Tag: Motley Fool

The Nickel Mines Ltd (ASX: NIC) share price is gaining strongly again today, up 15.58% at 89 cents at the time of writing.

This comes after the company announced it had signed a memorandum of understanding (MoU) with Shanghai Decent Investment Co. The MoU indicates Nickel Mines will acquire a 70% interest in PT Angel Nickel Industry, a development project in Indonesia’s North Maluku province.

Today’s share price gains bring the company’s gains to more than 31% so far in October. Year-to-date, the Nickel Mines share price is up 41%.

By comparison the All Ordinaries Index (ASX: XAO) is down 6% so far in 2020.

What does Nickel Mines do?

Nickel Mines is involved in both the production and processing of nickel. The company has a financial, operational and strategic partnership with China’s Tsingshan Group, which is the largest stainless steel producer in the world.

Nickel Mines also owns an 80% interest in the Hengjaya Nickel and Ranger Nickel RKEF processing facilities in Indonesia, the world’s largest vertically integrated stainless steel facility. In addition, the company holds an 80% interest in the long life, high-grade Hengjaya nickel mine, also in Indonesia. Nickel Mines has a market cap of $1.8 billion.

What was in the announcement?

The company said the Angel Nickel Industry (ANI) project would be a joint collaboration with Shanghai Decent Investment (SDI). SDI is Nickel Mines’ largest shareholder.

The project comprises 4 “next-generation” 54 KVA1 rotary kiln electric furnace lines with an annual nameplate production capacity of 36,000 tonnes of nickel metal. There is also a 380MW coal-fired power plant, which the company says will reduce its nickel pig iron production operating costs with its secure and integrated power supply.

The MoU stipulates the Nickel Mines will acquire a 70% interest in ANI for US$490 million (AU$690 million). An initial 30% interest will be secured by the end of Q1 2021 for US$210 million. The remaining $280 million will be paid by the end of Q4 2021 for the additional 40% interest.

The company has already paid a US$10 million good faith deposit.

Nickel Mines managing director Justin Werner commented:

The acquisition of 70% of ANI will more than double Nickel Mines’ attributable annual nameplate nickel metal production capacity and further cement Nickel Mines as a globally significant, low cost nickel producer.

Once again, this transaction represents a compelling investment opportunity and comes at a valuation that we believe is unrivalled in the global nickel market. For little over 40% of our current market capitalisation, we have the opportunity to double our nameplate production profile…

We will now work expediently to progress this MoU to a Definitive Agreement over the coming weeks and look forward to keeping the market informed on this exciting next step in our journey.

With global demand for nickel forecast to remain strong, the Nickel Mines share price is one to watch.

More reading

• Why the MyFiziq (ASX:MYQ) share price is falling today
• Medusa (ASX:MML) share price edges higher on quarter update
• Why the Aspen (ASX:APZ) share price is charging higher?
• Here’s why the Clean TeQ (ASX:CLQ) share price has surged 10% today
• The Michael Hill (ASX:MHJ) share price has rocketed 11% today. Here’s why.

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. 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.

The post Why the Nickel Mines (ASX:NIC) share price is up 16% today appeared first on Motley Fool Australia.

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“Intelligent fanatics” is a term coined by Charlie Munger, the VP of Berkshire Hathaway Inc. Class A (NYSE: BRK.A). Specifically, they are high energy, smart leaders who can inspire incredible achievement. For instance, they include famous examples like Elon Musk, Steve Jobs, Bill Gates or Jack Welch.

Likewise, Australia is blessed with many leaders like this. That is to say, architects who can design and build an organisation to meet a burning need. Here are some of the ones I follow, and the companies they have built.

Intelligent fanatics in mining

I worked in the orbit of Andrew Forrest 20 years ago. This was before he went on to be the founder of iron ore miner Fortescue Metals Group Limited (ASX: FMG). At the time he was building a massive nickel mine with new technology in the desert. Like Fortescue more recently, Murrin-Murrin had a range of billion dollar problems that I watched this guy and his leadership team blast through.

In addition, the growth of Fortescue’s mining operations has been beyond anything I could have imagined when he started all this near the turn of the century. The man is a human dynamo, who is always on the side of new approaches and new technologies. As long as Forrest remains at the helm of Fortescue I intend to hold onto my shares.

Another intelligent fanatic in mining is Bill Beament, the Chairman of Northern Star Resources Ltd (ASX: NST). Bill joined the company in 2007 as managing director when the share price was 9 cents. As it moves to finalise the merger with Saracen Mineral Holdings Limited (ASX: SAR) each share is worth $16.06 . It is worth mentioning that Saracen is led by its own intelligent fanatic in CEO Raleigh Finlayson.

The company has become known for a few things. First, they are quick to offload cassets they aren’t happy with. Second, it almost always increases the gold reserves of companies it acquires. Third, operating productivity of its acquisitions also goes up.

The merger with Saracen means that the super pit in Kalgoorlie will be under one company for the first time since Alan Bond unified all the local gold mines. I am very excited by what Northern Star could go on to achieve with Beament as chairman and Finlayson as managing director.

Financial fanatics

There are many leaders in this space that I find intriguing. Tempted though I am to talk about the founders of Afterpay Ltd (ASX: APT), it’s the founders of Zip Co Ltd (ASX: Z1P) that currently hold my interest.

Larry Diamond and Peter Gray are the intelligent fanatics behind an alternative finance company, not just a buy now, pay later (BNPL) firm. The move to partner with eBay Inc (NASDAQ: EBAY) via the company’s Zip Business arm places them squarely in the realm of non-bank lenders such as Resimac Group Ltd (ASX: RMC). Moreover, the company already has additional credit offerings outside of BNPL and owns PocketBook, a personal budgeting tool. Lastly, Zip Co has a deal with Amazon.com on its site, this is a major coup.

Of all of the BNPL companies, I think Zip Co is best placed over the medium to longer term because of the diversity of its product line, and its ability to attract solid deals with global partners. It will be less impacted by pressure on margins as more companies enter this space. 

More reading

• Class action lawsuit a new challenge for Rio Tinto (ASX:RIO) share price
• Zip (ASX:Z1P) share price slumps 10% this week: is it a buying opportunity? 
• Top brokers name 3 ASX shares to sell today
• Why IDP Education, WiseTech, Zip, & Zoono shares are tumbling lower today
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise

Daryl Mather owns shares of Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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The S&P/ASX 200 Index (ASX: XJO) went down by 0.5% today to 6,177 points.

Here are some of the highlights from the ASX today:

Tyro Payments Ltd (ASX: TYR)

The Tyro share price went up by 5.4% today after the payments business announced a merchant deal.

Tyro announced that it’s partnering with Bendigo and Adelaide Bank Ltd (ASX: BEN) to create a long-term merchant acquiring alliance.

As a result of the deal, Tyro expects to deploy more than 26,000 Tyro terminals in 2021 for the alliance, increasing its terminal fleet to just over 89,000 terminals.

Tyro will exclusively provide merchant acquiring services to Bendigo Bank’s existing merchant acquiring customers and Bendigo Bank will exclusively refer new merchant opportunities from its business customer base to Tyro, under a joint brand.

Economic benefits of Bendigo Bank’s existing merchant service contracts will move to Tyro on completion, which is expected in the first half of the calendar year. Tyro is buying Bendigo Bank’s merchant service contracts and associated goodwill.

Tyro will pay Bendigo Bank $9 million upfront. Bendigo Bank there will also get an on-going gross profit share from existing and newly referring Bendigo Bank business customers who use Tyro’s merchant acquiring services.

This alliance between the two ASX 200 shares has an initial 10-year term with provisions for extensions by agreement for additional five-year terms. If the alliance expires, all Bendigo Bank transferred and referred customers will remain with Tyro, with Bendigo Bank’s gross profit share to continue while those customers are served by Tyro.

Tyro said there are a few costs relating to implementing this alliance. There will be a one-off project resourcing cost of $3.8 million. There will also be other one-off project costs, including terminals, of $16.1 million. Finally, there will be ongoing additional personnel costs to support the alliance, which is expected to be around $6.7 million per annum.

The ASX 200 payments business is expecting that Bendigo Bank’s business customers will generate around $5 billion in transaction value in FY22. Tyro’s gross profit share (after the gross profit share to Bendigo Bank and before operating costs) from the Bendigo Bank cohort will be approximately $19 million in FY22.

The Bendigo Bank share price went up by 2.8% today.

Rio Tinto Ltd (ASX: RIO)

The ASX 200 mining giant announced its FY20 third quarter production results today.

Compared to the second quarter, iron ore shipments were down 5% to 82.1Mt, though production was up 4% to 86.4Mt. Bauxite production was down 1%, aluminium production was up 2%, mined copper was down 2% and production of pellets and concentrate at Iron Ore Company of Canada (IOC) was 21% lower due to an annual maintenance shutdown as well as a weather related power failure and mechanical issues also impacting production.

Rio Tinto CEO J-S Jacques said: “Rio Tinto has shown great resilience through challenging conditions and will continue to prioritise the health and safety of our employees, contractors and communities. The quality of our assets, coupled with our strong focus on capital discipline and value over volume approach, mean we can continue to invest in our business, support our communities, pay taxes and royalties to host governments and continue to generate superior returns to shareholders in the short, medium and long term.”

Aussie Broadband Pty Ltd (ASX: ABB)

Telecommunications business Aussie Broadband listed onto the ASX today. It had an amazing debut.

The Aussie Broadband share price almost doubled from its $1 listing price, finishing with a share price of $1.91.

Next Monday could be another very volatile day for the telco ASX share.

More reading

• Class action lawsuit a new challenge for Rio Tinto (ASX:RIO) share price
• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world
• Meet the ASX stock that could pay its first dividend in 8 years
• Why Dubber, New Hope, Pro Medicus, & Rio Tinto shares are dropping lower
• The Medibank (ASX:MPL) share price rockets on broker upgrade

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 Tyro Payments. 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.

The post ASX 200 falls, Tyro (ASX:TYR) up on merchant deal appeared first on Motley Fool Australia.

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When it comes to investing, I believe it can pay to keep things simple. 

While trying to buy low and sell high may generate strong returns if you’re able to successfully time the market, it certainly isn’t easy to do.

Instead, I would suggest investors use one of the simplest and most effective investment strategies – buy and hold investing.

This strategy sees investors buy high quality shares that have solid long term growth prospects and hold onto them for long periods of time. They will only sell them if the investment thesis is broken.

It is a strategy used to great effect by legendary investor Warren Buffett. If you look at his returns, it’s a pretty good testament to the strategy’s success.

But which shares should you buy and hold on the ASX? Three that I think would be great candidates are listed below. Here’s why I rate them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

I think the BetaShares NASDAQ 100 ETF is a great option for buy and hold investors. This is because it gives investors access to 100 of the highest quality businesses in the world through a single investment. Among its holdings are the likes of Amazon, Apple, Facebook, Microsoft, Netflix, and Tesla. One fund manager just tipped the latter to be worth US$2 trillion one day. This ETF would be a great way to take part in Tesla’s potential rise.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Another ASX share that I think would be a great buy and hold candidate for investors is Domino’s. I think it is a top option due to its strong brand and ambitious growth plans. At the end of FY 2020, Domino’s had a total of 2,668 stores. However, management doesn’t believe its expansion is anywhere near complete. It has set itself a target of more than doubling its network to 5,500 stores by 2033. 

NEXTDC Ltd (ASX: NXT)

A final buy and hold option is NEXTDC. As the region’s most innovative Data Centre-as-a-Service provider, I believe it is well-positioned to benefit from the accelerating shift to the cloud. This shift has led to significant demand for capacity in its data centres. So much so, it was forced to pull forward expansion plans. I expect this strong demand to persist for the foreseeable future and underpin strong sales and earnings growth.

More reading

• Should you stay invested in an ASX share after a strong run?
• 3 exciting ASX growth shares to buy for stellar long term returns
• 3 ETFs every ASX investor should consider today
• 3 ASX growth shares that I would buy in 2020
• Which ETFs attracted the most money this year?

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and Domino’s Pizza Enterprises Limited. 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.

The post Invest like Warren Buffett and buy and hold these fantastic ASX shares appeared first on Motley Fool Australia.

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A disappointing quarterly report may not be the only thing weighing on the Rio Tinto Limited (ASX: RIO) share price.

News of a class action lawsuit filed in the US against our largest iron ore miner is also casting a shadow over the stock.

The lawsuit accuses Rio Tinto of making false and misleading statements about the controversial Oyu Tolgoi project, according to the Australian Financial Review.

Rio Tinto’s share price under pressure

The Rio Tinto share price fell 1.1% to $95.23 in the last hour of trade when the S&P/ASX 200 Index (Index:^AXJO) lost 0.5%.

In comparison, the Fortescue Metals Group Limited (ASX: FMG) share price slipped 0.2% to $16.66 while BHP Group Ltd (ASX: BHP) declined 1.3% to $36.28.

Cost blowout and delays

The case against Rio Tinto is partly based on claims made by its former employee, Richard Bowley. He told a London court he warned his bosses of a cost blowout more than two months before Rio Tinto said the project was “on budget and schedule” in an October 2018 market filing.

As we now know, this turned out to be a farse. The massive Mongolian project was initially costed at US$5.3 billion in 2015. But delays and over-optimistic geologic assumptions sent costs soaring to US$6.8 billion while pushing back the start date by two years.

The project is now in limbo. Rio Tinto refuses to rescue the project and is leaving that task to Turquoise Hill Resources Ltd (NYSE: TRQ).

Funding limbo

Turquoise Hill, which is 50.79% owned by Rio Tinto, owns two thirds of Oyu Tolgoi with the balance resting in the Mongolian government’s hands.

The Mongolian government doesn’t have the cash to get the copper mine back on track either. Rio Tinto is pushing Turquoise Hill to undertake a multi-billion-dollar capital raise.

Little wonder the Turquoise Hill share price collapsed by more than 70% in the last five years and leaving shareholders feeling peeved.

Rio Tinto’s class action co-defendants

The plaintiff in the class action is New Jersey resident Anthony Franchi, reported the AFR. Franchi claims Rio Tinto’s and Turquoise Hill’s false disclosures tricked him into purchasing Turquoise Hill shares at “artificially inflated prices”.

The class action is for investors who bought Turquoise Hill shares between July 17, 2018 and July 31, 2019.

Besides Rio Tinto and Turquoise Hill, Rio Tinto’s outgoing chief executive Jean-Sebastien Jacques and Rio’s copper boss, Arnaud Soirat, have been named as individual defendants in the case.

More reading

• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world
• Meet the ASX stock that could pay its first dividend in 8 years
• There’s good news and bad for these ASX commodity shares
• Why Dubber, New Hope, Pro Medicus, & Rio Tinto shares are dropping lower
• The Medibank (ASX:MPL) share price rockets on broker upgrade

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Rio Tinto Ltd. 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.

The post Class action lawsuit a new challenge for Rio Tinto (ASX:RIO) share price appeared first on Motley Fool Australia.

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If you’ve never heard of BWP Trust (ASX: BWP), you’re not alone.

Yet the $2.7 billion real estate investment trust (REIT) leases buildings to one of Australia’s best known, and most successful retailers, Bunnings Warehouse.

Most Australians will have visited a Bunnings Warehouse, and not just for their snags. Though, with a your home improvement and outdoor needs stacked in your trolley, it’s hard to bypass the sausage sizzle. Especially if you have kids in tow.

What does BWP Trust do?

BWP Trust is an ASX REIT that invests in and manages commercial properties across Australia. The majority of its properties are leased to Bunnings Group Limited, which you’ll know as Bunnings Warehouses. Bunnings is a wholly owned subsidiary of Wesfarmers Ltd (ASX: WES).

Wesfarmers also owns around 25% of the issued shares in BWP Trust. BWP shares first began trading on the ASX in 1998.

BWP’s share price benefits from reliable income stream

Many landlords of brick and mortar retailers have been struggling to collect the rent this year. That’s one of the primary drivers that’s seen shopping centre owner and developer Scentre Group‘s (ASX: SCG) share price tumble 42% this calendar year.

But with Bunnings Warehouse leasing the majority of its properties, BWP Trust hasn’t had this issue.

For an idea of just how well Bunnings is performing, I’ll quote the Motley Fool’s own Scott Phillips, who on Monday wrote:

Bunnings numbers are truly out of this world. Numerically, I think it’s fair to say Bunnings is the best retailer in the world. If that seems like a big call, it is. But it’s not hyperbole.

In the most recently completed financial year, Bunnings’ earnings were up 14%. It was the best performing unit in parent Wesfarmers’ portfolio. Its return on capital was an astonishing 61%.

That is, for every $1 of assets in the business, Bunnings earned 61c… The year before, it was 51c.

(To be fair — and to Wesfarmers’ credit, the company was clear to disclose this — the 2020 ROI was favourably impacted by lower working capital at year end, this year.)

The quality of its primary tenant is reflected in BWP Trust’s share price. Despite falling 33% from 20 February through to 23 March during the COVID-19 driven market rout, BWP’s share price is up 5% year-to-date.

That compares to an 8% loss of the wider S&P/ASX 200 Index (ASX: XJO).

BWP Trust also paid both of its dividends this year for an annual dividend yield of 4.4% at the current share price.

More reading

• These ASX ETFs could be perfect for dividend-seekers
• Is the Wesfarmers (ASX:WES) share price a strong buy today?
• 2 of the best ASX dividend shares to buy today
• Why the Indoor Skydive (ASX:IDZ) share price is up 300% today
• Revealed: ASX Christmas winners and losers

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. 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.

The post How ASX 200 investors can collect a rent check from Bunnings Warehouses appeared first on Motley Fool Australia.

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There’s a thing about pessimism.

It just sounds smart, right.

The dour, considered view, outlining everything that could go wrong.

It makes sense to consider the risks. To recognise the potential pitfalls. To factor in the evidence that could tear us asunder.

And it’s deeply evolutionarily rooted. The off chance you might be taken by a lion was really worth thinking about.

Moreover, early evolutionary life selected for pessimism.

Generations of ‘What if it’s a lion?’ thinking meant survival of the person, and their genes.

Those who had a more ‘She’ll be right’ attitude, well, had less chance of passing that view to their offspring.

And yet.

And yet, the story of humanity is one of deep, deep optimism.

It’s the story of growth. Of innovation. Of taking risks.

It’s the story of progress.

James Watt decided to try to invent the steam engine. The Suffragettes thought women should be allowed to vote. Howard Florey devoted his life to scientific discovery, identifying penicillin in the process. Steve Jobs wanted to build a beautiful computer.

None of these happen if the people involved look at the risks and think ‘Nah, I won’t try, just in case. I mean, look at what can go wrong!’

Perhaps more importantly, for them, and in our context. None of them happen if they gave up because people said it couldn’t be done. Or because there were hurdles, and the progress took time, effort and commitment.

I share this thought because I worry about the impact of Negative Nellies on investors.

The ones who only see problems, risks and bad news.

See, in March and April this year, I was yelling — almost literally — here, on our Facebook Live Chats, with our members… just about everywhere… that I thought abandoning the investing ship in the face of COVID was going to be a huge mistake.

Not because I knew the market would bounce back so far or so fast, but because I was convinced it would bounce back.

I mightn’t have been Robinson Crusoe, exactly, but there weren’t too many of us on Optimism Island at the time.

The smart people sold. They knew things were going to get worse. They were too smart, you see, to hang around while share prices kept falling.

Except, they didn’t.

And many — maybe even most — of those people missed the recovery, or much of it, while they held to their beliefs.

These are smart people.

Thoughtful, earnest people.

Making the calls they genuinely thought were right.

But — and here’s the point — for what?

See, the beauty of investing is that — done properly — it’s not a ‘lion or no lion’ question.

If you’re suitably diversified and you’re not relying on margin loans (you’re not, are you?), then the sharemarket ‘lion’ is closer to a passing storm on a diversified farm.

Yes, it might wipe out part of your crop. Yes, it might set you back a year or so. Yes, you might have to clear some debris and replant some of your fields. But you almost never have to start from zero.

And when the rain is over and the sun comes out, the crops will come back.

But here’s the kicker.

Maybe the storm doesn’t come.

Maybe it’s a short, sharp rainshower.

Or maybe the clouds blow over harmlessly.

Can you imagine a farmer ploughing her crops into the ground every time the prospect of a storm was raised?

Or refusing to plant, just in case the rains don’t come?

“I’ll wait for the weather to arrive, then I’ll decide” is ‘smart’ — unless you’re a farmer, in which case you know full well that it’s too late by then.

“I won’t harvest the crop, because there’s a chance the silo gets a hole in it”

“I’ll harvest now, even though the plants are only partly grown, just in case there’s no rain next month”

I hope those examples sound silly.

I also hope you understand the analogy.

Because here’s something I’ve said before, and that I’ll keep on saying:

The ASX has never yet failed to regain, and surpass a previous high.

Get it?

The lion isn’t coming.

The storms will come, from time to time, but the farm will, despite the occasional setback, be more and more productive, over time.

Now, you can be in the storm prediction business if you want.

You can be the farmer who assumes the worst, and abandons his crops at the first sign of potential trouble.

You can seem ‘smart’ when, once in a blue moon you get your ‘predictions’ right.

And you can even feel smug when you say ‘Well, the storm didn’t come, but at least I was prepared for it’.

But good luck making money that way, over any length of time.

See, the stock market is almost stupidly biased in favour of the (sensible) optimists.

No, not the speculators, day traders or the gamblers.

The optimists.

The market goes up, over time.

Meaning, if you’re a pessimist, the odds are already stacked against you.

It’s a stacked deck. A loaded dice. A weighted coin.

The irony is that the people smart enough to develop comprehensive bear cases for the market or the economy as a whole can’t see it.

Or don’t want to see it.

Maybe it’s too simple. You can’t sound smart that way. Or feel smart.

Maybe it’s because their egos don’t like the idea that they could get rich without needing to be smarter than the other guy.

But it’s a helluva thing, isn’t it?

I had a conversation on Twitter yesterday with some smart people. See, I think the economy is really starting to show strong signs of life. Others disagreed.

And for all I know, they’re right. I don’t think they are, but they might be.

The thing is, for the long term investor, it just doesn’t matter.

Nor do the short term movements of the ASX.

(But how many of the self-professed gurus picked the fact the market would be up 7% in 7 days recently?)

You, my dear, capital-F Foolish reader, have two choices.

You can get distracted — and worse — by the smart-sounding talking heads and prognosticators. You can buy into their stories of gloom and tales of woe.

Hell, you’ll actually be right sometimes if you do.

Or, you can choose the other path.

The decried and derided ‘Optimism wins’ route. 

See, optimism isn’t blind faith. It isn’t ignoring reality. It isn’t shutting your eyes, clicking your heels and saying ‘there’s no place like home’.

It’s realising that humanity and progress are inseparable, despite setbacks. It’s looking at centuries of human achievement — and more than a century of stock market history — and hitching your wagon to that train (if you’ll excuse the mixed metaphor).

You won’t get to write best-selling books. 

Your name won’t be quoted as the guy or girl who ‘predicted the crash’.

You won’t be one of the cool kids.

You’ll just have to make do with building life-changing wealth — at least if history is any guide.

Yeah, it’s a burden, but someone has to do it.

Shouldn’t it be you?

Fool on!

More reading

• These ASX ETFs could be perfect for dividend-seekers
• Is the Wesfarmers (ASX:WES) share price a strong buy today?
• Why Afterpay’s (ASX:APT) Nick Molnar is embracing the fashion world
• Why the Coventry Group (ASX:CYG) share price is up 10% today
• Meet the ASX stock that could pay its first dividend in 8 years

Scott Phillips 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 Twitter. 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.

The post So much brainpower… wasted by betting against humanity appeared first on Motley Fool Australia.

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As well as providing investors with access to international markets, exchange traded funds (ETFs) can be used to generate income.

There are a number of ETFs out there that have been specifically designed to give income investors access to a large number of dividend shares.

Two which I think investors ought to consider buying today are listed below. Here’s why I like them:

iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD)

The first ETF for income investors to consider buying is the iShares S&P/ASX Dividend Opportunities ETF. This fund aims to provide investors with the performance of the S&P/ASX Dividend Opportunities Accumulation Index, before fees and expenses. It has been designed to measure the performance of a diverse group of 50 ASX-listed shares that offer high dividend yields and stability.

Among its holdings you’ll find supermarket operator Coles Group Ltd (ASX: COL), banking giant Commonwealth Bank of Australia (ASX: CBA), iron ore miner Fortescue Metals Group Limited (ASX: FMG), and conglomerate Wesfarmers Ltd (ASX: WES). At present its 12-month trailing dividend yield stands at 4.1%. However, I suspect that this will start to increase at a solid rate once the pandemic passes and dividend payments return to normal.

VanEck Vectors Australian Banks ETF (ASX: MVB)

Another ETF for income investors to consider buying is the VanEck Vectors Australian Banks ETF. As you might have guessed by its name, this ETF gives investors exposure to the Australian banking sector. This means that through a single investment, you’ll be buying a piece of Commonwealth Bank and the rest of the big four, the regional banks, and even Macquarie Group Ltd (ASX: MQG). I think this makes it a great option for investors that are wanting exposure to the banking sector, but aren’t too sure which of the banks to buy.

Estimating the yield that the ETF will offer in FY 2021 is tricky because of the pandemic. However, when things return to normal, I would expect a yield in the region of 5% to 6%. For now, I would estimate a partially franked 4% yield over the next 12 months.

More reading

• Is the Wesfarmers (ASX:WES) share price a strong buy today?
• How to get Coles to give you money for 11 years
• 2 safe ASX shares for your retirement portfolio
• Is the Coles (ASX:COL) share price set for a big Santa Rally?
• 2 blockbuster blue chip ASX shares to buy

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. 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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Is the Wesfarmers Ltd (ASX: WES) share price a strong buy today?

Wesfarmers has actually done really well since the March 2020 COVID-19 crash in my opinion. The Wesfarmers share price dropped to $31 at the lowest point. Since then it has risen around 55% to $48.

You may think that some of Wesfarmers’ businesses would be vulnerable in a global pandemic and a painful recession. But that’s not what happened.

People decided to buy from Bunnings to do home DIY projects. There was also big demand for Officeworks products to set up a home office and enable school children to learn from home as well. These trends really showed through in the FY20 result.

Wesfarmers’ strong FY20 result

Wesfarmers revealed a couple of months ago in its FY20 result that its continuing operations (before significant items) delivered growth of the net profit after tax (NPAT) of 8.2%. That would be a pretty good number in normal times, but during the COVID-19 pandemic I think it was a really good result.

The conglomerate reported that Bunnings’ FY20 underlying EBIT went up 13.9% and Officeworks’ underlying EBIT grew by 13.8%.

The Bunnings part of the result was the most important because it generates the lion’s share of the overall profit. In FY20 Bunnings made 64% of the total underlying EBIT.

I think that Bunnings is one of the best retail businesses in the whole country. It has great economics, provides strong customer service and has a good online offering.

However, FY20 proved to be a difficult year for its other divisions. Kmart Group continuing operations EBIT fell 23.5%, WesCEF continuing operations EBIT fell 9.2% and the industrial and safety division saw EBIT decline 53.5%.

The Kmart Group performance wasn’t too much of a surprise considering Target was already having difficulties before COVID-19 came along. It’s difficult for department stores when many customers are switching to the online format of retail rather than going in to stores.

But there was a promising update for FY21 when Wesfarmers released its FY20 result. It said that the strong retail sales growth experienced in the second half of FY20 continued through July. It also said that online sales increased significantly through July and August. Some businesses like Bapcor Ltd (ASX: BAP) have shown that retail sales continued strongly for the whole of the first quarter of FY21. 

Is the Wesfarmers share price a buy today?

That’s the big question. At the current Wesfarmers share price it’s trading at 27x FY21’s estimated earnings.

It’s a hefty valuation compared to previous years. But there are a few things to remember with this valuation if you think it’s definitely too expensive.

Wesfarmers may be able to show a strong FY21 half-year result if the impressive retail sales continue to Christmas, justifying the higher valuation.

Another factor is that interest rates are now extremely low in Australia. This is helping push investors into riskier assets looking for a better return. The cashflows of businesses are more valuable if interest rates are lower. Wesfarmers should be valued higher because of the RBA’s current position.

But the Wesfarmers share price certainly isn’t a buy at any price. I’m not looking to jump on it for my own portfolio right now. But I think it is priced reasonably for an income investor to take a small starting position and buy more shares on any price weakness.

Wesfarmers has been a solid ASX dividend share for many years. Its dividend has been reset a little after the divestment of Coles Group Limited (ASX: COL), but it continues to be a really good dividend option.

It currently offers a trailing grossed-up dividend yield of around 5%. That’s not a huge yield, but it’s much better than what you can get from a bank at the moment. I also think that the dividend can continue to grow if Bunnings keeps performing. Perhaps Wesfarmers will soon able to make another useful acquisition.

More reading

• How to get Coles to give you money for 11 years
• 2 safe ASX shares for your retirement portfolio
• Is the Coles (ASX:COL) share price set for a big Santa Rally?
• 2 blockbuster blue chip ASX shares to buy
• 4 ASX shares rated as strong buys by brokers

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. 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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There’s a reason the Afterpay Ltd (ASX: APT) share price makes headline news most every day.

In a year where most S&P/ASX 200 Index (ASX: XJO) shares have struggled to cope with pandemic burdens that have sent the index down 7% since 2 January, Afterpay has thrived.

Up more than 1.5% in early afternoon trading today, while the ASX 200 is slipping, the Afterpay share price has now gained a tremendous 214% for the year.

And if you were insightful, bold or just plain lucky enough to buy shares at the 23 March lows, you’d be sitting on a gain of more than 980% today.

How Afterpay is courting Millennial and Gen Z consumers

Afterpay’s buy now, pay later (BNPL) platform is dominated by younger consumers (under 40), with more women favouring BNPL options than men.

It seems like a savvy move, then, by co-founder Nick Molnar to sponsor a major event that caters to this demographic.

COVID-19 saw Australian Fashion Week cancelled this year. But the event is back on the agenda for 2021. And with major funding from Afterpay, it’s been rebadged Afterpay Australian Fashion Week.

Explaining the company’s reasoning behind supporting the fashion event, co-founder Nick Molnar says (as quoted by the Australian Financial Review):

The fashion industry was the first to embrace us. They were the ones who backed Afterpay to begin with – they got the Millennial and Gen Z attitude to money…

Our earliest adopting brands were Spell and the Gypsy Collective, Aje and Cue. It gives me immense pleasure to see Australian brands like these succeed internationally and to be a part of that story. When we started talking with Natalie (Xenita, executive director of event host IMG Australia) the thinking was, how do we leverage (Afterpay’s) reach locally and globally, working with Australian designers who are really having a moment. We feel privileged to partner with Fashion Week…

Molnar said from Afterpay’s perspective, the company was proudly Australian:

Having the ability to start with Australia gives us the right learning experience to see what opportunities exist down the track. We have 1 million users in the UK and 5 million in the United States, so we are uniquely positioned to take on something like fashion week as it becomes more consumer-facing.

With a dominant share of the BNPL market in Australia, and those kinds of growing numbers in the United States and the United Kingdom, the Afterpay share price could continue to grab headlines for a long time to come.

More reading

• Meet the ASX stock that could pay its first dividend in 8 years
• The Medibank (ASX:MPL) share price rockets on broker upgrade
• ASX 200 flat: Rio Tinto Q3 update, big four banks higher, GUD impresses
• How this fund manager’s 60% UP in the year of COVID-19
• How to use cash in an ASX share portfolio for maximum returns

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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