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With the Reserve Bank of Australia (RBA) keeping the official cash rate at a record low of 0.25% this month, it’s certainly a tough time to be an income investor. Having a ‘traditional’, conservative income portfolio consisting of a mixture of cash, bonds and ASX dividend shares is no longer viable in 2020. Even top-yielding cash investments like term deposits are yielding less than 2% (or even 1%) these days. Ditto with government bonds.

And to make matters worse, a bevvy of former dividend heavyweights have slashed their shareholder payouts this year. These include the ASX banks like Westpac Banking Corp (ASX: WBC) as well as Ramsay Health Care Limited (ASX: RHC), Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD).

Luckily, there are still some ASX shares that do offer solid income prospects. So here are 2 ASX dividend shares offering income yields of more than 6% today for your perusal.

AGL Energy Limited (ASX: AGL)

The AGL share price hasn’t been in investors’ good books this week. This energy giant reported its full-year earnings for FY2020 yesterday, and it wasn’t a pretty sight. Largely due to the coronavirus pandemic, AGL reported a 22% drop in profits after tax, which it expects to get worse in FY2021 before it gets better.

The good news was AGL committing to fund healthy dividend payouts over the next few years, vowing to pay out 100% of its earnings if necessary. Despite the pandemic’s negative impact on AGL, power and gas are still relatively inelastic services, making AGL a great defensive share for your portfolio. As such, I think AGL’s current trailing dividend yield of 7.25% is worth a good look today.

WAM Research Limited (ASX: WAX)

WAM Research is another income share that warrants a good look today in my view. It’s a listed investment company (LIC), which means it only invests in other ASX shares for the benefit of its owners. In WAM Research’s case, only small to mid-cap companies form its portfolio. As of 30 June, these included REA Group Limited (ASX: REA), Breville Group Ltd (ASX: BRG) and Adairs Ltd (ASX: ADH).

But what really attracts me to WAM Research in 2020 is its stupendous dividend yield. On current prices, WAM Research shares are offering a trailing, fully franked yield of 6.96% (which grosses-up to 9.94%). Such a robust dividend yield is a very welcome oasis in a year of arid income opportunities.

Foolish takeaway

I would happily buy either of these 2 ASX dividend shares for strong income in 2020. On current pricing, I think AGL is looking cheap (albeit for good reason), but it’s hard to say no to WAM Research’s high yield as well.

More reading

• 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
• Why I would buy CSL and these ASX 200 blue chip ASX shares
• 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 Sebastian Bowen owns shares of Ramsay Health Care Limited and WAM Research Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited and REA 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 FSA Group Ltd (ASX: FSA) share price today surged higher after the company reported better than expected full year results. The FSA share price was up 15.56% to $1.04 by the market’s close.

What FSA Group does

FSA Group is a provider of debt solutions and direct lending services to individuals in Australia. FSA has serviced thousands of Australians for just over 19 years. FSA offers a range of debt solutions and direct lending services. The company says it tailors these services to suit clients’ individual circumstances and to achieve successful outcomes for its clients. FSA has two business divisions which are Services and Consumer Lending.

How did FSA perform in FY 2020?

As stated by FSA, the 2020 financial year has been a year of challenges however it has also presented opportunities. For FY 2020, FSA Group generated $68.2 million in operating income, a 2% decrease on the prior corresponding period (pcp).  

This was largely due to the fact that, during the 2020 financial year, new client numbers for informal arrangements and debt agreements decreased by 5%. Clients for personal insolvency agreements and bankruptcy also decreased by 20% compared to the pcp. FSA Group currently manages $353 million of unsecured debt under informal arrangements and debt agreements. During the 2020 financial year, FSA paid $89 million in dividends to creditors.

Profit after tax was announced to be $16.3 million, a 13% increase compared to the results of 2019. The net cash inflow from operating activities was $19.4 million, a 14% increase. This was aided by home and personal loans growing by 4% from $441 million to $457 million. 

The company announced a fully franked final dividend of 3 cents per share, bringing the full year dividend to 6 cents per share.

What’s next for the FSA share price?

For 2021, FSA will seek to rebrand Azora (finance solutions for small businesses) and focus on growing its home loan and personal loan pools. The company is also aiming to maintain its leading position in a niche market and improve its informal arrangement offering, based on client and creditor feedback. Despite strong cash inflow, FSA will not provide FY 21 earnings guidance until a later date. However, the company advised it expects the FY 21 dividend to be between 6 – 7 cents per share.

On a side note, Sam Doumany is retiring after 17 years as Chairman of the company. He is expected to step down on 2 September, his 83rd birthday.

More reading

• ASX 200 rises 0.6%, Mesoblast soars
• Is the CBA share price a buy?
• ASX cannabis shares continue progress despite pandemic
• Get rich buying and holding these fantastic ASX shares
• 2 fantastic ETFs for ASX growth investors to buy today

Motley Fool contributor Daniel Ewing 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 S&P/ASX 200 Index (ASX: XJO) rose by around 0.6% today to 6,126 points.

The biggest rise of the day didn’t belong to an ASX share announcing a report:

Mesoblast Limited (ASX: MSB) takes off

A very positive US announcement sent the Mesoblast share price up 39% today.

The ASX 200 company said that Oncological Drugs Advisory Committee (ODAC) of the United States Food and Drug Administration (FDA) voted in favour that the available data supports the efficacy of remestemcel-L (RYONCIL) in pediatric patients with steroid-refractory acute graft versus host disease (SR-aGVHD).

Mesoblast chief medical officer Dr Fred Grossman said: “Steroid-refractory acute graft versus host disease is an area of extreme need, especially in vulnerable children under 12 years old where there is no approved therapy. We are very encouraged by today’s outcome and are committed to working closely with the FDA as they complete their review of our submission”.

Pediatric transplant physician Dr Joanne Kurtzberg said: “This devastating condition has an extremely poor prognosis and there are no FDA-approved options for children under the age of 12. The clinical studies I have directed have demonstrated the potential for this treatment to fill a significant unmet medical need.”

National Australia Bank Ltd (ASX: NAB) impresses

NAB released its FY20 third quarter update today.

The big four ASX 200 bank said that its cash earnings of $1.55 billion was down by 7% compared to the third quarter of FY19. Cash earnings before tax and credit impairment charges was up 5%. Unaudited statutory net profit came in at $1.5 billion.

NAB had a common equity tier 1 ratio (CET1) of 11.6% at 30 June 2020. The bank recently raised $4.25 billion from its institutional placement and share purchase plan.

Compared to the FY20 first half quarterly average, and excluding ‘large notable items’, cash earnings increased 24% and cash earnings before credit impairment charges increased 17%. Revenue rose by 10% reflecting higher markets and treasury income which included the reversal of unrealised mark-to-market losses.

NAB’s net interest margin (NIM) was “broadly stable” but fell a little because of the low interest rate environment. Expenses rose 2%.

The percentage of loans that are over 90 days past due increase to 1.06%.

NAB CEO Ross McEwan offered some encouraging words:

“The COVID-19 pandemic continues to challenge our customers and our bank, with varied impacts across industries and communities. The outlook remains highly uncertain, but decisive actions in April to strengthen our balance sheet allow us to support customers, while keeping our bank safe.

“We have a clear plan for NAB and we are getting on with it, including quickly embedding our new operating model and creating clear accountabilities. We are investing in our colleagues and executing fewer, more important projects. This will make a real difference to how well we serve customers and drive sustainable performance.”

ASX 200 share NAB saw its share price rise 1.2% today.

Baby Bunting Group Limited (ASX: BBN) booms

The Baby Bunting share price went up over 10% today after releasing its FY20 report. 

Baby Bunting said that its total sales increased by 11.8% today to $405.2 million with comparable sales growth of 4.9%. Online sales grew by 39.1%.

Its gross margin improved by 120 basis points to 36.2%.

Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 24.1% to $33.7 million and pro forma net profit after tax (NPAT) rose by 34.1% to $19.3 million. Statutory NPAT fell 14% to $10 million – this included business transformation costs and impairment charges.

Baby Bunting confirmed it didn’t qualify for jobkeeper payments.

The retailer announced a final dividend of 6.4 cents per share, bringing the full year dividend to 10.5 cents per share.

In the first six weeks of FY21 the company has seen comparable store sales growth of 20%, which includes the effect of Victoria’s restrictions, though Baby Bunting stores continue to operate. In FY21 Baby Bunting expects to open between four to six new stores.  

More reading

• Why I’d buy today’s CSL share price over Mesoblast
• 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
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher

Motley Fool contributor Tristan Harrison 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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Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?

The major ASX bank released its FY20 result to investors this week which included a number of interesting elements.

The headline figure was that cash net profit after tax (NPAT) was down 11.3% to $7.3 billion. A large part of the reduction was due to the $1.5 billion COVID-19 provision. Clearly COVID-19 is having an effect on CBA’s financials. As a bank it is connected to almost every part of the economy. The CBA share price was already down from the pre-COVID-19 price because of these expected impacts.

CBA was able to keep growing its loan book despite the difficult operating conditions. Business lending grew by 5.1%, or $7 billion in dollar terms. Home lending increased by $18.4 billion, which was 1.3 times more than the system’s growth rate. Household deposits grew by $25 billion, or 9.8% in percentage terms.

Deposit funding is now 74% of total funding, up from 69% because of the deposit growth.

The growth in lending and deposits helped operating income grow by 0.8% to $23.75 billion. Operating expenses grew by 0.7% to $10.9 billion because of higher staff costs and IT costs, offset by lower remediation costs.

I think it’s impressive that CBA is growing its loan book faster than the overall lending sector considering how large it is. The CBA share price can grow faster than other banks if it grows its loan book faster than the other banks in percentage terms.

A key measure for the profitability of a bank is the net interest margin (NIM). Banks lend out money, but it also has to pay someone for that funding – whether that funding is from customer deposits or from other lenders. The CBA NIM declined by 2 basis points to 2.07% for FY20 due to the impact of lower interest rates, partly offset by lower short-term funding costs.

How badly is COVID-19 affecting CBA’s loan book?

As I mentioned CBA has recognised a $1.5 billion COVID-19 provision. CBA also revealed that at 31 July 2020 there were 135,000 home loans that were still being deferred – this is 8% of the total. This is down from 154,000 at the peak.

At 31 July 2020, 59,000 business loans were still being deferred – that’s 15% of the total. It’s down from 86,000 at the peak.

The performance of these deferred loans will have a material impact on CBA’s FY21 profit and the CBA share price.

Hopefully there is a continuing trend over the next few months of fewer borrowers needing to defer repayments. Government stimulus is only going to last for a limited time. Jobkeeper is projected to end in March 2021.

Is CBA’s dividend still great?

CBA announced a final dividend of $0.98 per share. That was a 57.6% cut from the FY19 final dividend. The FY20 full year dividend was $2.98, a 31% cut from the FY19 dividend.

At the current CBA share price it has a FY20 grossed-up dividend yield of 6%. That’s a pretty good yield considering all of the COVID-19 impacts and the low interest world we’re living in.

CBA was able to still pay a decent dividend because of its balance sheet strength. At the end of FY20 it had a CET1 capital ratio of 11.6%. That’s comfortably higher than APRA’s ‘unquestionably strong’ benchmark of 10.5%.

At this share price is CBA a buy?

CBA shares are down 21.6% from the February 2020 high before COVID-19 hit the world. That’s a decent fall and may represent long-term value for income-seekers. The major ASX bank’s recovery is fairly dependent on how the overall national COVID-19 picture looks as well as how the economy rebounds (or .

The CBA share price isn’t cheap, but I’d prefer to buy it compared to most other banks on the ASX. However, banks could be operating in a challenged environment for some time – so there are other sectors I’d rather buy into, like technology.

More reading

• 2 easy ASX shares for a beginner to buy today
• Forget CBA and buy these quality ASX dividend shares
• Top brokers name 3 ASX shares to sell today
• Why AGL, Breville, CBA, & Telstra shares are dropping lower today
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result

Motley Fool contributor Tristan Harrison 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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ASX cannabis shares faded from the spotlight in 2020 as the coronavirus pandemic took over. But the Australian medical marijuana companies have been working through COVID-19 disruptions as they look to scale their businesses. Some have been quietly growing patient numbers while others seek additional funding to pursue their strategic agendas. We take a look at how ASX cannabis shares are performing. 

3 ASX cannabis shares in the spotlight

Althea Group Holdings Ltd (ASX: AGH)  

Althea saw growth in patient numbers falter due to COVID-19 disruptions early in the pandemic. Average new patients per business day fell from more than 36 in December to less than 22 in April. But the rate of growth has since rebounded with 583 new patients added in June, meaning Althea finished the financial year with 7,295 patients. Sales, which were lower than expected in April and May, rebounded in June, which became the company’s highest revenue month on record. 

Last month, Althea launched online sales of its medicinal cannabis products. Using the Althea Concierge app, patients can purchase products online and have them delivered directly to their doors, eliminating the need to visit a doctor or a pharmacy. Althea CEO, Josh Fegan, said “The ability for contactless sale is probably the biggest development yet for medicinal cannabis in Australia. You need to have a lot more than just a quality product in the highly regulated prescription cannabis space and Althea’s ongoing investment in technology provides us with a premium value proposition that we believe none of our competitors possess.” 

Interactions with healthcare professionals were fewer during the June quarter due to COVID-19 restrictions. In order to mitigate this, the team pivoted to virtual meetings where possible. The Althea concierge app also continued to play a role in providing virtual training and supporting health care professionals with product information and patient treatment plans. At the end of FY20, close to 600 health care professionals were prescribing Althea products. 

Althea achieved unaudited revenue of $1.59 million for the June quarter. This was a new record and up 5% on the March quarter despite COVID-19 disruptions. Unaudited revenue over the full year was $4.97 million, a 547% increase on FY19. At 30 June 2020, Althea had $10.4 million cash on hand, leaving it fully funded and in a strong position to meet its financial obligations. The strong increases in revenue despite the impacts of the pandemic have seen the Althea share price rebound strongly from its March low. This ASX cannabis share is currently trading at 35 cents, up 118% from its 16 cent low, but still 27% below its high for the year.  

Cann Group Ltd (ASX: CAN) 

Cann Group is in the medical marijuana cultivation and manufacture business. The business faced headwinds in the form of a global oversupply of cannabis earlier in the year. This combined with the coronavirus pandemic caused the Cann Group share price to fall from a January high of $1.69 to a March low of 61 cents. A July capital raising saw the share price fall further, with shares now trading at 49 cents. Cann Group raised $24.3 million of capital at an issue price of 40 cents per share, however the company’s major shareholder, Aurora Cannabis Inc (Canada), did not participate. Nonetheless Cann Group says it believes Aurora remains committed to the strategic relationship. 

The coronavirus pandemic has slowed the company’s progress in obtaining debt financing for the build of its Mildura growing facility. The build also requires engagement with specialist contractors based in Europe who are unable to enter Australia. Cann Group believes demonstrating an established revenue stream will strengthen its position in relation to securing external funding for Mildura. To this end, Cann Group has secured commercial supply agreements for cannabis products and dried flower for sale in Australia and to export markets including the United Kingdom and Europe. A distribution agreement is in place to deliver products to hospitals and pharmacies throughout Australia. An offtake agreement is also in place with Aurora enabling Cann Group to supply Aurora with products through to 2024. 

The ASX cannabis share can supply a broad range of products from specific cultivars in unique finished product formulations. Manufacturing arrangements with IDT Australia Limited (ASX: IDT) ensure products meet standards required for distribution in a range of markets. Cann Group is pursuing additional supply contracts with third parties in Australia and overseas. A growing revenue base and expanding supply arrangements will considerably strengthen the business case for the Mildura expansion, which the company remains strongly committed to. 

Auscann Group Holdings Ltd (ASX: AC8) 

The Auscann share price collapsed in March, falling to a low of 14 cents after trading as high as 36 cents in February. The share price has yet to recover from this fall, with shares currently trading at 15 cents. The company produces controlled dosage THC/CBD capsules and received its first orders during the June quarter. Product was supplied to Australian patients under the special access scheme. 

Recruitment and dosing was also completed during the quarter in a phase one study of the products. The study will provide information to inform dose selection and assist in prescribing the hard shell capsules. CEO, Ido Kanyon, said, “We are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule. This is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis for medical treatment.”

Auscann recorded net cash outflows of $5.5 million during the June quarter, primarily due to product manufacturing and operating costs. $3.1 million was spent securing high-quality raw material for R&D and manufacture. Research and development costs of $1.1 million were also incurred mainly in relation to the clinical trial. At the end of FY20, Auscann had a cash balance of $19.2 million which will support the continued progress of its growth strategy. 

What’s next for ASX cannabis shares?

The coronavirus pandemic has had a mixed impact on ASX cannabis shares. Demand for cannabis products had been growing strongly prior to the pandemic. Experts report that medicinal cannabis products get to about 1% to 2% of the population. Based on current Australian patient numbers, there is still significant growth to be seen. The key for these ASX cannabis shares will be capturing demand, both at home and abroad. 

More reading

• ASX cannabis shares adjust to coronavirus environment
• Why Afterpay, BHP, Cann, & Mesoblast shares are tumbling lower
• Why Cann, Flight Centre, Helloworld, & Zip shares are dropping lower
• Cann Group share price tanks on discounted capital raising

Motley Fool contributor Kate O’Brien 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 believe that one of the most effective investment strategies is buy and hold investing.

This strategy sees investors buy the shares of quality companies (with positive long term outlooks) and hold onto them for as long as the investment thesis remains intact.

But which shares would make good buy and hold options? Luckily there are a plethora of ASX shares which I believe could generate strong returns for investors over the long term.

Three that tick a lot of boxes for me right now are listed below. Here’s why I rate them highly:

Altium Limited (ASX: ALU)

The first buy and hold option to consider is Altium. It is a software-as-a-service company that provides an award-winning printed circuit board (PCB) design platform. PCBs are the small boards you find in almost all electronic devices. Given the proliferation of electronic devices because of the Internet of Things and artificial intelligence markets, demand for its software has been growing at a very strong rate in recent years. The good news is that management doesn’t expect this demand to ease any time soon. In FY 2020, it expects to have just over 50,000 software subscriptions. It is then targeting market domination and 100,000 subscriptions by FY 2025.

Nearmap Ltd (ASX: NEA)

I think Nearmap could be a great buy and hold option. It is a leading aerial imagery technology and location data company that gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. This helps users conduct virtual site visits, which enables informed decisions, streamlined operations, and ultimately significant cost savings. Although FY 2020 has been a bit of an underwhelming year for Nearmap, I believe this is just a temporary hiccup and its long term potential remains extremely positive. Especially given its industry-leading software in a highly fragmented market.

ResMed Inc. (ASX: RMD)

Another ASX share to consider buying and holding is ResMed. It is a sleep treatment-focused medical device company which has delivered consistently strong earnings growth over the last decade. Pleasingly, I’m very confident this positive form can continue over the next decade. This is thanks to its high quality masks and software solutions and its massive market opportunity. On its investor call last week, management noted that there are 936 million people with sleep apnoea globally. There are also over 380 million people who suffer from chronic obstructive pulmonary disease (COPD) and over 340 million people living with asthma. This gives it a huge runway for growth over the next decade.

More reading

• These exciting ASX tech shares could be perfect buy and hold options
• 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
• Whatever happened to WAAAX 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 Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. 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.

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If you’re looking to boost your portfolio with some new additions, then exchange traded funds (ETFs) could be an easy way to do this.

This is because ETFs give investors the opportunity to invest in a large and diverse number of shares through just a single investment.

Not only that, they give investors a way to invest into markets or sectors that would usually be difficult to access.

But which ETFs should you buy today? Two that I would add to my portfolio are listed below:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

I think the BetaShares Asia Technology Tigers ETF could generate strong returns for investors over the next decade. In many respects, it is Asia’s version of the famous Nasdaq 100 index (see below). The ETF gives investors exposure to the 50 largest technology and ecommerce companies that have their main area of business in Asia (excluding Japan).

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. This bodes well for the 50 companies included in this ETF and for owners of it.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

My favourite ETF is the BetaShares NASDAQ 100 ETF. This ETF aims to track the performance of the NASDAQ 100 index, which comprises 100 of the largest non-financial companies listed on the famous exchange.

This includes many companies that are at the forefront of the new economy, such as Amazon, Apple, Facebook, and Netflix. BetaShares notes that the ETFs strong focus on technology gives diversified exposure to a high-growth potential sector that is under-represented in the Australian share market. Given the quality on offer in the ETF, I believe it is likely to outperform the ASX 200 over the long run.

More reading

• 2 exciting high-growth ETFs to buy for high returns today
• 3 of the best ETFs for ASX investors to buy right now
• 2 of the best ASX shares to buy right now
• With global share markets soaring, here’s why it’s still a good time to buy ASX shares
• 2 of the best international ETFs that ASX investors can buy 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 BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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 Class Ltd (ASX: CL1) share price gained a whopping 40.6% this week, by late afternoon trading today. That compares to a 0.7% gain for the All Ordinaries Index (ASX: XAO).

The vast majority of Class’ 40.6% share price gain this week was delivered yesterday, when shares in the cloud-based software developer soared to close the day up 35.6%.

Year-to-date, the Class share price has not yet fully recovered from the smashing 57% loss it suffered during the COIVID-19-inspired share market sell-off. From 17 February through 19 March shares tumbled 57%.

After this week’s gains, the Class share price is down only 7.8% since 2 January.

At the current price of $1.90 per share, Class has a market cap of $235 million.

What does Class do?

Class Ltd develops and delivers cloud software for the Australian wealth accounting market. Its products automate manual workloads and support accountants and their clients with delivering digital Self Managed Super Funds (SMSFs).

Around 28% of all SMSFs are administered on Class Super. That works out to more than 180,000 accounts administered using Class software by more than 2,800 customers.

Why did the Class share price leap 41% higher this week?

The Class share price was clearly buoyed by the release of its 2020 financial year results yesterday.

The highlights of its report included a 15% increase in operating revenue and other income in the 2020 financial year compared to the previous year. That exceeded the company’s guidance of a 14% increase.

While earnings per share (EPS) fell almost 25% from the 2019 financial year, the EPS of 5.8 cents beat analyst expectations of 5.5 cents per share. The company also reported $17.4 million in operating cash flow, up 35% year-over-year.

Class’ total customer numbers also grew over the past year, up from 1,545 to reach 2,866 this year.

Investors also appear to be pleased with Class’ announcement that it is buying 100% of Smartcorp’s shares. Smartcorp is Australia’s first online company ordering and Australian Securities Investment Commission (ASIC) compliance system.

Commenting on the acquisition, Class CEO Andrew Russell said: “Acquiring Smartcorp accelerates the role Class will play in the documentation and corporate compliance space.”

Following on from Class’ stellar share price surge yesterday there looks to be some profit taking going on today, with the Class share price down 6% in late afternoon trading.

More reading

• Why today is a great day to add to your ASX share portfolio
• What’s driving the surge in jewellery retailer Lovisa Holdings’ share price in August?
• Class share price could be on the move following FY20 results
• Here’s the best mid-cap growth share to buy on the ASX
• 2 ASX retail shares on my radar in 2020

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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The Ryder Capital Ltd (ASX: RYD) share price has today pushed higher following a strong performance in FY20. At the time of writing, the Ryder share price is currently up 7.14% to $1.50.

What does Ryder do?

Ryder Capital was listed on the ASX in September 2015. It is managed by Ryder Investment Management Pty Ltd which is a Sydney-based boutique fund manager. The company pursues a high conviction, value driven investment strategy specialising in small to mid-cap Australasian equities.

The company’s top three holdings are Macmahon Holdings Limited (ASX: MAH), Updater Inc and Nextdc Ltd (ASX: NXT). Another of its largest holdings is 3P Learning Ltd (ASX: 3PL) which today has soared thanks to a takeover attempt. This is likely, in part, driving Ryder’s impressive gains.

How did Ryder perform in FY 2020?

Ryder was a very positive performer in FY 2020 despite the effects of the coronavirus pandemic. The company managed to deliver a 149% increase in total comprehensive income after tax to $7.7 million.

The company also increased total profit reserves by 65% to $18.9 million. This is the amount of money the company can distribute and, as a result of the increase, there was an increase in dividend yield. Ryder Capital announced a fully franked, 3 cents per share dividend, increasing the full year dividend by 25% to 5 cents per share.

Portfolio performance

Ryder’s full year investment performance was 12.34%, smashing the All Ordinaries Index (ASX: XAO) equivalent performance of -10.25%. The company beat its hurdle which was 4.93% for the year. This was calculated as the RBA cash rate plus 4.25%.

FY 2020 gross portfolio performance of 16.1% was also materially ahead of the company’s performance benchmark as well as the ASX All Ords and S&P/ASX Small Ordinaries Index (ASX: XSO). Cash holdings of $17.5 million at 30 June 2020 represented 17.90% of the portfolio. 

What’s next for the Ryder share price?

Peter Constable, Chairman of Ryder, has this to say about the coming year:

“The economic impacts of the COVID-19 health pandemic remain highly uncertain in depth, breadth, and timing.” 

He went on say, “This backdrop is not one that should be supportive of record high asset prices however, the magic of zero interest rates and record fiscal stimulus has forced risk aversion aside for now.”

The company is optimistic yet realistic about the future. Ryder expects to see further instances of mispricing creating opportunities for the company to deploy capital. Ryder explains that in the absence of viable investments, the company will look to increase its cash weightings, while maintaining its indirect exposure to gold.

The Ryder share price currently sits at $1.50, 7.14% higher than yesterday’s close and 3.4% higher in year-to-date trading.

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Motley Fool contributor Daniel Ewing 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.

The post Ryder share price rises 7% on strong full year report appeared first on Motley Fool Australia.

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When you’re young and first start investing, you might buy fledgling growth shares for their high risk, high reward gains. This is because if things don’t go to plan, you have plenty of time to bounce back and recover your losses.

Things are very different when you approach retirement. At this point I think investments should focus on capital preservation and income.

But which shares would be great core holdings in a retirement portfolio? I think the two ASX shares listed below would be great options. Here’s why:

Rural Funds Group (ASX: RFF)

The first option to consider adding to a retirement portfolio is Rural Funds. It is a real estate investment trust which owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. These include macadamia orchards, cattle assets, cotton assets, vineyards, and almond orchards. The latter two assets include Treasury Wine Estates Ltd (ASX: TWE) and Select Harvests Limited (ASX: SHV) as tenants.

Thanks to its ultra long-term tenancy agreements and periodic rent increases, I believe Rural Funds is in a strong position to deliver on its target of growing its distribution by ~4% per annum over the long term. Another positive is that Rural Funds pays its distribution in quarterly instalments, which provides investors with a regular source of income. In FY 2021 Rural Funds intends to pay an 11.28 cents per share distribution. Based on the latest Rural Funds share price, this equates to a 5.2% yield.

Woolworths Limited (ASX: WOW)

Another top option for a retirement portfolio could be Woolworths. I think it would be a good option for retirees due to the conglomerate’s numerous quality brands. These include Woolworths supermarkets, Dan Murphy’s, BWS, and BIG W. As a whole, I believe they are well-positioned for growth thanks to their defensive qualities and strong market positions.

Another potential driver of value in the future could be its supply chain improvement plans and the proposed spin-off of its $10 billion Endeavour segment. While the latter may be delayed until after the pandemic passes, I believe it could create value for shareholders. In the meantime, and based on the latest Woolworths share price, I estimate that it offers a fully franked 2.7% FY 2021 dividend yield.

More reading

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• Coles shares vs Woolworths shares. Which is a better buy?
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• 2 ASX dividend shares to buy with $5,000 today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of 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.

The post Why I would buy Woolworths and this ASX share for a retirement portfolio appeared first on Motley Fool Australia.

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