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If you’re looking to boost your income with some ASX dividend shares, then I think the ones listed below would be worth considering.

I believe both companies are in a good position to pay more generous dividends in FY 2021 and beyond. Here’s why I would buy them:

Aventus Group (ASX: AVN)

The first ASX dividend share to look at is retail property company Aventus. It has been a remarkably positive performer during the pandemic when many of its peers have struggled. This has been thanks to its focus on large format retail parks and the high weighting of its tenancies towards everyday needs. Aventus counts the likes of ALDI, Bunnings, Officeworks, and The Good Guys as tenants.

Given how these companies have continued to thrive during the pandemic, its rental collections were solid in FY 2020 and look likely to be equally strong this year. In light of this and based on the current Aventus share price, I estimate that it provides investors with an FY 2021 dividend yield of ~5.5%.

Fortescue Metals Group Limited (ASX: FMG)

Another ASX dividend share to consider buying is Fortescue. I think the iron ore producer would be a great option due to the high prices that the steel making ingredient is commanding this year. And thanks to an improving outlook for steel production in China, these lofty iron ore prices look likely to stay in or around current levels for longer.

Combined with its low cost operations, this should put Fortescue in a position to deliver high levels of free cash flow again in FY 2021. Pleasingly, given the strength of its balance sheet, I expect the majority of this free cash flow to be returned to shareholders. Which, based on the current Fortescue share price, I estimate will lead to a fully franked dividend yield of at least 6% this year.

More reading

• My 3 favourite ASX dividend shares to buy this year
• Top brokers name 3 ASX shares to buy next week
• Why Beach, Fortescue, Mesoblast, & SeaLink shares are tumbling lower
• How to generate $50k a year from ASX dividends
• Top ASX Stock Picks for October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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 Australian share market has been a very positive performer this week and is charging notably higher week to date.

And while the All Ordinaries Index (ASX: XAO) is still down materially from its pre-pandemic high, that hasn’t stopped some ASX shares from charging to new highs.

Three ASX shares which have just hit record highs are listed below. Here’s why they are soaring:

Baby Bunting Group Ltd (ASX: BBN)

The Baby Bunting share price jumped to a new record high of $4.96 on Tuesday. Investors were buying the baby products retailer’s shares after the release of a trading update ahead of its annual general meeting. That update revealed that Baby Bunting’s positive form has continued in FY 2021, with comparable store sales growth (to 2 October) of 17%. Excluding stores in the Melbourne metropolitan region, the company’s comparable store sales would have been up 28.5%. Management also revealed very strong online sales and click & collect growth.

Objective Corporation Limited (ASX: OCL)

The Objective Corp share price reached a record high of $13.20 yesterday. This latest gain means that the content, collaboration, and process management software solutions company’s shares have now more than doubled in value in 2020. The catalyst for this was its strong performance in FY 2020, which led to Objective Corp delivering a 22% lift in net profit after tax to $11 million. Also getting investors excited was management’s guidance for the year ahead. It expects “a material lift in revenue and profitability” in FY 2021.

Piedmont Lithium Ltd (ASX: PLL)

The Piedmont Lithium share price surged to a new high of 48 cents on Tuesday. Investors have been buying this U.S. based lithium miner’s shares after the release of a major announcement at the end of September. That announcement revealed that Piedmont Lithium has signed a binding sales agreement with electric vehicles giant Tesla. The two parties have signed an initial five-year term for the supply of spodumene concentrate (SC6) from Piedmont Lithium’s North Carolina deposit. The deal also includes the option for a further five-year extension by mutual agreement.

More reading

• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher
• Meet the latest ASX small cap stock that’s racing ahead during COVID
• Baby Bunting (ASX:BBN) share price on watch after very strong Q1 sales growth
• Could these US-based ASX lithium shares land a deal with Tesla (NASDAQ:TSLA)? 
• Forget day trading and buy and hold these fantastic ASX shares

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 Objective Limited. 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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On Tuesday the S&P/ASX 200 Index (ASX: XJO) fought back from a morning decline to continue its positive run. The benchmark index rose 0.35% to 5,962.1 points.

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

ASX 200 expected to drop lower.

The ASX 200 looks set to end its winning streak on Wednesday. According to the latest SPI futures, the benchmark index is poised to open the day 8 points or 0.1% lower. This follows a poor night of trade on Wall Street. Late in the session the Dow Jones is down 1.1%, the S&P 500 is 1.1% lower, and the Nasdaq is tumbling 1.2% lower. News that President Trump is calling off COVID-19 stimulus talks until after the election led to the selloff.

Federal Budget reaction.

A number of ASX 200 shares will be on watch today after the release of the Federal Budget last night. Retail shares may be among the biggest winners after the government cut personal tax rates to put more funds in consumers’ pockets. Elsewhere, R&D tax incentives have been left untouched, manufacturers have been allocated $1.5 billion in grants, and states have been given $10 billion to boost infrastructure projects. All in all, Australia’s debt is expected to reach almost $1 trillion in the coming years.

Oil prices storm higher.

Energy shares including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could push higher again on Wednesday after oil prices continued their recovery. According to Bloomberg, the WTI crude oil price is up 2% to US$40.01 a barrel and the Brent crude oil price is up 2% to US$42.10 a barrel. Traders were buying oil amid supply disruptions due to an approaching hurricane on the Gulf Coast.

Gold price sinks lower.

Gold miners Evolution Mining Ltd (ASX: EVN) and St Barbara Ltd (ASX: SBM) could have a tough day ahead after the gold price sank lower. According to CNBC, the spot gold price has fallen 1.15% to US$1,898.10 an ounce. The price of the precious metal came under pressure after U.S. Treasury yields climbed.

BHP rated as a buy.

The BHP Group Ltd (ASX: BHP) share price will be on watch after analysts at Goldman Sachs reiterated their buy rating and $40.10 price target on the mining giant’s shares. The broker notes that BHP has acquired a greater share of the Shenzi asset in the Gulf of Mexico. Based on Goldman Sachs’ long run oil prices of US$60 a barrel, it expects the acquisition to be highly accretive to earnings.

More reading

• ASX 200 rises on mixed day, big gold merger
• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• What investors learnt from the RBA’s rate decision today
• Does time in the market really beat timing the market?
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action

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. 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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Despite trading notably lower than its 52-week high, the Appen Ltd (ASX: APX) share price has been a market beater in 2020.

Since the start of the year, the machine learning and artificial intelligence data services company’s shares have risen a remarkable 55%.

Why is the Appen share price up 55% in 2020?

Investors have been buying Appen’s shares this year after it delivered further strong growth in FY 2020 despite the pandemic.

For the six months ended 30 June 2020, Appen reported a 25% increase in revenue to $306.2 million.

This was driven by the company’s key Relevance segment, which provides annotated data to be used in search technology for improving the relevance and accuracy of search engines, social media applications, and e-commerce websites.

The Relevance segment posted a 34% increase in revenue to $273.9 million during the first half. This offset weakness in the company’s Speech & Image segment, which reported a disappointing 20% decline in revenue to $31.9 million.

Also growing strongly was the company’s operating earnings. Appen reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) excluding growth investments of $62.5 million, up 35% on the prior corresponding period.

What about the future?

The good news is that management remains very positive on the company’s outlook. It noted that it is has high confidence in the long-term market potential for AI and training data.

Chairman, Chris Vonwiller, commented: “We are especially pleased with this result amidst the pandemic and the implementation of our growth initiatives. The strength of our business model, market exposure, competitive position and our consistent execution give us the confidence to push forward with our investments to solidify future growth.”

Should you invest?

At present, I estimate that Appen’s shares are changing hands at 39x FY 2021 earnings.

While this is a premium to the market average, it is actually very reasonable in comparison to other members of the WAAAX group, such as WiseTech Global Ltd (ASX: WTC). I estimate that its shares are trading at 94x FY 2021 earnings at present.

Overall, I think the Appen share price is a strong buy at the current level and expect its market beating return to continue over the 2020s.

More reading

• 4 stellar ASX growth shares to buy right now
• Where to invest $10,000 into ASX shares immediately
• 5 things to watch on the ASX 200 on Friday
• One ASX tech share to buy today ahead of government cash splash
• Where to invest your Coles (ASX:COL) dividends this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd and WiseTech Global. 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 JB Hi-Fi Limited (ASX: JBH) share price is up 23% so far in 2020, even after sliding 10% from its 25 August all-time highs. Despite its unique spot in the retailing world, with a large online footprint, the JB share price did not escape the wider selling that gripped the market in the early days of the pandemic. From 10 February through to 25 March the JB share price fell 47%.

Since that low, the share price has doubled, up 100%. That strong performance puts the company’s shares up 23% year to date. By comparison, the S&P/ASX 200 Index (ASX: XJO) is down 11% in 2020.

What does JB Hi-Fi do?

JB Hi-Fi is a consumer goods retailer. The company’s products include a range of home entertainment, gaming, music and IT products as well as white goods and home appliances. JB has made several acquisitions over the years, including acquiring The Good Guys in 2016.

JB Hi-Fi has over 300 stores across Australia and New Zealand. The company also operates online stores in both markets. JB Hi-Fi first began trading on the ASX in 2003. Today, the company has a market capitalisation of $5.4 billion and pays an annual dividend yield of 4%, fully franked.

Why the JB share price could run higher into Christmas

There are good reasons to believe that JB Hi-Fi’s share price could top the record high set on 25 August. That would represent a gain of 11% or more from today’s price of $47.04 per share (at the time of writing).

First, it’s a well managed company with strong sales growth. Total sales growth in the 2020 financial year came in at 11.6%. And the 2021 financial year is off to a good start, with the company reporting total sales growth in its Australian businesses of 42% in July, the first month of the new financial year.

Then there’s the government’s new, big spending budget, the finer details of which will be released shortly. Among the other spending packages, the budget is bringing forward the government’s stage 2 income tax cuts, and making them retroactive.

This, alongside other stimulus measures to support businesses and households, is going to put a lot of unexpected money into most households’ pockets. And with the Christmas season coming up, I expect COVID weary consumers will be looking to spend big to usher in the holiday cheer.

All this could spell a big uptick in the JB Hi-Fi share price.

More reading

• 3 ASX shares poised for huge growth in FY21
• Can the Harvey Norman (ASX:HVN) share price maintain its momentum?
• Top brokers name 3 ASX shares to buy next week
• Brokers upgraded JB Hi-Fi (ASX:JBH) share price and this other ASX stock to “buy” today
• 3 ASX shares with high-flying dividend yields

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.

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I think that one of the best ways to generate wealth is to invest with a long-term view.

After all, over the last 30 years the Australian share market has generated an average return of 8.76% per annum according to research by Fidelity.

This means that a single $20,000 investment would now have grown to be worth almost $250,000 if it earned the market return over the last three decades. I believe this demonstrates the power of investing with a long term view.

With that in mind, here are two top ASX shares that I think would be great buy and hold investments:

Altium Limited (ASX: ALU)

I think that Altium is one of the best buy and hold options on the Australian share market. This is because I believe the electronic design software company is well-positioned to grow its earnings at an above-average rate for a long time to come thanks to its platform’s exposure to the Internet of Things and AI booms.

But Altium certainly isn’t a one trick pony. In addition to its design software, the company has a number of other growing businesses such as Nexus and Octopart. The latter business in particular appears underappreciated by the market. Octopart is a search engine for electronic and industrial parts which aggregates parts from distributors and manufacturers online. This makes them easy to search for and purchase. It has a large market opportunity and could be a key contributor to its revenue growth over the 2020s.

Nearmap Ltd (ASX: NEA)

Another ASX tech share to consider buying is this aerial imagery technology and location data company. Nearmap has been growing at a very quick rate over the last few years thanks to the increasing demand for its services in both Australia and North America. And while its performance in FY 2020 was a touch underwhelming because of a large customer churn event (not competition related), I’m confident that this was just a one-off and out of Nearmap’s control.

Looking ahead, given the launch of several new products and potential expansions into new markets, I believe the company is well-placed for strong growth over the next decade. This could make it a great buy and hold investment option for investors.

More reading

• Altium (ASX:ALU) updates market on restructure
• ASX 200 jumps 2.6%, big 4 banks surge
• 2 outstanding ASX tech shares to buy for the long term
• Is this 1000% runner the next Nearmap (ASX:NEA) share price?
• 3 ASX shares I’d buy if the share market crashes again

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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. 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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Throughout the year, companies have slashed their dividends to protect their balance sheet in the face of COVID-19. As a result, income seeking investors have commonly ditched these blue chip ASX shares for other opportunities.

While the economy is still marred by uncertainty, it can be quite difficult to pick companies with reliable and growing dividends. So below, I have listed my 3 favourite ASX dividend shares to buy this year.

My top ASX shares to buy for dividends in 2020

Dicker Data Ltd (ASX: DDR)

Dicker Data is an Australian wholesaler and distributor of computer hardware, software and related products. Its vendors include HP Inc (NYSE: HPQ), Cisco Systems Inc. (NASDAQ: CSCO), Toshiba Corp, Lenovo Group Limited, Microsoft Corporation (NASDAQ: MSFT), AsusTek Computer Inc. and other major brands. The company services approximately 5,000 retailers which, in turn, service multiple clients ranging from small and medium-sized enterprises to large corporate businesses.

Dicker Data has delivered a robust performance during the pandemic thanks to the ongoing demand for its products and services. Since March, the Dicker Data share price has jumped from $3.90 to $7.91 at the time of writing. This represents a return of nearly 103% in the last six and half months, not including the quarterly dividends the company pays.

This year alone, Dicker Data paid out 28 cents to shareholders, with another expected dividend due in November. Surprisingly, the company has increased its dividend payments to shareholders by 50% during COVID-19, as compared to previous quarters.

The company has been growing its vendor agreements at a fast pace. In its interim results released in August, Dicker Data reported a record $1 billion in revenue. Furthermore, to supplement its future earnings, the company is building a new distribution centre. It is anticipated this will be completed at the end of the year.

Fortescue Metals Group Limited (ASX: FMG)

The world’s fourth largest iron ore producer, Fortescue has become a dominant player in the mining industry. With world-class assets located in the Pilbara region of Western Australia, the company has been booming in recent times.

Fortescue enjoys a close trade relationship with China, which has been a major consumer of the steel-making ingredient for the past decade. In September, Fortescue highlighted record earnings, with a large percentage of its profits handed down to shareholders.

In total, the company has paid out $1.76 in dividends during 2020. This reflected another record for Fortescue, and was a major boost to investors’ confidence in the company tracking strongly. At the time of writing, the Fortescue share price is up 1.52% to $16.74. This represents a decline of 14.42% from its 52-week high achieved in late August.

Looking forward, the mining outfit has poured $1.7 billion into its Eliwana Mine and Rail project. Due to completed in December this year, the huge investment is expected to produce 170 million tonnes of iron ore per year. In comparison, Fortescue shipped 178.2 million tonnes for the year ending 30 June 2020.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Listed for more than 107 years, Soul Patts (as it is commonly referred to) is the second oldest company listed on the ASX. The Australian investment house has a portfolio of ASX shares in industries such pharmaceuticals, mining, building materials, property investment, telecommunications, financial services and other equity investments.

Major share holdings include TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), and New Hope Corporation Limited (ASX: NHC).

Soul Patts’ broad asset diversification has made it resilient to economic crises. The company has awarded dividends to its shareholders for the last 40 years. Furthermore, Soul Patts has increased its dividend pay-out amounts every year since 2000. In September, the investment conglomerate announced a 35 cents per share dividend, bringing its total payment to 60 cents for its financial year.

The Soul Patts share price can be picked up for $24.21 at the time of writing. This represents an 8.32% increase over the company’s share price 12 months ago.

More reading

• 2 ASX shares that every investor should own
• Where I’d invest $10,000 into ASX dividend shares
• 2 quality ASX dividend shares to buy before the RBA meeting
• Top brokers name 3 ASX shares to buy next week
• Beat the RBA rate cuts with these ASX dividend shares

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Aaron Teboneras owns shares of Dicker Data Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia owns shares of and has recommended Brickworks, Dicker Data Limited, and Washington H. Soul Pattinson and Company 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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This afternoon the Reserve Bank elected to keep rates on hold at the record low of 0.25%.

However, it might be a little too soon for income investors to celebrate, because the central bank appears to have left the door open to a rate cut in November.

Governor Lowe commented: “The Board continues to consider how additional monetary easing could support jobs as the economy opens up further.”

In light of this, I think investors ought to consider buying the dividend shares listed below to combat low interest rates:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to consider buying is this real estate investment trust. Rural Funds owns a portfolio of high quality agricultural assets across several different industries. This includes macadamia orchards, cattle assets, cotton assets, almond orchards, and vineyards. The latter are leased to wine giant Treasury Wine Estates Ltd (ASX: TWE). In addition, many of its other assets are leased to some of the most experienced agricultural operators in the country, which I feel is a testament to their quality.

The strength of its portfolio was on display for all to see in FY 2020 when Rural Funds delivered an 8% increase in property revenue to $72 million. This allowed the company’s board to increase its distribution by its target rate of 4% per annum. The good news is that more of the same is expected in FY 2021 thanks to its long term tenancy agreements and periodic rent increases. Management intends to increase its distribution by 4% again to 11.28 cents per share. Based on the latest Rural Funds share price, this equates to a 4.9% yield.

VanEck Vectors Australian Banks ETF (ASX: MVB)

Another option for income investors to consider buying is the VanEck Vectors Australian Banks ETF. As you might have guessed from its name, this exchange traded fund gives investors exposure to the banking sector. And rather than having to choose just a single bank to invest in, this fund gives investors a piece of each of them. The VanEck Vectors Australian Banks ETF is invested in the big four banks, the regionals, and also investment bank Macquarie Group Ltd (ASX: MQG).

While predicting what dividends the banks will collectively pay in FY 2021 is difficult because of the pandemic, I would expect a yield in the region of 4%. This could then rise towards 6% in the following couple of years as trading conditions return to normal. Another bonus is that I think the banks are trading at attractive levels at the moment after sizeable declines this year. So, as well as benefiting from dividends, investors could experience solid share price gains over the next couple of years as bank shares potentially rerate to higher multiples.

More reading

• Where I’d invest $10,000 into ASX dividend shares
• 3 alternative ASX shares to buy for defensive income
• 3 strong and reliable ASX dividend shares for October
• Where to invest your Coles (ASX:COL) dividends this week
• 3 ASX shares for a stress-free life

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 and RURALFUNDS STAPLED. 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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American Rare Earths Ltd (ASX: ARR) shares were up 45.9% to 8.9 cents by today’s market close. The American Rare Earths share price moved as high as 10 cents in intraday trading, hitting a 52-week high before falling back. This came after an announcement by the company that discussed the US President’s executive order in relation to American domestic rare earth production. The executive order was made on 30 September 2020.

What was in the announcement?

According to the company, the executive order by the US President is critically important to the development of the US domestic rare earth supply chain. It also highlights the strategic value of the company’s two America-based projects, located in Arizona and Wyoming, to the US government.

American Rare Earths announced that its US-based board and management are well positioned to take advantage of the strategic initiatives being offered by the US government.

According to the announcement, the executive order stated the “importance of cooperation on supply chain issues with international partners and allies.” The intention of the bill, according to American Rare Earths, is to immediately strengthen America’s domestic rare earth mining and processing capabilities for defence and radiation-hardened electronics usage.

The announcement stated that the company’s US team was securing research and development relationships on cutting edge and very promising processing technology. The company stated that leading American universities will soon be testing American Rare Earths’ project feedstock in the processing of rare earths. The universities will be testing processes that have been shown to harvest much higher percentages of the elements than previous processes.

American Rare Earths discussed that both sides of American politics have bills that are currently moving through the US congress, each of which contain key elements that the company believes will help it to accelerate its rare earth projects.

About the American Rare Earths share price

American Rare Earths is an Australian exploration company with a focus on rare earth projects in America and Australia. It was previously known as Broken Hill Prospecting and has been listed on the ASX since 2011.

At 30 June 2020, American Rare Earths had cash on hand of $1,433,784. It made a net profit after tax of $923,000 in the year to 30 June 2020.

The American Rare Earths share price is up 709% since its 52-week low of 1.1 cents that it fell to during the March bear market. It is up 345% since the beginning of the year and since this time last year.

More reading

• 2 exciting ASX tech shares to buy and hold for a decade
• My 3 favourite ASX dividend shares to buy this year
• Buy these ASX dividend shares to smash low interest rates
• ASX 200 rises on mixed day, big gold merger
• Why the Xero (ASX:XRO) share price just hit a record high

Motley Fool contributor Chris Chitty 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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The S&P/ASX 200 Index (ASX: XJO) went up 0.35% to 5,962 points on a mixed day.

Australians can look forward to the federal budget tonight which will be announced at 7:30pm, though we have learned about plenty of details already including personal income tax cuts.

Gold merger

The big news of the day was a merger between Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR).

Northern Star will acquire all of Saracen’s shares by paying 0.3763 Northern Star shares for each Saracen share held. Saracen will also pay a special, fully franked dividend of A3.8 cents per share for shareholders.

After the merger, Northern Star shareholders will own 64% of the combined business and Saracen shareholders will own the remaining 36%.

Why are the two ASX 200 gold miners doing this? A key part is that it will bring ownership of KCGM under a single owner. The ‘golden mile’ will have a single owner for the first time in its more than 125 years of operation.

It will also unlock $1.5 billion to $2 billion of pre-tax synergies with optimisation of processing throughout the broader Kalgoorlie and Yandal regions, and other savings over a ten year period.

The combined business will have a pro forma market capitalisation of $16 billion and A$118 million of net cash. It will have immediate production of 1.6 million ounces per annum, with a path to 2 million ounces per annum.

The company will boast a ‘world-class portfolio’ with three large scale production centres in Kalgoorlie, Yandal and America.  

Northern Star Chair Bill Beament said: “This is a significant value-creating M&A. Our position as joint venture partners at KCGM, the close proximity of the majority of the combined company’s assets and a host of other synergies makes this a unique opportunity exclusive to Saracen and Northern Star shareholders.”

Saracen managing director Raleigh Finlayson said: “This is one of the most logical and strategic M&A transactions the mining industry has seen. The savings, the synergies and the growth opportunities it will generate make the transaction extremely compelling.

“In short, it is a unique opportunity for Saracen shareholders unlikely to be replicated via any other avenue.”

The Saracen share price rose 10% and the Northern Star share price went up 11%.

BHP Group Ltd (ASX: BHP)

Global commodity giant BHP announced today that it is going to acquire another 28% of Shenzi, a six-lease development in the deepwater Gulf of Mexico.

BHP is currently the operator with a 44% interest, Hess Corporation owns 28% and Repsol S.A. owns the other 28%.

Hess and BHP have agreed a price of US$505 million for the 28% stake, which will bring BHP’s working interest to 72% and add another 11,000 barrels of oil equivalent per day of production for BHP.

BHP thinks this acquisition is a good counter-cyclical buy and believes there is upside for the oil price with a global slowdown in development activity. The ASX 200 resources giant thinks oil will be attractive for the next decade and likely beyond.

BHP’s president of petroleum operations, Geraldine Slattery, said: “This transaction aligns with our plans to enhance our petroleum portfolio by targeted acquisitions in high quality producing deepwater assets and the continued de-risking of our growth options. We are purchasing the stake in Shenzi at an attractive price, it’s a tier one asset with optionality, and key to BHP’s Gulf of Mexico heartland. As the operator, we have more opportunity to grow Shenzi high-margin barrels and value with an increased working interest.”

The BHP share price grew by 0.33% today.

Insurance Australia Group Ltd (ASX: IAG)

The IAG share price dropped 0.3% after announcing the outcome of a class action against it.

IAG has agreed to settle a class action for add-on insurance products sold through motor vehicle and motorcycle dealers.

The settlement involves a gross payment of $138 million and is subject to approval by the Australian federal court.

Inclusive of all related costs and after insurance recoveries, IAG said it’s anticipating a net after tax impact from this settlement of less than $50 million. This will be included in the upcoming FY21 half-year report.

More reading

• Why the Coles Group (ASX:COL) share price just got upgraded to “buy”
• What investors learnt from the RBA’s rate decision today
• Does time in the market really beat timing the market?
• ASX 200 down 0.2%: Northern Star & Saracen announce mega merger, IAG settles class action
• Why Baby Bunting, Northern Star, Oil Search, & Telix shares are storming higher

Motley Fool contributor Tristan Harrison 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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