Tag: Motley Fool Australia

If you’re looking to add some dividend shares to your portfolio, then it could be worth considering exchange traded funds.

This is because there are a few exchange traded funds that give you exposure to a large number of dividend shares through a single investment.

The advantage of this is that it provides investors with the ability to diversify on a budget.

With that in mind, here are two exchange traded funds that I think would be great options for income investors:

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The first exchange traded fund for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. As its name implies, this exchange traded fund has a focus on high yield shares.

In total, the fund is invested in 66 of the highest yielding blue chip shares on the Australian share market. This comprises a diverse group of shares, with no industry accounting for more than 40% of the fund and no single company accounting for more than 10%. Among its holdings you will find the banks, BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), and Telstra Corporation Ltd (ASX: TLS). I estimate that its units offer a FY 2021 dividend yield somewhere in the region of 4% to 5%.

VanEck Vectors Australian Banks ETF (ASX: MVB)

Another exchange traded fund to consider buying is the VanEck Vectors Australian Banks ETF. I think this fund is a great option for investors that are wanting exposure to the banking sector, but aren’t sure which bank to buy.

This is because the fund gives investors the opportunity to get a piece of them all through a single investment. It is invested in the Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks, the regional banks, and also investment bank Macquarie Group Ltd (ASX: MQG). As with the other fund, I estimate that its units currently provide a 4% to 5% partially franked FY 2021 dividend yield.

More reading

• Latest ASX stocks upgraded by top brokers to “buy” today
• Brokers name 3 ASX 200 shares to buy right now
• The rocketing Aussie is shaping up as a new threat to the profit season
• Want to start investing? Here’s how
• Telstra and 2 more ASX shares I’d like to buy with $5,000

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

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The Mesoblast limited (ASX: MSB) share price could be heading higher from here according to one Australian broker.

A note out of Lodge Partners reveals that it believes Mesoblast shares are still a strong buy despite being up 85% since the start of the year.

Why is Lodge Partners bullish on Mesoblast?

According to the note, the broker is bullish on the global leader in allogeneic cellular medicines for inflammatory diseases due to the potential of its Ryoncil (remestemcel-L) product candidate.

In August Mesoblast will be having an advisory committee (AdCom) meeting with the Oncologic Drugs Advisory Committee (ODAC) to discuss Ryoncil’s use as a treatment for paediatric steroid-resistance acute graft versus host disease (paediatric SR-aGvHD).

Lodge Partners notes that the ODAC is the US Food and Drug Administration’s (FDA) key player in the regulation of cancer drugs. It plays a big role on whether a cancer drug gets approved or not.

The broker appears confident that the AdCom will run smoothly. So much so, it gives the company a 95% probability of receiving FDA approval further down the line.

Though, the broker has warned that a lot can happen between now and gaining FDA approval, so it could be a bumpy ride.

It explained: “One thing to keep mind, the AdCom votes on exactly what is before it. It may not like one aspect of the drug in question. If that aspect can be ameliorated by a simple labelling change, the change will be made, and the drug allowed through, even if the AdCom originally voted “no”. The same can happen on the FDA’s end.”

“The point, being there is a lot that can happen between the AdCom vote and the FDA’s final decision. Therefore, it is not uncommon for the FDA to approve drugs an AdCom has said no to and vice versa,” the broker added.

Nevertheless, the broker is confident that a positive result is coming and has suggested investors buy shares.

It concluded: “The path to approval for Ryoncil is now set. It just needs to get to the finish line. We have no doubt it will get there. Strong Buy maintained.”

More reading

• Mesoblast share price pushes higher ahead of the “most significant period in its history”
• 3 junior ASX healthcare shares with explosive growth potential
• ASX 200 drops 1.1%: Big four banks fall, Resolute rockets, Afterpay tumbles
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Why Mesoblast might be the best ASX healthcare growth share to own right now

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

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ASX-listed media companies could soon get a big earnings uplift as online US giants are forced to pay to use their content. 

The federal government will impose millions in fines on tech titans Facebook, Inc. Common Stock (NASDAQ: FB) and Google’s parent company Alphabet Inc Class C (NASDAQ: GOOG) if they breach a mandatory code of conduct. 

The code will force the social media giants to pay to use articles generated by Australian media organisations on their platforms. 

Google and Facebook pay to play

This is good news for the likes of the NEWS CORP/IDR UNRESTR (ASX: NWS) share price, Nine Entertainment Co Holdings Ltd (ASX: NEC) share price and Seven West Media Ltd (ASX: SWM) share price. 

These commercial operators can choose to negotiate with the social media companies individually or collectively. 

If they cannot reach a deal with the US giants, they will go through three months of remediation before moving to a binding final offer arbitration. The arbitrator must choose an offer within 45 days, according to the Australian Financial Review.

The code will be enforced by the Australian Competition and Consumer Commission (ACCC).

Big multi-million dollar fines 

Google and Facebook face fines of up to 10% of local turnover, $10 million or three times the benefit gained from the breach, whichever is greater. 

The Federal Treasurer Josh Frydenberg said during the press conference this morning when announcing the new penalties that the new rules was to create a level playing field. 

He pointed out that Facebook and Google were arguably the most powerful media organisations in the world and that local content producers needed to be properly paid for their work. 

Not-for-profit also covered 

While commercial media companies can negotiate payment, public broadcasters were excluded from the monetary component of the code. 

This is because media outlets like the Australian Broadcasting Corporation (ABC) were funded by the taxpayer. 

However, the public broadcasters can strike a deal to share data or other non-financial aspects of the code. 

Can Facebook and Google afford to disengage? 

We haven’t heard anything from Google or Facebook, but they have vehemently opposed such a code in the past. 

They’ve even gone so far as to say the news content that they use generates little monetary value, prompting some to wonder if they will simply stop syndicating news stories.  

Does this mean our listed media companies will see little monetary benefit from the new code? I don’t think so as I believe the social media platforms will not want to lose eyeballs. 

They will also leave their flank undefended from smaller rivals who will be willing to share revenue to attract viewers, and the big boys simply won’t have it. 

More reading

• US tech shares deliver massive results – what does it mean for ASX tech shares?
• A top ‘coronavirus share’ to buy this August
• Are the big US tech companies about to be broken up?
• 3 ASX shares to benefit from huge growth in streaming subscriptions during lockdown
• Kanye West – ASX shares for his US presidential campaign

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Brendon Lau 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 Alphabet (C shares) and Facebook. The Motley Fool Australia has recommended Alphabet (C shares), Facebook, and Nine Entertainment Co. Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX technology company Megaport Ltd (ASX: MP1) offers customisable, on-demand network services to corporate clients. It helps clients expand their network connectivity beyond the limits of traditional infrastructure by leveraging cloud-based technology. These services can help businesses stay connected when many staff are working remotely, as is the case right now because of the COVID-19 pandemic. But Megaport’s cloud network services also help to facilitate more agile working environments, even when the world is functioning a little more ‘normally’.

Megaport also gives companies the flexibility to manage their bandwidth usage: customers can scale up their bandwidth when transferring large amounts of data for major projects, and then reduce consumption during off-peak times. This allows companies to be more efficient with their data usage, cutting costs.

Along with other tech companies like data warehouse operator NextDC Ltd (ASX: NXT) and internet communications company MNF Group Limited (ASX: MNF), Megaport has been one of the few success stories to emerge out of the COVID-19 pandemic.

Revenues for the June quarter surged by 12% versus the prior quarter, and were up by 66% year-on-year to $17 million. The company also expanded its presence internationally, establishing operations in both Spain and Denmark.

Should you invest?

Despite a recent pullback, Megaport shares have still just about doubled in price since March, and are currently trading at $13.04. This is short of the 52-week high of $15.50 they reached in early June, but still means Megaport shares have risen a little over 20% so far in 2020.

With the economic outlook growing increasingly gloomy, many new investors may be understandably reluctant to pick up shares in companies that have already experienced strong recent gains. There is always the very real fear that a market correction is just around the corner, and the share prices of many growth companies could collapse – as they did back in March.

However, investors should balance this trepidation against a longer-term outlook. The coronavirus pandemic has the potential to bring about permanent changes in the way we all live. Many people may have discovered that working remotely suits their lifestyles much better. Big companies may also realise that they can save huge amounts on rent and other property costs by supporting more flexible working arrangements. And these changes need to be supported by the type of strong, adaptive, agile networks that Megaport facilitates.

Megaport has already racked up an impressive list of big-name international clients, including Adobe Inc, Tesla Inc and Zoom Video Communications Inc. This shows the importance that big, forward-thinking corporations place on creating secure, cloud-based networks for an agile workforce.

While there may be a few bumps along the way, I think over the long-run Megaport has the potential for enormous gains.

More reading

• Want to start investing? Here’s how
• Add these ASX growth shares to your portfolio in August
• CBA and 2 more ASX shares to buy and hold forever
• ASX investors have been buying Tesla and these international shares
• 3 coronavirus ASX shares to buy right now

Rhys Brock 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 MEGAPORT FPO, Tesla, and Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think that ASX share Future Generation Investment Company Ltd (ASX: FGX) could be a perfect buy for a $500 investment.

If you’re investing with $500 then you want to make sure you choose the right one.

Shares are a great way to build wealth over the long-term. But you don’t want your first investment to go badly wrong – that might put you off shares. 

I think the right ASX share is to go for something that could provide solid returns over the long-term.

A quick overview of Future Generation

Future Generation is a listed investment company (LIC). The job of a LIC is to invest in other shares on your behalf. But you can buy a LIC just like any other business on the stock exchange like Commonwealth Bank of Australia (ASX: CBA).

Many fund managers charge a management fee of around 1% (and then perhaps an outperformance fee, if it outperforms). Future Generation doesn’t charge any management fees or performance fees. Instead, it donates 1% of its net assets to youth charities. It has a noble cause.

Future Generation doesn’t invest directly into ASX shares. Instead, it invests into the funds of Aussie fund managers who invest in ASX shares. Those fund managers also don’t charge management fees or performance fees.

Why I think this ASX share is a great investment for $500

These are my reasons for picking Future Generation:

Diversification

When you start investing you have to pick something to buy. If you choose an individual share then your entire portfolio consists of just one share. That’s not diversified at all. Even high-conviction fund managers usually have around 10 different positions in their portfolio.

Most LICs offer a pretty diversified portfolio with at least 20 shares, perhaps several dozen positions. Future Generation is invested in the funds of around 20 funds. Each fund represents a whole portfolio of shares. So Future Generation’s underlying portfolio seems to be very diversified with different ASX shares.

Those fund managers only put shares in the portfolio they think can produce good returns, so it’s a compelling portfolio of underlying shares.

Dividends

One of the best features of investing in shares is the dividends. It’s nice to get paid for no effort, apart from making the initial investment.

Many LICs like to pay dividends to shareholders. LICs can pay a smoothed dividend to investors from the capital gains generated and dividends that the LIC receives.

Future Generation has increased its dividend every year since 2015, when it first started paying a dividend. The LIC was only formed in September 2014. That’s a reliable record from the ASX share.

At the current Future Generation share price it offers a grossed-up dividend yield of 7%. That’s a great yield in the current environment. 

Performance

A LIC’s investment performance can be measured against a benchmark. Future Generation’s benchmark is the S&P/ASX All Ordinaries Accumulation Index.

Future Generation’s gross portfolio performance has outperformed its benchmark by 3.3% over the past six months, 6% over the past year, 0.6% per annum over the past three years, 1.6% per annum over the past five years and 1.8% per annum since inception (September 2014).

Outperformance compared to the ASX share index over the long-term is attractive.

Cheap price

I think Future Generation is trading at an attractive price. With exchange-traded funds (ETFs) you buy $1 of assets for $1. With LICs you can buy $1 of assets for less than $1. That’s described as a discount to the net tangible assets (NTA). I think that’s an attractive way to buy ASX shares. 

At the end of June 2020, Future Generation had NTA per share of $1.147. That compares to the current Future Generation share price of $1.02. That’s a discount of 11%. I’d be very happy to accumulate shares at the current level.

More reading

• 3 top ASX dividend shares for income investors in August
• 3 of the best ASX dividend shares for income
• Starting to invest with $500? Here are 2 ASX shares
• 3 ASX dividend shares to grow and diversify your income
• 3 very reliable dividend shares I plan to pay for my retirement

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. 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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Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB) have all reported blowout results for the June quarter as demand for technology to connect us during the COVID-19 pandemic surges. The big United States tech stocks are benefitting from the shift to digital pretty-much-everything since the onset of coronavirus. 

Revenue and profits grow 

Apple reported year-on-year increases in revenue across all categories and jurisdictions with consumer demand for its products accelerating as many work and study from home. Facebook surpassed analysts’ quarterly revenue estimates thanks to an increase in ad sales as monthly active users rose to 2.7 billion. 

Amazon posted the biggest profit in its history as demand for its services soared during the pandemic. The world’s largest online retailer saw revenue increase 40% year-on-year to US$88.9 billion. Google’s parent company, Alphabet, beat market expectations with revenue of US$31.6 billion in the June quarter. The company’s cloud business in particular outperformed, increasing revenue 43% year on year to over $3 billion. 

ASX tech shares in the spotlight

So what does this mean for Australian technology shares? ASX tech shares have led the market comeback since March. The S&P/ASX All Technology Index (ASX: XTX) is up 90.1% from its March low, with the S&P/ASX 200 (ASX: XJO) up 30.7% over the same period. ASX tech shares like Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN), have spearheaded the recovery as demand for digital solutions accelerates.  

The Afterpay share price is up 678% from its March low, with growth in key financial metrics continuing unabated throughout the pandemic. Rather than slowing in the face of economic uncertainty, demand has accelerated as people turn to eCommerce and budgeting solutions simultaneously. Afterpay reported underlying sales of $11.1 billion in FY20, more than double those of the previous year. Sales accelerated in the fourth quarter, which recorded the highest quarterly performance ever, up 127% on Q4 FY19. 

The Kogan share price is up 345% from its March low with the online retailer reporting a spike in sales when lockdowns took place. Gross sales increased 103% year on year in April and May driving a 130% increase in gross profit across the period. The tech company reported more than 2,000,000 active customers at the end of May with founder Ruslan Kogan telling the Australian Financial Review ‘business is booming’. 

Foolish takeaway

ASX tech shares are feeling the same forces as their American counterparts. The move to transacting, working, studying, and shopping online is driving more people to online retailers and payment providers. These forces show no sign of letting up while the pandemic persists, and may be lasting even after it subsides. 

More reading

• Meet the ASX stocks that are about to get a boost from Facebook and Google
• 3 top ASX shares to buy and hold for at least a decade
• Will the coronavirus kill cash?
• Brokers name 3 ASX 200 shares to buy right now
• 3 coronavirus ASX shares to buy as consumer preferences change

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Amazon and Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, Facebook, and Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

For example, a single $20,000 investment into the share market would turn into over $200,000 if it earned an average annual 10% total return over a period of 25 years.

And if you were to add to this investment throughout the years and earn the same return, your wealth would grow materially.

But which shares would be good buy and hold options? Here are three ASX shares which I think have the potential to provide investors with strong returns over the long term:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX share to consider for a buy and hold investment is this gaming technology company. Although it looks likely to experience a short term reduction in demand for its poker machines due to the pandemic, I expect its social and mobile gaming apps to thrive during the crisis. If it can retain these users when casinos reopen and business returns to normal, Aristocrat Leisure will be well-placed to accelerate its grow over the coming years.

Kogan.com Ltd (ASX: KGN)

Another share to consider as a buy and hold investment is Kogan. I think the ecommerce company would be a top option due to the continued shift to online shopping and its increasingly popular website. In addition to this, its expansion into potentially lucrative verticals such as energy and mobile, the launch of Kogan Marketplace, and potential value accretive acquisitions should support its earnings growth in the future.

Xero Limited (ASX: XRO)

A final ASX share to consider buying and holding is Xero. The cloud-based accounting software provider has been growing at a very strong rate over the last few years and looks well-placed to continue this positive form over the 2020s. This is due to the quality of its product, the shift to cloud-based accounting, and its expansion internationally.

More reading

• US tech shares deliver massive results – what does it mean for ASX tech shares?
• 3 coronavirus ASX shares to buy as consumer preferences change
• 5 things to watch on the ASX 200 on Friday
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• These ASX online retail shares prove you don’t need stores to make sales

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Xero. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Audinate Group Ltd (ASX: AD8)

A change of interests of substantial holder notice reveals that a leading fund manager has taken advantage of recent share price weakness to top up its position in this digital audio networking technology provider. According to the notice, Australian Super has picked up an additional ~900,000 Audinate shares, lifting its stake to a total of 4,359,029 shares. This equates to a 6.42% interest in the company.

The super fund has been buying shares consistently since March and as recently as 23 July when it paid an average of $5.40 for 256,196 shares. The Audinate share price is down 43% from its 52-week high after the pandemic caused demand for its products to collapse. Judging by its investment, Australian Super appears confident demand will rebound strongly once the crisis passes.

BWX Ltd (ASX: BWX)

Another change of interests of substantial holder notice reveals that Paradice Investment Management has been increasing its stake in this personal care products company. According to the notice, Paradice now owns ~9.2 million BWX shares, up from ~6.99 million as of its last notice. This represents a 6.775% stake in the company.

Paradice was buying shares as recently as 27 July. On that day it picked up 250,000 shares for an average of ~$4.02 per share. It appears as though the fund manager is pleased with the way the Sukin manufacturer has turned around its fortunes after a few difficult years. Earlier this month BWX revealed that it expects to report a 25% increase in revenue to $187.6 million and a 30% lift in EBITDA (pre-AASB 16) to $27.5 million in FY 2020.

More reading

• Why Audinate, Nearmap, Resolute, & TechnologyOne shares are tumbling lower
• Audinate shares in trading halt, capital raising announced
• Afterpay and 1 other ASX tech share to buy and hold beyond 2030
• Why AGL Energy, Alumina, BlueScope, & BWX shares are dropping lower
• ASX 200 finishes up 0.4%, Rio Tinto grinds higher

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 AUDINATEGL FPO. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia has recommended AUDINATEGL 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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Whether you’re retired or still working, shares that produce dividend yields are a great way to generate a regular income stream.

Here we look at 3 ASX dividend shares to potentially buy this month: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Carsales.Com Ltd (ASX: CAR) and Bapcor Ltd (ASX: BAP). All 3 are high quality ASX 200 companies that pay strong and regular fully franked dividends.

Soul Patts

Soul Patts is an investment conglomerate that invests in a wide range of industries, from pharmacies and telecommunications to building products and mining. It has a solid long-term track record of outperforming the ASX index. The company is also a strong and consistent dividend-paying share. It currently pays a fully franked forward dividend yield of 3.01%.

Soul Patts has been listed on the ASX for over a century, and it has managed to pay a dividend every year in that time, and has increased that dividend every year since 2000.

The Soul Patts share price is currently well below pre-COVID-19 levels, making it a good buying opportunity right now, in my mind.

Carsales

Carsales has been the undisputed king of the local online automotive classifieds market in Australia for over 1o years. During that time, its share price has risen from $4.89 to now be trading at $18.78 at the time of writing. That’s an increase of over 280%. On top of that, Carsales pays a very attractive fully franked dividend. The company’s forward dividend yield is currently 2.46%. 

I believe that Carsales is well positioned for more strong growth over the next decade. This growth will be driven in particular from its expanding overseas operations, which includes South Korea and Brazil. Growth will also come from a strong entrenched local position, driven by a growing local population.

Bapcor

Bapcor has evolved to become the leading second-hand auto parts distributor in Australia and New Zealand. Beyond these markets, expansion into the Thailand will hopefully provide Bapcor with a launching pad to make inroads into the wider Asian market.

Bapcor recently revealed that the impact of the  pandemic has been less severe than it had originally predicted. In particular, Bapcor’s retail and Burson Trade businesses in Australia have experienced strong recent demand.

The Bapcor share price is still down from the level it was at before the pandemic began. This in my mind, offers investors a reasonably good buying opportunity right now. Bapcor currently offers a fully franked forward dividend yield of 2.85%.

Foolish Takeaway

Soul Patts, Carsales are Bapcor are 3 high quality ASX dividend shares that all pay a handy fully franked  dividend. All 3 companies have strong market positions in their respective industries, and all are in my buy zone right now.

More reading

• Why Afterpay, Bapcor, NRW, & Super Retail shares are climbing higher today
• 3 top ASX dividend shares for income investors in August
• A dirt-cheap ASX dividend share to add to your portfolio today
• These 2 cheap Warren Buffett shares could be top picks right now
• Why you should buy into this booming ASX retail sector today

Motley Fool contributor Phil Harpur owns shares of carsales.com Limited. The Motley Fool Australia owns shares of and has recommended Bapcor and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended carsales.com 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 2020 coronavirus pandemic has brought a lot of sudden and sharp changes to the way we used to live our lives. Many of these changes, such as social distancing, will probably turn out to be mostly temporary, once the pandemic passes into history. But many other trends, such as more of us working from home and using the internet to do our shopping will probably be here to stay. One of the most profound trends we have seen is the move away from cash payments towards electronic, ‘cashless’ payment methods.

According to reporting from the ABC, cash now makes up less than 25% of the total proportion of payments in the economy, down from nearly 40% just 4 years ago.

No wonder shares of companies providing cashless payment solutions are among some of the biggest winners over the past few months. That’s got to be why Afterpay Ltd (ASX: APT) is up more than 670% since 23 March. Or why Pushpay Holdings Ltd (ASX: PPH) is up nearly 150% and Zip Co Ltd (ASX: Z1P) up nearly 390%. It’s a similar story with United States payments shares like PayPal, Visa, Mastercard and Square.

Cash is as good as dead, right?

The death of cash? Not so fast

According to separate reporting in the Australian Financial Review (AFR), the reports of the death of cash might be greatly exaggerated. According to the AFR, the levels of cash in circulation is actually on the rise across many advanced economies. Apparently, there are 8% more banknotes in circulation across the US today than there were in 2019. It’s a similar situation in Europe. In fact, the AFR states that “of the largest economies, only China has begun to see an absolute decline in the ratio of physical currency to GDP.”

The ABC report backs this up, noting that in Australia, the proportion of $50 and $100 notes in circulation has ballooned since the 1980s. The report tells us that there was around $10 billion worth of $50 notes in circulation across the Australian economy in the year 2000. Today, in ‘cashless’ 2020, the number is close to $80 billion. It also notes that there are still around 500,000 bank accounts in Australia that are not tied to a debit card, instead linked to cash-only passbook accounts.

My conclusion? Cash isn’t going anywhere anytime soon.

Foolish takeaway

I certainly think cash will continue to decline as a major form of day-to-day payments. But I’m not betting the house that cash will be going extinct anytime soon. So by all means, invest in ASX payments shares that facilitate cashless payments. But don’t count on the death of cash just yet.

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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 PUSHPAY FPO NZX and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia 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.

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