Tag: Motley Fool Australia

There are some ASX dividend shares out there raising dividends like clockwork.

I think it’s particularly important to find businesses growing their dividends. If a business isn’t growing their dividend then it suggests the business is struggling to grow their earnings. It may suggest that the board thinks the business needs to hang onto cash just to tread water.

After Ramsay Health Care Limited’s (ASX: RHC) recent dividend suspension due to coronavirus impacts, there aren’t many shares left with solid dividend records.

Here are three ASX dividend shares that are growing their dividends like clockwork:

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

Soul Patts is now the ASX dividend share king of Australia. It is the only business to have increased its dividend every year since 2000.

The investment conglomerate has a diversified portfolio of listed and unlisted businesses. Some of its biggest holdings include shares like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW).

Its investments and other assets provide an attractive source of dividends, distributions, interest and so on. Soul Patts retains a certain amount of this each year to re-invest into more opportunities. It retained around 20% of its net regular operating cashflow in FY19.

Soul Patts has paid a dividend every year in its existence, which is a record that extends over a century.

Management have already guided that the dividend is expected to increase at the full year result later this year.

APA Group (ASX: APA) 

APA is another of the ASX dividend shares that has a record going back before the GFC. It has increased its distribution every year for a decade and a half.

What is APA? It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

There continues to be solid demand across the country for gas. More people are cooking at home. It’s getting into the colder months in the southern states.

APA funds its annual distribution from the cashflow that it makes. The distribution and cashflow have been growing nicely over the past decade.

The infrastructure giant continues to invest in new projects that will earn more cashflow in the future. This should help the distribution to keep growing.  

Rural Funds Group (ASX: RFF) 

Rural Funds is a farmland real estate investment trust (REIT). It owns an impressive portfolio of farms including almonds, cattle, cotton, vineyards and macadamias.

The farmland trust aims to grow the distribution by 4% a year, this goal comfortably beats the current inflation rate. It’s able to go for that level of growth through contracted rental indexation and investing in productivity improvements at its farms. It will occasionally make an acquisition which will presumably be accretive for unitholders.

It could be one of the best ASX dividend shares.

Farmland has been a solid performer over the years and 2020 is predicted to be another good year. Food security will become more important over the next decade, particularly if the global population keeps growing and some global farmland degrades in the 2020s.

It hasn’t been listed on the ASX that long, but its distribution increase record has been on target over the past five years.

Foolish takeaway

All three of these ASX dividend shares have been increasing their payments for many years. I think Soul Patts is by far the best dividend share on the ASX in terms of reliability and growth. It would be my pick dividend pick.

More reading

• 2 safe ASX dividend shares for income investors to buy right now
• Why I’m even more confident about the Soul Patts share price
• How to make a $1 million share portfolio by investing $1,000 a month
• Bring your portfolio to life with these quality ASX healthcare shares
• 2 blue chip ASX healthcare shares to buy right now

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 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.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Collins Foods Ltd (ASX: CKF)

A note out of UBS reveals that its analysts have upgraded this quick service restaurant operator’s shares to a buy rating with a slightly reduced price target of $8.95. According to the note, the broker was pleased to see the company’s KFC Australia operations have been performing well during the pandemic. In light of this, its defensive qualities, and attractive valuation, the broker believes Collins Foods’ shares are in the buy zone. I would agree with UBS on this one and feel it would be a good option for investors.

Harvey Norman Holdings Limited (ASX: HVN)

According to a note out of Goldman Sachs, its analysts have upgraded the retailer’s shares to a buy rating with an improved price target of $3.85. The broker made the move after industry feedback suggested that sales trends are proving more resilient across the sector than expected only a few months ago. In light of this, the broker has updated its forecasts for Harvey Norman in FY 2020 and FY 2021. While not my favourite option in the retail sector, I think it could be worth a closer look at this level.

NEXTDC Ltd (ASX: NXT)

Analysts at Morgan Stanley have retained their overweight rating and lifted the price target on this data centre operator’s shares to $10.50. According to the note, the broker believes NEXTDC is well-positioned for growth thanks to its ability to take advantage of the accelerated demand for cloud services. This follows the announcements of major new contracts in Melbourne and Sydney in recent weeks. The latter has led to the company pushing ahead with the construction of its third data centre in the city. I agree with Morgan Stanley and feel NEXTDC would be a great long term option.

More reading

• What to watch on the ASX 200 next week
• The ASX 200 blue chip shares I would buy with $5,000 after the market crash
• Top broker urging you to buy this ASX 200 retail stock next week
• Why I’d buy and hold CSL shares forever
• These were the best performing ASX 200 shares last week

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited and NEXTDC Limited. The Motley Fool Australia has recommended Collins Foods 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 S&P/ASX 200 Index (ASX: XJO) was on form again last week and recorded its second consecutive weekly gain. The benchmark index climbed 2.8% to 5391.1 points.

Next week is going to be another busy one for investors. Here are a few things to watch:

Wall Street ends the week on a high.

U.S. equities finished the week on a high on Friday despite record U.S. job losses. The Dow Jones pushed 1.9% higher, the S&P 500 climbed 1.7%, and the Nasdaq index continued its positive run with a 1.6% gain. Although a record 20.5 million jobs were lost last month, investors appear confident the worst of the coronavirus and its impact on the U.S. economy has passed. Back home, current SPI futures are pointing to a gain at the open on Monday for the ASX 200 index.

Commonwealth Bank third quarter update.

All eyes will be on the Commonwealth Bank of Australia (ASX: CBA) share price on Wednesday when Australia’s largest bank releases its third quarter update. Some analysts have tipped the banking giant to reveal its expectations for provisions in FY 2020. There is speculation that Commonwealth Bank’s bad debt provisions could be as high as $3 billion because of the coronavirus pandemic.

Xero full year result.

On Thursday investor attention will turn to market darling Xero Limited (ASX: XRO). It is scheduled to release its full year results before the market open. Expectations are high for the business and accounting software provider after a stunning performance in the first half of FY 2020. During the half Xero reported a 32% increase in operating revenue to NZ$338.7 million and total subscriber growth of 30% to 2.057 million.

Caltex annual general meeting.

Also on Thursday is the Caltex Australia Limited (ASX: CTX) annual general meeting from Sydney. Due to the pandemic and social distancing measures, the fuel retailer will be streaming its meeting online. Its shareholders will have the opportunity to participate by asking questions online during the meeting. It is likely to provide an update on current trading conditions and its expectations for the rest of the year.

Returns as of 6/5/2020

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.

More reading

• The ASX 200 blue chip shares I would buy with $5,000 after the market crash
• Top broker urging you to buy this ASX 200 retail stock next week
• 2 high yield ASX dividend shares to hold for a decade
• Why I’d buy and hold CSL shares forever
• These were the best performing ASX 200 shares last week

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Buying high quality shares and holding them for long periods may not be an exciting get-rich-quick strategy, but it is a proven strategy that has the potential to generate significant wealth over the long term.

Some of the world’s richest people, such as legendary investor Warren Buffett, have used this strategy to build their fortunes and there is nothing to stop you from doing the same.

With that in mind, here are three shares that I think would be fantastic buy and hold options:

A2 Milk Company Ltd (ASX: A2M)

This New Zealand-based infant formula and fresh milk company has been one of the best performers on the ASX over the last five years. This strong form has been driven largely by the increasing demand for its a2-only infant formula products in the China market. The good news is that the company still only has a modest share of the key market, thus giving it plenty of room for growth in the coming years. Combined with its expanding fresh milk footprint and its sizeable cash balance that could be used for acquisitions, I believe it is well-placed for further strong growth over the next decade.

Altium Limited (ASX: ALU)

Another ASX 200 share that I think could generate strong returns for investors over the next 10 years is Altium. It is a printed circuit board (PCB) focused design software company which look perfectly positioned to benefit from the rapidly growing Internet of Things market. This market is expected to grow to be worth upwards of US$1.2 trillion in 2022. Given how integral PCBs are in the design process for IoT devices, Altium’s industry-leading software looks likely to be in demand with product designers and engineers for a long time to come.

CSL Limited (ASX: CSL)

A final buy and hold option to consider is CSL. Whilst its shares trade at a notable premium to the market average, they always have done. And yet despite this, they have consistently generated outsized returns for investors over the last decade. Pleasingly, I expect this to remain the case over the next 10 years thanks to the quality and growth prospects of its CSL Behring plasma therapy business and its Seqirus influenza vaccines business. 

More reading

• Why I’d buy and hold CSL shares forever
• How to make a $1 million share portfolio by investing $1,000 a month
• How to build your first ASX share portfolio
• How to find winning ASX shares in a recession
• 3 star ASX shares to buy for the rest of 2020

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 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.

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It certainly has been a difficult year for income investors. The cash rate is at a record low of 0.25% and many of the most popular dividend shares have either deferred or cancelled their dividends.

The good news is that despite this, it is still possible to earn a decent income this year on the share market.

This is thanks to a number of dividend-paying companies that are well-placed to continue their growth in 2020 despite the pandemic.

Two safe dividend shares I would buy today for income are listed below:

Dicker Data Ltd (ASX: DDR)

The first dividend share to consider buying right now is Dicker Data. I’ve been very impressed with the way the company has continued to perform strongly this year despite the pandemic. Last month it revealed that its first quarter profits grew 36.3% on the prior corresponding period to $18.4 million. This was driven partly by increasing demand for working at home software and hardware. The company also revealed plans to increase its fully franked dividend by 31% to 35.5 cents per share in FY 2020. This represents a 5% fully franked dividend yield which will be paid in quarterly instalments.

Rural Funds Group (ASX: RFF)

Another good option for income investors could be this agriculture-focused property group. Rural Funds owns a large number of assets across several agricultural industries. These assets are of a high quality and are tenanted on long term agreements by many of the largest food producers in Australia. In light of this, I believe Rural Funds is well-positioned to continue growing its distribution at a consistently solid rate for a long time to come. In FY 2021 the company intends to lift its distribution to 11.28 cents per share. This works out to be a forward 5.9% distribution yield.

More reading

• Do you have $3,000 to invest in these 3 top ASX dividend shares?
• Why Dicker Data, Medibank, Mesoblast, & Orora are dropping lower
• This ASX dividend share is the latest to raise capital amid COVID-19
• Westpac tips the cash rate to stay at 0.25% until the end of 2023
• Why this stock is retiree’s dream ASX share for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited 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 Afterpay Ltd (ASX: APT) share price was a very impressive performer once again last week.

During the period the payments company’s shares smashed the S&P/ASX 200 Index (ASX: XJO) with a stunning 37% gain.

This gain means that Afterpay’s shares have now climbed 400% since crashing to a 52-week low of $8.01 in March.

Why did the Afterpay share price rocket higher?

The catalyst for Afterpay’s gain last week was news that Tencent Holdings has become a substantial shareholder.

This is potentially a bigger deal than first meets the eye. Tencent Holdings is the US$500 billion owner of the WeChat app which dominates the China market.

WeChat is a multi-purpose messaging, social media and mobile payment app which has over 1.1 billion monthly users.

The payment side of the business has been growing particularly strongly for Tencent. In the fourth quarter of 2019 it exceeded 1 billion daily average transactions for its commercial payments, covered over 800 million monthly active users, and worked with over 50 million monthly active merchants.

Clearly, a partnership of some kind in the future between the two parties could have a material benefit for Afterpay.

Afterpay certainly recognises this. Commenting on the substantial shareholder news, it said: “Tencent’s investment provides us with the opportunity to learn from one of the world’s most successful digital platform businesses. To be able to tap into Tencent’s vast experience and network is valuable, as is the potential to collaborate in areas such as technology, geographic expansion and future payment options on the Afterpay platform.”

This was echoed by Tencent’s chief strategy officer, James Mitchell.

He said: “Afterpay’s approach stands out to us not just for its attractive business model characteristics, but also because its service aligns so well with consumer trends we see developing globally in terms of Afterpay’s customer centric, interest free approach as well as its integrated retail presence and ability to add significant value for its merchant base”. 

Is it too late to invest?

While Afterpay clearly isn’t the bargain buy that it was just a little over six weeks ago, I still see a lot of value in its shares for long term focused investors.

There’s no guarantee that Tencent’s shareholding will lead to an expansion into Asia in the future, but if it does, combined with its existing operations and probable expansion into continental Europe, Afterpay looks well positioned to grow into a global payments giant over the next decade.

More reading

• These are the star ASX shares of the week
• These were the best performing ASX 200 shares last week
• Who is Tencent, Afterpay’s new investor?
• Why ASX payments shares might be the biggest winners of the 2020s
• Afterpay competitor Zip Co rockets higher after reporting 86% increase in April volumes

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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This week I became even more confident about Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). I think the Soul Patts share price looks even better because it’s expanding into a new industry.

According to reporting by the Australian Financial Review, Soul Patts is going to expand into data centres. It could be a very good move considering the current coronavirus conditions may make more people work from home permanently.

Soul Patts is not doing it alone, it’s taking a “significant” stake and help Leading Edge Data Centres grow.

The idea is to build smaller data centres in regional locations like Newcastle, Albury and Coffs Harbour. There’s a lot of data centre competition in the capital cities, but the regional areas also need the services and advantages provided by data centres.

It could even turn into a positive self-fulfilling loop. If the regional areas have the technology to support high-tech work then more people could move there and away from the congestion and high cost of living in those capital cities.

According to the AFR, Soul Patts believes that Leading Edge has the right relationships, sites and configuration to make a profitable go at the venture.

Why does this make me more confident about the Soul Patts share price?

The Soul Patts share price has been a good performer over the decades. The investment house’s current largest holdings are businesses like TPG Telecom Ltd (ASX: TPM), New Hope Corporation Limited (ASX: NHC) and Australian Pharmaceutical Industries Ltd (ASX: API). These businesses may generate good dividends for Soul Patts but there’s not going to be a lot of growth.

Those investments started off as small holdings and grew. Brickworks Limited (ASX: BKW) has a bit more growth potential but it’s going to be these new, smaller investments that drive future growth for Soul Patts.

I’m not just investing at today’s Soul Patts share price with only today’s investments in mind, but I’m thinking about the way the company will pivot towards growth and new industries in the coming years. That ability to regenerate the portfolio means Soul Patts can keep making good returns over the very long-term.

Foolish takeaway

At this share price Soul Patts offers a grossed-up dividend yield of 4.8%. I think we can be well rewarded for holding the company for the long-term with a very reliable growing dividend. I’d be very happy to buy some shares at this price.

More reading

• How to make a $1 million share portfolio by investing $1,000 a month
• 2 ASX shares I’ll hold until I’m 100
• 3 ASX dividend shares I would buy instead of the ASX banks today
• Why high dividend paying ASX shares are still the best way to secure a regular investment income
• 2 ASX shares to hold forever

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re wanting to add some blue chip ASX shares to your portfolio, then now could be a good time to do it.

This is because the market crash this year has dragged many blue chips down to levels which look extremely attractive to me.

Three blue chip ASX shares that I would buy with $5,000 are listed below. Here’s why I like them:

REA Group Limited (ASX: REA)

The first blue chip to consider is REA Group. I’m a big fan of the realestate.com.au operator due to its high quality business model that continues to demonstrate its resilience. Last week the property listings company released its third quarter update and revealed a 1% increase in revenue to $199.8 million and an 8% lift in EBITDA to $119.6 million. This was despite a 7% decline in listings during the quarter. And while listings in the fourth quarter are likely to be markedly lower, its cost cutting plan looks set to offset much of this. Looking further ahead, when conditions improve I expect REA Group’s earnings growth to accelerate once again.

SEEK Limited (ASX: SEK)

Another blue chip to consider buying is SEEK. I think this job listings company would be a great long-term option due to its very positive long term growth outlook. In FY 2019 SEEK delivered revenue of $1,537.3 million, which was up 18% on the prior corresponding period. Whereas now, management has set itself an aspirational revenue target of $5 billion by FY 2025. While this may be pushed back because of the coronavirus pandemic, I still expect the company to get there this decade. This could make it worth buying its shares and holding them for the long term.

Telstra Corporation Ltd (ASX: TLS)

A final blue chip share I would consider buying is Telstra. Although times have been hard for Telstra, I believe a return to growth isn’t too far away. This is because the headwind from the NBN rollout is close to peaking and rational competition has returned in the industry. Combined with its massive cost cutting plans and the arrival of 5G internet, I think the future is looking a lot brighter for this telco giant.

More reading

• Top broker urging you to buy this ASX 200 retail stock next week
• Why I’d buy and hold CSL shares forever
• These were the best performing ASX 200 shares last week
• Highlights from the week: ASX 200 rises 2.75%
• These were the worst performing ASX 200 shares last week

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended REA Group Limited and SEEK 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 retail sector is making a big comeback!

Consumer stocks outperformed the S&P/ASX 200 Index (Index:^AXJO) on Friday as the sector got a boost from the expected reopening of our economy from the COVID-19 pandemic.

We are likely to see a further re-rating of the consumer discretionary sector as the government’s three-step plan to loosen social restrictions over the coming months is implemented

The Wesfarmers Ltd (ASX: WES) share price jumped 2.9% to $37.45 while the JB Hi-Fi Limited (ASX: JBH) share price rallied 3.7% to $35.36.

One standout retailer

But it’s the Harvey Norman Holdings Limited (ASX: HVN) that is leading the charge with shares in the electrical and home furniture franchisor surging 6.7% to $3.03 yesterday.

Harvey Norman is getting an extra boost after Goldman Sachs upgraded the stock to “buy” on Friday, and the broker is forecasting further share price gains for the retail group.

“Industry feedback across listed and unlisted peers suggests sales trends and, to a lesser extent, profit conditions are proving more resilient across the sector than expected only a matter of months ago,” said Goldman Sachs.

“Despite the better than expected industry trends, HVN’s share price has not recovered from the March sell off, substantially underperforming the market by 15.5% since a recent high on February 19th.”

Improved outlook for retail

While it’s near impossible for anyone to confidently predict the outlook for FY21, Australia managed to contain the coronavirus outbreak better than many had feared.

A number of retailers have also delivered better than expected updates recently. This includes linen and homewares chain Adairs Ltd (ASX: ADH) and furniture retailer Nick Scali Limited (ASX: NCK).

The easing headwinds buffeting retailers prompted Goldman Sachs to upgrade its forecasts for the sector, and it won’t be the only broker taking a more favourable view to retail stocks.

Is Harvey Norman cheap?

“We forecast HVN is trading at 11.7x FY21 PE (50% discount to ASX200 Industrials), despite FY21 EPS being 16% below FY19,” said Goldman Sachs.

“On a property adjusted basis, we estimate HVN’s retail operations are trading at 3.0x PE in FY21.”

Goldman Sachs lifted its 12-month price target on Harvey Norman to $3.85 from $3.45 a share.

Looking for other stocks that can outperform as we emerge from the COVID-19 shutdown? The experts at the Motley Fool are tipping these ASX shares to race ahead.

Click on the link below to find out what these stocks are for free.

More reading

• ASX shares and investing trends that could boom post COVID-19
• Why I’d buy and hold CSL shares forever
• These were the best performing ASX 200 shares last week
• Highlights from the week: ASX 200 rises 2.75%
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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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