Tag: Motley Fool

I am more excited about shares of WAM Microcap Limited (ASX: WMI) from today. I’m going to tell you why in this article.

A quick overview of WAM Microcap

WAM Microcap is a listed investment company (LIC) which invests in the smallest businesses on the ASX. It targets ones with market capitalisations under $300 million at the time of acquisition. It’s operated by the high-performing team at Wilson Asset Management.

Why I’m usually excited about WAM Microcap

I think WAM Microcap could be one of the best LIC investment teams at the moment. It has proven to be a very strong performer.

At 31 August 2020, the LIC reported that over the prior three months its gross portfolio performance was 26.9%, which was 20.3% better than its benchmark. Over the prior year (including the COVID-19 crash) it produced a gross return of 25.4%, which was 23.3% better than its benchmark. Since inception in June 2017, its gross return has been 21.7% per annum, 13.3% per annum better than the benchmark.

I don’t think it’s always going to produce returns of 20% per annum, but I do believe that picking small caps and the WAM investment strategy can lead to continued outperformance of the S&P/ASX 200 Index (ASX: XJO) over the long-term.

WAM Microcap can turn this strong investment return into pleasing dividends for shareholders. It has paid a special dividend, as well as growing ordinary dividends, each year since FY17 when it started paying dividends.

At the current WAM Microcap share price it offers an ordinary grossed-up dividend yield of 5.7%.

The reason I’m more bullish from today

There was a piece today in the Australian Financial Review that caught my eye. WAM Microcap recently carried out a capital raising, with some of that money planned for pre-IPO investments.

The AFR reported that WAM Microcap has invested $2.5 million into AUCloud, which is described as a sovereign cloud services provider.

The COVIDSafe app and the shift to working from home highlighted the importance of having a safe, secure service that could be trusted for government officials to use. According to the AFR, the government is thinking about restricting access to government data to local players. This could be good news for companies like AUCloud which focuses on government and important national infrastructure clients. It was referred to as an ‘infrastructure as a service’ provider.

AUCloud is supposedly going to list onto the ASX later in 2020, it’s aiming to be profitable in this financial year.

WAM lead portfolio manager Oscar Oberg said: “With all the negative press around the COVIDSAFE app – we think the issue around sovereignty is going to increase. It will be a bullish time for software providers. As a pure play company in this space – the demand for cloud providers that are Australian owned as opposed to the global behemoths like Azure or AWS, will increase. Particularity with their exposure to government departments such as defence and key industries like financial services.

“AUCloud offers the security, the compliance and they have an increased level of efficiency and productivity to their clients. They also have a successful partner channel with some of the largest software companies in the world.”

If these are the types of investments that the LIC is going to invest in, then it’s an exciting proposition. I like WAM Microcap even more than before.

Foolish takeaway

WAM Microcap does a great job of identifying opportunities that are going to produce strong returns over the medium-term. Expanding its horizon to new investment ideas is exciting and could lead to more strong returns if the IPOs go quite well.

These pre-IPO ideas are not accessible to regular investors, so WAM Microcap could be a nice way to indirectly benefit from that as well as with other opportunities like institutional capital raisings. Sure, its management fees are higher than a cheap exchange-traded fund (ETF), but the net returns from WAM Microcap have been stronger than most ETFs – which make the fees more than acceptable.

I’d be happy to buy at this WAM Microcap share price because it’s probably trading close to its pre-tax net tangible assets (NTA), which is a fair price.

More reading

• 3 retirement myths you can’t afford to believe
• Is the new WAM Alternative Assets LIC a buy?
• 3 ASX dividend shares I’d buy with $3,000 today
• 3 ASX shares for beginners to buy
• 2 ASX shares I’d buy with $750 right now

Motley Fool contributor Tristan Harrison owns shares of WAM MICRO FPO. 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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There certainly are a large number of growth shares for investors to choose from on the Australian share market.

Two which I think are among the best on offer right now are named below. Here’s why I would invest $2,000 into these fantastic growth shares:

NEXTDC Ltd (ASX: NXT)

The first ASX growth share to consider buying is this innovative data centre-as-a-service provider. I’ve been very impressed with the way NEXTDC has been growing in recent times. For example, over the last four years the company’s customer numbers have grown at a compound annual growth rate (CAGR) of 21%. This has been driven by the seismic shift to the cloud, which is driving very strong demand for data centre capacity.

Pleasingly, the company isn’t just growing its customer numbers, its customers are using more and more of its services. Over the same period, its interconnections have grown at a CAGR of 31%. The catalyst for this has been increasing use of hybrid cloud and connectivity inside and outside its data centres due to customers expanding their ecosystems. The good news is that the shift to the cloud is still only getting started. I believe this leaves NEXTDC well-positioned to deliver strong earnings growth over the next decade. 

Xero Limited (ASX: XRO)

Another fantastic ASX growth share to consider buying is Xero. Although this cloud accounting and business software company had a sizeable 2.38 million subscribers at the last count, I still believe this figure can rise materially in the future. This is due to the relatively modest market share that cloud-based providers have at present. Despite the overwhelming benefits of cloud-based accounting software, the company estimates that less than 20% of the global English-speaking target market has made the shift.

I expect more and more businesses to make the switch in the coming years, which should underpin solid subscriber growth. Combined with price increases, its high retention rate, and the benefits of scale, I expect this to lead to above-average earnings growth over the 2020s.

More reading

• Buy and hold these ASX shares to grow your wealth
• Apple, Amazon, Microsoft are bigger than EVERY unicorn combined
• Is value investing dead?
• Leading brokers name 3 ASX shares to sell today
• Is the NEXTDC share price heading even higher from here?

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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 Smartpay Holdings Ltd (ASX: SMP) share price has jumped 3.3% to 62 cents following a trading update announced earlier today. At one point, the Smartpay share price hit an intraday high of 63.5 cents after opening at 59 cents. This compares to the All Ordinaries Index (ASX: XAO) which is down 1% today at 6,080 points.

What does Smartpay do?

Smartpay is the largest independently owned and operated EFTPOS provider in both Australia and New Zealand. The company develops innovative point-of-sale (POS) systems for over 25,000 business customers including banks, retailers and merchants.

Business update

Smartpay provided a trading update for the period ending 31 August. The performance in its Australasian business segments are as follows:

Australia

The EFTPOS provider saw Australian lead generation and new customer acquisition at record levels. In Australia, revenue increased 19% for June to July, and 91% year on year. This result was achieved despite the Victorian lockdown in August that caused a 6% decline in July’s incoming revenue.

The company warned that while 12% of its transacting terminal base was affected, including 5% by a single merchant category, customer growth has offset this.

Smartpay advised that transactions per terminal (as well as average transaction value) have been maintained above pre-COVID levels, standing at 4,432 with hopes of reaching 5,000 in the coming months.

New Zealand

The company noted that the most recent regional lockdown in Auckland had minimal impact on its trading and operational volumes. Furthermore, Smartpay highlighted its flexible remote working plans as a driver for its New Zealand business.

Outlook

Smartpay said that its recent results lead to a positive outlook, particularly as Victoria emerges from lockdown. This is reflected by strong customer acquisition and solid transaction numbers recorded in Australia.

The company also said it expected to see a boost in trading activity levels for the September quarter and will look towards continuing organic growth.

Smartpay share price summary

The Smartpay share price has been on a rollercoaster ride over the past year. From reaching a 52-week low of 16.5 cents and a 52-week high of 82.5 cents, the Smartpay share price is currently 16.98% up in year-to-date trading. 

More reading

• 2 fantastic ASX growth shares to buy with $2,000 today
• Ardent Leisure (ASX:ALG) share price soars 6% as Dreamworld reopens
• Why the City Chic (ASX:CCX) share price crashed 15% lower today
• 3 ASX shares poised for huge growth in FY21
• ASX 200 gender inequality lets the team down

Motley Fool contributor Aaron Teboneras 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 Ardent Leisure Group Ltd (ASX: ALG) started its long road to recovery today as Dreamworld reopened on the Gold Coast. The Ardent Leisure share price is trading higher as a result, up 5.43% at 48 cents. 

What does the company do?

Ardent Leisure owns and operates leisure and entertainment assets across Australia and the United States. In Australia, these include Dreamworld, WhiteWater World and SkyPoint theme parks. The company’s Main Event portfolio also includes a growing number of family entertainment assets in the US.

Why has the Ardent Leisure share price soared?

The Ardent Leisure share price is flying today as the company finally begins its recovery out of the coronavirus pandemic that has decimated its share price. The gates to Dreamworld and Whitewater World are finally open again, 177 days after the pandemic forced them shut.

Work on a new $30-million rollercoaster is also about to start, sparking further excitement for fans and shareholders.

Dreamworld is implementing health and safety measures, making WhiteWater World a seasonal water park. It will operate each year from early September to late January in response to the pandemic. The Gold Coast theme parks reportedly drew large crowds as more than 400 staff returned to work.

Rival operator Village Roadshow Ltd (ASX: VRL) reopened Movie World, Sea World and Wet’n’Wild in July.

What now for Ardent Leisure

The reopening comes a fortnight before the resumption of Work Health and Safety court proceedings against Ardent Leisure. In July, the company pleaded guilty to three charges relating to the deaths of four people on the Thunder River Rapids Ride in 2016. Shareholders will be hoping that a fast recovery from COVID-19 will help get the Ardent Leisure share price back on track.

More reading

• Village Roadshow share price lower on $100 million loss
• Ardent Leisure share price falls as Dreamworld owner reports $136 million loss

Motley Fool contributor Daniel Ewing 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 City Chic Collective Ltd (ASX: CCX) share price has tumbled lower on Thursday after the release of an announcement.

The fashion retailer’s shares are down 7% to $3.14 in afternoon trade but were as much as 15.5% lower in morning trade.

What did City Chic announce?

This morning City Chic provided an update on its plan to acquire the ecommerce assets of US-based plus-size retailer Catherines.

In July, the company undertook a $90 million equity raising. These funds were going to be used partly to support the potential acquisition of the Catherines assets following the bankruptcy of Ascena Retail Group.

At that point, the company was in pole position to complete the acquisition. It was named the stalking horse bidder and signed an asset purchase agreement. A stalking horse bid is essentially a reserve price for an auction.

That was set at US$16 million, though management warned that it was quite likely that the auction would take the final price beyond this.

What happened at the auction?

Well, this morning the company revealed that this was the case. But unfortunately for City Chic and its shareholders, it wasn’t the successful bidder.

According to the release, the assets were eventually sold at the auction for US$40.8 million. Management advised that this was above its assessment of the value of these assets and it didn’t want to overpay for them.

The company’s chief executive officer, Phil Ryan, commented: “Although it was disappointing not to win the assets at auction, we have a very good understanding of the plus size market and the value of the assets, and we did not want to overpay.”

“We have a focused strategy to grow our global digital presence and will execute this strategy through our extensive organic growth program and evaluating any inorganic opportunities on their merits,” he added.

But City Chic won’t let this setback hold it back. It sees plenty of opportunities to deploy its funds on acquisitions in the future.

“Given current market conditions, we continue to see opportunities to add brands to our collective and more aggressively take market share organically. We are well positioned financially and operationally to capitalize on these opportunities to scale globally,” Mr Ryan concluded.

More reading

• Why City Chic, Fortescue, Nearmap, & Zip shares are dropping lower today
• 3 ASX tech shares that are still in the buy zone
• Where I’d invest $20,000 into ASX shares right now
• 3 personal finance tips to help strong investing
• 2 top ASX shares I’d buy with $2,000

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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Some ASX shares are poised to deliver huge growth in FY21.

COVID-19 has been difficult for some businesses like Qantas Airways Limited (ASX: QAN). But for other businesses they have seen a strong increase in demand.

It seems like these three ASX shares are on track for a huge FY21:

Nick Scali Limited (ASX: NCK)

You wouldn’t think that a furniture business would be a strong performer during a global pandemic and Australia’s first recession in three decades. But Nick Scali is doing very well. In FY20 its net profit was flat, which was strong considering what was going on.

However, the FY21 outlook seems very promising for the ASX share.

Nick Scali said that trading during July was extremely buoyant with written order sales growing by 70% compared to the prior corresponding period. That followed on from May and June where sales orders were also up over 70%.

About two thirds of Nick Scali’s products are made to order with typical delivery lead times of 9 to 13 weeks. These orders will be delivered in the first quarter and contribute to revenue in FY21.

The ASX share is expecting first half net profit to be up by at least 50% to 60%, assuming no other adverse COVID-19 impacts.

At the current Nick Scali share price, it also offers a trailing grossed-up dividend yield of 8%.

Redbubble Ltd (ASX: RBL)

Online artist marketplace business Redbubble is another ASX share that’s seeing enormous growth.

In FY20 the company saw marketplace revenue grow my 36% with gross profit going up 42% and operating earnings before interest, tax, depreciation and amortisation (EBITDA) rising by 141%.

Growth accelerated in the last quarter of FY20 and it surged further in July 2020. In the first month of FY21 marketplace revenue grew by 132% with similar sale levels in the first two weeks of August. Who knows what the rest of FY21 will bring? But it seems the elevated sales could remain until at least Christmas this year.

The ASX share is going to keep working hard on acquiring, activating and retaining artists, acquiring users and transaction optimisation, understanding customers, building loyalty and the brand, and also improving its product lines and expanding its fulfilment network.

The Redbubble share price still looks decent value to me considering it generated $38 million of free cashflow in FY20.

I think the ASX share can continue to benefit from improving network effects over the coming years as it captures more market share.

Kogan.com Ltd (ASX: KGN)

E-commerce business Kogan.com has done extremely well since the lockdowns in March 2020.

The Kogan.com share price has risen by 410% over the past six months. But there could be more to come if it can continue its growth streak.

In FY20 the company grew gross sales by 39.3%, gross profit went up 39.6%, adjusted EBITDA rose 57.6% to $49.7 million and net profit after tax jumped 55.9% to $26.8 million. It also grew its active customer base by 35.7% to 2.18 million.

Growth was stronger in the FY20 second half with gross sales, gross profit and adjusted EBITDA rising by 62.5%, 68.3% and 74.1% respectively.

That elevated level of growth appears to be continuing (and accelerating). In July 2020 it saw gross sales and gross profit rise 110% and 160% year on year, adjusted EBITDA came in at more than $10 million.

The online e-commerce ASX share recently announced its August 2020 numbers – gross sales grew 117%, gross profit went up 165% and adjusted EBITDA soared 466%.

Kogan.com could be one to watch if its revenue and profit keep going up like this.

At the current Kogan.com share price it’s trading at 47x FY21’s estimated earnings.

Foolish takeaway

Each of these ASX shares seem on course for a solid FY21. Nick Scali keeps surprising, but I’m not sure if its strong numbers will continue over the medium-term. However, the shift to online shopping could continue. I think both Redbubble and Kogan.com could be good buys with a 5-year outlook at today’s share prices.

More reading

• Temple & Webster (ASX:TPW) share price hits record high after broker lifts its price target
• 3 ASX shares to buy before this window of opportunity closes
• 3 ASX tech shares that are still in the buy zone
• Redbubble (ASX:RBL) and this ASX share have more than doubled in 2020
• 2 of the best ASX tech shares to buy and hold until 2025

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 Kogan.com ltd. The Motley Fool Australia has recommended 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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It’s no secret that the gender gap in the top echelons of the S&P/ASX 200 Index (ASX: XJO) remains disappointingly wide. Incremental progress over the past few decades has been there, to be sure. It wasn’t too long ago when it was unheard of for a woman to be running an ASX company.

But a new report out today outlines just how far we have to go before there’s true gender equality on the ASX 200.

More worryingly, the progress that the last few years has seen looks to be stalling.

The Chief Executive Women group publish an annual report of gender diversity in the ASX 200, and the report for 2020 is now public.

Report lays bare ASX 200 inequality

Some of its key findings are as follows:

• out of 25 new ASX 200 CEO appointments in the past year, just one was a woman. Only 3 out of 50 appointments in the past 3 years have been women
• just 5% of ASX 200 companies (or 10 out of 200) have a female CEO, down from 6% last year.
• 15% of ASX 200 companies have executive leadership teams (ELTs) consisting of 40-60% women, up from 12% in 2019.
• around 65% of ASX 200 companies have no women on their ELTs.
• just 1 ASX 200 company has no men in its ELT.
• the telco sector has the highest proportion of women in ELTs at 24%.
• in industries with a female-dominant workforce (e.g. health care), there is massive under-representation in roles with profit and loss responsibility, with only 5% of leadership line roles in health care companies in the ASX 200 filled by women. This is down from 15% 4 years ago.

Chief Executive Women president Sue Morphet had this to say on these numbers:

We know that if businesses take immediate action to remove systemic barriers for women, particularly in career-forming years, they will see the most talented and qualified people appointed to senior positions which will benefit their company performance, and their bottom line.

We need business to unleash the largely untapped resource that highly educated, experienced and capable women are, leading to better performing businesses at a time when every job counts more than ever.

The solution?

Following these numbers, the group is calling for a number of actions from the ASX 200, including accountability on diversity targets and pay inequality, clear succession planning, and increasing availability and ‘normalcy’ of flexible and part-time work for all employees.

In some good news, it appears many investors aren’t taking these numbers lying down. According to reporting in the Australian Financial Review (AFR), Debby Blakey, chief executive of superannuation fund HESTA, says the fund will increasingly use its $54 billion worth of ASX voting power to “make boards more accountable for poor progress on gender diversity”. Hopefully, other institutional investors follow HESTA’s lead and put their money where their mouths are.

Foolish takeaway

It’s clear and obvious that gender inequality continues to plague the ASX, and it is worrying to see some trends going the wrong way in 2020. In my view, it’s the responsibility of all shareholders, as the ultimate owners of ASX 200 companies, to push for equality in our companies. Hopefully, we can do better in 2021 than the dismal numbers we see today.

More reading

• Why the lagging Worley (ASX:WOR) share price could be at COVID turning point
• Why the Fortescue (ASX:FMG) share price is underperforming its peers today
• 5 things to watch on the ASX 200 on Thursday
• ASX 200 rises 1%, SEEK (ASX:SEK) jumps 9%
• Meet the ASX sector that is cum-consensus upgrade for FY21

Motley Fool contributor Sebastian Bowen 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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In today’s market, there are many opportunities to pick up ASX growth shares that were considered pricey at the start of the year. Quality ASX growth shares like Nanosonics Ltd. (ASX: NAN) and Jumbo Interactive Ltd (ASX: JIN) have seen their share price plummet and, I believe, now present great value. However, I think the following three ASX growth shares will provide investors will the best returns for years to come.

3 ASX growth shares to consider buying now

Altium Limited (ASX: ALU)

Former market darling, Altium, has lost nearly 20% of its market value since COVID-19. The Altium share price was trading at an all-time high of $42.76 in February this year and now, at the time of writing, is just $34.37. While this ASX growth share reported a decent FY20 result, investors were hoping Altium would achieve its US$200 million revenue target. The tech company just fell short, achieving US$189.1 million, and in-turn was heavily sold off in the weeks following.

I think that despite the challenging conditions our global economy faces, Altium is a ready-made winner. This ASX growth share has an impressive client list and is well positioned to dominate the market. The need for its 3D printed circuit boards has been rapidly rising in an estimated $2 trillion electronics industry size.

Bubs Australia Ltd (ASX: BUB)

Casting out of A2 Milk Company Ltd‘s (ASX: A2M) shadows, is Australian-made infant formula, Bubs. In recent times, the ASX growth share has caused investors concern due to rising geopolitical tensions between Australia and China. Bubs’ biggest market is in the Asian superpower, accounting for 66% of total group revenue in its FY20 result. China is the largest and fastest growing infant formula market in the world, valued at $55 billion.

Furthermore, Bubs recently undertook a capital raise which further diluted its shareholder value. The funds were used to bolster its balance sheet and acquire an ownership stake in the Beingmate manufacturing facility in China.

I believe the strategic move is a way for Bubs to strengthen its ties to China amidst the political minefield. In light of this, I think the Bubs share price is trading at an attractive level and could reach higher in the near future. At the time of writing, the Bubs share price is 79 cents, up 0.6% today.

Nearmap Ltd (ASX: NEA)

Another ASX growth share that I would pick up today is Nearmap. The aerial imagery specialist announced a capital raise late last week to accelerate its growth opportunity. In response, shareholders tore the Nearmap share price apart, causing it to fall over 20% in the space of a week. At the time of writing, the Nearmap share price is $2.37, down 4%.

Through its capital raise, the company is seeking to increase its investment in sales and marketing initiatives in North America. In addition, the roll-out of its HyperCamera3 systems is expected to expand coverage at higher fidelity and enable expansion into new geographical markets.

In my opinion, I would strongly consider buying Nearmap at its current share price. I feel that this ASX growth share is grossly undervalued and could soar in the coming years.

More reading

• Why City Chic, Fortescue, Nearmap, & Zip shares are dropping lower today
• ASX 200 down 0.8%: Fortescue (ASX:FMG) tumbles, Afterpay (ASX:APT) sinks lower
• Why you should invest $5,000 into these ASX shares right now
• ASX 200 up 0.7%: Afterpay (ASX:APT) higher, QBE Insurance (ASX:QBE) lower on UK update
• 2 top ASX shares to buy for income and growth

Aaron Teboneras owns shares of Jumbo Interactive Limited and Nearmap Ltd. 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 Nanosonics Limited and Nearmap Ltd. 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 BUBS AUST FPO and Jumbo Interactive Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Nanosonics Limited and 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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Victoria is only now slowly emerging from lockdown. And social distancing rules remain in place across the rest of Australia.

With that in mind, the results on Australia’s unemployment rate from the Australian Bureau of Statistics (ABS) August Labour Force report are surprisingly upbeat.

The ABS data, released this morning, indicated that seasonally adjusted employment between July and August rose 0.9%. That means 110,000 more people were working, although not all of them were working as many hours as they’d like. Nationally, hours worked increased by 0.1%.

Women led the charge in cutting Australia’s unemployment rate.

ABS Labour Statistics head Bjorn Jarvis said the large increase in seasonally adjusted employment coincided with a large decrease in unemployment of 87,000 people, around 55,000 of whom were females.

Lockdown damage revealed

Not surprisingly, Victoria’s labour force is the most hampered, due to the state’s Stage 4 COVID-19 lockdown laws.

Jarvis said hours worked fell by 4.8% in Victoria, compared to a 1.8% increase across the rest of Australia. He added:

The August data provides insights into the labour market impacts from the Stage 4 restrictions in Victoria. In addition to the large fall in hours worked, employment in Victoria also decreased by 42,400 people and the unemployment rate increased to 7.1%.

The biggest labour market winner

Nationally, Australia’s unemployment rate was 6.8% in August. While down 0.7% from July, that’s still 1.6% above the August 2019 unemployment figures.

The ABS also revealed that unemployment rates decreased in every state and territory with the exception of Victoria where it increased 0.4%, and Tasmania, where it rose 0.3% to reach 6.3%. The Northern Territory was the biggest labour market winner, with unemployment falling 3.3% to 4.2%.

Despite a drop in Australia’s overall unemployment rate, the labour participation rate only nudged up 0.1% to reach 64.8%. That’s still 1.1% lower than in March this year.

The underemployment rate – people who are employed but not working as many hours as they’d like – stayed steady at 11.2%. That’s 2.4% higher than in March this year and 2.7% higher than in August 2019.

A final useful metric, the under-utilisation rate, combines the unemployment and underemployment rates. Under-utilisation declined by 0.7% to 18.0%. That’s heading in the right direction, but still 4.7% higher than it was in March.

More reading

• ASX 200 gender inequality lets the team down
• 3 ASX growth shares I’d buy right now
• ASX dividend share WAM Leaders (ASX:WLE) flags dividend boost
• Telstra (ASX:TLS) share price hits a 52-week low: Is this a buying opportunity for investors?
• Temple & Webster (ASX:TPW) share price hits record high after broker lifts its price target

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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ASX dividend share and listed investment company (LIC) WAM Leaders Ltd (ASX: WLE) has only been around since 2016. But since that time, this LIC has quickly developed a robust reputation as a solid ASX dividend share delivering income for its investors. In a year that has seen absolute carnage on the ASX dividend landscape, this has been a welcome oasis.

The company has already announced two dividend payments for its shareholders this year — an interim dividend of 3.25 cents per share (cps) that was paid out in April, and a 3.25 cps final dividend that will hit investors’ bank accounts on 30 October.

That gives WAM Leaders shares an expected yield for 2020 of 5.51% (or 7.87% grossed-up with WAM Leaders’ full franking).

But today, WAM Leaders has gone one step further and issued guidance for its upcoming dividends in 2021. According to an ASX announcement today, the company’s management is flagging that, for the 2021 calendar year, the company will be paying an interim dividend of 3.5 cps, which would be a 7.7% increase on 2020’s interim (and final) payout.

However, WAM Leaders notes that this guidance is “subject to no material change in market conditions”, so don’t go out and book a holiday just yet. According to the company, WAM Leaders has made this (rather unusual) announcement partly “in response to shareholders’ enquiries” and partly to “provide clarity to all shareholders participating in the share purchase plan”.

If WAM Leaders pays out two dividends of 3.5 cps each next year, it would give the shares a forward dividend yield of 5.93% on current pricing (8.47% grossed-up).

Is WAM Leaders a buy today for dividend income?

As an LIC, WAM Leaders has the advantage of being able to hoard profits so it can pay a smooth dividend over time. The company tells us that it has enough cash in its profit reserve to fund dividends for at least the next 2.6 years, which I think is attractive in a year that has seen many dividends dry up on the ASX.

Looking at WAM Leaders’ investment portfolio, I think this is a good option for anyone who wants exposure to the ASX’s largest companies and who appreciates a hefty dividend. As of 31 August, WAM Leaders’ top holdings include CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP) and Goodman Group (ASX: GMG).

As such, I think this LIC is a solid investment for income-seeking investors. The 2021 dividend guidance is a great move to give investors certainty and flags (in my opinion) that this company will continue to be a hefty income-generating investment well into the future.

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Sebastian Bowen 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 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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