently it has been maintaining the dividend, but there was a string of increases before that. With such a high yield, just maintaining the dividend would be great from this ASX dividend share.

Naos is another LIC that invests in shares with market capitalisations under $250 million. It’s finding those shares that are undiscovered to the rest of the market. It’s then able to turn some of those capital gains into a solid dividend. Those small caps hopefully have a lot of growth potential.

Fortescue Metals Group Limited (ASX: FMG) 

Australian resource shares are known for being decent ASX dividend shares through the cycle. In the good times they are dividend cash machines.

As long as the China-Australia relationship remains amicable then Fortescue should be able to keep generating solid returns and paying those big dividends.

It currently offers a trailing grossed-up dividend yield of 11.5%. That’s a very solid yield in the current world.

Which ASX dividend share to buy

Fortescue’s yield does look attractive, but you’re up for commodity risks if you go for that one. It’s hard to pick a winner of the other two ASX dividend shares. WAM Research is trading at a sizeable premium to its net assets, though I like the cash position and added diversification that WAM Research’s portfolio has.

More reading

• Goldman Sachs names 5 reasons iron ore prices won’t crash
• Looking for dividend income? Try these 3 ASX shares
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Why high yield dividend shares can be detrimental to your wealth
• These were the top 10 ASX 200 shares over the last year

Motley Fool contributor Tristan Harrison 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 S&P/ASX 200 Index (ASX: XJO) may be storming higher on Friday, but not all shares are doing the same.

One area of the market that is missing out on today’s rebound is the travel sector.

Here’s a snapshot of the sector at the time of writing:

• The Corporate Travel Management Ltd (ASX: CTD) share price is down 3%.
• The Flight Centre Travel Group Ltd (ASX: FLT) share price is 1.5% lower.
• The Qantas Airways Limited (ASX: QAN) share price is down 1%.
• The Webjet Limited (ASX: WEB) share price is down over 0.5%.

Why are travel shares underperforming today?

Today’s underperformance appears to have been sparked by comments out of the International Air Transport Association (IATA).

On Thursday the trade association for the world’s airlines warned that the impact of the pandemic on air travel was likely to be felt for many years to come.

In fact, the IATA estimates that passenger traffic won’t rebound to pre-crisis levels until at least 2023. This would be a blow for the likes of airline operators such as Qantas and travel bookers such as Flight Centre.

Though, the IATA’s director general and CEO, Alexandre de Juniac, told CNBC that he is optimistic that more planes will be in the skies in the next six weeks.

He said: “We are asking governments to have a phased approach to restart the industry and to fly again. We are aiming at reopening and boosting the domestic market by end of the second quarter, and opening the regional or continental markets — such as Europe, North America or Asia-Pacific — by the third quarter, and intercontinental in the fall.”

Mr de Juniac also revealed that he is against the idea of 14-day quarantine periods for travellers upon arrival. Given how this is arguably the length of a typical holiday, tourism markets are likely to struggle with restrictions of this nature in place.

He explained: “We are advocating with governments not to implement quarantine measures that will retain people for two weeks that will arrive anywhere. We think that it is useless provided we have implemented the health and sanitary controls that we are discussing with governments. It is absolutely key for the tourist industry which is so important for so many countries in Europe.”

It certainly looks like it will be an eventful few months for Australian travel shares. 

More reading

• Why Boral, Corporate Travel Management, United Malt, & Xero are dropping lower
• Broker tips 10 ASX 200 shares for a post-coronavirus recovery
• Why Beach, CBA, Qantas, & Xero shares are dropping lower
• Are ASX travel shares like Qantas great value?
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group 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 Why Qantas, Webjet and these ASX travel shares are dropping lower today appeared first on Motley Fool Australia.

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