Tag: Motley Fool

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 echo chamber is a bad place to be if you’re an investor. Bulls who only see the positives are toast. Bears who only see the negatives are toast. Shares of GameStop Corp (NYSE: GME) have been whipsawed these days, and with every move up or down, you’re seeing the camp with the tailwind trying to slam-dunk on the other, and that’s a big mistake. 

There’s real money being made (and more importantly, lost) here. Investing isn’t a video game. The narrative is also changing rapidly. If you think you know the players on either side of this first-person shooter, you may want to pull up the lineup card that’s been scribbled over countless times as the game plays out.

More than 871 million shares have been traded in the last eight trading days for a stock with less than 70 million shares outstanding. The greedy hedge funds that were short the stock were squeezed out in January. The early “hold the line” cheerleaders have probably dropped the line by now, high-fiving one another all the way to the bank.

The longs are new. The shorts are new. At one point, GameStop is going to be valued as a business instead of a battle cry. When that reality comes, the stock will probably be a lot lower than it is right now.

There’s no joy in this stick

There are frames of reference that can make any side look good. A stock that traded as high as $483 on Wednesday of last week closed at $90 on Tuesday of this week. Bears are killing it! However, this is also a stock that kicked off 2021 in the high teens. And that was after more than tripling in 2020. Bulls are killing it!

The dynamics that have made GameStop a bottle rocket are real, but so are the reasons it’s been fizzling out in recent days. There was a lot of short interest in the stock, and with a float as shallow as a kiddie pool, it was easy for a large group of speculators to send the boo birds scrambling for the exits.

The short-squeeze game will be harder to play now. Some third-party reports out of IHS Markit and S3 Partners have the number of shorts right now at roughly a third of what they were in mid January. With a market cap well above $30 billion at last week’s peak, it’s also going to be harder to gather up enough joyriders with the means to drive the shares higher even through speculative options play. 

What is GameStop worth? The answer is personal in the near term, but a little clearer in the long run. Over the past year, the stock has been worth as little as $72 million and as much as $33.7 billion based on market cap. That’s wild, unusual, and ultimately deceptive. 

GameStop is a shrinking business; the numbers bear that out. Sales are a little more than half of what they were eight years ago, and the fade-out is accelerating. GameStop has seen sharp double-digit declines in sales in back-to-back fiscal years. The “Uncle!” is heard loud and clear. There are 11% fewer stores open now than a year ago. The business model used to be the envy of the strip mall, but now GameStop’s not even generating positive operating income. This is a deteriorating business. 

You would think that a company devoted to video games would be all up on game theory, and that’s fair. GameStop saw the demise coming. It diversified into physical goods like collectibles and playthings when gaming went digital. It made a couple of acquisitions in digital delivery and even a smart deal last year to cash in on downstream revenue in the digital revolution. The numbers tell you how badly that has all played out. 

GameStop isn’t going away overnight, but the time is running out on its reinvention. It’s not going to keep going straight down. There will be breaks. There will be rallies. There will be shake-outs of the next wave of shorts. Betting on or against GameStop will continue to be risky, but the long-term trajectory of the business is bleak for believers.

Don’t buy GameStop with money that you will need. Don’t short GameStop with money that you will need. The balance of the market is still out there, and it will make a lot more sense.

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

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Rick Munarriz 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 The worst isn’t over for GameStop: Here’s why 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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The Commonwealth Bank of Australia (ASX: CBA) share price will be on watch as the market is expecting a big increase in dividends next week.

The CBA will be the first to give an indication whether investors’ hopes of an ASX bank sector revival have been misplaced.

Expectations are high and that’s why the sector outperformed the S&P/ASX 200 Index (Index:^AXJO) recently.

CBA’s potential 50% dividend uplift

The average analyst forecast for CBA’s upcoming interim dividend stands at $1.47 a share, according to the Australian Financial Review.

That’s a 50% increase over the bank’s greatly reduced final dividend of 98 cents that it paid last September.

That may not sound like a lot to shareholders as that equates to a modest yield of 3.4% (if you extrapolated the half-year payout). But this would rise to 4.8% if you can collect the franking credit.

More dividend growth for CBA

What’s more, CBA typically pays a bigger final dividend. In the pre-COVID-19 years, the bank’s final payment is 15.5% bigger than its half year dividend.

Also, if you believe the experts, dividends are set to continue rising as the sector continues to recover from the effects of the pandemic.

There’s lots of room for dividends to recover too. Even if CBA lifts its dividend to $1.47, the bank used to pay an interim dividend of $2 a pop.

Banks’ V-shape earnings recovery

There are reasons to feel optimistic about the banking recovery too. “Frozen loans” on CBA’s balance sheet have plunged by 80% to $51 billion at the end of 2020. These loans are tied to borrowers who have experienced hardship during the pandemic and have paused repayments.

The big drop in troubled loans means the bank can lower its provisioning. Every dollar it removes from provisions flow straight to its bottom line.

Let’s not forget that loan applications are up strongly. The value of new home loans approved in November hit a record high of $24 billion.

Excess cash for dividends and share buyback

The double tailwind could put CBA’s CET1 ratio at around 12%. This is 1.5 percentage points above what the banking regulator requires banks to hold and the excess cash will be useful in lifting dividends or funding other forms of capital return.

But analysts are split on how likely capital returns might be this calendar year. The bank may not want to raise the ire of the banking regulators by lifting dividends and funding a share buyback when the economy hasn’t fully recovered by COVID.

Foolish takeaway

CBA fortunes aren’t unique. The Westpac Banking Corp (ASX: WBC) share price, Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price and National Australia Bank Ltd. (ASX: NAB) share price will benefit from these trends too.

CBA is the only big bank with a June financial year end. The others will report their results and dividends later as their financial year end is in September.

More reading

• Pinnacle (ASX:PNI) share price will be on watch today
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• 5 things to watch on the ASX 200 on Thursday
• ASX 200 up 0.9%, Afterpay drops, CBA rises
• Financials sector rallies as ASX 200 sees third day of gains

Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. Connect with me on Twitter @brenlau.

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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Dirt-cheap shares could be among the biggest beneficiaries of a long-term stock market recovery. Their prices could currently include wide margins of safety that provide significant scope for capital growth in a rising stock market.

A strategy of buying such companies has generally been very successful in the past. As such, with many cheap stocks including companies that have dominant market positions and sound finances, now could be the right time to capitalise on their low prices.

High potential returns from dirt-cheap shares

Buying any asset at a lower price is usually a better idea than buying it at a higher price. It means there is greater potential to generate capital returns, since investors may not have priced in its long-term growth prospects. This logic has generally been profitable when applied to dirt-cheap shares, with them providing scope to outperform the wider stock market during a recovery.

For example, previous crises such as the dot com bubble and the global financial crisis have prompted some companies to experience severe declines in their share prices. Although in some cases they have lasted for many months, or even years, a stock market recovery has always taken hold. This has often meant that those investors who buy undervalued stocks have benefitted the most from a subsequent stock market rally.

A focus on quality companies

At the present time, many dirt-cheap shares face tough operating conditions. This may mean that they experience a decline in sales or profitability in the current year. However, such conditions are likely to be only temporary in nature. Often, they are being caused by disruption to specific industries as lockdown measures have been used to prevent the spread of coronavirus. As they are gradually lifted, improving sales and profit performance could be ahead.

Moreover, many cheap stocks are high-quality businesses that are likely to survive a period of disruption to their operations. For example, they may have low debt levels, sound strategies to adapt to a changing operating environment, as well as a track record of defensive characteristics in periods of weak economic performance. Such companies could be grossly undervalued, since investors may be overly focused on their short-term prospects instead of their long-term profit capabilities.

Reducing risks in a portfolio

Clearly, not all dirt-cheap shares will recover from the current economic challenges facing many sectors. Therefore, it is important to focus on fundamentals such as debt levels and other financial metrics to ascertain their financial strength. Similarly assessing their market position versus rivals, as well as industry growth trends, may help an investor to identify the best cheap stocks to buy.

Over time, they could be strong performers in a stock market recovery. They may be able to offer higher returns than are possible from the wider stock market in the coming years.

More reading

• Pinnacle (ASX:PNI) share price will be on watch today
• Leading broker tips 3 ASX shares to positively surprise during earnings season
• 3 compelling ASX tech shares to buy
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• 2 of the best ASX dividend shares to buy today

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 dirt-cheap shares now to capitalise on a stock market recovery appeared first on The Motley Fool Australia.

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The Pinnacle Investment Management Group Ltd (ASX: PNI) share price is one to watch after announcing a 70% increase in interim dividends. Shares in the Aussie listed investment company (LIC) jumped 7.1% higher ahead of its half yearly report.

Why is the Pinnacle share price on watch?

The Aussie investment group released its half year results for the period ended 31 December 2020 (first half 2021) just after Wednesday’s market close. The Pinnacle share price surged higher im anticipation of a strong result.

Pinnacle announced net profit after tax (NPAT) attributable to shareholders up 120% to $30.3 million. Basic earnings per share (EPS) surged 116% to 17.5 cents, up from 8.1 cents in 1H 2020. Diluted EPS similarly jumped 117% to 16.7 cents in a strong turnaround in the first half.

Importantly for shareholders, Pinnacle’s dividend is also set to surge thanks to higher earnings. The investment group announced a fully franked interim dividend of 11.7 cents – up 70% from this time last year. The Pinnacle share price may be one ASX share worth watching in early trade as investors evaluate the latest earnings bump.

Pinnacle’s Aggregate Affiliates funds under management (FUM) climbed to $70.5 billion as at half-year-end. That is an $11.8 billion (20%) increase on 30 June 2020 numbers and $8.9 billion (14%) up on 31 December 2019.

Aggregate retail FUM totalled $16.7 billion at 31 December 2020, up 28% on 30 June 2020 figures. Net inflows for the first half came in at $5.5 billion, with $1.9 billion from retail investors. That was a strong turnaround given the “dislocated” end to 2H 2020, with a rising market buoying investor confidence and stronger investment performance.

Pinnacle recorded total FUM of $70.5 billion comprising that $16.7 billion in Retail and $53.8 billion in Institutional capital. Record inflows, solid investment performance and continued FUM growth make the Pinnacle share price worth watching in early trade.

Foolish takeaway

The Pinnacle share price is on watch following the results release and yesterday’s share price surge. With earnings metrics more than doubling in the first half, Pinnacle’s interim dividend has also surged 70%. 

Pinnacle shares closed at 8.03 yesterday and is up 10.9% in 2020 compared to a 2.1% gain in the S&P/ASX 200 Index (ASX: XJO).

More reading

• 2 great ETFs to buy for growth potential
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 up 0.9%, Afterpay drops, CBA rises
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• ASX 200 up 1.1%: Amcor jumps, South32 sinks, Virgin Money UK rockets

Motley Fool contributor Ken Hall 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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Earnings season is here and Goldman Sachs has been busy looking at shares that its analysts believe have the greatest potential to surprise. This is in respect to earnings beats or misses, guidance surprises, or capital management.

Three ASX shares that the broker is tipping to surprise positively are listed below. Here’s what you need to know:

Afterpay Ltd (ASX: APT)

Goldman Sachs believes that Afterpay could outperform margin expectations in the first half of FY 2021. It is currently forecasting a net transaction margin of 2% but suspects this metric could come in higher.

It commented: “APT indicated in its 1Q21 trading update that Net Transaction Profit Margins had been maintained in line with FY20 (~2.3%). Our 1H21E is 2.0% as 2Q tends to have higher loss rates associated with peak retail sales in Nov/Dec.”

“However, as there is limited evidence of a deterioration in credit cycle in its key geographies; this is an area of potential positive surprise which could deliver better operating leverage than our forecasts assume, though we acknowledge seeding of new markets (start-up costs) and merchant growth (co-marketing expenditure) may dilute this leverage to an extent.”

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator is another company which the broker is tipping to positively surprise later this month. According to the note, the broker believes the company’s largely digital order-based delivery and takeaway business model has benefitted the company greatly during the pandemic.

And while store growth in certain markets will have been challenging because of lockdowns, Goldman believes it could surprise in France. It also suggested that commentary on potential acquisitions could go down well with the market.  

It said: “Apart from earnings, sales and store growth momentum in France is a key factor that could provide upside surprise to the market. Additionally, any favorable news on the ongoing search for potential acquisitions could also offer an extension of the future growth runway.”

SEEK Limited (ASX: SEK)

A third ASX share which Goldman Sachs is tipping to surprise is SEEK. It believes the job listings company will deliver a solid half year result and could upgrade its full year guidance to above current market expectations.

The market is currently expecting SEEK to deliver operating earnings of $404 million in FY 2021 but it feels this could be lifted to $420 million.

It commented: “We believe this upgrade will be a result of the continual improvement in macro trends (listings, unemployment etc.) relative to the October levels (which is what guidance was based on). We also believe SEK will provide an update around the sale process for Zhaopin, which could help reduce SEK gearing and help to accelerate growth.”

More reading

• ASX 200 up 0.9%, Afterpay drops, CBA rises
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• The growth of this BNPL ASX share has been outpacing Afterpay (ASX:APT)
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and 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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Earnings season is here and Goldman Sachs has been busy looking at shares that its analysts believe have the greatest potential to surprise. This is in respect to earnings beats or misses, guidance surprises, or capital management.

Three ASX shares that the broker is tipping to surprise positively are listed below. Here’s what you need to know:

Afterpay Ltd (ASX: APT)

Goldman Sachs believes that Afterpay could outperform margin expectations in the first half of FY 2021. It is currently forecasting a net transaction margin of 2% but suspects this metric could come in higher.

It commented: “APT indicated in its 1Q21 trading update that Net Transaction Profit Margins had been maintained in line with FY20 (~2.3%). Our 1H21E is 2.0% as 2Q tends to have higher loss rates associated with peak retail sales in Nov/Dec.”

“However, as there is limited evidence of a deterioration in credit cycle in its key geographies; this is an area of potential positive surprise which could deliver better operating leverage than our forecasts assume, though we acknowledge seeding of new markets (start-up costs) and merchant growth (co-marketing expenditure) may dilute this leverage to an extent.”

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator is another company which the broker is tipping to positively surprise later this month. According to the note, the broker believes the company’s largely digital order-based delivery and takeaway business model has benefitted the company greatly during the pandemic.

And while store growth in certain markets will have been challenging because of lockdowns, Goldman believes it could surprise in France. It also suggested that commentary on potential acquisitions could go down well with the market.  

It said: “Apart from earnings, sales and store growth momentum in France is a key factor that could provide upside surprise to the market. Additionally, any favorable news on the ongoing search for potential acquisitions could also offer an extension of the future growth runway.”

SEEK Limited (ASX: SEK)

A third ASX share which Goldman Sachs is tipping to surprise is SEEK. It believes the job listings company will deliver a solid half year result and could upgrade its full year guidance to above current market expectations.

The market is currently expecting SEEK to deliver operating earnings of $404 million in FY 2021 but it feels this could be lifted to $420 million.

It commented: “We believe this upgrade will be a result of the continual improvement in macro trends (listings, unemployment etc.) relative to the October levels (which is what guidance was based on). We also believe SEK will provide an update around the sale process for Zhaopin, which could help reduce SEK gearing and help to accelerate growth.”

More reading

• ASX 200 up 0.9%, Afterpay drops, CBA rises
• 2 ASX shares that humbled successful fundies
• Why the Afterpay (ASX:APT) share price is pushing higher again
• The growth of this BNPL ASX share has been outpacing Afterpay (ASX:APT)
• ASX 200 jumps 1.5%, RBA doubles QE, Afterpay soars

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and 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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There are some compelling ASX tech shares that could be worth looking into.

Some technology businesses have the potential to grow quickly and support high gross profit margins because software is so easily and cheaply replicated for new clients and users.

Here are some compelling ASX tech shares that could be worth looking into:

Redbubble Ltd (ASX: RBL)

Redbubble operates two leading global artist product marketplaces, Redbubble.com and TeePublic.com The company says that the artists sell uncommon designs on high-quality, everyday products such as apparel, stationery, housewares, bags, wall art and so on.

The company is slowly but steadily adding more product lines onto its site. One recent example is face masks due to the COVID-19 pandemic. This one category has made many millions of dollars of revenue for the company.

There was a large shift to online shopping during the first half of the 2020 calendar year, but the growth that Redbubble is experiencing has continued.

In the first quarter of FY21, Redbubble reported that its normalised revenue (excluding a change in delivery times) grew 98% to $139.3 million, its normalised gross profit increased by 118% to $59.6 million and it generated normalised earnings before interest and tax (EBIT) of $17.2 million.

Over the long-term the company is aiming for $1 billion of marketplace revenue.

At the time of the FY21 first quarter update, Redbubble CEO Martin Hosking said: “The strategic priority for the group now is to ensure we extend the market leadership we have established. We intend to invest in the customer experience to improve loyalty and retention and ensure long-term higher levels of growth. The company has the resources to undertake the anticipated investments and margin structure to ensure it can do so while remaining profitable.”

Altium Limited (ASX: ALU)

Altium is an electronic PCB software business that offers various software for different engineering outfits to design the products, services and vehicles of the future.

The ASX tech share has a number of high quality clients like Tesla, Space X, Google, Amazon, Apple, Microsoft, Disney, NASA, Cochlear Limited (ASX: COH) and ResMed Inc (ASX: RMD).

Over the long-term Altium is aiming to become the clear market leader in the industry in the same way that Microsoft dominated the office software space. To do that, it’s trying to reach 100,000 Altium Designer subscribers.

The company is currently going through a transition phase. Not only is it suffering from COVID-19 impacts, but it also focusing on a shift to the cloud with its Altium 365 product. This provides the opportunity for direct monetisation. It can generate transaction fees on manufacturing (like an Airbnb model) and it can also offer premium services (like an Amazon Prime model).

According to Commsec, the Altium share price is valued at 44x FY23’s estimated earnings.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ASX tech share actually gives exposure to many of the world’s biggest technology businesses.

The biggest positions in the portfolio include Apple, Microsoft, Amazon, Tesla, Facebook, Alphabet, Nvidia, PayPal and Netflix.

There are a number of other interesting businesses in the ETF portfolio like Adobe, Broadcom, Qualcomm, Texas Instruments, Advanced Micro Devices, MercadoLibre, Intuitive Surgical, Activision Blizzard and Zoom.

In terms of the management costs, it has an annual fee of 0.48% per annum.

The net return of Betashares Nasdaq 100 ETF over the last year has been 25.8% and it has produced average returns per annum of 21.25% since inception in May 2015.

More reading

• 2 fantastic ASX shares to buy this month
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• 2 quality SaaS ASX shares to buy in February 2021

Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. 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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With so many growth shares to choose from on the Australian share market, it can be hard to decide which ones to buy.

Two that could be worth considering are listed below. Here’s why they have been tipped as buys:

Bigtincan Holdings Ltd (ASX: BTH)

The first ASX growth share to look at is Bigtincan. This artificial intelligence-powered sales enablement automation platform provider has been growing strongly in recent years and this has continued in FY 2021.

Last week the company released its second quarter update and revealed further impressive recurring revenue growth.

Bigtincan reported annualised recurring revenue (ARR) of $48.4 million at the end of the period. This represents growth of 50% on the prior corresponding period and was driven predominantly by organic growth. Organic ARR came in at $40 million (up 42.9%) and ARR from acquisitions was $8.4 million.

In response to the update, analysts at Morgan Stanley initiated coverage on the company’s shares with an overweight rating and $1.40 price target. It believes the company is in a strong position for growth thanks to its leadership position in a growing industry.

Kogan.com Ltd (ASX: KGN)

Kogan is one of Australia’s leading ecommerce companies and the country’s answer to Amazon. It has been growing at a very strong rate in recent years and particularly in FY 2021 thanks to the acceleration of the shift to online shopping.

In fact, the company has just released its half year update, which revealed explosive sales and profit growth. For the six months ended 31 December, Kogan’s gross sales (including the Mighty Ape acquisition) increased 96% over the prior corresponding period.

And thanks to margin expansion, its gross profit grew over 120% and its earnings before interest, tax, depreciation and amortisation (EBITDA) jumped over 140%.

Analysts at Credit Suisse were pleased with its update. In response to it, the broker put an outperform rating and $21.08 price target on its shares. This compares to the current Kogan share price of $17.45. It believes Kogan is well-placed to benefit from the shift to online shopping.

More reading

• 2 compelling ASX shares to buy in February 2021
• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX
• 3 ASX tech shares to buy in February 2021
• 3 very impressive ASX quarterly updates from last week

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO and Kogan.com 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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Are you looking to boost your portfolio with a few dividend shares? Then you might want to take a look at the ones listed below.

Here’s why these ASX dividend shares could be among the best on offer on the Australian share market:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to look at is Coles. This supermarket giant has been a particularly strong performer over the last 12 months thanks to its defensive qualities and a favourable redirection in consumer spending.

Pleasingly, this strong form has continued in FY 2021, with Coles reporting solid growth across its business so far in the financial year. This appears to have positioned the company to deliver another strong full year result in August.

Looking further ahead, the company’s refreshed strategy appears to be positioning it for growth over the long term. This strategy is aiming to cut costs, boost automation, and make Coles an own brand powerhouse.

Analysts at Citi are positive on the company and have a buy rating and $21.20 price target on its shares. Its analysts are forecasting a 63.5 cents per share fully franked dividend in FY 2021. Which, based on the latest Coles share price, represents a fully franked 3.45% dividend yield.

Sonic Healthcare Limited (ASX: SHL)

Another ASX dividend share to look at is Sonic Healthcare. It is a leading medical diagnostics company with operations across the world.

Like Coles, Sonic has been a very impressive performer during the pandemic. For example, in October the company released its first quarter update and revealed a 29% increase in revenue to $2,144 million and a massive 71% lift in EBITDA to $580 million. This is being driven by strong demand for COVID-19 testing services and decent performances across the rest of the business.

Morgan Stanley is very positive on the company. Earlier this week, it put an overweight rating and $40.10 price target on its shares.

The broker expects a big dividend this year of ~$2.13 per share, which represents a 5.9% dividend yield. Though, it is worth noting that it is forecasting this dividend to reduce back to more normal levels of ~$1.23 per share in FY 2022. Based on the current Sonic share price, this will be a 3.4% yield.

More reading

• Got cash to invest? Here are 3 ASX shares to buy
• 2 COVID-19 amplified ASX shares to buy
• 3 ASX 200 shares that keep growing their dividends
• Top ASX shares to buy in February 2021
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Exchange-traded funds (ETFs) have the ability to give us exposure to a large group of businesses from a particular location or sector. Some ETFs have delivered a lot of growth.

Here are two that have outperformed the S&P/ASX 200 Index (ASX: XJO) over the past few years.

Betashares Asia Technology Tigers ETF (ASX: ASIA)

The US isn’t the only place to find technology giants with big addressable markets.

This ETF is about giving investors exposure to the 50 largest Asian technology companies outside of Japan through a single investment.

BetaShares says that due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector. The ETF provider also says that technology is under-represented in the Australian share market and it can complement investors’ US tech exposure.

You may be wondering about some of the Asian tech giants that make up this ETF’s portfolio holdings. The biggest five positions are: Taiwan Semiconductor Manufacturing, Samsung Electronics, Meituan, Tencent and Alibaba. These positions alone account for 47.5% of the portfolio. The next five are: Pinduoduo, JD.com, Netease, Sea and Infosys.

In terms of geographical diversification, just over half of the portfolio is made up of Chinese businesses. There’s another 20.7% based in Taiwan, 19.2% from South Korea and 5.1% from India.

It has an annual management fee of 0.67% per annum. Whilst that’s higher than many other index-based ETFs, it hasn’t harmed the returns too much. At 29 January 2021, it had produced a net return of 71.5% over the last year and an average return per annum of 37.2% since inception in September 2018.

Betashares Global Cybersecurity ETF (ASX: HACK)

This is another ETF provided by BetaShares. With this one, it provides a focus on a particular industry: cybersecurity.

There have been plenty of high profile cyber attacks over the past decade. BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.

At the moment there are around 40 positions in the portfolio, represented by both global giants and smaller niche emerging players.

Its biggest holdings include: Crowdstrike, Zscaler, Cisco Systems, Accenture, Splunk, Fireeye, Palo Alto Networks, Proofpoint, Fortinet and Sailpoint Technologies.

Whilst over half of the Betashares Global Cybersecurity ETF portfolio is classified as ‘systems software’, there are other categories like IT consulting and other services, communications equipment, internet services and infrastructure, application software and aerospace and defence.

Almost 90% of the portfolio is invested in businesses listed in the US, though many of them generate earnings from multiple countries. Other countries with a weighting in the portfolio of more than 1% include the UK, Israel, Japan and France.

This ETF also has an annual management fee of 0.67% per annum. Its net returns have also been better than the ASX in recent years. Over the last year the net return from Betashares Global Cybersecurity ETF was 25.2%, over the last three years the ETF has made an average return per annum of 25.1% and since inception in August 2016 the ETF has made average returns per annum of 20.9%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. 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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