Tag: Motley Fool

The Nearmap Ltd (ASX: NEA) share price had humble beginnings from a mere microcap to one of ASX’s leading tech shares. Could this 1000% runner be the next Nearmap share price? 

Enter Pointerra Ltd (ASX: 3DP) 

Pointerra provides a 3D data-as-a-service (DaaS) solution to support digital asset management activities across a range of sectors including civil infrastructure, mining, oil and gas, architecture, engineering and construction and government agencies at all levels. Its cloud-based solution is designed around compression, visualisation and analytics algorithms which index massive 3D data sets. The processed and hosted 3D data can be dynamically searched, accessed, visualised, analysed and shared by anyone, anywhere on any device. Its major client wins and plans for growth have seen the Pointerra share price run from 4 cents in July to 47 cents today (at the time of writing). This represents an increase of 1075% in only three months. 

The company is in its infancy but follows a similar business model as Nearmap’s with a diverse offering of analytics as a service (AaaS), data protection as a service (DPaaS) and DaaS. Moving forward, the company will continue to commercialise its technology via its DPaaS, DaaS and AaaS recurring subscription-based revenue model. Its ultimate vision is to create an online marketplace for the massive amounts of 3D data captured by the private and public sectors globally. 

In FY20, the company delivered a 115% increase in revenue to $2 million with an operating loss of $2.8 million and $2.3 million cash as at 30 June. 

Can Pointerra become the next Nearmap share price? 

Pointerra is in its early days but currently boasts a significant market capitalisation of $315 million. In the company’s most recent enterprise sales and annual contract value (ACV) update on 1 September, it reported further growth in spend by existing customers in addition to the onboarding of new customers in the United States energy utilities sector. 

The one month impact on ACV from increased spend by existing and new utility sector customers has already exceeded the company’s entire prior quarter uplift. ACV currently stands at US$3.98 million as at 31 August, representing a $1.11 million or 39% increase in just 30 days. 

Pointerra is now engaged directly and indirectly in servicing six paying utility customers across the US, with many more currently using and trialling Pointerra’s digital asset management platform. 

The total addressable market for the energy utility sector in the US comprises of 168 private (investor owned) companies, 812 cooperatives and more than 1,950 federal, state and municipal owned utilities. These organisations invest extensively in 3D data capture to better understand and manage the condition of their networks. Pointerra’s platform is positioned to deliver powerful insights and assist utilities in network management by simplifying workflow and improving the quality and accuracy of 3D data analytics. 

Foolish takeaway 

Pointerra is in its early days and is arguably a high risk/high reward investment. The company’s cash position could mean a potential capital raising in the near term. I believe this ASX share will continue to grow strongly and the Pointerra share price may provide a buying opportunity in the future. 

More reading

• Why EOS, Jumbo, Nearmap, & OceanaGold shares are dropping lower today
• 3 cheap ASX shares in the buy zone today
• 3 stellar mid cap ASX tech shares to buy for the long term
• The Nearmap (ASX:NEA) share price is down 28% in September: Time to buy?
• New to investing? I would invest $500 into these exciting ASX shares

Lina Lim has no position in any of the stocks mentioned. 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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If I were going to buy one ASX share this week it would be the exchange-traded fund (ETF) Betashares Ftse 100 ETF (ASX: F100).

What is Betashares Ftse 100 ETF?

This ETF is about giving investors exposure to the UK share market. As the name may suggest, it is invested in 100 of the biggest businesses on the London Stock Exchange.

The UK doesn’t have the large tech giants that the US does. But I like the diversification that the UK share market offers. Plus, plenty of its underlying holdings generate global earnings from many countries – they just happen to be listed in London.

It’s offered by BetaShares, one of the largest providers of passive investing options in Australia with a diverse array of ETFs.

How much is the annual management fee?

A key part of passively investing in ETFs is the management fee. The lower the annual fees the more of the net returns are left in the hands of the investors, which is obviously preferable.

Betashares Ftse 100 ETF has an annual cost of 0.45% per annum. That’s certainly not the cheapest fee out there available to ASX investors, but it’s a fair bit cheaper than many Australian active fund managers.

What shares does it own?

An ETF’s return will be entirely decided by its underlying holdings. So obviously it’s important to know what UK shares you’re actually invested in when you pick this investment option.

Betashares Ftse 100 ETF’s top 10 holdings are: AstraZeneca, GlaxoSmithKline, British American Tobacco, Diegeo, HSBC, Unilever, Rio Tinto, Reckitt Benckiser, BP and Royal Dutch Shell.

But there are plenty of interesting businesses outside of the top 10 such as: BHP Group, National Grid, Relx, London Stock Exchange, Prudential, Vodafone, Experian, Tesco, Ferguson, BAE Systems, Flutter Entertainment, Scottish Mortgage Investment Trust, Ocado, Just Eat, Smith & Nephew and Severn Trent.

I like the sector allocation of Betashares Ftse 100 ETF. Consumer staples has a 17.8% allocation, financials has a 17.4% allocation, healthcare has a 13.5% allocation, materials has a 11.2% allocation, industrials has a 11% allocation, energy has a 9.3% allocation, consumer discretionary has a 8.3% allocation, communication services has a 4.8% allocation, utilities has a 4% allocation and ‘other’ has a 2.8% allocation.

Whilst the lack of investment in ‘tech’ may be disappointing, there are plenty of other exciting and quality sectors to get exposure to. There isn’t too much of a focus on one industry. 

Why buy this week?

Good Australian ASX shares are trading strongly, so I’m not seeing too many opportunities here.

It can be a bit complicated when it comes to overseas investing. The investment needs to make sense both of the value of the underlying shares and a good exchange rate for the Australian dollar.

I think it makes a lot of sense to consider UK shares at the moment. There is a lot of uncertainty because of Brexit and COVID-19. The Betashares Ftse 100 ETF share price is still 27% lower than the pre-COVID-19 price.

Sometimes it’s a good time to buy shares whilst fear is elevated. Sometimes a share market can be under pressure for more than just a few months, but I don’t think the UK share market is going to be permanently impaired by the current issues.

The oil shares may be hurt for a while – but there are oil businesses in every major share market. I believe most of the shares in Betashares Ftse 100 ETF have a solid long-term future.

Earnings and dividends are being heavily affected at the moment because of COVID-19. But in the longer-term I think Betashares Ftse 100 ETF can return to having a solid dividend yield. At the moment the Australian dollar is close to a 52-week high again, so it’s a good time to buy GBP earnings.

More reading

• Where I’d invest $10,000 into ETFs right now
• Why I just bought shares of this ASX ETF
• COVID-19 fear hits the UK, 2 ASX shares to buy
• Here’s how I would spend $10,000 on ASX shares right now

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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Earlier today I revealed that Goldman Sachs has just upgraded Qantas Airways Limited (ASX: QAN) shares to a buy rating. You can read about that recommendation here.

Qantas isn’t the only travel share that the broker is positive on. This morning it also reaffirmed its buy rating on Sydney Airport Holdings Pty Ltd (ASX: SYD) shares and lifted the price target on them to $7.02.

Based on the latest Sydney Airport share price, Goldman Sachs’ price target implies potential upside of 20% over the next 12 months.

Why is Goldman Sachs positive on Sydney Airport?

Goldman Sachs likes Sydney Airport due to its position as the main gateway into Australia, something which it doesn’t expect to change when the crisis passes.

It commented: “Sydney Airport is an unregulated monopoly asset and the primary aviation gateway to Australia, a structural position that is not going to change following the Covid-19 pandemic.”

The broker also notes that the company has been able to hibernate during the crisis to conserve funds.

Goldman added: “The low cost base (and high cash margin) of the business has enabled it remain in effective ‘hibernation’ (i.e. cashflow neutral) through much of CY20 awaiting the recovery of both domestic and international activity.”

And while it acknowledges that it cannot rule out a second wave of COVID-19 infections, it remains optimistic that the relaxing of border restrictions will continue through to the end of the year.

In light of this, its analysts expect the company’s net operating receipts to recover with passengers as trading conditions return to normal. And given its stapled structure, its distributions are expected to recover along with its net operating receipts.

Distribution forecasts.

The broker has ruled out distributions in FY 2020 but expects Sydney Airport to pay shareholders 14 cents per share in FY 2021 and then 26 cents per share in FY 2022.

Based on the current Sydney Airport share price, this equates to 2.4% and 4.5% yields, respectively.

I think Goldman Sachs is spot on and Sydney Airport could be a great option for patient income investors.

More reading

• How to generate a passive income of $50,000 with ASX shares
• Beat the RBA rate cuts with these ASX dividend shares
• Advantage Australia — Why Morgan Stanley upgraded ASX shares to overweight
• ASX 200 Weekly Wrap: Bank shares push ASX 200 higher
• Brokers name 3 ASX shares to buy right now

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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Last week was a pretty volatile week for ASX shares, and I think this is likely to continue for a while. Between the United States election and the changes in Australian subsidies, it is clear that we live in an age of uncertainty. Nonetheless, here is a range of ASX shares that I believe should be on your watchlist in the current environment. 

2 good value ASX shares

Jumbo Interactive Ltd (ASX: JIN) recently signed a binding term sheet with Lottery West to sell its tickets online for up to ten years. The company also renewed its deal with Tabcorp Holdings Limited (ASX: TAH) which now stretches to 2030. Jumbo already has a slew of charity lottery sellers as clients, and has started to tackle the US market.

This company is reasonably priced considering the size of its addressable market. What’s more, as we all emerge from lockdown, the likelihood of larger jackpots looms. This, in turn, will fuel higher revenues for Jumbo.

Mortgage Choice Limited (ASX: MOC) is an ASX share that has recently come alive. With the recent changes to the responsible lending laws, this company is likely to see an increase in top line revenues. At its current price, the company has a price-to-earnings (P/E) ratio of 14.16 and a trailing 12 month dividend yield of 6.16%. I think this share will benefit from the near-future housing situation.

1 more to keep an eye on

Boral Limited (ASX: BLD) stands out to me as the best potential turnaround story on the ASX right now. As a collection of businesses that sell building materials, this company should be pretty straightforward. Yet, it has performed poorly for years. There is, however, now a new CEO in place. Moreover, the company is renewing the board, including two nominees from Seven Group Holdings Ltd (ASX: SVW).

Boral is committed to renewal across the board and there are already signs of US private equity players who have an interest in purchasing Boral’s US assets. I am keeping an eye on news relating to Boral and any signs of increased sales or productivity. I think this could become an opportunity. 

Foolish takeaway

All of these ASX shares are good companies entering into a period which is likely to favour them. In particular, two of these companies stand to benefit from relaxation of the responsible lending laws. However, these are not the only ones to benefit. Every time there is a large-scale regulatory change, there are potential winners on the ASX. 

More reading

• Top brokers name 3 ASX shares to buy next week
• Insiders have been buying Jumbo (ASX:JIN) and this ASX share
• 3 ASX trends to watch in budget week
• These ASX dividend shares could be stars of the future
• Brokers name 3 ASX shares to buy right now

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Jumbo Interactive Limited. The Motley Fool Australia owns shares of and has recommended Jumbo Interactive 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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MyFiziq Ltd (ASX: MYQ) is a small cap ASX share that has developed technology for personal health management. This share is often compared with Catapult Group International Ltd (ASX: CAT). While there are distinct differences in the two companies’ technologies and business models, I do believe MyFiziq is a growth share with a potentially large addressable market. 

What does this ASX share do?

MyFiziq provides a technology that is embedded in its partners apps via a software development kit. Specifically, it uses pictures from your smart phone to create a 3D avatar with accurate body size and shape measurements. The technology is currently used across the health and fitness, insurance, and medical sectors. What’s more, the company offers 97% accurate body measurements, with a repeatability of 98%.

This has the potential to revolutionise online clothing sales, with the precise measurement technology helping to reduce or eliminate the potential for returns. It also allows for auto-matching to the partner company’s specific size charts. This helps reduce human error in taking tape measurements. 

Within the insurance and medical fields, the product integrates body measurements with a vast, geographically diverse data set. In addition, the technology includes artificial intelligence and machine learning. Current applications include measuring the effectiveness of exercise and diet regimes, and corporate wellness programs.

Why is this ASX share moving?

The company announced a range of advances during September. Initially, it announced a binding term sheet with Asia Pacific corporate wellness platform WellteQ Ltd. The parties will work together in the $10 trillion dollar global telehealth, corporate wellness and insurance market.

Second, it announced definitive agreements with Biomorphik Pty Ltd, an Australian-based behavioural change and technology company. The two companies have commenced working together to release an initial product using MyFiziq’s new Body Scan OnDemand product.

Last, it announced a breakthrough in developing technology that can indicate body composition, including body fat percentages and more. Previously, only an actual medical scan, such as dual energy X-ray absorptiometry (DEXA), had the capability to do this. 

Company CEO, Vlado Bosanac, recently said;

…The Company, for want of a better explanation, is becoming a device-based health triage provider by allowing insurers, medical professionals, and healthcare providers to use an advanced tool, that demonstrates an individual’s risk markers with speed and convenience. 

Foolish takeaway

The technology and path to market of this product appears well executed, and it clearly has a large addressable market. It currently has a market capitalisation of $151.66 million after increasing 175% in value during September. Whilst I feel the MyFiziq share price carries significant risk of volatility, I think it would be a good ASX share to put on your growth watchlist over the next 12 – 24 months. 

More reading

• Why the MyFiziq (ASX:MYQ) share price is up 400% in just six weeks
• MyFiziq (ASX:MYQ) share price soars 30% on expansion news

Daryl Mather 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 Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International 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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On Friday the Qantas Airways Limited (ASX: QAN) share price closed the week at $4.11.

This means the airline operator’s shares are trading over 42% lower than where they started the year.

Is this a buying opportunity?

One leading broker that thinks this could be a buying opportunity for investors is Goldman Sachs.

This morning the broker upgraded Qantas’ shares from neutral to a buy rating and lifted the price target on them by a massive 49% to $5.28.

Based on the current Qantas share price, this price target implies potential upside of over 28% for its shares over the next 12 months.

Why is Goldman Sachs bullish on Qantas?

Goldman Sachs notes that Qantas is the dominant carrier in Australia and fully expects it to come out of the crisis in the same position.

It also believes that management has positioned the company to return to its pre-COVID profitability levels in the near future.

Goldman commented: “Following the drive to increase productivity and reduce costs we can have a high degree of confidence that the airline and its profitability will return to pre-Covid levels over the medium term once the market has settled.”

In addition to this, the broker advised that it has been sitting largely on the sidelines until it became clear when the domestic recovery would take place. Especially given how “c.80% of the carrier’s profitability [is] led by its domestic and Loyalty businesses.”

Pleasingly, its analysts appear confident the domestic market will recover both quicker and stronger than expected.

It explained: “We had been reluctant to take a more constructive view while we lacked certainty around the likely timing of the domestic market reopening. With greater confidence in an earlier and stronger recovery in both domestic and trans-Tasman activity than we previously forecast, we upgrade our rating to Buy.”

What is expected in FY 2021 and FY 2022?

According to the note, Goldman Sachs expects Qantas to post a sizeable loss in FY 2021. It is forecasting a loss before tax of $726.4 million, which equates to a 27 cents per share loss.

Pleasingly, the broker is expecting a material improvement in FY 2022 and has forecast profit before tax of $1,262.8 million and earnings per share of 47 cents.

Based on the latter, this means Qantas’ shares are changing hands for a little under 9x estimated FY 2022 earnings.

Should you invest?

Given the improving outlook for the domestic travel market, I think Goldman Sachs has made a good move upgrading Qantas’ shares to a buy rating today.

While the next 18 months are likely to be turbulent, I suspect patient investors could be rewarded handsomely.

More reading

• 5 things to watch on the ASX 200 on Monday
• The ASX shares that fund managers were buying this month
• Qantas (ASX:QAN) in trouble for pocketing JobKeeper
• Why the Flight Centre (ASX:FLT) share price and Webjet (ASX:WEB) share price are taking off
• Why the Regional Express (ASX:REX) share price is taking off today

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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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Webjet Limited (ASX: WEB) continues to be the most shorted share on the Australian share market by some distance. The online travel agent has 16.4% of its shares held short, which is down week on week. Its lofty valuation appears to be attracting short sellers.
• Myer Holdings Ltd (ASX: MYR) has seen its short interest remain flat at 11%. The department store operator has come under pressure since posting a 41.6% decline in EBITDA to $305.3 million in FY 2020. Judging by the high level of short interest, short sellers don’t appear confident FY 2021 will be any better.
• Speedcast International Ltd (ASX: SDA) has short interest of 10.6%. This communications satellite technology provider’s shares remain suspended whilst it undertakes a recapitalisation.
• InvoCare Limited (ASX: IVC) has short interest of 9.9%, which is flat week on week. This funerals company has been struggling in FY 2020 with social distancing initiatives. This led to InvoCare posting a very sharp decline in profits in the first half.
• Inghams Group Ltd (ASX: ING) has 8.5% of its shares held short, which is up slightly week on week once again. Short sellers may be expecting another tough year for the poultry producer due to higher input costs and an unfavourable shift in its sales mix.
• Galaxy Resources Limited (ASX: GXY) has entered the top 10 with short interest of 8.3%. Australia’s lithium miners have come under pressure since Tesla’s Battery Day event. The electric vehicle company revealed plans to mine its own battery materials.
• CLINUVEL Pharmaceuticals Limited (ASX: CUV) has seen its short interest fall slightly once again to 7.7%. Short sellers have been closing positions since the biopharmaceutical company announced plans to extend the use of its SCENESSE product to treat xeroderma pigmentosum.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest fall to 7.45%. Last week the regional bank announced greater than expected provisions relating to COVID-19. It also revealed that it has been underpaying staff by mistake.
• A2 Milk Company Ltd (ASX: A2M) has entered the top 10 with short interest of 7.3%. Short sellers will have been celebrating last week after the infant formula company’s shares crashed lower. This followed the release of guidance for FY 2021 which was materially lower than expected due to weakness in the daigou channel.
• Freedom Foods Group Ltd (ASX: FNP) is back in the top 10 with short interest of 6.95%. This diversified food company’s shares have been suspended for some time due to accounting irregularities. Freedom Foods’ shares are scheduled to return to trade at the end of the month.

More reading

• Top brokers name 3 ASX shares to sell next week
• 5 things to watch on the ASX 200 next week
• These were the worst performing shares on the ASX 200 last week
• These ASX growth shares could be strong buys in October
• The a2 Milk (ASX:A2M) share price crashed 17.5% lower in September

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Freedom Foods Group Limited and InvoCare 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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Are you looking to add some ASX growth shares to your portfolio this month? If you are, then you might want to take a look at the four listed below.

I believe these ASX growth shares are among the best on offer on the Australian share market right now. Here’s why I would buy them:

Appen Ltd (ASX: APX)

The first ASX growth share to buy is Appen. It is a leading developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI). Though its million-strong crowd sourced team of experts, Appen prepares the data that goes into the AI models of some of the biggest tech companies in the world. Given how investment in AI and machine learning is expected to grow rapidly in the future, I believe Appen is well-placed for growth over the next decade.

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software company. It provides a unified platform to streamline processes for employee administration, recruitment, on-boarding, learning, performance, remuneration, compliance training and payroll. It has been a strong performer in recent years and looks well-placed to continue this trend in FY 2021 and over the next decade. Especially given how management has approximately $139 million to deploy on value accretive acquisitions.

Kogan.com Ltd (ASX: KGN)

Another ASX growth share to buy is Kogan. It is a rapidly growing ecommerce company which has been benefiting greatly in 2020 from the accelerating shift to online shopping. This has resulted in stellar active customer and sales growth. And thanks to its improving margins, the company’s earnings growth has been even more explosive. As with ELMO, the company has undertaken a capital raising this year to provide it with the funds to make value accretive acquisitions.

NEXTDC Ltd (ASX: NXT)

Another ASX growth share which I think would be a great long term option for investors is NEXTDC. I believe the data centre operator is well positioned to capitalise on the increasing amount of data being generated by consumers and businesses. This consumption is only going to increase in the future as more software moves to the cloud and 5G internet adoption grows. I expect this to lead to growing demand for capacity in its world class data centres.

More reading

• 3 ASX tech shares to buy and hold for the next decade
• Where to invest $10,000 into ASX shares next week
• Meet the ASX 200 stock with a dividend yield that’ll hit ~14% in FY22
• Where to invest $10,000 into ASX shares immediately
• 5 things to watch on the ASX 200 on Friday

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Elmo Software and Kogan.com 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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Alternative assets can generate decent returns with not much correlation to the economy. So, alternative ASX shares could be a clever way to invest for defensive income.

One of the most unique shares on the ASX is Duxton Water Ltd (ASX: D2O). It owns water entitlements and it may benefit from the rising demand from high-value, high-water demand crops like almonds. However, the ongoing ACCC uncertainty makes me want to wait until the report is released before buying any more Duxton Water shares.

Meanwhile, there are other alternative ASX shares that can provide defensive income:

Rural Funds Group (ASX: RFF)

Rural Funds is a farmland real estate investment trust (REIT). Farms offer quite different return profiles compared to shopping centres or office buildings. It owns a variety of farm types including almonds, macadamias, cattle, vineyards and cropping (sugar and cotton).

Farms have been useful assets for many hundreds of years. We all need food. Rural Funds has a number of large, quality tenants like Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE), Olam and Australian Agricultural Company Ltd (ASX: AAC).

The alternative ASX share receives steadily-growing rent from its tenants, which helps management confidently predict that the distribution can grow by 4% per annum.

Rural Funds actually owns a large amount of water entitlements which are leased to tenants. So whilst the alternative ASX share doesn’t carry the operational risks of issues like droughts, it can help the tenant through drought problems.

At the current Rural Funds share price, it offers a FY21 distribution yield of 4.9%.

Blue Sky Alternatives Access Fund Ltd (ASX: BAF) / WAM Alternative Assets Limited (ASX: WMA)

The Blue Sky dramas will soon be over for this listed investment company (LIC) with management changing to Wilson Asset Management (WAM).

The alternative ASX share will invest across various assets including water, agriculture private equity, real estate, private debt and infrastructure. Some of these assets are only available to wholesale and institutional investors.

The LIC aims to deliver good total returns with a meaningful dividend yield.

At the end of August 2020 it had pre-tax net tangible assets (NTA) per share of $1.08, meaning it’s trading at a 16.7% discount.

Whilst I don’t expect this LIC to generate as strong returns as some of WAM’s other LICs like WAM Microcap Limited (ASX: WMI) and WAM Leaders Ltd (ASX: WLE), I think it could produce decent total returns.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is another agricultural REIT. The alternative ASX share owns some of the largest berry and citrus farms in Australia.

It receives a fixed rent and variable rent from its tenant, the large horticultural business Costa Group Holdings Ltd (ASX: CGC). The variable rent is a 25% profit share of the profit generated from the farms.

Some one-off issues, as well as the (lessening) drought have hurt the variable rent in FY20. However, I think that those issues are going to ease and we’re going to see a return to good profitability for Vitalharvest.

Another thing that’s exciting about the alternative ASX share is that it now has a new manager – Primewest Group Ltd (ASX: PWG). Primewest is going to look for food-related assets that can provide a more consistent return. It will still look for potential farm acquisitions, but other options could be food processing, food storage and food logistics properties.

At the current Vitalharvest share price it’s trading at a 14.3% discount to the net asset value (NAV) per unit. It also offers a trailing distribution yield of 6.1%. But I think the distribution is going to rise from here as the variable profit hopefully returns to normal.

More reading

• 2 great value ASX dividend shares to buy right now
• 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
• How to create a yearly income of $65,000 in dividends

Motley Fool contributor Tristan Harrison owns shares of DUXTON FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO, RURALFUNDS STAPLED, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended DUXTON 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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If you’re looking for a source of income in this low interest rate environment, then you might want to take a look at the ASX dividend shares listed below.

I believe both of these shares are well-placed to pay generous dividends over the coming years. This could make them great options for income investors today:

BWP Trust (ASX: BWP)

The first ASX dividend share to buy is BWP Trust. It is the largest owner of Bunnings Warehouse sites in Australia, with a portfolio of 68 stores leased to the hardware giant. In August, the company released its full year results and revealed a 1% increase in profit before gains on investment properties to $117.1 million despite the pandemic.

In addition to this, at a time when the values of retail properties are being impaired, BWP Trust recognised a $93.6 million increase in the gains in fair value of its investment properties. Management notes that this reflects the continuing strong market support for Bunnings Warehouse properties from an investment and risk perspective. In FY 2021, management expects to pay a distribution in the region of 18.29 cents per unit. Based on the latest BWP Trust share price, this works out to be an attractive 4.5% yield.

Coles Group Ltd (ASX: COL)

Another dividend share that has been performing strongly this year despite the pandemic is Coles. In FY 2020, the supermarket giant delivered a 6.9% increase in sales to $37.4 billion and a 7.1% lift in net profit after tax to $951 million. It also started FY 2021 positively and reported strong same store sales growth early in the financial year.

While its sales growth will inevitably moderate as the pandemic passes, given its defensive qualities, strong market position, and cost cutting plans, I’m confident Coles is still capable of delivering solid sales, earnings, and dividend growth over the next decade. This could make it a great ASX share for income investors to buy and hold for the long term. Based on the current Coles share price, I estimate that it offers investors a fully franked 3.2% dividend yield in FY 2021.

More reading

• Where should you invest your Wesfarmers (ASX:WES) dividends?
• Are Coles (ASX:COL) shares a top option for ASX dividend investors today?
• 3 ASX shares for growth, income, and value investors to buy in October
• 2 outstanding ASX shares to add to your retirement portfolio
• Which ASX REITs are still worth buying in a post-COVID-19 world?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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