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In morning trade the BHP Group Ltd (ASX: BHP) share price is pushing higher following the release of its half year results.

At the time of writing, the mining giant’s shares are up 2.5% to $46.90.

How did BHP perform in the first half?

BHP had a very positive half thanks to a strong production performance and favourable commodity prices.

For the six months ended 31 December, the Big Australian reported a 15% increase in revenue to US$25.64 billion. And thanks to a 3-percentage point expansion in its operating margin to 59%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 21% to US$14.7 billion.

Also growing strongly was the company’s free cash flow, which increased 39% over the prior corresponding period to US$5.2 billion.

This strong free cash flow generation allowed the BHP board to declare a fully franked interim dividend of US$1.01 per share (~A$1.30 per share). This is up 55% on the prior corresponding period and represents an 85% payout ratio.

What were the drivers of its growth?

The vast majority of BHP’s earnings were generated from its iron ore and copper assets.

The iron ore segment generated EBITDA of US$10.2 billion. Pleasingly, more of the same is expected in the second half, with management reaffirming its full year unit cost guidance.

The copper segment contributed US$3.7 billion in EBITDA. It is also on track to achieve its guidance for the full year.

Finally, the metallurgical coal and petroleum businesses contributed US$0.1 billion and US$0.8 billion of EBITDA, respectively, during the half. While the met coal segment fell short of guidance in the first half, it is still expected to achieve its full year guidance. The petroleum business is performing in line with expectation.

BHP’s Chief Executive Officer, Mike Henry, commented: “BHP has delivered a strong set of results for the first half of the 2021 financial year. Our continued delivery of reliable operational performance during the half supported record production at Western Australia Iron Ore and record concentrator throughput at Escondida. Our operations generated robust cash flows, return on capital employed increased to 24 per cent and our balance sheet remains strong with net debt at the bottom of our target range. The Board has announced a record half year dividend of US$1.01 per share, bringing BHP’s shareholder returns to more than US$30 billion over the past three years.”

The Chief Executive also commented on the sky high iron ore price, stating: “Our analysis indicates that before prices can correct meaningfully from their current high levels, one or both of the Chinese demand/Brazilian supply factors will need to change materially.”

Outlook

The good news for shareholders and the BHP share price, is that the company is positive on the future.

It said: “We remain positive in our outlook for long-term global economic growth and commodity demand. The 2020s hold great promise in this regard, with policymakers in key economies (for example China, Japan and the US) signalling a durable commitment to pro-growth agendas alongside heightened ambitions to tackle climate change.”

“Population growth, the infrastructure of decarbonisation and rising living standards are expected to drive demand for energy, metals and fertilisers for decades to come,” it concluded.

Following today’s gain, the BHP share price is now up 22% over the last 12 months.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Up 2%: Is the BHP (ASX:BHP) share price a buy?
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• 5 things to watch on the ASX 200 next week
• 2 excellent blue chip ASX 200 shares to buy

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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The Breville Group Ltd (ASX: BRG) share price is on the move this morning following the release of its first half results.

At the time of writing, the appliance manufacturer’s shares are up 7% to $32.85.

How did Breville perform in the first half?

For the six months ended 31 December, Breville reported a 28.8% increase in revenue to $711 million. This comprised Global Product revenue growth of 34% to $592.9 million and Distribution revenue growth of 7.9% to $118.1 million.

Management advised that its strong top line performance was driven by growth in all regions and categories. This was supported by the working from home (WFH) and premiumisation trends, as well as its operational decision to invest in inventory in May following its capital raising.

Things were even better for its operating earnings. Breville posted a 32% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $112.4 million.

It notes that this was driven by its strong revenue growth and improved gross margins. The latter was thanks to lower promotional spend, a swing in mix to premium products, and a weaker US dollar, which more than offset increased freight costs.

On the bottom line, the company delivered a 29.2% increase in net profit after tax to $64.2 million.

However, despite this strong profit growth, the Breville board decided to slash its interim dividend by 36.6% to a fully franked 13 cents per share. The company advised that this reflects its decision to reduce its target payout ratio to allow continued funding of growth opportunities on a cash-neutral basis.

It also advised that the previously activated dividend reinvestment plan has been suspended until further notice.

Management commentary

Breville’s CEO, Jim Clayton, was pleased with the half.

He said: “A good half for the Group, building on the momentum seen over the last few reporting periods and benefiting from the WFH phenomenon. All regions and categories delivered growth, despite experiencing very different and erratic retail backdrops.”

“We continued to accelerate our double-digit EBIT growth, while tactically investing in selected growth drivers and capabilities. Geographic expansion is delivering an increasingly diversified and balanced global portfolio, adding growth and resilience in a dynamic market environment.”

Outlook

Positively, the strong first half has led to the company upgrading its guidance for the full year. This appears to have offset any disappointment around the dividend cut and helped drive the Breville share price higher today.

According to the release, assuming no significant change in economic conditions in its major trading markets, it expects FY 2021 EBIT to be approximately $136 million. This compares to its previous guidance of $128 million to $132 million.

It also advised that its investment in New Product Development and Go To Market (NPD & GTM) as a percentage of net sales is approaching the strategic goal of 12%. In light of this, investment levels “will be flexed in 2H 21 depending on the sales growth delivered.”

More reading

• These blue chip ASX shares just hit multi-year highs
• Morgans picks February’s reporting season ASX heroes to buy now

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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Buying dividend shares for income in 2021 could be a sound move. In many cases, they offer significantly higher yields than are available on other income-producing assets such as cash, bonds or property.

However, due to the uncertain economic outlook, it is crucial to check that a company can afford its dividends.

Similarly, diversifying across a wide range of income shares with dividend growth potential could be a shrewd move that leads to less risk, as well as higher returns, in the long run.

Checking affordability among dividend shares

Buying dividend shares with high yields may sound like a simple solution to a common problem in a low interest rate environment. While this strategy can be successful, in some cases stocks with high yields are facing difficult operating outlooks that could weigh on their capacity to pay dividends at the expected rate.

As such, it is sensible to check how affordable a company’s dividend is before buying it. Otherwise, an investor may buy high-yielding stocks that ultimately need to reduce dividends to pay their other expenses.

Checking dividend shares for affordability can be done by comparing net profit with dividends. If shareholder payouts are covered more than once by net profit, there is headroom in case profitability falls in future. A figure below one suggests dividends may need to be cut at some point in future – unless there is a material improvement in profitability.

Dividend growth opportunities

As well as checking the financial standing of dividend shares, it could be prudent to understand the likelihood of them increasing shareholder payouts in future. Some high-yielding stocks may be attractive this year, but could become far less popular if their dividend growth is unable to match, or even beat, inflation over the coming years.

Clearly, dividend growth is closely linked to profit growth. As such, an investor must determine the prospects for improved earnings in the long run. Through analysing a company’s industry growth trends, its strategy and capacity to invest in new growth areas, it is possible to assess the likelihood of dividend growth in the long term.

Diversifying among income shares

Generating an income from a limited number of dividend shares is a risky process. It can mean that difficulties encountered by a small number of holdings have a large impact on the income generated by the entire portfolio.

Therefore, it is logical to diversify among a wide range of companies, sectors and regions when investing in dividend stocks. Doing so could be especially relevant right now, since many countries and sectors are experiencing more difficult operating conditions that others due to coronavirus. By diversifying, an investor can also obtain a more resilient income that grows at a faster pace, since they will be exposed to a wider range of dividend growth opportunities over the long term.

More reading

• How did ASX cannabis shares perform in 1H FY21?
• 2 highly rated ASX tech shares to buy today
• Tesla stock split: Is another one coming?
• NAB (ASX:NAB) share price on watch after Q1 update
• 2 exciting small cap ASX shares to watch

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.

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The first half of FY21 (1H FY21) saw positive developments for ASX cannabis shares surrounding the regulation of medicinal cannabis products both locally and internationally. International markets were buoyed by the down-scheduling of cannabis by the United Nations Commission.

This is expected to result in stronger demand and open up new opportunities for ASX cannabis shares, particularly in the CBD space. The United States cannabis market also received a boost from the Biden election, with Democrats seen as far more proactive in legalising cannabis.

In Australia, the TGA down-scheduled low-dose CBD from being a prescription-only medicine to being a pharmacist-only medicine. This means Australian consumers will be able to buy CBD products over the counter at pharmacies. Demand for medicinal cannabis continues to grow in Australia.

Based on current growth rates, it is estimated more than 30,000 active patients are currently receiving medicinal cannabis products in Australia, up from just over 10,000 a year ago. So with this in mind, how did ASX cannabis shares perform in 1H FY21? 

How have these 3 ASX cannabis shares performed?

Althea Group Holdings Ltd (ASX: AGH)

Althea was founded in Melbourne in 2017 and holds licences to import, cultivate, produce and supply medicinal cannabis. Currently operating in Australia, the United Kingdom, Germany, and Canada, the company has plans to expand into emerging markets throughout Asia and Europe. 

Althea reported record revenue for the December quarter of $2.7 million, a 29% increase from the September quarter. Cash receipts were up 27% for the quarter and the number of healthcare providers that had prescribed Althea’s products increased by 32%. These increases have been reflected in the Althea share price, which has increased 62% over the past six months. 

In the United Kingdom, Althea saw record revenues in December of $206,706 – a 90% month-on-month increase. The company’s UK clinics continue to add new patients at a healthy rate with follow up appointments generating good repeat business.

In Canada, subsidiary Peak Processing Solutions entered an agreement with a Canadian listed beverage company to produce three cannabis-infused beverages. An initial order is expected to be delivered in Q1 2021 representing more than CAD$100,000 in revenue for Peak. A licence agreement was also entered to produce branded topical products. Peak has now signed contracts with total forecast revenues of CAD$4.65 million over the next 12 months. 

Althea finished 2020 with a healthy balance sheet thanks to a $6 million share placement. At 31 December 2021 cash on hand was $8.96 million. In January an additional $3.78 million was raised via an oversubscribed share purchase plan. Since the end of 1H FY21, Althea has also completed its first shipments of products to Germany and to UK-based distributor Grow Pharma. CEO Josh Fegan said, “Europe is fast becoming a global hub for medicinal cannabis….with operations in the UK and Germany, Althea is at the forefront of this next frontier.”

Ecofibre Ltd (ASX: EOF) 

Ecofibre is a biotechnology company that produces and sells hemp-derived products in Australia and the US. The company produces Australian grown hemp food products through its Ananda Food brand and develops hemp-based textiles and composites through its Hemp Black business.

Ecofibre’s Ananda Health brand produces nutraceutical products. The December half was a difficult one for this ASX cannabis share, with revenue falling 49% to $14.7 million. This was reflected in the Ecofibre share price, which has fallen 41% over the past six months. 

Nutraceuticals revenues fell during 1H FY21 with COVID-19 disruptions magnifying challenges in the highly competitive CBD industry. This was partially offset by revenue increases in the Ananda Food and Hemp Black brands. Ananda Food is now available in 1,250 Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) stores.

The food brand saw a 61% increase in revenues in 1H FY21 and is aiming to become the Australian hemp food processor of choice. Ecofibre is focused on reducing variable growing and manufacturing costs and utilising its expanded client base to work towards scale benefits. 

Ananda Health is a leading US pharmacy brand for CBD but saw major COVID-related disruption to its independent pharmacy channel during 1H FY21. Ananda Health is a premium-priced product, however, many pharmacies are carrying cheaper brands as well as product formats that Ananda Health does not manufacture.

Ecofibre repriced a number of products in November, reducing prices by 15% to 25%. New product formulations are also in the pipeline. A decline in in-store traffic has resulted in the development of an e-commerce channel that will allow pharmacies to sell Ananda CBD online. This is expected to launch in mid-2021. 

Cann Group Ltd (ASX: CAN)

Cann Group has established R&D and cultivation facilities in Australia and is pursuing a fully-integrated business model as a developer and supplier of cannabis and related products. In 1H FY21, Cann Group announced several important sales, with associated products expected to be shipped in Q3 FY21. This has been reflected in the Cann Group share price, which is up 57% over the past six months.

A shipment of 1,400 units of NOIDECS-branded medical cannabis products was made in December and will be used by Europe’s first and largest national medical cannabis registry. Iuvo Therapeutics, a leading European medicinal cannabis importer and distributor, has placed an initial 19,000 units order for Cann Group product which is expected to ship in the current quarter, pending regulatory clearances. 

Locally, various products have been supplied to white label customers and compound pharmacists. According to Cann Group, customers are forecasting steady growth over the balance of FY21 as the Australian patient pool continues to grow.

Projected revenues remain heavily weighted to the second half of the financial year as Cann Group continues to work through regulatory clearances in Australia and overseas. The company recorded $99,000 in receipts from customers in the December quarter, but expects revenue to be boosted from orders anticipated to ship in the current quarter. 

Cann Group secured a $50 million bank debt facility from National Australia Bank Ltd (ASX: NAB) during the December quarter, which will be used to construct its cannabis production site near Mildura. Site activities are scheduled to begin late this month. The final cost to complete the facility, which will have an initial capacity of 12,500kg, is expected to be $65 million. This will be funded via the debt facility as well as cash on the balance sheet. 

What’s next for ASX cannabis shares?

Australian consumers are eagerly awaiting the launch of the first over-the-counter CBD products in Australian pharmacies. ASX cannabis shares are in a race to get these products through the regulatory process and onto the market, knowing that there will be a first-mover advantage for those entering the space early.

As the market for cannabis products continues to grow both locally and offshore, ASX investors are eagerly watching the development of this industry. 

More reading

• Why the Cann (ASX:CAN) share price is pushing higher
• Why the Ecofibre (ASX:EOF) share price is crashing 16% lower today
• Why AMP, Ecofibre, Magellan, & Vita shares are sinking today
• Here’s why the Althea (ASX:AGH) share price is jumping 7% today
• Why the Althea (ASX:AGH) share price has zoomed up 9% today

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths 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 currently looking for some ASX tech shares to add to your portfolio, then you might want to take a look at the ones listed below.

Here’s why these ASX tech shares come highly rated right now:

Appen Ltd (ASX: APX)

The first ASX tech share to look at is Appen. It is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. Appen works closely with some of the biggest tech companies in the world and has a strong position in the government sector through its Figure Eight business.

The Appen share price has underperformed recently after it revealed that COVID-19 headwinds were impacting demand. However, management appears confident that these impacts will be short term and expects its customers to start increasing their investment in machine learning and artificial intelligence again once the worst of the pandemic passes.

This could make now an opportune time to make a patient buy and hold investment in the company’s shares. Citi certainly believes this to be the case. It currently has a buy rating and $32.60 price target on its shares.

The broker believes that Appen is well-positioned to benefit from the expected increase in spending on artificial intelligence. It also sees opportunities for the company to expand its total addressable market.

Whispir Ltd (ASX: WSP)

Another ASX tech share to look at is Whispir. It is a growing software-as-a-service communications workflow platform provider operating in the Workflow Communications Platform as a Service market which has been tipped to be worth US$8 billion per year by 2024.

Whispir’s platform automates communications between businesses and their workers and customers. This allows users to improve their communications through automated workflows that ensure stakeholders receive accurate, timely, useful, and actionable insights.

The company has experienced very strong demand for its platform over the last 12 months, leading to some impressive annualised recurring revenue (ARR) growth.

This has continued in FY 2021, with Whispir recently releasing a very strong second quarter update. For the period ending 31 December, the company’s ARR grew 29.2% over the prior corresponding period to $47.4 million. This was also an 8.5% increase on its first quarter ARR.

Late last year Wilsons put an overweight rating and $5.10 price target on the company’s shares. This compares to the latest Whispir share price of $4.13.

More reading

• 5 fantastic ASX shares to buy right now
• 2 outstanding ASX tech shares to buy and hold until 2030
• Could these exciting small cap ASX shares be the next big thing?
• 2 buy-rated small cap ASX shares with strong growth potential
• Top ASX shares to buy in February 2021

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 recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia has recommended Whispir 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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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.

With so much momentum in both Tesla Inc (NASDAQ: TSLA)‘s stock price and its underlying business, is it a good time for the automaker to consider splitting its stock again?

Believe it or not, it’s only been six months since Tesla surprised investors with a 5-for-1 stock split announcement. Despite the stock splitting in fifths, its price has already appreciated to more than half of its pre-split value last August. In addition, it’s not just the stock that has seen momentum since last summer: The electric-car maker’s sales have surged, and profitability now looks like it’s here to stay. These may be signs that the growth stock could see another split this year.

Before we get into it, let’s tackle some basics.

What’s a stock split?

First, it’s worth explaining exactly what a stock split is. The most important thing to know about a stock split is that it technically doesn’t make investors any wealthier and doesn’t give the company whose shares are being split any incremental capital. A stock split is simply a division of one share into multiple new shares with a value totaling the original share.

Still don’t get it? Try this analogy: Assume you owned one share of Tesla. Now visualize this share as one full pizza. Next, someone walks up and slices the pizza into quarters. While you now have a sliced pizza, the total amount of food remains the same. The same is true for the total value of a shareholder’s ownership in a company before and after a 4-for-1 stock split.

The critical takeaway here is that a stock split doesn’t create shareholder value. Sure, Tesla stock has risen sharply since its recent stock split — but this doesn’t always happen following a stock split. Tesla stock’s rise is due to business performance, including strong sales growth and improving profitability. In addition, the company has simply grown on analysts and Wall Street and has become a stock market darling.

Why a Tesla stock split in 2021 is possible

Companies don’t usually consider a follow-up stock split unless several things happen. First, the stock should be trading significantly higher than its previous stock split. After all, one of the primary reasons companies split their stock is to make shares more affordable to retail investors. This makes the company’s shares more liquid and accessible to more investors.

Tesla certainly meets this criterion. Since the company announced a stock split last August, shares have risen almost 200% on a split-adjusted basis. Today, the stock is trading at a lofty price of more than $800 — well beyond the average share price of most companies.

Also making a good case for another stock split is Tesla’s strong business progress recently. If the stock’s rise was based solely on hot air, there’s no telling how long shares could stay at their elevated levels. And if shares had a good chance of losing all of their recent gains, why split shares again?

Fortunately, Tesla’s underlying business seems to be firing on all cylinders. Trailing-12-month vehicle deliveries at the time of Tesla’s stock split announcement were about 388,000. Today, that figure is at 500,000. Further, management has guided for deliveries in 2021 to exceed 750,000, showing how the company still seems to be early in its growth story.

Finally, Tesla’s quarterly free cash flow and cash on hand have risen from $418 million and $8.6 billion in the second quarter of 2020 to $1.9 billion and $19.4 billion in the fourth quarter of 2020, respectively, giving the company much healthier financials today.

Of course, Tesla investors shouldn’t count on a stock split in 2021. There’s simply no telling when the auto and green energy company might split its stock again — if ever. Further, there’s no reason to get excited about a potential stock split, as it doesn’t create any shareholder value. Nevertheless, there does seem to be a growing case for another stock split.

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

More reading

• Why investors should look beyond the ASX 200 to US share markets
• Nasdaq at record high! Here’s what it means for the ASX 200
• These 3 ASX shares invested in Bitcoin before Tesla (NASDAQ:TSL)
• Here’s what low interest rates really means for your cash
• Tesla invests $2b in Bitcoin. Has crypto finally arrived?

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The National Australia Bank Ltd (ASX: NAB) share price will be one to watch on Tuesday.

This morning the banking giant released its first quarter update.

How is NAB performing in FY 2021?

For the three months ended 31 December, NAB reported an unaudited statutory net profit of $1.7 billion and cash earnings of $1.65 billion. The latter was a 1% increase on the prior corresponding period.

NAB also provided the market with a comparison to the average quarterly performance of the bank during the second half of FY 2020. Based on this, the bank’s revenue fell 3% over the period. This reflects lower Markets & Treasury income mainly due to the non-repeat of mark-to-market loss reversal. Excluding this, revenue would have grown 1% thanks to higher fees and commissions income.

Cash earnings excluding large notable items improved 47% on the quarterly average it achieved during the second half of FY 2020. Whereas cash earnings before tax and credit impairment charges fell 5%.

The bank’s net interest margin declined but was stable excluding the impact of Markets & Treasury segment. Management advised that competition and low interest rates were offset by home loan repricing and lower funding and deposit costs.

One positive that might bode well for the NAB share price was its cost control. NAB’s expenses fell 1% thanks to productivity benefits and lower restructuring related costs. Management advised that it continues to target FY 2021 expense growth of between 0% to 2%.

At the end of the period, NAB had a CET1 ratio of 11.7%. This is well-ahead of APRA’s unquestionably strong benchmark.

Asset quality

Another positive that may go down well with investors and support the NAB share price was its update on asset quality.

The releases advises that credit impairment charges fell 98% compared with the quarterly second-half average of FY 2020. Furthermore, the number of 90+ days past due and gross impaired assets to gross loans and acceptances declined 2 basis points to 1.01%.

Though, it does note that there has been a 17 basis points increase in January due to missed payments relating to a large cohort of home loan customers exiting deferrals in October.

Speaking of which, Australian home loan deferral balances have reduced to $2 billion and Australian business loan deferral balances have fallen to $1 billion. This compares to peak deferral balances of ~$38 billion and ~$19 billion, respectively.

And while current asset quality trends for customers exiting deferrals are worse than for the total portfolio, management advised that they are better than expected. Furthermore, as of 3 February, the bulk of customers exiting deferrals have resumed repayments (over 90% of balances) and just a small cohort require further assistance.

Management commentary

NAB’s CEO, Ross McEwan, was cautiously optimistic on the future of the bank.

He said: “Implementation of our strategy is proceeding well as we invest for the long term and focus on initiatives that make a real difference to our customers and colleagues. While there is still much to do, it is pleasing to see momentum building in our core businesses as we simplify and streamline our processes and policies and enhance our digital offerings.”

The NAB share price is up 10% so far in 2021. Investors will no doubt be hoping this update helps drive its shares even higher today.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• How big will the ASX bank dividends be in 2021 and beyond?
• ASX 200 Weekly Wrap: RBA unleashes ASX’s inner animal
• CBA (ASX:CBA) share price rises as bank cuts savings rate

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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I’m a big fan of small cap shares so feel quite fortunate to have such a large number of them on the Australian share market.

Two small cap ASX shares that could have bright futures are listed below. Here’s what you need to know about them:

Doctor Care Anywhere Ltd (ASX: DOC)

The first small cap ASX share to watch is Doctor Care Anywhere. It is a growing UK-based telehealth company aiming to deliver high-quality, effective, and efficient care to its patients, whilst reducing the overall cost of providing clinical services.

Its shares landed on the Australian share market late last year after completing an IPO which raised $102 million. Management advised that the majority of the funds raised will be used to execute the company’s growth strategy. This strategy is focused on its investment in marketing and engagement capabilities, new services to drive growth in existing markets, and building international business development capabilities to pursue growth in new markets.

Given the growing popularity of telehealth, it will come as no surprise to learn that the company is growing quickly. Last month it released a fourth quarter update and revealed a 151% increase in revenue to 3.8 million pounds. This led to the company’s unaudited full year revenue increasing 102% year on year to 11.6 million pounds.

Pointerra Ltd (ASX: 3DP)

Another small cap ASX share to watch is Pointerra. It is a growing technology company with a focus on the commercialisation of 3D geospatial data. The company’s software solution allows users to manage, visualise, and share extremely large digital 3D datasets. It can also extract vital information from the data quickly that would otherwise take many hours to do.

Pointerra has been growing very strongly over the last 12 months. Positively, this strong growth continued during the second quarter and into the third. As of 29 January, the company’s Annual Contract Value (ACV) stood at US$6.88 million. This is an increase of US$1.06 million or 18% since its last update on 25 November. It is also up 262% since this time last year.

Management advised that this was driven partly by new customers in the US energy utilities and the US and Australian mapping sectors.

The good news is that its current ACV is still only a tiny portion of its overall market opportunity. Management estimates that its global market opportunity is currently worth a massive $500 billion annually.

More reading

• Why is the Pointerra (ASX:3DP) share price up 75% so far this year?
• Here’s why the Doctor Care Anywhere (ASX:DOC) share price gained 57% in two months
• Here are 3 ASX IPOs this fund manager was buying
• Here’s why the Pointerra (ASX:3DP) share price is storming higher
• Why the Doctor Care Anywhere (ASX:DOC) share price is shooting 6% higher

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 Pointerra Limited. The Motley Fool Australia has recommended Doctor Care Anywhere Group PLC and Pointerra 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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Are you looking for some dividend options for your portfolio in February? Then check out the two ASX shares listed below.

Here’s why these ASX dividend shares have been tipped to as buys this month:

Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure REIT is a real estate investment trust that invests in social infrastructure properties. 

At present the company owns a total of 396 properties across the ANZ region worth $1.36 billion and has a sky high 99.7% occupancy rate. These properties include childcare centres and government buildings such as bus terminals, emergency services command centres, and council properties. Management believes that targeting these types of assets will result in high tenant retention rates over the long term and ongoing capital growth.

Last week the company released its half year results and delivered a 14.1% increase in operating earnings to $29.1 million. It also revealed that its weighted average lease expiry (WALE) had increased by 1.3 years to a lengthy 14 years.

Another positive was that management upgraded its full year distribution guidance to 15.7 cents per share. Based on the current Charter Hall Social Infrastructure REIT share price, this represents a 5% yield.

One broker that is a fan of the company is Goldman Sachs. It has a conviction buy rating and $3.45 price target on its shares.

Rio Tinto Limited (ASX: RIO)

If you don’t mind investing in the resources sector, then you might want to look at Rio Tinto. Thanks to strong copper and iron ore prices, this mining giant has been tipped to reward shareholders with huge dividends in FY 2021.

One broker that is tipping a particularly big payout for investors this year is Ord Minnett. It recently put a buy rating and $153.00 price target on the company’s shares and is forecasting a massive ~$11.30 per share fully franked dividend in FY 2021.

Based on the current Rio Tinto share price, this represents a fully franked 9.5% dividend yield.

More reading

• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• 5 things to watch on the ASX 200 next week
• 2 quality ASX dividend shares to buy and hold
• 3 reasons why the Rio Tinto (ASX:RIO) share price is up today
• Charter Hall Social Infrastructure (ASX:CQE) shares higher after upgrading dividend guidance

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.

The post 2 high quality ASX dividend shares to buy right now appeared first on The Motley Fool Australia.

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Is the JB Hi-Fi Limited (ASX: JBH) share price a buy after releasing its FY21 half-year result?

JB Hi-Fi shares rose 3% yesterday in reaction to the report.

One broker has already had their say on what they thought of the electronics retailer’s result.

Highlights from the JB Hi-Fi report

For the six months ending 31 December 2020, the retailer reported that its total sales went up 23.7% to $4.9 billion. A growing component of that is the online sales, which rose 161.7% to $678.8 million – this made up 13.7% of the overall sales.

Looking at each individual segment, The Good Guys grew revenue by 9.1% to $1.45 billion and online sales went up 86.1% to $148 million. Management said that there was continued elevated customer demand for home appliance and consumer electronics products. The Good Guys’ gross profit margin improved 167 basis points to 22.4% and earnings before interest and tax (EBIT) grew 142.1% to $126.6 million, with the EBIT margin rising 417 basis points to 8.7%.

Next we’ll look at the key JB Hi-Fi Australia division, where total sales grew by 23.3% to $3.36 billion and online sales went up 201.9% to $515.6 million. There was also strong demand here for consumer electronics and home appliance products. The gross profit margin declined by 9 basis points to 22% as a result of the sales mix. EBIT rose 57.5% to $329.8 million and the EBIT margin improved 214 basis points to 9.8%.

The final division, JB Hi-Fi New Zealand, saw total sales growth of 9.1% to NZ$144.9 million. Online sales grew 69.2% to NZ$16.3 million. EBIT was NZ$6.9 million, whilst underlying EBIT rose 173% to NZ$4.1 million.

JB Hi-Fi’s total EBIT was up 76% to $462.8 million. This helped net profit after tax (NPAT) surge higher by 86.2% to $317.7 million. Earnings per share (EPS) went up by 86.2% to 276.5 cents.

As a result of the profit growth, the JB Hi-Fi board decided to declare an interim dividend of $1.80 per share, which was an increase of 81.8% from the prior corresponding period.

Commenting on capital management, the company said the board will continue to regularly review the group’s capital structure with a focus on maximising returns to shareholders and maintaining balance strength and flexibility.

Trading update

Whilst JB Hi-Fi said it wasn’t appropriate to give FY21 sales and earnings guidance due to the COVID-19 uncertainty, it was able to give a trading update for January 2021.

Total sales growth for JB Hi-Fi Australia was 17.3%, in New Zealand sales growth was 21.7% and at The Good Guys total sales went up 14.1%.

Is the JB Hi-Fi share price a buy?

Broker Citi has been one of the first to reveal its thoughts about the result.

The stronger gross profit margin and continuing strength of earnings were two highlights for the broker

Citi also pointed out that the EBIT growth of the Australian growth was good, it didn’t show the same operating leverage that The Good Guys did thanks to the stronger gross profit margin.

The broker is not expecting that JB Hi-Fi will be able to beat the second half performance of FY20 because of how strong consumer demand was during that period. Citi is expecting sales to be down slightly and profit to be down around 20%.

Citi thinks that the current dividend payout ratio of 65% and good levels of capital could mean an acquisition or capital return is on the cards for shareholders.

The JB Hi-Fi share price target remains $53, suggesting little capital upside over the next 12 months. JB Hi-Fi currently has a projected FY21 grossed-up dividend yield of 7.4% according to Citi.

More reading

• ASX 200 rises, JB Hi-Fi profit soars, Altium drops
• Morgan Stanley: ASX earnings season is topping expectations
• What does the market look like when things go back to normal?
• How JB HiFi (ASX:JBH) shares became an ASX dividend powerhouse
• JB Hi-Fi (ASX:JBH) share price on watch after bumper profit and dividend growth

Motley Fool contributor Tristan Harrison 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 Is the JB Hi-Fi (ASX:JBH) share price a buy after reporting? appeared first on The Motley Fool Australia.

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