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The choppy week is coming to a bright conclusion as the Woolworths Ltd (ASX: WOW) dividend will reach the accounts of shareholders on Friday.

The Woolworths share price closed at $39.70 on Thursday, down around 5.5% since its late-August highs of $42.3.

What happened to the Woolworths share price?

The recent weakness behind the Woolworths share price is broadly in line with the volatile S&P/ASX 200 Index (ASX: XJO).

Market moving headlines such as China’s Evergrande crisis, tumbling iron ore prices, rising inflation and United States’ debt ceiling has weighed on the broader market and investor sentiment.

As such, the ASX 200 has slipped 4.8% since mid-August all-time highs of 7,633.

Despite the shortcomings of the Woolworths share price, the company delivered a well-rounded FY21 performance following its successful divestment of Endeavour Group Ltd (ASX: EDV). 

Its full-year results highlighted a 5.7% increase in group sales to $67.278 million, a 22.9% jump in net profit after tax to $1.972 million and a final dividend of 55 cents.

The overall Woolworths dividend for FY21 came in at 108 cents per share, up 14.9% on FY20.

Looking ahead, the company said that it experienced strong sales growth in the first eight weeks of FY22, increasing 4.5% against the prior corresponding period.

It flagged that Big W sales have been impacted by COVID-19 restrictions, and expects earnings before interest and taxes (EBIT) in the first half to be materially below 1H FY21.

Group COVID-related costs were also creeping up slightly, increasing to 0.5% of sales in the first eight weeks of FY22.

What else do investors need to know about the Woolworths dividend?

The default option for dividends is a cash payment.

But for investors that elected to participate in Woolworths’ dividend reinvestment plan, the new shares will be priced at $39.63.

The new shares are expected to be issued to participants on Friday.

The post The final Woolworths (ASX:WOW) dividend will be paid today. Here’s what you need to know appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• 3 ASX shares protected from rising inflation and interest rates
• 5 defensive ASX shares to guide you through the market correction
• What happened for the Woolworths (ASX:WOW) share price in the FY22 first quarter?
• Woolworths (ASX:WOW) share price struggles amid staff shortages

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX investors are readying up for the final trading day this week, with ASX futures indicating a further rise in the benchmark index. This follows strength in the US stock market overnight amid a short-term debt limit extension deal being reached.

At the time of writing, futures are suggesting a 0.53% bump in the S&P/ASX 200 Index (ASX: XJO) at the open.

What happened on the US stock market overnight?

The US market swiftly ascended in the early moments of trade last night. Pivotally, lawmakers in the United States senate revealed a proposed agreement to quell the debt defaulting fears. According to the Financial Times, the proposal would see the debt limit raised by $480 billion. In turn, the government would have enough funds to get itself through to early December.

Across the market, investors witnessed a 0.83% climb in the S&P 500 Index (SP: .INX). Meanwhile, the Dow Jones Industrial Average Index (DJX: .DJI) gained 0.98% to 34,754.94 points. However, the standout was the Nasdaq Composite (NASDAQ: .IXIC), as it rallied 1.05% during the Thursday night session.

Some of the best performers overnight included Twitter Inc (NYSE: TWTR), Advanced Micro Devices Inc (NASDAQ: AMD), and Cisco Systems Inc (NASDAQ: CSCO). These companies gained 4.4%, 2.7%, and 2.0% respectively.

Commenting on the US stock market developments last night, chief investment officer at UBS Global Wealth Management Mark Haefele said:

A temporary deal should help reduce debt-ceiling related market volatility over the next few weeks as attention shifts toward December.

All in all, 10 out of the 11 industry sectors across the US market finished higher last night, setting a positive tone for Australian shares on Friday.

Ahead on the ASX today

Many investors will be watching the energy sector closely today after oil prices got a boost overnight. According to Bloomberg, the price of crude oil rose 1.8% to US$78.84 a barrel. As a result, the likes of Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be in for a green session today.

In some not-so-positive news, EML Payments Ltd (ASX: EML) will have shareholders on the edge of their seats at the open on Friday. The payments company released an announcement late yesterday afternoon indicating further potential implications from the Central Bank of Ireland. This is in regards to the company’s Prepaid Financial Services (Ireland) Limited business.

Finally, ASX-listed tech shares will be front of mind today. This is on the back of the strong showing by tech names on the US stock market last night.

The post What happened on the US stock market last night? appeared first on The Motley Fool Australia.

More reading

• October is ‘crash’ month: Will history repeat for the ASX 200?
• CBA (ASX:CBA) warns iron ore price will fall by 27% in the next year
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• ASX 200 (ASX:XJO) midday update: Pilbara Minerals jumps, Whitehaven Coal sinks

Motley Fool contributor Mitchell Lawler owns shares of Advanced Micro Devices and EML Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Advanced Micro Devices, EML Payments, and Twitter. The Motley Fool Australia owns shares of and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The A2 Milk Company Ltd (ASX: A2M) share price has been under pressure this week.

Over the last two trading sessions, the embattled infant formula company’s shares have fallen 9%.

This follows news that the company has been hit with a class action.

Is the A2 Milk share price in the buy zone?

According to a note out of Bell Potter, its analysts remain bullish on the A2 Milk share price.

The note reveals that the broker has retained its buy rating and $7.70 price target on its shares.

Based on the current A2 Milk share price of $5.92, this implies potential upside of 30% over the next 12 months.

What did the broker say?

Bell Potter has been looking at industry data and was happy with what it saw.

Its analysts highlight that infant formula exports to China rose 5% during August.

The broker commented: “Industry volumes rose +5% YOY in Aug’21, the second positive YOY outcome in the past four months. Volumes have been volatile in recent months, but in general terms are demonstrating signs of picking up from the lows seen in 2Q-3Q20. On a R3M basis, volumes are up +42% from the Jan’21 low.”

It was a similar story for exports from Christchurch to China, which recorded a 6% increase in August. This is a positive as historically there has been “a high correlation between the value of exports to China ex-Christchurch (CHC) and A2M reported PRC revenues.”

The broker also looked at infant formula imports into China from key markets and believes that things are improving.

Its analysts said: “The largest exporters of IMF to China are the EU, NZ and Australia. We view movements in volumes to China from these markets as indicative of overall market activity, with the R3M average removing monthly noise. While volumes continue to demonstrate double digit YOY declines (-28% YOY in Jul’21), sequentially volumes look to have formed a bottom in recent months, up +12% from Jan’21 lows.”

Undemanding valuation

In light of the above, no changes have been made to its forecasts and Bell Potter continues to see value in the A2 Milk share price.

It concluded: “There is no change to our Buy rating, earnings forecasts or A$7.70ps target price. In recent months we have seen a bottoming in trade flows into China and closer alignment of trade flows into and out of Australia. Trading at 14.3x FY22e EBITDA exMVM/US losses we don’t see A2M as particularly demanding relative to other China facing FMCG entities.”

The post Top broker tips A2 Milk (ASX:A2M) share price to jump 30% appeared first on The Motley Fool Australia.

More reading

• Why A2 Milk, Magellan, Santos, & Whitehaven Coal shares are falling
• Why A2 Milk, CBA, Flight Centre, & Magellan’s shares are sinking
• Which ASX shares are leading the way in the ASX 300 today?
• Leading brokers name 3 ASX shares to sell today
• ASX 200 (ASX:XJO) midday update: A2 Milk class action, tech shares rebound

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Aurizon Holdings Ltd (ASX: AZJ) share price has been a disappointing performer so far this year.

Since the start of the year, the rail freight operator’s shares have fallen 0.5%.

This compares unfavourably to an 8.5% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Where next for the Aurizon share price?

The good news is that one leading broker believes the Aurizon share price could be heading higher from here.

According to a note out of Morgans from last month, the broker has upgraded the company’s shares to an add rating with an improved price target of $4.14.

Based on the current Aurizon share price of $3.90, this implies potential upside of 6% over the next 12 months before dividends.

In addition, Morgans is forecasting a 28 cents per share dividend in FY 2022. Including this, the potential total return stretches to 13%.

What did the broker say?

Morgans noted that it was hard to ignore the potential returns on offer based on the Aurizon share price at the time.

It commented: “We upgrade to ADD, given improved return potential at current prices. This includes c.7% dividend yield and c.9% upside [at the time] to our revised target price of $4.14.”

The broker also likes Aurizon due to its defensive qualities and strong capital position.

Morgans said: “AZJ’s revenue protections and the essential and long-dated nature of its assets make its earnings less correlated with the business cycle, providing a defensive element to a portfolio. Also, its strong cashflows and debt capacity give it flexibility to pursue growth investment and/or undertake capital management initiatives.”

And while its analysts acknowledge that there are ESG and sustainability concerns, it “would expect AZJ’s cash yield (7.5%) and cheap trading multiples (7x EV/EBITDA, 13x PER) to attract value investors tolerant [of this].”

The post Why a top broker upgraded the Aurizon (ASX:AZJ) share price to a buy appeared first on The Motley Fool Australia.

More reading

• 2 highly rated ASX dividend shares to buy
• Aurizon (ASX:AZJ) share price lifts following sustainability report
• Broker tips BHP (ASX:BHP) and this dividend share to provide huge yields
• 2 buy-rated ASX dividend shares with attractive yields

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Zip Co Ltd (ASX: Z1P) share price had a bumpy first quarter for FY22.

Kicking off the new year at $7.57, shares in the Buy Now, Pay Later (BNPL) company accelerated to nearly $9 by mid-July. By the end of the quarter, Zip shares fell by 6.87% to $7.06 apiece. For context, the S&P/ASX 200 Index (ASX: XJO) actually ended the quarter 0.26% higher.

There’s been a few stories that have had a material impact on Australia’s second-largest BNPL provider during that time.

Let’s take a closer look.

Zip’s FY21 full year results

The Zip share price crashed in late August when the company released its full-year results for FY21. That’s despite the company posting the following, positive numbers:

• Revenue of $403.2 million, up 150% year on year (FY20 $161 million)
• Transaction volumes of $5,8 billion, up 178.5% (FY20 $2.1 billion)
• Transaction numbers of 41.3 million, up 293% (FY20 10.5 million)
• Active customers at 7.3 million, up 247.5% (FY20 2.1 million)
• Active merchants at 51,300, up 109.4% (FY20 24,500)
• Cash gross profit of $198 million, up 147% (FY20 $80.1 million)

Looking forward, Zip management said it did expect FY22 to be a “bumper year” for the company. The company noted that global market entries and investments are contributing meaningful total transaction volumes (TTV) in the new financial year.

What else has affected the Zip share price?

Other big moves by the BNPL provider include its strategic entering into the Indian market and its partnership with technology giant Microsoft Corporation (NASDAQ: MSFT).

On the former, Zip said in a media release it had agreed to make a “strategic” US $50 million investment in India-based BNPL operator ZestMoney.

ZestMoney currently has 11 million registered users, over 10,000 online merchants on the platform, and a point of presence in over 75,000 physical stores.

Management advised that this investment is consistent with its strategy to build a truly global BNPL business. And one that supports regional and global partners in multiple markets, providing everyone, everywhere with access to fair and transparent payment products. The Zip share price rose on the news.

On the latter, Zip says it will integrate its technology into the shopping experiences within Microsoft Edge. In turn, shoppers using the web browser will be able to use a digital payment option provided by Zip.

The integration into the company’s web browser will begin rolling out in the United States first. Microsoft is the second-largest company on the planet by market capitalisation. This news was a big deal for Zip. It is not uncommon for momentum from material developments to carry on for days afterwards.

Zip share price snapshot

Over the past 12 months, the Zip share price has decreased by about 6%. Year-to-date, however, shares in the company are up by roughly 22%. Its 52-week high is $14.53 per share and its 52-week low is $4.96 per share.

Zip has a market cap of approximately $3.9 billion.

The post How did the Zip (ASX:Z1P) share price perform last quarter? appeared first on The Motley Fool Australia.

More reading

• Why the Zip (ASX:Z1P) share price is storming 5% higher this Thursday
• These are the 10 most shorted ASX shares
• ASX 200 (ASX:XJO) midday update: Afterpay & Zip sink, energy shares rise
• Why the Zip (ASX:Z1P) share price is down 4% today
• ASX 200 tech shares set to slide as Nasdaq plunges 2%

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Microsoft and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If you’d like to invest in the tech sector but aren’t sure which shares to buy, you could look at the two exchange traded funds (ETFs) instead.

These ETFs allow investors to buy and collection of tech shares through a single investment. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first tech ETF to look at is the BetaShares Global Cybersecurity ETF. This popular ETF gives investors exposure to the leading companies in the growing cybersecurity sector.

Included in the fund are global cybersecurity players Accenture, Cisco, Cloudflare, Crowdstrike, Okta, Palo Alto Networks, and Splunk. These companies appear well-placed for growth over the 2020s due to increasing demand for cybersecurity services.

One of the companies you’ll be owning a slice of is CrowdStrike. It is a provider of incident response and forensic analysis services via its Falcon platform. CrowdStrike’s services are designed to help businesses understand whether a breach has occurred. It then allows the user to respond and recover from a breach with speed and precision to remediate the threat.

Whereas Palo Alto Networks is the global leader in cybersecurity solutions. Its offering includes advanced firewalls and cloud-based products that extend firewalls to cover other aspects of security. It has over 85,000 customers across over 150 countries. From these customers it generated US$4.3 billion of revenue in FY 2021, which was up 25% year on year.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another tech ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.

Among the companies you’ll be owning are game developers Activision Blizzard, Take-Two and Electronic Arts, and graphics processing unit (GPU) developer Nvidia. VanEck notes that the increasing popularity of video games and eSports means that these companies are well-placed to benefit.

One of the companies in the fund is Take-Two. It is the game developer behind the Grand Theft Auto and Red Dead franchises. While it may have been some time since Grand Theft Auto V was released, its online offering continues to generate significant revenues from micro-transactions. Furthermore, a new expanded and enhanced version is due to be released soon ahead of a much-anticipated (but unconfirmed) sequel which is expected in the next couple of years.

As for Nvidia, it is the world’s leading GPU developer and sits at the forefront of modern technologies. Its GPU deep learning ignited modern artificial intelligence and is used by cryptocurrency miners.

The post 2 fantastic tech ETFs for ASX investors appeared first on The Motley Fool Australia.

More reading

• Own BetaShares Global Cybersecurity ETF (ASX:HACK)? Here’s what you’re invested in
• Potential buys: 2 compelling ASX shares
• 3 ASX shares to buy this week
• 2 ASX growth shares that could be buys in October 2021
• These ASX shares could be top options for growth investors

Motley Fool contributor 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 has recommended BETA CYBER ETF UNITS. The Motley Fool Australia owns shares of and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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One expert has warned that many share market crashes have historically happened in October, and investors should act accordingly.

Already, the S&P/ASX 200 Index (ASX: XJO) has sunk 5.5% since its mid-August peak.

According to Switzer Financial director Paul Rickard, it’s “no surprise” that the market has been nervous after not seeing a correction since the COVID-19 crash in March 2020.

“October is ‘crash’ month,” he told Switzer Daily this week.

“Think back to the ‘Wall Street Crash’ of October 1929, ‘Black Monday’ of October 1987, the ‘Great Financial Crisis’ that started in October 2007 or even the ‘mini-crashes’ of 1989, 1997 and 2002.”

Rickard added that September broke an 11-month winning streak for the ASX 200.

“The S&P/ASX 200 lost 2.7% over the month to be up 11.3% in 2021. With dividends thrown in, the total return comes in at an impressive 14.8%.”

Don’t worry, momentum is strong

While the market is anxious about this month, Rickard analysed longer-term movements, which still show a strong upward trend.

He took the S&P 500 Index (SP: .INX) as a gauge, as the Australian market often follows the lead of the US.

“Although the spot index value has gone below the 30-day moving average, suggesting short term bearishness, it is miles away from its 300-day moving average – about 350 index points away,” said Rickard.

“Moreover, the Coppock indicator, which is a measure of relative strength, is very positive. Bottom line: the long term trend is in place and momentum is strong.”

The numbers for the Australian market are not quite as bullish, but “shows a similar story”.

“Locally, we are looking forward to lockdowns ending in NSW, and hopefully Victoria, and data to confirm that the economic recovery is rapid.”

‘Stack of money’ with nowhere to go

According to Rickard, the Reserve Bank’s message that interest rates would not rise until at least 2024 means “there is a stack of money moving into the share market”. 

“In October, this is being boosted by $8 billion from the Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW) buybacks, and record dividend payments from major resource companies including BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG),” he said.

“One key watch point will be whether the iron ore price can stabilise around the US$110 a tonne level.”

Rickard’s conclusion is that while October could look “a little scary”, investors will buy up bargains after any significant dips to push prices back up again.

“While we will take our lead from the US, the most probable call is to say that by the end of the December quarter, the nervousness of September and October will look like a good buying opportunity.”

The post October is ‘crash’ month: Will history repeat for the ASX 200? appeared first on The Motley Fool Australia.

More reading

• CBA (ASX:CBA) warns iron ore price will fall by 27% in the next year
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• ASX 200 (ASX:XJO) midday update: Pilbara Minerals jumps, Whitehaven Coal sinks
• Top broker upgrades the Super Retail (ASX:SUL) share price to buy

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Analysts from Commonwealth Bank of Australia (ASX: CBA) believe that the iron ore price is going to keep falling.

There are a number of different opinions out there, but this one comes from Vivek Dhar, an analyst for mining and energy commodities at CBA.

Despite the fact that the iron ore price has roughly halved over the last five months, the call is that iron ore could fall more than 25% to US$85 per tonne by the end of next year, according to reporting by the Australian Financial Review.

The main reason for that negative outlook is because of China’s efforts to reduce its emissions by cutting how much steel is being produced.

Mr Dhar reportedly wrote:

These steel output cuts, driven by emission reduction goals, aim to cap China’s steel output in 2021 at 2020 levels.

China’s steel output is crucial to iron ore prices because China accounts for 70 per cent ‑ 75 per cent of the world’s iron ore imports.

What do the big ASX 200 miners think about the iron ore price?

There are a few very large S&P/ASX 200 Index (ASX: XJO) miners on the ASX such as BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

The resources giant BHP released some thoughts on the iron ore price when it reported its FY21 result.

It noted that the iron ore prices have been elevated since the Brazil dam disaster that disrupted the iron ore market in early 2019. The miner said that conditions have been “particularly tight” since the second half of the 2020 calendar year, with a new record for the iron ore price. Lower iron ore production from some other major iron ore producers contributed to this.

However, BHP said:

Medium term, China’s demand for iron ore is expected to be lower than it is today [on 17 August 2021] as crude steel production plateaus and the scrap-to-steel ratio rises. In the long-term, prices are expected to be determined by high cost production, on a value-in-use adjusted basis, from Australia or Brazil. Quality differentiation is expected to remain a factor in determining iron ore prices.

However, BHP did say that it’s positive about the outlook for long-term global economic growth and commodity demand. Population growth, the infrastructure of decarbonisation and rising living standards are all expected to drive demand for energy, metals and fertilisers for decades to come.

The post CBA (ASX:CBA) warns iron ore price will fall by 27% in the next year appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX shares today
• Could the Fortescue (ASX:FMG) share price slide to $12.50 by Christmas?
• Own BHP shares? Here’s the latest on the miner’s nickel and EV battery play
• Could the Rio Tinto (ASX:RIO) share price reach $123 by the end of 2021?

Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price will be on watch in the coming period as multiple experts name it their value pick.

Shares for the telecommunications company have already risen almost 29% this year, closing at $3.87 yesterday.

But with the S&P/ASX 200 Index (ASX: XJO) sinking 5.5% over the past few weeks, investors are increasingly looking for ‘safe havens’.

Pengana Australian Equities Fund analyst Mark Christensen said this week that Telstra has one large and reliable revenue source.

“Telstra has 25% of their valuation effectively tied up in a long-term bond with the government essentially — it’s with the NBN,” he told a Pengana webinar.

“[The contract] has a step-up linked to inflation … So if inflation does run away, Telstra benefits by having that income stream also accelerate.”

This means that the telco is resilient against inflation and interest rate hikes, according to Christensen.

Expect Telstra’s dividends to remain healthy

Ord Minnett senior investment adviser Tony Paterno also likes the look of the Telstra share price for its reliability through some possibly turbulent years.

“Management is targeting mid-single digit growth in underlying operating earnings to fiscal year 2025,” he told TheBull.com.au.

“It expects increasing earnings to be driven by mobile service revenue growth, improving consumer and small business fixed margins and further cost reductions.”

Paterno forecasts Telstra’s fully franked dividends to stay at least at the current level of 16 cents per share.

“Telstra plans to return any excess cash flow to shareholders – in the absence of merger and acquisition opportunities – via an unfranked special dividend, or further on-market share buybacks.”

The current dividend yield is 2.58%, although that jumps to more than 4% if all 16 cents, which includes special cash payments, is counted.

Telstra is actually Pengana Australian Equities Fund’s largest holding currently.

It’s positioning its portfolio to be defensive-dominated for the coming years, expecting hard times for the general market.

“[We’re] making sure we’ve got companies that, at the very least, will not lose in an interest-rate or inflationary environment,” said Christensen.

“But more than that, we [aim to] find winners — those that benefit.”

The post Why these experts say the Telstra (ASX:TLS) share price is tempting right now appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares protected from rising inflation and interest rates
• Here’s what happened to the Telstra (ASX:TLS) share price in September
• When was the worst ever day on the Telstra (ASX:TLS) share price chart?
• Why this broker sees 30% upside for the AGL (ASX:AGL) share price
• 2 ASX dividend shares with fully franked yields of more than 5% today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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If your risk tolerance allows for it, having a little exposure to the small side of the market could be worth considering.

This is because if you can identify a future mid or large cap share while it is still in its infancy, you could potentially generate outsized returns in the future.

With that in mind, I have picked out two small cap ASX shares that brokers rate highly. They are as follows:

Adore Beauty Group Limited (ASX: ABY)

Adore Beauty is a growing online beauty retailer. It was founded in a Melbourne garage by Kate Morris and James Height back in 2000.

Since then, it has evolved into an integrated content, marketing, and ecommerce retail platform in order to better meet customer needs.

At the end of FY 2021, the company had 818,000 active customers. This was up 38% over the 12 months. Together with a 7% increase in its average revenue per customer, this led to Adore Beauty reporting a 48% jump in revenue to $179.3 million.

The good news is that this is still only a very small slice of the Australian beauty and personal market worth an estimated ~$11 billion a year. This gives Adore Beauty a very long runway for growth, particularly given the low penetration of online beauty sales compared to other Western markets.

Morgan Stanley is positive on the company’s long term outlook. So much so, it has an overweight rating and $6.00 price target on Adore Beauty’s shares.

Serko Ltd (ASX: SKO)

Another small cap to look at is Serko. It is an online travel booking and expense management provider. While times have been hard because of the pandemic, demand is starting to pick up and is likely to continue doing so as the vaccine rollout gathers pace and borders reopen.

Another big positive is the game-changing Booking.com deal, which has seen the launch of the new Zeno powered ‘Booking.com for Business’ platform. In August the company had migrated over 150,000 activated existing businesses onto the new platform, with more to follow.

This comes at a time when Serko notes industry trends are turning favourable because of the pandemic. It advised that risk and cost management will be the key priorities for organisations as they return to travel. As its Zeno product has a number of product capabilities to address the challenges of post-pandemic business travel, it expects to benefit.

Macquarie is positive on Serko. It currently has an outperform rating and NZ$8.31 (A$7.92) price target on its shares.

The post Brokers name 2 small cap ASX shares to buy appeared first on The Motley Fool Australia.

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Motley Fool contributor 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 has recommended Serko Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Serko Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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