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The Australian share market may have tumbled lower on Monday, but that didn’t stop the Senex Energy Ltd (ASX: SXY) share price from surging higher.

The energy producer’s shares were up as much as 13% higher at one stage before finishing the day 8% higher at 33 cents.

Why did the Senex share price surge higher on Monday?

Investors were fighting to get hold of Senex shares today after the release of a very positive announcement.

According to the release, Senex has been awarded preferred tenderer status for natural gas acreage in the Surat and Bowen basins. This is part of the Queensland Government’s domestic gas acreage tender process.

This award includes additional highly valuable Atlas acreage immediately adjacent to Senex’s existing development. It also comes with high-potential exploration acreage in the Bowen Basin on trend with the Scotia and Meridian gas fields.

Management notes that the new Atlas acreage will enable the rapid expansion of natural gas production to ~18 PJ/year. This is a sizeable increase of 50% on its current production.

Pleasingly, the new Atlas acreage is development-ready, subject to project approvals.

Uniquely positioned.

The company’s Managing Director and Chief Executive Officer, Ian Davies, was pleased with the news and believes the company is uniquely positioned to contribute to Australia’s gas-fired recovery from the COVID-19 recession.

He commented: “Senex is a material new entrant in a strong domestic market with high barriers to entry. We are increasing the supply of natural gas on the east coast to help our manufacturing sector, and we are here for the long term.”

“The Queensland Government’s award of acreage to Senex strengthens our ability to leverage our established hub-and-spoke infrastructure model for accelerated supply of affordable natural gas to the domestic market,” Mr Davies added.

Looking ahead, Mr Davies advised that the company is focused on its long term opportunities.

He explained: “Senex is committed to investing for the long-term to unlock both development-ready and exploration opportunities. We welcome the proactive policies in place to encourage development of Australia’s vast natural gas resources, which will help deliver affordable and sustainable gas supply.”

More reading

• Why Dicker Data, Harvey Norman, Rhipe, & Senex shares are pushing higher
• Where to now for the ASX energy shares?
• Senex share price edges higher after delivering top end of guidance

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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This week on the ASX, many investors will be looking forward to receiving that panacea of ASX investing – the dividend payment. Yes, that’s right, it’s a big week for dividend income investors. Eligible investors in BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS), Medibank Private Ltd (ASX: MPL) and Newcrest Mining Limited (ASX: NCM), among others, will receive their (usually) bi-annual dividend payments.

Dividends are direct returns from income-producing assets. It’s always nice to see them arrive in your bank account with no real effort or labour expended. It’s passive income at its finest.

But with the receipt of dividend payments, investors have a choice as to how to spend them. Some investors might use dividends for their living expenses – paying bills or funding the next holiday. But for others, they now have a choice as to what to do with the unessential, but welcome, cash payment.

A house dividend

The easiest thing to do, of course, is to treat yourself. Dividends are the fruit of your capital, so it’s understandable that many people might be tempted to go out and ‘reward themselves’ for their past investing discipline.

But in this case, the easiest thing to do is not ‘the best thing’ to do – in my opinion anyway. See, dividends are part of the compounding process that all good ASX shares let us participate in. By pulling out capital, we are diminishing the future potential of our returns down the road.

So if we do want to keep the ball rolling by reinvesting our dividends, how best to do it?

Well, many companies offer dividend reinvestment programs (or DRIPs) for this end. A DRIP allows the company to automatically reinvest dividends on our behalf back into shares of the issuing company. This is a great method of harnessing compound interest in my view. This might suit you if you’re prone to lethargy or apathy when it comes to your investment portfolio (no one’s perfect!).

But I don’t use DRIPs myself. Why? Because by putting your reinvesting on autopilot, you’re accepting what price the market is dictating at any given moment for the reinvestment itself. I far prefer to pool my dividends in a ‘reinvestment account’ and use them to buy the first cheap opportunity that comes along, whether it’s for the initial dividend-paying company or otherwise. This helps make sure that I’m always getting the best bang for my buck on the markets.

Foolish takeaway

Although I don’t use DRIPs myself, I think they are a useful and benevolent tool that investors who might be tempted to blow their dividends on an impulse buy. At the end of the day, as long as you’re ploughing any finds you receive back into the markets, you’re doing yourself a favour.

More reading

• Is it time to buy Telstra and these high quality ASX 200 shares?
• Magellan (ASX:MFG) share price slides lower after investing in Barrenjoey
• Why the Telstra (ASX:TLS) share price looks cheap today
• Why I like Saracen (ASX:SAR) and these ASX mining shares today
• Iron ore slumps: Does this make the BHP (ASX:BHP) share price and other miners a buy? 

Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining Limited and Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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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The S&P/ASX 200 Index (ASX: XJO) dropped by 0.8% today to 5,819 points.

Here are some of the highlights from the ASX 200:

Magellan Financial Group Ltd (ASX: MFG)

Magellan announced today that it has become a foundation investor in Barrenjoey Capital Partners. This is a newly established Australian financial services outfit which will offer a full set of services.

Barrenjoey will provide corporate and strategic advisory, equity and debt capital market underwritings, cash equities, research, prime brokerage as well as traditional fixed income services to Australian and international clients.

The ASX 200 share said that Barrenjoey will be led by a highly respected team of experienced executives including Guy Fowler as executive chair, and Brian Benari as chief executive. Other founding partners include John Cincotta, Matt Hanning and Chris Williams. Ken MacKenzie will join from early 2021 and be available to provide strategic advice.

Barclays will also become a foundation investors in Barrenjoey. Barclays has entered into an agreement with Barrenjoey covering global product distribution, research, cross-border advisory and debt capital markets, as well as making available “significant” balance sheet capacity.

Magellan’s investment will include the issue of approximately 1.2 million Magellan shares and $90 million cash to take a 40% economic interest in Barrenjoey, though it will only have a 4.99% voting interest. Magellan’s CEO Brett Cairns will join the Barrenjoey board.

The ASX 200 share will also provide Barrenjoey with a $50 million working capital facility to support the growth of the business.

Magellan CEO Brett Cairns said: “This investment represents a rare opportunity to generate attractive financial returns together with meaningful optionality and diversification prospects for Magellan and its stakeholders over the long term.

“We believe the partnership model that leaves control, equity ownership and core decision making with the executives is proven and powerful.”

Barclays will invest $45 million for a 9.99% economic stake and a 4.99% voting interest in Barrenjoey.

Insurance Australia Group Ltd (ASX: IAG)

Insurance giant IAG announced today that Mr Nick Hawkins will become the new managing director and CEO. Mr Hawkins, who joined IAG in 2001, was appointed deputy CEO in April 2020 after 12 years as the chief financial officer. Prior to that he was CEO of IAG’s New Zealand business.

Mr Peter Harmer will leave the ASX 200 company on 1 November 2020 after being the CEO for five years.

Mr Hawkins said: “I am excited to lead IAG during its next phase of growth and ensure the company emerges from the economic downturn as a strong, resilient organisation. Insurance plays a fundamental role in our society and I’m proud to work for and lead a company that is truly purpose-led and customer-focused.”

Worley Ltd (ASX: WOR)

Drax Power has awarded Worley a services contract for the first two carbon capture units at its power station in North Yorkshire, UK. The carbon capture units will be integrated into the biomass power generating units that have a total capacity of 2,580 MW.

Under the contract, Worley will provide pre-FEED (front-end engineering and design) services for the carbon capture units, which includes development of plant layout, cost estimation and schedules for FEED, detailed engineering, procurement and construction.

The ASX 200 share said this contract provides further indication of the increasing use of both biofuels and carbon capture in the global energy system.

The technology will use ‘negative emissions technology’. It’s called bioenergy with carbon capture and storage. It generates renewable electricity while permanently removing carbon dioxide from the atmosphere.

Worley CEO Chris Ashton said: “As a global professional services company headquartered in Australia, we are pleased that Drax has engaged Worley in this important carbon capture project. The contract supports Drax’s goal of becoming a world-leading, carbon-negative company by 2030, whilst also supporting Worley’s strategic focus on sustainability and delivering a more sustainable world.”

More reading

• 2 ASX shares I would buy for growth and income
• 2 reliable blue chip ASX 200 shares to buy today
• Latest ASX 200 stocks hit by broker downgrades today
• Two ASX infrastructure shares to buy before the October budget
• What you need to know about Tyro’s share price roller coaster today

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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Buying ASX shares for both growth and income is one of the best ways to invest, in my view. Nothing is better than holding a growth share that you’re reasonably sure has a bright future ahead of it, and being paid to hold it while you wait for this bright future to come to light. Finding these kinds of ASX shares can be tricky, but today let’s discuss 2 that I think fit the mould nicely.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is an ASX financial share that focuses on the funds management business. Over the past decade or so, this company has managed to grow into the largest fund manager in Australia. This is no mean feat or accident. Magellan is helmed by one of the best fund managers in the country, billionaire Hamish Douglass.

A keen follower and disciple of the legendary investor Warren Buffett, Mr Douglass has built his reputation on buying and holding what he sees as the best companies in the world. And this reputation has been an absolute asset for Magellan. This is a company that has managed to grow its funds under management (FUM) by 26% over the 2020 financial year to nearly $100 billion (a feat made devilishly tricky by the pandemic). As of August, Magellan’s FUM stands at $100.87 billion.

This growth has helped push Magellan shares up by close to 80% since 23 March, although the shares are still underwater for the whole year so far. Magellan is also a generous income share. On current prices, investors can expect a trailing yield of 3.89%, which comes partially franked and was increased by 16% over FY19’s dividend in FY20.

Adding all of these factors together, I think Magellan is a top share to buy for both growth and dividend income.

iShares S&P 500 ETF (ASX: IVV)

Our second growth and income share is this exchange-traded fund (ETF) from BetaShares. IVV tracks the American S&P 500, one of the most popular indices in the world. The S&P 500 holds 500 of the largest companies in the US. You’ll find tech titans like Apple Inc (NASDAQ: AAPL) and Microsoft Corporation (NASDAQ: MSFT) at the top of this ETF, but it also includes a diverse range of American companies like Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), healthcare giant Johnson & Johnson (NYSE: JNJ), oil companies like Exxon Mobil Corporation (NYSE: XOM) and carmaker General Motors Company (NYSE: GM).

Unlike the ASX, the S&P 500 has a reputation for growth over income, which is reflected in its average return of 17.15% per annum over the past 10 years. Nevertheless, IVV also offers a small dividend yield of 1.78% per annum on current prices. As such, I would be very happy to own IVV for both growth and income over the coming years.

More reading

• ASX 200 drops another 0.8%, Magellan (ASX:MFG) reveals a large investment
• ASX 200 down 0.5%: Harvey Norman (ASX:HVN) update, Magellan (ASX:MFG) makes Barrenjoey investment
• Magellan (ASX:MFG) share price slides lower after investing in Barrenjoey
• Why you should always invest in ASX shares when interest rates are low
• Magellan (ASX:MFG) reveals best share buys for September

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Johnson & Johnson. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple, Berkshire Hathaway (B shares), and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and recommends the following options: long January 2021 $85 calls on Microsoft, long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). 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) is home to a number of high quality shares for investors to choose from. But with so much choice, it can be hard to decide which ones to buy.

To narrow things down for you, I’ve picked out three ASX 200 shares which I think would be great additions to a balanced portfolio this week. They are as follows:

REA Group Limited (ASX: REA)

The first ASX 200 share to consider buying is this property listings company. While times are hard for the housing market right now, house prices have been tipped to rebound strongly in 2021. If this comes to pass, REA Group should see demand for listings increase. Combined with recent price increases, new revenue streams, and cost cutting, I feel REA Group’s earnings growth should accelerate once again.

Telstra Corporation Ltd (ASX: TLS)

Another option for investors on the ASX 200 is Telstra. I’ve been very pleased with the way the telco giant has turned around its fortunes in 2020 and believe it is well positioned for a return to growth in the near future. This is due to the return of rational competition in the telco industry, its cost cutting plans, and its leadership position in the 5G market. I expect the latter to underpin solid growth in its increasingly important mobile business in the coming years. Another positive is that the Telstra share price is trading close to its 52-week low at present. This could make it an opportune time to consider a patient long-term investment.

Wesfarmers Ltd (ASX: WES)

A final ASX 200 share to consider buying is Wesfarmers. It is the conglomerate behind popular brands such as Bunnings, Kmart, Target, Catch, and Officeworks. It also has a number of chemicals and industrial businesses such as lithium miner Kidman Resources. In addition to this, Wesfarmers has a strong balance sheet and plenty of cash to deploy on earnings accretive acquisitions. Combined, I believe the company is well-positioned to deliver consistently solid earnings growth over the 2020s. This could make Wesfarmers shares a great option for a balanced portfolio.

More reading

• 2 reliable blue chip ASX 200 shares to buy today
• Magellan (ASX:MFG) share price slides lower after investing in Barrenjoey
• Why the Telstra (ASX:TLS) share price looks cheap today
• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• Goldman Sachs names 4 reasons to buy Telstra shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended REA Group 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 Is it time to buy Telstra and these high quality ASX 200 shares? appeared first on Motley Fool Australia.

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The Perenti Global Ltd (ASX: PRN) share price was up 0.4% at the time of writing to $1.27. This came after the company announced it had received a BB rating from Fitch and confirmed a notes issue to refinance existing outstanding notes.

What was announced?

Fitch assigned Perenti a long-term issuer default rating of BB with a positive outlook. This was based on the credit rating agency’s assessment of Perenti as a global mining services contractor and its financial policy, which Perenti stated was prudent. A long term issuer default rating is based on the perceived likelihood that an issuer will default on their outstanding financial obligations.

Perenti chief financial officer Peter Bryant said the BB rating demonstrated the group’s solid credit profile and robust outlook.

This was the company’s inaugural rating by Fitch. Perenti is also rated BB by Standard and Poors and Ba2 by Moody’s.

Also today, Perenti announced it would issue $350 million in guaranteed senior unsecured notes in the United States. The proceeds would be used to redeem $350 million of 6.625% senior secured notes due in May 2022.

Moody’s, which matched its existing Ba2 rating with a stable outlook for the notes issue with Perenti’s rating overall, commented:

Perenti’s credit profile reflects the company’s improved business profile with the increased scale and diversification following the acquisition of Barminco. Perenti has a strong position in providing integrated mining services in its target markets and and a demonstrated ability to execute contracts with a diversified range of counterparties.

About the Perenti share price

Perenti provides services for surface and underground mining in Australia and Africa. It also engages in equipment hire, parts sales, service exchange and maintenance services. It has been listed on the ASX since 1994.

In August, Perenti announced record revenue of $2.04 billion for the year to 30 June 2020, up 3.8%. Earnings before interest, tax, depreciation and amortisation (EBITDA) were $443.8 million, up 6.8%. Net profit after tax in the year to 30 June, 2020 was $27.6 million. 

 The Perenti share price is up 182.22% since its 52-week low of 45 cents. However, it is down 20.63% since the beginning of the year. The Perenti share price is down 44.05% since this time last year.

More reading

• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• These were the best performing ASX 200 shares last week
• ASX 200 falls slightly, miners surge higher
• Perenti (ASX:PRN) share price pushes higher as contract secured
• ASX 200 rises 1%, CSL (ASX:CSL) leads the way

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 Atlas Arteria Group (ASX: ALX) share price has closed 3.98% lower today. The fall in the Atlas Arteria share prices comes after the company’s ASX announcement earlier today regarding its dividend payment for the 6 months ending 30 June.

The toll road company’s share price was savaged by the wider COVID-19 market selloff earlier this year, dropping 47% from 3 February to 23 March.

Since that low, the Atlas Arteria share price has rebounded nearly 45%. Despite that strong run higher, year to date the share price remains down more than 20%.

Atlas Arteria is part of the S&P/ASX 200 Index (ASX: XJO). By contrast the ASX 200 is down 13% for the year.

What does Atlas Arteria do?

Atlas Arteria Group (formerly Macquarie Atlas Roads) owns, operates and develops toll roads around the world. The company has four toll roads across the United States, France and Germany. Its APRR motorway network in France is Europe’s fourth-largest motorway group.

In 2010, Atlas Arteria was created through the splitting of Macquarie Infrastructure Group into two separate ASX-listed toll road companies: Macquarie Atlas Roads, now known as Atlas Arteria, and Intoll, which was subsequently acquired by a Canadian company.

Atlas Arteria has a market capitalisation of $6.2 billion.

What’s moving the Atlas Arteria share price?

The Atlas Arteria share price is today moving lower after the company announced an unfranked distribution of 11 cents per stapled security for the 6 months ending 30 June. Atlas Arteria estimates the payment will be made on 5 October. Shares begin to trade ex-entitlement this Friday 25 September.

Although the dividend payment is in line with the guidance the company provided on 27 August in its half year results, investors may be disappointed Atlas Arteria didn’t exceed that guidance. 11 cents per share is the lowest payout shareholders have received since 2017.

Investors are also still concerned with the ongoing impact that coronavirus is having on the company’s toll road revenues. A second wave of infections is building momentum in two of its core markets — Germany and France. Meanwhile, high infection levels in the United States continue to hinder travel there.

Those are valid short and even mid-term concerns. But with progress being made on the treatment and vaccine fronts, and global governments opening the purse strings to fund major road projects, the current Atlas Arteria share price could look like a bargain by this time next year.

More reading

• ASX 200 rises 1%, CSL (ASX:CSL) leads the way
• Atlas Arteria share price up 5% despite earnings hit

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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The Blackmores Limited (ASX: BKL) share price is on form for once on Monday.

In afternoon trade the health supplements company’s shares are up 1.5% to $70.15.

Despite this gain, the Blackmores share price is still down 27% from its 52-week high.

Is this a buying opportunity?

Although the Blackmores share price is trading notably lower this year, I wouldn’t be in a rush to invest just yet. This is due to its uncertain performance and the high multiples its shares are trading on.

This is a view that I share with analysts at Goldman Sachs. This morning the broker retained its neutral rating and cut its price target on Blackmores’ shares to $71.00.

It notes that the company is going through a major transformation at present.

Goldman explained: “BKL is progressing through a period of significant change as it vertically integrates production through its Braeside manufacturing facility, offloads underperforming assets (Global Therapeutics) and reestablishes its growth model into China and more broadly through Asia.”

This transformation is weighing on its earnings momentum and is expected to continue doing so in the near term.

However, based on the current Blackmores share price, Goldman suspects that the market is pricing in a much swifter turnaround.

It said: “Earnings momentum remains steadfastly negative, but growth expectations are strong and BKL’s PE remains elevated suggesting the market is pricing in a portion of a turnaround. We now forecast an underlying FY21 EBITDA of A$69.1mn and EPS of A$1.58.”

This means the Blackmores’ share price is trading at a lofty 44x FY 2021 earnings right now. And looking even further ahead, the broker is forecasting earnings per share of $2.21 in FY 2022. This equates to a multiple of 32x FY 2022 earnings for its shares.

In light of this, I would suggest investors either wait for a better entry point or for the company’s performance to improve.

In the meantime, I would sooner buy A2 Milk Company Ltd (ASX: A2M) shares. Goldman estimates that they are changing hands at 28x estimated FY 2021 earnings and 24x estimated FY 2022 earnings.

More reading

• ASX 200 Weekly Wrap: ASX 200 snaps 4 week losing streak… just
• These were the best performing ASX 200 shares last week
• Why I’m watching the Blackmores (ASX: BKL) share price this year
• Half of ASX 200 stocks at risk as China-Australia relations hit new low
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. 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 Is the Blackmores (ASX:BKL) share price in the buy zone yet? appeared first on Motley Fool Australia.

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I think that there are aren’t too many S&P/ASX 200 Index (ASX: XJO) shares that can be classified as reliable because of what has happened during COVID-19. Some businesses have been hit hard. 

Quite a few shares like National Australia Bank Ltd (ASX: NAB) and Woodside Petroleum Limited (ASX: WPL) have sunk and not recovered (yet).

However, there have been other ASX 200 shares that have been reliable during this difficult period.

I’m not suggesting that my two reliable ideas are amazing value or likely to smash the market over the medium-term. However, I think they have proven themselves through both this COVID-19 period as well as before that in ‘normal’ times.

Here are my two reliable ASX 200 share ideas:

Wesfarmers Ltd (ASX: WES)

Wesfarmers is a diversified business that has been around for many decades. It has proven its worth during this difficult COVID-19 period with the huge surge of people looking to buy home office equipment from Officeworks as well as home improvement project supplies from Bunnings.

In FY20 the company saw divisional earnings before tax (EBT), excluding significant items, rise by 1.3% to $2.89 billion. This was completely driven by the 13.9% EBT increase from Bunnings to $1.85 billion and the 13.8% increase to EBT by Officeworks. All the divisions saw declines in EBT, particularly Kmart Group and the industrial and safety division which saw EBT declines of 23.5% and 53.5% respectively.

Wesfarmers’ continuing net profit rose 8.2% after excluding significant items.

I really like the diversification offered by Wesfarmers and its various segments. The acquisition moves to buy lithium miner Kidman Resources and online retailer Catch could prove to be very sound investments.

The outlook for Wesfarmers in FY21 is uncertain due to COVID-19 and the Target restructuring. But over the long-term I think the ASX share can continue to generate good performance with a focus on shareholder returns (meaning dividends). It’s probably one of the best ASX dividend shares in the ASX 200.

At the current Wesfarmers share price it’s trading at 23x FY22’s estimated earnings.

CSL Limited (ASX: CSL)

CSL is currently the biggest business in the ASX 200. It has been a true success story over the past decade with the CSL share price rising 794%.

The healthcare biotech giant has done extremely well at expanding its product portfolio. Each product represents a defensive earnings stream. I think this difficult COVID-19 period has shown how important it is that a population takes healthcare seriously and how valuable CSL’s services are.

The ASX 200 share is actually going to be involved in manufacturing two of the most promising COVID-19 vaccines. One is the Oxford University candidate and the other one is the University of Queensland vaccine.

CSL continues to invest heavily in its research and development of new products. If you exclude that large R&D spending then the CSL share price valuation doesn’t look as high as it seems. That expenditure will hopefully open up new exciting treatments to help people and unlock more earnings growth.

In FY20 the ASX 200 share generated net profit after tax (NPAT) of US$2.1 billion. It also grew its full year dividend. In FY21 management has provided net profit guidance of US$2.1 billion to $2.265 billion. Further profit growth would be a good result considering all of the COVID-19 impacts, particularly when it comes to plasma collection centres.

At the current CSL share price it’s trading at 38x FY22’s estimated earnings.

Foolish takeaway

Both CSL and Wesfarmers are quality ASX 200 shares and overall have shown they can generate reliable profit growth even during a global pandemic. FY21 may be volatile over the coming months, but I’d feel content to own these businesses for many years to come at today’s valuations.

More reading

• ASX 200 drops another 0.8%, Magellan (ASX:MFG) reveals a large investment
• Is it time to buy Telstra and these high quality ASX 200 shares?
• Latest ASX 200 stocks hit by broker downgrades today
• Two ASX infrastructure shares to buy before the October budget
• What you need to know about Tyro’s share price roller coaster today

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 CSL Ltd. 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.

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The Advance NanoTek Ltd (ASX: ANO) share price is crashing lower on Monday afternoon after the release of a sales update.

At the time of writing the advanced materials company’s shares are down 11% to $3.35.

This leaves the Advance NanoTek share price trading 52% lower than its 52-week high and within sight of its 52-week low of $3.20.

What was in Advance NanoTek’s update?

Today’s update revealed that the company’s poor performance has continued in FY 2021 due to negative impacts from the pandemic.

According to the release, based on current distributor forecasts for the second quarter, the company expects its first half sales to be lower than the prior corresponding period.

Management explained that travel restrictions are reducing demand for sunscreen, which is having a knock-on effect on sales of its zinc oxide product. In addition to this, it believes its shortened delivery times are having a negative impact on near term demand.

The company explained: “ANO understands the delay in sales orders is due to the significant travel restrictions caused by the second and third waves of COVID-19 in Europe and the US.”

“We are also seeing distributors destocking due to us offering much shorter delivery times. Distributors prepared to comment, have indicated that Q3 sales should improve as customers are gearing up for the next season and continue to improve over foreseeable future,” it added.

What now?

In light of this sales uncertainty, the company advised that it can longer say that its first half result will be stronger year on year. Nor can it accurately predict its full year results because of the uncertainty.

Though, it has advised that the Board is working on a number of initiatives in an effort to diversify its product offerings. It is also looking to increase its distribution network and prepare the company for a potential significant increase in demand for zinc oxide over the next three years.

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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 Advance NanoTek 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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