Following a flat couple days of trading during the week, the ASX hit a record high on the 2nd of June, and once again on the 3rd of June. The ASX rallied 1.1%, or 75.2 points, to 7217.80 points, surpassing the previous record close of 7179.5 points from just last week on Wednesday. On Thursday, the ASX 200 was led by the likes of IOOF Holdings and Worley to post further gains – adding 0.59% and ending on 7260.1 points.
It was another day in the shift from growth to value, the ASX is estimated to continue performing well. With inflation fears setting in and commodity prices soaring, the resource heavy ASX has further structural tailwinds for a solid performance for the rest of the year. There are several other plays investors can look for in the current market environment.
The current monetary policy does not look like it will change its stance on low interest rates. This means dividends to most Aussie investors.
APA Group engages in the ownership and operation of energy infrastructure assets and business. It operates through the following business segments: Energy Infrastructure, Asset Management, and Energy Investments. The Energy Infrastructure segment includes all wholly and majority owned pipelines, gas storage and processing assets, and power generation assets. The Asset Management segment provides commercial services, operating services and asset maintenance services to the energy investments of the company and Australian Gas Networks Limited. The Energy Investments segment comprises the strategic stakes in a number of investment entities that house energy infrastructure assets of the company.
APA has a tremendous record of paying dividends to investors. It has the 2nd longest consecutive dividend growth streak on the ASX. APA has paid dividends for 15 years in a row. It’s not just an oil pipeline company anymore, APA has recently started to shift towards renewable energy as well and their pipelines can be used for transportation of hydrogen in the future.
Following a bit of selling pressure, APA shares trade at very interesting levels at $9.33 a share and a dividend yield of 5.87% per annum.
JB Hi-Fi Limited (ASX: JBH) needs no introduction as a company to Australians. It is one of the premiere retailers for consumer discretionary products in the country. They operate under 2 brands – JB Hi-Fi and The Good Guys. We are sure everyone reading this report has shopped at JBH at some point, if not every month. JB Hi-Fi and The Good Guys operate 314 stores across Australia and New Zealand as of FY2020. They are the market leader when it comes to retailing technology, home appliances, and consumer electronic products. One of the competitive advantages they have is their retail partnerships with the biggest brands in the world – Apple, Samsung, etc.
The pandemic has increased their revenues, margins and income after tax and their operating dynamics continue to be supported as we are in an era of e-commerce boom. Given the massive increase in sales and a shift towards online sales, JBH has managed to increase its profitability as fixed costs are reduced considerably in servicing online orders. Increased profits are the bedrock of dividends and JBH looks to be operating in a favourable operating environment.
Similar to APA shares, JBH shares have pulled back from their highs in recent weeks and have once again started to move in the right direction. JBH shares currently trade at $48.09 a share with a dividend yield 5.61%.
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