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On Friday the S&P/ASX 200 Index (ASX: XJO) finished a very positive week with a solid gain. The benchmark index rose 0.7% to 6,757.9 points.

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

ASX 200 expected to rise.

The Australian share market looks set to start the week higher. According to the latest SPI futures, the ASX 200 is poised to open the week 7 points or 0.1% higher. This follows a positive end to the week on Wall Street, which saw the Dow Jones rise 0.2%, the S&P 500 climb 0.55%, and the Nasdaq jump 1% higher.

Tech shares on watch.

It could be a positive start to the week for tech shares such as Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) after their US counterparts surged higher. On Friday the Nasdaq index rose 1% to close at a record high amid hopes that further stimulus is coming. Our local tech sector has a tendency to follow the lead of the tech-focused index.

Oil prices rise.

Energy producers including Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could start the week positively after oil prices pushed higher. According to Bloomberg, the WTI crude oil price rose 2.8% to US$52.24 a barrel and the Brent crude oil price climbed 3% to US$55.99 a barrel. Oil is now trading at its highest level since February.

Gold price sinks lower.

Gold miners such as Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could come under pressure today after the gold price crashed lower on Friday. According to CNBC, the spot gold price sank 4.1% to US$1,835.40 an ounce. Traders were selling safe haven assets after US political risks faded.

Zip update.

The Zip Co Ltd (ASX: Z1P) share price could be one to watch on Monday. The buy now pay later provider is expected to release its second quarter update this morning. This will include the all-important holiday season shopping period. Investors will be keen to see if the company’s strong sales growth continued or was impacted by growing competition.

More reading

• Top brokers name 3 ASX shares to buy next week
• This ASX sector is facing a tough 2021
• These were the worst performing ASX 200 shares last week
• ASX 200 rises 0.7% on Friday
• Mesoblast (ASX:MSB) share price could be facing more pressure in 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 Xero and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Analysts at Bell Potter have been busy finding ASX shares from several industries that they believe are best placed to have a strong 2021.

On this occasion, I’m going to look at emerging shares. Here are a couple that they rate highly:

PointsBet Holdings Ltd (ASX: PBH)

Bell Potter is a fan of this sports betting company and has placed a speculative buy and $15.10 price target on its shares.

The broker notes that the company has a significant opportunity in the United States market, where it currently has partnerships in 12 US states with a combined population of 94 million. It also sees huge potential from a “company transforming” media partnership with NBCUniversal.

Bell Potter commented: “This incorporates the largest sports audience of US media companies of 184m, spanning the NBC and Telemundo (Hispanic) national networks, 8 Regional Sports cable channels, as well as other cable channels and digital networks.”

Looking ahead, the broker appears to believe that PointsBet is well placed to “execute on its target of generating US$1bn of annual revenue by 2025, with a pathway to 10% market share in each US state.”

The PointsBet share price ended the week at $12.00.

Resimac Group Ltd (ASX: RMC)

Another emerging company the broker is positive on is Resimac. It has a buy rating and $2.50 price target on Australia’s leading nonbank mortgage provider.

It notes that the company is currently servicing over 50,000 customers with principally funded assets under management of $12.7 billion.

However, it appears to believe this could grow strongly in the future. Especially given how it “does not have the overhead of maintaining an extensive nationwide branch network, rather it has relationships with over 85% of Australia’s mortgage brokers, where customer service and a quick approvals process have been key factors for RMC increasing originations.”

Looking ahead, the broker is expecting a strong first half result. Noting that management’s profit guidance implies an increase of ~75% on the second half of FY 2020.

It is also expecting the company’s full year result to be strong, thanks partly to the benefits of a lower impairment charge. The broker notes that Resimac has seen the percentage of customers in COVID payment deferrals reduce from 10% to 4.4%.

The Resimac share price ended the week at $2.13.

More reading

• Why the BetMakers (ASX:BET) share price is surging 12% higher today
• Top ASX shares to buy in 2021
• The Pointsbet (ASX:PBH) share price just crashed 8%

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Taking the time to identify the best dividend shares to buy now could be a useful exercise for all passive income investors.

After all, the world economy faces a challenging period that could cause disruption when it comes to shareholder payouts.

As such, finding high-yielding shares with affordable dividends that can grow in the coming years could be a sound move. It may lead to an attractive income return in the long run.

Financially-sound companies can make the best dividend shares

The financial strength of a business is likely to have an impact on whether it is among the best dividend shares to buy today. The challenging operating conditions of 2020 could spill over into 2021. As a result, many companies may face threats from weak consumer confidence, rising unemployment and lower levels of business investment that have a negative impact on their financial prospects.

Therefore, buying dividend shares with sound financial positions seems to be a logical approach – especially in the current economic climate.

Companies with low net debt levels, or even net cash positions, and significant headroom when making interest payments on debt could offer greater resilience when paying dividends. Similarly, companies that are well within their banking covenants may be less likely to need to cut dividend payouts in order to satisfy their lenders.

Although assessing the financial positions of companies can help an investor to find the best dividend shares, it is by no means a water-tight method. However, it can significantly reduce the risk of a disappointing passive income through increasing the reliability of dividend payouts in the coming years.

Dividend growth potential over the long run

As well as financial stability, the best dividend shares are likely to offer long-term passive income growth. The scale of monetary policy stimulus enacted over the past 12 months means that higher global inflation could result over the coming years. This may have a negative impact on the spending power of investors who are unable to generate attractive growth in passive income from their portfolio.

As such, buying companies that have an attractive earnings growth profile could be a sound move. Higher earnings may mean they can afford to pay a rising dividend that beats inflation. Similarly, businesses that pay out a low proportion of net profit as a dividend may find it easier to raise shareholder payouts in the coming years.

Identifying companies with high earnings growth and low dividend payout ratios may mean obtaining a lower dividend yield today. Such companies could be in high demand due to their impressive future outlooks.

However, if they deliver strong dividend growth, they could prove to be the best dividend shares available today for long-term investors. They may also produce attractive capital returns, as an improving financial performance generally merits a higher share price.

More reading

• 4 top ASX share picks for 2021
• 2 of the best ASX shares to buy this month
• 2 quality ASX dividend shares to buy next week
• Top brokers name 3 ASX shares to buy next week
• Top brokers name 3 ASX shares to sell next week

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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There are some ASX shares that a market expert thinks are top picks for 2021.

James Gerrish from Market Matters has identified some businesses that could be worth watching this year.

Market Matters are very bullish about shares and the overall ASX in 2021. Here are three of those picks:

Commonwealth Bank of Australia (ASX: CBA)

Mr Gerrish’s low risk pick in the banking sector is CBA. He acknowledged that the biggest bank isn’t an earth-shattering pick. Market Matters thinks that bank prices could rally for at least the next six to twelve months. Mr Gerrish thinks the CBA share price could rise back to the mid-$90s.

One of the points for banks is that they borrow for the short-term and lend for the long-term. CBA is benefiting from a steepening yield curve at a time when loan growth is likely to surge.

As a reminder, FY20 statutory net profit after tax (NPAT) dropped 12.4% to $9.63 billion and cash NPAT declined 11.3% to $7.3 billion. The net interest margin (NIM) declined by another 2 basis points to 2.07% because of the impact of lower interest rates.

The latest financial result was the FY21 first quarter trading update which showed that CBA generated $1.9 billion of statutory NPAT and $1.8 billion of cash profit, down 16% on the prior corresponding period. CBA said that income was stable, but expenses (excluding customer remediation) were up 2%. In that latest quarter, the CET1 ratio continued to strengthen as it grew 20 basis points to 11.8%.

Looking at the Commsc earnings estimates for CBA shares, it’s valued at 21x FY21’s estimated earnings.

Lendlease Group (ASX: LLC)

Mr Gerrish said that Lendlease is in the sweet spot as property values rebound strongly and governments focus on infrastructure development. The target share price for Lendlease over the next 12 months is $17, which is just over 30% higher than the current Lendlease share price.

The FY20 result was heavily disrupted by COVID-19 impacts. The FY20 bottom line was a statutory loss after tax of $310 million. The core business delivered a net profit after tax of $96 million, though the second half of FY20 saw a net loss of $202 million. The core business has a development pipeline of $113 billion, which is up 48%. One of the key projects is the San Francisco Bay area project which is a $21 billion deal with Google to develop three of the internet giant’s major districts in the San Francisco Bay area over 10 to 15 years into mixed-use communities.

It recently completed the sale of its engineering division, though it kept the Melbourne Metro project – amending documents have been signed to deliver the tunnels and stations.

According to Commsec, the Lendlease share price is valued at 23x FY21’s estimated earnings.

Monadelphous Group Limited (ASX: MND)

Mr Gerrish said that Monadelphous, which is skewed towards engineering and construction in the mining sector, had an initial $13 price target but the strong pipeline of work brings a potential share price of $18 into play. At a current price of just over $14, that suggests room for growth of almost 30%.

Monadelphous recently announced it had secured new construction and maintenance contracts with both Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) with a combined value of approximately $60 million.

There is a three-year master services contract with Rio Tinto for the delivery of sustaining capital projects across various mine sites and port operations through the Pilbara region in Western Australia. There’s another three-year contract with Rio Tinto to provide mechanical, electrical and access maintenance services for fixed plant shutdowns at Rio’s Gove operations in the Northern Territory.

The BHP contract is a 12-month extension to its existing mechanical and electrical maintenance, shutdown and project services across BHP’s WA nickel operations.

According to Commsec, it’s priced at 23x FY21’s estimated earnings.

More reading

• 4 reasons why the CBA (ASX:CBA) share price could be a buy
• 2 quality ASX dividend shares to buy
• Why ANZ, Westpac, and the rest of the big four are storming higher today
• ASX 200 drops 1.1%
• What strong jobs data means for ASX 200 shares

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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A new year is here, so what better time to look at giving your portfolio a lift with a new addition or two.

But which shares should you buy? Listed below are two top ASX shares which have been tipped as potential market beaters over the next few years. Here’s what you need to know about them:

Kogan.com Ltd (ASX: KGN)

Kogan is one of Australia’s leading ecommerce companies. It has been growing very strongly this year after the pandemic accelerated the adoption of online shopping.

Pleasingly, its strong form has continued even after retail stores reopened as normal once again. For example, during the first four months of FY 2021, Kogan’s sales were up 99.8% on the prior corresponding period and its operating earnings were up an even greater 268.8%.

And with more and more spending expected to shift online in the future, Kogan looks well-positioned for growth over the 2020s. The company is also looking to accelerate its growth with earnings accretive acquisitions such as Mighty Ape.

Canaccord Genuity has a buy rating and $25.00 price target on the company’s shares. It was pleased with the Mighty Ape acquisition and sees the potential for significant revenue and cost synergies.

NEXTDC Ltd (ASX: NXT)

Another share to look at is NEXTDC. It is a leading data centre-as-a-service provider with a growing network of centres in key locations across Australia. As with Kogan, it has been a very strong performer this year because of tailwinds caused by the pandemic.

The accelerating shift to the cloud has led to a significant increase in demand for capacity in its data centre and underpinned strong revenue and earnings growth.

Looking ahead, the company still has a long runway for growth in Australia and opportunities to expand internationally. In respect to the latter, the company has recently opened offices in Singapore and Tokyo and is weighing up its options in these markets.

Morgan Stanley is a fan of the company and believes it is well-placed for growth. The broker has an overweight rating and $14.60 price target on its shares.

More reading

• How to turn $20,000 into $225,000 in 10 years with ASX shares
• Brokers name 3 ASX shares to buy right now
• 2 high quality ASX growth shares to buy today
• How to invest in ASX shares in a post-COVID world 
• 3 great ASX tech shares to buy

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia 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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If you’re wanting to add a few dividend shares to your portfolio, then you may want to check out the ones listed below.

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

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

The worst of the COVID-19 pandemic appears to be behind us now and things are looking a lot more positive for the banking sector. Especially following the relaxing of responsible lending rules, a sharp reduction in COVID loan deferrals, and an improving housing market.

Another recent development which is making the sector attractive to investors is APRA’s decision to remove its dividend restrictions on the banks. This follows some significant stress testing by the regulator.

Morgans is positive on ANZ and recently reiterated its add rating and lifted its price target on the bank’s shares to $26.00. The broker is also forecasting a $1.27 per share dividend in FY 2021 and a $1.50 per share dividend in FY 2022. Based on the current ANZ share price, this represents 5.3% and 6.3% dividend yields, respectively.

Coles Group Ltd (ASX: COL)

Another dividend share to consider buying next week is Coles. This leading supermarket operator has been growing at a solid rate in recent years thanks to a combination of same store sales growth, store expansion, and its defensive business.

Pleasingly, this strong form has continued in FY 2021, with Coles delivering stellar sales growth during the first quarter. This, and its strong start to the second quarter, appears to have put Coles in a position to deliver a strong full year result next year.

Analysts at Citi appear confident on its prospects this year. The broker has a buy rating and $21.20 price target on the company’s shares. It is forecasting a 63.5 cents per share fully franked dividend this year. This represents a fully franked forward 3.4% dividend yield.

More reading

• Leading broker names the ASX bank shares to buy in 2021
• Why ANZ, Westpac, and the rest of the big four are storming higher today
• ASX 200 up 1.55%: ANZ & Westpac surge higher, Afterpay & Xero tumble
• 2 blue chip ASX dividend shares to buy
• 5 things to watch on the ASX 200 on Thursday

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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Afterpay Ltd (ASX: APT)

According to a note out of Bell Potter, its analysts have a buy rating and $140.00 price target on this payments company’s shares. The broker believes there is a significant pipeline of catalysts that will support its growth in the future. This includes further integration with key ecommerce and payment infrastructure players, further growth in customers and underlying sales in the US and UK, and its healthy net transaction margin. It expects the latter to continue into FY 2021. In addition to this, it sees positives from its global expansion and comments by regulators in Australia regarding the buy now pay later industry. The Afterpay share price ended the week at $116.00.

Bapcor Ltd (ASX: BAP)

Analysts at Citi have retained their buy rating and $8.85 price target on this automotive parts retailer’s shares. According to the note, the broker believes Bapcor will benefit from a number of tailwinds. This includes solid new car sales and positive trends in the used car market. The Bacpcor share price last traded at $7.79.

Sonic Healthcare Limited (ASX: SHL)

A note out of Morgans reveals that its analysts have upgraded this healthcare company to an add rating with an improved price target of $37.32. The broker believes that Sonic Healthcare will benefit from a new normal that will see virus testing become part of everyday life because of the COVID 19 pandemic. This led to the broker upgrading its forecasts for the coming years and its price target accordingly. The Sonic Healthcare share price ended the week at $33.92.

More reading

• 3 top ASX dividend shares to buy
• ASX 200 rises 0.7% on Friday
• Leading broker names the ASX tech shares to buy in 2021
• Brokers just upgraded the Sonic (ASX:SHL) share price and this other ASX stock to “buy”
• ASX 200 up 0.4%: Afterpay & Zip charge higher, NAB rises, Harvey Norman hits new high

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

ASX Ltd (ASX: ASX)

According to a note out of Goldman Sachs, its analysts have retained their sell rating and $68.54 price target on this stock exchange operator’s shares. This follows the release of a mixed update for the month of December and calendar year 2020. While the broker feels recent weakness in its share price means that risks are now being more appropriately reflected, its shares have not fallen enough for a change of rating. The broker still feels they are overvalued at the current level. The ASX share price ended the week at $72.75.

Dacian Gold Ltd (ASX: DCN)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and 34 cents price target on this gold miner’s shares. The broker notes that Dacian Gold outperformed its expectations in the December quarter despite facing some operational disruptions. However, due to the broker’s subdued outlook for the gold price, it isn’t in a rush to make any changes to its recommendation. The Dacian Gold share price last traded at 54 cents.

Medibank Private Ltd (ASX: MPL)

Another note out of Macquarie reveals that its analysts have downgraded this private health insurer’s shares to an underperform rating with an improved price target of $2.70. The broker expects 2021 to be a tough year for health insurance providers due to structural pressures. The broker notes that a sizeable catch up in claims is coming post-pandemic, which it feels could weigh on earnings. As such, it has cut its forecasts accordingly. The Medibank share price ended the week at $3.01.

More reading

• This ASX sector is facing a tough 2021
• ASX 200 up 1.55%: ANZ & Westpac surge higher, Afterpay & Xero tumble
• Why the ASX Ltd (ASX:ASX) share price is pushing higher today
• ASX 200 falls on Tuesday
• Why Dacian Gold, Lovisa, MyFiziq, & Zip shares are dropping lower

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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At the small end of the market there are a number of companies which are growing at a very strong rate.

Three small cap tech shares that investors might want to get better acquainted with are listed below. Here’s how they have been performing:

Avita Medical Ltd (ASX: AVH)

Avita Medical is a global regenerative medicine company best known for its Recell system. This is a spray-on skin treatment used for burns victims. Demand for its offering has been growing very strongly over the last couple of years. Pleasingly, this has continued in FY 2021 after a minor blip in FY 2020 because of the pandemic.

During the first quarter, Avita reported a 59% increase in U.S based RECELL revenue to US$5 million. This strong revenue growth was driven by a 27.2% increase in procedural volumes to 496 and the addition of 9 new accounts in the first quarter. The latter brings its total accounts to 86.

Avita isn’t settling for this and is busy seeking to expand the use of the Recell system. It is hoping to be able to treat vitiligo with the system in the future. In addition, the company recently announced a collaboration with Houston Methodist Research Institute that will see the pairing of Avita’s proprietary Spray-On Skin Cells with Houston Methodist Research Institute’s expertise in reversing cellular ageing. The project is seeking to establish proof-of-concept for the development of a novel approach to reverse ageing and rejuvenate skin.

Bell Potter currently has a speculative buy rating and $15.00 price target on the company’s shares.

Bigtincan Holdings Ltd (ASX: BTH)

Bigtincan is a growing provider of enterprise mobility software. This software allows sales and service organisations to increase their sales win rates, reduce expenditures, and improve customer satisfaction. Bigtincan has been experiencing strong demand for its platform in 2020 from some major companies such as Nike and Red Bull.

This led to it growing its annualised recurring revenue (ARR) by 53% year on year to $35.8 million in FY 2020.

Pleassingly, more of the same is expected in FY 2021, with management providing guidance for ARR of $49 million to $53 million. This is still scratching at the surface of a sales engagement platform market estimated to be worth $6 billion a year by 2021.

Analysts at Canaccord Genuity are fans of the company. The broker has put a buy rating and $1.40 price target on its shares.

More reading

• Leading broker names the ASX healthcare shares to buy in 2021
• 2 explosive ASX tech shares to buy in January
• Why did the Avita (ASX:AVH) share price dive 60% in 2020?
• 2 growing mid cap ASX shares to buy
• Why AVITA, IDP Education, Over the Wire, & Viva Energy shares are dropping lower

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 BIGTINCAN FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Avita Medical Limited. The Motley Fool Australia has recommended Avita Medical Limited and BIGTINCAN FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some ASX dividend shares that have yields of more than 5%.

Higher yields may be attractive to some income-seeking investors that are struggling to find yield.

Here are some examples of businesses with yields of more than 5%:

Tassal Group Limited (ASX: TGR)

Tassal is Australia’s largest fish business. It has a large salmon segment and also a steadily-growing prawn division.

According to the ASX, Tassal has a market capitalisation of $721 million. At the current Tassal share price, it has a grossed-up dividend yield of almost 6%.

In FY20 the company generated earnings before interest and tax (EBIT) growth of 12.7% to $99.8 million and 13.3% growth of operating net profit after tax (NPAT) growth of 13.3% to $64.2 million. Statutory profit also went up 18.3% to $69.1 million. It was in this result that Tassal’s board decided to maintain its annual dividend at $0.18 per share.

A couple of months ago Tassal announced it was building on its prawn growth strategy after it acquired Billy Creek, a 1,300 hectare property which was next to its existing Proserpine prawn farm.

The combination of the two prawn properties provides an opportunity for an additional 350 hectares of ponds, supporting a total of circa 800 hectares of ponds across the wider precinct. Having two neighbouring properties means there is likely to be substantially lower capital investment required at the fish farms and material unit cost benefits and asset synergies such as processing, hatchery and management costs.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current describes itself as a global multi-boutique asset management business committed to partnering with exceptional investment managers. It combines capital, with specific economic structures, with strategic business development to help businesses grow.

According to the ASX, Pacific Current has a market capitalisation of $322 million. At the current Pacific Current share price it has a grossed-up dividend yield of 7.9%.

In FY20 its funds under management (FUM) grew by 62% to $93 billion. Its underlying earnings per share (EPS) went up 18% to $0.51 and the dividend per share jumped 40% to $0.35.

In the three months to 30 September 2020, Pacific Current’s FUM went up 14% to $106.4 billion which was predominately thanks to GQG.

Aside from investing in more managers, such as the recent Astarte Capital Partners investment, the ASX dividend share is planning for growth by thinking about launching a private fund to invest alongside Pacific Current – the company would receive management fee revenues from the fund and co-investment rights.

Nick Scali Limited (ASX: NCK)

Nick Scali is a furniture retailing business. Every year, Nick Scali imports more than 5,000 containers of leather and fabric lounges as well as dining room and occasional furniture.

According to the ASX, Nick Scali has a market capitalisation of $878 million. At the current Nick Scali share price it has a grossed-up dividend yield of 6.3%.

FY20 was disrupted by COVID-19. There was negative same store sales of 6.7%, causing sales revenue to decline by 2% to $262.5 million. However, the underlying EBIT margin improved by 90 basis points to 23.2% which helped maintain underlying net profit after tax at $42.1 million. The operating cash flow before interest and tax grew by 22.6%.

In FY20, Nick Scali decided to grow the final dividend by 12.5% to 22.5 cents per share, bringing the full year dividend to 47.5 cents – an increase of 5.6%.

The ASX dividend share announced a week ago that it’s expecting unaudited net profit after tax for the six months to 31 December 2020 to be $40.5 million, up approximately 100% compared to the prior corresponding period. Total written sales orders went up 45% in the first quarter and second quarter growth is 58% after the reopening of Melbourne stores.

The sales order book was at an all time high at 31 December 2020, which is expected to turn into “material” revenue and profit growth in the second half of the financial year.

More reading

• 2 compelling ASX shares to buy in January
• Why Atomos, Corporate Travel Management, Fortescue, & Nick Scali are dropping lower
• Why Nick Scali, Nitro Software, Silver Lake, & Xero shares are dropping lower
• Why these ASX shares just stormed to 52-week highs or better
• Why Fortescue, Nick Scali, Santos, & Zip shares are charging higher

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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