Tag: Motley Fool

Later today the Reserve Bank will meet to discuss the cash rate.

According to the latest cash rate futures, the market is pricing in a 56% probability of a rate cut to zero.

While I’m not convinced there will be a rate cut today, that doesn’t necessarily mean I’m expecting a rate hike any time soon.

In fact, I think it could even be several years until the central bank lifts rates again. In light of this, I believe income investors should focus on ASX dividend shares for a source of income.

But which ones should you buy? I think these two dividend shares would be top options:

Dicker Data Ltd (ASX: DDR)

Dicker Data is a leading wholesale distributor of computer hardware and software in the ANZ region. It has been a very positive performer in FY 2020 and recently released a strong half year result. During the six months, Dicker Data reported an 18.1% increase in revenue to $1,006.1 million and a 23.6% lift in net profit after tax to $29.4 million.

Pleasingly, management expects demand to remain strong in the second half, which I expect to support a generous final dividend. Based on the current Dicker Data share price, I estimate that it offers a fully franked forward 4.75% dividend yield. The good news is that I don’t expect its growth to stop there. Looking further ahead, the construction of its new distribution centre is expected to expand operations and boost revenue growth once complete.

National Storage REIT (ASX: NSR)

Another dividend option to consider is this self storage operator. I’m a big fan of National Storage due to its strong market position and growth through acquisition strategy. This strategy helped the company overcome the negative impact of the pandemic and report a 9% increase in underlying earnings to $67.7 million in FY 2020.

Although management is expecting its earnings to be flat at best in FY 2021, I still expect it to provide investors with a generous yield. The company is forecasting earnings of 7.7 cents to 8.3 cents per share this year and a dividend pay out ratio of 90% to 100%. Based on the current National Storage share price, the middle of this range implies a 4.2% distribution yield.

More reading

• This ASX-listed company makes $5.7 million per employee
• Is the Mirvac share price the best real estate buy right now?
• Will the RBA keep the cash rate on hold for 3 more years?
• Dicker Data share price surges following interim results
• Reinvest your Coles dividends in these top ASX 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 Dicker Data 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 Buy these ASX dividend shares if the RBA cuts rates appeared first on Motley Fool Australia.

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We asked our Foolish writers to pick their favourite ASX stocks to buy in September. 

Here is what the team have come up with…

Daniel Ewing: Adairs Ltd (ASX: ADH)

Adairs is my pick for the month of September – it has been a massive beneficiary of the shift to online retail and this is reflected in the strength of its share price in 2020. In picking this over competing retailers such as Nick Scali Limited (ASX: NCK), I’d cite the fact that it actually makes more money despite earning less revenue. Furthermore, while it has physical stores, for a lot of these stores Adairs has the option to walk away from the leases at any point if the coronavirus pandemic worsens. On top of this, it offers an attractive 3.16% yield.

Motley Fool contributor Daniel Ewing owns shares of Adairs Ltd.

Chris Chitty: Treasury Wine Estates Ltd (ASX: TWE)

In my opinion, Treasury Wine Estates is oversold. At the time of writing, its share price is up less than 18% from its 52-week low reached during widespread panic selling in March. The ASX 200 index has recovered more than 23% over the same period.

This underperformance has come since China announced that it would investigate Australian wine imports. However, all of Asia, including China, only made up a quarter of Treasury Wine’s consolidated net sales revenue in the 2020 financial year. Treasury Wine has sales in over 70 countries and in my opinion, it can achieve sales growth outside China. I think it will outperform over the long-term.

Motley Fool contributor Chris Chitty does not own shares in Treasury Wine Estates Ltd.

Lloyd Prout: Bigtincan Holdings Ltd (ASX: BTH)

In my view, Bigtincan is a great long-term buy-and-hold share for growth investors. Bigtincan develops software to increase efficiency and automate sales and marketing functions for enterprise clients.

The company reported a great set of FY20 results recently, with revenue growth of 56% to $31 million. This includes organic growth of 38%, which was at the top end of guidance range. The company had $71.9 million in cash and equivalents as at 30 June.

With a market capitalisation of $300 million–400 million, the share price will be volatile. But in my opinion, over the long-term as digitisation increases, the business and share price should thrive.

Motley Fool contributor Lloyd Prout owns shares in Bigtincan Ltd and expresses his own opinions.

Brendon Lau: Worley Ltd (ASX: WOR)

The contract engineering group posted a solid FY20 result that showed its controversial acquisition of ECR last year is paying off. The stock is looking cheap as it significantly underperformed the market. In my view, the big jump in revenue and earnings, together with a strong order book and an increase in synergies from ECR, will help trigger a re-rating in the stock.

Motley Fool contributor Brendon Lau owns shares of Worley Ltd.

Bernd Struben: Sydney Airport Holdings Pty Ltd (ASX: SYD)

Sydney Airport has seen much of its business evaporate in the face of COVID-19. While the share price has gained 19% from its March lows, it’s still down 39% since 6 December 2019. And while the company has historically been a reliable dividend payer, it did not pay a dividend on 30 June.

But people need air travel. Especially in Australia. And when they can do so again, I believe they will do so in droves. If you have a longer-term investment horizon (2 plus years), I believe Sydney Airport will exceed its December 2019 highs and recommence with regular dividends.

Motley Fool contributor Bernd Struben does not own shares in Sydney Airport Holdings Pty Ltd.

James Mickleboro: Appen Ltd (ASX: APX)

At the end of August, the Appen share price fell heavily after the release of its half year results. Although it delivered a 25% increase in revenue to $306.2 million and a 20% lift in statutory net profit after tax, investors appear to have been expecting an even stronger result from the artificial intelligence services company.

I think this share price weakness has created a buying opportunity for investors in September. Particularly given its very positive long-term growth outlook, thanks to the growing importance of machine learning and artificial intelligence and its leadership position in the market.

Motley Fool contributor James Mickleboro does not own shares in Appen Ltd.  

Glenn Leese: JB Hi-Fi Limited (ASX: JBH)

JB Hi-Fi is a leader in the consumer electronics space. The popular brand is a regular stop for shoppers, which is no surprise considering its sales, iconic branding and huge range of products. JB Hi-Fi operates through 3 subsidiaries, JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys (acquired in 2017).

The share price has rewarded investors with a massive 150% growth over the last 6 months, with no signs of slowing down. An increase in working from home, online retail sales and demand for entertainment products have created the perfect storm for the consumer electronics company.

Motley Fool Contributor Glenn Leese does not own shares in JB Hi-Fi Limited.

Matthew Donald: NextDC Ltd (ASX: NXT)

NextDC delivered a solid FY20 result with revenue and earnings growth. It’s my top September stock pick because I believe it can continue increasing its number of customers, contract utilisation and interconnections.

It continues to develop data centres around Australia, driven by surging demand. Additionally, the growth of e-commerce should drive the NextDC share price higher now and into the future.

As testament to its growth story, it recently became a member of the S&P/ASX 100 Index (ASX: XTO) for the first time. I expect NextDC’s FY21 revenue and earnings to keep growing.

Motley Fool contributor Matthew Donald does not own shares in NextDC Ltd.

Phil Harpur: Megaport Ltd (ASX: MP1)

Megaport is an ASX tech share that provides a ‘network as a service’ offering. This enables enterprises to increase or decrease their fixed broadband bandwidth requirement according to their individual needs.

Megaport recently reported total revenues of $58.0 million for FY 2020. That was a very impressive 66% over the prior year. Monthly recurring revenue also grew very strongly, increasing by 57% on a year-on-year annualised basis. I believe that Megaport is well placed to continue to expand over the next 5 years, driven by the rising demand for cloud computing and the need for rapid network connectivity.

Motley Fool contributor Phil Harpur owns shares of Megaport Ltd.

Sebastian Bowen: Coles Group Ltd (ASX: COL)

Of all the dividend shares reporting their earnings last month, Coles was one of the most impressive in my view. As rival Woolworths Group Ltd (ASX: WOW) (along with many other dividend shares) delivered a dividend cut, Coles instead went the other way and increased its final dividend by 14.6%. As such, I think Coles is a great buy this September as a reliable ASX share for an uncertain world.

The Coles share price has also recently pulled back from all-time highs, so I think there is a strong buying case if this profile appeals to your investing temperament or goals going forward. 

Motley Fool contributor Sebastian Bowen owns none of the shares mentioned.

Ken Hall: Xero Limited (ASX: XRO)

Aussie tech shares impressed during the August earnings season with Afterpay Ltd (ASX: APT) and others rocketing higher. However, I have my eye on another member of the ‘WAAAX’ group: Xero. Xero reports its earnings off-cycle so the accounting software provider’s shares quietly crept higher in August.

Strong customer retention and acquisition are what I like. Yes, Xero shares trade at an exceptionally high price-to-earnings (P/E) ratio. However, I think the potential growth and addressable market on offer make that worth a look in September. I would hate to miss out on potential growth before its next earnings announcement.

Motley Fool contributor Ken Hall does not own shares in Xero Limited.

Nikhil Gangaram: 5G Networks Ltd (ASX: 5GN)

My pick for September is 5G Networks. The telecommunications company recently released a very promising financial report for FY20. For the full-year, 5G Networks reported that the company had doubled earnings before interest, taxes, depreciation and amortisation (EBITDA), whilst also highlighting a 700% increase in operating cash flow.

In my opinion, the company has genuine short and long-term revenue drivers. With the COVID-19 pandemic driving people to work from home, the cloud-based services offered by 5G Networks should see heightened demand. From a technical perspective, the 5G Networks share price is trading near all-time highs and is poised to rise further, in my view.

Motley Fool contributor Nikhil Gangaram does not own shares in 5G Networks Ltd.   

Daryl Mather: Jumbo Interactive Ltd (ASX: JIN)

Jumbo Interactive sells lottery tickets on license from Tabcorp Holdings Limited (ASX: TAH). Coronavirus lockdowns pushed more sales online, which resulted in the company increasing its active players by 9% and its FY20 EBITDA by 7.6% – even with 10 fewer major jackpots.

During the lockdown, the company re-signed its agreement with Tabcorp up to 2030, removing one of the larger risks for investors. The company has also signed 4 agreements with charities through FY20. This allows charities to use the platform to sell lottery tickets also.

I think Jumbo Interactive is under valued and well positioned for growth. 

Motley Fool contributor Daryl Mather does not own shares in Jumbo Interactive Ltd.

More reading

• These market veterans believe a share market pullback is coming. Here’s their surprising advice…
• Beat low interest rates with Coles and this ASX dividend share
• 2 ASX dividend shares with yields over 10%
• Where to invest $20,000 into ASX shares immediately
• Leading brokers name 3 ASX shares to buy today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO and BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Appen Ltd and COLESGROUP DEF SET. The Motley Fool Australia has recommended Jumbo Interactive Limited and MEGAPORT 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 Top ASX Stock Picks for September 2020 appeared first on Motley Fool Australia.

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Have you given any thought to what you’re going to do the next time the share market falls?

I’m not necessarily talking about the 37% plunge the All Ordinaries Index (ASX: XAO) suffered in February and March during the COVID-19 panic selling.

But US share markets are now back at or near record highs. And the All Ords has soared 37% from its 23 March lows, bringing it to less than 14% off its all-time highs. With that kind of historic share price growth in mind, it’s well worth considering your plan for any potential share price retracement.

And panic selling shouldn’t be on the agenda.

Let’s see what the smart money has to say.

What the experts are saying about share prices in 2020

Here are 4 market experts’ opinions, as quoted by Bloomberg:

Randy Frederick is the vice president of trading and derivatives at Charles Schwab & Co. He said, “I can’t see what’s going to change people’s perspective on why we should stop buying. If we continue to buy and we have a few more pullbacks, which I think is likely, people will just continue to jump in and buy those dips.”

Brian Belski is the chief investment strategist at BMO Capital Markets. In a note he wrote, “US stocks have exhibited an epic price recovery that not only is unprecedented but tests most major academic and common-sense assumptions.” On Friday he restored his forecast of approximately 4% further gains for the S&P 500 by year’s end.

Shawn Snyder is the head of investment strategy at Citi Personal Wealth Management. He said, “When investors believe that (the Fed will intervene), it gives them excess confidence and they’re willing to take on more risk and buy stocks even though valuations are high. There are several bears that have thrown in the towel.”

Victoria Fernandez is the chief market strategist for Crossmark Global Investments. Bloomberg notes that she wouldn’t be surprised to see a share market pullback sometime in 2020, but citing low interest rates she still expects the market to trend higher. “You’ve got these really low rates. That’s going to help drive the market.”

Foolish takeaway

Consensus opinion, and I’ll throw my hat in that ring, foresees some pullbacks ahead. But the same voices also see share markets trending higher, at least for the rest of the year.

That means you may want to consider any pullbacks as buying opportunities. And keep some powder dry — aka cash on hand — to take advantage of those bargains when they come along.

That doesn’t mean investing in any old shares that are losing value. What it means is looking for shares that are down during market pullbacks, which have good opportunities for strong share price rebounds.

I’ll leave you with 2 widely different examples.

First, blue-chip share Sydney Airport Holdings Pty Ltd (ASX: SYD).

Sydney Airport’s share price fell 48% from the implosion in air travel caused by the coronavirus. The Sydney Airport share price is up 25% from its March lows, but still down 32% year-to-date. If your investing horizon spans at least 2 years, Sydney Airport shares could well look like a bargain at today’s prices once people begin flying again (which they will).

If Sydney Airport’s share price falls during a wider market pullback, it could prove a great buying opportunity, in my view.

Second, growth stock Afterpay Ltd (ASX: APT).

Afterpay’s share price also got hammered by the virus, losing 78% from mid-February through March. But thanks to a 927% share price surge (yes, you read that correctly) from its 23 March lows, Afterpay has delivered its shareholders a gain of 199% so far in 2020.

If the Afterpay share price takes another tumble during any market retracement, this is one dip you may want to buy into.

More reading

• If you invested $10,000 in Kogan shares 5 months ago, here’s how much you’d have today
• 2 Warren Buffett quotes you need to read this week
• This ASX-listed company makes $5.7 million per employee
• The Afterpay share price nears $100: buy, sell or hold 
• Why shares go low Mondays and high on Fridays

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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 These market veterans believe a share market pullback is coming. Here’s their surprising advice… appeared first on Motley Fool Australia.

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The S&P/ASX 200 Index (ASX: XJO) dropped by 0.22% today to 6,060 points.

Here are some of the highlights from the ASX today:

Scentre Group (ASX: SCG) and Mosaic Brands Ltd (ASX: MOZ)

The Scentre share price went up by 5.4% today and the Mosaic Brands share price grew by 17.7%.

Mosaic announced that after successful negotiations with Scentre, all non-Victorian stores in Westfield shopping centres have now reopened.

But the commercial terms of the agreement remain confidential. Victorian stores remain closed because of stage 3 and stage 4 restrictions.

Mosaic will continue to negotiate with landlords nationally to achieve “commercially sound lease terms consistent with the fundamental shift the Group sees in the retail rental market”.

The retail company will seek to minimise future store closures, but it still anticipates closing 300 to 500 stores over the next 12 months to two years.

Mosaic chair Richard Facioni said: “We’re pleased to have reopened our Westfield stores over the weekend following a mutually agreeable outcome to our negotiations with Scentre Group.

“We have had a long-standing relationship with Westfield enabling us to reach a solution that worked for both parties. This is a good outcome for Mosaic and, in particular, the 400 affected team members. As we noted last week, shuttered stores work for no one.”

IOOF Holdings Limited (ASX: IFL)

IOOF announced its FY20 result and a large acquisition today.

Underlying net profit after tax (UNPAT) was down 34.9% to $128.8 million. UNPAT from continuing operations fell 32.3% to $124 million.

Statutory net profit after tax rose 414.6% to $147 million. Total funds under management, administration and advice (FUMA) grew 46% to $202.3 billion.

The diversified ASX 200 financial business declared a final dividend of 11.5 cents per share.

IOOF also announced that it’s going to acquire MLC from National Australia Bank Ltd (ASX: NAB) for $1.44 billion. The acquisition is expected to deliver more than 20% of earnings per share (EPS) accretion on an FY21 pro forma basis including $150 million of targeted pre-tax synergies, excluding transaction and integration costs.

The acquisition price of $1.44 billion represents 7.4 times pro forma UNPAT including the targeted synergies, though it’s 16.2 times pro forma UNPAT excluding synergies.

If the acquisition goes ahead IOOF will be the number one retail wealth manager by FUMA with $510 billion and the number one advice business by the number of advisers with 1,884 advisers.

IOOF CEO Renato Mota said: “The opportunity to acquire a highly complementary business of the quality and size of MLC is compelling. MLC is a natural fit with IOOF and presents a unique opportunity to create value from synergies for the benefit of clients, members and shareholders. This is a once in a generation opportunity to create the leading wealth manager of the future.”

AGL Energy Ltd (ASX: AGL)

ASX 200 business AGL has announced it has entered into a binding agreement to acquire Click Energy from Amaysim Australia Ltd (ASX: AYS). The acquisition price is $115 million.

The acquisition includes 215,000 energy service customers and increases AGL’s total services provided to 4.2 million services. It’s aiming for 4.5 million customer services by 2024.

AGL said that its cost to serve is below that of Click Energy’s and that means AGL believes it can help Click Energy’s lower its cost base. Around 97% of Click Energy customers already use online billing, so AGL believes it can improve their service after its investments in its digital customer service.

AGL expects the acquisition to be “modestly accretive” to AGL’s underlying earnings. The acquisition will be financed from AGL’s existing debt facilities.

There will be approximately $40 million of transaction and integration costs. The ASX 200 company will recognise this as a significant item in FY21.

More reading

• The Mosaic Brands share price surges 21% on lease deal
• Amaysim share price down following FY20 results and divestment announcement
• Top fund manager says ASX share mania is at a turning point
• This ASX-listed company makes $5.7 million per employee
• ASX 200 edges higher: Fortescue sinks, NAB sells MLC Wealth, Costa jumps

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday the Reserve Bank is widely expected to keep the cash rate on hold at 0.25% once again. This is then predicted to be the same outcome for many meetings to come.

In light of this, it looks likely that low interest rates will be here for a few more years.

How can you beat them? The two ASX dividend shares listed below could be great ways to generate superior yields. Here’s why:

Coles Group Ltd (ASX: COL)

The first ASX dividend share to consider buying to beat low interest rates is Coles. I think the supermarket giant is perfectly positioned for long term growth thanks to its strong market position, defensive business, and expansion opportunities.

Another positive is the company’s focus on cost cutting and automation with its Refreshed Strategy. This should support its margins and ultimately its earnings and dividend growth over the coming years. For now, based on the current Coles share price, I estimate that it offers investors a fully franked ~3.2% FY 2021 dividend.

Rural Funds Group (ASX: RFF)

Another ASX dividend share I would buy is this agriculture-focused property group. It owns 61 properties across five agricultural sectors including almonds, cattle, cropping, vineyards, and macadamias. I’m a big fan of the company due to its defensive qualities and its long leases. At the end of FY 2020, the company’s weighted average lease expiry (WALE) was 10.9 years. It also has a high weighting towards blue chip tenancies, with 78% of revenue coming from corporate or listed tenants such as Treasury Wine Estates Ltd (ASX: TWE).

This allowed Rural Funds to continue its growth during the pandemic, with the company reporting an 8% increase in property revenue to $72 million. Looking ahead, management reaffirmed its plan to grow its distribution by 4% in FY 2021 and intends to pay shareholders 11.28 cents per share. Based on the current Rural Funds share price, this works out to be a 5% yield.

More reading

• Are ASX banks or miners buys for dividends?
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality
• Will the RBA keep the cash rate on hold for 3 more years?
• ASX reporting season heroes to buy for FY21
• 3 quality ASX shares to add to your retirement portfolio

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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How much would you have today if you had invested $10,000 in the Kogan.com Ltd (ASX: KGN) share price 5 months ago?

Kogan has been one of the most dramatic ‘rags-to-riches’ ASX shares to have held over the past 5 months. Like other hot growth stocks such as Afterpay Ltd (ASX: APT), Kogan shares have significantly whipsawed in value over the course of 2020 so far. It was hard hit during the March crash, but investors quickly re-rated Kogan when it became clear how much the coronavirus pandemic was benefitting the business.

What does Kogan do?

Kogan is an e-commerce company that is quickly emerging as the ASX’s answer to the famous Amazon.com, Inc – the undisputed behemoth of global online retailing. Kogan started life way back in 2006 and has always adopted an ‘online only’ model. It started out by selling electronics and TVs, but has expanded over the past 15 years into everything from insurance and groceries to furniture and superannuation. It sells a wide range of branded products as well as its own ‘home-brand’ range.

How has the Kogan share price performed in 2020?

Now to the part you’ve all been waiting for. So, Kogan shares have had a volatile 2020 so far. They started the year trading for $7.47 but crashed spectacularly in the market crash that the pandemic brought on in March. Kogan reached a low of $3.45 on 16 March. If an investor had invested $10,000 in Kogan shares on that date at that price (unlikely, but possible), they would have picked up 2,898 shares with some change left over. Fast forward to today and Kogan shares are trading for $20.80 at the time of writing. That would give those 2,898 shares a value of $60,278.40 today, a 500% gain. That’s some return! If that hypothetically lucky investor had sold those shares when Kogan set a new all-time high of $22.99 earlier this month, they would have banked a $66,625 windfall.

Eat your heart out.

Are Kogan shares still a buy today?

So, is the Kogan share price still a good buy post-$20? Well, I don’t think so, not if you’re after another 500% gain over the next 5 months anyway. But I still think Kogan is a great company which might be worthy of an investment today if you’re a long-term investor. Kogan was certainly the beneficiary of the March/April lockdowns which forced people to turn to inline shopping like never before. The company did post sales growth of around 40% in FY2020, which I don’t think will be topped in FY21. Even so, Kogan is a company growing its market share in the growing trend of online shopping. That’s a pretty good spot to be.

Kogan is a volatile share, so I’m not too keen on buying it this close to its all-time high. I’d love to own some, but I’ll be waiting for a pullback sometime in the future. Fingers crossed.

More reading

• These market veterans believe a share market pullback is coming. Here’s their surprising advice…
• 2 Warren Buffett quotes you need to read this week
• The Afterpay share price nears $100: buy, sell or hold 
• Why shares go low Mondays and high on Fridays
• Polynovo and 2 more ASX 200 shares to watch this week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon and Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Finding an ASX dividend share with a yield of 10% per annum is not an easy task. Finding one that can sustainably pay such a yield is harder still.

The market doesn’t often price a company’s shares at a level that offers a 10% yield, so a lot of research and analysis is necessary when dealing with such an offer. And that’s exactly what we’ll be doing today with 2 ASX shares that I’ve found that do indeed offer yields of 10% or more per annum. So let’s see if we’d swipe left or right on these shares today.

2 high-yielding ASX dividend shares

1) Fortescue Metals Group Limited (ASX: FMG)

Fortescue is an iron ore miner that has grown into one of the biggest on the ASX today. Its shares have been on a tear recently, up more than 61% in 2020 alone. This can be mostly explained by the price of iron ore, which has exploded this year and remains around the historically-high US$120 per tonne level. Since it only costs Fortescue between US$12–13 to extract 1 tonne of ore, it’s a good time to be a shareholder of this company.

But let’s talk dividends, the reason why we’re here. In its earnings report for the 2020 financial year, Fortescue declared a final dividend of $1 per share. That brings the total amount of dividends paid in FY20 to a full franked $1.76 per share, which represents a trailing dividend yield of 10.09% on current prices (or 14.41% grossed-up).

Such a stupendous yield is hardly believable, but Fortescue shares did trade ex-dividend for the final payout this morning, so make sure you add that pinch of salt. Even so, this is a monster income stock to be sure. Now, iron ore is a notoriously cyclical commodity, so its fairly certain that the company will not be paying $1.76 in dividends every year ad infinitum.

Conversely, this company has such a low cost base that it should be able to fund a hefty payout even if iron ore prices fall in the future. But as long as they stay near US$120, I expect the big dividends to continue from Fortescue.

2) WAM Capital Ltd (ASX: WAM)

Our second 10% dividend share is this listed investment company (LIC). WAM Capital has been around since 1999 and has made a name for itself as a strong dividend payer. It invests in a portfolio of ASX shares that it thinks have strong growth prospects. Some of its top holdings (as of 31 July) include the A2 Milk Company Ltd (ASX: A2M), Pushpay Holdings Ltd (ASX: PPH) and Adairs Ltd (ASX: ADH).

WAM Capital’s most recent dividend came in at 7.75 cents per share, which gives this company an annualised trailing yield of 7.21%, or 10.3% grossed-up with full franking. Although this yield looks great on paper, I’m less bullish in its sustainability than Fortescue’s. That’s because, as of 31 July, WAM Capital has advised investors that it only holds 8.7 cents per share in its profit reserve. That means it will be unable to continue to pay an annual 15.5 cents per share dividend for too much longer unless the company has some kind of windfall. This could well come to pass, but there’s a good chance it won’t in my view.

As such, I think I would prefer to hold Fortescue shares today instead.

More reading

• Are ASX banks or miners buys for dividends?
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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.

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The Rumble Resources Ltd (ASX: RTR) share price climbed 9.09% higher today to 18 cents. This came after the company announced it would buy 100% of the Western Queen Gold Project in Western Australia.

What are the acquisition details?

Rumble Resources struck a deal with Ramelius Resources Limited (ASX: RMS) to acquire 100% of the Western Queen Gold Project.

Rumble will pay for the project with its own shares. It will issue $1 million worth of shares at a price based on the 30-day volume weighted average price prior to completion. Rumble noted the ASX listing rules allow for the placement to be conducted.

With exploration of the Western Queen site ongoing, Rumble Resources will provide an update when the drilling project is completed and assays finalised.

Current resource estimates for the Western Queen deposit are 962,000 tonnes at 3.9 grams per tonne of gold, with a total resource of 120,000 ounces of gold.

About the Rumble Resources share price

Rumble Resources is an Australia-based resources company with a focus on finding value in existing mineral resource assets. It has been listed on the ASX since 2011.

In its June quarterly activities report, Rumble Resources said it had identified multiple high grade gold shoots at Western Queen. The company secured a 500%  increase in its landholding, extending the project strike to 35km.

Company drilling at its Fraser Range nickel, copper and gold project in Western Australia will target tier-1 discoveries of each of the minerals. The company also confirmed that drilling at Munarra Gully in Western Australia had revealed a tier-1 gold copper and silver system.

In addition, its drilling at Earaheedy in Western Australia had confirmed large scale zinc lead and silver discoveries. The company also identified 15 high priority target zones at its Lamil copper and gold project in Western Australia.

Rumble Resources had $6.19 million in cash on hand at 30 June 2020 up from $2.9 million at 30 March 2020.

The Rumble Resources share price is up 300% since its 52-week low of 4.5 cents. It has returned 157.14% since the beginning of the year. The Rumble Resources share price is up 100% since this time last year.

More reading

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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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Many ASX shares are flying high at the moment. The March 2020 COVID-19 crash seems like a distant memory.

If you bought during the crash then you’re probably sitting on pleasing gains. But what happens if it crashes again? There are a few things that could cause a crash like the upcoming the US election, disappointing vaccine news or perhaps a geopolitical event relating to China.

Uncertainty is part of investing in ASX shares. But volatility can be exciting for investors, it creates opportunities to buy shares at cheaper prices.

These are three ASX shares I’d buy if the ASX were to crash again:

Share 1: Altium Limited (ASX: ALU)

I think Altium is one of the highest-quality businesses on the ASX. The Altium share price has risen by 48% since 23 March 2020. That’s a pretty strong recovery.

However, COVID-19 conditions have impacted Altium’s short-term and longer-term earnings. It temporarily lowered prices to attract more customers. In FY20 revenue only grew by 10% and ‘normalised’ earnings per share (EPS) only grew by 5%.

It’s now trading at 56x FY22’s estimated earnings. I like this ASX share, it’s one of my preferred long-term investment ideas. However, the buying price is very important with investing. I’d be interested in buying Altium shares were around 20% cheaper at approximately $30 (or lower).

Altium is still aiming for revenue of US$500 million by 2025, but it could take six to twelve months longer to reach. I’m comfortable waiting for a cheaper price before buying more shares. Perhaps the US election will throw up the best chance to buy at a price of around $30.

Share 2: Magellan Global Trust (ASX: MGG)

I think the best global businesses are worth owning in any portfolio. But the problem is that they’re not ASX shares, they’re listed overseas.

A good way to buy them could be to get indirect exposure with a listed investment trust (LIT) like Magellan Global Trust which is run by Magellan Financial Group Ltd (ASX: MFG).

Magellan likes to stick to the highest-quality ideas that it can find. It owns positions in names like Microsoft, Facebook, Alibaba, Alphabet, Tencent, Reckitt Benckiser, Atmos Energy, Visa, Eversource Energy, Mastercard, Xcel Energy and Crown Castle International.

During the last selloff we saw that not only did the Magellan Global Trust net asset value (NAV) fall, but the share price dropped even further. This offered an attractive discount to buy shares. I’d be happy to buy shares again with a NAV discount of around 10%.

Share 3: WAM Microcap Limited (ASX: WMI)

WAM Microcap is a listed investment company (LIC) which invests in small ASX shares. It targets businesses with market capitalisations under $300 million at the time of purchase.

The high-performing LIC is run by the team at Wilson Asset Management (WAM). It has been a very strong performer since inception, with gross portfolio returns of 17.8% per annum – that’s before fees, expenses and taxes.

During the COVID-19 crash, WAM Microcap’s share price plunged from $1.58 to $0.85. It has since recovered to $1.48.

If another crash occurred and WAM Microcap’s share price were to suffer heavily again, I think that would be a really good buying opportunity, particularly for income investors because WAM Microcap is paying out a large dividend each year.

At the current WAM Microcap share price it offers an ordinary grossed-up dividend yield of 5.8%. That yield doesn’t include the regular special dividends that it has paid in each of the last three financial years.

Foolish takeaway

I really like each of the above ASX shares. At the current prices I’m not eager to buy any of them, though a crash could create good buying opportunities for all of them. Due to WAM Microcap’s impressive returns, it would probably be the one that I’d be drawn to the most during another crash.

More reading

• Are ASX banks or miners buys for dividends?
• 4 fantastic ASX growth shares to buy in September
• 3 stellar ASX growth shares to buy right now
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• 2 ASX shares perfect for a starter portfolio

Tristan Harrison owns shares of Altium, MAGLOBTRST UNITS, and WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. 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 Event Hospitality and Entertainment Ltd (ASX: EVT) share price has started the week with a day in the red following the release of its full year results.

The entertainment company’s shares ended the day 2.5% lower at $8.13.

How did Event perform in FY 2020?

It was a difficult year for Event due to the significant disruption its businesses faced because the pandemic.

For the 12 months ended 30 June 2002, the company reported a 22.3% decline in revenue to $784 million and a 54.2% drop in normalised earnings before interest, tax, depreciation and amortisation (EBITDA) to $105 million. This includes $34 million in Government subsidies.

Event’s revenue and earnings decline was the result of the last four months of the year, following the outbreak of COVID-19 globally and government-imposed restrictions.

Over the final four months of the financial year, the company’s revenue was down $262 million on the prior corresponding period. Prior to then, revenue had been up 2.5% year to date.

Things were even worse on the bottom line, with Event reporting a 78.5% decline in normalised profit before interest and tax (EBIT) and a statutory net loss after tax of $11.4 million.

The company’s result includes $54 million of individually significant items net of tax, the majority of which were non-cash items.

In light of this profit decline, no final dividend was declared for FY 2020.

“Unprecedented external factors.”

The company’s CEO, Jane Hastings, commented: “The year was impacted by the most unprecedented external factors experienced in the Group’s 110-year history, including bushfires, floods and COVID-19 government-mandated restrictions.”

“Despite the impact of bushfires we achieved strong performance prior to the COVID-19 period with revenue up 2.5%, EBITDA up 1.7% and normalised profit up 2.2% in the eight months ended February 2020 on an adjusted basis. This was the second highest EBITDA result for the period from July to February from continuing operations in the Group’s history,” she added.

Event’s result could have been far worse. The chief executive revealed that the company has managed to make significant cost-savings during the pandemic.

Hasting explained: “The final four months of the year was defined by the impact of COVID-19 government mandated restrictions which immediately impacted revenue, down $262 million for the four month period. We immediately adapted with new operating models by division, reflecting the various government COVID-19 restrictions and plan for potential financial scenarios.”

“This planning has enabled the Group to pivot at short-notice and achieve $140 million in cost reduction including government subsidies, excluding the benefit of negotiated rent relief which will be recognised once agreements have been signed. We are well prepared and some of the changes are expected to deliver lasting benefits for the future,” the chief executive added.

Outlook.

Unsurprisingly, no guidance has been provided due to the uncertain environment.

Though, management notes that there is a backlog of strong future films waiting to be released. This is expected to support its Entertainment business once trading conditions return to normal.

The company’s Hotel business is not expected to return to pre-COVID-19 levels until international tourism resumes. Until then, occupancy levels of 50% to 60% will be required for its hotels to be profitable.

Finally, thanks to a revision to its operating model, the Thredbo business is expected to be profitable, subject to weather conditions.

More reading

• Rumble Resources share price up 9% on acquisition news
• 3 ASX shares I’d buy if the share market crashes again
• 2 ASX shares I would buy right now for both growth and income
• The Mosaic Brands share price surges 21% on lease deal
• Are ASX banks or miners buys for dividends?

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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