Tag: Motley Fool Australia

Yesterday Moneyme Ltd (ASX: MME) announced it had reached a lending milestone of $500 million, and that it was launching a new payments processing service. Consequently, the Moneyme share price shot up and finished the day 20.47% higher. The crux of the announcement was not that the company was launching a payments processing service, but that it would offer a buy now, pay later (BNPL) function at the point of sale. A business move headed up by former Zip Co Ltd (ASX: Z1P) sales professionals.

I believe this exposes two core truths about the Australian fintech sector in 2020. First, the BNPL sector, or pay by instalments, is no longer revolutionary in Australia. And second, all of this and more is due to the failure of the big four Australian banks.

The failure of the big four

The big four banks are fundamentally mortgage providers, with business loans and digital payments thrown in. They have been woeful at defending their turf. For instance, by population Australia is a small country, dominated by four large banks protected by legislation. So how on earth did Tyro Payments Ltd (ASX: TYR) become the fifth largest merchant acquiring bank, after the big four, by number of terminals? Moreover, bank lending to households via credit cards has been falling significantly since 2002. The Australian aversion to consumer debt has been growing for almost two decades. So why didn’t any of them come up with Afterpay Ltd (ASX: APT)? 

The Moneyme share price isn’t the only one to benefit by being more accessible, user friendly and offering cheap pricing. To paraphrase Paul Keating, every pet shop galah has an opinion on fintech shares these days. Companies like CML Group Ltd (ASX: CGR) provide cashflow solutions to small and medium sized companies through innovative debtor finance platforms. Additionally, lenders such as WISR Ltd (ASX: WZR) provide short term personal finance, while RAIZ Invest Ltd (ASX: RZI) is helping the public to save money.

It is almost like watching the death of Borders Bookstores again after the rise of Amazon.com (NASDAQ: AMZN). Consequently, given that the big four banks have allowed these spaces to open up, what does this mean for Moneyme?

Is the Moneyme share price sustainable?

In my view, there is not a chance that the company’s share price is sustainable. Not in the medium term anyway. It announced it had acquired 55 merchants. Zip Co has 23,600. Moreover, its most similar payments competitor, Tyro, has 32,000 Australian merchants. Not only that, but a BNPL service is something Tyro could quickly open up at the point of sale.

Furthermore, the Commonwealth Bank of Australia (ASX: CBA) is already doing so slowly via its part ownership of Klarna, the world’s largest BNPL company. To illustrate further just how competitive this sector is now, the Splitit Ltd (ASX: SPT) model of working with the large credit cards, to break down payments into instalments, is also likely to eat into market share. 

Foolish takeaway

The Australian buy now, pay later sector has become crowded to the point of normalcy. Accordingly, I believe the spike in the Moneyme share price is irrational optimism, not a sustainable valuation. Additionally, this is without considering the impacts of inevitable Australian regulation, and a raft of unlisted companies.

I think there are plenty of other growth opportunities in the fintech sector generally. However, within the BNPL sector, I believe it is now a race for the United States market. The startup companies that can establish a beachhead in that $5 trillion retail market are the ones that will survive this modern day gold rush.

More reading

• CBA delivers $7.3bn cash profit and declares 98 cents per share final dividend
• 5 things to watch on the ASX 200 on Wednesday
• Have $2,000 to invest? Try these 2 ASX growth shares today
• Flight Centre and Zip Co were among the most traded shares on the ASX last week
• Why this reporting season is different, and now’s a great time for ‘buy to hold’ investors in ASX shares

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Daryl Mather 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 Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Tyro Payments and ZIPCOLTD FPO 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 Amazon. 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 Commonwealth Bank of Australia (ASX: CBA) share price will be in focus this morning following the release of its full year results.

How did Commonwealth Bank perform in FY 2020?

For the 12 months ended 30 June 2020, Commonwealth Bank reported operating income of $23,758 million, up 0.8% on the prior corresponding period. This reflects volume growth in home lending and deposits, which offset a 2 basis point decline in its net interest margin to 2.07%.

Management advised that home lending grew at 1.3x system growth due to strong operational execution. Household deposit balances grew 9.8% year-on-year, and spot transaction account balances were up 25%.

The bank’s statutory net profit after tax including discontinued operations was $9,634 million, up 12.4% on FY 2019. This statutory result includes significant gains on the sale of businesses.

Whereas the company’s cash net profit after tax from continuing operations was down 11.3% to $7,296 million. This was driven largely by higher COVID-19 loan impairment expense.

Commonwealth Bank dividend.

As was expected, Commonwealth Bank has cut its final dividend down materially following recent guidance by APRA.

It has declared a 98 cents per share fully franked final dividend, which represents a dividend payout ratio of 49.95% of second half statutory earnings. This was in line with APRA’s guidance that banks should retain at least 50% of earnings

This final dividend brings Commonwealth Bank’s full year dividend to $2.98 per share, which is down 31% on FY 2019’s dividend.

At the end of the period, Commonwealth Bank’s CET1 ratio stood at 11.6%. This is up 90 basis points year on year and comfortably ahead of APRA’s ‘unquestionably strong’ benchmark of 10.5%.

COVID-19 loan deferrals.

Commonwealth Bank also provided the market with an update on its COVID-19 loan deferrals.

As of the end of July, COVID-19 related home loan deferrals stood at 135,000 home loans. This represents 8% of total accounts and is down from a peak of 154,000 home loans.

Approximately 59,000 business loans are currently being deferred. This represents 15% of its total balance and is down from 86,000 business loans at the peak.

Management commentary.

Commonwealth Bank’s Chief Executive Officer, Matt Comyn, was pleased with the company’s performance in a challenging environment.

He said: “Despite the challenging environment, operational performance in the business remains strong. Combined with our strong balance sheet and capital position, this enables us to continue supporting customers and the economy. Using our strengths in customer service, technology and data we will check-in regularly with customers to assess their financial needs and to support their recovery.”

“The next few months will be critical and some sectors will take longer to recover than others, however, we remain positive about Australia’s long-term prospects. We will also continue to work with government, regulators and our industry peers to support initiatives that stimulate economic activity and jobs,” he concluded.

More reading

• MoneyMe share price surges, but is it sustainable?
• 5 things to watch on the ASX 200 on Wednesday
• Why this reporting season is different, and now’s a great time for ‘buy to hold’ investors in ASX shares
• ASX reporting season reveals some upside surprises
• Forget term deposits and buy these ASX dividend shares

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

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ASX biotech shares have been persistent outperformers in recent times. CSL Limited (ASX: CSL) is one of the largest ASX shares by market capitalisation with a $127.6 billion valuation based on the current CSL share price.

However, CSL shares aren’t your only option for biotech exposure in the Aussie share market.

What other ASX biotech shares are available?

Polynovo Ltd (ASX: PNV) has been another top performer in recent years.  Polynovo’s proprietary NovoSorb BTM product has proven to be a highly successful solution in the treatment of severe burns.

The Polynovo share price is now up 15.6% in 2020 and 1,854.6% in the last 5 years. That’s good news for investors who backed the ASX biotech share from an early stage.

Then there’s Mesoblast limited (ASX: MSB). Mesoblast is an Aussie regenerative medicine company that provides treatments for inflammatory ailments, cardiovascular disease and back pain.

The Mesoblast share price was hammered in yesterday’s trade after a United States Food and Drug Administration (FDA) report.

The ASX biotech share crashed 31.0% lower after the release of the FDA briefing document. The FDA noted concerns about the clinical performance of Mesoblast’s treatment for paediatric steroid-resistant acute graft versus host disease.

That’s disappointing news for shareholders but I think the long-term outlook for Mesoblast is still intact. The company still has some exciting products in Phase 3 trials which could be big money earners in the future.

Is today’s CSL share price the best biotech buy?

CSL is the obvious choice if you’re looking for safety. It has an extensive history of research and development (R&D) success and is a big fish in the industry.

That blue-chip status could help the ASX biotech share in the current volatile market. It could also provide some piece of mind for investors who don’t want to buy a speculative growth share.

However, I think there is also some potential upside for both Polynovo and Mesoblast. 

Polynovo is looking to extend the application of the NovoSorb BTM product into other, lucrative industries. That includes breast augmentation and hernia treatment markets.

For Mesoblast, I think a 31.0% share price drop could present a tasty buying opportunity. That’s a big mental hurdle to overcome for investors and you’d have to really believe in the company’s long-term success.

However, ASX biotech shares can rise and fall with critical decisions on their products. That means I wouldn’t be writing off the Mesoblast share price solely based on the FDA announcement.

More reading

• Top ASX dividend shares to buy in August 2020
• ASX 200 rises 0.5%, Mesoblast plunges
• 5 quality ASX shares to buy in August
• Mesoblast share price crashes 29% lower on FDA doubts
• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO

Ken Hall 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. and POLYNOVO 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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The Webjet Limited (ASX: WEB) share price jumped 5.6% yesterday and is now up 30% since last Monday. The Webjet share price has still been smashed in 2020 but is now seeing a strong recovery.

The big question for value investors is whether or not now is a good time to buy.

Why the Webjet share price is surging

This is a perplexing question. The Webjet share price is rocketing higher despite tight coronavirus restrictions across the country.

Prime Minister Scott Morrison was even quoted as saying internal borders may stay shut until Christmas.

That’s not good news for the travel industry but hasn’t stopped investors piling in to Webjet shares recently.

I believe some investors are thinking that part of the short-term danger has subsided.

It could be that large institutional backers are buying back in and betting that Webjet’s insolvency risk is subdued.

Whatever the reason, the Webjet share price has a lot of momentum behind it right now. So, is it a good time to buy?

Are other ASX travel shares in the buy zone?

I think Corporate Travel Management Ltd (ASX: CTD) has more to offer than the Webjet share price right now.

The Aussie travel share jumped 4.4% higher yesterday and is now up 121.5% since 19 March.

One reason I prefer Corporate Travel to Webjet is its significant earnings from the business and government sector.

This has proven to be more resilient compared to leisure bookings. But it’s not just Corporate Travel that I’d prefer to buy over Webjet right now.

Sydney Airport Holdings Pty Ltd (ASX: SYD) is another top travel share. 

Sydney Airport straddles the line between travel and infrastructure given its significant underlying assets.

Shares in the Aussie airport are down 37.5% this year as the company taps investors for a $2 billion capital raising.

The group’s half-year earnings report contained some soft numbers but that was largely to be expected in the current climate.

Foolish takeaway

I won’t be buying into ASX travel shares just yet. I certainly don’t like to invest in things I don’t understand and the Webjet share price is one of those things.

I will, however, be keeping an eye out for the Aussie travel agency’s full-year earnings report in August.

More reading

• ASX 200 rises 0.5%, Mesoblast plunges
• ASX 200 up 1%: Challenger disappoints, Sydney Airport to raise $2bn, a2 Milk names new CEO
• Why Bendigo and Adelaide Bank, CIMIC, James Hardie, & Webjet are storming higher
• Sydney Airport to raise $2 billion after COVID-19 profit collapse
• CBA and 2 more ASX 200 shares to watch this week

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. 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 have $12,000 to invest into ASX shares then you’re in luck. There are plenty of quality options to choose from.

The share market has rebounded strongly from the COVID-19 share market selloff a few months ago. There are plenty of ASX share ideas where prices may have reached almost as high as they can reach in the medium-term such as Coles Group Limited (ASX: COL) and Afterpay Ltd (ASX: APT).

I want to invest in ASX shares where there’s likely to be strong profit growth over the long-term but the valuation still seems reasonable.

If I had $12,000 to invest, this is where I’d put the money into these ASX shares:

Share 1: Pushpay Holdings Ltd (ASX: PPH) $4,000

Pushpay is one of the most exciting ASX growth shares in my opinion. It helps large and medium US churches to receive electronic donations. This is very useful during this COVID-19 era considering all of the social distancing and restrictions that is going on in the country. Pushpay also offers a livestreaming service to its church clients so it can still connect with its congregation.

I think Pushpay has a lot of growth potential. It was generating growth before COVID-19 came along but the unfortunate circumstances have really brought forward the adoption curve.

In FY20 it grew its revenue by a third to US$129.8 million and in FY21 it’s expecting to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to US$50 million..

I’m impressed that its gross margin is growing at a strong rate – in FY20 its gross margin improved from 60% to 65%. I also thought its recent acquisition of Church Community Builder was a really smart move. The combined business has a stronger offering. The two businesses can also sell to each other’s customer base.

Over the long-term the ASX share is aiming for US$1 billion of annual revenue which would make Pushpay a much bigger business if it achieves the goal.

At the current Pushpay share price it’s trading at 30x FY23’s estimated earnings.

Share 2: Bubs Australia Ltd (ASX: BUB) – $3,500

I think Bubs is a quality business with a lot of growth potential. Its management have proven they can grow the infant formula business effectively. I like how it used acquisitions to secure its supply chain with its own Chinese-approved manufacturing facility.

The ASX share has grown strongly over FY20 despite the issues relating to COVID-19.  FY20 revenue increased by 32% to $62 million. Its FY20 fourth quarter showed the international growth potential – Chinese direct sales increased 26% and other export market sales grew by 71%.

I’m not expecting Bubs to be as globally successful as one of its competitors, but I think it has a very long growth runway geographically. It can expand with new products like Vita Bubs and the organic grass-fed cow milk infant formula range.

Over the long-term I think this ASX share could grow substantially in size. The growing gross profit margin will help drive the bottom line higher.

Share 3: WAM Microcap Limited (ASX: WMI) – $4,500

WAM Microcap is a listed investment company (LIC) which targets ASX small caps with market caps under $300 million. It’s this hunting ground which can generate really strong long-term returns because not many investors are searching in this area.

The investment team at Wilson Asset Management (WAM) have proven to be very effective at delivering strong returns.

At 30 June 2020 its portfolio had made a gross return of 32.9% over the past three months and 15.9% per annum since inception in June 2017. I think the WAM team can continue to outperform over the long-term with the investment style and focus on ASX growth shares.

Another of the attractive things about the LIC is the good dividend payments. WAM Microcap is growing its ordinary dividend and it keeps paying special dividends.

At the current WAM Microcap share price it offers a grossed-up dividend yield of 5.75%.

Foolish takeaway

I think each of these ASX shares are capable of producing strong returns over the next five years. WAM Microcap offers great diversification, but I believe both Pushpay and Bubs can grow into much larger businesses over time.

More reading

• 5 quality ASX shares to buy in August
• 3 exciting ASX growth shares to buy with $3,000
• 3 ASX shares to buy and hold for the next decade
• A2 Milk and 1 other top ASX growth share to buy this month
• Can the Bubs share price go higher in 2020?

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. 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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It could be a challenging day of trade for many of Australia’s leading gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) on Wednesday.

This follows a shocking night of trade for the spot gold price, which crashed materially lower following a return of risk appetite.

What happened to the gold price?

According to CNBC, the spot gold price has crashed 5.8% lower during overnight trade to US$1,921.8 an ounce. This is over US$150 lower than Friday’s record high of US$2,072.5 an ounce.

The silver price hasn’t fared well, either. The fellow safe haven asset is down a massive 15% to US$24.86 an ounce at the time of writing. This could be bad news for South32 Ltd (ASX: S32). Its shares have been rising on the back of the improving silver price in recent weeks.

Analysts believe the improving risk appetite is due to better than expected economic data and news of a potential Russian coronavirus vaccine.

Edward Moya, senior market analyst at broker OANDA, told CNBC: “This feels like a mini crash. We could not overcome the early morning headlines of a Russian potential vaccine, and there was just continued optimism flowing into stocks.”

This sentiment was echoed by Bart Melek at TD Securities. He told clients: “The precious metals complex was driven by a drop in rates, a steady increase in inflation expectations and a falling U.S. dollar. The rally is now giving up some of these gains as these drivers lose momentum.”

Mr Melek also notes that the trade became crowded, which is why the pullback has been particularly severe.

“Speculators and Commodity Trading Advisors (CTAs) are reducing their gold and silver exposure, as volatility trends higher and as they take profits out of a crowded trade,” he explained.

Given how strongly the shares of Evolution Mining Ltd (ASX: EVN), Saracen Mineral Holdings Limited (ASX: SAR), and other gold miners have rallied in recent months, it unfortunately looks set to be a very red day for their shares on Wednesday.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Has the ASX 200 finally taken off?
• ASX reporting season reveals some upside surprises
• 5 things to watch on the ASX 200 on Tuesday
• Gold price tops US$2,000: What’s driving it higher and how can you benefit?

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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) continued its positive run and pushed higher again. The benchmark index rose a solid 0.5% to 6,138.7 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to edge higher.

It could be another positive day for the ASX 200 on Wednesday, despite a poor night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is set rise 5 points or 0.1% at the open. On Wall Street, the major indices gave back their gains to end the day deep in the red. The Dow Jones fell 0.4%, the S&P 500 dropped 0.8%, and the Nasdaq index fell 1.7%.

CBA FY 2020 results.

The Commonwealth Bank of Australia (ASX: CBA) share price will be in focus today when it releases its full year results for FY 2020. According to a note out of Goldman Sachs, its analysts expect the bank’s FY 2020 cash earnings from continued operations (pre-one offs) to come in at $7,815 million. This represents an 8% decline on the prior corresponding period. The broker is forecasting a final dividend of 100 cents per share.

Afterpay block trade.

The Afterpay Ltd (ASX: APT) share price will be on watch today after one of the biggest black trades of the year occurred after market on Tuesday. According to the AFR, an institutional investor was very keen to get a slice of Afterpay, grabbing 2.85 million shares for $71.50 each. This was a 1.9% premium to the closing price and a total consideration of $203 million. Given that the trade was undertaken by Goldman Sachs, it could be a sign that Tencent Holdings has been increasing its stake. Goldman bought a 5% stake for the WeChat owner earlier this year.

Oil prices drop.

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could drop lower today after oil prices came under pressure overnight. According to Bloomberg, the WTI crude oil price is down 0.65% to US$41.67 a barrel and the Brent crude oil price has fallen 0.8% to US$44.63 a barrel. Oil prices were charging higher before giving back their gains and more during a volatile session.

Gold price crashes.

It could be a difficult day of trade for gold miners including Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) after the gold price crashed lower. According to CNBC, the spot gold price has crashed 5.5% to US$1,924.2 an ounce after a return of risk appetite following encouraging economic numbers and a supposed Russian coronavirus vaccine.

More reading

• ASX gold miners on watch after gold price crashes lower
• The latest ASX stocks leading brokers are urging you to buy today
• ASX 200 rises 0.5%, Mesoblast plunges
• Have $2,000 to invest? Try these 2 ASX growth shares today
• Why the Coles share price just hit a new record high

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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Along with our Top ASX Stock Picks for August, we also asked our Foolish writers to pick their favourite ASX dividend shares to buy this month.

Here is what the team have come up with…

Kate O’Brien: AGL Energy Limited (ASX: AGL)

For a side of certainty with my dividends, I would be looking to AGL Energy. The company operates Australia’s largest energy portfolio, generating gas and electricity and selling it to end users. While COVID-19 may have shut down industries across Victoria, it can’t turn off demand for energy. This provides a degree of reliability for AGL’s earnings. AGL targets a dividend payout ratio of 75% and has predicted full year profits in the upper half of its guidance range. At the time of writing, the AGL share price is yielding 6.52% and is still around 20% down from its 2020 high. 

Motley Fool contributor Kate O’Brien does not own shares in AGL Energy Limited. 

Chris Chitty: Fortescue Metals Group Limited (ASX: FMG)

Fortescue Metals Group has seen significant success recently as a result of a surging iron ore price. Not only is this company offering potential earnings growth, it has a trailing dividend yield of 5.44% fully franked (at the time of writing). In the financial year to 30 June 2020, Fortescue Metals shipped over 178 million tonnes of iron ore with C1 cash costs of just US$12.94, this is against a current iron ore spot price of more than US$100 per tonne. With China hungry for iron ore as it builds up its infrastructure, I believe Fortescue is in a great position to continue paying large dividends.

Motley Fool contributor Chris Chitty does not own shares in Fortescue Metals Group Limited.

Toby Thomas: Charter Hall Long WALE REIT (ASX: CLW)

I’ve been keeping an eye on this real estate investment trust (REIT) for a while now, and think it could be a dividend harvester for a long time to come. Last week, the property trust announced its full-year results for FY20, which included a 5.2% rise in operating earnings and statutory profit of $122 million. The REIT currently pays out an annual dividend yield of around 5.8%, and is highly attractive for its average lease duration spanning a whopping 14 years. That provides long-term security for shareholders, who have the peace of mind knowing that blue-chip tenants such as  Woolworths Group Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), BP and Coles Group Ltd (ASX: COL) will continue to pay rent for the foreseeable future.

Motley Fool contributor Toby Thomas does not own shares in Charter Hall Long WALE REIT, Woolworths Group Ltd, Telstra Corporation Ltd or Coles Group Ltd.

Lloyd Prout: CSL Limited (ASX: CSL)

CSL is the largest company on the ASX, but it definitely isn’t the cheapest at approximately 46x earnings (at the time of writing). But, with around a 1% dividend yield and currently trading approximately 18% below its February highs, I think the CSL share price provides long-term investors a great total return opportunity.

CSL’s plasma collections have been impacted by COVID-19, but over the long term the business should recover and the company should continue to grow earnings at a double-digit rate. The company also has a relatively low payout ratio of under 50%, providing room to grow the dividend even if earnings are flat.

Motley Fool contributor Lloyd Prout does not own shares in CSL Limited and expresses his own opinion.

Tristan Harrison: PM Capital Global Opportunities Fund Ltd (ASX: PGF) 

PM Capital Global Opportunities Fund is a listed investment company (LIC) that invests in international shares which are usually unloved by the market.  

It currently has a grossed-up dividend yield of around 6.1%, at the time of writing, and it has grown its dividend each year since 2016 when it started paying one. It has an outlook of growing dividends.  

The LIC has diversified holdings like KKR & Co Inc, Visa Inc, Siemens AG and Freeport-McMoRan Inc. It’s also trading very cheaply – its share price is trading at around a 19% discount to the 31 July 2020 net tangible assets (NTA). I think it’s a good way to diversify your income stream.  

Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. 

Daryl Mather: Charter Hall Retail REIT (ASX: CQR)

The Charter Hall Retail REIT is focused on shopping centres like several other REITs. However, it is focused on neighbourhood and sub-regional centres. For example, the company owns a shopping centre in Albany, WA as well as Townsville, QLD. These centres are anchored by supermarkets and typically contain non-discretionary stores like chemists.

I think the market has misjudged the impact of coronavirus on these assets. The REIT currently has a trailing 12-month dividend yield of around 6.2%. Its share price is down 24.24% year to date (at the time of writing) and it has a market capitalisation that is about 76% of its net tangible assets.

Motley Fool contributor Daryl Mather does not own any shares of Charter Hall Retail REIT.

Brendon Lau: Amcor PLC (ASX: AMC)

The global packaging group may sound like an unexciting income share with a yield between 4%-5%, but unexciting is exactly what income investors need right now. Amcor’s earnings are expected to be relatively stable during the COVID-19 mayhem given its large exposure to the consumer staples and medical industries. This means it’s unlikely to cut its dividend. What’s more, unlike most other ASX 200 shares, Amcor pays its dividend quarterly.

Motley Fool contributor Brendon Lau does not own shares of Amcor PLC. 

Glenn Leese: Platinum Asset Management Ltd (ASX: PTM)

Platinum Asset Management is a pooled investment sponsor. Essentially, it provides services to hedge and mutual funds by helping with launches and management. Platinum also invests in the share market directly, applying a value investing strategy across consumer, health care and technology sectors. With the current state of the world, these sectors are excellent targets.

For more than 10 years, Platinum has delivered a stable and increasing dividend. The yield has nearly doubled since 2009, from 3.6% up to 6.99% at the time of writing, making it my top dividend stock pick.

Motley Fool contributor Glenn Leese does not own any shares in Platinum Asset Management Ltd.

Bernd Struben: Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare Limited was established in 1987. Today, Sonic Healthcare is the world’s third largest pathology/laboratory medicine company with a market cap of around $16 billion. Based in Sydney, it operates in 8 countries.

The company has an enviable track record of growing — or at the very least maintaining — its total dividend per share payout dating all the way back to 1994.

The last interim dividend of 34 cents per share was paid on 25 March, for an annual dividend yield of 2.5%, partially franked at 30%.

Atop its reliable dividends, the Sonic Healthcare share price has gained nearly 19% year to date.

Motley Fool Contributor Bernd Struben does not own shares in Sonic Healthcare Limited.

Michael Tonon: WAM Global Ltd (ASX: WGB)

Not many companies are in the position to increase their current dividend payment, let alone announce a 100% increase. However, this is exactly what listed investment company (LIC) WAM Global has recently done.

WAM Global is an LIC which manages a diversified portfolio of global companies. With the current increase in its final dividend, it now pays shareholders a 5% fully-franked dividend (grossed up), with enough profit reserves to cover this payment for at least the next 3 years.

In addition, it has been growing its dividend rapidly since it began paying in 2019 and currently also trades at a ~12% discount to its net tangible assets (NTA) when compared to July’s before tax NTA of $2.28. 

Motley Fool contributor Michael Tonon owns shares in WAM Global Ltd. 

Matthew Donald: Charter Hall Long WALE REIT (ASX: CLW)

Charter Hall Long WALE REIT has a diversified property portfolio across industrial & logistics, office, long WALE retail, telco exchange and agri-logistics sectors. Its strong tenants, which include government, ASX-listed and multinational companies, have helped the group deliver solid full year results announced last week.

COVID-19 hasn’t had a significant impact on the business. Additionally, from FY17 it has been able to deliver an average distribution growth rate of 3% to FY20.

Going forward, due to its diverse property portfolio and quality tenants, I believe the group will be able to deliver continued distribution growth to investors.

Motley Fool contributor Matthew Donald does not own shares in Charter Hall Long WALE REIT.

Phil Harpur: JB Hi-Fi Limited (ASX: JBH) 

Electronics retailer JB Hi-Fi has continued to perform well financially, despite the challenges of the coronavirus pandemic. For the half year so far (to early June), JB Hi-Fi reported sales up 20% over the prior corresponding period. Demand has been particularly strong during the pandemic for technology products. I am particularly attracted to JB Hi-Fi as a retailer because its online channel is more developed than some of its other bricks and mortar competitors such as Harvey Norman Holdings Limited (ASX: HVN). Online sales have been booming during the crisis. JB Hi-Fi also pays a fully-franked forward dividend yield of around 3.3%.

Motley Fool contributor Phil Harpur does not own shares in JB Hi-Fi Limited or Harvey Norman Holdings Limited.

Sebastian Bowen: CSL Limited (ASX: CSL)

CSL is not normally considered a strong ASX dividend share. And fair enough too – on recent prices, you can only expect a dividend yield of around 1%. But I think CSL is an underappreciated dividend star. It has increased its payouts by an average of 15% per annum since it first started sending cash out the door in 2013. If this continues, it won’t be long until CSL is a dividend heavyweight in its own right. And investors who get in early will benefit the most. As such, I think CSL is a top dividend pick today for income down the road.

Motley Fool contributor Sebastian Bowen does not own shares in CSL Limited.

James Mickleboro: BWP Trust (ASX: BWP) 

I think that BWP Trust would be a great dividend option for investors in August. It is an REIT that invests in and manages commercial properties throughout Australia. The majority of its properties are leased to home improvement giant Bunnings Warehouse. These are high quality assets which have actually increased in value during the pandemic. This is quite the opposite to what is happening with most retail properties right now. In FY 2021, BWP intends to pay a distribution in the region of 18.3 cents per unit. This works out to be an attractive 4.6% yield based on the current BWP share price, at the time of writing.

Motley Fool contributor James Mickleboro does not own shares in BWP Trust. 

Nikhil Gangaram: Nick Scali Limited (ASX: NCK)

Nick Scali is my dividend pick for August. Despite the chaos caused by the COVID-19 pandemic, the furniture retailer recently surprised the market with its results for FY20, whilst also predicting a bumper FY21.

For the 12 months to 30 June, Nick Scali reported revenue of $262.5 million and net profit of $42.1 million. In addition, the company cited a strong order book and expects earnings to jump 50% for the first half of FY21. As a result, Nick Scali increased its final dividend by 12.5%, with the company set to pay out 22.5 cents per share.

Motley Fool contributor Nikhil Gangaram does not own shares in Nick Scali Limited.  

Daniel Ewing: AGL Energy Limited (ASX: AGL)

AGL has been hard hit by the pandemic, despite it traditionally being considered a safe haven asset. AGL operates and owns Australia’s largest energy generating portfolio. Thus, it is convenient that the public’s need for electricity is incessant. Furthermore, Victoria is having to endure a second lock down in the middle of winter. Shareholders will be hoping this causes an uptick in utility consumption that will provide a meaningful boost to earnings for the energy giant. AGL currently offers a trailing dividend of 6.52% on current prices. With franking at 80%, the yield is nothing to be scoffed at.

Motley Fool contributor Daniel Ewing does not own shares in AGL Energy Limited.

More reading

• 5 quality ASX shares to buy in August
• Broker sees top returns for iron ore miners BHP and Rio
• Why the Coles share price just hit a new record high
• ASX dividend investors! Ignore shares in consumer staples at your peril
• Has the ASX 200 finally taken off?

The post Top ASX dividend shares to buy in August 2020 appeared first on Motley Fool Australia.

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If you’re looking for strong returns over the next decade, but small caps are too risky for your tastes, then you might want to take a look at the mid cap space.

I think this is a great side of the market to look for investment ideas. This is because mid caps traditionally carry less risk than small caps but offer stronger potential returns than large caps.

With that in mind, I have picked out three top mid cap ASX shares which I think would be top options:

Collins Foods Ltd (ASX: CKF)

The first ASX mid cap share to consider buying is Collins Foods. It is one of the ANZ region’s largest KFC restaurant operators and also has a growing presence in Europe. It is these operations that I’m most bullish on over long term. Due to the under penetration of the KFC brand in Europe, I believe there is a significant expansion opportunity over the next decade. In addition to this, the company’s rollout of the Taco Bell brand across Australia appears to be going well and could be supportive of growth in the coming years.

EML Payments Ltd (ASX: EML)

Another mid cap share to look at is EML Payments. It is a payments company with a focus on pre-paid cards and digital gift cards. It provides its services to a wide range of businesses such as shopping centres, bookmakers, and salary packaging companies. Given its exposure to shopping centres, its performance is likely to be impacted greatly because of the pandemic. However, I believe this is understood and built into its share price now. In light of this, I would suggest investors focus on its very positive long term outlook. Which was boosted recently with the acquisition of UK-based Prepaid Financial Services. This has diversified its offering and gives EML access to the emerging field of banking as a service.

Jumbo Interactive (ASX: JIN)

A final mid cap share to consider buying is Jumbo Interactive. It is an online lottery ticket seller and the operator of the Oz Lotteries website. Jumbo also has a growing Software as a Service (SaaS) business which looks set to be the key driver of growth in the future. It is the international expansion of this business that is expected to play a key role in the company achieving its target of $1 billion in ticket sales through its platform by FY 2022. This will be triple what it achieved in FY 2019. Considering how the majority of lotteries globally are still not online, I believe the Powered by Jumbo SaaS business has a very lucrative global opportunity.

More reading

• 3 stellar mid cap ASX shares to buy
• Here’s how to start investing with $5k
• 2 top ASX shares to buy for reporting season
• Why these ASX mid cap shares could smash the market over the next 5 years
• Is now the time to buy the Jumbo Interactive share price?

James Mickleboro owns shares of Collins Foods Limited. 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 Emerchants Limited and Jumbo Interactive 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.

The post 3 mid cap ASX shares that could generate strong long term returns appeared first on Motley Fool Australia.

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Mining technology provider Imdex Limited‘s (ASX: IMD) share price gained an impressive 19.8% in July. That far outpaced the 0.9% gain from the All Ordinaries (INDEXASX: XAO).

After more than four years of strong performance, Imdex’s share price got hammered during COVID-19 panic selling in February and March. After hitting a record high share price of $1.71 on 26 February, Imdex’s share price cratered 53% by March 25.

From there, the company’s share price ran higher — with plenty of ups and downs along the way — to gain 66% by 31 July.

Year to date, the mining tech’s share price is down 6.8%. At the current price of $1.37 per share, Imdex has a market cap of $531 million.

What does Imdex Limited do?

Imdex develops cloud-connected devices and drilling optimisation products to improve the process of identifying and extracting mineral resources for mining companies across the world. Its technologies include drilling fluid products, data solutions and geo-analytics services to improve exploration results by helping companies obtain accurate subsurface data and receive critical information in real-time.

Imdex operates in the Asia Pacific, Europe, Africa, the Middle East and the Americas.

Why did Imdex’s share price leap 20% in July?

There was no single cause to drive Imdex’s share price up 20% in July.

The Imdex share price likely benefitted from the rapid resurgence of most of the mining companies it supplies following the shock downturn in February and March.

On 7 July, Imdex also released a promising announcement to the ASX, stating it had acquired AusSpec International Limited for $8.5 million. $3 million of that was in cash with the remaining $5.5 million in Imdex shares. AusSpec is a leading provider of spectral mineralogy through its Artificial Intelligence (AI) Spectral InfraRed Interpretation System. Imdex reported its acquisition was immediately cashflow positive and would provide a recurring revenue stream.

On 20 July, Imdex also reported that, “interest in its cloud-connected technologies has spiked during the COVID-19 pandemic, the positive effect of which will flow through for the next 10 years”.

Chief Executive, Paul House, noted that the impacts of the coronavirus on the way people in the mining industry were working had moved up the adoption of some of Imdex’s products and services by as much as 12 months.

More reading

• 3 mid cap ASX shares that could generate strong long term returns
• Why the Pilbara Minerals share price surged 40% in July
• The latest ASX stocks leading brokers are urging you to buy today
• ASX 200 rises 0.5%, Mesoblast plunges
• 5 quality ASX shares to buy in August

Motley Fool contributor Bernd Struben 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 did the Imdex share price leap 20% higher in July? appeared first on Motley Fool Australia.

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