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The Challenger (CGF) Share Price Is Being Hit

The Challenger Limited (ASX: CGF) share price fell 7% this morning after a 3% fall yesterday due to announcements made to the market.

About Challenger

Challenger is Australia’s largest provider of ‘annuities’, which are financial products typically sold to retirees who seek reliable income. Challenger was established in the mid-’80s and listed on the ASX in 1987. In 2018, Challenger managed more than $90 billion between its investment portfolio, which is the sum of the money invested by retirees who buy annuities, and its fund management business.

The Announcements

Yesterday, the Challenger share price fell 3% following an announcement made the day before, which confirmed that Challenger has ceased to be a substantial shareholder in Experience Co Ltd (ASX: EXP), an adventure tourism company that has seen its shares declining recently.

The more concerning news for Challenger shareholders came this morning during its Investor Day presentation. In its presentation, Challenger said it is expecting its 2020 financial year (FY) normalised net profit before tax to be between $500 million and $550 million, down from the expected $545 million to $565 million in FY19.

Its cost-to-income ratio is expected to increase and the tax rate is expected to be 28%-30%, compared to 26%-28% in FY19. All things considered, FY20 is not looking particularly bright for Challenger.

Personally, I’d rather invest in one of the high-quality, dividend-paying companies mentioned in the free report below.

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

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Are you stuck wondering where to invest right now? Have you got cash 'sitting on the sidelines'? Are you looking for dividend income AND growth but don't know where to start? Rask's expert ASX analyst team has just released a full report, detailing where we'd invest $10,000 right now.

Not only are we offering these 11 investment ideas completely FREE, we've also released an in-depth podcast to go with the report!

So, whether you have $2,000 or $50,000, our brand new analyst report could help transform your watchlist. Right now, you can get the full analyst report emailed to you for FREE by CLICKING HERE NOW.

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