Tag: Motley Fool Australia

Last week was a disappointing one for the S&P/ASX 200 Index (ASX: XJO). A poor finish to the week led to the benchmark index falling 1.6% over the period to 5,927.8 points.

Investors will no doubt be hoping for better next week. Ahead of another eventful week, I thought I would take a look to see what we should be watching out for.

Here are five things to watch next week:

ASX futures flat.

The ASX 200 looks set to have a subdued start to the week. According to the latest SPI futures, the ASX 200 is expected to fall 1 point at the open on Monday. This is despite a positive end to the week on Wall Street on Friday, which saw the Dow Jones rise 0.45%, the S&P 500 push 0.8% higher, and the Nasdaq index jump 1.5%. The latter was supported by the Apple share price, which surged 10% higher after its quarterly update. The tech giant is now the world’s most valuable company.

REA Group results.

The REA Group Limited (ASX: REA) share price will be one to watch on Friday when the property listings giant releases its full year results. According to CommSec, analysts are expecting the company to deliver a full year net profit after tax of $263.12 million. This will be a decline from $295.5 million in FY 2019, which isn’t a bad result all things considered. A final dividend of 51 cents per share is also expected to be declared.

Reserve Bank meeting.

On Tuesday the Reserve Bank of Australia will meet to discuss the cash rate. At present, the market is pricing in a 57% probability of a rate cut to zero at the meeting. While this means a cut is reasonably unlikely, it certainly is in play. Especially given the recent strengthening of the Australian dollar versus the greenback.

BWP results.

Bunnings Warehouse landlord BWP Trust (ASX: BWP) is scheduled to release its full year results on Tuesday. In June the company revealed that it has been collecting rent largely as normal during the pandemic. As a result, it expects to declare a second half distribution of 9.27 cents per unit. This will bring its full year distribution to 18.29 cents per unit, up 1% on the prior financial year. According to CommSec, analysts expect a full year profit of $117 million.

Insurance Australia results.

All eyes will be on the Insurance Australia Group Ltd (ASX: IAG) share price on Friday when it hands in its full year results. According to CommSec, the market is expecting the insurance giant to post a net profit after tax of $444.83 million. Last month the company advised that no final dividend would be declared. It commented: “While IAG recognises many shareholders will be disappointed with no final dividend, it believes it is important to adhere to its long-established dividend payout policy and to maintain a strong capital position in the current uncertain environment.”

More reading

• These were the worst performing shares on the ASX 200 in July
• These were the best performing shares on the ASX 200 in July
• These were the best performing shares on the ASX 200 last week
• These were the worst performing shares on the ASX 200 last week
• ASX 200 drops 2%, ASX banks fall, Super Retail jumps

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA 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 5 things to watch on the ASX 200 next week appeared first on Motley Fool Australia.

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The stock market has a long track record of recovery. Therefore, even though the coronavirus pandemic could cause further challenges for a large number of businesses, the long-term prospects for equity investors could be very positive.

With the world economy also having an encouraging track record of returning to positive growth after recessions, and major economies enacting stimulus packages, the turnaround potential for shares appears to be high.

As such, now could be the right time to buy a diverse range of shares in order to benefit from a recovery after the pandemic.

Stock market track record

It’s easy to look back on previous stock market downturns and fail to appreciate the mood among investors when they were in full swing. For example, a glance at the long-term performance of major indices such as the S&P 500 makes the tech bubble seem like a blip on its path to growth. However, at the time, there were major concerns among investors regarding the outlook for the economy. This caused many stocks to collapse in value, which left many investors with serious losses.

However, equities went on to recover from the tech bubble, and from other declines such as the financial crisis, to post strong returns. Therefore, even though investor sentiment is relatively weak at the present time, and further challenges could yet be ahead in the short run, the prospect of a recovery for stock prices seems to be high. Its track record is very solid, with investors who buy while risks are high having often been among the major beneficiaries during a subsequent recovery.

Economic improvements

Any stock market recovery is often predicated on the prospect of an economic recovery. On this front, the prospects for long-term investors are relatively bright. The world economy may face threats such as geopolitical risks in Europe, and a continued rise in coronavirus cases, but it has always been able to return to positive growth following its recessions.

Certainly, the current recession could be greater than has been experienced for many years. However, confidence among consumers and businesses is likely to recover over time. For long-term investors, this could mean that now is an attractive opportunity to buy shares.

Stimulus packages

The stock market rebound has been aided greatly by fiscal and monetary policy stimulus packages introduced in a variety of major economies. Furthermore, policymakers have made it clear that further stimulus is available should it be required.

This could significantly aid the recovery in equity prices over the coming years from the present pandemic. It may help to provide liquidity to a wide range of businesses, which could help them to survive the short run. It may also encourage asset price growth over the long run, which took place following the financial crisis. This could aid the performance of stock prices, and help you to improve your financial position over the coming years.

More reading

• These were the worst performing shares on the ASX 200 in July
• 7 ASX shares to watch this reporting season
• Top brokers name 3 ASX shares to sell next week
• These were the best performing shares on the ASX 200 in July
• 5 things to watch on the ASX 200 next week

Motley Fool contributor Peter Stephens 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 3 reasons why I think the stock market will recover after this pandemic appeared first on Motley Fool Australia.

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Investing is like many things in life – the hardest part can be just getting started! If you’re financially organised enough to have some funds to start your investment journey, congratulations! Here are the next steps to building your investment portfolio. 

Roadblocks

Fear and uncertainty are two of the biggest roadblocks that prevent people from taking action to realise their plans. If you knew what the outcome of a decision would be, you would know how to make the decision. But we don’t know what the future holds. 

Investing can be confusing – there are so many options to consider – shares, options, exchange-traded funds (ETFs), bonds…the list goes on. We all want to make optimal choices about how to invest our money. The key is to understand your goals, understand your options and match the two appropriately. 

When we buy a share, we are essentially taking a gamble on the future profitability of a company. We can’t know ahead of time what this will be. What we can do is thoroughly research the company, its market, and the prevailing economic forces to make an informed decision. Then, we can monitor the progress of our investments and any changes in their operating environments. 

Goals and time frames

Share prices fluctuate on a daily basis. Individual share prices react to company-specific factors as well as economy-wide factors. The market as a whole can be volatile. Over time, however, higher risk shares tend to outperform lower risk asset classes such as bonds. Over the last 100 years, ASX shares have, on average, provided a real return (after inflation) of 6%. 

Naturally, there have been times when shares have returned less than than ‘risk-free’ assets. During the GFC (global financial crisis) the S&P/ASX 200 (ASX: XJO) fell more than 53%. This is one of the reasons why investors in ASX shares should have a time horizon of at least around 5 years. Equities are typically a longer-term investment as time helps to mitigate short-term risk and smooth out fluctuations in price and performance. If you’re going to need your capital in the next couple of years, you may be better off choosing a lower risk option like a term deposit. 

Diversification

The price of individual ASX shares moves daily (sometimes dramatically) and often without much notice. But not all ASX share prices move the same way at the same time. By spreading your money across a variety of shares, your overall return will be less volatile. This is known as diversification. Diversifying involves building a portfolio of multiple holdings across different industries and sectors. 

A diversified portfolio will be less exposed to the impact of events affecting a particular company or industry. This leaves the portfolio holder less exposed – if a particular business or sector isn’t performing well, you won’t lose all your money. Some companies in your portfolio may perform better than others, improving overall returns.  

Diversification can occur not just across the share market, but across asset classes. ASX shares are an obvious place to start an investment portfolio, but there are also international shares, government and corporate bonds, and property. The returns on these asset classes are not perfectly correlated so holding a basket of them reduces the overall risk of your portfolio. 

Investments

So where to invest your $5,000? This will depend on what you’re trying to achieve. If you’re looking for long-term capital growth, you may want to consider high growth companies such as Appen Ltd (ASX: APX) and Afterpay Ltd (ASX: APT). If you’re looking to generate income, you will instead look to ASX shares with a track record of paying dividends like Fortescue Metals Group Limited (ASX: FMG) or AGL Energy Limited (ASX: AGL).

To achieve maximum market exposure and sufficient diversification, including some ETFs could be a good option. ETFs are funds which are traded on the stock exchange like ordinary shares. The funds hold assets such as shares, bonds, commodities, or other investments. Because ETFs hold multiple assets and usually charge low management fees, they are a popular choice for diversification. 

The Betashares Australia 200 ETF (ASX: A200) provides exposure to the largest 200 companies listed on the ASX based on market capitalisation. The S&P/ASX 200 (ASX: XJO) changes quarterly as companies’ market capitalisations rise and fall. In the most recent quarterly update, Mesoblast Limited (ASX: MSB), Megaport Ltd (ASX: MP1), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) joined the index. Estia Health Ltd (ASX: EHE), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), and Pilbara Minerals Ltd (ASX: PLS) were removed. 

ASX shares you use 

Investors can also find it useful to invest in companies that they are actually a customer of. After all, if you think a company provides a good product or service, others probably will too. Becoming a shareholder in these companies means you stand to receive a portion of the money you spend with a company back in the form of dividends. 

For example, do you shop at Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW)? Do you buy online at Kogan.com Ltd (ASX: KGN) or Temple & Webster Group Ltd (ASX: TPW)? Do you use buy now, pay later services like those offered by Afterpay or Splitit Ltd (ASX: SPT)? If so, it may be worth investigating the investment potential of these companies. 

International shares

To mix things up a bit, it can be worth adding some international exposure to your portfolio. The VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL) provides exposure to some of the largest listed companies in the world outside of Australia. The fund provides access to 300 international shares in a single trade. Top holdings include Apple Inc, Microsoft Corp, Facebook Inc, Visa Inc, Johnson & Johnson, Alphabet Inc, MasterCard Inc, Procter & Gamble Inc, and Roche Holding AG. 

Foolish takeaway 

Deciding how much of your $5,000 to invest in each option will depend on your risk profile and investment goals. If you are comfortable with more risk, you may devote more funds to growth shares. If you are more risk averse, a more conservative portfolio may be appropriate. 

More reading

• 7 ASX shares to watch this reporting season
• Top brokers name 3 ASX shares to sell next week
• These were the best performing shares on the ASX 200 in July
• 3 of the best ASX dividend shares to buy right now
• 3 ASX dividend shares for dependable income

Kate O’Brien owns shares of Appen Ltd and Mayne Pharma Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended Kogan.com ltd, MEGAPORT FPO, and Temple & Webster Group 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 Here’s how to start investing with $5k appeared first on Motley Fool Australia.

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Investing is like many things in life – the hardest part can be just getting started! If you’re financially organised enough to have some funds to start your investment journey, congratulations! Here are the next steps to building your investment portfolio. 

Roadblocks

Fear and uncertainty are two of the biggest roadblocks that prevent people from taking action to realise their plans. If you knew what the outcome of a decision would be, you would know how to make the decision. But we don’t know what the future holds. 

Investing can be confusing – there are so many options to consider – shares, options, exchange-traded funds (ETFs), bonds…the list goes on. We all want to make optimal choices about how to invest our money. The key is to understand your goals, understand your options and match the two appropriately. 

When we buy a share, we are essentially taking a gamble on the future profitability of a company. We can’t know ahead of time what this will be. What we can do is thoroughly research the company, its market, and the prevailing economic forces to make an informed decision. Then, we can monitor the progress of our investments and any changes in their operating environments. 

Goals and time frames

Share prices fluctuate on a daily basis. Individual share prices react to company-specific factors as well as economy-wide factors. The market as a whole can be volatile. Over time, however, higher risk shares tend to outperform lower risk asset classes such as bonds. Over the last 100 years, ASX shares have, on average, provided a real return (after inflation) of 6%. 

Naturally, there have been times when shares have returned less than than ‘risk-free’ assets. During the GFC (global financial crisis) the S&P/ASX 200 (ASX: XJO) fell more than 53%. This is one of the reasons why investors in ASX shares should have a time horizon of at least around 5 years. Equities are typically a longer-term investment as time helps to mitigate short-term risk and smooth out fluctuations in price and performance. If you’re going to need your capital in the next couple of years, you may be better off choosing a lower risk option like a term deposit. 

Diversification

The price of individual ASX shares moves daily (sometimes dramatically) and often without much notice. But not all ASX share prices move the same way at the same time. By spreading your money across a variety of shares, your overall return will be less volatile. This is known as diversification. Diversifying involves building a portfolio of multiple holdings across different industries and sectors. 

A diversified portfolio will be less exposed to the impact of events affecting a particular company or industry. This leaves the portfolio holder less exposed – if a particular business or sector isn’t performing well, you won’t lose all your money. Some companies in your portfolio may perform better than others, improving overall returns.  

Diversification can occur not just across the share market, but across asset classes. ASX shares are an obvious place to start an investment portfolio, but there are also international shares, government and corporate bonds, and property. The returns on these asset classes are not perfectly correlated so holding a basket of them reduces the overall risk of your portfolio. 

Investments

So where to invest your $5,000? This will depend on what you’re trying to achieve. If you’re looking for long-term capital growth, you may want to consider high growth companies such as Appen Ltd (ASX: APX) and Afterpay Ltd (ASX: APT). If you’re looking to generate income, you will instead look to ASX shares with a track record of paying dividends like Fortescue Metals Group Limited (ASX: FMG) or AGL Energy Limited (ASX: AGL).

To achieve maximum market exposure and sufficient diversification, including some ETFs could be a good option. ETFs are funds which are traded on the stock exchange like ordinary shares. The funds hold assets such as shares, bonds, commodities, or other investments. Because ETFs hold multiple assets and usually charge low management fees, they are a popular choice for diversification. 

The Betashares Australia 200 ETF (ASX: A200) provides exposure to the largest 200 companies listed on the ASX based on market capitalisation. The S&P/ASX 200 (ASX: XJO) changes quarterly as companies’ market capitalisations rise and fall. In the most recent quarterly update, Mesoblast Limited (ASX: MSB), Megaport Ltd (ASX: MP1), Omni Bridgeway Ltd (ASX: OBL), and Perseus Mining Limited (ASX: PRU) joined the index. Estia Health Ltd (ASX: EHE), Jumbo Interactive Ltd (ASX: JIN), Mayne Pharma Group Ltd (ASX: MYX), and Pilbara Minerals Ltd (ASX: PLS) were removed. 

ASX shares you use 

Investors can also find it useful to invest in companies that they are actually a customer of. After all, if you think a company provides a good product or service, others probably will too. Becoming a shareholder in these companies means you stand to receive a portion of the money you spend with a company back in the form of dividends. 

For example, do you shop at Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW)? Do you buy online at Kogan.com Ltd (ASX: KGN) or Temple & Webster Group Ltd (ASX: TPW)? Do you use buy now, pay later services like those offered by Afterpay or Splitit Ltd (ASX: SPT)? If so, it may be worth investigating the investment potential of these companies. 

International shares

To mix things up a bit, it can be worth adding some international exposure to your portfolio. The VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL) provides exposure to some of the largest listed companies in the world outside of Australia. The fund provides access to 300 international shares in a single trade. Top holdings include Apple Inc, Microsoft Corp, Facebook Inc, Visa Inc, Johnson & Johnson, Alphabet Inc, MasterCard Inc, Procter & Gamble Inc, and Roche Holding AG. 

Foolish takeaway 

Deciding how much of your $5,000 to invest in each option will depend on your risk profile and investment goals. If you are comfortable with more risk, you may devote more funds to growth shares. If you are more risk averse, a more conservative portfolio may be appropriate. 

More reading

• Top brokers name 3 ASX shares to sell next week
• These were the best performing shares on the ASX 200 in July
• 3 of the best ASX dividend shares to buy right now
• 3 ASX dividend shares for dependable income
• Is the Woolworths share price in the buy zone?

Kate O’Brien owns shares of Appen Ltd and Mayne Pharma Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, Appen Ltd, COLESGROUP DEF SET, and Woolworths Limited. The Motley Fool Australia has recommended Kogan.com ltd, MEGAPORT FPO, and Temple & Webster Group 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 Here’s how to start investing with $5k appeared first on Motley Fool Australia.

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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:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of UBS, its analysts have retained their buy rating and $29.60 price target on this gaming technology company’s shares. The broker notes that an industry survey shows that Aristocrat’s gaming machine sales fell less than expected during the June quarter. It also shows that its games are in demand, with three out of the top five premium leased machines belonging to Aristocrat. Though, it has warned that its second half earnings could underwhelm due to casino closures. I agree with UBS and believe Aristocrat Leisure would be a great long term investment option.

Corporate Travel Management Ltd (ASX: CTD)

A note out of Ord Minnett reveals that its analysts have upgraded this corporate travel company’s shares to a buy rating with an improved price target of $12.97. According to the note, Ord Minnett believes it has more than enough liquidity to ride out the pandemic. It notes that this is a luxury that many of its competitors do not have. In light of this, the broker appears to believe Corporate Travel Management could come out of the crisis in a stronger position. Although I think Ord Minnett makes some great points, I intend to wait for the crisis to pass before considering an investment.

CSL Limited (ASX: CSL)

Another note out of UBS reveals that its analysts have retained their buy rating and $331.00 price target on this biotherapeutics company’s shares ahead of its full year results in August. According to the note, the broker expects CSL to deliver a 15% increase in profit in FY 2020. And while it notes that CSL is facing headwinds in FY 2021, it appears optimistic that its vaccine sales will offset some of this. I agree with UBS on this one as well and would be a buyer of its shares.

More reading

• Is the Woolworths share price in the buy zone?
• 3 top ASX shares to buy and hold for at least a decade
• Brokers name 3 ASX 200 shares to buy right now
• 3 underloved ASX healthcare shares with strong comeback potential
• 2 must-buy ASX 50 shares to snap up today

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 and has recommended Corporate Travel Management 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 Top brokers name 3 ASX shares to buy next week appeared first on Motley Fool Australia.

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A second market crash may or may not occur following the recent rebound in equity prices. As such, investors may wish to purchase cheap shares today while they offer good value for money in many cases, ahead of a likely long-term stock market recovery.

Of course, keeping some cash on hand in case more attractive buying opportunities come along could be a sound move. However, with many sectors appearing to offer wide margins of safety, investors may wish to invest a large proportion of their portfolio while their prices are temporarily low.

Predicting another market crash

Trying to predict when a market crash will occur is almost impossible. For example, at the present time the stock market faces numerous risks that could realistically weigh on the world economy’s prospects. However, at the same time it could be argued that many of those risks are already factored into share prices. Therefore, they may not necessarily cause a severe decline in stock prices should they come to fruition.

Investors may wish to take advantage of low prices while they are on offer. The past performance of the stock market suggests that its downturns do not last in perpetuity, and can quickly give way to sustained bull markets that offer high returns. This may mean that focusing your capital on stocks, rather than other assets, could be a shrewd move. It may not necessarily lead to high returns in the short run, but could produce relatively high capital growth in the coming years.

Cheap shares

While some sectors have rebounded following the recent market crash, other industries continue to be exceptionally unpopular among investors. For example, energy, leisure and retail stocks are trading significantly below their long-term averages in many cases. This suggests that they may offer wide margins of safety, and that investors are adopting a cautious stance regarding their prospects.

This could present a buying opportunity for long-term investors. Although there are clear risks ahead that could cause their stock prices to trade lower for a time, over the coming years a recovery from their current price levels seems likely.

Relative appeal

As mentioned, holding some cash in case of a market crash could be a sound move. However, holding too much of your capital in assets that offer low returns, such as bonds and cash, could be detrimental to your long-term financial prospects. Low interest rates and the potential for reduced spending power may mean that shares offer significantly greater return prospects – especially since they have wide margins of safety in many cases.

Therefore, despite the threat of another market decline, now could be the right time to buy a diverse range of cheap shares to maximise your potential to take part in a likely stock market recovery.

More reading

• Top brokers name 3 ASX shares to buy next week
• 3 ASX LICs offering big dividend yields over 7%
• 1 ASX share to take advantage of the strong FAANG shares
• Smart investors should buy these ASX growth shares
• How to turn $20,000 into over $200,000 in 10 year with ASX shares

Motley Fool contributor Peter Stephens 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 Why I’d buy cheap shares despite the threat of another stock market crash appeared first on Motley Fool Australia.

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Listed investment companies (LICs) are a great option to invest in for big dividend yields in my opinion.

What’s a LIC?

A LIC is a company just like any other. LICs provide half-year and annual reports, they have boards of directors and so on.

Normal operating companies might be a retailer, a bank, a tech company or something like that. The main difference is that LICs invest in other businesses on behalf of shareholders.

LICs make profit from investment returns. That’s a combination of capital growth and the dividends the LICs receives from its investments.

The boards of LICs can choose to pay a smoothed dividend for investors with its total returns.

Here are three ideas with big dividend yields of more than 7%:

WAM Leaders Ltd (ASX: WLE)

WAM Leaders is a LIC run by Wilson Asset Management (WAM). The LIC targets large cap ASX shares. But you shouldn’t think of it as a passive investment vehicle like an exchange-traded fund (ETF). It’s quite active, switching between positions to try to make the best profit it can.

Over the past year its portfolio returned 2.7% before fees, expenses and taxes, outperforming the S&P/ASX 200 Accumulation Index by 10.4%. That’s impressive in my opinion.

In FY20 the LIC increased its dividend by 15% to 6.5 cents per share. That equates to a grossed-up dividend yield of 8.1% at the current WAM Leaders share price. It has increased its dividend each year since FY17 when it started paying one – it was only formed in 2016.

At the end of June 2020 it had a portfolio well suited to ride through any COVID-19 problems. Some of its biggest holdings were: BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Goodman Group (ASX: GMG), Newcrest Mining Limited (ASX: NCM), OZ Minerals Limited (ASX: OZL), Rio Tinto Limited (ASX: RIO), Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW).   

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This LIC is run by Naos Asset Management, a manager which focuses on smaller ASX shares. 

Naos generally has a portfolio around 10 names which it aims to be invested in for at least five years. That’s a high-conviction portfolio.

Over FY20 NAOS Small Cap Opportunities Company outperformed the S&P/ASX Small Ordinaries Accumulation Index by 8.26% before fees, taxes and interest.

The LIC seems committed to paying a quarterly dividend of 1 cent per share. That equates to an annual grossed-up dividend yield of 11.3% at the current NAOS Small Cap Opportunities Company share price.

Using the pre-tax net tangible assets (NTA) per share of $0.68 at 30 June 2020, it’s trading at 26% discount to last month’s NTA. We’ll have to wait a week or two to see July’s NTA.

At the moment some of its positions are: Eureka Group Holdings Ltd (ASX: EGH), MNF Group Ltd (ASX: MNF) and Over The Wire Holdings Ltd (ASX: OTW).

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is a LIC with a twist. It doesn’t invest in individual ASX shares. It invests in funds of fund managers that invest in ASX shares. But neither Future Generation or the fund managers charge any management fees. That enables Future Generation to donate 1% of its net assets per year to youth charities.

At the current Future Generation share price it offers a grossed-up dividend yield of 7.1%. It has increased its dividend each year since 2015.

It’s invested in around 20 fund managers at the moment. I think that provides a lot of attractive diversification. Bennelong is the fund manager with the biggest allocation right now.

Future Generation is trading at a 13% discount to the NTA at the end of June 2020.

Foolish takeaway

I like all three of these LICs for dividend income potential. The Naos LIC clearly has the biggest yield and it’s trading at a big discount to its NTA. But Future Generation offers very attractive diversification, a good discount and a good yield too. It’s hard to pick between these two.

More reading

• This ASX share could be perfect for a $500 buy
• 3 top ASX dividend shares for income investors in August
• 3 ASX dividend shares with yields over 5%
• 3 of the best ASX dividend shares for income
• 3 ASX shares now trading at crazy cheap prices

Tristan Harrison owns shares of FUTURE GEN FPO and NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended MNF Group Limited and Telstra Limited. The Motley Fool Australia has recommended Over The Wire Holdings 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 3 ASX LICs offering big dividend yields over 7% appeared first on Motley Fool Australia.

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There’s one ASX share in-particular that I think is a good option to get exposure to the US FAANG tech shares. I’m talking about BetaShares NASDAQ 100 ETF (ASX: NDQ).

For people that don’t know, the FAANG shares are a group of technology stocks in America. It stands for Facebook, Apple, Amazon, Netflix and Google. Google is now called Alphabet, so perhaps it should be called FAANA. Or FAAAN.  

Over the past decade there are few shares that have performed as well as this tech group have.

When you look at the recent profit updates you can see that the FAANG shares can perform strongly (perhaps even stronger) during a global pandemic.

More people are staying inside. They may watch more Netflix or Youtube. They may go on one of Facebook’s platforms more often. Perhaps they’re more likely to order things on Amazon. Maybe they’ll decide to buy a new Apple device.

The FAANG shares mostly deliver their services digitally, so they were well suited to keep thriving during the COVID-19 restrictions.

Facebook, Apple and Amazon all reported impressive numbers:

Amazon said its sales jumped 40% for the three months to US$88.9 billion with profit doubling to US$5.2 billion.

Apple reported its quarterly revenue increased 11% year on year to US$59.7 billion with remote work and school contributing to higher sales and iPads and Mac computers. Apple’s profit increased 12.5% to US$11.25 billion.

Facebook announced that its revenue increased by 11% to US$18.7 billion and net profit rose by 98% to US$5.18 billion.

Alphabet revealed that its revenue fell 2% to US$38.3 billion and net profit dropped around 30% over the corresponding period as many companies reduced their advertising spending.

Alphabet’s revenue was better than expected, so I suppose that counts as a win as well.

Technology juggernauts

The FAANG group have incredibly strong economic moats. You don’t see the same sort of strength with ASX shares. 

Imagine how much you’d need to spend to create a better phone company (and app store) than Apple. Think how much you’d have to spend on software development and advertising to be people’s preferred internet search engine over Google. Would it even be possible to dislodge any them? The FAANG shares are powerful. 

There’s more growth to come. More advertising will probably shift to digital, particularly when it comes to advertising on online video – good for Facebook and Alphabet’s Youtube. Virtual reality will be good for Facebook’s Oculus. A shift to automated cars should be very good for Waymo. Quite a few of the NASDAQ giants are helping the world shift to cloud computing.

NASDAQ ETF

There’s more to BetaShares NASDAQ 100 ETF than just the FAANG shares. The ETF owns 100 shares. There are other very important holdings like Microsoft, Nvidia, PayPal, Cisco, Intel, Broadcom and so on. But Apple, Amazon, Microsoft, Alphabet and Facebook make up almost half of the ETF’s holdings.

The ETF offers good diversification for a pretty cheap fee. Its annual management fee is 0.48%. There are ETFs that cost less, but you get targeted exposure to some of the best technology businesses in the world. It’s the net returns that count the most. 

It has performed very well after fees. Over the past year the ETF has returned 35.5%. Over the past three years it has returned 26.6% per annum and over the past five years it has returned 21.5% per annum. You can’t argue with those types of returns. That’s much better than the ASX in my opinion.

The FAANG shares are powering ahead. But there are a couple of potential problems ahead. One is that they are coming under increased scrutiny by politicians in the US who claim they are being anticompetitive and bias. In other places around the world, the companies face slightly lower profit margins – Australia wants the FAANG shares to pay for news and Europe is challenging them on competition and tax.

But I don’t think those issues will stop the FAANG shares. The US wouldn’t want to break them up into pieces – otherwise the Chinese giants may gain an advantage.   

I think BetaShares NASDAQ 100 ETF is a great investment idea for the long-term, though I think the US election could cause some volatility. Sometime in the next six months could prove to be a good buying opportunity. But you should be able to do well from today’s price. 

More reading

• These could be outstanding buy and hold options for ASX investors
• These ASX ETFs could generate strong long term returns
• Here are easy ways to diversify your ASX portfolio
• How to become a millionaire with ASX shares starting with $0
• 3 ETFs for simple wealth building

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 1 ASX share to take advantage of the strong FAANG shares appeared first on Motley Fool Australia.

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I believe Australian investors are spoilt for choice when it comes to growth shares.

But with so many high quality and fast-growing shares to choose from, it can be hard to decide which ones to buy.

To give investors a hand, I thought I would pick out three fast-growing companies which I believe could be great investments in August. Here’s why I would buy these shares:

Altium Limited (ASX: ALU)

The first growth share I would suggest investors consider buying is Altium. It is an electronic design software platform provider. The rapidly growing Internet of Things (IoT) and artificial intelligence (AI) markets are causing a proliferation of electronic devices globally. Altium is perfectly positioned to benefit from this due to its leadership position in the electronic design market. Overall, I believe this will allow Altium to deliver on its revenue target of US$500 million in FY 2025. This compares to its FY 2020 revenue of ~US$189 million.

Nanosonics Ltd (ASX: NAN)

Another growth share to consider buying is Nanosonics. I think the infection prevention company is a fantastic long term investment. This is due to the strength and growth potential of its trophon EPR disinfection system for ultrasound probes and upcoming product launches. While not a lot is known about these secretive new products, they are understood to have similar market opportunities to the trophon EPR system. And if they are anywhere near as successful, the sky could be the limit for the Nanosonics share price.

Pro Medicus Limited (ASX: PME)

A final growth share that I would buy is Pro Medicus. It is a leading provider of radiology IT software and services to hospitals, imaging centres, and healthcare companies. Demand for its offering from major healthcare institutions has been growing strongly over the last few years. This has led to stellar earnings growth. For example, in FY 2019 Pro Medicus delivered a massive 91.9% increase in full year profit to $19.1 million. It then backed this up with a 32.7% increase in net profit after tax to $12.1 million during the first half of FY 2020. I suspect the pandemic may stifle its second half growth, but I expect it to rebound strongly once the crisis passes.

More reading

• How to turn $20,000 into over $200,000 in 10 year with ASX shares
• 3 quality ASX shares to add to your portfolio
• Buy these fantastic ASX tech shares for potential market beating returns
• Is this your last chance to buy Altium shares for a good price?
• These could be outstanding buy and hold options for ASX investors

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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Nanosonics 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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I’m a very big fan of buy and hold investing and believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

This time around I have picked out the three ASX shares that are listed below:

ASX Ltd (ASX: ASX)

The operator of the Australian stock exchange has been a great place to invest your money over the last decade. Thanks to its near monopoly on share trading in Australia, ASX Ltd has been able to grow its earnings and dividends at a consistently solid rate over the period. This has ultimately led to the ASX Ltd share price generating an average total return of 13.8% per annum since 2010. This would have turned a $20,000 investment in its shares into almost $73,000.

Nanosonics Ltd (ASX: NAN)

If you invested $20,000 into the shares of this infection prevention company in 2010, you would be sitting on a small fortune today. Thanks to the success of Nanosonics’ trophon EPR disinfection system for ultrasound probes, the company’s sales have been growing at a rapid rate over the last decade. This has led to Nanosonics shares generating an average total return of 27.2% per annum. This means that investment would now be worth an incredible $220,000.

Sonic Healthcare Limited (ASX: SHL)

A winning combination of organic and acquisitive growth led to this international medical diagnostics company growing its earnings and dividends at a solid rate over the last 10 years. This has resulted in the Sonic Healthcare share price smashing the market over the period. Its shares have generated an average total return of 14.3% per annum since 2010. This would have turned $20,000 into over $76,000 today.

More reading

• 3 quality ASX shares to add to your portfolio
• 3 underloved ASX healthcare shares with strong comeback potential
• Nanosonics and 2 other ASX healthcare shares to buy
• Why PolyNovo and these ASX healthcare shares could be long term market beaters
• 5 things to watch on the ASX 200 on Monday

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 Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics 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 How to turn $20,000 into over $200,000 in 10 year with ASX shares appeared first on Motley Fool Australia.

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