Tag: Motley Fool

  • Why the Western Areas (ASX:WSA) share price is crashing 10% lower

    man looking down falling line chart, falling share price

    The Western Areas Ltd (ASX: WSA) share price has been a very disappointing performer on Tuesday.

    In afternoon trade, the nickel producer’s shares are down a sizeable 10% to $2.49.

    This means the Western Areas share price is now down 20% from the 52-week high of $3.10 it reached in January.

    Why is the Western Areas share price crashing lower?

    Investors have been selling Western Areas shares today following the release of its half year results.

    According to the release, the company reported a 21.5% decline in revenue to $122.7 million and a 65.5% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $24 million.

    On the bottom line, Western Areas recorded a loss after tax of $12 million. This is down from a profit of $24.7 million a year earlier.

    Management advised that its poor performance was driven by lower production and recoveries, higher cash costs, and a slightly softer nickel price.

    Outlook

    Also weighing on the Western Areas share price today was its guidance for FY 2021.

    Management commented: “In light of the first half performance, the Company has adjusted guidance to account for the nickel production that has been deferred into FY22, primarily from Flying Fox.”

    Western Areas now expects production of 16,000 to 17,000 tonnes of nickel concentrate at a unit cash cost of $3.75 to $4.25 per pound. This compares to its previous guidance of 17,000 to 19,000 tonnes with a unit cash cost of $3.50 to $4.00 per pound.

    In respect to its higher costs, management explained that this is the result of the lower grade forecast for its mines and fixed costs relating to mine maintenance.

    How does this compare to expectations?

    According to a note out of Goldman Sachs, its analysts were expecting EBITDA of $26 million and a loss of $11 million. So Western Areas has fallen a touch short with its result.

    However, the broker was not surprised by the guidance downgrade. It commented: “We already forecast 16.0kt at A$4.21/lb, at the bottom end of the revised guidance range for production and the top end for costs.”

    At present, Goldman has a neutral rating and $2.40 price target on Western Areas shares.

    Where to invest $1,000 right now

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    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 the Dubber (ASX:DUB) share price is surging 6% higher

    A man with a yellow background makes an annoncement, indicating share price changes on the ASX

    The Dubber Corp Ltd (ASX: DUB) share price is climbing higher today on news the company has launched its products across the AT&T network.

    In early afternoon trade, the cloud-based software-as-a-service (SaaS) company’s shares are up 6.27% to $1.78.

    Dubber is a cloud call recording and data capture company that provides unified communication products to its clients. The company’s technology enables voice calls to be analysed and turned into data for process improvement.

    What’s driving the Dubber share price higher?

    In today’s release, Dubber advised that AT&T Inc has deployed its unified call recording and voice intelligence solutions on three networks. These include AT&T’s IP toll-free network, hosted voice service, and Cisco Webex Calling with AT&T Business in the United States.

    The AT&T network is a session initiation protocol (SIP) trunking service (a method of sending voice and other unified communications services over the internet) that enables inbound toll-free calls.

    Dubber said that more than 3 million business customers around the world used AT&T’s network. This includes Fortune 500 companies operating in the financial services, retail, healthcare, insurance, and manufacturing industries.

    The partnership signifies Dubber’s importance to the AT&T network as the technology can easily connect voice data to big data sets. The company will offer unified call recording and voice artificial intelligence feature to new and existing customers on AT&T IP toll-free.

    What did management say?

    Dubber CEO Steve McGovern commented:

    AT&T Business is again bringing industry-leading innovation to customers. By eliminating the costs of legacy on-premise and application- specific call recording and then automating compliance, customer experience and call centre activity enterprises can gain an immediate reduction in capital expenditure and drive increased productivity.

    AT&T Business vice president of voice & collaboration Rich Shaw added:

    Voice data is one of the last great untapped resources for companies. By making data and insights from conversations more accessible, we unlock the potential to drive digital and customer experience transformation through voice.

    With the pandemic and acceleration of remote work, moving to network-centric and unified call recording has never been more important. Together with Dubber, we can help answer these customer needs on a global scale.

    The Dubber share price has gained close to 80% over the past 12-month period.

    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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    Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Dubber. 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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  • Reddit’s ‘Roaring Kitty’ doubled his stake in GameStop (NYSE:GME)

    This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

    This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

    The Reddit stock trader who launched an insurrection against hedge funds trying to short GameStop (NYSE: GME) into oblivion is serious when he says he’s bullish on the video game retailer.

    The Wall Street Journal reported last week that Keith Gill — known as Roaring Kitty on his YouTube — channel doubled his stake in GameStop to 100,000 shares for a position that was worth $4 million.

    The mouse that roared

    Gill got the short-squeeze ball rolling last month after posting his bullish take on the video game retailer and noting hedge funds had overplayed their hand and shorted more stock than there was available to trade.

    It quickly became clear that small retail investors acting in concert to buy GameStop shares and options could cause the stock price to rise. In doing so, short-sellers would start covering their positions, leading to further increases in the share price.

    What Gill perhaps didn’t realize was that a torrent of pent-up emotion would be unleashed in the process, and not only would GameStop be caught in a “gamma squeeze,” but that other heavily shorted stocks would get sucked into the vortex. 

    AMC Entertainment (NYSE: AMC), Bed Bath & Beyond (NASDAQ: BBBY), and Nokia (NYSE: NOK) were among the companies that saw their stock prices soar hundreds if not thousands of a percent higher in the course of just a few days.

    Gill was called to testify before Congress on his actions that precipitated the stock trading frenzy, along with the heads of hedge funds and the Robinhood online trading app. Gill testified essentially that he liked GameStop’s stock, and he has apparently backed up that sentiment with money, purchasing an additional 50,000 shares.

    GameStop stock was up over 7% in midday trading Monday, which would have added approximately another $290,000 in value to Gill’s position.

    This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

    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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    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.

    Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

    The post Reddit’s ‘Roaring Kitty’ doubled his stake in GameStop (NYSE:GME) appeared first on The Motley Fool Australia.

    This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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  • Why the Bank of Queensland (ASX:BOQ) share price is up 10% to a 52-week high

    BOQ, bank of Queensland

    The Bank of Queensland Limited (ASX: BOQ) share price has returned from its trading halt with a bang.

    This afternoon the regional bank’s shares have raced 10% higher to a 52-week high of $9.25.

    When the Bank of Queensland share price hit that level, it meant they were up a remarkable 57% in the space of six months.

    Why is the Bank of Queensland share price racing higher?

    Investors have been buying the bank’s shares today after it announced the successful completion of the institutional component of its capital raising.

    According to the release, the bank raised a total of $673 million from institutional investors via an underwritten 1 for 3.34 accelerated pro rata non‐renounceable entitlement offer and placement.

    These funds were raised at $7.35 per new share. This represents a discount of 12.6% to the Bank of Queensland share price at the close of play on Thursday last week.

    Management advised that the institutional entitlement offer was strongly supported with a take‐up rate of ~98%. The placement also received significant demand.

    Bank of Queensland will now push ahead with the retail component of its $1.35 billion capital raising.

    Why is Bank of Queensland raising funds?

    The proceeds from the capital raising with be used to complete the transformative acquisition of ME Bank.

    Bank of Queensland’s Managing Director and CEO, George Frazis, commented: “We are very pleased with the strong support we have received from our institutional shareholders and other investors as we take this unique opportunity to create a leading customer‐centric alternative to the big banks.”

    “We believe that this transformational merger creates a compelling proposition with significant scale benefits through the alignment of operating models and our technology roadmaps.”

    “We are pleased that investors recognise the compelling strategic and financial proposition of this transaction and we are excited to work hard to deliver better outcomes for our customers, employees, the community and our shareholders,” he concluded.

    Is the Bank of Queensland share price good value?

    Despite hitting a 52-week high today, a couple of brokers still believe the Bank of Queensland share price can go higher.

    Analysts at Goldman Sachs have a buy rating and $9.63 price target on its shares. Whereas analysts at Credit Suisse have an outperform rating and $9.50 price target.

    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 the Austal (ASX:ASB) share price got torpedoed today

    Austal share price sinks

    The Austal Limited (ASX: ASB) share price sank to a two-year low this morning after its US boss was walked the plank.

    The Austal share price slumped 19% to $2 at the time of writing – making it the worst performer on the S&P/ASX 200 Index (Index:^AXJO).

    The second worst performer is the Perenti Global Ltd (ASX: PRN) share price with its 11% fall from grace and Afterpay Ltd (ASX: APT) share price losing around 8%.

    Mismanagement allegations sink Austal’s share price

    Nothing sinks a ship faster than governance concerns! Investors jumped ship following Austal’s update on investigations by US authorities.

    These investigations relate to Austal’s Littoral Combat Ship (LCS) program before July 2016. Its being undertaken by the US Department of Justice and the Securities Exchange Commission. The Australian Securities and Investments Commission (ASIC) is also looking into the matter.

    No captain at the helm

    The good news is that Austal believes any breach is relatively minor and has been corrected. But this didn’t save the company’s US president Craig Perciavalle, who resigned after Austal commissioned its own investigation.

    Austal USA Chief Financial Officer, Rusty Murdaugh will take over in the interim until a permanent replacement is found.

    What the investigation is all about

    There’s a lot riding on this. The US operations are the most significant part of Austal’s business and the market does not like uncertainty.

    The investigations centre around the write back of work in progress (WIP) that was announced to the ASX on 4 July 2016 relating to the LCS program.

    Austal’s commissioned investigation found that the quantum of write back was appropriate given Austal’s revenue and profit following the revision that was made to the estimated cost to complete the remaining LCS vessels.

    A few small leaks

    But the devil’s in the details. Shareholders would be spooked to learn that Austal underestimated the construction costs of the LCS vessels. The blowout is driven by costs related to US Naval vessel Rules and mandatory shock standards.

    This doesn’t speak well of Austal’s management skills although management believes it “materially complied with its reporting requirements with the US Navy”.

    Austal also identified isolated instances of misallocation of labour hours between vessels in the early stages of the program.

    Further, it didn’t install valves that meet the US Navy’s specification, although the US Navy has since accepted these valves.

    The bigger worry for the Austal share price

    While Austal’s transgressions could be far worse, US authorities can still penalise the company and that decision is yet to be made.

    The bigger fear is that the US Navy will sideline Austal in future tenders, although management tried to reassure investors that it still has a close relationship with its largest client.

    Investors are yet to be reassured.

    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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    Brendon Lau owns shares of Austal Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. 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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  • Why Afterpay, Austal, Perenti, & SEEK shares are tumbling lower

    A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

    In afternoon trade the S&P/ASX 200 Index (ASX: XJO) has bounced back from a poor start and is charging higher. At the time of writing, the benchmark index is up 0.55% to 6,818.4 points.

    Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are tumbling lower:

    Afterpay Ltd (ASX: APT)

    The Afterpay share price is down a sizeable 8% to $136.89. Investors have been selling Afterpay and other tech shares today following a very poor night of trade on Wall Street’s technology-focused Nasdaq index. So much so, at the time of writing, the S&P/ASX All Technology Index (ASX: XTX) is down 4.4%. In addition to this, investors may be nervous ahead of Aftetpay’s half year results tomorrow.

    Austal Limited (ASX: ASB)

    The Austal share price is down 9% to $2.25. Investors have been selling the shipbuilder’s shares after it revealed that investigations are being conducted by US regulatory authorities. According to the release, these investigations are looking into historical matters concerning Austal’s Littoral Combat Ship (LCS) program.

    Perenti Global Ltd (ASX: PRN)

    The Perenti share price has crashed 12% lower to $1.25. This has been driven by the release of the mining services company’s half year results this morning. Perenti posted a 4.8% increase in revenue to $1,056.2 million but a 25.8% reduction in underlying net profit to $44.6 million.

    SEEK Limited (ASX: SEK)

    The SEEK share price has tumbled 8% lower to $27.79. This is despite the job listings giant upgrading its full year earnings guidance this morning. Today’s decline appears to have been driven by weakness in the tech sector and news that its founder and CEO, Andrew Bassat, is stepping down. Mr Bassat will be replaced by former Commonwealth Bank of Australia (ASX: CBA) boss, Ian Narev, on 1 July. Mr Narev is currently SEEK’s COO. The company also announced plans to sell down its stake in the China-based Zhaopin business.

    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.*

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    James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended SEEK 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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  • Polynovo (ASX:PNV) share price rises despite widening losses

    healthcare asx share price rise represented by happy doctor

    Polynovo Ltd (ASX: PNV) shares are swinging around today after the company released its earnings report for the first half of the 2021 financial year (1H21) before market open this morning. At the time of writing, the Polynovo share price has risen 0.83% to $2.43 after climbing as high as $2.47 earlier in the day.

    What did Polynovo report this morning?

    Polynovo is an ASX health care company that specialises in treatments for burn injuries and other skin maladies.

    The Polynovo share price is staying afloat today after the biotech reported that revenues for 1H21 came in at $12.8 million, up 25.3% over the $10.2 million from the prior corresponding period (1H20). Gross margins for product sales rose 3.9% as well.

    However, that was offset by expenses increasing 32.6% from $11.2 million in 1H20 to $13 million in 1H21. A large component of this increase came from increased staff headcount.

    That rise in expenses helped push earnings before interest, tax, depreciation and amortisation (EBITDA) to a loss of $2.9 million, up 46.2% from the previous loss of $1 million. Earnings before interest and tax (EBIT) losses also rose 41%, going from a loss of $2.4 million in 1H20 to a loss of $3.3 million in 1H21.

    That resulted in Polynovo delivering a net profit after tax loss of $3.54 million, up 46.3% from the $2.42 million loss of 1H20.

    Overall, the company posted an underlying loss of $0.87 million for 1H21, down 40.2% from its loss of $1.45 million in 1H20. No dividend was announced, in case you were wondering.

    Polynovo has blamed the coronavirus pandemic on “lumpy” revenues for the period, citing “reduced access and reduced elective surgery in all regions”.

    Even so, the company has pointed to a 31.2% rise in sales of its flagship NovoSorb product as a bright spot over the period. It also highlighted the fact it managed to sign 22 additional customers in the United States, which brings the total new accounts opened for the 2020 calendar year to 109. That’s an 89% rise over the 2019 calendar year.

    About the Polynovo share price

    Although the Polynovo share price is having a decent day today, the company has had a rough start to the year. Polynovo shares remain down 37.15% year to date, and down more than 14% over the past 12 months. In saying that, Polynovo shares are still up more than 1,170% since August 2017.

    On the current Poynovo share price, the company has a market capitalisation of around $1.61 billion.

    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.

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

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  • The Sky Network (ASX:SKT) share price has slipped 5% today. Here’s why

    A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

    The Sky Network Television Limited (ASX: SKT) share price is trading lower today after the company announced its half-yearly report.

    At the time of writing, its shares are down by 5.88% at 16 cents.

    What’s driving the Sky Network share price today?

    In today’s release, the company reported revenue for the first half of FY21 at $356.9 million. This was 7% lower than the prior corresponding period (pcp). 

    Management put that down to the impact of the COVID-19 pandemic, despite Sky Network experiencing strong growth in streaming revenue and the gradual recovery in advertising. 

    Despite the slide in revenue, the company increased its earnings before interest, tax, depreciation and amortisation (EBITDA). EBITDA rose 30% from $89.7 to $116 million.

    Furthermore, net profit after tax was up 234%, climbing to $39.6 million. The company said permanent cost savings from various initiatives contributed to the strong EBITDA and NPAT results.

    This was also reflected in the company’s operating expenses, which fell to $242.8 million, 18% lower than the pcp. Notably, the company managed to cut $18 million in permanent savings.

    Moreover, Sky Network has grown cash balances on hand to $123m following its capital raise last year. Along with undrawn debt facilities, this enables it to repay the $100m of bonds that mature in March 2021 and provides significant headroom going forward.

    Management comments

    Sky Network chair Philip Bowman welcomed the report, saying:

    We are encouraged with the solid results achieved in the first half. Sky has a unique role to play as the content aggregator which can deliver to all of New Zealand, and [chief executive] Sophie Moloney and her team have a clear focus to maintain performance in the coming months and years.

    Outlook 

    Looking ahead, the company said it would continue to focus on revenue stabilisation. Sky Network expects organic growth in Neon and Sky Sport Now. With an ongoing recovery in advertising and commercial revenues during the remainder of FY21.

    The company also stated it would undertake additional investment in the second half of FY21, primarily for its Sky broadband service ahead of projected revenue growth.

    Sky Network also reaffirmed its guidance for FY21 with revenue from $695 to $715 million. EBITDA will increase to between $170 and $182.5 million.

    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 Daniel Ewing 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 is the AUB Group (ASX:AUB) share price rocketing 8% today?

    A drawing of a white rocket streaking up, indicating a surging share pirce movement

    The AUB Group Ltd (ASX: AUB) share price is rocketing today, up nearly 8% in early afternoon trading.

    We look at the specialist insurance provider’s financial results for the half-year ending 31 December (H1 FY21) below.

    What financial results did AUB Group report for H1 FY21?

    The AUB Group share price is leaping higher following this morning’s ASX release, where the company reported an improvement on all its core financial results compared to H1 FY20.

    Underlying net profit after tax (underlying NPAT) came in at $30.7million. This is an increase of 44.2% on the $21.3 million reported in the prior corresponding period (pcp).

    Reported NPAT of $24 million represented a 44.5% gain on the $16.6 million in the corresponding half. AUB credited both organic and acquisition-driven growth in its Australian Broking division for much of the gains.

    Underlying earnings per share (EPS) increased by 43.2% year-on-year to 41.47 cents per share.

    AUB Group will pay a 16.0 cent per share (cps) dividend, fully franked, up 10.3% from the 14.5 cps in the prior corresponding period.

    Words from the CEO

    Commenting on the results, AUB Group CEO, Michael Emmett, said:

    1H21 Was an important period for the group during which we were able to demonstrate the benefit of our investment in BizCover, grow broking revenue and improve broking profits across our existing network, agree the sale of Altius to finalise our exit from Health and Rehabilitation Services, strongly progress the implementation of our two key technology platforms, make further strategic investments including in 360 Underwriting and Experien and to continue our strategy to consolidate and scale existing businesses.

    These strategic initiatives leave us poised for strong, continued growth in the second half and in FY22, enabling us to upgrade our full year profit guidance.

    AUB Group stated it will remain focused on its growth ambitions. The company upgraded its full 2021 financial year underlying NPAT guidance to $63–65 million.

    AUB Group share price snapshot

    Longer-term shareholders of AUB Group will have nothing to complain about, with shares up 43% over the past 12 months. By comparison, the All Ordinaries Index (ASX: XAO) is up a whisker thin 0.1% in that same time.

    Year-to-date the AUB Group share price is up 15%.

    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 Bernd Struben 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 I’d buy dividend shares in 2021 for growth and passive income

    WAM Capital dividend represented by glass piggy bank with dollar sign made of grass growing inside it

    Buying dividend shares has been a popular means of generating a passive income for many years. They provide a relatively high yield, as well as dividend growth potential.

    However, their appeal could increase significantly over the next few years. A lack of income opportunities elsewhere may mean that demand for dividend shares rises rapidly. This may push their prices higher, and provide investors with capital growth.

    As such, now could be the right time to build a diverse portfolio of income shares. Their total return prospects over the long run seem to be very attractive.

    The passive income appeal of dividend shares

    From a passive income perspective, dividend shares could be more attractive than ever. Despite the recent stock market rally, it is possible to buy a wide range of dividend stocks that can provide a high, and growing, passive income over the long run.

    While this situation may be no different than in the past, what has changed over recent years is the difficulty in generating an income from other mainstream assets. Low interest rates mean that cash savings accounts offer sub-inflation returns in some cases. Meanwhile, rising bond prices prompted by lower interest rates mean that yields on many investment grade bonds have been squeezed.

    As such, from an income perspective, dividend shares offer a significantly higher return than other income-producing assets. This may mean that many investors have little option but to use dividend stocks to provide them with a worthwhile passive income in 2021, and potentially in the coming years.

    Capital growth opportunities from dividend shares

    A rise in demand for dividend shares could push their prices higher. As ever, the performance of any stock is based on supply and demand among investors. Should there be a consistent period of buying among today’s high-yielding shares, they could deliver attractive capital returns.

    The result of this may be a potent mix of a high passive income and market-beating capital appreciation. As such, dividend shares could have a broader appeal than they have done in the past, with investors focused on capital returns potentially purchasing them. Their appeal is further enhanced because of the high valuations present among many growth stocks after the recent market rally. In comparison, dividend shares may offer wide margins of safety that translate into high returns.

    Managing risk within an income portfolio

    Despite their return potential, dividend shares are not without their risks. As with any company, they could experience further disruption from coronavirus. Meanwhile, an uncertain economic environment may create tough operating conditions for many businesses that ultimately lead to lower levels of sales growth and profitability.

    Therefore, it remains important to diversify among income shares in 2021. Doing so could reduce overall risks, and allow for a broader range of opportunities to deliver impressive total returns in the long run.

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    Returns As of 15th February 2021

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    Motley Fool contributor Peter Stephens 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.

    The post Why I’d buy dividend shares in 2021 for growth and passive income appeared first on The Motley Fool Australia.

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