Tag: Motley Fool

  • 2 high yield ASX dividend shares to buy today

    ASX dividend shares represented by cash in jeans back pocket

    On Tuesday the Reserve Bank of Australia kept the cash rate on hold at the record low of 0.1%.

    The central bank also appeared to indicate that it expects rates to stay at this level for a few more years. While this is good news for borrowers, it is the opposite for savers and income investors.

    But don’t worry, because the Australian share market is home to a number of quality companies that are sharing their profits with shareholders in the form of dividends.

    Two ASX dividend shares to consider buying are listed below. Here’s what you need to know about them:

    Accent Group Ltd (ASX: AX1)

    Accent is a footwear-focused retailer with a collection of popular store brands. It has been growing very strongly over the last few years and during the pandemic.

    This has been driven by a combination of new store brand launches, the expansion of its existing footprint, and strong demand in-store and online.

    Positively, Accent is on form again in FY 2021. In February the company reported a 6.6% increase in total sales to $541.3 million and a 57.3% lift in net profit after tax to $52.8 million.

    According to analysts at Bell Potter, they are confident it will have a strong second half and are forecasting an 11.9 cents per share dividend in FY 2021. Based on the current Accent share price, this will mean a fully franked 5.4% yield.

    Bell Potter has a buy rating and $2.65 price target on its shares.

    Telstra Corporation Ltd (ASX: TLS)

    This telco giant could be a great dividend share to buy to overcome low interest rates. Especially given its improving outlook, which is being underpinned by its T22 strategy and the easing NBN headwind.

    In addition to this, the company is looking to unlock value by splitting into three separate businesses and offloading some assets.

    Analysts at Goldman Sachs are positive on its future and are forecasting a 16 cents per share annual dividend for the foreseeable future. Based on the current Telstra share price, this will mean a 4.7% fully franked dividend yield.

    Goldman Sachs has a buy rating and $4.00 price target on its shares.

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    Returns As of 15th February 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Accent Group. 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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  • 2 ASX sectors where dividend shares will go backwards this year

    sad piggy bank sinking underwater

    Value and dividend shares have done nicely out of the market’s rotation out of growth stocks this year.

    Two experts had even predicted the S&P/ASX 200 Index (ASX: XJO) would deliver 4.5% to 4.8% gross yield this year.

    This would be sweet relief for all those income investors that suffered in 2020.

    “The February reporting season saw a number of companies declaring record dividends and what’s most encouraging is that many of those businesses that have handsomely rewarded investors, look to have strong tailwinds in the foreseeable future,” Plato Investment Management managing director Dr Don Hamson said last month.

    “Thankfully, we’ve now seen a very swift recovery in dividends.”

    AMP Capital portfolio manager Dermot Ryan this week agreed, saying there was an almost market-wide “rejuvenated dividend outlook”.

    “The turnaround at this stage has been led by larger cap names, whereas smaller companies without the benefit of diversified cash flows have been somewhat later to benefit. That said, we should see strong growth across the board from this point on.”

    Don’t just blindly pick dividend shares though

    However, Ryan warned that ASX investors still need to be selective about which industries and companies to harvest dividends from.

    Two sectors are even forecast to produce shrinking yields in the next couple of years.

    “Dividends in almost every sector are forecast to grow strongly on a one- and two-year basis, with the exception of materials, which are coming off records driven by those soaring iron ore prices and volumes – and utilities, who are suffering from poor pricing, particularly in wholesale electricity.”

    Graph showing expected dividend growth by sector

    Used with permission from AMP Capital, FactSet sector estimates. Data from 30 March 2021.

    He also red-flagged a couple of subsectors.

    “Tourism and education are expected to also continue to languish, along with the insurance sector which now has widespread flooding to add to its list of woes at a time when low interest rates are strangling the carry on insurers’ cash reserves.”

    The big risk to expected dividend growth

    Ryan said that the coronavirus pandemic still remained the largest threat to expanding dividends.

    “The main risk to this two-year dividend outlook is linked to vaccinations and the associated threat of lockdowns, which will remain high until a critical proportion of the population are inoculated.”

    A critical mass of the vaccinations will mean travel and tourism can be resurrected, and might even trigger an export boom.

    “The world – and particularly Australia – appears overstimulated and we believe that when the world is vaccinated, inflation might follow,” said Ryan.

    “We have seen a little in the way of that kind of inflation recently in parts of the mining sector in Western Australia, a state that has been largely COVID-free since the first wave of the pandemic. But for now, we believe a little inflation is normal this early in the cycle, although a factor to keep an eye on in the event that asymmetrical inflation in sales or cost lines starts to cut into company profit margins.”

    But if the vaccine program could continue without disruptions, Ryan, like his AMP Ltd (ASX: AMP) colleague Shane Oliver, thinks the ASX will break its all-time record.

    “We expect that the market will continue its strong push higher through the ASX’s record high of 7,200, driven by the strong profit and dividend growth in local equity markets.”

    These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

    Motley Fool Australia’s Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

    Our team of investors think these 3 dividend stocks should be a ‘must consider’ for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

    Don’t miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

    Returns As of 15th February 2021

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    Motley Fool contributor Tony Yoo 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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  • Can the Qantas (ASX:QAN) share price soar even higher?

    view from below of jet plane flying above city buildings representing corporate travel share price

    The Qantas Airways Limited (ASX: QAN) share price was on form on Tuesday and charged higher.

    The airline operator’s shares ascended over 3% to close the day at $5.26.

    Why did the Qantas share price take off?

    Investors were buying Qantas and other travel shares on Tuesday following the announcement of an Australia-NZ travel bubble.

    This travel bubble will allow travellers from either side of the Tasman to visit without a 14-day COVID-19 quarantine period. It is due to open in less than two weeks on 18 April.

    Is it too late to invest?

    According to a note out of Goldman Sachs, it isn’t too late to invest.

    This morning the broker reiterated its buy rating and $6.38 price target on the airline operator’s shares.

    Based on the current Qantas share price, this price target implies potential upside of 21% over the next 12 months.

    What did Goldman say?

    Goldman Sachs was pleased with the news, noting that this would be a big boost to its international business. Particularly given how New Zealand accounted for ~13% of international passengers and ~5% of total passengers pre-COVID.

    Its analysts said: “The announcement would add international volumes which has remained minimal given international border restrictions. Pre-Covid (CY19), New Zealand accounted for c. 13% of international pax (c. 5% of total pax) for Qantas group. It is difficult to forecast the recovery volume, but we highlight that with additional routes and capacity, and while other international destinations remain closed, it could present upside to pre-Covid levels.”

    In light of this, the broker continues to believe that Qantas is a great COVID recovery investment option for investors.

    “We reiterate our Buy rating on QAN.AX. QAN represents a strong recovery investment, if the Australian COVID-19 vaccination program has the effect of reducing community transmission of the virus and limits the need for domestic border closures,” Goldman concluded.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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  • Uniti (ASX:UWL) share price on watch following bullish broker note

    Man with mobile phone standing over modem, telecommunications, telco. Telstra share price, TPG share price, vocus share price

    The Uniti Group Ltd (ASX: UWL) share price has been a strong performer in 2021.

    Since the start of the year, the internet provider’s shares have risen an impressive 38%.

    Is it too late to buy Uniti shares?

    The good news for investors is that one leading broker doesn’t believe it is too late to invest.

    According to a note out of Goldman Sachs, its analysts have initiated coverage on the company with a buy rating and $3.00 price target.

    Based on the current Uniti share price of $2.41, this implies potential upside of 24.5% over the next 12 months.

    What is Uniti?

    Uniti is a provider of fibre connectivity to new Australian residential premises, competing with the government owned NBN. When successful, Uniti builds and operates these fibre networks as a wholesaler.

    Goldman notes that developers partner with Uniti due to lower pricing, the inclusion of TV & smart-building services, improved co-ordination with developers, and estate aesthetics.

    Why is the broker bullish?

    The broker believes that Uniti is well-placed for growth via market share gains following a period of significant M&A activity. This includes the purchase of the Velocity assets from telco giant Telstra Corporation Ltd (ASX: TLS) late last year for $140 million.

    Goldman said: “After a period of significant M&A, UWL is refocusing on organic growth and aiming to increase its share of new residential fibre connections in Australia. After consolidating all existing operators and having TLS join its network in Dec-20 (TLS = 46% fixed share), we believe UWL has both the scale and offerings to more aggressively compete and grow share from 15% (FY21E, 30k premises) to 21% (FY30E, 54k).”

    “UWL’s current contracted premises (202k at Dec-20) also underpins an extended period of organic growth, with these builds delivering particularly attractive returns (we estimate 73% ROIC). However, we still see attractive economics on future builds, estimating a 15% ROIC even if developer contributions are competed away completely. We also see barriers to entry in this market, with developers requiring telco partners (UWL has > 40, incl. TLS), while RSPs require sufficient scale to justify onboarding costs.”

    Valuation

    Why is the Uniti share price worth $3.00 today? Goldman’s analysts explained how they came to this valuation.

    They said: “Our 12-m target price of A$3.00 is based on an FY23E EV/EBITDA SOTP. We ascribe: (1) A$2.90 fundamental value (85% weight) using 15X Wholesale & Infrastructure (W&I) for +14% FY21-23E growth vs. CNU on 13X for +1%, NXT on 32X for +25%) and 8X on its CPaaS cash business; and (2) A$3.50 M&A valuation (15% weight) given elevated industry M&A. With +25% upside, we view UWL as having an attractive risk-reward and initiate at Buy, but do see a degree of integration risk given the recent M&A.”

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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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  • 2 great ASX 200 blue chip shares for dividends

    Dividend stocks represented by paper sign saying dividends next to roll of cash

    The S&P/ASX 200 Index (ASX: XJO) is home to some really good ASX 200 dividend shares that could be worth owning for dividends.

    Some businesses didn’t manage to grow the dividend in 2020 because of COVID-19, but there were a few that managed to grow both the dividend and the profit in FY20. That growth has continued into FY21. 

    These two businesses could be really good options for dividends:

    Fortescue Metals Group Limited (ASX: FMG)

    Fortescue is one of the biggest miners in the world and it has also been one of the ASX 200 shares paying the biggest dividends as well.

    The business has been benefiting from a really strong iron ore price, with lower production in Brazil and continued high demand from China. In the first half of FY21, the realised price was 42% higher to US$114 per dry metric tonne.

    Fortescue’s half-year revenue climbed 44% to US$9.3 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 57% to US$6.6 billion and net profit after tax (NPAT) grew 66% to US$4.08 billion.

    It was the above strength that allowed management to declare a whopping 93% increase in the interim dividend to AU$1.47 per share. The board are aiming for a dividend payout ratio of 80% of net profit going forwards. It plans to invest 10% in future resource growth opportunities and the other 10% to fund renewable energy growth through Fortescue Future Industries (FFI).

    Fortescue plans to find and fund large-scale green resource and infrastructure opportunities, particularly relating to hydrogen.

    The ASX 200 blue chip dividend share is rated as a buy by Credit Suisse, which has a price target of $23.50 on the miner and it expects it to pay a FY21 dividend of $3.62 per share, equating to a grossed-up dividend yield of 22% for this financial year.

    Wesfarmers Ltd (ASX: WES)

    Wesfarmers is another business that has a strong reputation for shareholder returns.

    The business has an array of strong-performing businesses like Bunnings and Officeworks which generate excellent returns and allow Wesfarmers to pay solid and growing dividends.

    Bunnings is one of the best businesses in Australia and the FY21 half-year result showed that. It reported a 76.6% return on capital and underlying earnings before tax growth of 39% to $1.27 billion. Same store sales growth was 27.7% and online penetration increased from 0.4% to 3.1%.

    Bunnings earned more than 60% of the core earnings before tax for Wesfarmers.

    Wesfarmers’ continuing operations net profit increased by 23.3% to $1.39 billion and underlying earning per share (EPS) grew 25.5% to $1.25, allowing the interim dividend to rise by 17.3% to $0.88 per share.

    One thing to note with the ASX 200 blue chip share is that retail sales growth is expected to moderate from March as the businesses begin to cycle against the initial impacts in COVID-19 where there were strong sales, particularly in Bunnings and Officeworks.

    More dividend growth could be coming because Wesfarmers said that sales across the group’s retail businesses have continued to remain strong through January and February, with some impact from government-mandated trading restrictions.

    Management said that the portfolio of cash-generative businesses with trusted brands and leading market positions are well placed to deliver satisfactory shareholder returns over the long-term.

    At the current Wesfarmers share price, it has a projected grossed-up dividend yield of 4.7% according to Commsec.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor Tristan Harrison owns shares of Fortescue Metals Group Limited. The Motley Fool Australia owns shares of 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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  • LIVE COVERAGE: ASX to fall; oil rebounds

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Kate O’Brien owns shares of Apple and Rio Tinto Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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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  • 5 things to watch on the ASX 200 on Wednesday

    woman watching asx share price on digital screen

    On Tuesday the S&P/ASX 200 Index (ASX: XJO) started the shortened week on a very positive note. The benchmark index rose 0.85% to 6,885.9 points.

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

    ASX 200 expected to fall

    The Australian share market looks set to give back some of its gains on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 9 points or 0.1% lower this morning. This follows a weak night of trade on Wall Street, which saw the Dow Jones fall 0.3%, the S&P 500 drop 0.1%, and the Nasdaq edge lower.

    Oil prices rebound

    It could be a better day for energy producers such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) after oil prices rebounded. According to Bloomberg, the WTI crude oil price is up 1.3% to US$59.40 a barrel and the Brent crude oil price has risen 1% to US$62.78 a barrel. Strong economic data gave oil prices a lift.

    Gold price storms higher

    Gold miners Evolution Mining Ltd (ASX: EVN) and Newcrest Mining Limited (ASX: NCM) could be on the rise after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.9% to US$1,744.70 an ounce. The price of the precious metal rose after the US dollar and bond yields eased.

    Qantas rated as a buy

    The Qantas Airways Limited (ASX: QAN) share price is good value according to analysts at Goldman Sachs. This morning the broker reiterated its buy rating and $6.38 price target on the airline operator’s shares following the announcement of an Australia-NZ travel bubble. Goldman notes that New Zealand accounted for ~13% of Qantas’ international passengers prior to COVID-19.

    Dividends being paid

    A number of companies will be rewarding their shareholders later today with dividend payments. Among the companies paying shareholders are waste management company Cleanaway Waste Management Ltd (ASX: CWY) and engineering company Perenti Global Ltd (ASX: PRN). In other news, the Adbri Ltd (ASX: ABC) share price will be trading ex-dividend this morning for its 7.3 cents per share dividend.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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  • Why ASX 200 shares are at a 6-week high

    rising ASX share price represented by paper plane made from news paper

    ASX 200 shares got off to a flier this week after a strong day of trade on Tuesday. The S&P/ASX 200 Index (ASX: XJO) closed up 0.8% at 6,885.9 points as a number of sectors saw strong gains.

    Why are ASX 200 shares at a 6-week high?

    There were a couple of big themes in Tuesday’s trade. The morning session saw strong gains across resources, technology and more after the Easter break.

    Several big-name shares led the benchmark index higher, including Cleanaway Waste Management Ltd (ASX: CWY) and Afterpay Ltd (ASX: APT). The Afterpay share price rocketed 10.0% higher to start the shortened trading week despite no new announcements.

    Strong investor sentiment helped propel several big-name ASX 200 shares higher on Tuesday, but the second big factor came in the early afternoon.

    New Zealand Prime Minister Jacinda Ardern announced a new trans-Tasman travel bubble at 2pm. That saw ASX travel shares rocket higher as investors reacted well to the news.

    The new quarantine-free arrangement will come into effect on 19 April and marks an important step in a return to normality amid the coronavirus pandemic. Australia and New Zealand will stick to a traffic light system for the bubble to encourage travel between the two nations.

    That’s good news for the economy, with more jobs and economic spending likely to flow from the bubble arrangement. ASX 200 shares like Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN) surged higher on the back of the news.

    That, combined with a strong start in the morning session, helped propel ASX 200 shares higher. The S&P/ASX 200 closed at 6,885.9 points – its highest point since Tuesday 16 February this year.

    Foolish takeaway

    Several sectors saw strong gains in a good start to the trading week today. A number of high-profile ASX 200 shares surged higher on the back of bullish sentiment and a big step forward for the travel industry.

    Where to invest $1,000 right now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

    *Returns as of February 15th 2021

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    Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T 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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  • NZ-Australia bubble opens! Qantas (ASX:QAN) shares take off

    Two hands holding bubbles containing airplanes, indicating share price movements for ASX travel and airline companies

    New Zealand and Australia have opened a “travel bubble” between the two countries.

    The bubble, which opens on the night of 18 April, allows travellers from either side to visit without enduring a 14-day COVID-19 quarantine period.

    Since October, New Zealand residents could already travel to Australia in a “one-way bubble”. 

    But Kiwi prime minister Jacinda Ardern announced on Tuesday afternoon that quarantine requirements would now be scrapped for travellers going the other direction.

    “This is an exciting day – the trans-Tasman bubble represents the start of a new chapter in our COVID response and recovery,” she said.

    “I know families, friends and significant parts of our economy will welcome it, as I know I certainly do.”

    The first significant re-opening of international travel for Australia has meant that ASX shares related to that activity have gone gangbusters Tuesday.

    Qantas Airways Limited (ASX: QAN) was an obvious beneficiary. Its share price shot up 3.14% to close the day at $5.26. 

    That’s more than double what it was just over a year ago when coronavirus panic struck markets.

    Dust off your passports – let’s fly!

    Qantas International chief Andrew David said travellers on both sides of the Tasman were chomping at the bit.

    “We know Australians are keen to head overseas again, so we expect strong demand for flights to New Zealand. And there are many Kiwis who can’t wait for a winter escape to warmer weather in Australia.”

    Qantas had only been operating 3% of pre-COVID capacity between Australia and New Zealand since the pandemic struck. That will be ramped up to 83% as soon as the bubble starts.

    In normal times, international tourists outside the two countries account for 20% of the demand for trans-Tasman flights.

    The airline and its budget brand Jetstar will start the bubble with 122 return flights each week servicing 15 routes across the Tasman Sea. This equates to about 52,000 per week.

    For the first 3 days of the bubble, all seats will be available for Qantas frequent flyers to book as Classic Flight redemptions.

    David added that aside from tourism, reconnecting loved ones would be especially satisfying.

    “Hopefully, stories of missed weddings and birthdays on either side of the ditch will now be a thing of the past.”

    Shares for Qantas’ counterpart across the ditch, Air New Zealand Limited (ASX: AIZ), did even better Tuesday, soaring more than 8.2% before closing at $1.83, up 5.8%.

    Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

    When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

    In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

    *Returns as of 15/2/2021

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    Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. 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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  • Why the PointsBet (ASX:PBH) share price shot up 7% today

    3 men at bar betting on sports online 16.9

    The PointsBet Holdings Ltd (ASX: PBH) share price just hit the proverbial jackpot. At close of trade today, the online bookmaker’s shares were trading for $13.93 – up 7.32%. The upwards movement came as the company announced it was strategically placed to deal with upcoming regulatory hurdles.

    For comparison, the S&P/ASX 200 Index (ASX: XJO) finished the day up 0.84%.

    Let’s take a closer look at today’s news and how it might have affected the PointsBet share price.

    Illinois reverts back to in-person betting

    The PointsBet share price flew today. In a statement to the ASX, PointsBet confirmed the US state of Illinois would no longer suspend rules on in-person registration for online betting. The regulation, which was signed into law in June 2019, was suspended by Illinois Governor JB Pritzker one year later due to the COVID-19 pandemic and social distancing concerns.

    Illinois is the fifth largest state in the US by population and GDP.

    The Governor refused to extend the executive order at its most recent expiry date. As a result, from 4 April 2021, in-person registration will again be mandatory for Illinois residents wishing to make online bets. People will need to register at a licensed gaming location.

    In its statement, PointsBet claims it has “a significant competitive advantage in an in-person registration environment.” The company believes its sportsbook locations are strategically situated in the Chicago metro area. The statement highlights the Hawthorne Race Course, which is only 8.5 miles from downtown Chicago. The company also states it has 3 other betting locations in the windy city, of which 2 are currently operational. Investors seemingly agree and are pushing up the PointsBet share price as a result.

    The company believes it is well situated to transition due to the changing regulation in the state. In addition, PointsBet says it is onboarding and training retail staff in the area ahead of the two biggest events for gambling in the state – the start of Major League Baseball and the Kentucky Derby horse race.

    PointsBet share price snapshot

    Over the last 12 months, the PointsBet share price has increased a staggering 506.42%. It has, however, come down from its all-time peak of $18.13 it achieved in early February. Concerns over the changing regulatory environment in the US, which PointsBet is aggressively expanding into, has led to a fall in its share price since then.

    PointsBet has a market capitalisation of $2.6 billion.

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    Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Pointsbet Holdings Ltd. 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.

    The post Why the PointsBet (ASX:PBH) share price shot up 7% today appeared first on The Motley Fool Australia.

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