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Low interest rates could be the new normal, at least for the next few years. As such, many investors are looking to ASX dividend shares to provide the additional income that once used to come from bonds and term deposits. 

In an opening statement to the house of representatives standing committee on economics on 14 August 2020, the Reserve Bank of Australia (RBA) Governor, Philip Lowe, said in regards to interest rates:

The Board has clearly indicated that it will not increase the cash rate until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target range. Given the outlook I discussed earlier, these conditions are not likely to be met for at least three years. So it is highly likely that the cash rate will be at this level for some years and having a target for three-year yields of 25 basis points reinforces this message.

In this low interest rate environment, here are my selections for three ASX dividend shares you could consider adding to your portfolio today:

3 ASX dividend shares to buy today

AGL Energy Limited (ASX: AGL)

Despite energy headwinds, AGL was able to deliver earnings within its guidance and declare a 51 cent dividend. For calendar year 2020, this brings AGL’s annual dividend total to 98 cents per share. At the current AGL share price of $15.43, it offers investors a dividend yield of 6.35%. This is considerably better than the returns offered by savings and term deposit accounts.

Additionally, AGL’s management has the intention of paying special dividends during FY21 and FY22. Management has advised, however, that the special dividends are subject to market conditions and that the temporary removal of franking credits will be necessary. 

AGL’s guidance for FY21 underlying profit after tax is between $560 million and $660 million.

Due to the essential nature of electricity and gas, and the company’s strong cash flow, I believe AGL will be able to continue generating dividends for shareholders despite the impact of the coronavirus pandemic. 

Wesfarmers Ltd (ASX: WES)

Whilst the pandemic has resulted in lower foot traffic and, therefore, reduced sales across its Target and K-Mart businesses, Wesfarmers’ Bunnings and Officeworks chains have benefitted from consumers spending increased time in their homes. Furthermore, recent Victorian lockdowns could see Wesfarmers’ Catch.com.au online business help offset some sales decline caused by reduced foot traffic in its physical store locations.

As mentioned, Wesfarmers overall was a major beneficiary of the first lockdown as people prepared for the changes in the way we live. However, the company’s earnings release on Thursday this week could provide further guidance on how the second lockdown in Victoria is impacting on the business into FY21.

At the current Wesfarmers share price of $48.08, and an annualised dividend of $1.53 per share in FY20, the current dividend yield for Wesfarmers is 3.18%. 

Arena REIT No 1 (ASX: ARF)

Arena is a real estate investment trust (REIT) that invests in defensive industries such as childcare, healthcare, education and government.

Last week, the REIT announced its FY20 results. Despite the impact of the coronavirus pandemic on its business, it was still able to deliver an increase in earnings.

In its outlook, the group provided distribution guidance of between 14.4 and 14.6 cents per security for FY21. This represents an increase of 3-4% over FY20. I believe the defensive nature of this REIT could see it continue to deliver increases in its distribution into the future. The current Arena REIT share price of $2.37, and the distribution guidance of 14.4 cents per security, represents a yield of 6.08%.

More reading

• Afterpay and Mesoblast were among the most traded shares on the ASX last week
• Is the Coles share price a post-earnings buy for ASX dividend income?
• What’s driving Arena REIT’s huge weekly share price gain?
• Rates on hold until 2023? Buy these ASX dividend shares
• These were the worst performing ASX 200 shares last week

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

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This year, the Appen Ltd (ASX: APX) share price has been a strong performer, and today is no different with the Appen share price storming to a new all-time high in intraday trade.

Investors who bought Appen shares in January would now be sitting on gains of more than 74% – a solid return for shareholders who kept their cool in the ASX March sell-off.

Here’s why I think this quality ASX tech share is a strong buy-and-hold option for the long term.

What does Appen do?

A global leader in collecting and labelling data for machine learning and artificial intelligence (AI) systems. Appen’s vast expertise includes 1 million skilled contractors who speak over 180 languages. The company boasts the industry’s most advanced annotation platform.

Digital assistants and chat boxes, recommenders on search engines and fraud protection systems are just some of the applications Appen works to develop and improve.

Appen’s global reach

The company’s corporate headquarters is in New South Wales, Australia, with offices in various locations around the world to service its diverse customer base. Appen’s clients are from an array of industries such as technology, automotive, financial services, retail, healthcare and government.

Some of its customers include tech titans Apple, Google and Microsoft, with voice-activated assistants like Siri and Google no doubt a major source of recurring revenue for Appen.

The COVID-19 impact

The company has come through the coronavirus pandemic relatively unharmed as it largely generates its earnings from the US tech giants, which have all continued to spend on projects. In addition, the increase in search, social media and e-commerce platforms is expected to help Appen meet its 2020 performance targets.

The company restated its FY20 guidance of an underlying earnings before interest, tax, depreciation and amortisation (EBITA) in the range of $125–$130 million. This represents a 23.8–28.7% year-on-year increase.

Appen also recently advised the market it had a healthy balance sheet, with cash resources in excess of $100 million. This puts the company in a good spot to weather any unforeseen circumstances.

Can the Appen share price run continue?

As we approach the end of reporting season, it is evident that investors have been snapping up Appen shares ahead of its FY20 results to be released on 27 August.

In intraday trade today, Appen shares hit a new all-time high of $39.31. The Appen share price set its previous all-time high of $38.47 in June of this year. At the time of writing, Appen shares are trading at $39.20.

As the AI market is expected to grow to $97.9 billion by 2023, the addressable market opportunity is enormous for Appen. The company is investing in product diversification to support long-term growth.

Foolish takeaway

Expectations are high for Appen, however investing in quality ASX growth shares for the long-term can be very rewarding to shareholders. While Appen should be able to meet its forecasted earnings for 2020, I think that the Appen share price will move based on the near-term projections for the company come late August.

Appen has a history of being conservative when it comes to releasing guidance numbers. You only have to look back to the last few years when Appen updated the market with its upgraded earnings.

Nonetheless, I believe that the Appen share price is a strong buy for any investor who chooses to have a member of the WAAAX group in their portfolio.

More reading

• 3 of the best ASX growth shares you can buy right now
• How to turn $20,000 into $900,000 in 5 years with ASX shares
• Brokers name 3 ASX shares to buy right now
• How investing in ASX shares could help you grow $10,000 into $100,000
• 3 ASX shares that could grow rapidly during the 2020s

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Aaron Teboneras 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 Alphabet (A shares), Alphabet (C shares), Apple, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), 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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Investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

There were a few new entries this week, following their respective results releases, and one very familiar name.

Here’s the data:

Mesoblast limited (ASX: MSB)

If you were watching the markets last week, you won’t be surprised to learn that Mesoblast shares were the most traded on the CommSec platform over the period. Last week the biotech company’s shares crashed around 40% in the space of two days before rebounding over 60% higher to reach a record high. This was due to concerns over a critical meeting with the U.S. FDA, which ultimately turned out very favourable. Incredibly, the buying and selling was so rampant that Mesoblast shares accounted for 6.5% of all trades on the platform last week. Approximately 66% of these trades were buys.

Telstra Corporation Ltd (ASX: TLS)

CommSec investors were busy buying this telco giant’s shares last week. Telstra’s shares accounted for 2.8% of all trades on the platform, with 90% of these coming from buyers. Despite this, Telstra’s shares still lost almost 8% of their value. It appears as though investors were buying the company’s shares after they tumbled lower following the release of its full year results.

Commonwealth Bank of Australia (ASX: CBA)

Australia’s largest bank was popular with investors and accounted for 2% of trades on the CommSec platform. This followed the release of its full year results during the week. The buying and selling was reasonably even with 55% of trades coming from buyers.

AGL Energy Limited (ASX: AGL)

This energy retailer was among the most traded shares last week, accounting for 1.7% of all trades on the platform. And although the AGL share price lost 9% of its value over the period, the vast majority of these trades were from buyers. A massive 94% of trades came from the buy-side. As with Telstra, they appear to believe its post-results share price weakness is a buying opportunity.

Afterpay Ltd (ASX: APT)

Finally, once again, this payments company was popular with investors. Afterpay shares accounted for 1.5% of trades on the CommSec platform last week. Though, on this occasion, there was far more selling going on than buying. Approximately 68% of these trades came from sellers. However, this didn’t stop the Afterpay share price from climbing 7.2% over the week.

More reading

• Low interest rates the new normal? 3 ASX dividend shares to buy today
• Have $3,000 to invest? Try these 2 dirt-cheap ASX shares
• 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
• New investors should do this before investing in 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 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.

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If you have $3,000 to invest in dirt-cheap ASX shares, I think it’s a great use of money.

Investing in shares isn’t like buying a new computer, iPhone or weave. Rather than your money vanishing into someone else’s pocket, a good investment can put money to work and return it to your pocket over time (hopefully a lot more than you initially invested).

But it goes without saying that central to this outcome is choosing a good investment. And part of finding a good investment is paying a good price.

So today I’ve found 2 ASX shares that I think are dirt-cheap on current prices – and thus have the potential (in my opinion anyway) of making good long-term investments.

Dirt-cheap ASX share 1) Telstra Corporation Ltd (ASX: TLS)

The Telstra share price hasn’t been a top performer over the past week or so. Ever since the telco giant reported a less-than-impressive set of earnings numbers last week, investors have been piling out of Telstra. As a result, the Telstra share price is down nearly 10% since last Wednesday and is going for just $3.07 at the time of writing. But this is what leads me to believe this company is a dirt-cheap buy today.

Firstly, Telstra told us last week that its generous and fully franked 16 cents per share dividend is to be maintained this year. On current prices that gives Telstra a forward dividend yield of 5.26% (or 7.51% grossed-up).

Secondly, the company is heavily investing in 5G technology, the next generation of mobile internet. If the company can extend its market-leading position into 5G when it hits mainstream integration, it could result in a lucrative hunting ground for earnings for Telstra over the coming decade. For these reasons, I think Telstra is a dirt-cheap buy today.

2) Betashares FTSE 100 ETF (ASX: F100)

Turning to an exchange-traded fund (ETF) with this one, here we have a fund that tracks the FTSE 100, which is the United Kingdom’s equivalent to our own ASX. With 100 of the UK’s top companies, it’s a diverse and exotic investment in my view and one that could add some real spice to a portfolio. Some of the top companies in this ETF include AstraZeneca, HSBC, Royal Dutch Shell and Diageo.

The reason F100 has caught my eye is its current share price. This ETF reached a high of $11.50 a share late last year, but as of today, you can pick some up for just $8.46. That’s more than 22% below the pre-crash high we saw in February.

A lower share price also translates into a higher trailing dividend yield. On current prices, F100 is offering a trailing yield of 4.4%, which looks pretty good to me. These numbers lead me to consider this ETF a dirt-cheap ASX share to buy today.

More reading

• Afterpay and Mesoblast were among the most traded shares on the ASX last week
• Telstra share price hit by broker downgrade today
• 2 growing ASX dividend shares to buy next week
• 4 ASX shares to profit from booming ecommerce
• Important takeaways from the Telstra analyst call

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.

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The S&P/ASX 200 Index (Index:^AXJO) is racing higher today as a slew of positive results lifted sentiment. It’s not too late to join the party as leading brokers pick the latest ASX stocks to buy today.

One stock that Macquarie Group Ltd (ASX: MQG) is pushing is the BlueScope Steel Limited (ASX: BSL) share price.

Shares in the steel products maker jumped 3.4% to $12.77 in after lunch trade as the broker reiterated its “outperform” recommendation on the stock following its results announcement.

Better than expected profit results

BlueScope’s profit performance was reasonably strong given the impact of COVID-19 with the group’s ASP and Building Products divisions the big standouts.

Demand for its products in Australia held up better than many expected, particularly for residential construction.

US weakness may be reversing

However, it wasn’t all good news as the group’s US North Star business underperformed.

“North Star missed our expectations, however, a 5.5% decline in sales volumes in 2HFY20 was still a decent outcome given the environment,” said Macquarie.

“North Star is operating at near-full capacity, with recovering auto demand key to reducing the discounting we saw in 2HFY20.”

The broker’s 12-month price target on BlueScope stands at $13.50 a share.

Capital raising no deterrent

While the Lynas Corporation Ltd (ASX: LYC) share price remains in a trading halt, UBS is wasting no time in encouraging investors to buy the miner when it comes back to the bourse.

Lynas shares are temporarily suspended as it finalises its $425 million capital raising and it last traded at $2.61.

The cash will be used to move part of its processing from Malaysia to Australia. This is to comply with licensing requirements in the Asian country due to environmental concerns.

Key drivers for Lynas share price

“We think the equity issue on balance is a good move as it deals with the key funding/balance sheet risk for the company,” said UBS.

“But the size of the raising is larger than we anticipated and either leaves the company overcapitalised or well positioned to invest in downstream options.”

The dilution from the cap raise didn’t stop the broker from lifting its price target on Lynas to $3 from $2.80 a share.

UBS is bullish on the rare earth miner as its aligned to two powerful trends – the rise of electric vehicles which requires rare earths, and the move by Western countries to cut their dependency on China for the minerals.

More reading

• Why Fortescue’s share price has surged 72% in 2020
• US markets at record highs! Here’s what it means for ASX investors
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• New investors should do this before investing in ASX shares
• ARB share price rallied to a two-year high on profit results and outlook

Motley Fool contributor Brendon Lau owns shares of BlueScope Steel Limited, Lynas Limited, and Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie 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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The Fortescue Metals Group Limited (ASX: FMG) share price has gained a stellar 72% year-to-date. That’s enough to place it in the number 7 spot of top share price gainers on the S&P/ASX 200 Index (ASX: XJO) for 2020. By comparison, the ASX 200 is down 9.1% for the year.

Fortescue wasn’t immune to the wider COVID-19 selloff gripping the markets earlier this year. The iron ore producer and explorer’s share price dropped 23% from 21 February to 9 March. Since that low, the Fortescue share price is up an eye-popping 113%.

And this isn’t a high-risk microcap miner hitting the motherlode we’re talking about here. Fortescue is the fourth biggest iron ore producer in the world, with a market cap of $56.4 billion.

Fortescue’s share price is on the rise again today, up 2.7% at the time of writing.

What does Fortescue do?

Fortescue is an iron ore production and exploration company. With core assets located in the Western Australia’s Pilbara region, Fortescue first publicly listed in 1987. It now ranks as the fourth largest iron ore producer in the world.

The company owns and operates integrated operations spanning two iron ore mine hubs; the five-berth Herb Elliott Port and Judith Street Harbour towage facility in Port Hedland and the fastest heavy haul railway in the world.

Why Fortescue share price soared 72%?

Fortescue has been a clear winner from the rising iron ore prices this year, currently at US$120 per US ton. And while the iron ore prices are widely forecast to fall, that fall may not be quite so fast and hard as many analysts have predicted.

Bank of America, for one, recently upgraded its outlook for iron. On August 7, it lifted its forecast for 2020 to US$96.70 per tonne, up from US$86. It also raised its 2021 forecast from US$71.30 per tonne to US$85.

Meanwhile, one of Fortescue’s top competitors, Brazil’s Vale SA (NYSE: VALE) has seen its own iron ore production drop as mines struggled to cope with the pandemic in the nation. That supply drop came at a strategic time for Fortescue, as China – the world’s most voracious consumer of iron ore – emerged from its own coronavirus hibernation.

With steel demand in China likely to remain strong as it turns to infrastructure and other construction projects to bolster its economy, Fortescue’s share price could have further to run.

More reading

• US markets at record highs! Here’s what it means for ASX investors
• Tech shares race to record highs as Bank of America tips BHP and Rio shares
• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• New investors should do this before investing in ASX shares
• ARB share price rallied to a two-year high on profit results and outlook

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

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The Marley Spoon AG (ASX: MMM) share price has surged 1200% in 2020. Despite the meteoric rise in the Marley Spoon share price, the company’s shares remain a core holding for this leading fund manager.

Marley Spoon a core holding

Leading fund manager, Perennial Value Management, recently released its monthly microcap report. The report highlighted the performance of its Microcap Opportunities Trust, which was up 10.2% for the month of July.

Perennial’s report also revealed that Marley Spoon has been a core holding and the strongest contributor to the trust’s performance. The fund manager noted that Marley Spoon exceeded expectations, following the company’s earnings update in late July.

The meal kit provider remains a core holding for Perennial, with its strong operating performance supporting the Marley Spoon share price. Analysts from Perennial expected the company’s growth rate to fade as economies re-opened.

However, Marley Spoon has seen its growth accelerate in all markets, particularly in the United States. Analysts at Perennial have been impressed by the company’s high retention rates and reduced acquisition costs. In addition, Marley Spoon’s revenue has been generated at higher margins with the company’s cash position also improving.  

How has Marley Spoon performed?

Marley Spoon is the second largest, subscription-based meal kit provider in Australia. In its most recent market update, the company reported strong demand for its meal kits in the second quarter of FY20.

Marley Spoon highlighted that the COVID-19 pandemic has contributed to strong growth in its global business. As a result, the company reported a 129% increase in revenue for the second quarter of FY20 to 73.3 million euros.

In addition, Marley Spoon reported positive operating earnings before interest, taxes, depreciation and amortisation (EBITDA) of 4.5 million euros and highlighted lower customer acquisition costs. The company also upgraded its full-year guidance, with at least 70% revenue growth expected in 2020.

Should you buy at today’s Marley Spoon share price?

The COVID-19 pandemic has changed consumer behaviour and increased the demand for online and convenience services. In my opinion, the Marley Spoon share price is well positioned to continue benefitting from these changes.

In addition, global market research company, Nielsen, estimates that the market for meal kits is expected to grow rapidly. Marley Spoon is well capitalised to fuel global expansion, with the company having completed a $16.6 million capital raising in May this year.

The fact that a leading fund manager like Perennial has Marley Spoon shares as a core holding should provide investors with extra assurance. However, given the recent rapid rise in the Marley Spoon share price, I think the most prudent strategy would be to wait for the company’s full-year results before making an investment decision.

More reading

• 3 ASX small cap shares with serious growth potential
• Can the Bubs share price go higher in 2020?
• ASX shares that could get a boost from Victoria’s shutdown
• Up 1,000% in 2020! Is it too late to buy Marley Spoon shares?
• Why Sezzle and these ASX shares recorded huge gains in July

Motley Fool contributor Nikhil Gangaram 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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At the weekend I looked at how $20,000 investments fared in a number of popular ASX shares over the last five years. You can read about their staggering returns here.

But that was then and this is now. Which shares should you invest $20,000 into today?

I have picked out two ASX shares that I think could be great places to invest these funds:

a2 Milk Company Ltd (ASX: A2M)

The first share to consider investing $20,000 into is a2 Milk Company. I think the fresh milk and infant formula company could be a top option due to its positive long-term outlook. After growing its earnings at a rapid rate over the last few years, I‘m confident a2 Milk’s strong form can continue for some time to come. 

This is due to the long runway for growth it has in the massive China market. Although it is generating significant revenues in the key market, it still only has a very modest market share. Given its strong brand, expanding distribution footprint, and a2-only differentiation, I believe it can increase its share materially in the future. In addition to this, its expanding fresh milk footprint in the United States and its sizeable cash balance should be supportive of future growth. The latter gives a2 Milk Company the option to accelerate its growth in the coming years through potential earnings accretive acquisitions. The recent appointment of a new CEO with M&A experience appears to be a big positive in that regard.

Pushpay Holdings Group Ltd (ASX: PPH)

The majority of companies out there have been negatively impacted in some way by the pandemic. But this donor management platform provider for churches isn’t one of them. The pandemic had an immediate impact on churches. From shifting to online services, to ensuring members could safely tithe, church leaders quickly embraced new technologies.

This led to strong customer growth and even stronger recurring revenue and profit growth for Pushpay in FY 2020. The good news is that these positive tailwinds remain strong in FY 2021, with management expecting to double its operating earnings over the 12 months. Pleasingly, even if Pushpay delivers on this bold target, which I expect it will, it will still only be scratching at the surface of its total addressable market. This gives it a significant runway for growth over the next decade.

More reading

• Where I’d invest $10,000 today into ASX shares
• Why I would buy Afterpay and this quality ASX tech share
• Top brokers name 3 ASX shares to buy next week
• 5 things to watch on the ASX 200 next week
• How to turn $20,000 into $900,000 in 5 years with ASX shares

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 PUSHPAY FPO NZX. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended 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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This morning, Coles Group Ltd (ASX: COL) joined the long conga line of ASX companies reporting their FY2020 earnings.

Investors didn’t seem to know what to think of the numbers, given the Coles share price rose after open before giving it all up… and then some. At the time of writing, Coles shares are down 1.37% to $18.67.

Coles did report some solid numbers, including revenue growth of 6.9% and net profit growth of 7.1% (you can read more about Coles’ earnings here). But it was the dividend announcement that caught my eye.

Coles has built a reputation as a solid (if not impressive) dividend share since it was kicked out of its former parent company Wesfarmers Ltd‘s (ASX: WES) nest back in November 2018. It’s been a welcome dividend share in many ASX income investors’ portfolio in a year that has seen ASX bank dividends dry up and a bevvy of other former dividend heavyweights slash, defer and cancel their payouts.

So today, Coles announced a fully franked, final dividend of 27.5 cents per share, which is a 14.6% increase on last year’s final dividend of 24 cents per share. With Coles’ February interim dividend of 30 cents per share, Coles will pay 57.5 cents per share in dividends in 2020.

That gives the Coles share price a trailing dividend yield of 3.08% (or 4.4% grossed-up with full franking credits) at today’s level.

Is the Coles share price a buy for dividends today?

A 3.08% dividend is nothing to sneeze at today, especially considering the lack of alternatives on the ASX right now and the record low interest rates investors are currently enjoying.

But how sustainable is this dividend? Well, Coles has an earnings policy when it comes to paying dividends, endeavouring to consistently pay out between 80-90% of its earnings as dividends. Based on Coles’ basic earnings per share for FY2020 of 71.3 cents, paying out 57.5 cents gives Coles a payout ratio of 80.65%.

That to me indicates there is plenty of room for the Coles dividend to grow over time, especially if Coles can continue to grow earnings by around 7% per annum into the future.

Of course, that payout ratio target was made in a pre-COVID world. As such, it might be jettisoned if the coronavirus pandemic weighs on the company’s costs in the months and years ahead. But on today’s earnings report, I think there are good signs that Coles will continue to be a dividend heavyweight in 2021 and beyond.

More reading

• ASX 200 up 0.2%: Westpac cancels dividend, Treasury Wine hammered, Coles impresses
• Coles share price on watch after strong FY 2020 result
• 5 things to watch on the ASX 200 on Tuesday
• 2 growing ASX dividend shares to buy next week
• Top brokers name 3 ASX shares to buy next week

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

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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:

Bendigo and Adelaide Bank Ltd (ASX: BEN)

According to a note out of the Macquarie equities desk, its analysts have retained their underperform rating and cut the price target on this regional bank’s shares to $6.00. This follows the release of its full year results which fell short of the broker’s expectations due largely to the pandemic. Macquarie doesn’t appear convinced that its performance will improve greatly any time soon and has revised its earnings estimates lower. The Bendigo and Adelaide Bank share price is changing hands for $6.36 this afternoon.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Analysts at Credit Suisse have retained their underperform rating but lifted the price target on this pizza chain operator’s shares to $53.19 ahead of its full year results release. Credit Suisse appears to have concerns over new store openings and expects this to weigh on its future growth. As a result, it doesn’t believe its shares deserve to trade at such a premium and has labelled them as expensive. The Domino’s share price is fetching $76.06 on Tuesday.

JB Hi-Fi Limited (ASX: JBH)

A note out of Citi reveals that its analysts have retained their sell rating but lifted their price target on this retailer’s shares to $44.80 following its full year results. According to the note, the broker was pleased with JB Hi-Fi’s performance in FY 2020 and felt it delivered a strong set of numbers. However, it suspects that its momentum may have peaked in July. And while it expects a strong first half result in FY 2021, it feels its second half growth could turn negative. The JB Hi-Fi share price is trading at $47.63 this afternoon.

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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. 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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