FNArena’s Weekly Insights – August 02 2021

In this week’s Weekly Insights:

-August Bonanza, But What’s Next?
-Conviction Calls
-Research To Download

By Rudi Filapek-Vandyck, Editor FNArena

August Bonanza, But What’s Next?

The upcoming August corporate reporting season should offer plenty of positives for Australian shareholders.

With both banks and large cap mining companies swimming in cash, there should be plenty of additional rewards on top of a strong recovery in post-2020 dividends. Both ANZ Bank and National Australia Bank have already indicated as much and Rio Tinto’s larger-than-usual payout, including a bonus dividend, is equally but the first sign of what is likely to follow over the coming four weeks.

But the benefits that await from August stretch much wider; the quicker than anticipated economic recovery has fueled a much quicker than forecast recovery in corporate profits and balance sheets, and thus Australia awaits an even greater recovery in dividends across the board.

But wait, there is more, a lot more. Asset sales are providing the proverbial cherry on the cake with REITs and companies including Waypoint REIT, Telstra and Insurance Australia Group selling off parts of the business with the intention of (at least partially) passing on the proceeds to shareholders.

And, would you believe it, there is more, still. Increased confidence in that the world will overcome the challenges provided by covid, has interest in pursuing mergers & acquisitions spiking noticeably on the ASX. The latest such announcement came from Afterpay on Monday morning, informing investors its board had agreed to a full take-over by US-listed Square.

We already knew about suitors for Sydney Airport, Oil Search, Japara Healthcare, Spark Infrastructure, iCar Asia, and Iress among mid and larger cap names, but chances for the next suitor to announce itself for an ASX-listed target are improving by the day, or so it seems.

Can Treasury Wine Estates be next? Or Challenger or Praemium, maybe? How about Aerometrex, Bapcor or NextDC? Is Altium now fully off the hook? (See also last week’s Weekly Insights for a list of potential targets).

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