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The Westpac Banking Corp (ASX: WBC) share price has had a tough run over the last 5 years but some shareholders of the ASX 200 blue chip stock believe its dividends have covered its losses.

On 27 July 2016, the Westpac share price finished the day’s trade at $30.92. Yesterday, it was sitting at $24.76 when the ASX closed.

That represents a fall of 19.92% over the last 5 years and means an investor who bought into the bank 5 years ago today would be out of pocket $6.16 apiece.

In that same time, the S&P/ASX 200 Index (ASX: XJO) has gained 34.14%.

While the Westpac share price’s performance has been drab, many of the bank’s shareholders keep it in their portfolio because of its dividends.

But have Westpac’s dividends made up for its tumble?

A quick note:

At this point, it’s worth noting that some investors likely see value in dividends despite a shares’ performance.

That’s because shares like Westpac give out franked dividends, which can help some investors reduce the amount of tax they pay.

All Westpac’s dividends have been fully franked at 30% since 2000.

Have Westpac’s dividends made up for its share price tumble?

The Westpac share price has dropped by nearly a fifth over the last half-decade.

However, Westpac routinely hands out strong dividends.

So, would an investor with a 5-year-old holding in Westpac have made back their money, or even gained some, from Westpac’s dividends?

Here’s a list of all dividends presented to Westpac shareholders over the last 5 years:

Westpac’s dividends

• December 2016 – 94 cents
• July 2017 – 94 cents
• December 2017 – 94 cents
• July 2018 – 94 cents
• December 2018 – 94 cents
• June 2019 – 94 cents
• December 2019 – 80 cents
• June 2020 – none
• December 2020 – 31 cents
• June 2021 – 58 cents

The maths:

An investor who bought $10,000 worth of Westpac shares exactly 5 years ago would currently have a holding worth approximately $8007.75.

So far, this investor isn’t doing too well.

However, they’ve received around $2370.63 worth of dividends in that time ($7.33 per share).

This means this pretend investor is approximately $378.38 better off having invested in Westpac 5 years ago.

At the end of the day, that signifies a 3.78% return. Not a bad result, and a better one than if they’d invested in Telstra Corporation Ltd (ASX: TLS) 5 years ago.

Westpac share price snapshot

While the last 5 years haven’t been great for the Westpac share price, it has performed well recently.

Right now, it’s 26% higher than it was at the start of 2021 and has lifted 41% since this time last year.

The post The Westpac share price is down 20% in 5 years. But have the dividends paid off? appeared first on The Motley Fool Australia.

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• 2 highly rated ASX 200 dividend shares that could be buys
• These 3 ASX 200 shares were the most heavily traded today
• Plumbing, health, tech: 3 ASX shares to buy for instant diversification
• The Telstra (ASX:TLS) share price is down 35% in 5 years. But have the dividends paid off?
• 5 things to watch on the ASX 200 on Tuesday

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 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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The BHP Group Ltd (ASX: BHP) share price could be on the move on Wednesday.

This follows the announcement of a potential acquisition this morning.

What did BHP announce?

The Big Australian has announced that it has made a recommended all-cash offer to acquire all the issued and outstanding common shares of Noront Resources for C$0.55 per share. This values Noront Resources’ equity at C$325 million.

The offer is also a significant premium to one which Noront Resources received in May from Wyloo Metals of C$0.315 per share.

Positively, BHP and Noront have entered into a definitive support agreement, whereby Noront has agreed to support the takeover bid.

What is Noront Resources?

Noront Resources is a Canadian based mining company, listed on the TSX Venture Exchange.

The release explains that it is focused on the development of its high-grade Eagle’s Nest nickel, copper, platinum and palladium deposit and chromite deposits. This includes Blackbird, Black Thor, and Big Daddy, all of which are located in the James Bay Lowlands of Ontario in an emerging metals district known as the Ring of Fire.

BHP’s Chief Development Officer, Johan van Jaarsveld, commented: “We are pleased that the Noront board has seen the value in our offer and has recommended it to its shareholders. This is a win-win for both BHP and Noront shareholders.”

“For BHP, the acquisition of Noront presents a world-class growth option, in a key future-facing commodity. The highly prospective Eagle’s Nest nickel project provides an excellent platform from which to develop further opportunities in Ontario’s Ring of Fire,” he added.

“We are excited to bring our mining expertise and capabilities to develop these long-term opportunities. We look forward to working in constructive partnerships with First Nations peoples, government and communities to realize the untapped potential of these important resources,” van Jaarsveld concluded.

The BHP share price is up 24% in 2021.

The post BHP (ASX:BHP) share price on watch after announcing Ring of Fire acquisition 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. 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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Wesfarmers Ltd (ASX: WES) shares have been a very strong performers in 2021.

Since the start of the year, the conglomerate’s shares have risen a sizeable 20%. This means Wesfarmers shares are now up 34% over the last 12 months.

Unsurprisingly, given these strong gains, expectations are high for Wesfarmers next month when it hands in its full year results.

In light of this, I thought I would take a look to see what the market is expecting from the retail giant.

Here’s what to look for during reporting season

The market is expecting favourable trading conditions to lead to solid revenue and profit growth in FY 2021.

For example, according to a recent note out of Goldman Sachs, its analysts are expecting Wesfarmers to report full year revenue of $34,132.1 million. This will be a 10.6% increase on FY 2020’s revenue.

In respect to earnings, the broker is forecasting a 9.6% increase in earnings before interest and tax (EBIT) to $3,508 million. This is expected to be driven largely by a 16.7% increase in Bunnings earnings to $2,268 million and a 30% jump in Department store earnings to $678 million.

Goldman expects this to lead to Wesfarmers declaring a full year dividend of $1.84 per share. Based on where Wesfarmers shares trade today, this will mean a 3% fully franked dividend yield.

Another thing that could be worth watching out for is commentary around its plan to acquire Australian Pharmaceutical Industries Ltd (ASX: API). If successful, management plans to create a new healthcare division.

Are Wesfarmers shares good value?

While Goldman Sachs currently has a buy rating on Wesfarmers shares, its price target of $59.70 has recently been surpassed. Based on this, it appears as though the market is expecting the company to outperform expectations in FY 2021.

Time will tell if that is the case, but all will be revealed in late August when Wesfarmers releases its results.

The post Own Wesfarmers (ASX:WES) shares? Here’s what to look for during reporting season appeared first on The Motley Fool Australia.

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• Here’s what the Wesfarmers (ASX:WES) dividend will pay you today
• Wesfarmers (ASX:WES) share price up as Catch involved in ACCC inquiry

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 owns shares of and has recommended Wesfarmers 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 Qantas Airways Ltd (ASX: QAN) share price has spent the last three months range-bound, struggling to break above $5 while finding buying support around $4.50.

Why the Qantas share price remains grounded

According to an article featured on Livewire, Montgomery Investment Management chief investment officer Roger Montgomery isn’t too optimistic about the near-term prospects of the travel industry.

“Victorian and New South Wales lockdowns, and the spread of the virus through other states, has resulted in less enthusiasm for forward booking travel,” he said on the blog.

“While leading indicators from Similarweb and Google trends remained strong into May, both trended lower into June, and are likely to have fallen further in July following the lockdowns of Australia’s two most populous states.”

In stark contrast to Montgomery’s observations, Qantas previously forecast domestic capacity to reach 95 per cent of its pre-COVID levels in the fourth quarter of FY21.

It also believed that “Qantas and Jetstar expect to average 107 and 120 per cent respectively of their pre-COVID domestic capacity in FY22”.

This announcement was made back on 20 May, where the Qantas share price rallied 3.54% to $4.68.

Expectations vs. reality

Qantas’ optimistic forecasts have been hit by a rapidly evolving COVID-19 situation across Australia.

This week, the ABC revealed an email sent to Qantas staff. The broadcaster reported:

… the airline said it was running around 90 per cent of pre-COVID capacity before Sydney’s lockdown took that to around 60 per cent.

Now, adding in the Victorian and South Australian lockdowns, the Qantas boss said the airline had reduced domestic capacity to less than 40 per cent of what it was pre-COVID.

Qantas chief executive Alan Joyce was hopeful that lockdowns might end soon, “allowing the airline to get back up to 60 per cent of pre-COVID domestic capacity by August and 80 to 90 per cent by spring”.

Why the Qantas share price is higher this week

The Qantas share price is up 3.3% this week to $4.69 but remains around November 2020 levels.

NSW reported an additional 172 locally acquired cases on Tuesday, the highest daily figure since the beginning of the Sydney outbreak.

Despite the grim figures from NSW, there is a glimpse of hope for other major cities.

Victorian Premier Daniel Andrews announced that the state is officially out of lockdown from 11:59 pm on Tuesday, with some restrictions still in place.

The post What is the outlook for the Qantas (ASX:QAN) share price? appeared first on The Motley Fool Australia.

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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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There are a group of S&P/ASX 200 Index (ASX: XJO) shares that continue to increase their dividend every year for investors.

Plenty of businesses previously known for paying dividends have reduced their payment during the last 18 months. Businesses like Westpac Banking Corp (ASX: WBC), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL) all implemented reductions.

But these two continued the increases:

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the largest pathology healthcare businesses in the world with operations in ANZ, North America and Europe.

It is playing a very important part in the COVID-19 pandemic where it has performed millions of tests. That work continues, particularly in locations where COVID-19 infections are rising (with the Delta variant).

Sonic has increased its dividend most years in the last two decades, including a current growth streak that goes back several years.

That record continued in the FY21 half-year result where the board decided to maintain its progressive dividend policy with a 6% rise to 36 cents. That was a modest increase compared to the earnings growth with revenue rising 33% and net profit going up 166% to $678 million.

At the time of the profit announcement, management said that the ASX 200 share was looking for further growth opportunities, including acquisitions.

Last month the business announced that it was going to acquire Canberra Imaging Group (CIG). This business comes with annual revenue of around $60 million and is the leading radiology practice in Canberra. It is a “significant and positive step” in developing Sonic Imaging’s division in Australia, broadening its footprint, deepening the talent pool, increasing the division’s revenue by around 10% and offering potential synergy benefits.

At the current Sonic share price, it offers a partially franked dividend yield of 2.2%.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX 200 share that also has a long dividend record going. Not only has it increased its dividend every year for the past several financial years in a row, but it also hasn’t cut its dividend in over forty years.

Whilst the business is best known for being the largest brickmaker in Australia (and now the northeast of the US), it’s the other assets that Brickworks relies on to pay its dividends each year.

A significant part of the cashflow to pay the dividend comes from its Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) investment that it owns around 40% of. Soul Patts’ diversified portfolio is defensively positioned in businesses like TPG Telecom Ltd (ASX: TPG) and Bki Investment Co Ltd (ASX: BKI), swimming schools and agriculture. Soul Patts has been steadily increasing its dividend to shareholders, like Brickworks, for two decades.

Brickworks also has a large and growing industrial property joint venture alongside Goodman Group (ASX: GMG). At the FY21 half-year result, Brickworks said this business has significant land for further development at each of its estates.

There is a total of 171,000 sqm of lease pre-commitments already secured. The completion of these facilities over the next two years will result in gross rent within the trust increasing by around $38 million, representing a 40% uplift from the current level.

Brickworks said that there has been an evolution towards more sophisticated and specialised facilities, incorporating things like robotics, automation and multi-storey warehousing.

In addition to the pre-committed developments, a further 336,900 sqm of gross lettable area (GLA) is available for development within the trust, providing further opportunity for growth.

At the current Brickworks share price, it has a grossed-up dividend yield of 3.5%.

The post 2 ASX 200 shares that keep growing their dividends appeared first on The Motley Fool Australia.

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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 Brickworks. The Motley Fool Australia has recommended Sonic Healthcare 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 Virgin Money UK CDI (ASX: VUK) share price will be one to watch on Wednesday morning. This comes after the United Kingdom-based bank released its third-quarter trading update for the 2021 financial year yesterday afternoon.

During Tuesday’s market close, Virgin Money shares ended the day up 4.30% trading at $3.64.

Let’s take a closer look at how the company performed over the last 3 months.

How did Virgin Money perform for the third quarter?

Virgin Money shares may be on the move today as investors had the night to digest the company’s latest results.

For the period ending 30 June 2021, Virgin Money reported overall customer deposits fell to £68 billion (A$128.3 billion). This represents a decline of 0.8% compared to the prior quarter as the group continued to drive down costs. The more expensive term deposits balances dropped in line with expectations as management focused on repricing the portfolio lower.

Virgin Money highlighted a strong relationship deposit balance growth with stable lending balances. Relationship deposit balance grew to £29.8 billion (A$56.23 billion), a 3.7% increase on Q2 FY21.

Mortgage balances came to £58.7 billion (A$110.71 billion), a 0.7% lift compared to the last 3 months. This reflected higher volumes of new lending and upbeat market conditions ahead of stamp duty land tax (SDLT) changes.

Business lending sunk to £8.7 billion (A$16.41 billion), down 2.4%, while personal lending jumped to £5.2 billion (A$9.81 billion). The latter came from a surge in credit cards as spending levels picked up.

Group net interest margin (NIM) accelerated to 168 basis points (bps) for the third quarter, up from 160bps in Q2. The company stated that it benefitted from a lower cost of funds as well as higher hedge contributions.

FY21 NIM is expected to be slightly ahead of 160bps, stabilising in the fourth quarter. This is a result of wholesale funding costs and increased competition offsetting the ongoing improvement in deposit repricing.

What did the CEO say?

Virgin Money CEO David Duffy welcomed the strong result, saying:

Virgin Money performed well as our strategy continued to translate into improved financial delivery in a strengthening environment.

We carried our momentum of relationship deposit growth into the second half, reducing our cost of funds. Our asset quality remained robust, while capital ratios improved further.

Mr Duffy went on to discuss the company’s outlook, adding:

We have increased full-year NIM guidance and, while COVID continues to impact the near-term, we have a strong capital position and robust provisions. We see great opportunities from further developing our digital capabilities to deliver an improved customer experience and greater efficiencies.

Virgin Money share price snapshot

Virgin Money has a market capitalisation of roughly $3.2 billion, cementing its place within the S&P/ASX 200 Index (ASX: XJO). The company’s share price has more than doubled in the past 12 months and is up 50% year-to-date.

The post Why the Virgin Money UK (ASX:VUK) share price will be on watch today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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The Temple & Webster Group Ltd (ASX: TPW) share price could be worth looking at after releasing its FY21 result.

This business is a leading online retailer of furniture and homewares. It has over 200,000 products on sale from hundreds of different suppliers. Temple & Webster runs a drop shipping model where products are sent directly to customers by suppliers. This helps with delivery times and reduces the need to hold inventory. That means it can offer a larger product range.

Temple & Webster also has a private label range of products that are sourced directly by the company from overseas suppliers.

There were a few things that may make the Temple & Webster share price a good one to think about:

Continued top line growth

The company reported another strong year for growth, despite the lockdown e-commerce boom occurring in some of FY20.

Full year revenue in FY21 went up for 85% to $326.3 million. That included a high growth rate of 26% in the fourth quarter of FY21 (which was being compared against the fourth quarter of FY20 where revenue had increased 130% year on year).

The trade and commercial division saw revenue growth of 110%, which is becoming a more sizeable part of the business.

Temple & Webster’s strong revenue growth has continued into the first month of FY22. For the period of 1 July 2021 to 24 July 2021, revenue has increased by 39% year on year.

Private label is also seeing growth. As a percentage of sales, private label went from 19% in FY20 to 26% in FY21. This comes with benefits such as diversification of supply (with less dependency on its drop-ship network), improved margins, stock assurance and speed of dispatch.

Customer loyalty and increased spending

Total customers increased by 62% year on year to 778,000. More active customers means a bigger group of people it can market to. It also means there’s potential for those customers to return again.

Indeed, Temple & Webster said that in FY21 revenue per active customer increased 12% year on year due to customers repeat buying more often and spending more when they do.

The company doesn’t have to spend as much on marketing to bring these customers back again. Its 12-month marketing return on investment (ROI) remained “healthy” at 2.3x, even with significant TV investment to build brand awareness.

Temple & Webster’s conversion rate continues to improve, with a high customer satisfaction rate. The company is looking to expand its scope of augmented reality offer, provide 3D room visualisations, and offer a virtual designer (AI led) and visual search (on an app).

Other things that company is looking to provide is an after hours and weekend delivery service, data integration for self-service and it’s working with logistics partners on peak periods.

Strong outlook

The company is looking to grow its revenue by strong double digits during a period of high investment. This could help the Temple & Webster share price rise further

It’s expecting an ongoing adoption of online shopping due to structural and demographic shift. The business is looking to grow its online market leadership position with the ultimate goal of becoming the largest retailer (online and offline) for furniture and homewares in its home market.

After this period of investment, it’s expecting to be able to leverage its scale and strategic moats to grow its contribution profit margin in percentage terms whilst benefiting from better supplier terms and higher brand awareness. Being larger should also help slow investment in fixed costs.

The business is also thinking about its next investment horizon, such as international expansion.

The post Why the Temple & Webster (ASX:TPW) share price could be a buy after the FY21 result appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group 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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It’s a great time to be invested in ASX 200 shares in the resources sector.

Last week, the Australian Bureau of Statistics (ABS) released its preliminary international merchandise trade figures for June.

Within the release, it highlighted a fourth consecutive record month for metalliferous ores.

The report said: “Driving the increase was iron ore, up $1,043m (6%) to $17,553m. The iron ore increase was primarily price driven despite recent pressure to reduce prices.”

But its not just iron ore.

The Bloomberg’s Commodity Index, which reflects the broader performance of energy, metals and agriculture, has rallied from record lows in April 2020 to a 5-year high this month.

The strong performance of commodities, more broadly speaking, has seen a number of related ASX 200 shares lift to record highs.

However, the consistent theme among record makers isn’t iron ore.

What do record-setting ASX 200 shares have in common?

It’s renewables.

From lithium to nickel, there has been a surge in demand for materials used to manufacture battery technology and electric vehicles.

Which ASX 200 shares are hitting new record highs ?

BHP Group Ltd (ASX: BHP)

The BHP share price marked a new all-time high of $53.65 on Tuesday.

While BHP is one of the world’s largest iron ore producers, the company recently entered into a nickel supply agreement with Tesla.

BHP CEO Vandita Pant commented on the agreement saying:

“Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade, in large part to support the world’s rising demand for electric vehicles.”

Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price has gone from strength-to-strength in 2021. It has rallied 58.90% year-to-date to a record high of $63.85 on Monday.

Alongside the company’s core mining services and iron ore operations, it also operates two high-profile lithium joint ventures with Chinese lithium giant Ganfeng and US-listed Albemarle.

Orocobre Limited (ASX: ORE)

The Orocobre share price stormed higher last Thursday, following the release of its June quarterly results.

A key highlight was the company’s average realised price for its lithium carbonate. Orocobre cited a 45% quarter-on-quarter increase in prices to US$8,476/tonne free on board (FOB).

The company also hinted at ongoing discussions with Toyota Tsusho Corporation regarding “an expansion of lithium hydroxide production to meet forecast growth in demand”.

Pilbara Minerals Ltd (ASX: PLS)

Pilbara Minerals is another lithium player cruising to a record close of $1.77 on Monday.

The bullish performance of Pilbara Minerals follows a similar narrative as Orocobre — driven by a jump in lithium spot prices, ramping up production to meet demand and heightened investor interest in battery and renewable sectors.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price rallied to an all-time high of $7.20 on Monday. This came after the company released its quarterly activities report.

Encouragingly, the report highlighted a strong uplift in the average selling price of its rare earths. This surged from $20.20 per kilo in Q4 FY20 to $39.10 per kilo in Q4 FY21.

Lynas has a unique position as one of few ASX 200 shares engaged in the production of rare earths.

The post 5 ASX 200 shares hitting record highs. What do they have in common? appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Tesla. 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, The Montgomery Fund portfolio manager Joseph Kim reveals a pair of ASX shares that he’d be intrigued to see in his portfolio in 5 years’ time.

Timeless ASX shares

The Motley Fool: If the market closed tomorrow for 5 years, which stock would you want to hold?

Joseph Kim: I’ve got 2 answers here.

For the more risk-tolerant investor, I really like AVITA Medical Inc (ASX: AVH). It’s done really well and it’s burnt me in the past. 

There’s a lot of concern around cash burn and the total addressable market, et cetera. I won’t say it’s not risky because they still need to execute. 

When you look at biotechs and you look at medical device companies in general, a lot of it is about promotion and they promote the product and how awesome it is. But when you talk to the surgeons and the physicians that are going to ultimately use it and have to get reimbursed by the US medical system to use it, you potentially get different answers.

Now, the other part of that is a lot of the times when they spruik their products, they don’t even have approval from the FDA, right? So this is an amazing product, whatever, but we don’t have FDA approval because we haven’t been able to demonstrate statistical significance that this thing actually works in terms of what we say it does. 

Most of the time they don’t work. [But] this one is proven to work. You’ve de-risked the FDA approval part, which is usually the biggest risk with these biotech and medical device companies.

So yeah, it’s going to take time. And there’s always going to be people that won’t use it because they’re just stuck in their ways… But then, ultimately, as a doctor with the duty of care, you’ve got to provide the best outcome to your patients. I think from that perspective, I’m pretty optimistic now. 

The other one is Goodman Group (ASX: GMG). So founder-led business, got all the right tailwinds. 

People are going to say, it looks expensive. It’s [been] expensive for a long period of time. Five years is a long time… With Goodman, you have [the] right tailwinds, they’re in the right areas. You’ve got a management team that’s aligned [to a] value-focused business. You can see the pipeline of developments that they have. And in the next 2 or 3 years, you should be growing at about 10% [per annum]. The business is getting more valuable over time.

MF: Is the adoption of online shopping a theme for Goodman?

JK: It is. Data centres too, by the way, they developed data centres.

One of the big things over the past 3 or 4 years, it’s [become] more extreme, is that there’s a real hollowing out of the middle of everything. What I mean by that is you look at brands, luxury brands. Right at the top they’re booming. The middle is where it’s really suffering relatively.

It’s a bit like that in property as well. You’ve got the cheaper property that’s in not-so-great locations. And, yeah, they’ve all gone up with money being cheaper and cheaper, but then the top end has gone extreme.

So the middle is hollowed out. These guys are in the right place for that too. Their locations, what they have, and so you go, well, is that a trend that’s going to stop anytime soon? It’s unlikely. 

That’s why I’m more bullish on Goodman as opposed to just pure e-commerce. Because, yes, e-commerce is great — but it’s more like they’re in the right places with the right pipeline of opportunities with a focused management team.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

JK: Oh my God, this is an easy one. 

It was during March in 2020. So we were able to go defensive before the [COVID-19] market crash because we anticipated COVID being a bigger issue than what the market was initially thinking, but it took too long for us to get back in. 

Our clients and our investors didn’t get the full benefit of — obviously the downward journey was much more pleasant — but the rebound journey. People are a lot more averse to capital loss than capital gain, right? So that journey is a lot more unpleasant. There are few people who got both sides [correct].

Why it’s even more frustrating is because at the bottom of the market, we were like, ‘Hey, we’re really outperforming’. This is when things start to look reasonable and we should lock some of that away now. What I mean by that is we should really start using some of [that] cash into really high-quality businesses that we know are going to be here in 2 or 3 years’ time. 

If the market keeps falling, yeah, we’ll probably fall a bit more with it, but this is where you have to look beyond the valley. 

And the reasoning was, look at what China did. China locked down for 3 months, just completely locked down. It wasn’t smooth, but they were able to reduce the number of cases… Then you look at what the central banks were doing, they were printing enough money and providing enough support — physical and monetary support — to make sure that we could tide everyone over for those 3 months. 

Now, what derailed that was the US just having a rampage in COVID cases, which meant that they just didn’t do that hard lockdown. 

So we did put cash to work, but it was also a period of extreme uncertainty with no vaccine timetable. But again, with the benefit of hindsight, that’s probably been by far my biggest regret.

MF: Is there a particular ASX share that you missed out on that particularly hurts?

JK: We were a little bit late to Wesfarmers Ltd (ASX: WES), but we did end up buying that pretty quick. That’s obviously done really well. 

Look, it’s tempting to say BHP Group Ltd (ASX: BHP), but it’s not because we identified BHP as one that had a margin of safety because of what China was doing in terms of stimulating the old parts of the economy. By the old parts of the economy, I mean the property, construction, infrastructure, et cetera. That’s the easiest lever for them to pull. So it’s tempting to say that, but I think there were better risk-return opportunities than BHP… Yes, the reward didn’t look as high, but there was a much lower risk. So I’m not as anxious around that.

Again, we bought into it a bit late, but Goodman got below $10. And finally, when it got below $10, we knew why it was going there because there were a lot of property funds that were highly leveraged and they had to deleverage. So there was a golden opportunity to get it very cheaply.  I wish we had’ve got back in earlier.

The post 2 ASX shares to hold onto for the next 5 years appeared first on The Motley Fool Australia.

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• Fortescue (ASX:FMG) share price within arms’ reach of all-time highs
• BHP (ASX:BHP) share price hits new all-time high on Tuesday
• Here’s why the Wesfarmers (ASX:WES) share price is up 7% in a month
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Motley Fool contributor Tony Yoo owns shares of Avita Medical Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Avita Medical Limited. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Avita Medical 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 Rio Tinto Limited (ASX: RIO) share price is reaching new highs. But it may also be a large dividend opportunity over the next 12 months.

Rio Tinto is one of the largest iron ore miners in the country. According to the ASX, it has a market capitalisation of over $48 billion.

It wasn’t long ago that the huge resources business released its second quarter production result.

Quarterly production numbers

The miner revealed that in the second quarter of 2021, its Pilbara iron ore production was down 9% against the prior corresponding period (pcp) to 75.9 Mt. Compared to the first quarter of 2021, production was down 1%.

The company explained that the reduction compared to last year was due to above average rainfall in the West Pilbara, shutdowns to enable replacement mines to be tied in, processing plant availability, and “cultural heritage management”. Ongoing COVID-19 restrictions and a tight labour market have further impacted the miner’s ability to access experienced contractors and particular skill sets.

It’s expecting iron ore shipments to be at the low end of its guidance range for the 2021 year (325 Mt to 340 Mt), which remains subject to COVID-19 disruptions, tie-in and ramp up of brownfield replacement mines and management of cultural heritage.

Looking at the other production numbers that Rio Tinto released, against the pcp, bauxite was down 6% to 13.7 Mt, aluminium was up 4% to 816 kt, mined copper was down 13% to 115.5 kt, titanium dioxide slag was up 14% to 298 kt, IOC (Iron Ore Company of Canada) iron ore pellets and concentrate was down 2% to 2.7 Mt.

The Rio Tinto CEO Jakob Stausholm provided some commentary about its quarter:

The global economy, in-particular China, recovered strongly and we are intensely focused on servicing our customers with as much product as we can…Heightened COVID-19 constraints, which resulted in numerous travel restrictions, added further pressure on the business and limited our ability to access additional people, particularly in Western Australia and Mongolia, in order to deliver operational improvements or maintenance initiatives and accelerate projects.

Is the Rio Tinto share price a dividend opportunity?

Different brokers have different thoughts about Rio Tinto.

For example, Credit Suisse has a price target of $133 on the business, so it’s not expecting the share price to do much over the next 12 months. The dividend is a positive according to the broker. It’s expecting a dividend of $15.18 per share in FY21 and an annual dividend of $10.10 in FY22, translating to a fully franked dividend yields of 11.4% and 7.6%.

But UBS is very different with its price target – it rates Rio Tinto as a sell with a price target of $104. However, the broker is expecting the iron ore price is going to fall into 2022 and further beyond that. It has guided for a FY21 dividend of $21.38 and a FY22 dividend of $12.73 – which is more than Credit Suisse is forecasting. UBS is expecting the fully franked yields for FY21 and FY22 to be 16% and 9.6%.

The post Is the Rio Tinto (ASX:RIO) share price a good dividend opportunity? appeared first on The Motley Fool Australia.

More reading

• Fortescue (ASX:FMG) share price within arms’ reach of all-time highs
• Rio Tinto (ASX:RIO) share price rises despite aluminium production cuts
• Lynas share price soars, BHP and Rio on watch, A2 on the naughty list. Scott Phillips on Nine’s Late News
• What to expect from the ASX 200 during earnings season
• Why City Chic, Lynas Rare Earths, Rio Tinto, & Stavely Minerals are charging higher

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.

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