Tag: Motley Fool

While most readers will have seen the Telstra Corporation Ltd (ASX: TLS) full year result for FY 2020 last week, not everyone will have had chance to listen to its analyst call.

In light of this, I thought I would highlight a few key questions and answers from the call that may help you with an investment decision.

What was discussed on the Telstra analyst call?

Telstra’s CEO, Andy Penn, was asked about NBN profitability. Once again, the chief executive voiced his concerns over NBN wholesale pricing.

He said: “In terms of NBN profitability, if you look at our reported ARPU on fixed broadband, I think it’s around $71, $75 or something like that, it’s probably slightly lower in relation to NBN as we are still partway through the migration to that, and we’ve got input costs there of around $45, $46 already that we pay to the NBN.”

“… the fundamental problem is, is that if your wholesale price is two thirds of the retail price, which essentially it is, that’s what makes it incredibly challenging, when as a retailer you’ve got to distribute and market the product, you’ve got to service it, you’ve got to manage billing, you’ve got to put in modems, deal with a lot of the complexities of the administration and the management and the service of NBN,” he added.

And while Telstra is aiming to improve the efficiency and profitability of its NBN service, Mr Penn stressed that “there’s a bigger structural problem there as well just given where wholesale prices are today, and where NBN’s ARPUs are intended to get to.”

The dividend.

There’s been a lot of talk about the sustainability of its dividend. This stems from Telstra’s dividend policy which aims to pay out 70% to 90% of accounting earnings. However, these earnings are generally lower than its cash earnings.

This has led to many analysts suggesting Telstra should change its focus to a free cash flow-based dividend policy.

Mr Penn commented: “On the point about dividend, there hasn’t been a change of policy, but there is a bit of a structural shift happening for us, which we expect to sustain over a longer period of time between our cash earnings and our accounting earnings, where our cash earnings will be quite a bit lower – sorry, our cash earnings will be higher than our accounting earnings, and our DN&A will be [higher] than our cash CapEx, and so that actually assists us in that regard.”

Competition.

This year a third major telco player was created with the merger of TPG Telecom Ltd (ASX: TPG) and Vodafone Australia. Telstra’s executives were quizzed on recent price increases and whether they expect them to hold if the competition doesn’t follow.

CFO, Vicki Brady, commented: “At this point we’re really pleased with how customers have reacted to that. As we’ve said before, we think this is an important point as 5G scales up, and we think it’s really important, and customers know it’s important, they really balance value, quality and price. And with our leadership position in 5G and our extending network differentiation, that’s what we’re really focused on and committed to, and our competitors will choose to react as they see fit.”

COVID-19 impact.

Telstra was also asked about the $600 million COVID-19 impact that it is facing over FY 2020 and FY 2021. Analysts were curious about whether any of these lost earnings would return.

Brady responded: “Just to talk a little bit more about the COVID impact. So if I focus on 2021 and our estimated $400 million, as you as you said, the roaming piece is uncertain, and it is $200 million of that impact in 2021. Obviously I think we all hope to get back to international travel at some stage, but it is unclear when that will be, and until that happens obviously international roaming continues to be impacted.”

“On the $100 million of productivity impact from the delays in our T22 productivity job reductions, that is timing. Clearly that’s something we will come back to in February 2021, and so that productivity is not a permanent change, that is just a timing change.”

“In terms of the customer related support packages and the impacts on our NAS professional services, again timing is uncertain, but we would certainly hope that they are temporary impacts, not permanent impacts,” she added.

Conclusion.

At the end of the call, Mr Penn spoke positively about the future.

He concluded: “We’ve met guidance, we’ve delivered our dividend. We’re providing guidance for FY21. There’s a few economic implications of COVID in the current situation for us, but we think we’re balancing making the right decisions of being responsible, supporting our customers and our people and delivering returns for our shareholders. But more importantly setting us up for growth as we come out of COVID with the investment in digital that we’ve made, but also the acceleration of the rollout to 5G.”

More reading

• Telstra and 2 more ASX dividend shares I like in August
• Brokers name 3 ASX shares to buy right now
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• Is the Telstra dividend in danger? This leading broker thinks it’s safe
• ASX 200 drops 0.7%, Telstra falls 7.7%

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. 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 Important takeaways from the Telstra analyst call appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kMiL8U

I’m a big fan of buy and hold investing and firmly believe it is the best way for investors to grow their wealth.

To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

On this occasion I’m going to change the formula slightly and look at a 5-year period. This is because there are a few shares which I want to speak about that haven’t actually been listed for a decade.

With that in mind, here’s how $20,000 investments in these ASX shares in 2015 would have fared:

A2 Milk Company Ltd (ASX: A2M)

The a2 Milk share price has been on fire over the last few years thanks largely to the insatiable appetite for its infant formula in the lucrative China market. A combination of strong sales in mainland China and among daigou shoppers in the ANZ market, has underpinned rapid earnings growth over the last five years. This has been reflected in the a2 Milk share price, which has provided lucky investors with an average annual return of 93.1% over the period. This means that if you had invested $20,000 into its shares in August 2015, your investment would be worth $537,000 today.

Appen Ltd (ASX: APX)

Incredibly, the a2 Milk share price isn’t the strongest performer in the list. Over the last five years the Appen share price has outperformed it with a staggering average annual return of 114.4%. The catalyst for this has been incredible rise of artificial intelligence (AI) and the subsequent demand for Appen’s AI and machine learning data preparation services from major technology companies such as Facebook, Microsoft, and Apple. The latter used Appen to help it develop its Siri assistant. Overall, a $20,000 investment in Appen’s shares five years ago would be worth a mouth-watering $906,000 today.

NEXTDC Ltd (ASX: NXT)

Thanks to the seismic shift to the cloud and the ever-increasing amount of data being consumed by consumers and businesses, NEXTDC’s data centres have experienced a surge in demand over the last few years. This has particularly been the case during the pandemic, with NEXTDC reporting several major contract wins. This has led to the company bringing forward capacity additions and new developments. Over the five years, NEXTDC shares have generated an average return of 35.5% per annum. This would have turned a $20,000 investment into a cool $91,500.

More reading

• Ryder share price rises 7% on strong full year report
• 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
• 4 quality ASX shares to buy in August

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of A2 Milk and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How to turn $20,000 into $900,00 in 5 years with ASX shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31Xh53w

Some ASX shares are trading at crazy cheap prices in my opinion.

Some shares look cheap but perhaps they are rightly cheap because of the COVID-19 conditions they face. One example is Qantas Airways Limited (ASX: QAN). Who knows when international flights will resume? 

However, there are other ASX shares that seem like cheap buying opportunities to me:

Citadel Group Ltd (ASX: CGL)

Citadel is an ASX tech share that provides secure software to manage information. Some of its main clients operate in the sectors of defence, education and healthcare.

Indeed, it’s the healthcare that the ASX share is targeting with its recent acquisition of a UK healthcare software business called Wellbeing. The UK company provides software to help manage patient workflow.

Recurring revenue makes up around 70% of Wellbeing’s total revenue. The acquisition increases Citadel’s overall recurring revenue from 41% to 48% of total revenue.

The acquisition will increase the ‘health’ gross profit segment to around half of Citadel’s overall gross profit. Citadel’s earnings before interest, tax, depreciation and amortisation (EBITDA) margin will rise from 22% to 26%.

Citadel’s revenue becomes more defensive and its profit margin will be higher. There’s a lot to like about this acquisition. The ASX share could steadily become a larger global software player.

It’s currently trading at just 12x FY22’s estimated earnings. I think that looks very cheap.

NAOS Small Cap Opportunities Company Ltd (ASX: NSC)

NAOS Small Cap Opportunities is a listed investment company (LIC) which targets ASX shares with market capitalisations between $100 million to $1 billion. These businesses are small enough that they have plenty of growth potential, but large enough that they aren’t too risky. 

Some of the current businesses that the LIC is invested in are MNF Group Ltd (ASX: MNF), BSA Limited (ASX: BSA), Over The Wire Holdings Ltd (ASX: OTW) and Eureka Group Holdings Ltd (ASX: EGH). There is promising growth potential with each of these ASX shares.

At 31 July 2020 it had pre-tax net tangible assets (NTA) per share of $0.69. The current NAOS Small Cap Opportunities share price is trading at a 25% discount to the NTA. That’s a big discount for a LIC.

In the meantime, investors who buy shares will seemingly get an annual grossed-up dividend yield of 11%.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is a real estate investment trust (REIT) that owns farmland. It actually owns some of the largest aggregations of berry and citrus farms in Australia. Those farms are leased to Australia’s biggest agricultural business, Costa Group Holdings Ltd (ASX: CGC). Vitalharvest has a profit share agreement with Costa for the farms that Costa rents.

The ASX share currently offers investors a cash yield of 6%. That’s not bad going considering Costa has had a rough time recently with the drought, crumbly berries and fruit flies at the citrus farms. If profitability were to return to 2019 levels then Vitalharvest may be able to pay a 7% yield.

Vitalharvest’s share price could rise over the coming months as investors learn more about the new manager’s plan to grow the business. It’s going to take a more active approach in finding acquisitions in Australia and New Zealand.

The REIT won’t just be targeting farms, it’s also going to look at other food property assets. It will look at buildings related to food processing, food storage and food logistics.

At 31 December 2019, Vitalharvest had a net asset value (NAV) per unit of $0.95. The current Vitalharvest share price is a 16% discount to that NAV.

I think a return to normal profitability for Costa, higher distributions, and acquisitions led by the new manager could see the share price rise closer to the NAV.

Foolish takeaway

I think each of these ASX shares look very cheap compared to either their future earnings or recent asset value. At the current prices I think Citadel could produce the strongest returns over the next few years due to its growth, higher margins and low earnings multiple. But both the Naos LIC and Vitalharvest are both trading at big, attractive discounts to their underlying value.

More reading

• 2 of the best ASX tech shares to buy and hold until 2025
• Why the Coca-Cola share price and these ASX stocks just got upgraded by brokers to “buy”
• 2 ASX shares that are absurdly cheap right now
• 3 ASX LICs offering big dividend yields over 7%
• 3 top ASX dividend shares for income investors in August

Tristan Harrison owns shares of NAO SMLCAP FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Over The Wire Holdings Ltd. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended Citadel Group Ltd and Over The Wire Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 3 ASX shares trading at crazy cheap prices appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fVejRn

If you’re looking to make some new additions to your portfolio this month, then I think the three ASX shares named below would be fantastic options.

I believe they are among the best shares available to investors on the Australian share market and could generate strong returns for investors over the next decade.

Here’s why I would rate them five stars:

Altium Limited (ASX: ALU)

The first five-star stock to consider buying is Altium. It is a leading electronic design software provider which has exposure to the rapidly growing Internet of Things and artificial intelligence markets. These markets are underpinning the proliferation of electronic devices globally, which is driving strong demand for software subscriptions. It is also supporting the growth of its other businesses, such as workflow solution platform NEXUS and electronic parts search engine Octopart. Given the favourable industry tailwinds and its leadership position in the electronic design market, I believe Altium is well-placed to achieve its revenue target of US$500 million in FY 2025. This will be an increase of over 150% from its FY 2020 revenue.

Pushpay Holdings Group Ltd (ASX: PPH)

Pushpay is another ASX share that I would give five stars to. It is a donor management platform provider for the faith sector which has been growing at a very quick rate over the last few years. This was certainly the case in FY 2020, with the pandemic appearing to accelerate the shift to a cashless society and ultimately the adoption of its platform. In FY 2020 Pushpay reported a 33% increase in revenue to US$127.5 million. And thanks to its operating leverage, its earnings grew at an even quicker rate. More of the same is expected in FY 2021, with management forecasting the doubling of its operating earnings. Pleasingly, this is still only scratching at the surface of its overall market opportunity.

ResMed Inc. (ASX: RMD)

A final five-star stock to consider buying is ResMed. I’m a big fan of the sleep treatment focused medical device company due to its very positive long term outlook. This is due to its world class products, intuitive software solutions, and its rapidly growing ecosystem. At the end of FY 2020, ResMed’s digital health ecosystem had grown to over 12 million cloud connectable medical devices. This provides it with strong recurring revenues and an invaluable amount of high quality data. Combined, I believe ResMed is well-placed to win a greater slice of its target market over the next decade and beyond. This is a very big market and includes 936 million people with sleep apnoea globally, 380 million people who suffer from chronic obstructive pulmonary disease (COPD), and over 340 million people living with asthma.

More reading

• Get rich buying and holding these fantastic ASX shares
• 2 of the best ASX tech shares to buy and hold until 2025
• 4 quality ASX shares to buy in August
• 2 ASX shares that every investor should own
• Why I would buy ResMed and these ASX growth 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 and recommends Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX and ResMed Inc. 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 3 five-star ASX shares to buy appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kT0Ayr

The S&P/ASX 200 Index (ASX: XJO) was on form last week and recorded a solid gain. The benchmark index rose 2% over the period to end at 6126.2 points.

While a number of shares climbed higher, some recorded stronger than average gains. Here’s why these were the best performers on the ASX 200 last week:

Treasury Wine Estates Ltd (ASX: TWE)

The Treasury Wine Estates share price was the best performer on the index with an impressive 17.6% gain. This follows the release of its full year results for FY 2020. For the 12 months, the wine company reported a 6% decline in net sales revenue to $2,649.5 million and a 22% decline in EBITS to $533.5 million. Treasury Wine Estates’ performance was impacted by challenging conditions in the US wine market and the COVID-19 pandemic. The latter impacted the sales of high margin luxury products. However, news that sales in China rebounded very strongly in June went down well with investors.

Corporate Travel Management Ltd (ASX: CTD)

The Corporate Travel Management share price wasn’t far behind with a 17% gain last week. The travel sector was on form last week, possibly due to Russia claiming to have a working COVID-19 vaccine. In addition to this, a week earlier Corporate Travel Management was the subject of a broker note out of Morgans. According to the note, its analysts upgraded its shares to an add rating with a $12.85 price target. This was largely on valuation grounds, but also on the belief that corporate travel markets might be stronger than expected.

Flight Centre Travel Group Ltd (ASX: FLT)

The Flight Centre share price was on form last week and recorded a 15% gain. As well as getting a boost for the above-mentioned reason, Flight Centre released an update on its operating cash outflows. According to the release, Flight Centre has surpassed its key target of a monthly net operating cash outflow of $65 million. A $53 million net operating cash outflow was recorded in July, comfortably below its target. This outflow reduces to $43 million if you include the $10 million per month net benefit flowing from the Job Keeper wage subsidy.

NRW Holdings Limited (ASX: NWH)

The NRW Holdings share price was a positive performer and climbed 13% over the period. This may have been driven by bargain hunters after a sizeable decline a week earlier. One broker that certainly believes the NRW share price is in the buy zone is UBS. Earlier this month it put a buy rating and $3.15 price target on the contractor’s shares.

More reading

• ASX 200 rises 0.6%, Mesoblast soars
• Waypoint REIT share price gets a boost from financial guidance upgrade
• Why I would buy CSL and these ASX 200 blue chip ASX shares
• Why today is a great day to add to your ASX share portfolio
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Treasury Wine Estates Limited. 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.

The post These were the best performing ASX 200 shares last week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3aoR1Ct

According to the most recent weekly economic report out of Westpac Banking Corp (ASX: WBC), its team continue to expect the cash rate to stay on hold at 0.25% for some time to come.

It looked at recent comments out of the Reserve Bank and feels confident that rate hikes are a long way off.

Westpac commented: “The Governor is entirely confident that the cash rate will not be increased for three years given the requirement for the Board to be confident that inflation would be sustainably within the 2–3 % band.”

This means income investors are likely to be contending with low interest rates for some time to come.

But don’t worry, because the ASX dividend shares listed below could help you earn an income. Here’s why I would buy them:

Dicker Data Ltd (ASX: DDR)

I think Dicker Data is well-positioned to continue growing its dividend for the foreseeable future. It is a wholesale distributor of computer hardware and software across the ANZ region. While countless companies are struggling in 2020, Dicker Data has been delivering record sales and profits. During the first half of FY 2020, the company reported half year revenue above $1 billion for the first time and a 30.4% lift in net profit before tax to $42 million. As a result, the company is aiming to lift its full year dividend by over 30% to 35.5 cents per share. Based on the current Dicker Data share price, this represents a generous fully franked 4.8% dividend yield.

Wesfarmers Ltd (ASX: WES)

Another company which I think is well-placed to continue growing its dividend over the coming years is Wesfarmers. This is due to the quality of its portfolio and particularly its Bunnings business. The hardware giant is the conglomerate’s biggest contributor to earnings and has been performing very strongly during the pandemic. And thanks to government stimulus which is supporting the home improvement market, I expect this positive form to continue in FY 2021. Overall, I expect this to lead to Wesfarmers paying shareholders a fully franked dividend of $1.46 per share in FY 2021. Based on the current Wesfarmers share price, this equates to a fully franked 3.1% dividend yield.

More reading

• 2 ASX dividend shares with yields over 6% today
• 2 blue chip ASX dividend shares to buy
• If an ASX share announces a demerger, here’s why you should listen
• Is BetaShares Australia 200 ETF the best ASX ETF?
• As CBA slashes its dividend, the brutal reality is bank shares have been dogs for 5 years, with more pain ahead

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. 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.

The post Rates on hold until 2023? Buy these ASX dividend shares appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3hagguw

Last week the S&P/ASX 200 Index (ASX: XJO) was on form and recorded a strong gain. The benchmark index rose an impressive 2% to finish the period at 6126.2 points.

Unfortunately, not all shares on the index were climbing higher over the period. Here’s why these were the worst performers on the ASX 200 last week:

Silver Lake Resources Limited (ASX: SLR)

The Silver Lake Resources share price was the worst performer on the index with a disappointing 10.7% decline. This appears to have been driven by a sharp pullback in the gold price after risk sentiment improved. For the same reason, the Northern Star Resources Ltd (ASX: NST) share price came under pressure and fell by 10.4% over the five days.

Breville Group Ltd (ASX: BRG)

The Breville share price wasn’t far behind and dropped 9.1% last week. The appliance manufacturer’s shares came under pressure after the release of its full year results. Although Breville delivered a 25.3% increase in revenue and an 11.2% increase in normalised net profit after tax to $75 million, some investors were betting on an even stronger result. Goldman Sachs believes the Breville share price weakness is a buying opportunity.

AGL Energy Limited (ASX: AGL)

The AGL Energy share price was out of form and tumbled 8.8% lower over the period. Investors were selling the energy company’s shares after the release of its full year results. AGL Energy reported an underlying profit after tax of $816 million for FY 2020. This was a 22% decline on the prior corresponding period but within its guidance range. Unfortunately, another sizeable decline in profits is expected in FY 2021. Management has provided underlying profit after tax guidance of $560 million and $660 million in FY 2021.

Challenger Ltd (ASX: CGF)

The Challenger share price was the next worst performer with an 8.6% decline. The annuities company’s shares were sold off after the release of its full year results. In FY 2020 Challenger posted an 8% decline in normalised net profit before tax to $507 million and a statutory loss after tax of $416 million. In FY 2021 the company expects its normalised net profit before tax to decline again. It provided guidance of between $390 million to $440 million. This represents a 13.2% to 23% decline year on year.

More reading

• 2 ASX dividend shares with yields over 6% today
• Top broker tips the Breville share price to rise beyond $30
• Wage growth is plummeting – here are 3 ASX dividend shares to start a second income
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• AGL share price fall a warning for the LNG sector

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger 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 These were the worst performing ASX 200 shares last week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/31SbATR

ASX share reporting season is into the full swing of things. There were a number of interesting FY20 results this week.

Here are three of my favourite ASX share reports/updates of the week:

Class Ltd (ASX: CL1)

Class impressed the market with its result. I like seeing a business managing to turn around sentiment when it seemed as though Class’ SMSF segment may have hit a ceiling.

In FY20 Class reported that operating revenue and other income increased by 15% to $44.1 million and annualised recurring revenue rose by 22% to $46.8 million.

Whilst the bottom line didn’t grow, it was the acquisition and FY21 guidance that was particularly exciting.

In FY21 the ASX share is expecting revenue to grow by another 20% to $53 million with an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin of more than 40%.

The Smartcorp acquisition seems like a great move, it’s a software business which deals with documents and compliance and counts two of the big four accounting firms as clients. Between Smartcorp and NowInfinity, Class will have a 10% market share of that industry.

I think that Class has done well to pivot back to growth. It will have high EBITDA margins with strong recurring revenue.

The Class share price looks more interesting after it dropped back on Friday.

Magellan Financial Group Ltd (ASX: MFG)

Fund manager Magellan reported an impressive result considering all of the market turmoil that occurred in the second half of FY20.

Average funds under management (FUM) rose by 26% to $95.5 million. Net profit after tax (NPAT) rose by 5% and adjusted NPAT grew by 20%. Total dividends paid by Magellan for FY20 increased by 16% to 214.9 cents. It also finished with $925.4 million of net tangible assets at 30 June 2020.

I’ve been impressed how Magellan has managed to grow year after year since the GFC.

I also like that the ASX share is looking to continually innovate. It’s working on a retirement income product for the Australian market. It just obtained a necessary private binding tax ruling from the ATO.

Magellan also revealed the proposed launch of a new series of products.

The new products will use Magellan’s investment philosophy and research to offer investors lower cost, more diversified portfolios of high quality companies. The cost will be 0.5% per annum, which is cheaper than its other equity strategies.

Magellan also announced that it would launch a sustainable investment strategy which will include climate change risk considerations.

These new products should help Magellan grow its FUM further over the coming years.

The Magellan share price has risen strongly since March 2020. It’s more than doubled since the COVID-19 bottom. 

Premier Investments Limited (ASX: PMV)

The final update that I think was really impressive was Premier Investments – the retailer which owns brands like Peter Alexander, Smiggle, Just Jeans and Jay Jays.

It wasn’t actually a complete report from the company, just quite a detailed trading update for the second half of FY20.

I was impressed by the ASX share due to its ability to grow profit despite what is happening with COVID-19.

Premier Retail said that whilst global sales were down 18% to $484.2 million, its online sales and earnings before interest and tax (EBIT) rose to deliver record earnings.

Premier Retail’s online sales of $123.3 million was up 70% compared to the prior corresponding period and contributed 25.5% of its total sales. The ASX share was pleased to report that online sales deliver a significantly higher EBIT margin compared to the retail store network.

Full year FY20 online sales were up 48.8% to $220.4 million and contributed 18.1% of Premier Retail’s total FY20 sales.

Premier Retail now expects FY20 second half EBIT to be up between 9.7% to 11.7% to $58.7 million to $59.7 million. FY20 EBIT is expected to grow by 10.5% to 11% to between $184.8 million to $185.8 million.

The Premier Retail share price has risen about 7.5% since the update. It has recovered strongly since March 2020 as well. 

More reading

• Why the Class share price is up 41% this week
• Is the Premier Investments share price still a buy after yesterday’s gains?
• Is now a good time to buy Magellan shares?
• Why AMP, Premier Investments, QBE, & Treasury Wine shares are storming higher
• Premier Investments share price zooms 12% higher on strong trading update

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Class 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 My favourite 3 ASX share reports of the week appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3gZPTrc

ASX dividend shares are worth a premium right now. Many Aussie companies are slashing their dividends in the August earnings season as the coronavirus pandemic continues to bite.

However, there are still some companies that are as reliable as ever. One that springs to mind is Telstra Corporation Ltd (ASX: TLS).

Telstra hit its earnings guidance and maintained a 16 cents per share (cps) full-year dividend.

Here’s why I like Telstra and 2 more ASX dividend shares after their latest earnings updates.

Telstra and 2 more ASX dividend shares I like

There’s no doubt these are challenging times for Telstra. The Aussie telco hit earnings guidance on cash flow and underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

However, NBN impacts and the ongoing pandemic are also expected to hit FY21 earnings.

But Telstra’s dividend payout policy has been a real strength in recent years. That looks set to continue with the company’s 16 cps dividend representing a ~5% dividend yield based on the current Telstra share price.

Despite some challenges, I think the potential 5G boom and reliable dividend makes Telstra a top ASX dividend share.

It’s not just the telcos that I’m watching. I like the look of Aussie insurer QBE Insurance Group Ltd (ASX: QBE).

QBE reported a modest 4 cps dividend on Thursday despite reporting a US$712 million net loss.

That doesn’t exactly scream top ASX dividend share but I like QBE’s prospects for FY21.

The Aussie insurer reported minimal exposure to the ongoing pandemic. That includes both in direct insurance and its reinsurance exposures.

That 4 cps dividend would represent a yield of 0.73% on the current QBE share price. However, I think the symbolism of a dividend payment in these times is a vote of confidence in future earnings and balance sheet strength.

Finally, the Charter Hall Social Infrastructure REIT (ASX: CQE) is another ASX dividend share on my watchlist.

Shares in the Aussie real estate investment trust (REIT) climbed 11.3% higher this week. That came after a steady full-year result headlined by a 25% jump in net property income and a 16 cps distribution.

I think the ability to maintain steady earnings and pay a dividend make the Charter Hall Social Infrastructure REIT a strong ASX dividend share.

Foolish takeaway

These are just a few of the ASX dividend shares I like from the August earnings season so far.

I’ll be keeping an eye out for more strong income shares to buy in the coming weeks.

More reading

• Brokers name 3 ASX shares to buy right now
• Brokers just downgraded the Telstra share price and these other ASX 200 stocks
• Is the Telstra dividend in danger? This leading broker thinks it’s safe
• ASX 200 drops 0.7%, Telstra falls 7.7%
• 2 blue chip ASX dividend shares to buy

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

The post Telstra and 2 more ASX dividend shares I like in August appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3fZthGa

Warren Buffett is perhaps the world’s most celebrated stock investor, but shares for his company are phenomenally expensive.

The price for Berkshire Hathaway Inc (NYSE: BRK.A), Buffett’s publicly listed investment vehicle, has risen so much over the decades that as of August 14 it sits at an astounding US$318,114 (AU$444,660).

This isn’t exactly an accessible price for mum-and-dad investors.

But there is a neat trick, not available to Australian companies, that can be used to get yourself to the “Buffett” table.

It’s called fractional shares.

“Fractional shares are portions of whole shares of a stock or ETF,” Stake chief operations officer Dan Silver told The Motley Fool Australia.

“This means that you can trade a dollar amount of a stock irrespective of the share price — you have the flexibility to invest what you want.”

So for Berkshire Hathaway, you could buy 0.003 of one share to pay just US$1,000 for a piece of Warren.

Amazon.com Inc (NASDAQ: AMZN) shares, at more than AU$4,000 each, is another example where it might make sense to buy a fraction.

Silver said fractional shareholders have the same rights as full-stock owners.

“Fractional shares are held in your name with our broker and custodian, so you have full beneficial interest,” he said.

“For example, this means that you receive dividends and any other corporate actions on a pro-rata basis.”

Why are fractional shares not available in Australia?

Cultural and systemic differences mean fractional investing is not available for companies listed in Australia.

Silver said in the US, brokerage fees have tended to be on a per-share basis, meaning transaction costs are reduced as the share price climbs.

But in Australia brokerage fees tend to be pegged to the trade value.

“[Australian] share prices are rarely above a couple of hundred dollars. There is more incentive for companies to maintain share prices at a level that does not prevent retail ownership.”

US shares are owned by a custodian (usually an institution) on behalf of the benefiting customer, rather than held directly by the shareholder like in Australia.

This ownership model makes fractional shares easier to implement.

In the US, stock splits and dividend reinvestment plans can also result in part-shares floating around. In Australia, leftover dividends are often held as a credit to be used at the next opportunity.

Fractional shares can be harder to sell

Although fractional stocks are becoming more prevalent, only certain brokers and broking platforms deal in them – meaning they’re not available to the entire market.

This could make it harder to sell later.

The selling brokerage firm would have to join your fraction with other fractions to form a whole share to trade on the open market.

But if they’re popular stocks like Berkshire Hathaway and Amazon, perhaps this hurdle is nothing to worry about.

More reading

• Stock split watch: Could Amazon be next?
• ASX investors have been buying these international shares
• MoneyMe share price surges, but is it sustainable?
• Here’s what a stock split means for investors
• 5 investing tips from Irving Kahn – who called the 1929 stock market crash

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Tony Yoo 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 and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon. 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 How Aussies can buy Warren Buffett shares without paying $445,000 appeared first on Motley Fool Australia.

from Motley Fool Australia https://ift.tt/3kLthx9