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The Webjet Limited (ASX: WEB) share price has been on a disappointing run over the last month. This comes despite no news being released by the online travel agent since the middle of May – over 2 months.

At yesterday’s market close, Webjet shares finished the day down 1.26% to $4.69.

COVID-19 lockdowns hit the travel industry

The resurgence of COVID-19 cases in Australia is a likely catalyst for the recent downturn in the Webjet share price.

As the super infectious Delta variant spreads through communities, travel restrictions have returned, with some states closing their borders. This impacts companies like Webjet that rely on domestic travel to generate revenue.

A large number of cases across the states could mean that hard lockdowns will potentially remain for the coming weeks. Most notably, South Australia, is in the midst of one of the world’s harshest lockdowns, with level 5 restrictions in place.

Adding to the woes, New Zealand has enforced mandatory quarantine for most of Australia. This will also likely affect Webjet’s revenue stream as fewer people will be travelling internationally.

Fortunately, Webjet still has substantial cash reserves to survive the ongoing crisis that has put the travel industry in a tailspin. At its most recent update in May, the company stated it had $431 million pro forma cash on hand. This includes the net proceeds of $250 million in convertible notes completed in April 2021.

The average monthly cash burn rate stands at around $5.5 million, although this may change due to the unfolding situation. However, going off estimates, this provides Webjet with enough breathing space to run operations for the next 6.5 years without raising additional funds or drawing down on debt.

The company is scheduled to hold its annual general meeting (AGM) on 31 August.

Webjet share price summary

Over the last 12 months, the Webjet share price has lifted more than 60% since hitting near COVID-19 lows, but is still a long way off from 2019 levels.

Currently, the company’s share price is sitting in the middle of its 52-week range of $2.63 to $6.33.

Based on valuation grounds, Webjet has a market capitalisation of around $1.7 billion, with approximately 379 million shares outstanding.

The post Why the Webjet (ASX:WEB) share price has fallen 10% in a month appeared first on The Motley Fool Australia.

More reading

• What happened on the US stock market overnight and how could it impact ASX shares?
• These are the 10 most shorted ASX shares
• Fund manager sees Webjet (ASX:WEB) share price as ‘golden’ opportunity
• Broker says Webjet (ASX:WEB) share price weakness is a buying opportunity
• Fresh blow to ASX 200 travel shares as Victoria lockdown looms large

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 owns shares of and has recommended Webjet 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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Could the Hub24 Ltd (ASX: HUB) share price be one to look at after its latest quarterly update?

Hub24 has a few different parts to its business. It has its Hub24 platform, the HUBconnect business and Xplore platform. The business offers advisers and their clients a comprehensive range of investment options, with managed portfolio solutions and enhanced transaction and reporting functionality.

June 2021 quarterly update

For the three months to 30 June 2021, Hub24 announced record platform quarterly net inflows of $3.9 billion. That comprises $2.2 billion from Hub24 platform, $1.4 billion from the completion from the completion of the ClearView Wealth bulk transition and $0.3 billion from Xplore Wealth.

It also had record platform annual net inflows of $8.9 billion – an increase of 80% year on year.

Total funds under administration (FUA) is now $58.6 billion, including Xplore, with platform FUA of $41.4 billion as at 30 June 2021 (up 141% year on year). The portfolio, administration and reporting services (PARS) FUA was $17.2 billion.

During the quarter, the private label investment and superannuation offer for IOOF Holdings Limited (ASX: IFL) was launched and the Hub24 and IOOF teams are continuing to work together to roll out the solution across the IOOF adviser network. The bulk transition of $1.4 billion from Clearview was also completed during the quarter, management said this demonstrated the teams’ ability to deliver record organic growth whilst also managing large scale projects.

The company said that given Hub24’s significant growth in FY21, the expansion of our product and service offerings and the opportunities available in the market, it is investing to support future growth. The company is going to expand its executive team, hire additional distribution team members and invest in technology infrastructure to support scale and ongoing innovation.

According to the latest available ‘Strategic Insights’ data for the Australian platform market, Hub24’s market share has increased to 3.9% from 2.5% at 31 March 2021 and now includes the Xplore platform FUA.

Broker opinion on the Hub24 share price

Credit Suisse is one of the first brokers to react to Hub24’s update. The broker noted that the FUA rise, helped by strong inflows, was stronger than it had been expecting.

Another thing that the broker noted was that it has grown its market share of advisers from 9% to 15% over FY21. As a result, FUA may be able to reach a higher number than originally thought.

Credit Suisse has a price target of $31 on Hub24 for the next 12 months and rates it a buy. That suggests the Hub24 share price could increase by more than 20% in the next year, if the broker is right.

On the broker’s numbers, Hub24 is valued at 58x FY22’s estimated earnings.

The post Is the Hub24 (ASX:HUB) share price a buy? appeared first on The Motley Fool Australia.

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• Why BHP, HUB24, Qantas, & Santos shares are dropping today
• Hub24 (ASX:HUB) share price drops despite ‘record’ Q4 update
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• 2 top ASX tech shares rated as buys by brokers
• The Hub24 (ASX:HUB) share price took a hit today

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 Hub24 Ltd. The Motley Fool Australia has recommended Hub24 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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The A2 Milk Company Ltd (ASX: A2M) share price was previously the darling of the S&P/ASX 200 Index (ASX: XJO). Shares in the Kiwi dairy company climbed nearly 1,000% from July 2016 to July 2020.

But it’s been a tough time for investors since then.

The A2 Milk share price has plummeted more than 64% lower to $6.89 per share in the last 12 months, hitting a 52-week low of $5.04 in May 2021.

So, what’s driving these recent share price losses for one of the previous ASX market darlings?

Why the A2 Milk share price is down 64% in the last 12 months

Perhaps unsurprisingly, the coronavirus pandemic hasn’t helped A2 Milk. The Kiwi company generates a significant proportion of sales from daigou sales channels. Daigou is the cross-border exporting of goods from outside China for resale and consumption in China.

Restrictions on travel and increasing problems with inventory management have spurred multiple A2 Milk earnings downgrades. That’s spelled trouble for the A2 Milk share price which has been tracking lower since July last year.

The announcement in August 2020 that senior executives were selling down certainly didn’t help. Millions of dollars worth of company shares were sold by the Chairman, CEO, COO and others in August which triggered a further share price decline.

It’s been a dramatic fall for a company that had long been seen as a growth success story. Shares in the Kiwi dairy company have, however, lifted off their recent lows in July.

Foolish takeaway

Clearly, the A2 Milk share price has struggled in the last year or so. Early investors in the company would still be sitting on a paper gain even at the current levels.

It’s also not all doom and gloom for investors. The Kiwi dairy group’s shares have actually gained 10% in the last month after closing at $6.89 per share on Tuesday.

The post It’s been a bad year for the A2 Milk (ASX: A2M) share price. Here’s why appeared first on The Motley Fool Australia.

More reading

• 3 reasons to buy A2 Milk (ASX:A2M) shares right now
• Afterpay and Zip were among the most traded ASX shares last week
• These are the 10 most shorted ASX shares
• The A2 Milk (ASX:A2M) share price is up 17% in the last month, here’s why
• Why is the A2 Milk (ASX:A2M) share price down almost 3% on Thursday?

Motley Fool contributor Ken Hall 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 National Australia Bank Ltd (ASX: NAB) share price hasn’t been performing at its best so far this month.

In fact, NAB shares are currently trading 2.8% lower than their final closing price of June. After beginning the month at $26.22, NAB shares closed yesterday trading for $25.47 apiece. That is a fall of 0.7% on the day.

The flop follows news the big bank is in discussions to buy Citi’s Australian consumer business and reports it’s been tangled up in potential fraud.

Let’s take a closer look at what the market’s heard from NAB lately.

The month so far for NAB

A flat June’s trading for the bank continued into the beginning of July. The NAB share price gained just 0.14% between June 30 and July 13.

Then, after market close on July 13, the bank announced it was in discussions about acquiring Citi’s Australian consumer business.

At the time, Motley Fool Australia said Citi’s Australian consumer business will reportedly cost its new owner around $2 billion. The sale is also said to include around $11.5 billion worth of assets that would fit well with NAB’s current business model.

Citi’s Australian consumer business offers banking products including credit cards, loans, mortgages, foreign currency accounts, term deposits, and general banking accounts.

Following the news, the NAB share price gained a tiny 0.08% on July 14.

Then, on 16 July, reports swirled that NAB may be caught up in Forum Finance’s alleged fraudulent leases. NAB is thought to hold mortgages against founder Bill Papas’ property portfolio. Another report claimed NAB could be in hot water following breaches of Papua New Guinea’s anti-money laundering laws.

NAB shares fell 1.9% on the day the reports were published.

NAB share price snapshot

Despite its recent poor performance, the NAB share price is still well and truly in the green.

It has gained 11% since the beginning of 2021. It is also about 40% higher than it was this time last year.

The post It hasn’t been a great month so far for the NAB share price appeared first on The Motley Fool Australia.

More reading

• ANZ’s (ASX:ANZ) $1.5bn buyback puts other ASX 200 banks under capital return spotlight
• Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)?
• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: ASX shakes off lockdowns to rise higher
• Here are 2 ASX dividend shares analysts rate as buys

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.

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It has been an eventful couple of months for the EML Payments Ltd (ASX: EML) share price.

Since this time in May, the payments company’s shares have lost 26% of their value.

Though, this isn’t a bad outcome considering the EML Payments share price was down as much as 45% at one stage.

Why is the EML Payments share price under pressure?

Investors were selling down the EML Payments share price in May after the release of an update on its PFS Card Services Ireland business. That update revealed that the Central Bank of Ireland raised concerns over the business in relation to Anti-Money Laundering/Counter Terrorism Financing compliance.

This is particularly bad news because EML Payments moved its European operations out of London and into Ireland due to Brexit. This means that this business is responsible for all its PFS Card Services’ European revenue.

Management revealed that 27% of EML Payments’ total revenue is generated by the business. And with the Central Bank of Ireland intending to take action, potentially even removing its financial service authorisation for the European market, the company could lose a big chunk of its revenue.

Where next for its shares?

Where the EML Payments share price goes next could depend on what action the Central Bank of Ireland takes on the PFS Card Services Ireland business.

However, one leading broker has effectively removed the business from its valuation and still believes EML Payments shares are decent value. According to a note out of Macquarie, its analysts have an outperform rating and $3.95 price target on its shares.

While Macquarie may have removed the under-fire business from its valuation, it appears confident that any action will not be as extreme as forcing it to shut down. This could mean a big increase in its valuation should the outcome be much more favourable for EML Payments.

Recent broker upgrade

Another leading broker that appears to agree with this view is RBC Capital. Earlier this month the broker upgraded EML Payments shares to an outperform rating with an improved price target of $4.50.

RBC Capital believes the market is overestimating the impact from any action, creating a buying opportunity for investors. It suspects that a one-off fine and higher compliance costs are the most likely outcome from the investigation.

Overall, the last couple of months have been tough for EML Payments shares. However, if these brokers are to believed, the next two could be much more positive.

The post Two months on, what is the outlook for the EML Payments (ASX:EML) share price? appeared first on The Motley Fool Australia.

More reading

• The EML Payments (ASX:EML) share price surges 5% today
• The 3 ASX shares that top brokers just upgraded to “buy”
• Here are the 5 worst performing ASX 200 tech shares from FY21
• The EML Payments (ASX:EML) share price zoomed 4% higher today

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 EML Payments. 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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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, Totus Capital portfolio managers Ben McGarry and Tim Warner pick a pair of stocks that have tailwinds galore.

Best share #1: The world is rebuilding

MF: What is the best stock buy right now?

Ben McGarry: Fortescue Metals Group Limited (ASX: FMG), in the short term, still looks very good to us.

We’ve owned Fortescue since the Vale dam collapse a couple of years ago, on a supply shortage in iron ore that would be supportive for pricing. 

The supply continues to disappoint. We had the Rio Tinto Limited (ASX: RIO) quarterly out this morning and iron ore volume supplies to the downside. It’s very difficult to see where major new projects are coming online which is quite a different setup to the last time we had an iron ore price slide.

[Fortescue] is about to pay about 9% of the market cap in an interim dividend… a half-year dividend after the next result. That should be paid in early September.

At spot pricing this morning, the iron ore price is at US$220 a ton. You know, these guys get it out of the ground for less than US$20 a ton. So the spot pricing versus where the market has their long-term iron ore forecast, and even near-term iron ore forecast, is way out of whack.

Spot pricing [is] less than 3 times earnings, comes [with] a huge dividend yield, a net cash balance sheet, it has long-life assets, owns its own rail, port and shipping infrastructure, and has a founder that is highly aligned with returning capital to shareholders. 

We actually liked the market structure of iron ore as well. It’s a nice consolidated market globally and, as I said, it’s difficult to see where the supply is coming from over the next few years with most of the world trying to stimulate their economies to grow.

Tim Warner: It fits our process around cash-generative, owner-operator. It still fits in. Whilst it might not be a year-long growth story, it still fits within our process and adds some diversity to the book.

BM: You’ve certainly got super-clean accounting in the major iron ore companies, same as you’ve got in the major tech companies.

Because they’re so cash-generative, they don’t need to dress up their earnings with tricks like amortisation of intangibles, et cetera. It’s a very clean part of the market in terms of reporting and accounting.

Best share #2: The world is having their groceries delivered

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

TW: HelloFresh SE (ETR: HFG), which is the leader in the meal kit delivery space. 

Our view is that the product is fantastic. It offers convenience, value, and a quality, all-in-one solution. Both Ben and I are users of meal kits and believe that there’s a sticky habit-forming process from using them.

It’s got a long runway for growth. The grocery retail market is an extremely large market, it’s one of the biggest markets in the world. And the online share of that lags a lot of other categories in retail. 

Then, of that, meal kits, it’s only such a small portion of that together. So it’s a very nascent opportunity and huge marketplace, which we like for the long-term growth prospects.

The business model is counter-positioned against the incumbent supermarket retailers. So it structurally has higher margins due to their vertical integration throughout the whole supply chain, from the producer through the brand through the wholesale that they take all the margin — whereas a typical retailer only takes the retail margins at the end. 

[This] makes it extremely hard for the incumbent, legacy retailers to compete in this niche category as it’s a different business model and they’re focusing on trying to just do online retail, not delivering meal kits.

You’ve also got the food wastage, as it’s a B2C business… The customer is ordering in advance, they minimise food wastage, which is like 10% to 12% for retailers, which is a huge cost to their cost of goods. 

One’s a retailer, one’s the manufacturer and we think they’re in this nice sweet market spot where it’s hard for these incumbent guys to compete. But in a huge market where they can just take little bits of share, which is not very meaningful to the large supermarkets — but to them, it’s extremely meaningful.

In the short term, from a market perspective, it looks to be a temporary COVID beneficiary. Everyone thinks that everyone’s just jumped on the meal kit bandwagon because it’s easy and we’re in lockdown. And I’m sure there’s some truth to that but trends that they have been reporting, and what we’re seeing from data, is that we think it’s more of a structural change that’s being accelerated forward.

Pre-COVID, these businesses were profitable, free cash-flow generative, and growing at 30% to 40% top line… So, there was a business model here with structural change happening and we think it’s only being put forward. And then finally it’s a self-funding business model, it receives cash upfront from their customers and pay their suppliers later, doesn’t need to raise any capital and it can deploy that capital at really high rates in return for a long period of time. 

So we like that one on a 5-year buy and hold.

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.

BM: Look, we did well in the first quarter of 2020 and we got more bullish, but not quickly enough in the second quarter of 2020. 

[We] were sort of surprised by the level of stimulus and with interest rates near zero, a lot of companies with very high valuations took off. The sort of environment in the second half of last year with a lot of monetary and fiscal stimulus and zero interest rates meant that unprofitable companies and companies with less proven and more faddish business models were some of the best performers in the second half of 2020.

We were slow to recognise that and gave up a chunk of the good performance in the start of the year.

MF: Was there a specific company you wished you bought into during that period? 

BM: The two that, you know, surprised us the most were Tesla Inc (NASDAQ: TSLA) and Afterpay Ltd (ASX: APT). And the issue that we should have been quicker to recognise then was that the ‘customer love’ for the product. I think that’s the common denominator.

MF: Do you have a position on Afterpay at the moment? Either short or long?

BM: No, we’ve sort of steered clear. We think the buy now, pay later space is tricky, in that it’s highly competitive. 

The main protagonists are burning a lot of cash. And they’ve been clear beneficiaries of a strong retail environment during the COVID period and the stimulus. 

We’ve got a lot of respect for Afterpay management but it’s just unclear how the industry is going to evolve over the medium term. 

The post The 2 best shares to hang your hat on: fund managers appeared first on The Motley Fool Australia.

More reading

• ASX 200 drops, ANZ up and Afterpay rises
• ASX investors were buying GameStop (NYSE:GME) shares last week
• Leading brokers name 3 ASX shares to sell today
• Afterpay and Zip were among the most traded ASX shares last week
• Why Afterpay, ANZ, JB Hi-Fi, & Zip shares are pushing higher

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tony Yoo owns shares of AFTERPAY T FPO and Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Amazon, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon. 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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Are you looking for some attractive dividend yields to boost your income? Then you may want to look at the ones listed below.

Here’s why these ASX dividend shares have been tipped as great options for income investors right now:

Mineral Resources Limited (ASX: MIN)

If you’re happy to invest in the resources sector, then Mineral Resources could be an ASX dividend share to consider. It is a mining and mining services company with a focus on two hot commodities – iron ore and lithium.

It is thanks to its exposure to these metals that Mineral Resources has been tipped to pay very generous dividends in the near term.

For example, analysts at Macquarie are expecting Mineral Resources to pay fully franked dividends of $3.32 per share in FY 2021 and then $3.05 per share in FY 2022. Based on the latest Mineral Resources share price of $58.14, this will mean fully franked yields of 5.7% and 5.2%, respectively, over the next two financial years.

Macquarie currently has an outperform rating and $73.00 price target on the company’s shares.

Super Retail Group Ltd (ASX: SUL)

Another ASX dividend share to look at is Super Retail. It is the retail group behind the BCF, Macpac, Rebel, and Super Cheap Auto retail brands.

Super Retail has been experiencing strong sales growth in FY 2021 thanks to a favourable redirection in consumer spending. Combined with margin expansion, this led to the company reporting a 139% increase in half year underlying net profit after tax to $177.1 million.

One broker that is very positive on the retailer is Credit Suisse. It likes the company due to its strong brands and equally strong market position. The broker expects this to underpin dividends of 71.7 cents per share in FY 2021 and then 49.2 cents per share in FY 2022. Based on the latest Super Retail share price of $12.67, this will mean fully franked yields of 5.7% and 3.9%, respectively.

The broker currently has an outperform rating and $14.45 price target on its shares.

The post 2 buy-rated ASX dividend shares for income investors appeared first on The Motley Fool Australia.

More reading

• Guess which sector this week’s top performing ASX 200 shares all come from
• Why the Mineral Resources (ASX:MIN) share price is up 39% in 3 months
• 2 ASX 200 mining shares that could be buys
• 2 high quality ASX dividend shares with very big yields
• Why the JB Hi-Fi (ASX:JBH) share price is down 7% this month

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 Super Retail Group 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 you’re wanting to invest in the small side of the Australian share market, then the three small caps listed below could be worth a closer look.

They are growing quickly and could have very bright futures ahead of them. Here’s why these small cap ASX shares could be worth adding to your watchlist:

Adore Beauty Group Limited (ASX: ABY)

The first small cap to watch is Adore Beauty. It is a leading online beauty retailer which has been growing strongly during FY 2021. So much so, it expects to report full year revenue growth of 43% to 47%. And while Adore Beauty’s growth is likely to moderate in FY 2022 as its cycles strong sales growth during the pandemic, its longer term outlook remains very positive. This is due to its leadership position and the structural shift online for beauty sales.

Audinate Group Limited (ASX: AD8)

Another small cap ASX share to look at is Audinate. It is the leading digital audio-visual networking technologies provider behind the world class Dante audio over IP networking solution. Management notes that Dante is the evolution of AV systems, converging all previous connection types into one to deliver vastly superior performance. The solution is also making these systems easier to use, easier to expand, and less expensive to deploy. The number of Dante enabled products manufactured by its customers is now eight times greater than its nearest rival. This makes it the clear industry leader. Audinate has also just entered the video market, with its products being received very well.

Booktopia Group Ltd (ASX: BKG)

A final small cap ASX share to watch is Booktopia. This online book retailer has been growing at an explosive rate in FY 2021. For example, during the first half, Booktopia reported a 51.1% increase in revenue to $112.6 million and a 502.3% jump in underlying EBITDA to $8 million. This strong form continued in the third quarter, with the company delivering a 53% increase in quarterly revenue. Management advised that this strong growth is being driven by the shift to online shopping and its new distribution centre. The latter is allowing the company to respond to the growing demand by shipping more books than ever.

The post 3 exciting small cap ASX shares to watch appeared first on The Motley Fool Australia.

More reading

• Here’s why the Audinate (ASX:AD8) share price is up 25% in a month
• Is the Adore Beauty (ASX:ABY) share price a buy?
• Could the Youfoodz (ASX: YFZ) takeover offer indicate a bubble?
• Leading brokers name 3 ASX shares to buy today
• Why Australian Pharma Industries, Audinate, NRW, & Vulcan are racing higher

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 AUDINATEGL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited and Booktopia Group Limited. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO. 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 some quality S&P/ASX 200 Index (ASX: XJO) shares that might be ideas to think about for dividend income.

It’s pretty tough to find sources of income for capital at the moment because of how low interest rates are right now.

The below two ASX 200 dividend shares could be ones to think about:

Rural Funds Group (ASX: RFF)

Rural Funds is a leading real estate investment trust (REIT) in the agricultural space. It owns a high-quality portfolio of assets that are spread around the country in different states and climactic conditions.

Those farms span the sectors of cattle, almonds, macadamias, vineyards and cropping (sugar and cotton). The properties are predominately leased to large and listed operators such as Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV), Olam, JBS and Queensland cotton.

The business aims to grow its distribution per investors by 4% per annum, which is materially higher than inflation has been over the last several years. It funds this distribution growth through organic rental growth, productivity investments at the farms and the occasional acquisition.

The ASX 200 share recently announced a $100 million equity raising. This will pay for the development of 1,000 hectares of macadamia orchards, acquiring more cattle properties and the acquisition of up to 8,338ML of water entitlements for $38.4 million which are leased to a private farming company for five years, which will boost its adjusted funds from operations (AFFO – the net rent).

Rural Funds is expecting to pay a distribution of 11.73 cents per unit in FY22. At the current Rural Funds share price, it offers a forecast distribution yield of 4.5%.

Brickworks Limited (ASX: BKW)

Brickworks is another ASX 200 dividend share to think about.

It hasn’t cut its dividend in over forty years, which is a very long record when it comes to ASX companies.

Construction materials can be a cyclical industry. It has a number of different subsidiaries across different products including bricks, paving, masonry, roofing, specialised building systems and precast.

It also has a leading market position in brickmaking in the north east of the US after making a few acquisitions before COVID-19.

But it’s other parts of the business’ cashflow that funds the Brickworks dividend each year.

The ASX 200 dividend share has an ultra-long-term cross-shareholding partnership with Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), the investment conglomerate. Brickworks owns around 40% of Soul Patts.

Soul Patts has a diversified portfolio of different assets. The lion’s share of assets are other ASX businesses like TPG Telecom Ltd (ASX: TPG), Brickworks, New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Group Ltd (ASX: PCG) and Pengana International Equities Ltd (ASX: PIA). It also has investments in private businesses related to agriculture, resources, swimming schools and more.

Soul Patts has been paying Brickworks (and all shareholders) a growing dividend over the last 20 years.

The other part that funds Brickworks’ dividend is its 50% ownership of a quality industrial property trust. That property enterprise is building high-quality buildings that are then leased to really good tenants. Amazon and Coles Group Ltd (ASX: COL) are expected to be two of the newest tenants to move into two huge, high-tech warehouses. Once those warehouses are complete, it’s expected to significantly increase the value and rental income of the trust.

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

The post 2 ASX 200 shares that could be buys for dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company 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 owns shares of and has recommended Brickworks, COLESGROUP DEF SET, RURALFUNDS STAPLED, Treasury Wine Estates Limited, and Washington H. Soul Pattinson and Company 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 Telstra Corporation Ltd (ASX: TLS) share price has risen by almost a quarter in the 2021 year to date, but could it be an idea for dividend income?

It has been a strange 12 months for the business. Its share price went under $2.70 at the end of October 2020, but it has risen by 40% since then.

Telstra has been busy making business moves in recent months.

Corporate activity

In March 2021, it announced the next steps in its proposed restructuring to enable it to better realise the value of its infrastructure assets, take advantage of potential monetisation opportunities and create additional value for shareholders.

The business revealed that one of the divisions would be ‘InfraCo Towers’, which would own and operate Telstra’s passive or physical mobile tower assets, which Telstra said it’s looking to monetise given the strong demand and compelling valuations for this type of high-quality infrastructure.

In June 2021, Telstra revealed that it was going to sell 49% of that towers business to a consortium for $2.8 billion. The towers business is the largest mobile tower infrastructure provider in Australia with approximately 8,200 towers. Those consortium partners include the Future Fund, Commonwealth Superannuation Corporation and Sunsuper.

With that deal, Telstra says it’s able to maximise the overall value for shareholders, maintain control of the assets and agree terms that secure Telstra’s mobile network leadership and competitive differentiation into the future. It will continue to own the active parts of the network, including the radio access equipment and spectrum assets, to ensure it continued to maintain its industry leading mobile coverage and network superiority.

Telstra has entered into a 15 year agreement (with the option to extend) with InfraCo Towers to secure ongoing access to existing and new towers.

The company said it will be investing $75 million to improve connectivity in regional Australia. After that, it plans to return 50% of net proceeds to shareholders. Next month in reporting season, it plans to give more details about the manner of returning those proceeds, including a potential share buy-back in FY22 at its full year result. The rest of the money will be used to reduce debt.

What about the Telstra dividend?

In its FY21 half-year result, it said that the Telstra board expects to pay a FY21 total dividend of 16 cents per share.

One of Telstra’s stated goals is to maximise returns for shareholders. Part of that plan is to pay a fully franked ordinary dividend of 70% to 90% of underlying earnings. It’s also returning around 75% of net one-off NBN receipts to shareholders over time through fully franked special dividends.

The broker Ord Minnett currently rates the Telstra share price as a buy, with a price target of $4.25.

Ord Minnett is expecting the FY21 and FY22 annual dividend to be $0.16 per share. That translates to a grossed-up dividend yield of 6.1%.

The post Could the Telstra (ASX:TLS) share price be a buy for dividends? appeared first on The Motley Fool Australia.

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• Here are 3 of the ASX 200’s most heavily traded shares on Tuesday
• Lockdowns hurt, ASX falls, Wesfarmers climbs, and the Aussie set to fall? Scott Phillips on Nine’s Late News
• Is the Telstra (ASX:TLS) share price good value amid acquisition news?
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• 2 defensive ASX 200 shares that brokers rate as ‘buys’ this Monday

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 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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