Tag: Motley Fool

Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think and their thoughts on various ASX shares. In this edition, TMS Capital portfolio manager Ben Clark explains why the Square-Afterpay deal is so fantastic for shareholders.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Ben Clark: Our High Conviction Fund has very much got a growth skew. So we’d look for businesses that we believe can materially grow their earnings over long periods of time. 

It’s an ‘index-unaware’ fund. As opposed to many of the funds out there, if we don’t like parts of the market, we just won’t invest in it. So probably the best example of that, the Australian share market is heavily weighted towards banks and resources — we don’t own any banks in the fund and we only own one resource stock.

I say to investors, we truly practice what we preach. If we see a business that we really, really like, we’ll take a very materially overweight position in it. We truly believe in long-term, patient investing. 

So I think nearly three-quarters of the stocks that are held in the fund were held at the fund’s inception on 1 July 2016 — and have been held by our company in IMAs, or individually managed accounts, for much longer periods of time than that. 

It’s quite a concentrated mix. We generally have about 20 to 25 shares. 

In terms of what we’d look for when we’re investing in a company, probably 4 or 5 key attributes. (We) heavily favour founder-led businesses with plenty of skin in the game with a proven track record. We like companies that have got their balance sheet in order and can ride through the unexpected, as probably COVID‘s taught us. Businesses that we believe have a structural tailwind behind them, and ideally businesses that can reinvest back into themselves at very high returns on invested capital, which we believe adds to long-term compounding effects.

Afterpay-Square deal makes ‘a lot of sense’

MF: Afterpay Ltd (ASX: APT), which is a hot topic this week, would fit your philosophy pretty well?

BC: Yes, Afterpay is one of those stocks that has been held since the fund’s inception. We are active in trimming and adding to positions as we see them go in and out of favour. And Afterpay… is one that has swung around dramatically in price over the last 5 or 6 years. 

I think as of today, we’ve got about a 5% weighting to Afterpay and that’s been kind of consistent through the last 5 years. So you would have to say that we’ve been trimming more often than we’ve been adding to it, given the rise in the share price, but it has definitely served us well.

MF: How do you feel about the Square Inc (NYSE: SQ) acquisition?

BC: I think it’s an incredibly good transaction. Square is a business we know really well. In individual accounts, we do own some exposure to Square directly. We own a business called Tyro Payments Ltd (ASX: TYR) in the High Conviction Fund and we did quite a bit of work on Square when we were looking at Tyro, so I think it’s an incredible business that the fit between the 2 companies makes strategically a lot of sense.

I was on the call last night, on the Square earnings call, and I really think that (for) the 2 founders of Afterpay, this is not an exit for them. They see this as the transaction (that) gives them the ability to accelerate the growth of Afterpay. 

This is one of the strengths of the High Conviction Fund — that this index-unaware basis will mean that we will continue to own Square as a CDI listed on the ASX. 

2 ASX shares still going strong after 5 years

MF: What are your two biggest holdings?

BC: Probably the last few years now… No.1 is Resmed CDI (ASX: RMD). We’ve got about an 11% weighting in Resmed at the moment. Again, it’s been held since the fund’s inception. It’s one stock that I don’t think has ever been trimmed, and we’re still very bullish on the outlook for that business. 

And the second is Xero Limited (ASX: XRO). We have about a 9% weighting to Xero. Again, I don’t think it’s ever been trimmed since it entered the portfolio and I think it was put in there about a year after the fund started running. 

So they’re the businesses that we really haven’t tinkered with. They have been quite volatile — as most growth stocks are — and we’ve tried to take advantage of that volatility over the years.

How does the future look for these 2 shares?

MF: You’ve done pretty well out of both, but it sounds like you’re happy to continue holding them?

BC: Yeah. Look, (they’re) obviously very different businesses. 

In the case of Resmed, we believe that Resmed was a massive COVID loser last year. Their main market is in the United States. If you were in the US and you were worried, or your doctor was worried, that you might have sleep apnea, you really weren’t in a rush to go and get tested in hospitals, go into a doctor’s surgery, sleep clinics, et cetera. I mean, there really was a realistic chance you would die if you got COVID in America last year. And hospitals were closed to non-COVID procedures, so it was a very difficult year for them.

But if you fast forward to this year, there’s kind of 3 key things going in their favour. The reopening of America and a backlog of cases that will need to be treated. The first launch of their HVAC machine… This isn’t a frequent product cycle. This is the first one I think in 6 years and you see last time we saw meaningful acceleration in sales when the new machine was released. And thirdly Koninklijke Philips NV (AMS: PHIA), which owns Respironics, has had a major product recall of their HVAC machine, which is the number 2 player in the US market. 

To us, the stars are aligning to what is going to be a pretty good year for Resmed.

In the case of Xero, (it’s) still probably going through somewhat of a troubled time with COVID. The recent lockdowns across the country are not good for a lot of small and mid-sized businesses. 

Ultimately, as bad as it sounds, the accounting software is the last thing to be switched off if a business doesn’t survive this time. Because they still need to do BAS tax returns, wages, all that sort of stuff. So they’re incredibly resilient assets within the businesses, and the government’s putting a lot of businesses back on life support, and hopefully this is the last of the lockdowns that we see. 

But we just think there’s so much potential for new adjacencies for Xero. Growth in new regions, et cetera.

The post These 2 hot ASX shares take up 20% of our fund: manager appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• 2 fantastic ASX shares named as buys by analysts
• New Resmed (ASX:RMD) product could shake up market share – Expert
• Why Argosy Minerals, Genworth, Vulcan, & Zip shares are charging higher
• Square earnings, what it means for the Afterpay (ASX:APT) share price?

Motley Fool contributor Tony Yoo owns shares of AFTERPAY T FPO, Square, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Square, Tyro Payments, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3lErI6K

There has been an incredible amount of momentum behind the Commonwealth Bank of Australia (ASX: CBA) share price this year, rallying 26.5% from $83.40 on 1 January to a record close of $105.50 by 17 June.

Ever since its record highs, the CBA share price has been grinding sideways. CBA shares have edged 0.21% lower in July.

Why the CBA share price is moving sideways

Sydney lockdowns weigh on economic recovery

The Reserve Bank of Australia (RBA) released its August monetary policy meeting minutes on Tuesday. The RBA flagged that the Australian economy was likely going to contract in the third quarter of 2021.

“The economic recovery in Australia has been stronger than was earlier expected. The recent outbreaks of the virus are, however, interrupting the recovery and GDP is expected to decline in the September quarter.”

The slowdown in near-term growth and heightened uncertainty could be a factor weighing on sentiment for the CBA share price.

Despite the near-term concerns, the central bank remains positive that the economy will pick up from where it left off.

“The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly. Prior to the current virus outbreaks, the Australian economy had considerable momentum and it is still expected to grow strongly again next year. ”

Lending indicators fall in June

The Australian Bureau of Statistics (ABS) has revealed that new loan commitments in housing and personal segments fell in June.

ABS figures show that new loan commitments for housing fell 1.6% month on month to $32.05 billion.

This represents the first month-on-month decline in 2021. However, still a significant 82.7% higher compared to a year ago.

Similarly, personal fixed-term loans fell sharply, down 12.6% month on month to $1.74 billion, but 16.8% higher year on year.

In June, the CBA share price went full circle, rallying 5.15% from $100.72 to a record close of $105.50 on 17 June, before closing 0.84% lower at $99.87 at the end of the month.

Conflicting interest rate expectations

The CBA share price took a sharp 7.41% tumble between 17 and 21 June.

Headlining the sell-off was news that the US Federal Reserve expected to potentially increase interest rates by late 2023. This is instead of its previous forecast of at least 2024.

Back at home, Westpac Banking Corp (ASX: WBC) also lifted its interest rate expectations, pointing to a potential rate hike from the RBA by Q1 2023.

CBA share price snapshot

Despite the recent lack of traction, the CBA share price is still up an impressive 22.14% year to date.

A near-term catalyst for the company’s shares could be its upcoming full year FY21 results on Wednesday 11 August.

The post How did the CBA (ASX:CBA) share price perform in July? appeared first on The Motley Fool Australia.

More reading

• FY 2021 results preview: Is the CBA (ASX:CBA) share price good value?
• Here are 3 dipping ASX shares now ready to rally
• 5 things to watch on the ASX 200 on Wednesday
• Leading broker slaps $89 target on CBA (ASX:CBA) share price
• CBA (ASX:CBA) share price lifts amid soaring property prices

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.

from The Motley Fool Australia https://ift.tt/3rUANth

If you’re wanting to beat low interest rates in 2021, then you might want to look at the dividend shares listed below.

They offer investors attractive yields that are vastly superior to term deposits and savings accounts. Here’s what you need to know about them:

Aventus Group (ASX: AVN)

Aventus is a leading owner, manager, and developer of retail parks. It has a portfolio of 20 centres featuring a diverse tenant base of 593 quality tenancies. At the last count, national retailers represented 87% of its total portfolio.

In addition, the company has overweight exposure to the household goods sector and everyday needs. Given how positively this side of the retail market has performed during the pandemic, this has allowed Aventus to collect rent largely as normal in FY 2021. This led to Aventus reporting a 6.5% increase in funds from operations (FFO) to $55.9 million during the first half.

Goldman Sachs is a fan of Aventus. It currently has a buy rating and $3.27 price target on its shares. The broker is also forecasting very generous dividends in the coming years. Based on the latest Aventus share price of $3.17, it estimates yields of ~5.3% and ~6% in FY 2021 and FY 2022, respectively.

Carsales.Com Ltd (ASX: CAR)

Another ASX dividend share to look at is Carsales. It is the auto listings company dominating the ANZ market and operating in a number of international markets.

Carsales has been a positive performer over the last decade, delivering consistently solid growth over the period. Pleasingly, this has continued in FY 2021. Carsales expects revenue of $433 million to $437 million and adjusted net profit after tax of $149 million to $153 million this year. The latter represents an 8% to 11% increase on FY 2020’s profit of $138 million.

Analysts at UBS are positive on the company. They currently have a buy rating and $24.00 price target on its shares. UBS is also forecasting dividends of 44 cents per share in FY 2021 and 50 cents per share in FY 2022. Based on the current Carsales share price of $21.90, this will mean fully franked yields of 2% and 2.3%, respectively.

The post 2 growing ASX dividend shares given buy ratings appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares insiders are buying ahead of reporting season
• 2 ASX dividend shares that analysts rate as buys
• 2 growing ASX dividend shares analysts rate as buys
• 2 top ASX dividend shares tipped as buys
• 3 ASX shares to buy before looming economic slowdown: expert

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 AVENTUS RE UNIT and carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fw0rzL

According to one expert from BetaShares, Betashares Asia Technology Tigers ETF (ASX: ASIA) could be an opportunity after a pullback due to Chinese regulation concerns.

What’s going on?

Over the last six months, Betashares Asia Technology Tigers ETF has dropped by over 22% and in just the last month it has fallen around 7%. That’s despite the global share market continuing to rise, particularly the technology sector.

Betashares Asia Technology Tigers ETF is an exchange-traded fund (ETF) that follows a number of non-Japanese technology businesses. Half of the portfolio is invested in Chinese-listed business.

BetaShares Chief Economist, David Bassanese, pointed out that the decline started several months ago when there was a shift from ‘growth’ shares to ‘value’ shares.

Mr Bassanese pointed out that the decline of the Asian tech share prices has not been due to a fall in earnings. Indeed, those earnings have increased “strongly”.

It is China’s regulatory crackdown that he attributes a large part of the fall to.

A number of Chinese businesses have faced new rules and attention in China, starting with Alibaba.

The focus of China on these tech names has been “anti-competitive practices in areas where companies have significant market power.”

Is Betashares Asia Technology Tigers ETF a buying opportunity?

Mr Bassanese noted that long-term growth is likely in the Chinese economy (and globally) for consumer goods and semiconductors.

The private sector is “critical” to China’s economic success.

He pointed to the high levels of technology adoption and the large and growing Asian middle class as reasons to be positive on businesses within the ETF’s portfolio.

There is also the fact that a number of Chinese businesses have multiple divisions making profit, so a decline in one area can be made up in other areas of the company.

Mr Bassanese argues that China likely doesn’t want to kill its golden geese. Any measures taken could help some of the smaller Chinese tech businesses grow – which the Betashares Asia Technology Tigers ETF may already own in its portfolio further down in the exposure list.

However, the BetaShares economist cautioned that short-term volatility and risks are part of investing.

Bottom line

In his concluding thoughts about Betashares Asia Technology Tigers ETF, Mr Bassanese said:

All up, it seems likely that the price impact of the latest round of regulatory risk now being absorbed by the Asian technology sector will eventually fade. As such, the current period of price weakness may well represent a buying opportunity for long-term investors who still see potential in this growth thematic.

The Asian technology sector generally trades at a price-to-forward earnings discount to the global (largely U.S. dominated) technology sector. Since 2003, that discount has averaged around 15%, whereas by late-July it had increased to 30%.

The post Expert: Chinese regulation worries could make Betashares Asia Technology Tigers ETF (ASX:ASIA) a buy appeared first on The Motley Fool Australia.

More reading

• Tencent share price plummets 10%, here’s what it means for ASX investors
• 2 excellent ETFs for ASX investors in August
• Here’s why the BetaShares Asia ETF (ASX:ASIA) share price is down 10% over a month
• 2 ASX tech shares that might be buys in August 2021
• What’s gone wrong with China shares like Tencent lately?

Motley Fool contributor Tristan Harrison 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 BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3AahFKP

There are a lot of growth shares for investors to choose from on the Australian share market.

To narrow things down, I have picked out three ASX growth shares that are highly rated. Here’s what you need to know about them:

Breville Group Ltd (ASX: BRG)

The first ASX growth share to look at is Breville. The appliance manufacturer has been a very strong performer this year thanks to favourable tailwinds brought about by COVID-19. These include more cooking and working at home and a redirection in consumer spending. This led to Breville reporting a 28.8% increase in first half revenue to $711 million and a 29.2% increase in net profit after tax to $64.2 million. More of the same is expected in the second half, which should be boosted further by recent acquisitions and its ongoing international expansion.

UBS has a buy rating and $35.70 price target on its shares.

ELMO Software Ltd (ASX: ELO)

Another ASX growth share to look at is ELMO. It is a HR and payroll platform provider that continues to grow strongly even during the pandemic. ELMO’s platform allows businesses to simplify and streamline a wide range of tasks. It has also just launched a new Experiences module, which facilitates smooth, efficient employee journeys through key life cycle stages. Management expects this to broaden its convergent solution and strengthen its customer offering.

Morgan Stanley currently has an overweight rating and lofty $9.70 price target on ELMO’s shares.

IDP Education Ltd (ASX: IEL)

A final ASX growth share to look at is IDP Education. It is a provider of international student placement services and English language testing services. As you might expect, it was hit hard by the pandemic. Positively, IDP Education has been tipped to win market share and resume its rapid growth once the crisis passes and trading conditions return to normal. It will also be boosted by a major acquisition in India that makes it the dominant force in the key market.

Macquarie is bullish on IDP Education. Its analysts currently have an outperform rating and $32.60 price target on its shares.

The post 3 top ASX growth shares rated as buys appeared first on The Motley Fool Australia.

More reading

• 2 beaten-up ASX shares that could be buys in August 2021
• Elmo (ASX:ELO) share price spikes on new ‘Experiences’
• Here’s why the IDP Education (ASX:IEL) share price jumped 15% in July
• 2 buy-rated growth shares for ASX investors in August
• 3 stellar ASX growth shares rated as buys

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 Elmo Software and Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Elmo Software. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3jsb1ZN

The Fortescue Metals Group Limited (ASX: FMG) share price may still be attractive despite the miner falling by 7.5% over the last week.

Indeed, a lower price may actually offer better value for investors.

The iron ore price has taken a bit of a dive over the last couple of weeks.

But there is more to think about the iron ore giant than simply a lower share price.

The Fortescue Metals share price is currently rated as a buy by the brokers Macquarie Group Ltd (ASX: MQG) and Ord Minnett.

Here are four reasons why investors may still be attracted to Fortescue:

Exploring for other commodities

At the moment, Fortescue generates a huge amount of profit from its iron ore.

But other miners, such as BHP Group Ltd (ASX: BHP) and Mineral Resources Limited (ASX: MIN), have shown that a commodity diversification strategy can lower that risk of depending on the price of one resource.

Fortescue is also looking for other resources to mine. The miner states:

Through our world class exploration capability together with our business development and projects focus, we are driving future growth, targeting the early stage exploration of commodities that support decarbonisation and the electrification of the transport sector.

We are undertaking exploration activities in New South Wales and South Australia, as well as in Ecuador and Argentina, and preliminary exploration activities on tenements that are in application in Colombia, Peru, Portugal and Kazakhstan, prospective for copper, gold and lithium.

New iron ore operations

But iron ore is still a major focus for Fortescue. There are two elements to Fortescue’s iron ore revenue – the price per tonne and how many tonnes it produces.

Eliwana is the newest Fortescue mine. The company is developing the ‘Western Hub’ in the Pilbara region, which includes significant amounts of high iron content. Eliwana was commissioned in December 2020, which Fortescue says is integral to its supply chain and maintenance of its low-cost status, providing greater flexibility to capitalise on market dynamics. This could help support the Fortescue Metals share price.

It’s also working on the ‘Iron Bridge Magnetite Project’, which is costing a few billion dollars to develop. It will deliver 22mt per annum of high grade product. Fortescue says that the process design, including the use of a dry crushing and grinding circuit, is “innovative” and “will deliver globally competitive capital intensity and operating costs”.

A big dividend

Fortescue is still expected to pay large dividends over the next year or so. Ord Minnett is expecting Fortescue’s annual FY21 dividend to amount to a grossed-up dividend yield of around 28% at the current Fortescue Metals share price.

The FY22 grossed-up dividend yield is forecast by Ord Minnett to be around 27.5%.

Some brokers have smaller dividend forecasts for FY21 and FY22, but there are still expectations for large dividends from the miner over the next year or so, which analysts are taking into account.

The company is looking to pay a dividend payout ratio of around 80% to shareholders.

Fortescue Future Industries (FFI)

Fortescue says that FFI is the 100% renewable green energy and industry division of the business. It’s establishing a global portfolio of renewable green hydrogen and green ammonia operations that will position FFI at the forefront of a global renewable hydrogen industry.

It is working on a number of areas that could help its own business become greener and unlock new earnings streams. Green hydrogen, green steel, green haulage tracks, green ships and green trains are just some of the areas that FFI is working on.

Fortescue has committed around 10% of its net profit to invest into FFI initiatives.

The post 4 reasons why the Fortescue (ASX:FMG) share price could still be attractive appeared first on The Motley Fool Australia.

More reading

• Why the Fortescue (ASX:FMG) share price has fallen off a cliff
• Why ASX lithium shares are beating the iron ore majors – again
• This leading broker believes Fortescue Metals (ASX:FMG) shares can lift
• Own Fortescue (ASX:FMG) shares? Here’s what to look for during reporting season
• Fortescue (ASX:FMG) share price under most pressure as iron ore crashes to bear market

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.

from The Motley Fool Australia https://ift.tt/3A5JcwW

The last 7 days have been busy for the Qantas Airways Limited (ASX: QAN) share price.

The airline has been plagued with news of land sales, digital health passes, a federal court loss, and its decision to stand down 2,500 crew.

Simultaneously, outbreaks of COVID-19‘s delta strain in Southeast Queensland, and the ongoing outbreak in Sydney, have seen some potential travellers stuck at home while lockdowns were lifted in Victoria and South Australia.  

The Qantas share price fell another 0.44% yesterday to finish the day trading for $4.50. That’s 4.05% lower than it was this time last week.

Let’s take a closer look at Qantas’ wild week.

The week that’s been for Qantas

The first reports that shocked the Qantas share price came last Thursday morning.

Then, The Australian reported Qantas is looking to sell almost 14 hectares of land in Sydney’s inner suburb of Mascot.

Qantas is reportedly expecting to gain $500 million from the land’s sale. The funds would go towards paying off some of the company’s debt.

Later that day, Qantas announced it has partnered with the International Air Transport Association to implement a digital health pass.

The pass would conglomerate a traveller’s vaccination status and COVID-19 test results, before determining whether their COVID-19 status matches the border requirements of their destination.

The pass would be required by all Australians travelling on Qantas’ and Jetstar’s international flights when overseas travel restarts.

The Qantas share price fell 0.43% on Thursday.

On Friday, the Qantas share price was hit again when news broke that the airline had lost its federal court battle against the Transport Workers’ Union.

The court found that Qantas’ decision to outsource more than 2,000 jobs was a direct result of its former employees’ union memberships. The decision, therefore, violated the Fair Work Act.

Qantas said it will appeal against the decision.

The Qantas share price fell 0.65% on the back of the news.

Finally, on Tuesday Qantas made the decision to stand down 2,500 frontline Qantas and Jetstar employees.

Qantas’ CEO Alan Joyce said the staff will likely stay home for the next 2 months, during which he believes Sydney’s COVID-19 outbreak will continue to spread.

Joyce’s prediction was echoed by New South Wales Premier Gladys Berejiklian yesterday. Berejiklian told a press conference that Sydney’s outbreak likely hasn’t peaked.

The stood down crew will be paid until mid-August. None will lose their jobs as a result.

Qantas shares dropped 1.5% over the course of Tuesday.

Qantas share price snapshot

While the Qantas share price hasn’t been tracking well this year, it’s slightly recovered from the height of the pandemic.

Qantas shares are swapping hands for 8% less than they were at the start of 2021. However, they’ve gained 38% since this time last year.

The post The Qantas (ASX:QAN) share price is down 4% this last week. Here’s why appeared first on The Motley Fool Australia.

More reading

• The Flight Centre (ASX:FLT) share price has been struggling. Here’s why
• ASX 200 midday update: Afterpay jumps again, Qantas stands down crew
• Qantas (ASX:QAN) share price slips as airline stands down 2,500 crew
• Top brokers name 3 ASX shares to buy next week
• Qantas (ASX:QAN) share price drops after federal court loss

Motley Fool contributor Brooke Cooper 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.

from The Motley Fool Australia https://ift.tt/3ytMEkD

There are a group of ASX dividend shares that are expected to pay an income yield of more than 5% in FY22.

Some businesses have seen enormous levels of demand and profit generated in FY21 because of various effects of COVID-19. Those effects could change in FY22. So, it may be wise for investors to look beyond FY21 when thinking about what dividends could be paid.

The below two businesses are liked by analysts, have growth plans for the future and are expected to pay grossed-up yields of more than 5% over the next 12 or so months:

JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is one of the largest electronics and home appliance retailers in Australia and New Zealand. It has three segments – JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.

FY21 has certainly been a bumper year for the business. Total sales increased 12.6% to $8.9 billion, with JB Hi-Fi Australia sales rising 12% to $5.96 billion, The Good Guys sales growing 13.7% to $2.7 billion and JB Hi-Fi New Zealand sales going up 17.4% to NZ$261.6 million.

Total FY21 earnings before interest and tax (EBIT) grew 53.8% to $743.2 million.

Shareholders may see another large FY21 final dividend increase from the ASX dividend share. In the FY21 half-year result, the interim dividend grew by 81.8% to $1.80 per share.

Credit Suisse, which rates JB Hi-Fi as a buy, thinks a more modest full year dividend will be paid in FY22 compared to FY21.

The broker is expecting FY21 to come with a full year dividend of $2.26 per share. That would translate to a forward grossed-up dividend yield of 6.6%.

JB Hi-Fi continues to invest in its digital offering to improve the service and experience for customers. This is helping get the product to customers quicker, as well as improving conversion rates. Improving the supply chain is another focus area. Becoming a leading supplier of products and services to commercial, government and education markets is also a target area for the company.

Nick Scali Limited (ASX: NCK)

Nick Scali is another ASX dividend share in the retail space.

It sells a selection of high-quality furniture pieces to households.

There has been an increase of spending by people on improving their homes. Nick Scali has been a beneficiary of this trend.

The first six months of FY21 saw a large increase in profit and the dividend. Underlying net profit doubled to $40.5 million, operating cashflow soared 222% to $53.5 million and the interim dividend was increased by 60% to 40 cents per share.

There are a number of areas where the business is targeting further growth.

The ASX dividend share wants to expand the store network across Australia and New Zealand, initially targeting 86 showrooms across both markets. Management said that recent store openings demonstrate continued appetite from consumers for a bricks and mortar offering. On 4 May 2021 it had 61 stores.

Nick Scali also has plans to launch into adjacent categories and increase the value proposition for customers.

Growing its e-commerce offering is a relatively untapped area. This will support store network growth and allow it to succeed in high volume categories with new product ranges.

The company is planning to grow by acquisition where it can see it can add “considerable value”. It is seemingly on the hunt for the business Plush Sofas.

This ASX dividend share is currently rated as a buy by Citi. The broker is expecting Nick Scali to pay a dividend of just over 48 cents in FY22, equating to a forward grossed-up dividend yield of 5.5%.

The post 2 ASX dividend shares that could be buys with yields above 5% appeared first on The Motley Fool Australia.

More reading

• 2 ASX dividend shares with BIG dividend yields
• COVID Delta is raging: 4 ASX shares to buy in turbulent times
• 2 high-yielding ASX 200 dividend shares
• The Zip (ASX:Z1P) share price is the best performing BNPL of 2021
• Is the JB Hi-Fi (ASX: JBH) share price in the buy zone after its update?

Motley Fool contributor Tristan Harrison 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.

from The Motley Fool Australia https://ift.tt/3yr6mO2

On Wednesday the S&P/ASX 200 Index (ASX: XJO) followed Wall Street’s lead and pushed higher. The benchmark index rose 0.4% to 7,503.2 points.

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

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 13 points or 0.2% lower this morning. This follows a poor night of trade on Wall Street which saw the Dow Jones fall 0.9%, the S&P 500 drop 0.45%, and the Nasdaq edge 0.1% higher.

Oil prices sink

Energy producers such as Oil Search Ltd (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could tumble lower after oil prices sank overnight. According to Bloomberg, the WTI crude oil price is down 3.7% to US$67.98 a barrel and the Brent crude oil price has fallen 3% to US$70.20 a barrel. Oil prices dropped after US stockpiles increased.

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.1% to US$1,814.9 an ounce. Strong physical demand for gold helped offset concerns over the US Federal Reserve potentially easing asset purchases.

PointsBet shares rated as a buy

The Pointsbet Holdings Ltd (ASX: PBH) share price could be great value according to analysts at Goldman Sachs. According to a note, the broker has retained its buy rating but trimmed its price target on the sports betting company’s shares to $14.90. This follows the release of its fourth quarter update and the announcement of its fully underwritten $400 million capital raising.

Westpac-Afterpay deal in focus

The banking as a service deal between Westpac Banking Corp (ASX: WBC) and Afterpay Ltd (ASX: APT) share price is set to be reviewed following the latter’s acquisition by Square. According to the AFR, the bank is looking at the strategic rationale of providing white-label bank accounts to Afterpay customers at a time when Square is ramping up its activities in the Australian banking sector.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• ASX 200 rises, BWP Trust falls, Genworth soars
• Why Chalice Mining, GUD, Integral Diagnostics, & PointsBet are dropping
• Why Argosy Minerals, Genworth, Vulcan, & Zip shares are charging higher
• Woodside (ASX:WPL) share price edges higher despite Scarborough cost increase
• Square earnings, what it means for the Afterpay (ASX:APT) share price?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Pointsbet Holdings Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2TSBR4o

Domino’s Pizza Enterprises Ltd (ASX: DMP) shares have been very strong performer in 2021.

Since the start of the year, the pizza chain operator’s shares have risen a sizeable 38% to $121.61.

In light of this, expectations are high for its full year results later this month.

What is the market expecting from Domino’s in FY 2021?

According to a note out of Goldman Sachs, its analysts are expecting Domino’s to report strong growth for FY 2021. The broker is expecting:

• Network sales growth of 13.9% to $3.7 billion and revenue growth of 14.5% to $2.2 billion
• ANZ same store sales (SSS) growth of 3.5%, Europe SSS growth of 6.8%, and Japan SSS of 15%
• Underlying EBITDA increase of 23.8% to $391.4 million
• Underlying net profit after tax up 33.1% to $193.8 million
• Final dividend of 69.2 cents per share

What did the broker say?

Goldman Sachs notes that its estimates imply above consensus growth in FY 2021.

It commented: “We expect FY21 EBITDA to be at A$437.7mn on a post AASB16 basis, +4.5% vs. consensus. We note that our FY21 earnings outlook implies a beat on both medium term guidance of 3-6% SSS growth (GSe +7.8%) and 7-9% net store openings (+10.5%) for FY21 driven by an underlying trading momentum attributable to the pandemic as well as strong store openings, including those delayed by the pandemic in the prior year. We also forecast store openings to be ahead of the 7-9% guidance into FY22, but normalize thereafter.”

In addition to this, the broker has suggested investors look out for commentary on potential merger and acquisition (M&A) plans and new store openings. Positive details on these facotrs could be a boost for Domino’s shares.

Goldman said: “Key factors to watch for in FY21 earnings release from our perspective will be commentary regarding the momentum of new store openings especially in Europe, any details on M&A progress including Taiwan, which has already been announced and ongoing trading momentum.”

Are Domino’s shares in the buy zone?

While Goldman Sachs currently has a conviction buy rating on Domino’s shares, its price target of $121.40 is roughly in line with where they trade today.

This could make it worth waiting for its results before considering an investment in Domino’s shares at this stage.

The post Own Domino’s (ASX:DMP) shares? What to expect from its FY21 results appeared first on The Motley Fool Australia.

More reading

• 3 stellar ASX growth shares rated as buys
• Top brokers name 3 ASX shares to sell today
• Why Altium, Beach, Domino’s, & Piedmont Lithium are tumbling lower
• The Domino’s (ASX:DMP) share price is near an all-time high. Here’s why
• Why the Wesfarmers (ASX:WES) share price just hit a new all-time high

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 Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fvczRp