Are you looking to buy some dividend shares next week? Then listed below are two shares that might be worth considering.

Here’s why they are being tipped as dividend shares to buy:

Bravura Solutions Ltd (ASX: BVS)

The first share to look at is Bravura Solutions. This leading provider of software products and services to the wealth management and funds administration industries isn’t normally regarded as a dividend share, but a significant pullback in the Bravura share price has made it one.

That share price weakness has been driven by concerns over the impact that the pandemic and Brexit have been having on its performance. While a weak result is expected in FY 2021 for these reasons, management appears confident that demand will bounce back once these headwinds ease.

Goldman Sachs remains positive on the company and thinks investors should deal with this short term pain due to the potential long term gains.

It believes Bravura is well positioned due to its strong market position, high degree of recurring revenue, and its emerging microservices ecosystem strategy. It has a buy rating and $5.00 price target on its shares.

It is also forecasting a ~10.6 cents per share dividend in FY 2021. Based on the current Bravura share price, this represents a 3.5% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

The second ASX dividend share to look at is Fortescue. It is one of the world’s leading iron ore producers and a company that has been rewarding its shareholders handsomely with dividends in recent years.

This has been underpinned by its strong free cash flow generation thanks to significant cost reductions, an increase in its grades, production and shipment growth, and favourable iron ore prices.

In respect to the latter, the spot iron ore price was trading at US$168 a tonne late last week. This compares very favourably to Fortescue’s C1 costs of just US$12.74 per wet metric tonne.

Unsurprisingly, with margins as strong as that, Fortescue has been tipped to reward shareholders with bumper dividends again in FY 2021.

One broker that certainly expects this to be the case is Macquarie. It is forecasting a fully franked $2.04 per share dividend over the next 12 months. Based on the current Fortescue share price, this equates to a sizeable 9.4% dividend yield.

Macquarie has an outperform rating and $26.50 price target on Fortescue’s shares.

More reading

• 5 things to watch on the ASX 200 on Friday
• Why the Fortescue (ASX:FMG) share price sank 4% lower today
• Why the IGO (ASX:IGO) share price is tanking today
• Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower
• ASX 200 down 0.7%: BHP & Fortescue tumble, Reliance rockets, CSL downgraded

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bravura Solutions Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Two of the best ASX dividend shares to buy in February appeared first on The Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) was well and truly out of form last week following a chaotic few days of trade. The benchmark index fell 2.8% over the week to end at 6,607.4 points.

Fortunately, not all ASX 200 shares sank lower with the market last week. Here’s why these were the best performers on the index over the period:

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price was the best performer on the ASX 200 last week with a 22.4% gain. The shopping centre operator’s shares charged higher following GameStop’s meteoric rise. Unibail-Rodamco-Westfield had a decent amount of short interest, so the Reddit-GameStop development appears to have spooked short sellers into closing positions in a hurry, driving its shares higher.

IDP Education Ltd (ASX: IEL)

The IDP Education share price was on form and charged 12.6% higher of the five days. Investors were buying the student placement and language testing company’s shares following the release of a bullish broker note out of UBS. Its analysts retained their buy rating and lifted the price target on IDP Education’s shares to $23.00. According to the note, UBS believes that trading conditions are improving. Looking further ahead, it believes the company is well-placed to deliver strong earnings growth over the medium term.

Domain Holdings Australia Ltd (ASX: DHG)

The Domain share price wasn’t far behind with a gain of 8% last week. This also appears to have been driven by a positive broker note. Analysts at Credit Suisse upgraded the property listings company’s shares to an outperform rating with an improved price target of $5.10. It believes the company’s overweight exposure to NSW will be a positive if stamp duty reforms in the state proceed.

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine share price was a positive performer and climbed 7.8% over the week. As with Unibail-Rodamco-Westfield, this appears to have been driven by short sellers buying shares in a hurry to close their positions amid fears traders may do a “GameStop” with the wine company’s shares.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

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 Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates 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 interesting reasons why investors may be interested in the Kogan.com Ltd (ASX: KGN) share price.

What is Kogan.com?

Kogan.com is an e-commerce business that sells a variety of products on its website including TVs, phones, appliances, furniture, garden supplies, cars, energy, mobile plans, insurance and NBN internet.

Kogan.com update

Kogan.com released a trading update for the FY21 first half.

Across the Kogan Group, which includes Kogan.com and Mighty Ape, it said that gross sales went up 96% and gross profit grew 120%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by more than 175% and EBITDA went up by more than 140%.

The company said it finished with cash of AU$78.9 million with AU$1.4 million of the group’s debt facility drawn within Mighty Ape.

In terms of active customers, Mighty Ape finished the half-year with 719,000 and Kogan.com finished with 3,003,000.

The company said it had its first week of $30 million, $40 million and $50 million of gross sales in the same week. Gross sales were greater than $50 million for the Black Friday week of 23 November to 29 November.

Gross sales on Black Friday, being 27 November 2020, were greater than $15 million for the day, the biggest day in the history of the business. Kogan Marketplace had its first $10 million week of gross sales in Black Friday week. Matt Blatt had it first week of more than $1 million gross sales.

Kogan.com’s founder and CEO Ruslan Kogan said: “We are proud to have delivered another record half while undertaking significant investments into the future of the business. I am so proud of how our team is navigating extreme growth within our core business, and responding to the fast-changing economic, health and supply-chain environment.

“We delivered our largest acquisition to date in Mighty Ape and expanded the Kogan.com community of members to more than 3 million active customers. We are investing into building strong customer relationships by expanding our logistics capability, our marketing reach and our systems and infrastructure – giving us the foundation to continue delighting customers as the business further scales.”

3 reasons why the Kogan.com share price might be interesting

1: Expanding product lines and margins – Kogan continues to expand its product lines. Each time it adds a new product line it increases the total addressable market. Being able to service more of the customers’ needs makes the relationship more valuable for both the customer and the company.

Its margins have continued to rise over the years. In FY17 the EBITDA margin was 4.3%, it rose to 6.3% in FY18, 6.9% in FY19 and 9.3% in FY20. The EBITDA margin appears to have risen further with EBITDA growing by 140% whilst gross sales went up 96% in this half-year update.

2: New Zealand growth – Kogan recently bought Mighty Ape which is a leader in gaming, toys and other entertainment categories.

In FY20, Mighty Ape is expecting to make $137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, representing year on year growth of 43.7%, 58.1% and 254.1% respectively.

This acquisitions open up growth potential for the business in another country. Kogan can expand Mighty Ape’s product lines and help it grow. Mighty Ape can help Kogan in any areas that it has better expertise than the parent business.

3: Growing shareholder returns – Kogan.com has been delivering profit growth and this has resulted in market outperformance over the various time periods.

Over the last year the Kogan.com share price has gone up around 240%. Since the start of 2017, Kogan.com shares have risen by approximately 1,250%.

Not only has the share price been rising, but the dividend has been going up too. In FY20 Kogan.com increased its annual dividend by 46.9% to 21 cents.

More reading

• These were the worst performing ASX 200 shares last week
• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400
• Here’s why the Kogan (ASX:KGN) share price is sinking 5% lower

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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The S&P/ASX 200 Index (ASX: XJO) has just had its worst week in almost three months following a market selloff on Thursday. The benchmark index fell 2.8% to end at 6,607.4 points

While a good number of shares dropped lower last week, some fell more than most. Here’s why these were the worst ASX 200 performers over the period:

IOOF Holdings Limited (ASX: IFL)

The IOOF share price was the worst performer last week with a decline of 16.6%. Investors sold the financial services company’s shares following the release of its second quarter update. That update revealed that IOOF’s Funds Under Management, Advice and Administration (FUMA) fell $0.4 billion to $202.4 billion during the quarter. This was despite the company recording positive market movements of $12.7 billion during the three months.

Ampol Ltd (ASX: ALD)

The Ampol share price wasn’t far behind with a decline of 14.9% over the five days. Last week the fuel retailer announced the completion of its $300 million off-market buyback. Ampol revealed that it bought the shares back at $26.34, which represents a 14% discount. The company advised that it expects $24.33 of the buyback price to be treated as a fully franked dividend for Australian capital gains tax purposes.

Lynas Rare Earths Ltd (ASX: LYC)

The Lynas share price was out of form and dropped 14% lower last week. This appears to have been driven by market volatility and profit taking after a strong gain earlier this month. Not even an impressive second quarter update could take its shares higher. According to the release, Lynas delivered second quarter production of 1,367 tonnes, which was in line with its guidance. This led to the company posting record quarterly sales revenue of $119.4 million. This was up from $87.3 million in the first quarter.

Kogan.com Ltd (ASX: KGN)

The Kogan share price was a very poor performer and dropped 13.8% over the period. The catalyst for this was the release of a first half trading update. Kogan revealed that it achieved a 96% increase in gross sales and a 140%+ jump in earnings before interest, tax, depreciation and amortisation (EBITDA) for the half. While this is strong growth by ordinary standards, it is a reasonably sharp slowdown compared to earlier in the half. After the first four months of the financial year, Kogan’s sales were up 99.8% and its operating earnings were up 268.8%.

More reading

• ASX 200 ends 0.6% down, Kogan falls 8.5%, Service Stream soars 10%
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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Is the Westpac Banking Corp (ASX: WBC) share price a buy? Some brokers like Morgan Stanley and Credit Suisse have had their say. 

A lot has happened to the Westpac share price over the last 12 months. During the COVID-19 crash to 23 March 2020 it fell by just over 45% to $14.10. Since then it has risen by over 50%.

FY20 result

The FY20 report was released in November 2020 and it showed a large profit decline partly because of the effects of COVID-19.

Westpac’s cash earnings were down 62% to $2.61 billion and cash earnings per share (EPS) fell 63% to 72.5 cents. Statutory net profit fell by 66% to $2.29 billion.

Westpac attributed the large drop of profit to a number of one-off items including provisions and costs for the AUSTRAC proceedings ($1.3 billion), provisions for estimated refunds, payments, costs and litigation relating to the royal commission, write-downs relating to intangible items and asset sales and revaluations.

Excluding notable items, cash earnings still declined 34% because of the difficult operating conditions.

Westpac noted that more than two thirds of Westpac’s home loan customers on deferral packages had started making repayments again. At the time of the report, $16.6 billion of Australian home loans were in deferral, down from $54.7 billion. There were also $1 billion of Australian small business loans, down from $10.1 billion.

The big bank said it had a CET1 capital ratio of 11.13% at the end of FY20.

The board decided to pay a final, fully franked dividend of 31 cents per share. The total dividend to be paid represented 49% of Westpac’s statutory profit which was in line with the current APRA guidance.

Westpac’s CEO, Peter King, said at the time that while Westpac expects the economy to grow in the rest of 2021 and 2022, unemployment would remain elevated for some time.

What’s happening now?

The Australian Prudential Regulation Authority (APRA) has lifted the limit about how much of a dividend that banks could pay. Previously, banks had to hold onto half of their statutory earnings. However, APRA does still expect banks to take a prudent approach.

As broker Credit Suisse has pointed out, this could allow the major banks to feel more comfortable to pay higher dividends in FY21 and beyond.

Other brokers, like Morgan Stanley, think the economy is in a better position and this will benefit Westpac as it’s leveraged to a recovery, the big bank also has a healthy balance sheet and there’s an ongoing sector rotation. The broker thinks that Westpac will outperform the S&P/ASX 200 Index (ASX: XJO) in 2021.

Valuation estimates

According to Commsec, the Westpac share price is valued at 17x FY21’s estimated earnings. After a projected recovery of earnings, Westpac shares are priced at 12x FY23’s estimated earnings.

Westpac also has a projected grossed-up dividend yield of 5.7% for FY21.

The West[ac share price targets of Morgan Stanley and Credit Suisse (which means where they think the Westpac share price will be in 12 months) combines for an average of $23.55, which suggests a potential capital gain of approximately 10% over a year.

More reading

• Jailing of NAB exec a scary déjà vu for NAB (ASX:NAB) share price
• 2 top ASX dividend shares to buy in February
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• These ASX shares are falling after being hit by broker downgrades today
• ASX dividends will be up 30% this year: fundie

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.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 0.6% today to 6,607 points.

Here are some of the highlights from the ASX:

Kogan.com Ltd (ASX: KGN)

Kogan.com released a trading update for the FY21 first half. The Kogan.com share price fell 8.5% in response.

Across the Kogan Group, which includes Kogan.com and Mighty Ape, it said that gross sales went up 96% and gross profit grew 120%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) grew by more than 175% and EBITDA went up by more than 140%.

The company said it finished with cash of AU$78.9 million with AU$1.4 million of the group’s debt facility drawn within Mighty Ape.

In terms of active customers, Mighty Ape finished the half-year with 719,000 and Kogan.com finished with 3,003,000.

Kogan.com said the business had its first week of $30 million, $40 million and $50 million of gross sales in the same week. Gross sales were greater than $50 million for the Black Friday week of 23 November to 29 November.

Gross sales on Black Friday, being 27 November 2020, were greater than $15 million for the day, the biggest day in the history of the business. Kogan Marketplace had its first $10 million week of gross sales in Black Friday week. Matt Blatt had it first week of more than $1 million gross sales.

Kogan.com’s founder and CEO Ruslan Kogan said: “We are proud to have delivered another record half while undertaking significant investments into the future of the business. I am so proud of how our team is navigating extreme growth within our core business, and responding to the fast-changing economic, health and supply-chain environment.

“We delivered our largest acquisition to date, in Mighty Ape and expanded the Kogan.com community of members to more than 3 million active customers. We are investing into building strong customer relationships by expanding our logistics capability, our marketing reach and our systems and infrastructure – giving us the foundation to continue delighting customers as the business further scales.”

Service Stream Limited (ASX: SSM)

The Service Stream share price jumped 10% today after the company announced a multi-year agreement with Telstra Corporation Ltd (ASX: TLS).

The ASX 200 business said that the contract is for design and construction services.

Under Telstra’s new commercial framework, Service Stream will be a key deliver partner responsible for performing design, construction and maintenance activities associated with its wireless and fixed-line infrastructure networks.

The five-year agreement is for an initial period of three years, with two one-year extension options, at Telstra’s election. The agreement is expected to transition on or around April 2021.

Whilst the agreement does not provide guaranteed volumes, Service Stream has historically delivered approximately $70 million of wireless and $30 million in fixed-line infrastructure works per annum to Telstra under similar agreements, with a larger pool of delivery partners historically operating across allocated regions.

National Australia Bank Ltd (ASX: NAB)

NAB announced today it has agreed to acquire 100% of the shares in 86 400.

The major ASX 200 bank explained that 86 400 was founded by Cuscal Ltd and led by CEO Robert Bell. It was granted an authorised deposit-taking institution licence in July 2019. As at 15 January 2021, 86 400 had more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.

NAB disclosed that it commenced discussions with 86 400 in late 2020. To support 86 400’s growth, NAB bought a minority stake in 86 400 and currently holds an approximate shareholding of 18.3% of the neobank.

The ASX 200 bank wants to acquire the rest of the business for $220 million, including other upfront transaction related expenses up to $220 million.

In April 2020, NAB announced plans to prioritise UBank to deliver a market-leading digital experience and new product propositions to customers. The acquisition of 86 400 will accelerate UBank’s growth by combining its established customer base, brand and colleagues with 86 400’s experience and technology platform.

The NAB share price dropped 1.6% today.

More reading

• How to buy US shares from Australia right now
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• The latest ASX stocks to be hit by broker downgrades
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Telstra Limited. The Motley Fool Australia has recommended Service Stream 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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Investing in other geographic markets has become a popular way to diversify a portfolio. The risks associated with being exposed to significant events in one location can be lessened by holding investments in countries outside our own.

The United States (US) offers some of the biggest companies in the world, with a strong technology presence. So you may be wondering, how do you buy US shares from Australia? We’ll cover some of the options available and some other important information.

How to buy US shares from Australia

Brokers with US shares available in Australia

The first thing you’ll need is a broker. Many of the big-name brokers in Australia offer international share trading.

Brokers like National Australia Bank Ltd’s (ASX: NAB) Nabtrade, Commonwealth Bank of Australia’s (ASX: CBA) CommSec, and more recently Selfwealth Ltd’s (ASX: SWF) self-titled platform.

In addition to these, there are brokers like Stake, which solely offer US equities. Although if you try to sign up to Stake at the moment, you may have run into a roadblock. According to The Australian Financial Review Stake has reported that it is still experiencing some functionality issues for a portion of its users. 

Each broker is different and as such, you should take a little time to assess which works best for you. Evaluate what suits your needs including aspects like fee structure, which shares are available, and price data options.

US shares in a simple packaged form

Once you’re set up with a broker it’s a case of researching and picking which US shares you would like to buy. But if the recent volatility in individual US shares like GameStop Corp (NYSE: GME) has you looking for more diversified alternatives, exchange-traded funds (ETFs) are also available.

US-focused ETFs cast a wide net and package together a grouping of US shares into one tradable product. Examples of such ETFs available for trading on the ASX include BetaShares Nasdaq 100 ETF (ASX: NDQ), VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT), and iShares S&P 500 ETF (ASX: IVV).

What to watch out for

When buying US shares from Australia there are some things that are worth keeping an eye out for.

Firstly, hidden fees can add up, be sure to read all the product disclosures and individual costs when placing a trade. It is easy for a broker to market $0 brokerage fees these days, but there are other fees likely replacing that. Fees you may not notice include account funding fees, currency conversion fees, and membership fees for access to price data.

Some of these fees might be a couple of cents on the dollar, but this can quickly add up. For example, if you were to execute a trade to buy $5000 of a US share, paying 2 cents on the dollar in fees, that’s $100 in fees.

More reading

• GameStop chaos: Real reason Robinhood cut off retail investors
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• 2 excellent ETFs for ASX investors in February
• GameStop (NYSE:GME) stock insanity: Here are 4 things you need to know
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400

Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. 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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Sun Cable is a private Australian solar energy infrastructure developer. The company’s ambitious flagship $22 billion solar farm project plans to supply Darwin and up to 20% of Singapore’s electricity demand, as reported by the ABC.

The Australia-ASEAN Power Link (AAPL) project is slated to be one of the world’s largest solar farms in the world.

Signed deal with the Northern Territory

The latest news for the company is the signing of a development agreement with the Northern Territory Government. This agreement was described by Sun Cable’s CEO David Griffin as a roadmap to the “financial close” portion of the project.

The AAPL project is still 3 years away from its deadline for financial close before the commencement of construction in late 2023. Following construction, the supply of power is expected for Darwin by 2026 and to Singapore in 2027.

Sun Cable is currently working with Singapore to reach a signed agreement, however, there are reportedly several non-negotiables on supply reliability that the company is working through.

As quoted by the ABC, Mr Griffin commented on the importance of electricity reliability to Singapore: “We have to ensure that our supply is at least equal to the level of reliability that they currently enjoy. We’re up to the challenge on that.”

In order to deliver power to Singapore, Sun Cable will need to lay 3,750 kilometres of undersea cable from the Darwin Harbour to Singapore.

Renewables demand set to increase

The new US President Joe Biden has already re-joined the Paris Climate Agreement and has a long list of planned initiatives for propelling the renewable energy front in the US. This focus on renewables is not an anomaly. Countries all around the world are seeking ways of becoming less reliant on traditional energy sources, whether for altruistic reasons or for more self-interested factors.

Only a couple of weeks ago we saw the meteoric rise of Vulcan Energy Resources Ltd (ASX: VUL) with its plans to deliver a net-zero carbon emission method for mining lithium. 

New Zealand based Meridian Energy Ltd (ASX: MEZ) is another company riding the renewable trend. Meridian is the largest electricity producer in New Zealand, and all of its supply is generated by renewable sources. The company’s shares are up 31% in the last year. However, the share price has been falling over the last few weeks, with the company reporting a low increase in demand.

More reading

• What’s with the Vulcan (ASX:VUL) share price today?
• Here’s why the Meridian Energy (ASX:MEZ) share price slumped 8% today
• The Piedmont Lithium (ASX:PLL) share price just rocketed 32% to a record high
• Zip and Vulcan were among the most traded ASX shares last week
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher

Motley Fool contributor Mitchell Lawler 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 GameStop Corp (NYSE: GME) frenzy this week was controversial enough, but $0 brokerage trading app Robinhood poured petrol on the fire overnight.

The platform cut off retail investors from trading in GameStop shares and other short squeeze targets on Thursday night Australian time, citing excessive volatility and “risk management”.

The move immediately drew criticism, with politicians on absolute opposite ends of the spectrum blasting Robinhood.

“This is unacceptable. We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” said prominent leftist Democrat senator Alexandria Ocasio-Cortez.

In response, far-right Republican senator Ted Cruz simply replied: “Fully agree.”

Fully agree. 👇 https://t.co/rW38zfLYGh

— Ted Cruz (@tedcruz) January 28, 2021

https://platform.twitter.com/widgets.js

Later in the day Robinhood backed down, announcing “limited buys” would be allowed from Friday’s session.

“We’ll continue to monitor the situation and may make adjustments as needed.”

But the damage was already done. 

According to RMIT university senior lecturer Angel Zhong, legal action has started against the platform.

“Robinhood users have filed a class action, as the trading app ‘purposefully, willfully and knowingly removed the stock, GME, from its trading platform in the midst of an unprecedented stock price’, thereby depriving retail investors of the ability to invest in, and manipulate, the open-market.”

Why did Robinhood block retail investors?

Robinhood, true to its name, made its fortune by making the share market accessible to the masses. 

But the overnight ban seemed to run completely the opposite of that spirit.

So why did it block retail investors from the biggest market event this year?

Zhong, who is an expert in investor behaviour, said it all had to do with the relationships Robinhood has with other companies in the background.

In return for revenue, the app passes on trades to big companies called ‘market makers’. They then pocket a small difference in the share price charged to the end user and the actual wholesale transaction cost.

“While Robinhood is fee-free, it makes money by providing liquidity to hedge funds such as Melvin Capital, and Citadel Securities – the trading platform’s largest customers.”

“More importantly, Citadel bailed out Melvin Capital, which shorted GameStop heavily and suffered a huge loss.”

If a service is provided for free, then you’re not the customer – you are the commodity.

“The lesson seems to be there is no free lunch,” said Zhong.

More reading

• GameStop frenzy: 3 shorted ASX shares that could shoot up
• GameStop (NYSE:GME) stock insanity: Here are 4 things you need to know
• The Reddit-GameStop-Robinhood saga is heating up
• 53% share price jump lands GME Resources (ASX: GME) in trading halt
• What Is a Gamma Squeeze?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s not yet a full year since COVID-19 smashed its way across the globe. Yet in that short time the pandemic has changed countless aspects of our lives. Even in Australia, where we’ve done an exceptional job keeping the virus at bay.

Twelve months ago, the idea of social distancing and strict lockdowns in the free world was almost unimaginable. Not to mention the massive shift to working, socialising, and shopping from home.

Now, with the vaccine rollout commencing in much of the world and about to kick off Down Under, you might think this year will see a return to ‘normal’. But that’s unlikely to be the case.

With a bit of luck, we could see many of 2020’s restrictions eased or even lifted over the coming months. But many trends set over the past year are likely to persist — including the accelerated shift to online shopping.

Here’s an excerpt from online trading and investment specialist Saxo Bank’s first quarter 2021 Quarterly Outlook for global markets (published Wednesday 27 January):

The pandemic… has transformed consumer spending habits for good. Only digital companies or those able to levy digitalisation were able to protect or, in some cases, even increase their revenue stream. All of this is unlikely to change when stores open their doors again, exacerbating the infrastructure investment gap.

Tapping into the infrastructure investment gap

The infrastructure investment gap Saxo refers to centres on logistics spaces (warehouses) and transport (international and domestic).

Steen Jakobsen, chief economist and CIO at Saxo Bank says the business world “has been so busy getting digital and virtual that they forgot the real physical world. You can have the world’s best product online and sell millions of units, but if you cannot produce, ship and deliver it, good luck making a return.”

Sam Tamblyn, the founder and managing director of Urban Property Australia, has homed in on this trend. Writing in the Australian Financial Review about investing in Australia in 2021, Tamblyn says:

In my view, the industrial property market is tipped to be the best-performing commercial property asset class, driven by the increased consumer take up of e-commerce and infrastructure investment.

Travis Erridge, managing director of logistics consultancy TM Insight, is also bullish on logistics assets, driven by the booming e-commerce sector. According to Erridge (quoted by the AFR):

This means a greater industrial footprint and increasing demand for warehousing in capital cities and in the inner city areas. Gone are the days of overly lean supply chains and instead flexibility is key. Businesses need an agile supply chain that can cope with new demands of the consumer.

Online sales to keep on growing

Colliers International estimates that we need some 85,000 square metres of warehouse space for every $1 billion spent shopping online. And Colliers forecasts continued strong growth in e-commerce in the year ahead.

According to Malcom Tyson, managing director of industrial at Colliers International (quoted by the AFR):

We are forecasting online sales to grow by $12.8 billion in 2021, which would result in demand of about one million square metres of warehouse demand from e-commerce alone in 2021.

Tyson estimates there is around $26 billion of capital – both institutional and private – keen to invest in the logistics sector (as at December).

“Given this, additional assets from corporate groups are expected to be brought to market in 2021 as groups look to capitalise on the continued strength of the industrial and logistics market.” 

Christopher Dembik, head of macro analysis for Saxo Bank adds:

If we accept that digitalisation will drive everything and online platforms will become dominant, we need to understand that we have reached the point where the lack of investment in infrastructure to source and build, and in logistics to deliver the products that these successful platforms sell, is becoming a serious constraint that is about to drive cost inflation higher.

3 ASX logistics shares

If the e-commerce boom continues, as highlighted above, ASX logistics shares could be among the big beneficiaries.

We’ll take a look at 3 of those here.

First up, APN Industria REIT (ASX: ADI). The Australian real estate investment trust (REIT) owns a portfolio of industrial and business park assets in Sydney, Melbourne, Brisbane and Adelaide. APN has a market cap of $614 million and pays an annual dividend yield of 5.8%. Shares are up 1% so far in 2021, and down 6% over the past full year.

Next up, Centuria Industrial REIT (ASX: CIP), Australia’s largest domestic pure play industrial REIT. Centuria’s warehouses are located across Australia’s capital cities. Centuria has a market cap of $1.7 billion. It pays an annual dividend yield of 5.9%. The Centuria Industrial REIT share price is flat so far in 2021 and down 15% since 29 January 2020.

Last up, Goodman Group (ASX: GMG), which has logistics operations that span Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil. Goodman has a market cap of $32.7 billion. It pays an annual dividend yield of 1.7%. Goodman’s share price is down 9% in 2021, but still up 18% over the past full year.

More reading

• The Centuria (ASX:CIP) share price climbs on acquisition news
• 2 of the best blue chip ASX shares to buy
• 2 outstanding blue chip ASX shares to buy right now
• 2 of the best blue chip ASX shares to buy today
• How this ASX REIT finished 2020 in positive territory

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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