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Low interest rates are making it difficult to live off money in the bank. I think ASX dividend shares are the answer.

The official RBA interest rate is now just 0.25%. That’s not going to generate much money even if you have $1 million in the bank. Cash may provide short-term downside protection, but over the long-term inflation can eat away at the ‘real’ value of your money.

I think that ASX dividend shares could be the answer. They can provide a bigger yield and deliver growth.

Here are three income ideas with solid yields:

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business. It produces and sells building products like bricks, masonry, precast and roofing. It has a strong market position across Australia, it’s the market leader of bricks in Australia.

The ASX dividend share also is the market leader in bricks in the north east of the US after acquiring three brick businesses. The United States is a large long-term opportunity with how big the population is. Brickworks will bring its efficiency to that division over time.

Brickworks hasn’t cut its dividend in over four decades. It has been able to do this because the dividend is entirely funded by the dividends from investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) as well as the net rental from its 50% stake of an industrial property trust.

At the current share price, Brickworks offers a grossed-up dividend yield of 4.75%.  

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

This is a listed investment company (LIC) which is operated by Naos Asset Management.

The benefit of a LIC is that it can invest in ASX growth shares, make investment returns and pay that profit out as a dividend. Good returns can mean it can afford to be an ASX dividend share.

It runs a high-conviction portfolio with around 10 names. An example of what it owns is MNF Group Ltd (ASX: MNF).

At the current share price, NAOS Small Cap Opportunities Company offers a grossed-up dividend yield of 10%. It’s currently paying a 1 cent per share dividend every quarter and it’s aiming to grow its dividend sustainably over the long-term.

It’s also trading at a 16.7% discount to the pre-tax net tangible assets (NTA) at the end of July 2020.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is an agricultural real estate investment trust (REIT). The ASX dividend share leases large berry and citrus farms to Costa Group Holdings Ltd (ASX: CGC).

Not only does Vitalharvest receive a fixed rental return from its farms, but it also receives 25% of the profit generated from its farms with a profit share agreement with Costa.

Variable rent in FY20 was impacted by a number of “coinciding, unprecedented events” which led to a 30.9% decrease compared to FY19, the lowest variable rental return since FY19. Costa and Vitalharvest’s manager think the worst effects of these events are over.

I think that Vitalharvest’s variable rent can rebound in FY21 and beyond with demand from export markets for quality Aussie agricultural products and an improving situation with the drought.

The ASX dividend share is looking to buy new assets related to food such as food processing and food storage. These new properties will hopefully reduce the downside risk associated with the variable rental component.

At the current share price, Vitalharvest offers a distribution yield of 6.25%. It’s also trading at a 17.6% discount to the net asset value (NAV) per unit at 30 June 2020.

Foolish takeaway

I think each of these ASX dividend shares could deliver solid income over the coming years. Brickworks likely has the most reliable dividend. However, the Naos LIC and Vitalharvest are both trading at large discounts to their underlying value and offer attractively big dividend yields.

More reading

• Are ASX banks or miners buys for dividends?
• 5 top ASX dividend shares you should never sell
• This is where I’d invest $1,000 right now into ASX shares
• 3 ASX 200 growth shares to buy right now
• Where to hunt for ASX dividend share income in 2020

Motley Fool contributor Tristan Harrison owns shares of NAO SMLCAP FPO and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, COSTA GRP FPO, MNF Group Limited, and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX dividend growth shares are an endangered species in 2020. This year has really separated the wheat from the chaff and the cream from the milk when it comes to dividend-paying shares. Many former ASX dividend stars have turned up to shareholders empty-handed this year as a result of the coronavirus pandemic. These include Westpac Banking Corp (ASX: WBC), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Ramsay Health Care Limited (ASX: RHC).

But there are some shares that are growing their dividend instead. They are rare and may require you to look under rocks that you might not have before. The 2 ASX dividend shares that I’ve found below are both Listed Investment Companies (LICs), which operate a little differently to normal ASX shares. That’s because a LIC is itself an investor of a sort. LICs holds a portfolio of other shares on behalf of their owners. In this way, they can be a useful addition to a dividend portfolio.

1) MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is a LIC that used to be part of the Magellan Financial Group Ltd (ASX: MFG). Even though MFF and Magellan have gone their separate ways to some extent, Magellan co-founder Chris Mackay remains MFF’s chief portfolio manager. Mr Mackay is regarded as one of the best fund managers in the country. MFF holds a portfolio of mostly US-based shares. Its top holdings are payment giants Visa and Mastercard, as well as Microsoft and Warren Buffett’s Berkshire Hathaway. It also has a sizeable cash position as of 28 August of 37.6%.

MFF is also a solid dividend payer. It has just announced a 3 cents per share fully franked final dividend, which was up from February’s 2.5 cents per share interim payout and gives the company an annualised yield of 2.25%. Further, the company has just announced that it intends to increase its biannual dividends to 5 cents per share over the next 3 years. That would equate to a 3.76% annualised yield on today’s prices.

2) WAM Global Ltd (ASX: WGB)

WAM Global is another internationally-focused LIC with a strong track record of dividend growth. This LIC also invests is US shares, as well as holdings from Europe, China and the United Kingdom. Some of its top holdings include Tencent Holdings, EA Games, Microsoft and Nomad Foods, as well as a 5.9% cash position. It’s run by the reputable Wilson Asset Management, which has developed a strong track record with its 20-year history of running LICs.

WAM Global has recently declared a fully franked final dividend of 4 cents per share, which doubled FY19’s final payout of 2 cents per share. That gives WAM Global an annualised trailing yield of 3.74% on current prices. The company has a profit reserve of 30.1 cents a share as well, so I think this dividend is well covered and sustainable. If this dividend growth continues at this rate (likely in my view due to the fat profit reserve), I expect WAM Global to be a top yielding ASX dividend growth share in just a few years.

More reading

• 2 ASX shares I would buy right now for both growth and income
• This ASX-listed company makes $5.7 million per employee
• 2 ASX shares perfect for a starter portfolio
• 2 great ASX shares I’d buy for income and growth
• 2 ASX shares I’d invest $1,000 into EVERY month

Sebastian Bowen owns shares of Magellan Flagship Fund Ltd, Mastercard, Ramsay Health Care Limited, Visa, and WAMGLOBAL FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Mastercard and Visa. The Motley Fool Australia has recommended Mastercard and Ramsay Health Care 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

According to a note out of UBS, its analysts have retained their sell rating and NZ$20.20 (A$18.45) price target on this medical device company’s shares. While the broker acknowledges that the company has a major opportunity in the home respiratory device market, it isn’t enough for a change of rating. UBS continues to believe that its shares are overvalued at the current level. The Fisher & Paykel Healthcare share price is trading at $33.54 on Tuesday.

National Storage REIT (ASX: NSR)

A note out of Goldman Sachs reveals that its analysts have retained their sell rating and lowered the price target on this self storage company’s shares to $1.54. Although National Storage delivered a full year result in line with the broker’s expectations, it isn’t overly confident on FY 2021. Goldman expects the company’s earnings to slide 3.5% this year, before rebounding 6.6% in FY 2022. In light of the tough year ahead, the broker retains its sell rating and believes there are more attractive opportunities for investors to focus on. The National Storage share price is changing hands for $1.86 this afternoon.

PointsBet Holdings Ltd (ASX: PBH)

Analysts at Credit Suisse have downgraded this sports betting company’s shares to an underperform rating with a $6.50 price target. According to the note, the broker notes that PointsBet has signed a major deal with NBC Universal in the United States. However, as the agreement has a marketing spend commitment of US$393 million over five years for PointsBet, the broker suspects it could take until FY 2025 before the company delivers operating earnings in the market. In light of this, it feels its shares are overvalued currently. The PointsBet share price is trading $13.15 on Tuesday.

More reading

• The Pointsbet share price rocketed 118% in August and our in-house pro says it’s still a long-term buy
• Buy these ASX dividend shares if the RBA cuts rates
• Why Fortescue, Openpay, Pointsbet, & Sezzle shares are dropping lower
• Is the Mirvac share price the best real estate buy right now?
• Is it too late to buy the Pointsbet share price?

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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Apple‘s (NASDAQ: AAPL) stock split is on track to be a resounding success. The tech giant’s share price has climbed roughly 30% since the company published second-quarter results and announced the 4-for-1 split at the end of July, and the recent fervor over the move has prompted speculation about which other large companies might carry out their own splits.

Perhaps no other company in the tech sector is a better candidate than Amazon (NASDAQ: AMZN). The e-commerce and cloud computing giant’s shares currently trade at roughly $3,400 a pop, and it’s been more than two decades since the company orchestrated a stock split. Here’s why Jeff Bezos and Co. could soon join the stock-splitting fray. 

What would a stock split mean for Amazon?

A stock split wouldn’t have any direct impact on the e-commerce pioneer’s market capitalisation – it would simply increase the company’s share count and reduce its stock price by a proportional amount. For example, if a 10-for-1 stock split happened tomorrow, a person holding one share of Amazon stock at $3,400 per share would find they now held 10 shares valued at $340 each.

Amazon’s market cap would hold steady at approximately $1.7 trillion if this hypothetical split took place, and Jeff Bezos (the company’s CEO and largest individual shareholder) would still be sitting pretty with a net worth of roughly $200 billion. However, the act of making shares easier to buy for smaller investors could have the effect of increasing the appeal of owning Amazon stock and ultimately boost the company’s valuation – just as it seems to have done for Apple and Tesla (NASDAQ: TSLA).

Tesla’s post-split momentum has been even more impressive than Apple’s, with the electric vehicle maker’s stock soaring roughly 60% since the company announced plans on 11 August  for a 5-for-1 split. While gains for the broader market and each company’s respective business momentum have played big roles in the stock gains, it appears the stock splits have also been catalysts.

Splits could be coming back in style

The market is going gaga for stock splits, with the recent moves from Apple and Tesla prompting soaring interest among investors and speculation about which other companies will be next to get in on the action. Just take a look at this chart tracking search interest for the term “stock split” over the last year courtesy of Alphabet-owned Google Trends.

The explosion of interest over the last month would look even starker if you adjusted the search parameters on Google Trends to track searches for the term over the last five years. While business results will still be the most important factor in a stock’s long-term performance, there are actually some good reasons for the recent hype around splits.

Lower share prices tend to make stocks more accessible. With surging activity among retail investors this year due to market volatility and the popularity of apps like Robinhood, that kind of accessibility has added appeal. It’s reasonable to think that more management teams will look at the Apple and Tesla splits and see compelling reasons to carry out their own splits. 

A stock split makes sense for The Everything Company

Amazon went public in 1997 and has conducted three stock splits in its roughly 23 years as a publicly traded company. However, these moves all occurred very early in the e-commerce pioneer’s history, with the last one orchestrated in September 1999.

The company’s split-adjusted share price has climbed roughly 173,500% since its market debut – a staggering figure made possible by dominant performance in online retail and cloud computing. While the ability to purchase fractional shares has recently become more widely available and removed obstacles to purchasing stocks with high prices, not all stockbrokers offer this option. Large share prices can also be a psychological barrier to some investors.

There’s another potential perk worth mentioning. A stock split could give Amazon the opportunity to be included in the Dow Jones Industrial Average. The DJIA is price-weighted, and Amazon’s current stock price is a barrier to inclusion because it’s so much higher than any other company included in the index. Being added could create positive catalysts for the company’s share price because the stock would be included in funds that track the index, and investors who bought those funds would also be buying Amazon stock. 

Amazon has the second-highest share price of any U.S.-based company, trailing only Berkshire Hathaway‘s Class A shares, and the timing for a split seems to be right on the heels of success for Apple and Tesla’s recent moves. How Bezos and the rest of the management team at Amazon feel about a split move remains to be seen, but there are certainly shareholders who are hoping Amazon follows Apple’s lead. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Better buy: Amazon.com vs Microsoft
• Tesla stock splits: Here’s what investors should know
• Apple’s stock split Monday. Here’s what you need to know.
• Why Alphabet should split its stock
• Apple shares will surge 20% after its stock split, according to this analyst. Is he right?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and Tesla and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Apple. 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Oil is considered as the lifeblood of industrialised nations. The precious resource is what keeps the world running. However, in recent times, the price of oil has tanked due to the severe impact of COVID-19 on world economies.

Global traffic has come to a standstill with international travel restricted, logistical supply chains disrupted and passenger movement slowed. With no near end in sight, this has affected ASX energy shares such as BHP Group Ltd (ASX: BHP), Woodside Petroleum Limited (ASX: WPL), Origin Energy Ltd (ASX: ORG), Oil Search Limited (ASX: OSH), and Senex Energy Ltd (ASX: SXY) among others.

So, let’s take a look at oil and its price movements impacting on ASX energy shares.

What are the main types of crude oil?

The type of crude oil generally depends on the geographical location of the oil field and the characteristics of the oil itself. While there are more than 160 different types of oil traded on the global market, two primary types of crude oil serve as a global benchmark for oil prices. West Texas Intermediate and Brent crude. They can be distinguished as follows:

West Texas Intermediate (WTI)

• Sourced from oil fields in the US
• Cheaper to produce than Brent Crude
• Lighter due to low density and low sulphur content

Brent crude

• Sourced from the North Sea between the Shetland Islands and Norway
• Popular to refine into diesel fuel and gasoline
• More expensive than WTI

Oil price fluctuations

Oil prices are predominately driven by three factors: current supply, future supply and demand.

Over the past few decades, oil prices have soared and plummeted amid various economic crises, natural disasters and political adventures around the globe.

From the onset of the coronavirus pandemic, the spot price for oil significantly dropped. As demand for the black gold waned, this caused a large fall on the broader ASX market. Tensions rose between OPEC nations amidst the fallout, which led to a pricing war.

The price of a barrel of WTI went in negative territory for 2 days in April. This was a first in history. These past few months however, the prices of Brent crude and WTI have somewhat recovered and can be today fetch US$46.07 and US$43.12, respectively (at the time of writing).

What does this mean for ASX energy shares?

ASX energy shares have not been spared in the oil market bloodbath. The ASX’s largest oil producer, Woodside has seen its share price fall almost 50% since its 52-week high. Oil Search has fared much worse, down 60% from its year-high in January.

Other companies such as BHP, Origin and Senex have also seen their share price tumble. However, because of their portfolio diversification in the resources sector, the energy giants have managed to largely escape the brutal sell-off.

Foolish takeaway

No one could have predicted the spot price of oil crashing below zero. Indeed COVID-19 has severely reduced oil demand around the world. However, oil is still vital in almost every industry and is used as a by-product in everyday lives.

I believe that oil demand will outstrip supply within the next 12 months, and thus ASX energy share prices will rebound to pre-pandemic levels. Now could be a good time for a patient investor to pick up these beaten down ASX energy shares.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Are ASX banks or miners buys for dividends?
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 next week

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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Traditional investment wisdom says the greater the risks you take, the higher the potential returns (and losses).

And in the share market, large and small capitalisation companies roughly equate to the lesser and greater risk investments, respectively.

Larger companies are more established players in their sector and are likely to have more reliable and steady revenue streams.

Smaller players may have more volatile revenue streams but are at a stage when their fortunes can skyrocket (or fall off a cliff).

But recent research has revealed the old risk-reward relationship might just be a myth, at least on the ASX.

Large caps beat small caps, every time

Sydney research firm Foresight Analytics has revealed that over the last 2 decades, large cap companies have outperformed smaller rivals.

And this is seen both over the short-term (last 3 years) and over the entire 20-year timeframe.

Timeframe (to 30 June 2020)	Large cap return (% pa)	Small cap return (% pa)
1 year	(5.1)	(3.71)
3 years	7.89	5.27
5 years	8.43	6.55
10 years	8.88	5.09
20 years	8.74	6.37
Source: Foresight Analytics, table created by author

Foresight Analytics managing director Jay Kumar told The Motley Fool that in Australia a few very large companies hog most of the investor capital.

“If you look at the weighting structure… it’s heavily concentrated in the top 10, top 15 names. And also heavily concentrated in two sectors — financials and resources.”

This means the smaller players are starved of available capital. And less demand means lower returns for the small caps.

Another theory is that compulsory superannuation in Australia contributes towards more conservative investment in the local stock market.

Large caps recover better after market crashes

Another surprise against conventional wisdom is that large cap companies recover their share price faster after a market crisis.

According to Kumar, investors look for companies with very specific attributes after a traumatic event.

“After a stress in the market, generally investors tend to favour liquid and large companies,” he said.

“Over the four stress periods we analysed, small companies have significantly underperformed compared to large caps, including in the first 30 to 40 days after a crisis.”

High quality companies always outperform, as opposed to picking out mediocre companies that might be priced attractively.

“Exposure to quality companies provides a good hedge against market distress,” Kumar said.

More reading

• What do you do after record share price gains?
• Here’s why the Telstra share price fell 15% in August
• Why the Fortescue share price went backward in August
• These ASX stocks at earnings risks as the Aussie is forecast to hit US80 cents
• ASX 200 down 1.7%: Afterpay sinks on PayPal news, QBE sacks its CEO, bank shares lower

Motley Fool contributor Tony Yoo 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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Do you remember what you were doing 34 years ago?

I know that’s a long time to think back. That is if you were even born then.

For me, though, August 1986 was a particularly memorable period. The end of the month saw me start my first year at the University of Michigan. It was an exciting time that ushered in new friends, new knowledge, and eventually new career paths.

Clearly there was a lot going on in my life that month. And as a 17-year-old uni student, I didn’t have an extra dollar to my name to even contemplate investing in the share market. So I would have had no clue that the S&P 500 Index (INDEXSP: .INX) had just posted a stellar month of share price gains.

1986, in fact, was such a good August for the top 500 listed US shares that it took 34 years for another August to roll around which beat the S&P 500’s performance that year.

Yes, I’m talking about last month, which saw the index gain 7.0%.

And it’s not just tech sharess handing investors big share price gains. Indeed, the best performer on the S&P 500 in August was Royal Caribbean Cruises Ltd (NYSE: RCL), whose share price soared more than 41% for the month. Though even after that tremendous rally, Royal Caribbean’s much-battered share price is still down almost 49% in 2020.

But you should still own tech shares

With that said, technology shares are still leading the charge in the blistering share market rebounds, both in the US and here in Australia.

The tech-heavy NASDAQ-100 Index (NASDAQ: NDX), for example, gained 11% in August. And it’s up almost 73% from the March 23 low.

One of the better gauges for tech share price performance in Australia is the S&P ASX All Technology Index (ASX: XTX). The index tracks 50 of Australia’s leading and emerging technology companies.

If you’re not familiar with it, it only launched recently, on February 24.

No surprise then that the basket of 50 shares tanked over the following month. But in testament to the strength of the nascent Aussie tech sector, the All Technology index is up a whopping 107% from its March 23 low. And it gained 13% in August, compared to the 2.2% gain posted by the S&P/ASX 200 Index (ASX: XJO).

But these strong gains don’t mean shares in general, and ASX tech shares in particular, can’t run much higher.

Gareth James, an equity research strategist at Morningstar, points to low interest rates, which are likely to remain low for quite some time, as driving the momentum behind the tech share rally.

James says (as quoted by the Australian Financial Review):

Tech stocks have strong economic moats and won’t be impacted by the downturn and some could even have an uptick in earnings outlook, but this isn’t really about the earnings, it’s about the multiples. Momentum is a strong, established phenomenon in stock markets and when a stock gets moving investors keep them moving in the same direction for a while.

What do you do after huge share price gains?

One of the biggest questions keeping investors up at night isn’t whether to sell shares that have lost them money. It’s whether to sell shares that have reaped huge gains.

Take e-commerce company Kogan.com Ltd (ASX: KGN). Kogan’s share price leapt almost 25% in August. Year-to-date the share price is up 178%. Enough to turn a $10,000 investment in $27,800.

If you’d invested at the beginning of the year, do you take some profits? Maybe sell half just in case the share price pulls back from here?

Not according to the Motley Fool’s own Andrew Legget, an analyst with Scott Phillip’s investment service, Share Advisor. And Scott and Andrew were atop Kogan’s potential fully 3 years ago.

Here’s an excerpt from Andrew’s update to Share Advisor members:

We first recommended this company (Kogan) in September 2017 at a price of $3.60. It was undoubtedly a long-term investment thesis focussed on the trend towards e-commerce. Six months later in March 2018 the price was just under $10 – a phenomenal return. If you got out here you would be up 172%. We continued to recommend members invest at this price. However, I’d be willing to bet that some looked at this price as an opportunity to get out. If they did sell, they soon probably would have felt justified as in November of that year, following a series of partial sell downs by the founder Ruslan Kogan, the share price was sitting as low as $2.65.

But Scott and Andrew didn’t recommend selling Kogan shares. In fact, they’ve never downgraded Kogan since they first recommended it.

And at Kogan’s current price of $20.93 per share, members who followed their advice will have nothing to complain about. Unless they’re unhappy with a gain of 457%!

The lesson, Andrew writes:

[W]e never got carried away at its previous highs nor did we panic when the price soon collapsed. We simply asked ourselves a simple question; has there been anything that has changed our view on the future prospects of this business? The answer we came to was “no”, so we did the only thing that made sense… nothing. Then we let time do its thing.

On a day where many ASX share prices are heading lower, we’ll leave you with that. Don’t get carried away when share prices go up and don’t panic when they go down.

Let time do its thing.

More reading

• Revealed: Risk-reward myth shattered
• Here’s why the Telstra share price fell 15% in August
• Why the Fortescue share price went backward in August
• These ASX stocks at earnings risks as the Aussie is forecast to hit US80 cents
• ASX 200 down 1.7%: Afterpay sinks on PayPal news, QBE sacks its CEO, bank shares lower

Bernd Struben 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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The Pointsbet Holdings Ltd (ASX: PBH) share price is up an eye-popping 170% since 2 January. And it owes much of that surge to last month. In August alone, the Pointsbet share price rocketed 118%.

The online bookmaker wasn’t immune to the wider stock market ravages during the early COVID-19 lockdowns. Far from it. Pointsbet’s share price crashed 80% from 13 February through to 23 March. Since that low, the share price is up an astounding 995%.

These are the kinds of gains normally reserved for long shot gambles. But it was enough to see Pointsbet’s share price gain 170% year to date.

By comparison the S&P/ASX 200 Index (ASX: XJO) is down 11% in 2020.

What does Pointsbet do?

Pointsbet is an Australian online bookmaker. The company provides gamblers with traditional fixed odds markets in sports and racing, as well as spread betting. Pointsbet advertises that it offers more markets on NBA, AFL and NRL than any other bookmaker in the world.

Pointsbet shares began trading on the ASX in June 2019.

Why the Pointsbet share price is soaring and could keep running higher

While the Pointsbet share price was already performing well in late August — up 53% year to date on 27 August — it really took off the following day.

That came on the back of its full-year 2020 financial results and its announcement of a potentially highly lucrative deal with United States network NBC, which is owned by cable giant Comcast.

On the financial end, Pointsbet posted a 194% increase in total revenue. Turnover was also up 103% from the previous year, with a 191% increase in its net win results. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $6.9 million. And this was with numerous major sporting events being postponed or cancelled over the past 6 months.

As for the deal with NBC, Pointsbet agreed to spend some half a billion dollars in marketing with the network over the coming 5 years. In return, it gains access to NBC’s 184 million viewers, reaching 81% of the US sports betting market.

This may be a gamble, but the Motley Fool’s own Anirban Mahanti is maintaining his buy rating on the Pointsbet share price.

Anirban recommended Pointsbet in his investment service, Extreme Opportunities, back in October 2019. Members who followed his advice are today sitting on gains of 367%.

Here’s what he wrote to his readers following Friday’s share price surge:

While we are excited about this deal and its capacity to turbocharge Pointsbet’s growth ambitions, we are also cautious because the future outcomes are by no means certain.

Today’s ~$6.80 increase in the PointsBet share price is a one day ~242% increase on our cost basis of $2.80 for Pointsbet. No doubt this doesn’t happen every day. There will be tough days ahead too and as ever, it is the long term that counts.

Indeed, it is the long term that counts.

As for the short term, Pointsbet’s share price is up 0.8% in afternoon trading.

More reading

• Why Fortescue, Openpay, Pointsbet, & Sezzle shares are dropping lower
• Is it too late to buy the Pointsbet share price?
• How to invest in ASX shares in uncertain times?
• ASX 200 drops 0.9%, Costa reveals healthy result
• ASX Stock of the Day: Pointsbet share price surges 77% on NBC deal

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings 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.

The post The Pointsbet share price rocketed 118% in August and our in-house pro says it’s still a long-term buy appeared first on Motley Fool Australia.

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The Telstra Corporation Ltd (ASX: TLS) share price fell 15% in August, dropping from $3.40 at the start of the month to yesterday’s closing price of $2.89.

It hasn’t been a great year for Telstra in 2020 so far either. Telstra shares are down around 20%, year to date, which isn’t a great look when the S&P/ASX 200 Index (ASX: XJO) is only down around 9.4% over the same period. So what’s going on with the ASX’s largest telco?

Telstra’s not so good, very bad month

Telstra’s disappointing month can be put down to just one thing: its earnings report for the 2020 financial year (FY20). In this report, Telstra hit its guidance and reported the continuation of the 16 cents per share dividend that the company has been paying for a few years now. But investors weren’t too stoked on the company reporting a 9.7% fall in earnings and a 14.4% drop in net profits.

Even though Telstra will be paying out 16 cents per share in dividends for FY20, I think investors are getting the wobbles about the sustainability of this payout. Telstra currently has a ‘payout ratio’ policy of paying out between 70–90% of its earnings as dividends. On Telstra’s current guidance, it will be unable to continue to pay 16 cents per share in dividends in FY21 under this framework. Thus, it’s my opinion that investors are starting to panic and are pricing in a Telstra dividend cut for FY21.

Is the Telstra share price a buy at these levels?

I think this substantial August dip is a good buying opportunity for Telstra shares. Yes, its earnings are continuing to be battered by the NBN rollout and a sluggish economy. But I happen to think Telstra’s 16 cents per share dividend is safe for FY21.

My Fool colleague James Mickleboro pointed out last month that if Telstra moved to a free cash flow model for its dividend payments, its 16 cents per share payout could be sustained going forward, a view shared by both investment bank Goldman Sachs and myself. What’s more, I think Telstra’s heavy investment in its 5G rollout will pay dividends in the future (literally).

5G is the next generation of mobile network technology and could unlock some significant future earnings streams if Telstra can capture the lion’s share of a 5G market (which is likely, in my view). Yes, Telstra is facing some challenges. But at the end of the day, I think it’s a reliable dividend payer with a defensive earnings base and some future 5G growth potential. I’d be happy to pay under $3 for Telstra shares today as a result.

More reading

• Revealed: Risk-reward myth shattered
• What do you do after record share price gains?
• Zip and Brainchip were among the most traded shares on the ASX last week
• Why the Fortescue share price went backward in August
• These ASX stocks at earnings risks as the Aussie is forecast to hit US80 cents

Motley Fool contributor Sebastian Bowen owns shares of 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.

The post Here’s why the Telstra share price fell 15% in August appeared first on Motley Fool Australia.

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Australia’s leading investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

Once again, there were a number of familiar names in the list this week, which were joined by a surprise addition.

Here’s the data:

Zip Co Ltd (ASX: Z1P)

This buy now pay later provider was incredibly popular with ASX investors last week. Zip shares accounted for a staggering 9.9% of total trades made on the CommSec platform, with approximately two-thirds of these trades coming from buyers. Investor were buying the company’s shares following a series of positive announcements. These include a big improvement in the performance of its QuadPay business, a partnership with eBay, and the release of its full year results. These buyers certainly did well. The Zip share price hurtled 35% higher over the period.

Afterpay Ltd (ASX: APT)

Afterpay shares were popular with investors once again last week. The payments company’s shares accounted for 2.7% of trades on the CommSec platform. And like rival Zip, the majority of these trades came from buyers. Approximately 68% of trades were from the buy side, which helped drive the Afterpay share price 12% higher over the period. The announcement of its European expansion was the key catalyst for this gain.

Brainchip Holdings Ltd (ASX: BRN)

The surprise entry to this week’s list is Brainchip. The provider of ultra-low power high performance artificial intelligence technology accounted for 1.6% of trades on the platform last week. This was driven predominantly by buyers, who contributed 72% of these trades. Over the week the Brainchip share price added almost 17%, bringing its year to date gain to a massive 580%. Excitement around its Akida technology is behind this strong form.

Telstra Corporation Ltd (ASX: TLS)

This telco giant accounted for 1.5% of trades on the CommSec platform last week. With 85% of these trades coming from buyers, it appears as though investors believe recent share price weakness is a buying opportunity. However, despite the support from the buy side, it wasn’t enough to stop the Telstra share price from falling 5% over the period.

Openpay Group Ltd (ASX: OPY)

This junior buy now pay later provider is back in the top five. Last week Openpay shares accounted for 1.4% of trades on the CommSec platform. This appears to have been driven by increased investor interest in the industry and optimism ahead of its results release on Monday. And although the buying and selling was relatively even, this didn’t stop the Openpay share price rising 25%.

More reading

• These ASX stocks at earnings risks as the Aussie is forecast to hit US80 cents
• ASX 200 down 1.7%: Afterpay sinks on PayPal news, QBE sacks its CEO, bank shares lower
• Why Afterpay, Flight Centre, Helloworld, & QBE shares are tumbling lower
• Zip share price drops lower despite completing QuadPay acquisition
• Afterpay and Zip shares sink lower after PayPal announces Pay in 4 BNPL product

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Zip and Brainchip were among the most traded shares on the ASX last week appeared first on Motley Fool Australia.

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