Tag: Motley Fool

The BHP Group Ltd (ASX: BHP) share price will be one to watch this morning after the release of an update.

What did BHP announce?

This morning BHP provided an update on its Samarco operation in Brazil, which is co-owned with Brazilian mining giant Vale.

According to the release, Samarco has now met the licensing requirements to restart its operations at the Germano complex in Minas Gerais and its Ubu complex in Espírito Santo, Brazil. As a result, the mining giant has commenced iron ore pellet production.

This comes just over five years since Samarco’s operations were suspended following the failure of the Fundão dam on 5 November 2015. That dam failure led to the tragic loss of 19 lives at the operation.

Management advised that Samarco’s gradual restart of operations incorporates concentrator 3 at the Germano complex and pelletising plant 4 at Ubu. There will also be a new system of tailings disposal combining a confined pit and tailings filtering system for dry stacking.

Independent tests have been carried out on Samarco’s preparations for a safe restart of its operations. The company expects to initially produce approximately eight million tonnes of iron ore pellets per annum.

What has happened over the last five years?

The company revealed that extensive work is still being undertaken by the Renova Foundation to remediate and compensate for the damages of the failure of the Fundão dam in 2015 and that BHP Billiton Brasil continues to support Renova in its work.

By November 2020, Renova had spent approximately BRL 10.7 billion (approximately US$2.1 billion) on its remediation and compensation programs.

In addition to this, over the same period, approximately BRL 3.1 billion (approximately US$620 million) had been paid in indemnities and emergency financial aid to approximately 325,000 people.

Iron ore price softens.

Potentially offsetting this positive update is news that the iron ore price softened overnight.

According to CommSec, the spot iron ore price lost US$3.95 or 2.4% to end the session at US$163.05 a tonne.

This could put a bit of pressure on the shares of BHP, Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) today.

More reading

• Are we heading for a new ASX resources ‘supercycle’?
• Why is everyone talking about the iron ore price?
• ASX miners put on alert as the iron ore price crashes overnight
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Iron ore hits 9-year high: What this means for BHP, Fortescue, & Rio Tinto

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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Well, 2020 has certainly been an eventful year, from raging bush fires to widespread pandemic panic. If one thing is for sure, we are eager to put it behind us and start afresh in 2021.

One phenomenon I will be watching in the coming year is the Millennial and Gen Z participation in the market. There have been strong catalysts this year for the massive influx, but there are also risks to this trend.

Why the trend?

Unfortunately for my young comrades (being a Millennial myself) the pandemic has hit us hardest when it comes to both unemployment and under-employment.

According to the labour force data from the Australian Bureau of Statistics, in November the youth unemployment rate increased another 0.1 percentage point to 15.6%. However, this is still lower than the 23-year record high in June, at 16.4%.

With such a high unemployment rate, the younger demographic was left sitting at home wondering what to do next.

It seems that when you mix youthful exuberance, boredom, and desperation, you get beginner investors trying their luck at share market trading. This concoction has already been dubbed the ‘Robinhood phenomenon’, popularised by the US-based fee-free trading app, Robinhood.

Data in Australia indicates that more than 40% of Millennials and Gen Zers bought shares for the first time this year, as reported in the Australian Financial Review. This is a far greater uptake than other demographics and implies these younger people were seeking a new avenue for income.

What are the risks?

When you drop a novice into a pro arena, the outcome is usually not good for the novice. It is fine to risk what you can afford to lose while gradually building up experience. When unemployed, however, what you’re risking is your next rent – or possibly (thanks to the government) your superannuation.

Unfortunately, getting rich overnight on a penny stock or pulling a full-time job’s worth of income in dividends tends to be reserved for very few people. The more common outcome is sub-optimal returns for the investor looking to make a quick fortune.

The problem (although a good problem to have in the short term) is that the market has rallied hard since the 23 March low, with the S&P/ASX 200 Index (ASX: XJO) returning just over 46% at the time of writing.

If you invested in some reasonably notable shares in March/April you would have a decent profit by now. Though the market doesn’t go up forever and beginner investors should be mindful of their exposure in the event of another bear market.

If only we had a crystal ball

To say what 2021 entails would be impossible, although it would be nice if it was a little less eventful.

There are two ways I can see it going – either the number of new young investors will go down or up with the youth unemployment rate, or Pandora’s box has been opened and the phenomenon will continue to thrive, irrespective of the unemployment rate.

It certainly will make for an interesting year ahead.

More reading

• The NBN is finally finished. Is Telstra (ASX:TLS) waiting in the wings?
• BrainChip (ASX:BRN) share price on watch following major announcements
• Got cash to invest? Here are 3 ASX shares to buy
• Why the BSA (ASX:BSA) share price is on watch today
• What to do when your shares are heavily shorted

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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Those of us with longer memories (or perhaps just longer lifespans) might remember the origins of the National Broadband Network (NBN). It was first announced as an election promise back in 2007, upon which construction began shortly afterwards.

There have been many ups and downs since, as well as a seismic disruption to the telecommunications landscape in Australia – as shareholders of Telstra Corporation Ltd (ASX: TLS) would know.

In building the NBN, the NBN Co required Telstra’s old telephony network of copper wires and ducts to lay the infrastructure required to underpin of the new fibre optic cable. The impacts of this sale have been immense for Telstra shareholders.

Since Telstra could no longer both own a single national cabling network, and charge its competitors for the privilege of using it alongside it, the company is a lot smaller today than it used to be. Rewind the clock back to 2015 and Telstra was a company with a $6.60 share price, and about to pay an annual dividend of 32 cents a share.

Today, Telstra is a company with a share price of $3.01 (at the time of writing). Its investors have enjoyed just 16 cents per share in dividends in 2020.

But things could be coming full circle for Telstra.

Telstra calls NBN home

According to reporting in the Australian Financial Review (AFR), after almost 13 years, the federal communications minister has announced that the NBN is finally complete and “fully operational”. And that means that the NBN is one step closer to the government’s intended goal of privatisation.

According to the report, this declaration is one of 4 steps that the NBN will need to fulfil in order for a sale. The other steps reportedly include a lengthy Productivity Commission enquiry.

However, the AFR reports that, in a rather poetic turn of events, Telstra is the leading contender to buy the NBN back off the government when it does get the final green light for sale. There are likely to be competitors for the NBN such as superannuation funds.

But the AFR notes that any future owner that isn’t Telstra would have to pay up every year to keep using Telstra’s infrastructure, as the NBN does today. That means Telstra would be the only bidder without this handicap to overcome. As such, Telstra is considered the frontrunner.

Well, it won’t exactly be ‘Telstra’ owning the NBN, rather Telstra’s infrastructure division InfraCo. The report tells us that if Telstra did decide to bid, “the Australian Competition and Consumer Commission has been clear it would have to separate [InfraCo] from Telstra and become its own standalone company”.

So perhaps Telstra shareholders have a spin-off to look forward to at some point in the next few years. If the report is to be believed of course. Something for Telstra shareholders to keep in mind!

More reading

• Why the BSA (ASX:BSA) share price is on watch today
• 2 ASX dividend shares with big yields
• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• 2 blue chip ASX shares to buy for 2021
• Cimic (ASX:CIM) share price falls despite positive update

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. 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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The BrainChip Holdings Ltd (ASX: BRN) share price is on watch this morning as it comes out of a trading halt. The company’s shares were previously suspended pending a market announcement.

After yesterday’s market close, the artificial intelligence technology company provided two major announcements. The first in relation to an order for its Akida Early Access Evaluation Kit, and the second, a signing of an intellectual property license agreement.

The BrainChip share price closed at 32.5 cents, up 3.1% before being placed in a trading halt on Tuesday.

NASA places an order

According to its release, BrainChip advised that the United States National Aeronautics and Space Administration (NASA) has placed an order for its Akida Early Access Evaluation Kit.

Under the early access program, NASA will use the Akida Early Access Evaluation Kit within its NASA shared service centre (NSSC) at the NASA/Ames research centre (ARC) in California.

The early access program is bestowed to a select group of customers that can have immediate access to the Akida device, evaluation boards and technical support. In exchange for inclusion to the program, BrainChip collects a payment that offsets expenses to provide ongoing support.

NASA will use the kit to examine how Akida technology using a neuromorphic processor will meet its stringent spaceflight requirements. Brainchip highlighted that the Akida neuromorphic processor is capable and fits within spaceflight and aerospace constraints.

The ground-breaking device simulates the functionality of the human neuron without the need for an external CPU, memory or deep learning accelerator. This is important as the reduction in parts requires less size and power, thus fulfilling the minimal component count requirement.

Licencing agreement

In other news, BrainChip also advised it signed an intellectual property license agreement with Renesas Electronics America Inc.

Renesas Electronics America Inc. is a subsidiary of parent company, Renesas Electronics Corp. The latter which is a global semiconductor manufacturer that specialises in microcontroller and automotive system-on-chip (SoC) products.

Under the unconditional agreement, BrainChip will deliver its Akida technology to Renesas Electronics America for use as a SoC licenced product. The deal will include a single-use design license, implementation support services (at an agreed cost), royalty payments per unit, and software maintenance services for 2-years.

The Akida SoC is a small, low cost and low power product that makes it ideal for cutting edge applications. These include advanced driver assistance systems (ADAS), autonomous vehicles, drones, vision-guided robotics, surveillance and machine vision systems.

What did the CEO say?

Commenting on the new order, BrainChip CEO Louis DiNardo said:

We are both excited and proud that NASA has procured Akida as part of our Early Access Program. The recognition that neuromorphic computing may play an important role in spaceflight applications is an important milestone for our industry.

We hope that the potential benefits from the Akida neuromorphic processor for use in spaceflight and aerospace applications may provide a valuable contribution to further NASA’s primary mission to benefit humanity.

Mr DiNardo went on to speak about the licencing agreement:

This is an exciting and significant milestone in obtaining the Company’s first IP licensing agreement. Furthermore, this is a market validation of our technology.

Licensing Akida IP also provides us with an opportunity for recurring revenue over the lifetime of our customer’s SoC product. We are equipped to help additional customers integrate Akida technology into their products, which benefit from low power and real-time performance, as well as extend capabilities to provide AI solutions to IoT devices at the edge without the need for cloud connectivity.

About the BrainChip share price

The BrainChip share price fell from glory in September after reaching as high as 97 cents. Although at current prices, its shares are down 66% from its all-time high, the company is up 673% over the past 12 months.

BrainChip has a market capitalisation of $525.4 million at the time of writing.

More reading

• Why Brainchip Holdings (ASX:BRN) shares are in a trading halt
• Why the BrainChip (ASX:BRN) share price is charging higher
• ASX small caps could get a boost with the Aussie dollar hitting 28-month highs
• Here’s why the BrainChip (ASX:BRN) share price is zooming 8% higher

Motley Fool contributor Aaron Teboneras 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 look like they could be very interesting to watch over the long-term.

Here are three investment ideas to keep your eyes on:

Audinate Group Ltd (ASX: AD8)

Audinate is a business that’s liked by listed investment company (LIC) Climate Capital Ltd (ASX: CAM). Audinate markets the Dante system as a better way to connect AV by replacing point-to-point audio and video connections with easy-to-use, scalable and flexible networking.

Clime liked the recent positive FY21 first quarter trading update from Audinate with monthly revenue trending upwards over the quarter, reaching pre-COVID levels by September. This was better than expected against a forecast of a 38% decline in unit volumes in 2020 which was included in Audinate’s FY20 results presentation in August.

The fund manager said that the recent sales resilience reflects Audinate’s diverse customer base, with stronger demand from corporate and higher education customers offsetting weakness from live music. Industry unit volumes are expected to rise significantly in coming years. Audinate is set to capture much of this demand, with eight times the adoption rate of its nearest competitor. Clime thinks that the next generation products have the potential to accelerate end-market acceptance.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

According to VanEck, the exchange-traded fund (ETF) provider, this investment gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages, or ‘wide economic moats’, according to Morningstar’s equity research team.

For a business to be counted as trading at attractive value, target companies have to be trading at attractive prices relative to Morningstar’s estimate of fair value.

There’s a total of 48 holdings in this ASX share’s portfolio. The largest ten positions at 30 November 2020 were: Applied Materials, Corteva, Charles Schwab, Microchip Technology, Boeing, Compass Minerals International, Aspen Technology, Yum! Brands, Cheniere Energy and American Express.

The ETF has outperformed the S&P 500 over the longer-term. VanEck Vectors Morningstar Wide Moat ETF’s total return has been 16% per annum over the last five years, compared to 13.6% for the S&P 500. Those quoted returns are after the annual management fee of 0.49% per annum.

Kogan.com Ltd (ASX: KGN)

Kogan.com is an e-commerce ASX share. Its website sells a wide variety of products and services.

On the retail side of things, customers can buy items from various categories including TVs, computers, phones, heating and cooling, appliances, furniture, office supplies, toys, video games, clothes, shoes and tools.

The services that it offers, largely through partnerships, include: car insurance, home insurance, internet, mobile, energy, superannuation, credit cards, cars and home loans.

The final place that the ASX share generates earnings from is its membership program called Kogan First. This gives free delivery on thousands of eligible products, upgrades to express shipping at no extra cost, priority customer service and access to exclusive member-only deals and discounts.

Mr Kogan, the founder of the company, has spoken about the benefit to the company of its growing number of people using its loyalty scheme: “The Kogan First community of members grew exceptionally during the second half, and importantly these loyal members on average purchase and save much more often than non-members, demonstrating loyalty to the platform, and also demonstrating the significant savings and other benefits available through the loyalty program.”

In the 2021 financial year to October 2020, Kogan.com’s gross sales were up 99.8%, gross profit was up 131.7% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was up by 268.8%.

The ASX share also just acquired Mighty Ape for $122.4 million, which is an online retailer that specialises on gaming and toys. In FY21 Mighty Ape is expected to generate AU$137.7 million of revenue, gross profit of $45.7 million and EBITDA of $14.3 million, before synergies.

At the current Kogan.com share price it’s valued at 25x FY23’s estimated earnings.

More reading

• 2 dirt cheap ASX shares to buy in 2021
• Is this the perfect ETF to buy for 2021?
• Put these small cap ASX shares on your watchlists today
• 2 exciting mid cap ASX shares to buy for the long term
• Here’s why the Kogan.com (ASX:KGN) share price jumped over 7% higher today

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The BSA Limited (ASX: BSA) share price is on watch this morning on news of a major new telecommunications deal.

The technical services company announced after yesterday’s market close that it has secured a multi-year agreement for its field operation services. The BSA share price closed flat at 33 cents in trading yesterday.

What did BSA announce?

In the release, BSA advised it has entered an agreement to provide Telstra Corporation Ltd (ASX: TLS) with field operations services in partnership with Kordia Solutions.

BSA provides installation and maintenance solutions to the broadcast and telecommunications industries. Kordia Solutions focuses on end-to-end telecommunications, communications, broadcast and servicing infrastructure needs.

The field operations services agreement will see BSA provide Telstra with a range of services. These includes designing and constructing building systems services across its existing Victoria and Tasmanian properties. In addition, the company will perform major telecommunications work in both states that will involve asset relocation and delivery of wideband connectivity.

BSA said the initial term of the deal will be for a 3-year period. This can be extended on Telstra’s behalf for an additional two 1-year options.

The new deal is projected to generate around $25 million in revenue for BSA’s first year of the contract. While this is based on forecasted work volumes carried out, further opportunities are expected to arise in the later years.

What did the managing director say?

BSA managing director Tim Harris, welcomed the deal, saying:

BSA is extremely proud to have teamed with Kordia to secure this contract and to begin a collaborative working relationship with Telstra. We look forward to a long and successful partnership as we bring our expertise in service delivery and customer experience to Telstra and its customer base.

About the BSA share price

The BSA share price has been on peaks and troughs throughout 2020. Reaching as high 41 cents in January, before falling as low as 23 cents in March due to the COVID-19 sell-off.

BSA has market capitalisation of $143 million at its current price.

More reading

• 2 ASX dividend shares with big yields
• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• 2 blue chip ASX shares to buy for 2021
• Cimic (ASX:CIM) share price falls despite positive update
• ASX 200 Weekly Wrap: ASX hits new post-March high

Motley Fool contributor Aaron Teboneras owns shares of Telstra Limited. 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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Shorting is an investment activity that’s usually the domain of professionals and the bane of retail shareholders.

Fund managers who short a stock will make money if the price goes down. It’s hardly an endorsement for the company.

So what happens if you read that a share that you own has been shorted?

Forager Funds chief investment officer Steve Johnson recently addressed this dilemma in a company video. 

Here’s the good news

For any share that you purchase or hold, you need to research both the pros and cons of the company behind it.

This means a report from a short investor is a non-emotive way to educate oneself about the risks, according to Johnson.

“We always want to know what the bear case is on a stock if we’ve got a strong bull case, and understand why people on the other side are selling it.”

Johnson said fundies who short a stock are usually pretty public about their concerns. Perhaps they’re motivated to speak out in order to push the price down.

“You can go and get the report, you can read it, do your own research and work out whether you think they are right or not.”

Perhaps you agree with the short case and decide to sell or not buy.

Huge upside

But say you disagree with the short investor and you hold onto the shares. 

According to Johnson, if the heavily shorted stock surges in value it’ll be a better windfall than other shares.

Why is this?

“The big upside in these stocks is that when they are wrong, it can cause a surge in the share price in a very short period of time as they’re all rushing to get out of their positions.”

Johnson said the level of short interest in each ASX stock is published on the exchange’s website.

“It’s a really good idea if you are researching something on the long side, go and have a quick look at how big the short interest is.

“Then you can usually Google a short interest report about the company that you’re looking at. It’s an interesting way of seeing the bear case.”

Forager Funds runs the ASX-listed Forager Australian Shares Fund (ASX: FOR). Its share price is up more than 15% for the year, trading at $1.36 on Wednesday afternoon AEDT.

More reading

• Sell now or hold forever? What to do with shares like Afterpay (ASX:APT)
• This ASX travel share is already too expensive: fundies

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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The A2 Milk Company Ltd (ASX: A2M) share price will be one to watch on Thursday after the release of an announcement.

What did a2 Milk announce?

This morning a2 Milk confirmed that it has entered into a binding agreement relating to the acquisition of a 75% interest in Mataura Valley Milk (MVM).

MVM is a dairy nutrition business that is located in Southland, New Zealand. Management notes that the proposed acquisition will provide the company with the opportunity to participate in nutritional products manufacturing. It also provides supplier and geographic diversification and strengthens its relationship with key partners in China.

According to the release, the company will be paying a total consideration of NZ$268.5 million for the 75% stake in MVM. This is based on an enterprise value of circa NZ$385 million.

The acquisition will be undertaken on a debt-free cash-free basis and funded from the company’s existing and rather substantial cash reserves. At the end of FY 2020, a2 Milk had a cash balance of over NZ$850 million.

What now?

The completion of the proposed transaction is subject to approval from the New Zealand Overseas Investment Office. Management expects completion to occur on 31 May 2021.

A key feature of the company’s proposed investment in MVM is that MVM’s current majority shareholder, China Animal Husbandry Group (CAHG), will retain a 25% interest alongside it.

CAHG is a wholly owned subsidiary of China National Agriculture Development Group, which itself is the the parent company of a2 Milk’s strategic logistics and distribution partner in China, CSFA Holdings Shanghai (China State Farm).

Why MVM?

The company revealed that the due diligence process has confirmed its strategic rationale for pursuing this acquisition.

Management notes that this includes the establishment of dual supply arrangements for nutritional products to complement its existing supply relationships. It will also help capture a unique opportunity to acquire a recently constructed and operational, world-class nutritional products manufacturing facility in New Zealand.

Another reason is that MVM is well located for access to a growing productive milk pool, supported by favourable climatic conditions and water availability. It also notes that it will be partnering with a highly respected China state owned enterprise in CAHG, to assist in further developing the business, including into China.

Finally, the acquisition gives it the opportunity to produce additional infant nutrition products for China and other markets and the ability to capture manufacturing margin.

A2 Milk’s Chief Executive Officer, Geoff Babidge, commented: “MVM provides a unique opportunity to acquire a new world-class nutritional products manufacturing capability in New Zealand, alongside a highly respected China state owned enterprise in China Animal Husbandry Group. We have worked closely with CAHG and MVM over recent months and have developed relationships with both teams that we are confident will provide a strong foundation for the business going forward. We continue to be impressed by the MVM facility and the management team.”

More reading

• 3 top ASX shares to buy in 2021
• Why a2 Milk, Air New Zealand, Mesoblast, & Recce shares are storming higher
• Why a2 Milk and these ASX shares have been smashed in 2020
• Leading brokers name 3 ASX shares to sell today
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With demand for healthcare services expected to grow strongly over the next decade due to population growth, shifts in demographics, and improving technologies and treatments, the healthcare sector has been tipped as a place to invest.

But which shares should you buy? Two top ASX healthcare shares that could be worth a closer look are listed below:

Cochlear Limited (ASX: COH)

When it comes to shifting demographics, and particularly in respect to the growing number of over 65s, there are few companies that stand to benefit as much as Cochlear. It is a global developer, manufacturer, and distributor of cochlear implantable devices for the hearing impaired.

As hearing loss is typically a part of the ageing process, a growing number of over 65s globally is expected to lead to an increase in demand for hearing solutions in the coming decades. And thanks to its industry-leading products and the high barriers to entry, Cochlear appears well-placed for long term growth.

Macquarie is a fan of the company and has an outperform rating and $241.00 price target on its shares.

CSL Limited (ASX: CSL)

This biotherapeutics company is another which has been tipped to have a bright future. This is because CSL appears to be in a strong position for growth over the long term due to increasing demand for immunoglobulins, its expansive plasma collection network, growing demand for influenza vaccines, and its burgeoning research and development pipeline.

The latter has some very lucrative therapies under development and is being underpinned by a material investment each year. In fact, in FY 2021, CSL will be investing approximately ~US$1 billion into its research and development activities. This follows a US$922 million investment in FY 2020.

One broker that is particularly positive on the company’s prospects is UBS. It recently put a buy rating and $346.00 price target on CSL’s shares.

More reading

• 7 top ASX biomedical shares in 2020
• In a record-breaking year, here are some of the world’s most popular shares
• ASX 200 Weekly Wrap: ASX hits new post-March high
• 2 outstanding ASX shares to buy and hold for a decade
• ASX healthcare shares could outperform in 2021: Fundie

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 Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear 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 looking for decent dividend yields for 2021, then you might want to look at the dividend shares listed below.

Here’s what is expected from them next year:

Rural Funds Group (ASX: RFF)

Rural Funds is an agriculture-focused property group that owns a number of properties across five agricultural sectors. These high quality properties are leased on ultra long term agreements to some of the biggest operators in the industry. This includes wineries leased to wine giant Treasury Wine Estates Ltd (ASX: TWE).

At the end of FY 2020, Rural Funds had a weighted average lease expiry (WALE) of 10.9 years. Given that these leases have rental increases built into them, the company has great visibility on its future earnings.

In light of this, management appears confident that it is well-positioned to continue growing its distribution by its 4% per annum target each year in the future. This will mean a distribution of 11.28 cents per share in FY 2021. Which based on the current Rural Funds share price, equates to a 4.35% yield.

Telstra Corporation Ltd (ASX: TLS)

After several disappointing years due to the NBN impact on its earnings, Telstra’s outlook is becoming increasingly positive. This is being underpinned by its T22 strategy, which is stripping out costs and simplifying its business.

Another big positive is the status of the NBN rollout. While this rollout still has further to go, the headwinds it is causing are now peaking.

In light of this, a return to growth doesn’t appear far away. Especially given the rational competition in the industry and the arrival of 5G internet. The latter is expected to give its average mobile revenue per user metric a boost in the coming years.

Finally, with the Telstra board intending to do what it can to maintain its 16 cents per share dividend, the company’s shares could yield very generous dividends in the coming years. Based on the current Telstra share price, a 5.3% fully franked dividend is expected next year.

More reading

• These 4 ASX REITS are about to go ex-dividend
• Why Bigtincan, Over the Wire, Resolute, & Uniti shares are dropping lower
• Why a2 Milk and these ASX shares have been smashed in 2020
• 2 blue chip ASX shares to buy for 2021
• Cimic (ASX:CIM) share price falls despite positive update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED, Telstra Limited, and 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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