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Are you looking for some dividend options for your portfolio? Then check out the two ASX shares listed below.

Both have been tipped to provide investors with very generous dividend yields in 2021:

Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure REIT is the largest Australian ASX-listed real estate investment trust that invests in social infrastructure properties.

It targets ongoing capital growth by focusing on assets with specialist use, limited competition, and low substitution risk. This is expected to drive high tenant retention rates over the long term. In addition to this, it looks for strategic locations with high underlying land values and those with a triple net structure with minimal capex leakage.

The Charter Hall Social Infrastructure REIT is Goldman Sachs’ preferred pick in the space. It has a conviction buy rating and $3.35 price target on its shares. The broker is expecting a 15 cents per share dividend in FY 2021. Based on the latest Charter Hall Social Infrastructure REIT share price, this represents a 4% yield.

Super Retail Group Ltd (ASX: SUL)

Another dividend share to look at is Super Retail. It is the retail group behind popular store brands such as Macpac, Rebel, and Super Cheap Auto.

It has been a positive performer in FY 2021 despite the lockdowns in Victoria. During the first 17 weeks of the financial year, the company delivered 25% growth in both total and like for likes sales. It also reported strong momentum in its digital channels, with online sales growth of 132% and Click & Collect representing 44% of its year to date total online sales.

One broker that is a fan of the company is Citi. It has a buy rating and $13.10 price target on the company’s shares. It is also forecasting a 63.5 cents per share fully franked dividend in FY 2021. Based on the latest Super Retail share price of $10.48, this equates to a 6% yield.

More reading

• Citigroup picks the best ASX retail stocks to own for 2021
• Aussie dollar breaking to new 30-month high will boost these ASX stocks
• ASX 200 up 0.3%: Fortescue rockets, Afterpay sales explode, Westpac APRA update
• These were the worst performing ASX 200 shares in November

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Super Retail Group 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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Despite the negative impact of the COVID-19 pandemic on the share market this year, a good number of shares have recorded very impressive gains.

Three that have even managed to double in value in 2020 are listed below. Here’s why they are on fire this year:

Fortescue Metals Group Limited (ASX: FMG)

The Fortescue share price is up a sizeable 120% since the start of the year. Investors have been buying the mining giant’s shares following a sharp rise in the iron ore price. Due to supply concerns in Brazil and robust demand for the steel making ingredient in China, the iron ore price recently hit a nine-year high of US$176.90 a tonne. This compares to the company’s C1 production cost of just US$12.74 per wet metric tonne.

Galaxy Resources Limited (ASX: GXY)

The Galaxy share price has rocketed 122% higher in 2020. This has been driven by a recovery in lithium prices after a couple of years of weakness. Traders are becoming increasingly positive on the battery making ingredient due to the rise of electric vehicles. This follows an incredible year for Tesla which revealed that the appetite for its electric vehicles is extremely strong.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has recorded a stunning 283% gain since the start of the year. Investors have been fighting to get hold of the online homewares and furniture retailer’s shares after the pandemic led to a shift to online shopping and a surge in its sales. This has continued into FY 2021, with Temple & Webster reporting a 138% increase in revenue financial year to date (as of 19 October 2020). This strong top line growth led to its earnings before interest, tax, depreciation and amortisation (EBITDA) coming in at $8.6 million for the first quarter. This is more than the entire EBITDA it generated in FY 2020.

More reading

• How to get the best out of the 2021 mining boom
• 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
• 2 ASX shares with huge fully franked yields
• How useful is the P/E ratio in assessing ASX shares?

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) followed the lead of global markets and dropped lower. The benchmark index fell 1.05% to 6,599.6 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 to rebound.

It looks set to be a much more positive day for the Australian share market on Wednesday. According to the latest SPI futures, the ASX 200 is expected to open the day 57 points or 0.9% higher this morning. This is despite a mixed night of trade on Wall Street. In late trade the Dow Jones is down 0.35%, the S&P 500 is flat, and the Nasdaq is up 0.45%.

US congress passes COVID stimulus package.

The US Congress has passed a massive COVID-19 relief and government spending package. It finally made the move with the aim of injecting long-delayed aid into the fight against a once-in-a-century health and economic crisis. According to CNBC, both chambers approved the more than US$2 trillion legislation. This comprises US$900 billion in pandemic aid and US$1.4 trillion to fund the government through to 30 September.

Oil prices soften further.

Energy producers including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have another tough day after oil prices softened further. According to Bloomberg, the WTI crude oil price is down 1.8% to US$47.09 a barrel and the Brent crude oil price has fallen 1.4% to US$50.22 a barrel. Once again, the new COVID-19 strain in Europe has fuelled demand recovery concerns.

Gold price falls.

Gold miners such as Evolution Mining Ltd (ASX: NCM) and St Barbara Ltd (ASX: SBM) could come under pressure after the gold price dropped lower again. According to CNBC, the spot gold price has fallen 0.8% to US$1,868.20 an ounce. A stronger US dollar weighed on the price of the precious metal.

Omni Bridgeway given conviction buy rating.

The Omni Bridgeway Ltd (ASX: OBL) share price could be dirt cheap according to one leading broker. A note out of Goldman Sachs reveals that it has reiterated its conviction buy rating and $5.50 price target. This compares to its current $3.78 price target. Goldman believes the company is positioned for any class action regulation changes and growth offshore.

More reading

• ASX 200 drops over 1%
• Why ASX energy shares in this beaten down sector could rally in 2021
• How to get the best out of the 2021 mining boom
• With an 8% dividend yield, is the AGL (ASX:AGL) share price a buy?
• Here’s why a big broker thinks you should avoid these ASX gold shares 

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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2020 will be remembered for a lot of things.

COVID-19, mostly. And the bush fires that ravaged the country in January and February.

It’s been a helluva year.

2020 will also be remembered as the year the RBA’s official cash rate hit 0.1%.

It’s not zero. But it might as well be.

Yes, it makes mortgages cheaper. And business loans. 

(Not credit cards, though. How good is competition, huh?).

You know the other thing it keeps low? The interest rate on your saving.

Then again, can we really call 0% an interest rate at all?

Whenever the RBA’s rates decisions are made, attention turns instantly to the impact on those with a mortgage.

I guess that’s logical, but it ignores the fact that the majority of Australians don’t have one.

We’re split into three roughly equal groups – those who have a mortgage, those who rent, and those who own their homes outright.

So while the attention is on the borrowers, what happens to the poor bloody savers when rates are near zero?

They get dudded.

Not deliberately. And not (at least, arguably) unfairly.

But they’re the collateral damage in the fight to keep the economy growing.

Unless you have millions (and millions) in the bank, you simply can’t pay the bills using the interest you get on cash in the bank.

Either you’re digging (deep) into your capital, or you have to cut back. Hard.

Or, there are reverse mortgages, which eat into the equity in your home.

Talk about three tough options.

So what do you do?

It mightn’t surprise you to hear this from me, but I think the answer is shares.

In particular, dividend shares.

Why?

Well, the yields are much higher (sometimes 5-10 times higher!) than cash in the bank.

They often also come with valuable franking credits attached.

And, while shares as an asset class are risky, a well-chosen portfolio and a long-term mindset can meaningfully mitigate much (but not all) of that risk.

See, shares have, over time, delivered much better returns than cash.

Yes, with a lot more volatility.

And yes, with a big variability in individual company outcomes.

But managed well – diversified, using a cash cushion, and having a long-term mindset – I think shares can be a very, very effective alternative to cash.

Which, I think, is somewhat understating it.

More directly, I think you have a very good chance of being able to fund retirement expenses while preserving (and probably growing) your capital, using shares, in a way you simply can’t with an equivalent cash pile.

There’s no need for a fancy trading strategy using options or other derivatives, either!

(And don’t get me started on those ‘high interest, paid monthly’ products that are being flogged in the papers these days. If it looks too good to be true…)

I know for some of you, the idea of abandoning savings for what you might see as ‘risky’ shares is anathema. If you’ve never invested in shares – or used them for income – I don’t blame you.

It’s like you have a gun to your head, and you’re being forced to choose between less interest and more risk.

Actually, it’s not like that, at all. It is exactly that.

Now, as I said, it needs to be a well-managed portfolio. It needs to be diversified. You need to know what you’re doing. And you need to have a long-term mindset and be prepared for volatility.

But, especially given the alternative is paltry, I reckon that’s something that’s worth trying to get comfortable with.

More reading

• Is Apple (NASDAQ:AAPL) about to launch an electric car?
• Why this fund manager prefers Transurban over Sydney Airport, Flight Centre and Qantas
• Sandfire (ASX:SFR) share price falls despite record shipment
• ASX 200 drops over 1%
• SciDev (ASX:SDV) share price surges 8% on this announcement

Motley Fool contributor Scott Phillips 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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Apple Inc (NASDAQ: AAPL) is a company I’d wager almost everyone on the planet would be familiar with. Its flagship product, the iPhone, is among the most popular consumer goods in the world.

If you throw in all of its other famous devices, such as the Mac, the iPad, AirPods and (more recently) Apple Pay, you can get a grasp of this company’s scale. No wonder Apple is one of, if not, the world’s most valuable companies by market capitalisation at US$2.18 trillion. 

But a new report from the Australian Financial Review (AFR) today could herald a new, and massive, chapter in this company’s incredible history. According to the report,  Apple is “moving forward with self-driving car technology, and is targeting 2024 to produce a passenger vehicle”.

The vehicles “could include [Apple’s] own breakthrough battery technology” as well.

iCar for Apple?

Apple has reportedly been developing self-driving technology since 2014 through the dramatically named ‘Project Titan’. This project has apparently had a haphazard strategy, and has gone through various cycles of ‘will it, won’t it’.

But according to the report, “Apple has progressed enough that it now aims to build a vehicle for consumers”. And central to these plans is Apple’s battery technology. This, the report states, could “radically” reduce the cost of batteries and “increase the vehicle’s range”. 

“If there is one company on the planet that has the resources to do that, it’s probably Apple. But at the same time, it’s not a cellphone,” is what a Project Titan worker told the report. 

However, Apple is far from guaranteed success in this endeavour. The supply chain construction alone would require enormous capital and planning. And Apple would have to play catchup to the likes of Tesla Inc (NASDAQ: TSLA), which has been scaling its own vehicle production to great success using its own in-house and world-leading battery technology in recent years.

Not to mention other electric car companies that have been enjoying positive news of late too, such as Nio Inc (NYSE: NIO) and Rivian. As well as the plethora of existing internal combustion engine car companies like Toyota, Volkswagen, Ford Motor Company (NYSE: F), General Motors Company (NYSE: GM) and Honda that are turning to electric drivetrains.

It’s also not the only tech giant dabbling in this space either. Alphabet Inc‘s (NASDAQ: GOOG)(NASDAQ: GOOGL) Waymo has been developing its own self-driving technology for years now.

But still, none of these companies has the combination of size, cash or brand power that Apple does. So it will be an interesting space to watch.

More reading

• In a record-breaking year, here are some of the world’s most popular shares
• Why shares are less risky now than 30 years ago
• US “mum and pop” investors leaving the pros in the dust in 2020 stock rally
• What will happen when Tesla (NASDAQ:TSLA) joins the S&P 500 today?
• The 1 mega-cap tech stock that doesn’t fear Washington

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Tesla. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Apple. 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 clock is ticking on 2020. And for most Australians, the new year can’t come too soon.

Hopes are growing that multiple coronavirus vaccines will largely put this year’s pandemic woes behind us. And along with those hopes, ASX investors are turning their attention to the recovery trade.

4 ASX 200 shares that have soared on the recovery trade

The true scope of COVID-19’s impact on the Aussie and global economies became clear towards the end of February. And investors took note. Commencing on 21 February, most every share on the ASX sold off heavily through to late March.

Shares in the travel sector were some of the most impacted as domestic and international travel slowed to a trickle. They’ve also seen some of the strongest rebounds in recent months as investors eye the light at the end of the viral tunnel.

Here are 4 examples, all part of the S&P/ASX 200 Index (ASX: XJO).

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price crashed 48% by 19 March. Since that low shares have rebounded by 38%.

The Qantas Airways Limited (ASX: QAN) share price plummeted 70% by 19 March. Shares are up 124% since then.

The Flight Centre Travel Group Ltd (ASX: FLT) share price cratered 78% by 19 March. The share price has bounced back 68% since that low.

And finally, toll road developer and operator, Transurban Group‘s (ASX: TCL) share price dropped 39% by 19 March. Shares have gained 38% since then.

Why this fund manager prefers Transurban shares

Atlas Funds Management chief investment officer Hugh Dive believes investors eyeing the recovery trade may be getting ahead of themselves when piling into some of these ASX 200 travel shares.

According to Dive (quoted by the Australian Financial Review):

I’m very surprised at how fast these stocks have all bounced back given they’re a long way out of the woods. Flight Centre, at close to $16, the margin of safety just isn’t there like it was at $7 and you’re staring down the barrel of a long, slow recovery. That price is reflecting a much quicker bounceback than that. We’d like to own Sydney Airport but again, it just doesn’t have that margin of safety.

Something like a Transurban is quite unaffected and traffic in Sydney is pretty much back to where it was. That’s been a better place to put our money than Sydney Airport or Qantas… One of the key things we’re looking for is dividend yield and it’s hard owning a Qantas or a Sydney Airport for a dividend when there’s no revenue.

The Transurban share price is slipping today, down 1%.

More reading

• In a record-breaking year, here are some of the world’s most popular shares
• ASX 200 down 0.85%: ANZ CFO resigns, tech shares tumble, iron ore jumps
• Transurban (ASX:TCL) share price wobbles on new CFO announcement
• 3 best and worst performing ASX transport shares of 2020
• ASX 200 ends slightly down

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Flight Centre Travel Group 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 Sandfire Resources Ltd (ASX: SFR) share price has dropped today despite the company announcing record shipments of copper concentrate.

Near market close, the Sandfire share price was trading down 1.83% at $5.37.

Record shipment

Earlier today, Sandfire advised that it has completed the largest-ever single shipment of copper concentrate. The mineral was extracted from its 100% owned DeGrussa operations in Western Australia.

Weighing more than 23,000 wet metric tonnes (wmt), the copper concentrate left the Port of Geraldton in Western Australia bound for Europe, to be refined in smelters. The process will be overseen by Sandfire’s strategic partner, Concord Resources.

At the current spot copper prices, its estimated that the shipment is worth more than $52 million.

Management commentary

Commenting on the shipment, Sandfire managing director and CEO Karl Simich said:

Apart from being a significant milestone in itself, this record shipment is also testament to the strong demand for the high-grade, high-quality copper concentrate that we produce at DeGrussa from a range of long-term customers around the world.

Sandfire has a strong global network of concentrate customers spanning China, Japan, Korea, The Philippines and Europe which we have built up over the past decade, thanks to the consistency of production from the DeGrussa Operations and the exceptional quality of our product.

Addressing the US$150 billion industry as a whole, Mr Simich said government stimulus measures around the world had positively impacted the copper market. This included measures taken to increase infrastructure, green energy and reduce carbonisation – all of which were heavily reliant on copper.

He added:

Europe and China are both currently investing heavily in incentivising electric vehicles, which underpins a buoyant demand outlook for copper over the medium and long-term.

About the Sandfire share price

The Sandfire share price has been on a rollercoaster ride over the past 12 months. It reached as high as $6.27 in January before falling to a decade low of $2.75 in March. The company’s shares are 10% down year-to-date.

Sandfire has a market capitalisation of $962.7 million and a price-to-earnings (P/E) ratio of 12.5.

More reading

• UBS just downgraded these outperforming ASX mining stocks
• These were the best performing ASX 200 shares last week
• Why Laybuy, Mesoblast, Sandfire, & Telix shares are charging higher
• ASX 200 down 0.2%: Zip’s November update, Mesoblast jumps, Westpac’s asset sale
• Why the Sandfire Resources (ASX:SFR) share price is soaring 10% 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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The S&P/ASX 200 Index (ASX: XJO) fell by 1% today to 6,600 points.

Here are some of the highlights from the ASX:

Magellan Financial Group Ltd (ASX: MFG)

Magellan announced it’s buying a 10% stake in GYG for $86.8 million. GYG is an Australian based quick service restaurant chain specialising in made to order, fresh Mexican food with 147 restaurants across Australia, Singapore, Japan and the US.

GYG is led by founder and CEO Steven Marks as well as chairman Guy Russo, who used to be the CEO of McDonalds as well as Kmart and Target.

Hamish Douglass, the chairman of Magellan, said: “We are extremely pleased to become a shareholder in GYG. Magellan has deep investment experience in the quick service restaurant industry and we believe Magellan can both add and gain considerable insights as a major investor and supportive shareholder. GYG is a world class business with enormous growth potential and represents a highly attractive investment opportunity for our principal investments business.”

GYG founder and CEO Steven Marks said: “We are incredibly excited to welcome Magellan to the GYG family. Our ambition is to be the best restaurant company in the world and, to achieve that, we need the support of the best partners and strongest board. Magellan’s global experience and track record in the QSR space is truly world class and we could not think of a better qualified or more aligned partner to have alongside as we enter the next, most exciting phase of the GYG journey.”

The Magellan share price went down by around 0.3% today.

David Jones property

Charter Hall Group (ASX: CHC) announced that a consortium of Charter Hall funds and partnerships have exchanged contracts to purchase the David Jones flagship Elizabeth Street store in Sydney for a price of $510 million.

This property comprises 12 levels on a strategic 3,530 sqm prime CBD retail site which overlooks Hyde Park with views to Sydney Harbour.

David Jones, as the vendor, has in recent years completed a significant capital works program which has created a world class showcase of department store retailing according to Charter Hall.

Charter Hall’s consortium has acquired the property on a sale and leaseback transaction. It has a 20-year, triple-net lease with a minimum of 2.5% per annum rent increases, supplemented by an agreed turnover rent linked to sales performance. Charter Hall itself will hold a 25% holding, whilst Charter Hall Long WALE REIT (ASX: CLW) will own another 50% and the final 25% will be owned by Charter Hall DVP partnership.

The purchase price reflects a 5% initial yield based on the initial annual net rent of $25.5 million.

Charter Hall CEO and managing director David Harrison said: “This acquisition is consistent with our strategy in so many ways, namely: securing long weighted lease expiry, triple-net leased assets, combining the appetite of our managed funds and partnerships to partner with the group on high conviction prime real estate acquisitions, co investing group capital alongside our partners to secure attractive earnings growth from our property investment portfolio, whilst also expanding the group’s FUM platform.”

The Charter Hall share price fell by around 0.5% today.

Volpara Health Technologies Ltd (ASX: VHT)

Medical technology business Volpara announced that it has signed a five-year software as a service (SaaS) contract with BreastScreen Queensland.

It has run a successful pilot trial with BreastScreen Queensland on the Gold Coast. BreastScreen Queensland is the third largest public breast screening programme in Australia – the contract will roll out VolparaEnterprise to 11 BreastsScreen Queensland services operating in Brisbane and elsewhere in the state. The BreastScreen Queensland services comprise 69 gantries and 43 sites that include 10 mobile units. Volpara expects the service to go live in early 2021.

The terms and conditions of the contract with BreastScreen Queensland are confidential.

Volpara CEO Dr Highnam said: “We are delighted to now have BreastScreen Queensland signing up to use our software, making it the second major public breast cancer screening programme in Australia signed up to Volpara products. This is news that will resonate around the world, and we are extremely pleased that our software will be helping women in the fight against breast cancer.”

The Volpara share price rose 4.5% today. 

More reading

• Why ASX energy shares in this beaten down sector could rally in 2021
• How to get the best out of the 2021 mining boom
• 2 reasons why the Magellan (ASX:MFG) share price is attractive
• With an 8% dividend yield, is the AGL (ASX:AGL) share price a buy?
• Why a2 Milk, Doctor Care Anywhere, McPherson’s, & Volpara are pushing higher

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 and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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 SciDev Ltd (ASX: SDV) share price has surged up today, after the company announced record quarterly sales in its United States oil and gas business.

At the time of writing, the SciDec share price is trading up 7.64% at 78 cents.

What’s moving the SciDev share price?

Investors are buying the water engineering company’s shares today, after it announced increased activity levels within its US oil and gas sector business.

It says that drilling activity continues to recover from the COVID-19 lows of the June quarter, and the company is continuing to win business, gain market share and grow revenue in the sector.

The second-quarter FY21 revenue from the oil and gas sector is now forecast to be approximately $4 million, ahead of the previous quarter of $3 million.

SciDev also said that activities in the Canadian oil-sands industry are on track with progress outcomes to be reported in calendar year 2021.

Commenting on this latest update, SciDev managing director and CEO, Lewis Utting, said:

SciDev, through our highland fluid technology (HFT) services, continue to see strengthening activity levels in the US oil and gas sector.

Our supply chains remain strong and customer demand is growing. Our investment in organisational capability during 2020 is yielding results, with HFT capturing an increasing amount of market share.

New contracts update

In today’s release, SciDev also announced that a purchase order from a major South Texas company for completion fluids has been extended, and the company is seeing an expansion of purchase orders from other existing clients.

It also said that a major European oil company has seconded HFT staff to provide product development for the new environmentally friendly oilfield performance chemistry. Several patent applications have been lodged with commercial activities now under consideration.

About the SciDev share price in 2020

SciDev develops chemistries and engineering solutions to help clients with a range of operational issues associated with water.

The company acquired the HFT business, which provides a range of water chemicals and professional services to the oil and gas sector, for $5 million in March this year.

In its latest quarterly update in October, the company reported a record $9.4 million in sales, which included $4.6 million in sales during September alone. 

The SciDev share price meanwhile, has had a volatile year, trading within a low-high price band of 280% – between 25 cents and 95 cents. 

However, the share price has now gone full circle and back to roughly where it started at the beginning of the year.

At the current share price, the company boasts a market cap of $117 million.

More reading

• Why ASX energy shares in this beaten down sector could rally in 2021
• Why the Hub24 (ASX:HUB) share price could go higher
• The Cimic (ASX:CIM) share price is down 2% lower today. Here’s why
• How to get the best out of the 2021 mining boom
• 2 reasons why the Magellan (ASX:MFG) share price is attractive

Motley Fool contributor Eddy Sunarto 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 imminent death of fossil fuels has been trumpeted by all manner of analysts for decades now.

Tied into that are the forecasts of an ever-declining market – and share prices – for the companies that dig up and process fossil fuels.

Topping the list of energy sources we’ve repeatedly heard are destined for the near-term scrapheap is coal. Particularly thermal coal, the variety used to generate electricity, over coking coal, which sees more use in the manufacture of steel.

Now coal shares, and the investors who back them, have become increasingly controversial as the world tries to de-carbonise in an effort to mitigate climate change.

But here’s the thing.

According to the International Energy Agency’s (IEA) latest annual coal report, coal is still the largest source of electricity on Earth. And the IEA expects it won’t lose that mantle to renewables and gas for another 5 years.

Even then, the agency says the decline in coal use will be gradual.

Steady or growing mid-term demand for coal

Keisuke Sadamori is the IEA’s director of energy markets and security. And he pours cold water on predictions of the rapid demise of coal.

According to Sadamori (as quoted by the Australian Financial Review), “[W]ith coal demand still expected to remain steady or to grow in key Asian economies, there is no sign that coal is going to fade away quickly.”

In fact, the IEA forecasts global demand for coal will increase 2.6% in 2021 as both industrial activity and electricity demand bounce back. That follows on a 5% fall in 2020, driven by lower demand during the coronavirus pandemic.

We have China to thank for the fact that the demand for coal didn’t plummet even further this past year. “The decline would have been even steeper without the strong economic rebound in China, the world’s largest coal consumer, in the second half of the year,” Sadamori said.

The IEA expects the growing global demand for coal to top out in 2025 at around 7.4 billion tonnes.

That’s darn near 1 tonne of coal for every person on the planet.

Every single year.

And it’s only a touch below the record coal use of 8 tonnes set in 2013.

That hardly sounds like an industry in its death throes.

China is likely to remain the world’s largest consumer of coal – at some 4 billion tonnes per year. However, most of the new demand is forecast to come from India, Vietnam and a handful of other southeast Asian nations where new coal-fired power plants continue to be constructed and industrial activity is expected to ramp up.

Now, these figures won’t come as good news to activists concerned about coal’s impact on the environment. But they could provide a much needed tailwind for some of the shares in Australia’s beaten down coal sector.

While Indonesia was the largest bulk coal exporter in the world in 2019, the IEA reports that Australia (the number 2 bulk exporter) earned the number 1 spot in terms of energy and value.

China the wild card

The outlook for Australian coal shares remains muddied by the recent trade disruptions with China, the biggest market for Aussie coal.

The Australian Government has now downgraded its estimates for thermal coal (this excludes coking coal) for the 2020-2021 financial year.

As reported by the AFR, the Department of Industry’s latest quarterly resources and energy report states:

Coal markets are in a state of flux dealing with issues quite separate to COVID-19. Shipments of (mainly Australian) coal faced delays at Chinese ports.

Price differentials have changed dramatically; the bottom line for Australian coal producers is lower profitability, and the likelihood of production cuts the longer the Chinese restrictions remain in place.

The Department of Industry lowered its coal export projections for the financial year from 208 million tonnes to 199 million tonnes. It expects export earnings from coal to fall from $20 billion to $15 billion year-on-year.

3 ASX coal shares

No one – save perhaps China’s President Xi Jinping himself – can predict how long China’s import restrictions on Aussie coal will remain in place.

What we do know is there are already reports of rising electricity prices in China that may be tied to the restrictions. And we do know that global demand is set to ramp up over the next years, as coal remains the top source for the world’s electricity.

With that in mind, Whitehaven Coal Ltd (ASX: WHC), one of the worst performers on the S&P/ASX 200 Index (ASX: XJO) in 2020, could see a turnaround in the year (or years) ahead.

Year-to-date Whitehaven’s share price is down 37%. Though it has regained 14% from the 16 March lows. Whitehaven pays a 0.91% dividend yield, unfranked.

Yancoal Australia Ltd (ASX: YAL) also has yet to fully recover from the pandemic selloff earlier this year. The Yancoal share price is down 18% since 2 January. Yancoal pays an 8.99% dividend yield, unfranked.

On the smaller end of the spectrum, with a market cap $216 million, is Stanmore Coal Limited (ASX: SMR).

Year-to-date, Stanmore’s share price is down 22%. Stanmore pays a 3.66% dividend yield, fully franked.

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

The post Why ASX energy shares in this beaten down sector could rally in 2021 appeared first on The Motley Fool Australia.

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