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

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

In late 2018, Moderna Inc (NASDAQ: MRNA) went public in the largest biotech initial public offering (IPO) in history. Its value barely moved until mid-February 2020, when COVID-19 cases in the U.S. started showing up in multiple states. Now that its coronavirus vaccine has received Emergency Use Authorization, some investors might think there is limited upside left in the stock. That thinking might lead shareholders of Moderna to do the worst thing they could do right now.

Warp speed and beyond

Working with the National Institute of Allergy and Infectious Diseases, the company delivered a vaccine just 42 days after the genome sequence of the novel coronavirus was made public. Since then, the U.S. government has provided $4.1 billion to the company to get the drug to market, and will purchase 200 million doses of the vaccine with an option to buy 300 million more. Management’s base case is for 600 million of the doses to be available by the end of 2021.

Much has been made about using mRNA for its vaccine, but patented fat molecules that deliver the genetic instructions to the cell are also part of the secret sauce. Without these, a strong response from the immune system would destroy both carrier and cargo. On a December investor conference call, CEO Stephane Bancel referenced the 20 products in the company’s pipeline using this approach, asserting capital had been a limiting factor in the past. Now, with $4 billion of cash on the balance sheet, he expects more successful launches such as the potential for $2 billion to $5 billion in sales from the company’s cytomegalovirus vaccine, which is currently in a phase 2 trial. 

Selling the stock now that one drug is authorized may lock in a profit, but Moderna’s most valuable asset could be its platform for drug development. If so, it will take years to play out. Shareholders who sell now could be giving up on the company just as it’s starting to revolutionize how diseases are treated.

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

More reading

• Why Moderna stock fell 32% in December
• Moderna’s stock has surged 488% in 2020: Is it a buy for 2021?
• Here are the US shares ASX investors are buying
• How the 21st century actually started in 2020
• Where will Moderna be in 5 years?

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

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Making a passive income large enough to give up work is likely to be a major ambition for many people.

Through buying a diverse range of high-quality dividend shares today, it is possible to obtain a worthwhile income alongside generous capital returns.

Although holding some cash means lower returns in the short run, it can act as a buffer to protect an investor from market downturns such as the 2020 stock market crash.

Buying dividend shares for a passive income

Dividend shares offer the most attractive passive income among mainstream assets at the present time. Low interest rates and high property prices mean that the income returns of savings, bonds and property are relatively low. As such, for investors who have capital available to invest today and require an income right now, dividend stocks are likely to be the obvious choice.

They could also provide strong capital growth in the long run. This makes them attractive for investors who are seeking to build a portfolio from which to obtain an income in the long run. The high yields of many income shares suggests that they offer good value for money at the present time, which could translate into capital growth. Meanwhile, their appeal versus other assets could lead to growing demand that pushes their valuations higher in the long run. This may lead to a larger retirement portfolio that makes it easier to generate a passive income in older age.

Diversifying among dividend stocks

Whether an investor is seeking a passive income today or in future, diversifying among a wide range of dividend shares is an important consideration. The future outlook for the economy is very uncertain at the present time. Some companies, industries and regions could be hit harder by factors such as political change and the future path of the coronavirus pandemic.

Therefore, it makes sense to have a broad range of stocks from a variety of industries and locations in a portfolio. This reduces an investor’s reliance on a small number of stocks for their capital returns or income. The end result could be a stronger, and more resilient, passive income in the long run.

Holding cash to reduce risk

As mentioned, cash savings offer a disappointing passive income due to low interest rates. However, holding some cash can be a sound move.

For investors who seek an income today, cash can act as a buffer should the economic outlook deteriorate. This was the case in the first part of 2020, when many companies postponed or cancelled their dividends in response to the coronavirus pandemic.

Similarly, holding cash can allow an investor who is building a portfolio to take advantage of sudden declines in share prices. This may enable them to use market cycles to their advantage in building a larger portfolio with a more generous passive income in the long run.

More reading

• Why the Treasury Wine (ASX:TWE) share price crashed 43% lower in 2020
• These were the best-performing ASX IPOs in 2020
• ASX mining shares that delivered the best returns in 2020
• Warning: 2021 is going to be difficult
• 2 ASX dividend shares with attractive 2021 yields

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

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The Treasury Wine Estates Ltd (ASX: TWE) share price was well and truly out of form in 2020.

Over the 12 months the wine company’s shares lost approximately 43% of their value.

Why did the Treasury Wine share price crash lower in 2020?

There was one major catalyst for the company’s bitterly disappointing share price performance over the last 12 months.

It started in August when reports first emerged suggesting that China was preparing to put import duties on Australian wine exports amid allegations of wine dumping.

This then became a reality in November when the Chinese Ministry of Commerce (MOFCOM) officially announced tariffs on Australian wine exports.

Treasury Wine was hit particularly hard and revealed that the MOFCOM had applied a deposit rate of 169.3% to the imported value of its wine in containers of two litres or less.

This provisional measure is in place until 28 August 2021 at the latest. Though, the company advised that the final determination of the anti-dumping investigation will determine if the measure will be maintained, adjusted, or removed beyond that date.

What impact does this have?

Unfortunately for Treasury Wine, it has been generating a significant amount of revenue in the China market.

In FY 2020, China represented approximately two-thirds of the total Asia region earnings or 30% of its overall group earnings. This is predominantly from its luxury and masstige wine, which can ill-afford to have prices increased by ~169%.

In light of this, management has warned that while the provisional measure remains in place, demand for its portfolio in China is expected to be extremely limited.

Will 2021 be better for Treasury Wine?

Management has been busy developing a detailed response plan which aims to reduce the impact on its earnings and maintain the long-term diversification and strength of its business model and brands.

However, it notes that the benefits are likely to be limited in FY 2021 and will progressively reach their full potential over a two to three-year period.

As a result, 2021 looks set to be a tough year for the wine company. But with its share price losing half of its value in 2020, it’s probably fair to say that this is already reflected in its valuation.

Though, one broker that is still sitting on the fence is Goldman Sachs. It has a neutral rating and $8.60 price target on its shares.

Goldman is forecasting earnings per share of 31 cents, 46 cents, and 53 cents, respectively, over the next three years. This means its shares are changing hands for 31x estimated FY 2021 earnings at present.

More reading

• My biggest regrets from 2020
• 2 ASX dividend shares with generous yields
• ASX 200 shares hardest hit by COVID-19 in 2020
• These ASX dividend shares offer investors attractive yields
• 2 ASX dividend shares with big yields

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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Private companies climbed over one another to go public in 2020 to grab all the money on offer in a hot share market.

But with such a wide range in quality, some did better than others after listing on the ASX.

“Some [were] taking advantage of a short term boost to profits from COVID. With the market placing high valuation multiples on some of these sectors, they got the double benefit of high valuation multiples on cyclically high profits,” Prime Value portfolio manager Richard Ivers told The Motley Fool last week.

“Others were high quality businesses with a solid long term outlook.”

Sudden share price spikes in the early life of ASX shares don’t necessarily equate to long-term investment worth.

But it’s still interesting to look at which initial public offerings (IPOs) performed the best last year after listing. It indicates confidence from investors that the company has some sort of future.

The Motley Fool has picked out the six newly listed companies which delivered the highest share price gains in 2020. (Mining companies, often speculative, have been excluded from the rankings.)

Douugh Ltd (ASX: DOU): 467% return

This fintech has gone gangbusters since listing in October. Investors lucky enough to pay 3 cents per share during the IPO saw the Douugh share price end the year off at 17 cents.

Douugh has an eponymous smartphone app that helps users use artificial intelligence to “simplify” everyday banking. It analyses spending, pays bills, and helps customers reach savings goals.

The company also has a partnership with Mastercard Inc (NYSE: MA) to issue virtual debit cards under that badge.

Douugh shares have been in a trading halt since before market open on 21 December, pending an announcement regarding an acquisition.

Cosol Ltd (ASX: COS): 290% return

Cosol is a technology services provider, specialising in enterprise asset management systems. 

It managed to list in January before COVID-19 really struck Australia with an IPO price of 20 cents per share. Shares in the Brisbane business sold for 78 cents when the trading year ended.

The company revealed at its annual general meeting in November that it had won contracts with big clients like the Australian Defence Force and Energy Queensland.

4DMedical Ltd (ASX: 4DX): 233% return

Another technology company, 4DMedical is the inventor of a medical imaging system called XV Lung Ventilation Analysis Software. The business reaps revenue from both software and hardware.

4DMedical sold shares for 73 cents a piece during its IPO. The 4DMedical share price has taken off since its float on the ASX in August, trading at $2.43 at the end of 2020.

The Melbourne and Los Angeles-based firm received approval for its technology from the Therapeutic Goods Administration in September, and scanned its first commercial patient in December.

Playside Studios (ASX: PLY): 130% return

Playside Studios is an electronic games maker. The company sold for 20 cents a share during its IPO but after less than a month of ASX trading it ended the year at 46 cents. 

Read about Playside’s work in our 3 mammoth IPOs of 2020.

Credit Clear Ltd (ASX: CCR): 113% return

You can see by now there is a definite theme among the highest-returning IPO shares in 2020.

Credit Clear is yet another tech provider that sells accounts receivables software. The app provides the payer with an option for paying in instalments and allows the payee to access business intelligence about its customers.

After selling for 35 cents during its IPO, the Credit Clear share price surged 133% in just its first week on the ASX in October.

It has somewhat moderated now but still went for a very nice 74.5 cents when the year closed.

Aussie Broadband Ltd (ASX: ABB): 99% return

Aussie Broadband is an internet services provider, mainly selling NBN plans.

The company deliberately markets itself as a premium provider, pointing out its superior speed, bandwidth and Australian customer service call centre.

The Victorian company sold its IPO shares for $1 a piece, including to some lucky customers. When it floated on 27 October, Aussie Broadband’s market capitalisation was $190 million.

Now, with the Aussie Broadband share price doubling in just two months, it is using the capital raised to build its own dark fibre network. This means in the long term it will no longer have to pay lease fees to Telstra Corporation Ltd (ASX: TLS).

“It also means we can connect businesses directly to our own fibre. So we’re not paying the NBN or someone else for those services,” Aussie Broadband managing director Phillip Britt told The Motley Fool back in September.

“We’ve got some fairly lofty ambitions. The capital markets was the obvious way to raise cash to do what we want to do.”

More reading

• The Telstra (ASX:TLS) share price sank 15% lower in 2020: Time to buy?
• 3 mammoth IPOs of 2020
• 2 exciting small cap ASX shares to watch in 2021
• Here are 6 of the top performing ASX fintech shares of 2020
• Can the ugliest ASX 200 dogs of 2020 turnaround in the New Year?

Tony Yoo 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 Mastercard. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Aussie Broadband Limited. The Motley Fool Australia has recommended Mastercard. 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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China’s appetite for commodities and global supply disruptions has led to a standout year for commodity prices across the board.

But not all commodities are created equal. Here are the top performing ASX 200 mining shares that delivered the best returns in 2020.

1. Mineral Resources Limited (ASX: MIN)

The Mineral Resources share price is the best performing ASX mining share after running 127% to a record all-time high of $37.50. The company is involved in both mining services to help clients operate and maintain facilities, establish and manage production, as well as investments in commodity projects including iron ore and lithium assets. 

The commodity boom has benefited every aspect of its business, with FY20 being the company’s best full year results to date. It posted earnings before interest, tax depreciation and amortisation (EBITDA) up 77% to $765 million and boasts a return on invested capital of 49.6%. The company is ensuring that its iron ore projects maximise volumes to capitalise on strong iron ore prices. 

2. Fortescue Metals Group Ltd (ASX: FMG)

The Fortescue share price comes in at second place after soaring up 115%. This is largely thanks to the iron ore spot price hitting a fresh 7-year high of US$158 per tonne on the back of supply constraints and China’s infrastructure spending. 

Looking ahead in 2021, the Australian Government commodity forecaster, the Office of the Chief Economist, sees iron ore prices to remain above US$100 per tonne until mid-2021, before easing gradually to around U$75 by the end of 2022 as supply recovers and Chinese stimulus eases back.  

3. Oz Minerals Limited (ASX: OZL) 

The Oz Mineral share price finished the year 80% higher thanks to higher copper and gold prices. The company experienced the best of both worlds with copper topping US$8,000 a ton last month for the first time in more than 7 years and gold sitting near record all-time highs of US$1,922/oz. 

4. Lynas Rare Earths Ltd (ASX: LYC) 

The Lynas share price has hit a 7-year high after its shares surged more than 70% last year. China is the world’s largest supplier of rare earths, but rising global trade tensions between the US and China has helped push prices to multi-year highs. Lynas mainly produces the rare earth compound Neodymium (NdPr) which has soared to a 7-year high.

Foolish takeaway

The combination of a weaker US dollar, Chinese stimulus and rising global liquidity has helped bolster many commodities well above pre-COVID-19 highs. ASX mining shares, especially iron ore and copper producers, will likely continue to benefit from this so called ‘commodity super cycle’ in 2021. 

More reading

• 2 ASX dividend shares with attractive 2021 yields
• Is it better to buy 2020’s best or worst ASX shares?
• Will the Fortescue (ASX:FMG) share price double again in 2021?
• 5 things to watch on the ASX 200 on Monday
• Highlights from the ASX 200’s best ever December quarter

Motley Fool contributor Lina Lim 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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An expert has warned this year will be a tough one for share investors.

According to Forager Funds chief investment officer Steve Johnson, share markets have now gone too far ahead of economic recovery from COVID-19.

“I think it’s going to be a difficult year,” he said on a Forager video.

“People need to expect those returns from equities to be lower than they’ve been historically from today’s pricing level. That makes it more difficult.”

The major dark cloud in 2021, according to Johnson, is interest rates heading up in response to a steep economic recovery out of the current recession.

“If we’re ever going to see pressure on interest rates going up and inflation, it’s going to be over the course of the next two years,” he said.

“I think that’s the big risk for financial markets of all sorts out there, that interest rates start to pick up over the next few years and that people start looking at 5% and 6% returns on equities and saying ‘Well, I can get 3% on a bond portfolio now. I want more.’”

His perspective is a contrast from other finance experts who have predicted a boom year for equities in 2021.

BetaShares chief economist David Bassanese said last month earnings forecasts have “held up remarkably well in recent months”.

“We are looking at 15 per cent growth in forward earnings by end [of] 2021 if current expectations hold up.”

Johnson’s cautiousness was why his team’s funds, including Forager Australian Shares Fund (ASX: FOR), are concentrating on current cash flow.

“We’re really positioning ourselves to be [in the] short duration we own businesses that are going to give us cash flow in the short to medium term, rather than using low discount rates to justify high prices for businesses down the track.”

Buying in dips takes nerves of steel

During last year, the Forager team took advantage of the volatility to pick up some bargains during the dips.

But that takes courage because no one knows when the market’s hit the bottom until afterwards.

“At the times when the best opportunities are there, it is going to be stressful,” Johnson said.

“That’s probably my most important role as CIO here that I get up in those times of crisis and I say to our whole team: ‘Everyone is panicking, it is time for us to invest.’”

He added this is why it’s important during quiet times to prepare a target list of stocks one will buy if the market sinks.

“[Being] ready to pull the trigger in those environments is the most important thing that you can do to take advantage of it.”

Johnson recalled how his team was able to pick up shares of a very prominent US tech company during the panic last March.

“We copped a lot of criticism for our investment in Uber Technologies Inc (NYSE: UBER) at US$24 a share. It’s trading north of US$50 now and it really was widespread panic in that part of the market that nobody was ever going to start using that company’s products again,” he said.

“I don’t think anyone that actually sat down and did a proper analysis of what that business was worth at the time would have concluded it was worth less than US$24.”

The share price for Forager Australian Shares Fund was at $1.15 a year ago but traded at $1.38 as of late Monday afternoon.

More reading

• What to do when your shares are heavily shorted
• Why shares are less risky now than 30 years ago
• How to invest in US shares in 2021
• Here are the US shares ASX investors are buying
• Amazon’s driverless electric vehicle is coming

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Uber Technologies. 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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Thankfully in this ultra-low interest rate environment, there are a large number dividend shares for investors to choose from on the Australian share market.

Two ASX dividend shares that could be top options for income investors are listed below. Here’s why they come highly rated:

Bravura Solutions Ltd (ASX: BVS)

The first dividend share to look at is Bravura. It is a leading wealth management and transfer agency software solution provider.

Bravura has a number of popular solutions that are being used by big financial institutions.  This includes its key Sonata wealth management platform, the Rufus transfer agency solution, the Garradin back office solution, and the Midwinter financial planning solution.

These solutions have large addressable markets and appear to have positioned the company perfectly for growth once the pandemic passes.

One broker that is positive on the company is Goldman Sachs. It has a buy rating and $4.50 price target on its shares and is forecasting a 10.6 cents per share dividend in FY 2021. Based on the latest Bravura share price, this represents a 3.3% dividend yield.

Fortescue Metals Group Limited (ASX: FMG)

Another dividend share to consider is Fortescue. It is one of the world’s leading iron ore producers and looks perfectly placed to deliver another bumper profit result in FY 2021. This is thanks to its record shipments, ultra-low C1 production costs of US$12.74 per wet metric tonne, and the sky high iron ore price.

In respect to the iron ore price, the steel making ingredient rose 3% to US$165.29 a tonne overnight. With prices at this level, Fortescue is generating significant free cash flows from its operations.

Macquarie is expecting the majority of this to be returned to shareholders in the form of dividends. The broker has pencilled in a dividend of approximately $2.61 per share fully franked in FY 2021. Based on the current Fortescue share price, this equates to a massive 10.5% dividend yield.

More reading

• Is it better to buy 2020’s best or worst ASX shares?
• Will the Fortescue (ASX:FMG) share price double again in 2021?
• 5 things to watch on the ASX 200 on Monday
• Highlights from the ASX 200’s best ever December quarter
• The 5 best performing ASX 200 shares of 2020

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.

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Are you looking for ASX dividend shares to boost your income? There could be some ideas to consider in this article:

Pacific Current Group Ltd (ASX: PAC)

Pacific Current has a grossed-up dividend yield of 8.1%.

In FY20 it grew its dividend by 40% to $0.35 per share on the back of underlying earnings per share (EPS) going up by 18% to $0.51.

It generates earnings by making investments into quality fund managers around the world and benefiting from growth in funds under management (FUM) of those managers. In FY20, FUM grew 62% to $93 billion, largely thanks to fund manager GQG.

For the quarter to 30 September 2020, the ASX dividend share’s FUM went higher by 14% to $106.4 billion, again GQG was the main contributor for growth.

Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

According to Commsec, it’s valued at 9x FY23’s estimated earnings.

Brickworks Limited (ASX: BKW)

Brickworks has a grossed-up dividend yield of 4.3%.

The ASX dividend share hasn’t cut its dividend for over 40 years. The dividend is supported by its non-construction assets.

Brickworks owns approximately 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). Soul Patts has plenty of different listed and unlisted investments. Some of the holdings on the ASX are TPG Telecom Ltd (ASX: TPG), Brickworks itself, New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industries Ltd (ASX: API), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Palla Pharma Ltd (ASX: PAL). Unlisted investments include financial services, resources, agriculture and swimming schools. Soul Patts has increased its dividend per share to Brickworks every year since 2000.

The other asset that funds Brickworks’ dividend is its 50% stake of a joint venture property trust with Goodman Group (ASX: GMG). This trust builds quality industrial properties for tenants on the excess land that Brickworks no longer needs. The latest property being built is a huge, high-tech warehouse for Amazon. When the Amazon warehouse, and one for Coles Group Ltd (ASX: COL), is completed it’s expected to push the gross assets of the trust up above $3 billion and increase the rental profit distributions by at least 25%.

As a bonus about Brickworks for ASX dividend share investors, the Australian construction sector is starting to recover from COVID-19 impacts. However, the US construction industry is still struggling.

APA Group (ASX: APA)

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

The energy infrastructure giant funds its annual distribution from the operating cashflow, which grows as more projects come online. APA just announced another pipeline project in WA which is expected to unlock more cashflow in the coming years.

At the current APA share price, it has a distribution yield of 5.2%. The ASX dividend share has increased its distribution every year for a decade and a half, which is one of the longest records on the ASX, behind Soul Patts.

More reading

• These were the worst performing ASX 200 shares last week
• Top ASX shares to buy in January 2021
• 2 ASX dividend shares to buy for 2021
• 3 ASX shares to buy for 2021
• ASX 200 drops lower

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group and 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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The Telstra Corporation Ltd (ASX: TLS) share price was a disappointing performer again in 2020.

The telco giant’s shares lost 15.1% of their value over the 12 months. This compares to a 1.4% decline by the benchmark S&P/ASX 200 Index (ASX: XJO).

Why did the Telstra share price underperform?

Investors were selling Telstra’s shares last year amid concerns over the impact that the pandemic was having on its operations and ultimately its dividend.

In FY 2020, the company estimated that its underlying result included a net negative impact from COVID-19 of approximately $200 million. This relates to lower international roaming, financial support for customers, delays in NAS professional services contracts, and additional bad debt provisions.

And while this didn’t stop Telstra from maintaining its 16 cents per share fully franked dividend in FY 2020, there are nagging fears that this might not be the case in FY 2021.

In light of this, the Telstra share price has fallen accordingly to reflect a potential dividend cut.

Is a dividend cut coming?

Judging by its share price performance, many in the market appear to believe a dividend cut is coming this year.

However, it is worth noting that most analysts are forecasting a 16 cents per share fully franked dividend for the foreseeable future.

This follows comments by the company in respect to its willingness to adjust its dividend policy appropriately to maintain this dividend, just as long as it isn’t for a temporary fix.

What else happened in 2020?

In November Telstra announced an important milestone in its T22 strategy with the proposed restructuring of the company to create three separate legal entities.

Telstra’s CEO, Andrew Penn, believes the restructure would enable the company to take advantage of potential monetisation opportunities for its infrastructure assets which could create additional value for shareholders.

Mr Penn commented: “The proposed restructure is one of the most significant in Telstra’s history and the largest corporate change since privatisation. It will unlock value in the company, improve the returns from the company’s assets and create further optionality for the future.”

Is the Telstra share price weakness a buying opportunity?

This proposal went down well with analysts at Goldman Sachs. It reiterated its buy rating and $3.75 price target on its shares following the news.

The broker also reaffirmed its forecast for a 16 cents per share fully franked dividend in FY 2021 and beyond.

Goldman commented: “We believe the update from Telstra will be viewed positively, given: (1) it reflects a greater willingness to monetize its attractive infrastructure assets to create shareholder value; and (2) underlying earnings trends, particularly in mobile, which looks to be trending favorably, supporting the improved FY23 ROIC target.”

“This supports our positive view on Telstra, which continues to be predicated on: (1) A positive mobile inflection approaching, which typically drives outperformance; (2) The 16cps dividend is a sustainable, and could be supplemented by meaningful TowerCo proceeds; and (3) Significant Infrastructure value, which could be crystallized over time as we head towards NBN privatization,” it concluded.

More reading

• Can the ugliest ASX 200 dogs of 2020 turnaround in the New Year?
• 2 star stocks for your ASX retirement portfolio
• 2 buy-rated ASX dividend shares for income investors to snap up
• These ASX dividend shares could be top Christmas gifts for income investors
• 3 top ASX dividend shares for a better retirement

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 ASX shares out there that are growing very quickly. Businesses that are growing faster than average may be able to achieve higher-than-average shareholder returns.

These two businesses are growing rapidly:

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is a large online-only retailer of furniture and homewares. It has over 180,000 products on sale from hundreds of suppliers. The company runs a drop shipping model, where products are sent directly to customers by suppliers which enables faster delivery times and reduces the need to hold inventory, thereby allowing a larger product range. The ASX share also has its own private label range which is sourced from overseas suppliers.

FY20 was a year of accelerating growth. For the full year it grew revenue by 74% to $176.3 million. However, revenue went up 96% in the second half and it grew 130% in the fourth quarter.

Whilst revenue grew 74%, earnings before interest, tax, depreciation and amortisation (EBITDA) went up 483% to $8.5 million. The adjusted EBITDA margin improved from 2.5% in FY19 to 5.3% in FY20.

The company said that its growth, combined with the negative working capital nature of the business model, allowed it to finish with $38.1 million in cash and zero debt, which excludes the $40 million capital raising money.

Temple & Webster’s CEO Mark Coulter explained the benefits of gaining market share during the most-affected COVID-19 months: “The NAB online sales index suggests our category grew around 57% during the months of April to July, while we grew around 150% for the same period. We believe this is due to the increasing benefits of scale as we get larger. We are forging closer relationships with our suppliers as we become a more significant part of their business which allows us to obtain stock security, better terms and exclusive product ranges. We are also making larger investments in areas such as technology and data, brand awareness and our private label products; and we can produce more content by having more creative resources. In effect, the bigger we get, the better and strong our customer proposition becomes, which is a virtuous cycle.”

In FY21 the company said that its revenue had grown by 138% for the period of 1 July 2020 to 19 October 2020, compared to the prior corresponding period. The first quarter of FY21 saw EBITDA of $8.6 million, which was more than the total of FY20. The contribution margin continued to be higher than 15% and customer satisfaction was still at record levels.

Temple & Webster said it’s committed to a high growth strategy to take advantage of the structural shift towards online, capitalising on both organic and inorganic opportunities.

According to Commsec projections, the Temple & Webster share price is currently valued at 35x FY23’s estimated earnings.

Kogan.com Ltd (ASX: KGN)

Kogan.com is another ASX share that’s growing rapidly. It’s an e-commerce platform that sells a wide array of products and services including phones, TVs, appliances, toys, clothes, cars, mobile, internet, insurance and credit cards.

The locked-down period also helped Kogan.com grow rapidly with the shift to online shopping.

FY20 saw gross sales jump 39.3% to $768.9 million, adjusted EBITDA went up 57.6% to $49.7 million and net profit went up 55.9% to $26.8 million. This helped total dividends rise by 46.9% to 21 cents per share. The EBITDA margin has grown from 4.3% in FY17 to 9.3% in FY20.

One of the things that the company is most proud of is its growing Kogan First membership base because members purchase on average much more often than non-members, demonstrating loyalty to the platform.

In the first four months to October 2020, gross sales increased by 99.8%, gross profit went up 131.7% and adjusted EBITDA went up by 268.8%. The company has been making large marketing investments into building the customer base and brand, which it’s expecting will have long term benefits for the company.

According to Commsec, the Kogan.com share price is valued at 26x FY23’s estimated earnings. 

More reading

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• These ASX shares are growing rapidly in FY 2021
• Got money to invest? Here are 3 ASX shares to buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group 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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