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With a new year upon us, now could be an opportune time to start looking at any additions you want to make to take your portfolio to the next level in 2021.

Listed below are 10 high quality ASX shares you might want to consider:

a2 Milk Company Ltd (ASX: A2M)

A2 Milk Company is a leading infant formula and fresh milk company. It differentiates itself in a crowded market with its focus on A2-only products. The company claims this protein makes its products easier to digest than regular milk, which has gone down particularly well with consumers in China. While FY 2021 looks set to be a rare off-year because of COVID-19 headwinds, management remains positive on its long term prospects. Analysts at Macquarie agree and have recently put an outperform rating and $17.95 price target on its shares.

Altium Limited (ASX: ALU)

Altium is a printed circuit board (PCB) design software provider which is aiming for market dominance. Management believes it can achieve this thanks to the quality of its software and particularly its new cloud-based Altium 365 platform. Given the proliferation of electronic devices due to the Internet of Things and artificial intelligence markets, this certainly is a lucrative market to dominate. Analysts at Morgan Stanley are confident on its prospect. They have an overweight rating and $40.00 price target on the company’s shares.

Bravura Solutions Ltd (ASX: BVS)

Bravura Solution is a provider of software and services to the wealth management and funds administration industries. It has a number of quality products that are being used by many of the world’s largest financial institutions. This includes its Sonata wealth management platform and the Midwinter financial planning software. It is another company which has struggled with the pandemic. However, analysts at Goldman Sachs believe it is worth dealing with this short term pain for the long term gains. They have a buy rating and $4.50 price target on Bravura’s shares.

CSL Limited (ASX: CSL)

CSL is the biopharmaceutical giant behind the CSL Behring and Seqirus businesses. These two businesses are leaders in their fields and have a host of lucrative therapies and vaccines generating billions in revenue each year. The company also invests significantly in research and development and will be putting almost US$1 billion into these activities in FY 2021. This helps to ensure that the company stays ahead of the curve and has a pipeline of products ready to save lives and underpin solid revenue growth in the future. UBS is a fan of the company and has a buy rating and $346.00 price target on its shares.

Kogan.com Ltd (ASX: KGN)

One of the biggest success stories on the Australian share market in 2020 has been this ecommerce company. While it has been performing positively in recent years, its growth went into overdrive this year when the pandemic accelerated the shift to online shopping. This led to significant customer, sales, and earnings growth in FY 2020. Pleasingly, this has continued into the new financial year as well and looks set to be bolstered by value accretive acquisitions. This strong form has caught the eye of Credit Suisse. It recently put an outperform rating and $20.60 price target on its shares.

Nanosonics Ltd (ASX: NAN)

Nanosonics is the infection prevention specialist behind the trophon EPR disinfection system for ultrasound probes. This product is regarded as the best in its class and has been growing its market share consistently over the last few years. This is good for two reasons. One is the unit sales, the other is the recurring revenues it generates from consumables. Management is planning to release new products targeting unmet needs in the coming years. If they are a success, they could give its growth a big boost. UBS has a buy rating and $7.20 price target on Nanosonics’ shares. It believes the company is well-placed to benefit from the growing importance of infection prevention following the pandemic.

Nearmap Ltd (ASX: NEA)

Nearmap is a leading aerial imagery technology and location data company with operations in the ANZ and North American markets. While its growth has been a bit inconsistent in recent times, management appears confident it is back on track. So much so, it is aiming to deliver annualised contract value (ACV) growth of 20% to 40% per annum over the long term. This growth is expected to be driven by new growth initiatives, geographic expansion, and the launch of its latest AI product. Morgan Stanley has an overweight rating and $3.10 price target on Nearmap’s shares.

NEXTDC Ltd (ASX: NXT)

NEXTDC is a technology company that provides innovative data centre outsourcing solutions, connectivity services, and infrastructure management software. It has a partner ecosystem which hosts Australia’s largest independent network of carriers, cloud, and IT service providers. NEXTDC has been a big winner this year after the pandemic accelerated the shift to the cloud and led to significant demand for its data centre capacity. In fact, demand was so strong that it had to bring forward development plans. This appears to have impressed Goldman Sachs. Last month its analysts put a buy rating and $13.20 price target on its shares.

SEEK Limited (ASX: SEK)

SEEK is an online job listings company. As well as dominating the ANZ market, the company has a number of international operations. This includes its Zhaopin business, which is one of the leaders in the massive China market. FY 2020 was a difficult year because of the pandemic, but it is bouncing back strongly now the worst is over. Credit Suisse has been impressed with its recovery from the pandemic and put an outperform rating and $28.50 price target on its shares last month.

Xero Limited (ASX: XRO)

Xero is a leading cloud-based business and accounting software provider. It has been growing its customer numbers and recurring revenues at a strong rate for many years. This has been driven by the quality of its offering, the shift to the cloud, and the stickiness of its product. Xero boasts an ultra low churn level, which gives it a firm foundation to build on. Given the size of its market globally and the potential opportunity it has to monetise its app ecosystem, Goldman Sachs recently slapped a buy rating and $157.00 price target on its shares.

More reading

• 5 ASX shares rated as buys by top fundie
• 5 things to watch on the ASX 200 next week
• 2 blue chip ASX shares Warren Buffett would love
• 3 leading ASX tech shares to buy
• ASX 200 drops on Friday

James Mickleboro owns shares of NEXTDC Limited and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd., Kogan.com ltd, Nanosonics Limited, Nearmap Ltd., and Xero. The Motley Fool Australia owns shares of and has recommended A2 Milk and Bravura Solutions Ltd. The Motley Fool Australia has recommended Kogan.com ltd, Nanosonics Limited, Nearmap Ltd., and SEEK 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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Cheap dividend stocks could offer a generous passive income relative to other mainstream assets. Their yields are significantly higher than the returns available on other income-producing assets, in many cases.

Therefore, building a diverse portfolio of stocks that have affordable dividends and the potential to raise them over the long run could be a shrewd move. It may lead to a worthwhile passive income that stays ahead of the returns on assets such as cash, bonds and property.

Making a passive income with cheap dividend stocks

The 2020 market crash means that there are many cheap dividend stocks available to purchase today. Due to their disappointing share price performances, their yields may be high in many cases.

While this may make them seem attractive at first glance, looking beyond a company’s dividend yield could be very worthwhile. In other words, checking that it is affordable given the current challenging operating conditions could be a logical move. There is little point in buying a high-yielding stock if its dividends cannot be paid in 2021 and beyond.

Analysing the affordability of shareholder payouts among cheap dividend stocks can be achieved by checking the dividend coverage ratio. It is calculated by dividing net profit by dividends. A figure in excess of one suggests that the current level of dividends is affordable, and may have a higher chance of being maintained in an uncertain operating environment.

Dividend growth opportunities

Cheap dividend stocks could offer a growing passive income in some cases. Certainly, they may struggle to raise shareholder payouts in the short run if their operating conditions are poor. However, the past performance of the world economy suggests that stronger GDP growth is likely to be ahead. This could mean that company profits improve, and management confidence strengthens so that they pay a larger dividend.

Clearly, assessing the likelihood of dividend growth is very subjective. It is heavily linked to a company’s profitability. However, by investing in industries that can benefit the most from an economic turnaround, or those sectors that enjoy long-term growth trends, an investor may increase their chances of generating a rising income from cheap dividend stocks.

Reducing risk for a stable passive income

It may be tempting to buy a small number of the best cheap dividend stocks available today. They may offer the highest yields, the best growth potential and the most stable passive income.

However, diversifying across a wide range of businesses can reduce portfolio risk. It means that there is less reliance on a small number of companies from which to obtain an income. A diverse portfolio of dividend shares may offer greater stability, as well as a more resilient income that rises at a faster pace over the long run.

Clearly, cheap dividend stocks could fall in price in the short run due to the challenging economic outlook. But, over time, their total return prospects appear to be bright.

More reading

• 10 highly rated ASX shares to buy in 2021
• Top brokers name 3 ASX shares to buy next week
• Top brokers name 3 ASX shares to sell next week
• 2 ASX shares to buy with big international growth plans
• 2 ETFs delivering solid returns

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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

Appen Ltd (ASX: APX)

According to a note out of UBS, its analysts have retained their buy rating and $44.00 price target on this artificial intelligence services company’s shares. This is despite Appen downgrading its FY 2020 earnings guidance last week due to COVID headwinds. UBS believes investors should look beyond this short term weakness and focus on its long term opportunity. The broker is expecting a rebound in its performance in FY 2021 when these headwinds ease. The Appen share price ended the week at $25.44.

Australian Pharmaceutical Industries Ltd (ASX: API)

A note out of the Macquarie equities desk reveals that its analysts have initiated coverage on this pharmacy chain operator and distributor’s shares with an outperform rating and $1.47 price target. The broker believes the Priceline pharmacy owner is well positioned for growth thanks to a number of favourable industry trends. It also notes that it has exposure to popular and high margin laser clinic services. The Australian Pharmaceutical Industries share price closed at $1.29 on Friday.

Healius Ltd (ASX: HLS)

Analysts at Credit Suisse have retained their outperform rating and lifted the price target on this healthcare company’s shares to $4.30. The broker appears to have been pleased with Healius’ trading update last week which revealed a strong performance across the business. Particularly in respect to COVID testing. Credit Suisse has also upgraded its earnings forecasts for the medium term to reflect the company’s $200 million on market share buyback and its cost cutting plans. The Healius share price was fetching $3.90 at Friday’s close.

More reading

• Westpac (ASX:WBC) tips Australian dollar to hit 80 US cents in 2021
• 3 ASX growth shares to add to your portfolio in 2021
• These were the worst performing ASX 200 shares last week
• Why JPM just upgraded the beaten-down Appex (ASX:APX) share price to “buy”
• Brokers name 3 ASX shares to buy right now

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 Appen Ltd. 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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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

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

ASX Ltd (ASX: ASX)

According to a note out of Credit Suisse, its analysts have retained their underperform rating and $73.00 price target on this stock exchange operator. This follows the release of its trading data for the month of November. While ASX performed largely in line with expectations during the month, the broker continues to believe that its shares are expensive at the current level. Particularly given that it expects revenue growth will be hard to come by in FY 2021. The ASX share price ended the week at $74.89.

Fortescue Metals Group Limited (ASX: FMG)

Analysts at Morgan Stanley have retained their underweight rating but lifted the price target on this iron ore producer’s shares to $17.45. While the broker has upgraded its earnings forecasts for Fortescue over the coming years to reflect higher than expected iron ore prices, it isn’t enough for a change of rating. The broker doesn’t appear to see enough value in its shares at the current level and holds firm with its bearish stance. The Fortescue share price was changing hands for $22.95 on Friday.

Northern Star Resources Ltd (ASX: NST)

Another note out of Morgan Stanley reveals that its analysts have downgraded this gold miner’s shares to an underweight rating and cut the price target on them to $11.70. The broker isn’t expecting the gold price to do a great deal in 2021 and is forecasting it to remain in or around current levels. Morgan Stanley also believes that potential exploration success and improvements at its Pogo operation have already been factored into its share price. The Northern Star share price ended the week at $12.39.

More reading

• These were the best performing ASX 200 shares last week
• I wouldn’t buy this if I was you…
• UBS just downgraded these outperforming ASX mining stocks
• Fortescue (ASX:FMG) share price hits record all-time high, here’s what brokers think
• 5 things to watch on the ASX 200 on Friday

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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There are some ASX shares that have big international growth plans.

Accessing the global market gives ASX shares a much larger total addressable market.

Here are two compelling businesses with international growth:

Collins Foods Ltd (ASX: CKF)

Collins Foods is a large franchisee of KFC and Taco Bell outlets in Australia. Indeed, it now has over 240 KFC Australian outlets. It is on track to open nine to twelve KFC Australia restaurants in FY21.

It also has a KFC outlet network in Europe with a total of 41 locations, across both Germany and the Netherlands. Collins Foods believes that there are acquisition opportunities in Europe. It has signed an agreement to acquire three restaurants in the Netherlands for €2.5 million.

In terms of Taco Bell, it has 13 outlets with ten in Queensland and three in Victoria.

In the recent FY21 half-year result Collins Foods reported that KFC Australia revenue grew by 15.6% on same store sales growth of 12.4%. The KFC Australia earnings before interest and tax (EBIT) went up 28% after a 150 basis point increase of the EBIT margin.

The ASX share’s European operations have been affected more heavily than Australia because of COVID-19 impacts and the ability of the company to improve its takeaway channels to replace its dine-in channel.

Whilst the European division managed to grow revenue by 1.1%, its same store sales declined by 4.2%. The Europe underlying earnings before interest, tax, depreciation and amortisation (EBITDA) dropped by 43.6% to $1.5 million.

Collins Foods believes that KFC Europe still remains a significant opportunity for growth. It said that same store sales bounced 3% higher across two months after government COVID-19 restrictions were eased during the first half. The company also said that there had been a significant shift to the drive-thru channel, particularly in Germany, which is expected to have medium-term margin benefits. Collins Foods said that strong value and retail offers launched in Germany in the early weeks in the second half lifted same store sales growth to 7.8%.

The ASX share is expecting to build one to three additional drive-thru outlets in Europe during the second half. It’s aiming for a new restaurant development pipeline building towards a minimum of three to four openings per year, all drive-thru.

At the current Collins Foods share price, it’s valued at 18x FY23’s estimated earnings according to Commsec data.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is an ASX share which is predominantly growing in the US. It services the large and medium church sector with its electronic donation technology.

With this target market, it’s aiming for annual revenue of US$1 billion over the longer term.

However, the company does also have plans to expand into other areas. It can target smaller churches, not just the megachurches.

The ASX share is demonstrating economies of scale and strong leverage as it grows in size. In the FY21 interim result it grew its earnings before interest, tax depreciation, amortisation and foreign currency (EBITDAF) margin by 14 percentage points from 17% to 31%.

In FY21, Pushpay is expecting to more than double its EBITDAF to a range of US$54 million to US$58 million.

Ben Griffiths, from fund manager Eley Griffiths, wrote earlier this year: “Over the last 12 months it has become clear PPH is at an inflection point for both cashflow and earnings. Under the stewardship of CEO Bruce Gordon, PPH has transitioned from a founder-led investment phase into an optimize/monetization phase. What is more surprising is the very conservative nature of the accounts (a rarity in small cap tech, outside Iress). We believe the next few years for PPH will be rewarding and that COVID-19 will accelerate the already entrenched trend to digital giving/engagement from cash.”

At the current Pushpay share price, it’s valued at 26x FY23’s estimated earnings according to Commsec data.

More reading

• 2 outstanding ASX shares to buy and hold
• 3 of the best ASX shares you can buy today
• 3 compelling ASX payment shares to buy
• Why this analyst thinks the Domino’s (ASX:DMP) share price is a ‘buy’
• Top ASX shares to buy in December 2020

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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended Collins Foods Limited and PUSHPAY FPO NZX. 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 two exchange-traded funds (ETFs) in this article are delivering solid returns.

What are exchange traded funds?

As linked above, ETFs are investment vehicles that allow the investor to buy a whole group of businesses at once. With some of them you can buy a decent number of shares with one investment – 50 to 100 holdings. Other investments give exposure to thousands of businesses at once.

Some ETFs are focused are providing dividend income to investors like Vanguard Australian Shares High Yield ETF (ASX: VHY) and BetaShares S&P 500 Yield Maximiser (ASX: UMAX).

The following ETFs have been generating ASX-beating returns:

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF is provided by BetaShares, one of the largest ETF providers in Australia.

BetaShares explains that the fund’s portfolio includes global cybersecurity giants, as well as emerging players, from a range of global locations. With cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.

Mr Fouse, a partner and lead strategist with Pinkston, wrote this year for Forbes about cybercrime: “Not long after the outbreak first took hold, dozens of hospitals, medical labs and health care organizations in the U.S. and abroad were the victims of ransomware attacks. At around the same time, the FBI’s Internet Crime Complaint Center began receiving 3,000 to 4,000 daily cybersecurity complaints — a more than threefold increase from the 1,000 daily complaints it was receiving prior to the pandemic.

And today, with more Americans working from home, cybersecurity risks are at an all-time high. A slew of recent phishing attacks appeared to specifically target remote workers, preying upon the COVID-19 moment to steal, hack and install malware.

In a report released on March 11, the U.S. Cyberspace Solarium Commission (CSC) revealed the full extent of America’s cybersecurity vulnerabilities. According to the CSC, the costs of cybercrime are only increasing, and a concerted cyberattack on America’s infrastructure could be devastating.”

Looking at the Betashares Global Cybersecurity ETF’s biggest holdings its largest positions are: Crowdstrike, Zscaler, Okta, Cloudflare, Cisco Systems, Accenture, F5 Networks, Palo Alto, Leidos and Science Applications International. It currently has around 40 holdings in total.

Most of these holdings are based in the US, but there is also exposure to other countries including the UK, France, Israel, Japan and South Korea.

It has an annual management fee of 0.67% per annum. At the end of November 2020, Betashares Global Cybersecurity ETF had produced net returns of 19.2% since inception in August 2016, 21.5% per annum over the past three years and 18.3% over the past year.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

VanEck says that this ETF gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.

It has a total of almost 50 holdings. Its biggest holdings are: Applied Materials, Corteva, Charles Schwab, Microchip Technology, Boeing, Compass Minerals International, Aspen Technology, Yum! Brands, Cheniere Energy and American Express.

As mentioned, all of this ETF’s businesses are based in the US. The ETF has diversification to various sectors. In terms of allocations of more than 10%, it has a 22.2% weighting to IT, an 18.2% exposure to health care, a 17.1% holding of financials shares, 11.3% is industrial shares and 10.1% is allocated to consumer staples.

This ETF has an annual management fee cost of 0.49% per annum. Over the past five years, the VanEck Vectors Morningstar Wide Moat ETF had delivered an average return per annum of 16%. That even outperformed the S&P 500’s return of 13.6% per annum over the past five years.

More reading

• 2 quality ETFs to buy for long-term investing
• 2 ETFs for ASX tech investors to buy today
• 4 ASX growth shares to buy in December
• Why this ASX cybersecurity ETF is a buy today
• 2 growth-focused ETFs rated as buys

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 BETA CYBER ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares S&P500 Yield Maximiser. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a few different ASX shares that Ophir High Conviction Fund (ASX: OPH) likes the most right now. 

What is Ophir?

Ophir is a fund management business that is headed by Andrew Mitchell and Steven Ng.

The fund manager runs a few different portfolios, but the one I’m covering is the Ophir High Conviction Fund.

This fund looks to provide investors with a concentrated exposure to high quality companies outside of the S&P/ASX 50.

Ophir uses an extensive investment process that combines a rigorous company visitation schedule and fundamental bottom-up analysis to find opportunities. It looks to identify businesses operating within structural growth sectors with the ability to meaningfully grow and compound earnings over time.

Typically, the majority of businesses within the portfolio will already have well-established business models with large or growing end markets and a clearly identifiable pipeline of future growth opportunities.

As a concentrated portfolio, the fund seeks to identify the very best of these opportunities in order to ensure each portfolio position delivers a meaningful impact on overall portfolio returns.

This strategy appears to have worked. Over the past year the Ophir High Conviction Fund portfolio has delivered a gross return of 19.7% per annum. Since inception in August 2015, the gross portfolio return has been an average of 23.2% per annum.

What are the ASX shares that Ophir likes?

Ophir listed its largest five exposures at the end of October 2020 in its most recent update. In alphabetical order those businesses are:

A2 Milk Company Ltd (ASX: A2M), which is an infant formula business with significant exposure to Chinese customers.

Afterpay Ltd (ASX: APT), which is a buy now, pay later business which is growing rapidly in the US.

Domino’s Pizza Enterprises Ltd. (ASX: DMP), which is a large franchisor of Domino’s outlets in Australia, New Zealand, Belgium, France, The Netherlands, Japan, Germany, Luxembourg and Denmark.

Nextdc Ltd (ASX: NXT), which is a data centre business which provides digital infrastructure for the cloud.

Xero Limited (ASX: XRO), which is a cloud accounting software business which has a presence in many countries including New Zealand, Australia, the UK, the US, Canada and South Africa.

Ophir’s recent overall thoughts on its portfolio

The fund manager doesn’t try to meaningfully time its allocations to investment styles, sectors or ASX shares off the back of ‘top down’ macroeconomic or political factors. It’s not that Ophir doesn’t think these have an effect, just that the fund manager doesn’t have an edge in timing allocations when lots of investors and analysts already look at these factors.

It also doesn’t help that there isn’t a model that is able to consistently and reliably assist with that process.

In recent times Ophir has been, at the margin, reducing how much underweight it is to ‘reopening theme’ companies as it became clearer that a COVID-19 vaccine was likely. This process was accelerated thanks to the Pfizer and Moderna vaccine news. That’s why Ophir increased its allocation to good quality companies that are growing faster than the market and likely to benefit from a relaxation in social distancing measures.

However, that doesn’t mean that Ophir has been involved in investing in ‘value’ or ‘cyclical’ type companies for the sake of it. The core of the funds remain in ASX shares that Ophir believes can grow and compound earnings largely regardless of the macroeconomic environment.

Its holdings of Afterpay, Xero and ResMed Inc (ASX: RMD) were strong performers in October. Ophir was particularly pleased that ResMed posted a strong quarterly result, although it was boosted by one-off ventilator sales.

More reading

• ASX 200 drops on Friday
• Why JPM just upgraded the beaten-down Appex (ASX:APX) share price to “buy”
• 2 outstanding ASX shares to buy and hold
• Why the Afterpay (ASX:APT) share price is surging higher today
• 3 ASX tech shares to buy for the long term

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 Xero. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited and ResMed Inc. 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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According to the latest Westpac Banking Corp (ASX: WBC) weekly economic report, the banking giant is expecting rates to stay low for a long time to come.

In fact, Westpac’s economic team are forecasting the cash rate to stay at the record low of 0.1% until at least December 2022.

That’s two more years that income investors and savers are going to have to contend with these ultra low rates.

In light of this, the Australian share market looks likely to remain the place to be for a source of income for some time.

Fortunately, there are a number of shares on the market with generous yields. Two with yields above 4% are named below:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust which owns a collection of commercial assets. The majority of which are warehouses that are leased to home improvement giant, Bunnings.

It has been a positive performer this year despite the pandemic and was able to pay a distribution as normal in FY 2020. It paid 18.29 cents per share to shareholders after reporting like-for-like rental growth of 2.4% and a 1% increase in profit (before gains on investment properties) to $117.1 million.

Management has guided to a similar distribution in FY 2021. Based on the current BWP share price, this represents a 4.2% yield.

Rural Funds Group (ASX: RFF)

Rural Funds is an agriculture-focused property group. It owns a total of 61 properties across five agricultural sectors. These quality properties are leased to some of the biggest operators in the industry such as almond producer Select Harvests Limited (ASX: SHV) and wine giant Treasury Wine Estates Ltd (ASX: TWE). 

One of the main attractions to the company for income investors is its long term leases, which have rental increases built in. At the last count, Rural Funds’ weighted average lease expiry (WALE) stood at 10.9 years.

This gives management great visibility on its future earnings and has allowed it to provide guidance even during the pandemic. In FY 2021, Rural Funds intends to increase its distribution by 4% to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 4.6% yield.

More reading

• Westpac (ASX:WBC) tips Australian dollar to hit 80 US cents in 2021
• 5 ASX dividend shares to buy for income in 2021
• ASX 200 down 0.3%: CSL sinks, Zip’s Facebook deal, IGO rockets
• Westpac (ASX:WBC) share price lower on AGM update
• 2 ASX dividend shares with attractive 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 RURALFUNDS STAPLED 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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The S&P/ASX 200 Index (ASX: XJO) was able to continue its impressive run last week, but only just. The benchmark index rose just 0.1% over the five days to end the week at 6,642.6 points.

Another busy week is expected next week. Here are five things to watch:

ASX futures pointing slightly lower.

The Australian share market looks set to start the week ever so slightly in the red. According to the latest SPI futures, the ASX 200 is poised to open the week 1 point lower on Monday. This follows a mixed night of trade on Wall Street on Friday. The Dow Jones rose 0.15%, the S&P 500 fell 0.15%, and the Nasdaq dropped 0.2%. 

US approves Pfizer COVID-19 vaccine.

Investor sentiment could be given a boost next week following news that the US FDA has given its authorisation for the emergency use of Pfizer’s COVID-19 vaccine. According to CNBC, the FDA’s emergency use authorisation will allow the federal government’s distribution of the potentially lifesaving vaccine across the country immediately. In fact, on Friday night, the government revealed plans to distribute 2.9 million doses of the vaccine within 24 hours. This will be followed by an additional 2.9 million doses 21 days later for patients to get their second shot.

Kogan to join the ASX 200.

S&P Dow Jones Indices has announced its quarterly rebalance of the S&P/ASX Indices. Two new additions have been announced for the ASX 200, effective at the open of trading on December 21. Those companies are online retailer Kogan.com Ltd (ASX: KGN) and plumbing parts company Reece Ltd (ASX: REH). Heading out of the index are three shares, due to the index currently having 201 shares following a demerger. These are Avita Therapeutics Inc (ASX: AVH), Cooper Energy Ltd (ASX: COE), and Western Areas Ltd (ASX: WSA).

ANZ and NAB annual general meetings

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price will be on watch on Wednesday when it holds its annual general meeting (AGM). The banking giant could provide investors with an update on current trading and its COVID-19 loan deferrals. This will be followed by the National Australia Bank Ltd (ASX: NAB) AGM on Friday.

More AGMs.

It isn’t just the banks that are holding their AGMs next week. A number of agriculture-focused companies will be holding their meetings as well. This includes Elders Ltd (ASX: ELD) on Thursday and then Incitec Pivot Ltd (ASX: IPL) and Nufarm Ltd (ASX: NUF) on Friday.

More reading

• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Will China’s tariffs cripple the Aussie economy’s 2021 recovery plan?
• ASX 200 drops on Friday
• Why JPM just upgraded the beaten-down Appex (ASX:APX) share price to “buy”

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 Avita Medical Limited and Kogan.com ltd. The Motley Fool Australia has recommended Avita Medical Limited, Elders Limited, and Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 5 things to watch on the ASX 200 next week appeared first on The Motley Fool Australia.

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The Australian dollar has been a strong performer in recent months and climbed to a 30-month high against the U.S. dollar last week.

While this is great news for importers and international travellers (when they can travel), it is the opposite for exporters like Graincorp Ltd (ASX: GNC) and those that generate the majority of their sales in U.S. dollars such as Appen Ltd (ASX: APX).

The bad news for the latter group is that the economics team at Westpac Banking Corp (ASX: WBC) is tipping the Australian dollar to continue to strengthen.

What is Westpac saying?

According to the latest Westpac Weekly economic report, its team believe the Australian dollar is on track to hit 80 U.S. cents in 2021.

Westpac’s Chief Economist, Bill Evans, commented: “The steady rise in the AUD since mid–year, when it was trading around USD0.68 has been due to rising iron ore prices (up from around US$80/t to US$145/t); ongoing momentum in China as the government seeks to restore positive growth for the year; Australia’s success in containing the virus; a boost to global optimism with the advent of successful vaccines; and positive surprises around Australia’s recovery and lift in consumer and business confidence since the recession.”

“There is understandable uncertainty about iron ore prices but the other factors seem set to roll into 2021 supporting our long– held USD0.80 target for AUD by end 2021,” he added.

Mr Evans points out that nearly all cycles in our currency are two to four years in length and generally are linked to global growth and particularly China’s growth and policy cycle.

Even higher in 2022?

Mr Evans believes 80 cents in 2021 is a safe bet and suspects the Australian dollar could go even higher in 2022.

He commented: “The question is whether this momentum can extend into 2022. With the AUD having bottomed out in March 2020, a ‘normal’ two year plus cycle sees the upswing lasting well into 2022.”

Furthermore, Westpac believes policy tightening in China and the developed world is unlikely, which rules out “an abrupt downward adjustment to the AUD.”

“For now, we are comfortable to project the upward momentum in AUD into 2022 reaching a high of USD0.82 before flattening off in the second half although there are clear upside risks to this scenario,” he concluded.

More reading

• 3 ASX growth shares to add to your portfolio in 2021
• These were the worst performing ASX 200 shares last week
• Why JPM just upgraded the beaten-down Appex (ASX:APX) share price to “buy”
• Australian wheat exporters retreat amid trade dispute with China
• Brokers name 3 ASX shares to buy right now

James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. 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 Westpac (ASX:WBC) tips Australian dollar to hit 80 US cents in 2021 appeared first on The Motley Fool Australia.

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