Day: January 23, 2022

2 buy-rated ASX 200 dividend shares with great yields

Couple counting out money

Couple counting out moneyCouple counting out money

Are you looking for dividend shares to buy? If you are, then you might want to look at the shares listed below that have been named as buys by the team at Morgans.

Here’s why these ASX 200 dividend shares could be worth considering right now:

Telstra Corporation Ltd (ASX: TLS)

The first ASX 200 dividend share to look at is Australia’s largest telecommunications company. It could be a quality option due to its increasingly positive outlook after years of earnings declines and dividend cuts brought about by the rollout of the NBN.

The key to its positive outlook will be the T25 strategy, which has management targeting solid and sustainable growth in the coming years. Combined with the arrival of 5G and rational competition, some analysts believe the company will soon be in a positive to increase its dividend for the first time in almost a decade.

The team at Morgans are fans of Telstra. It has an add rating and $4.55 price target on its shares. The broker also continues to forecast dividends of 16 cents per share in FY 2022 and FY 2023. Based on the current Telstra share price of $4.09, this will mean yields of 3.9%.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that Morgans is positive on is this banking giant. It believes the recent weakness in the Westpac share price is unwarranted and has created a buying opportunity for investors.

Particularly given its belief that Westpac can cut its cost base in line with its plans. All in all, Morgans notes that its shares are the cheapest among the big four and offer the biggest forecast dividend yields.

Morgans has pencilled in fully franked dividends per share of $1.23 in FY 2022 and then $1.62 in FY 2023. Based on the current Westpac share price of $20.98, this will mean yields of 5.9% and 7.7%, respectively.

The broker has an add rating and $29.50 price target on Westpac’s shares.

The post 2 buy-rated ASX 200 dividend shares with great yields appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

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Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2 underrated ASX dividend shares to think about: analysts

A business man on a road raises his arms as dollar notes rain down on him, indicating a dividends windfallA business man on a road raises his arms as dollar notes rain down on him, indicating a dividends windfallA business man on a road raises his arms as dollar notes rain down on him, indicating a dividends windfall

Key points

  • Some of the underrated ASX dividend shares could be good options for income
  • Sims is one of the world’s largest metal recycling businesses
  • Metcash is a leading supplier to independent supermarkets and liquor stores, as well as owning Mitre 10, Total Tools and Home Timber & Hardware

Some ASX dividend shares are very well known by investors. However, there are others that may be unknown but still be able to offer attractive income over time.

Analysts look at most businesses on the ASX to consider if they are opportunities. A company that is both good value and offers a good yield might be able to achieve decent total returns.

With that in mind, here are two ideas:

Sims Ltd (ASX: SGM)

Sims is best known for being a global leader in metal recycling. It has operations in several countries, with a network of processing facilities, some with deep-water port access, supported by an extensive network of feeder yards.

Sims Metal buys, processes and sells ferrous and non-ferrous metal to manufacturers in 30 different countries. It says it sells around 10 million tonnes of secondary metals annually. It buys that metal from metal dealers, peddlers, auto wreckers, demolition firms and others who generate obsolete metal, and from manufacturers who generate industrial metal.

The ASX dividend share said it was seeing strong earnings momentum in the first half of FY22. Underlying earnings before interest and tax (EBIT) for the first half of FY22 is expected to be between $310 million to $350 million, driven by strong margins which was achieved through good market prices and “sound margin management” across all businesses.

However, freight supply costs and general inflation are offsetting some of the gains.

Sims has been busy making acquisitions including the assets of Atlantic Recycling Group, a US recycling business in Baltimore, Maryland. This cost US$37 million plus working capital adjustments.

Citi currently rates Sims as a buy with a price target of $18.50. Excluding the effect of franking credits, the broker is expecting Sims to pay a dividend yield of 3.6% in FY22 and 2.3% in FY23.

Metcash Limited (ASX: MTS)

Metcash is another ASX dividend share that could be worth thinking about.

It’s the business that supplies IGAs around the country, as well as liquor businesses including Cellarbrations, The Bottle-O, IGA Liquor, Duncans and Thirsty Camel. The hardware segment is growing profit particularly quickly, it includes Total Tools, Mitre 10 and Home Timber & Hardware.

The business is now targeting a dividend payout ratio of around 70% of underlying net profit after tax. In the recent FY22 half-year result it increased the interim dividend by 31% to 10.5 cents. The hardware division saw EBIT surge 53.3%. In hardware, it’s upgrading and expanding its store network.

The ASX dividend share is working on the digital side of its overall business. In HY22, group online sales were around $60 million, which was an increase of 46%. Metcash says there is “substantial growth potential” here.

The broker Ord Minnett rates the Metcash share price as a buy, with a price target of $5. This broker reckons Metcash will pay a grossed-up dividend yield of 7.6% in FY22.

The post 2 underrated ASX dividend shares to think about: analysts appeared first on The Motley Fool Australia.

Should you invest $1,000 in Sims right now?

Before you consider Sims, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Sims wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Top brokers name 3 ASX shares to sell next week

Keyboard button with the word sell on it.

Keyboard button with the word sell on it.Keyboard button with the word sell on it.

Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that investors might want to hear about are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

ASX Ltd (ASX: ASX)

According to a note out of Morgan Stanley, its analysts have downgraded this stock exchange operator’s shares to an underweight rating and cut the price target on them to $72.50. The broker doesn’t see value in the company’s shares compared to global peers. Particularly given the risks it is facing. This includes potentially higher costs from its CHESS replacement project. The ASX share price ended the week at $84.78.

Sandfire Resources Ltd (ASX: SFR)

A note out of Ord Minnett reveals that its analysts have downgraded this copper miner’s shares to a sell rating with a $5.60 price target. This follows the release of a mixed fourth quarter update this month. Ord Minnett notes that Sandfire’s production was strong during the quarter, but its costs were disappointing. In light of this and a strong share price rally over the last three months, the broker has no option but to downgrade its shares. The Sandfire share price was fetching $6.88 at the end of the week.

Zip Co Ltd (ASX: Z1P)

Analysts at Macquarie have retained their underperform rating and slashed their price target on this buy now pay later provider’s shares to $3.40. This follows the release of a second quarter update which fell short of the broker’s forecasts. Macquarie appears concerned by its slowing momentum in the US. This has led to its analysts downgrading their earnings estimates for the coming years, resulting in the reduction in its price target. The Zip share price ended the week at $3.33.

The post Top brokers name 3 ASX shares to sell next week appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2 small cap ASX shares with a lot of potential: experts

growth charts with small cap written on a sticky notegrowth charts with small cap written on a sticky notegrowth charts with small cap written on a sticky note

Key points

  • Small cap ASX shares can have plenty of growth potential
  • City Chic is a globally-growing retailer of apparel for plus-size women which is growing strongly in the US
  • Volpara is a breast screening health technology business which is growing its subscription revenue at fast pace, with a gross profit margin

Small cap ASX shares may be able to provide an attractive amount of capital growth because they are starting from a relatively small base compared to the current size of the ASX’s blue chips.

Not every small business is destined to go on and achieve strong returns.

However, expert analysts have concluded that these two options look very compelling:

City Chic Collective Ltd (ASX: CCX)

City Chic is one of the world leading specialist retailers that sells plus-size clothing, footwear and accessories to women. It sells through a number of brands and websites including City Chic, Evans and Avenue.

In recent weeks the City Chic share price has been dropping, offering more value for prospective investors. Since 22 November 2021, City Chic shares have dropped 23%.

The broker Macquarie currently rates this small cap ASX share as a buy with a price target of $7.10. That suggests a potential rise of the City Chic share price of more than 40% over the next year.

City Chic recently provided a trading update for the 26 weeks to 26 December 2021. It included sales revenue growth of 49.8% to $178.3 million, namely thanks to growth of 62% in the Americas to $77.2 million. Both the City Chic USA and Avenue websites are performing strongly.

However, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be roughly flat and in a range of between $22.5 million to $23.5 million for HY22. Management said this was pleasing because of a $4 million EBITDA hit due to store closures, the impact of acquisitions and COVID-19 related market and cost reduction measures taken in the prior corresponding period.

Macquarie puts the City Chic share price at 26x FY23’s estimated earnings.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara’s mission is to save families from cancer. It is well progressed with its breast cancer screening services and it is also working on a lung cancer offering as well.

Over 13.4 million US women are now using at least one Volpara product, as well as many women across Australia and New Zealand. In America, the small cap ASX share has a market share of around a third.

The healthcare technology business says that its strategic commercial partnerships set the stage for greater reach in not only genetic testing for breast cancer (which helps reduce risk for the patient) but also expansion into the US lung cancer market where AI and software offer the prospect of saving many lives.

Volpara continues to report a very high gross profit margin, it was higher than 91% in the first half of FY22. It also saw its subscription revenue jump 35% to NZ$11.8 million – an increase of 42% in constant currency terms. Annual recurring revenue (ARR) reached NZ$29 million at the end of the period.

The small cap ASX share is working on several ways to increase its average revenue per user (ARPU), which includes upselling more of its platform to the same clients so that they can provide a better service for clients and perform more efficiently.

Over the last three months the Volpara share price has dropped by around 30%.

Morgans currently rates the company as a buy with a price target of $1.94. That implies a potential upside over the next 12 months of almost 120%. In a recent newsletter, the company said that its third quarter of FY22 (to December 2021) has already beaten its previous best third quarter in terms of net new ARR added.

The post 2 small cap ASX shares with a lot of potential: experts appeared first on The Motley Fool Australia.

Should you invest $1,000 in City Chic right now?

Before you consider City Chic, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and City Chic wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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