Tag: Motley Fool

Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

According to a note out of Citi, its analysts have retained their sell rating but lifted the price target on this pizza chain operator’s shares to $59.60. While the broker was pleased with its growth in FY 2020 and notes that the new financial year has started strongly, it has concerns over a lack of operating leverage and its valuation. It notes that the company’s shares are trading at a significant premium to the market average. The Domino’s share price ended the week at $85.00.

InvoCare Limited (ASX: IVC)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and cut the price target on this funeral company’s shares to $9.00. This follows the release of its half year results last week. Macquarie expects the tough trading conditions to persist in the near term and has downgraded its earnings estimates accordingly. In light of this poor form, it feels a rerating to higher multiples is off the cards for some time. The InvoCare share price last traded at $10.23.

Qantas Airways Limited (ASX: QAN)

Analysts at Credit Suisse have retained their underperform rating and $3.00 price target on this airline operator’s shares. According to the note, the broker believes there could be upside for its shares over the next couple of years. However, it doesn’t see the current Qantas share price as an attractive entry point and thinks investors should keep their powder dry. Especially given how uncertain the recovery in travel markets is. Qantas shares were changing hands for $3.90 on Friday.

More reading

• WiseTech and 2 more ASX shares outperforming this earnings season
• Should you buy ASX shares before or after reporting season?
• Why I’d buy the Domino’s share price at an all-time high
• The latest ASX 200 stocks hit by broker downgrades
• Top brokers name 3 ASX shares to sell today

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

The post Top brokers name 3 ASX shares to sell next week appeared first on Motley Fool Australia.

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A new month is upon us, so what better time to consider an addition or two to your portfolio.

If you’re interested in growth shares then I think the three shares listed below could be worth considering in September. Here’s why I like them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ASX growth share to consider buying is actually an exchange traded fund (ETF) that gives investors access to a group of the most promising technology companies in the Asian market. A total of 50 of the largest technology and ecommerce companies that have their main area of business in Asia (excluding Japan) are included in the fund. These include tech giants such as Alibaba, Baidu, JD.com, and Tencent Holdings. BetaShares notes that due to its younger, tech-savvy population, Asia is surpassing the West in respect to technological adoption. As a result, the sector is anticipated to remain a growth sector for a long time to come. I believe this bodes well for the 50 companies included in the fund.

NEXTDC Ltd (ASX: NXT)

A second growth share to consider buying is NEXTDC. It is an innovative data centre-as-a-service provider with a growing network of centres in key locations across Australia. NEXTDC has been a very strong performer this year because of the accelerating shift to the cloud. This has driven exceptionally strong demand for its services and appears to have positioned the company to deliver stellar profit growth in the coming years. The company also has the option to accelerate its growth through further expansions in capacity, its network, and perhaps even into the Asia market. Overall, I believe the NEXTDC share price could be a market beater over the 2020s.

Pushpay Holdings Group Ltd (ASX: PPH)

A final growth share that I would buy is Pushpay. It is a donor management platform provider for the faith, not-for-profit, and education sectors which has carved out a big slice of the massive U.S. market in recent years. Pleasingly, thanks to the quality of its platform, it appears well-placed to continue growing its share over the 2020s. Especially given the US$87.5 million acquisition of church management system provider Church Community Builder last year. This acquisition has strengthened its offering and looks set to support margin expansion over the coming years. And while the Pushpay share price may have doubled in value over the last 12 months, I don’t believe it is too late to invest. I’m confident its shares can still go materially higher from here over the next decade.

More reading

• Where to invest $25,000 into ETFs right now
• At this share price is Pushpay a millionaire maker?
• 3 high quality international ETFs for ASX investors to buy right now
• Where to invest $10,000 into ASX shares immediately
• The smartest 7 ASX shares to buy if you have $2,000

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

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Afterpay Ltd (ASX: APT)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and $101.00 price target on this payments company’s shares following its guidance upgrade. The broker was pleased with this development. In addition to this, the broker believes the company was operating with conservative credit settings during the second half and would have delivered an even stronger result if the economic environment were more certain. I agree with Morgan Stanley and feel Afterpay would be a great buy and hold option. Though, I would suggest investors restrict an investment to just a small part of a balanced portfolio.

CSL Limited (ASX: CSL)

Analysts at UBS have retained their buy rating and lifted the price target on this biotherapeutics company’s shares to $346.00. This follows an FY 2020 result which was in line with expects and positive guidance for the year ahead. Overall, it appears to see a decent risk/reward on offer with its shares at the current level. I would have to agree with UBS on this one and believe CSL is a great option for investors.

Nearmap Ltd (ASX: NEA)

A note out of Citi reveals that its analysts have retained their buy rating and lifted the price target on this aerial imagery technology and location data company’s shares to $3.00. According to the note, the broker has lifted its estimates in FY 2021 to account for stronger annualised contract value. The broker also notes that Nearmap is aiming to achieve positive cash flow in the new financial year. I think Citi is spot on and Nearmap could be a great option for investors.

More reading

• 5 things to watch on the ASX 200 next week
• 3 exciting mid cap ASX tech shares to buy for the long term
• 2 ASX 50 shares to buy for your retirement portfolio
• Should you buy ASX shares before or after reporting season?
• Buy CSL and these quality ASX blue chip shares today

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 CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. 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.

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I think that it makes a lot of sense to invest money into exchange-traded funds (ETFs).

ETFs allow investors to take a passive approach to investing into the share market without having to make the decisions about what shares to buy and sell – the ETF does it automatically.

An ETF is usually the type of investment that you could make and hold for many years, perhaps for the rest of your life.

They can give you good diversification with a single investment, which lowers risks.

Here are the ones I’d buy with $25,000 today:

Betashares Ftse 100 ETF (ASX:F100) – $5,000

This one is invested in the largest 100 businesses on the UK share market. In many ways the ASX is similar to the London Stock Exchange, although the UK has a few more global businesses than Australia.

Looking at the top holdings, these are the biggest 10 exposures: Astrazeneca, GlaxoSmithKline, HSBC, Diageo, British American Tobacco, BP, Rio Tinto, Unilever, Reckitt Benckiser and Royal Dutch Shell.

I like the diversification offered by the London Stock Exchange – there isn’t a heavy focus on financials and materials.

The UK share market has been through a tough time in recent years due to Brexit, but I think there’s good value there. Be greedy when others are fearful, as the saying goes.

When COVID-19 passes I think this ETF could pay a very attractive dividend to investors.

BetaShares Global Quality Leaders ETF (ASX: QLTY) – $15,000

This is one of my favourite ETF ideas these days. I think a focus on quality should generate good results. Indeed, this ETF has performed very well since inception in November 2018, it has produced net returns of 18.8% per annum.

Its investments come from across the world. Whilst around two thirds of the portfolio is invested in (multi-national) US shares, it’s also invested in businesses in various other countries like Japan, Switzerland, France, Denmark and so on.

Businesses have to rank well on four metrics to make into the portfolio: return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.

A group of businesses that do well on all of these metrics are likely to generate solid total shareholder returns.

What businesses make it into the holdings? The biggest positions are: Apple, Nvidia, Adobe, Accenture, Facebook, Intuit, Nike, Intuitive Surgical, Texas Instruments and Alphabet (Google).

I like that it’s not just focused on one country, one region or one industry. Plus, you get the high-quality exposure for an annual fee of just 0.35% per annum.

BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $5,000

Asia is a huge part of the global economy, I think it could be a mistake to largely ignore the whole region, which many ETFs do.

There are plenty of China risks when it comes to this ETF. Chinese businesses make up more than half of this ETF. However, I think the reward potential is higher if you focus on just the technology shares listed in Asia.

I think the Asian tech giants are the equal to technology giants in the US. Indeed, technology adoption is high in Asia and that’s helping the Asian tech businesses grow at a fast pace. 

These are some of the largest positions in the Asian technology ETF: Taiwan Semiconductor Manufacturing, Meituan Dianping, Alibaba, Tencent, Samsung, JD.com, Netease, Infosys, Pinduoduo and Sea.

This ETF has been a strong performer – over the past year it has returned 56% after fees, and since inception in September 2018 it has returned 27.8% per annum.

The annual management fee is 0.67% per annum, which is on the pricier end of possible ETFs, but it would cost a lot more if we invested through an active manager.

Foolish takeaway

I like each of these ETFs. I particularly like the global quality ETF – it’s the type of investment that one could seemingly hold for many years and see strong returns. But I think the other two ETFs offer good income and growth prospects respectively.

More reading

• 3 high quality international ETFs for ASX investors to buy right now
• Have $3,000 to invest? Try these 2 dirt-cheap ASX shares
• 2 fantastic ETFs for ASX growth investors to buy today
• 2 exciting high-growth ETFs to buy for high returns today
• 2 ASX shares I would buy for growth and income

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. 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 Where to invest $25,000 into ETFs right now appeared first on Motley Fool Australia.

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Unfortunately for income investors, interest rates are currently at ultra-low levels and look unlikely to improve for some time to come.

The good news is that there are still plenty of ASX dividend shares that offer generous yields.

But which dividend shares should you buy? Here are two ASX dividend shares I would buy:

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust that owns a diversified portfolio of high quality agricultural assets across Australia. This includes macadamia orchards, cattle assets, cotton assets, vineyards, and almond orchards. These assets are leased to some of the most experienced agricultural operators in the country such as Treasury Wine Estates Ltd (ASX: TWE) and Select Harvests Limited (ASX: SHV). 

Thanks to its ultra long-term tenancy agreements and the inclusion of periodic rent increases, I believe Rural Funds is in a great position to continue growing its distribution at a solid rate over the next decade. Management has a target of ~4% distribution growth each year and looks set to deliver on this in FY 2021. It is forecasting an 11.28 cents per share distribution this financial year. Based on the latest Rural Funds share price, this equates to a 5.15% yield.

Telstra Corporation Ltd (ASX: TLS)

Another dividend share to consider buying is this telco giant. The Telstra share price has come under pressure this month following the release of its full year results. This is because its guidance for FY 2021 implies that there will be a dividend cut this year. While this is a distinct possibility due to its existing dividend policy, I would argue that its policy is out of touch with its current financials. This is because it is based on its accounting earnings, which is actually lower than its free cash flow.

A switch to a free cash flow based dividend policy would allow the company to maintain its current dividend if it delivers on its guidance. Analysts at Goldman Sachs believe this is likely to occur and have held firm with their estimate for a 16 cents per share dividend in FY 2021. Based on the current Telstra share price, this will mean a fully franked 5.25% dividend yield in 2021.

More reading

• 5 blue chip ASX 200 shares a beginner can use to start a share portfolio
• 2 ASX dividend shares with yields over 7%
• Why I would buy Telstra and this ASX dividend share today
• 3 fantastic ASX 200 shares for retirees to buy
• Afterpay and Mesoblast were among the most traded shares on the ASX last week

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

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Starting a portfolio of ASX 200 shares can be hard for a beginner investor. We Fools like to say that any new investor should aim to ramp to have at least 15 shares in their portfolios quickly as possible.

With this many investments, you can mitigate ‘single-company’ risk somewhat and start enjoying the benefits of a diversified portfolio. But which shares to choose?

Here’s a list of 5 ASX shares from the S&P/ASX 200 Index (ASX: XJO) that I think would make a great foundation for any beginner portfolio.

Telstra Corporation Ltd (ASX: TLS)

Telstra is the largest telco on the ASX and a staple company for thousands of ASX investors. I like it for a beginner for its strong dividend and future 5G growth potential.

Commonwealth Bank of Australia (ASX: CBA)

Owning an ASX bank used to be some kind of ‘rite of passage’ for ASX 200 share investors. But 2020 has been a tough year for the banking sector and the banks don’t elicit the same starry eyes as they used to.

Still, if you’d feel better with an ASX banking share in your portfolio, I think CBA is the pick of the bunch. It has managed to maintain a reasonable dividend this year and should recover in line with the broader economy over the next few years.

Wesfarmers Ltd (ASX: WES)

Wesfarmers is the largest conglomerates on the ASX and has a mindblowing portfolio of investments of its own. Not only does it own the Bunnings, Target, Kmart and Officeworks store chains, it also owns mines, chemical manufacturing facilities and a clothing line under its belt. Wesfarmers is a strong, stable company with a robust dividend and would not look out of place in any ASX portfolio in my view.

Woolworths Group Ltd (ASX: WOW)

Woolies should be familiar with most ASX investors. Not only does it own the eponymous supermarket chain, but Woolworths also owns a vast network of bottleshops and pubs, which include the Dan Murphy’s and BWS outlets. I like Woolworths as a conservative and defensive investment, and so I think it would make a great share for a beginner portfolio.

BHP Group Ltd (ASX: BHP)

Normally, I’m not too wild on mining shares for a beginner. But BHP’s proud history, massive size and diversified earnings base prompt me to make an exception. BHP has operations spanning coal, petroleum, copper and iron ore mining. The company is an ultra-low-cost producer, which means it stands to benefit if any of these commodities have a pricing boom. As such, I think the Big Australian is another great share to own in a diversified portfolio.

Foolish takeaway

I’m not saying these 5 ASX 200 shares are essential for a new portfolio, but I do think they are good places for a beginner to start with. You can choose all of them, some or none at all. As long as you aim to build up your portfolio with quality companies, you can’t go wrong!

More reading

• 2 of the best ASX dividend shares to buy next week
• 5 things to watch on the ASX 200 next week
• 2 ASX dividend shares for income investors to buy next week
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths 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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Last week the S&P/ASX 200 Index (ASX: XJO) ended its winning streak with a small weekly decline. The benchmark index lost 0.2% over the five days to end it at 6,111.2 points.

Another busy one is expected next week with a large number of major results due to be announced.

Here are five things that I think investors should be watching next week:

ASX futures pointing lower.

The ASX 200 is expected to start the week as it finished it. According to the latest SPI futures, the benchmark index is poised to open the week 11 points lower. This is despite a solid finish to the week on Wall Street with all three major indices pushing higher. The Dow Jones rose 0.7%, the S&P 500 climbed 0.35%, and the Nasdaq index pushed 0.4% higher.

Afterpay full year results.

The Afterpay Ltd (ASX: APT) share price was on form last week and reached a record high of $82.00. All eyes will be on its shares on Thursday when it releases its full year results. While its results have largely been pre-released (EBITDA of ~$44 million), investors will no doubt be interested to learn how it has fared in FY 2021 and whether it has any further expansion plans. Rival Zip Co Ltd (ASX: Z1P) will also be releasing its results on Thursday.

Flight Centre to report major loss.

The Flight Centre Travel Group Ltd (ASX: FLT) share price will be in focus on Wednesday when its eagerly anticipated full year results are released. The travel agent giant is expecting to report a significant loss after tax in FY 2020 because of the pandemic. It has provided guidance for a statutory loss of between $825 million to $875 million.

Fortescue tipped to declare a big dividend.

On Monday the Fortescue Metals Group Limited (ASX: FMG) share price will be on watch when the iron ore producer releases its full year results. Thanks to improving grades, sky high prices, and record shipments, Fortescue is expected to report a bumper profit result. As a result, analysts are forecasting a generous full year dividend. Macquarie, for example, has forecast a fully franked dividend of ~$1.80 per share for FY 2020. This represents a 10% dividend yield.

Tech star Appen to report half year results.

The Appen Ltd (ASX: APX) share price stormed to a record high of $40.93 last week. Investors appear to be betting on the artificial intelligence company reporting another strong half year result on Thursday. In May, Appen reaffirmed its full year guidance for underlying EBITDA in the range of $125 million to $130 million. Judging by its share price performance, investors may be optimistic that an upgrade is coming.

More reading

• These were the best performing ASX 200 shares last week
• Where to invest $100,000 into ASX shares right now
• These were the worst performing ASX 200 shares last week
• The ASX 200 fell 0.1% today, Suncorp shines
• Where to now for the NIB 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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re looking for a way to beat low interest rates, then the ASX dividend shares listed below would be worth considering.

I believe both dividend shares would be great options for income investors due to their generous yields and strong businesses. Here’s why I would buy them:

BHP Group Ltd (ASX: BHP)

If you’re not averse to investing in the resources sector, then I would suggest you consider buying BHP shares. This is because BHP owns and operates some of the highest quality assets in the world. It also has several growth opportunities, particularly in respect to oil production, that could create value for investors in the future.

Another positive is its low costs and favourable commodity prices. The latter is certainly the case with iron ore, with the steel making ingredient commanding a price of over US$120 a tonne at present. This means BHP’s iron ore operations are generating high levels of free cash flow. The majority of which I expect to be returned to shareholders. So much so, I estimate that BHP’s shares currently provide investors with a fully franked ~5% FY 2021 dividend yield.

National Storage REIT (ASX: NSR)

Another dividend share to consider buying right now is National Storage. I think the self storage operator could be a top long term option for income investors due to its strong market position and growth through acquisition strategy. And although the company is inevitably going to be impacted by the pandemic, I don’t believe it will be as bad as many of its real estate peers.

As a result, I’m optimistic National Storage will be able to continue paying shareholders a decent distribution during over the coming year. Based on the current National Storage share price, I estimate that it offers a 4.4% FY 2021 distribution yield.

More reading

• 3 top ASX200 dividend shares to buy right now
• After the stellar COVID-19 rebound, can ASX share prices keep rising?
• How the OZ Minerals share price is benefitting at Rio Tinto’s expense
• Tech shares race to record highs as Bank of America tips BHP and Rio shares
• Why I would buy CBA and this ASX dividend share for income

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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I think there are some ASX income shares which are must-haves for any investor that is focused on generating dividend income.

The official RBA interest rate is now just 0.25%. That has caused the income we can get from bank saving accounts to drop significantly.

I think there are some ASX shares that should be in most income investor portfolios:

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a listed investment company (LIC). I really like LICs as ASX income share ideas.

When you limit yourself to just operating businesses that have a higher dividend yields then you may find that plenty of them offer average (or even inferior) total returns because they have low growth potential (and a low price/earnings ratio) and/or they have a high dividend payout ratio with limited re-investment opportunities.

LICs can invest in growth shares (or anything else), make capital gains and then pay out some of those returns as a smoothed (and hopefully growing) dividend.

WAM Microcap is one of the best-performing LICs. Since inception in June 2017, WAM Microcap portfolio’s gross return was 17.8% per annum. That’s before expenses, fees and taxes – so the net return has been a bit less. However, the gross portfolio return was 11.6% better per annum than the S&P/ASX Small Ordinaries Accumulation Index. That’s great outperformance.

The ASX income share has steadily increased its dividend since FY18 and it has also paid a special dividend each year too.

Excluding special dividends, WAM Microcap offers a grossed-up yield of 5.8% at the current WAM Microcap share price.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

In terms of dividend reliability, I think Soul Patts could be the best ASX income share around.

Soul Patts has grown its dividend every year since 2000. No other ASX share has a record as good as that. Soul Patts has actually paid a dividend every year since it listed in 1903, including through wars and other recessions.

The investment house owns large positions in a number of different shares including TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI).

Most of Soul Patts’ investments pay annual dividends to Soul Patts each year. The ASX income share can then pay out most of those dividends to its own shareholders, after paying for expenses. It retains about a fifth of that net cashflow to invest into more opportunities.

At the current Soul Patts share price it offers a grossed-up dividend yield of 4.2%.

Future Generation Investment Company Ltd (ASX: FGX)

Future Generation is another LIC, but this one is very different to WAM Microcap. But I think it could also be a good ASX income share pick.

It invests in the funds of fund managers that invest in ASX shares. Its investment choices are meant to be into the best investment managers in Australia.

But those fund managers work for free for Future Generation so that the LIC can donate 1% of its net assets per annum to youth charities. That means no management fees and no performance fees. These donations are particularly important during times like this COVID-19 period.

Since inception in September 2014, the Future Generation portfolio’s gross return has been 2.2% per annum better than the S&P/ASX All Ordinaries Accumulation Index. That’s before expenses, fees and taxes.

Some of its biggest fund manager allocations are with Bennelong, Paradice, Regal, Eley Griffiths and Wilson Asset Management. Future Generation is invested in lots of shares through the underlying funds, so Future Generation has great diversification. 

At the current Future Generation share price it offers a grossed-up dividend yield of 6.8%.

Foolish takeaway

I think all three of these ASX income shares are great options for dividends. At the current prices I’d probably go for Soul Patts first with its reliable dividend – WAM Microcap appears to be trading at bit of a premium to its net tangible assets (NTA) now.

More reading

• Where to hunt for ASX dividend share income in 2020
• 3 Warren Buffett ASX dividend shares you can buy right now
• I think Soul Patts is the best ASX dividend share
• 4 ASX shares to profit from booming ecommerce
• 2 ASX shares you could invest $500 into

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks 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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If you’re on the lookout for a little exposure to the small side of the market, then you’re in luck.

I believe there are a number of small cap ASX shares that have strong long-term growth potential.

Three which I think could be worth adding to your watchlist today are listed below. Here’s why I like them:

Alcidion Group Ltd (ASX: ALC)

I think this healthcare informatics solutions company is worth watching closely. It provides a number of software solutions which have been designed to improve the efficacy and cost of delivering services to patients and reduce hospital-acquired complications. Given the growing trend for healthcare organisations to shift to a paperless environment, I think it is well-positioned for long term growth once the pandemic passes.

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider which has achieved very strong sales growth in recent years. This has been driven largely by the increasing demand for its Dante product. This award-winning audio over IP networking solution is used widely across the professional live sound, commercial installation, broadcast, and recording industries globally. Unfortunately, demand for Dante fell materially during the pandemic, leading to an underwhelming FY 2020 result. However, given its strong balance sheet, industry-leading products, and significant market opportunity, I think it could be worth being patient with the company.

People Infrastructure Ltd (ASX: PPE)

People Infrastructure is a leading workforce management company that delivers innovative solutions to workforce challenges. It has also been disrupted by the pandemic, but still expects to deliver a strong full year result this month. In May the company suggested it would deliver normalised EBITDA in the range of $24 million to $25 million in FY 2020. This will be 35% to 40.5% increase year on year. So with its shares still down 44% from their 52-week high, I think it is definitely worth a closer look.

More reading

• Audinate share price drops 7% as coronavirus hits FY20 earnings
• Are these small cap ASX shares future stars?
• 2 exciting small cap ASX shares to watch
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Alcidion Group Ltd and AUDINATEGL FPO. The Motley Fool Australia has recommended Alcidion Group Ltd, AUDINATEGL FPO, and People Infrastructure 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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