Day: 7 April 2022

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of Wall Street and is tumbling lower. At the time of writing, the benchmark index is down 0.7% to 7,438.1 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Andromeda Metals Ltd (ASX: ADN)

The Andromeda Metals share price has continued to sink and is down a further 15% to 9.8 cents. Investors have been selling this kaolin explorer’s shares this week following the release of a bitterly disappointing definitive feasibility study (DFS) for the Great White Kaolin Project in South Australia. Management revealed an internal rate of return (IRR) of 36% and a 5.9 years payback, which compares unfavourably to previous estimates of 175% and 15 months, respectively.

ARB Corporation Limited (ASX: ARB)

The ARB share price is down 5% to $39.39. Part of this decline is attributable to the 4×4 parts manufacturer’s shares trading ex-dividend this morning for its interim dividend. Eligible shareholders can now look forward to receiving this fully franked 39 cents per share dividend later this month on 22 April.

BCI Minerals Ltd (ASX: BCI)

The BCI Minerals share price is down 7% to 44.2 cents. This follows the release of an update on its Mardie project this morning. Comments around costs appear to have spooked investors. Management commented: “Cost pressures are evident across the mining and construction sectors in Western Australia. We are closely monitoring and managing our contracts and are reviewing the inflationary impact on the total Mardie capital cost.”

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price is down 6% to $49.59. This appears to have been driven by weakness in the tech sector today following another very poor night of trade on the Nasdaq index on Wall Street. It isn’t just WiseTech that is tumbling today. At the time of writing, the S&P ASX All Technology index is down 3.1%.

The post Why Andromeda Metals, ARB, BCI Minerals, and WiseTech shares are tumbling lower appeared first on The Motley Fool Australia.

More reading

• Here’s why the ARB Corporation share price is on the slide today
• ASX 200 midday update: Magellan jumps, tech shares tumble
• Why Andromeda Metals, Block, Paladin Energy, and Zip shares are dropping
• Hoping to pocket the ARB Corporation dividend? Read this
• These were the best and worst performing ASX sectors in March

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 WiseTech Global. The Motley Fool Australia owns and has recommended WiseTech Global. The Motley Fool Australia has recommended ARB Corporation 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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It might be a red day for the S&P/ASX 200 Index (ASX: XJO) on Thursday, but that hasn’t stopped a handful of shares from reaching 52-week highs today.

In afternoon trade, the Aussie benchmark index is 0.5% worse for wear, treading around 7,450 points. Yet, a select few ASX 200 constituents are being embraced amongst the sour session.

These ASX 200 shares are being celebrated today

Endeavour Group Ltd (ASX: EDV)

Following on from hitting a new all-time high yesterday, the Dan Murphy’s and BWS owner is setting new records again today. Shares in Endeavour Group have lifted more than 1% during trade to reach $7.66.

However, there’s not a whole lot of new information out from the company today. Insinuating the company’s shares might still be revelling in an improved outlook from Goldman Sachs. The broker set its price target for Endeavour Group at $8 per share.

New Hope Corporation Limited (ASX: NHC)

The next ASX 200 share leaving the market green with envy is coal producer New Hope Corporation. Shares are making the trek upwards today despite there not being any announcements from the $3.1 billion energy giant. At the time of writing, the New Hope share price is up 2.2% to $3.79 — with an intraday high of $3.80.

For reference, this stampede into positive territory has continued after non-exec director and non-exec chair Thomas Millner and Robert Millner acquired more shares. According to the filings, the two board members added more than $1.68 million worth of New Hope shares across 4 April and 5 April.

Worley Ltd (ASX: WOR)

Finally, Worley is another new 52-week high candidate today. Although, the engineering services company has slipped into the negative as the day has gone on. Regardless, Worley shares climbed to $13.89 shortly after the market opened. Now that price is closer to $13.50 as we head into the afternoon.

This ASX 200 share is another name hitting the new high milestone without much substance today. Despite Worley shares charging 10% higher in the last month, the company hasn’t released a price-sensitive announcement since 23 February, which was its half-year results.

The post 3 ASX 200 shares smashing 52-week highs on Thursday appeared first on The Motley Fool Australia.

More reading

• A toast! The Endeavour share price just hit an all-time high
• In a sea of red, these ASX 200 coal shares are floating above water. Here’s why
• Could these ASX shares be set to benefit from increasing Russian sanctions?
• Federal budget: Goldman Sachs names 4 ASX shares to buy
• Here’s a look at some ASX shares with ex-dividend dates coming up in April

Motley Fool contributor Mitchell Lawler 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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Perhaps more than any other sector, ASX energy shares had a wild ride over the quarter just gone. During the three months to 31 March, global energy prices went on a rollercoaster, largely as a consequence of the disruptions caused by the war in Ukraine and subsequent sanctions levied on the Russian economy.

As a result, the world has seen record-high oil, gas, and coal prices which, of course, have flowed through to the bowser, the supermarket, and almost every corner of the economy. But how did the companies that drill, pump, and mine oil, gas, and coal out of the ground fare during these tumultuous times?

Well, let’s first check out the ASX’s largest energy share, Woodside Petroleum Limited (ASX: WPL),

Woodside started 2022 at $21.93 a share. On 31 March, this energy giant finished up at $32.10. That’s a rather stunning rise of 46.37% for the March quarter. This arguably proves how valuable soaring energy prices can be for an ASX energy share.

ASX energy shares shoot the moon over March quarter

But did other energy shares experience similar moves? Beach Energy Ltd (ASX: BPT) is another company in this space worth checking out. Beach shares were priced at $1.26 each on New Year’s Eve. Fast forward to 31 March, and we saw the company shoot up to $1.56. That’s a far less enthusiastic, but still solid, rise of 23.81%.

Santos Ltd (ASX: ATO) is another ASX energy heavyweight. It was going for $6.31 a share at the start of the quarter ending 31 March. But by the end, we saw this company reach $7.74 — a gain of 22.66%.

Turning to an ASX coal miner, let’s examine how Whitehaven Coal Ltd (ASX: WHC) shares performed over the same period. Whitehaven ended 2021 at a share price of $2.61. But three months later, the company had reached $4.15 a share. That’s a whopping gain of 59% in three months.

So, all in all, it has been a very lucrative quarter for ASX energy shares. Whitehaven was the clear winner, followed by Woodside, with both companies clocking gains of more than 45%. But all of these companies managed to appreciate by more than 20% over the first quarter of 2022. No doubt ASX energy investors will be hoping for a repeat performance during the current quarter ending 30 June. But we shall have to wait and see.

The post Black gold! Here’s how well ASX energy shares performed over the March quarter appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why has the Beach Energy share price tumbled 11% in a month?
• Woodside share price dips despite project green light
• In a sea of red, these ASX 200 coal shares are floating above water. Here’s why
• Could these ASX shares be set to benefit from increasing Russian sanctions?

Motley Fool contributor Sebastian Bowen 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

It’s easy to look at a stock like Amazon (NASDAQ: AMZN) and think that at $1.7 trillion, it can’t possibly go much higher in value than where it is today. But as long as a company has ways to continue growing, there’s no reason its valuation won’t also increase. And there’s no danger for this cash-rich business to run out of opportunities anytime soon. 

In just three charts, investors can see why, despite its massive size, Amazon can still be an excellent long-term investment.  

A leader in the cloud market

Although Amazon is primarily known for being a top online retailer, its cloud business, Amazon Web Services (AWS), has also made a name for itself in the industry. Many top companies use AWS, including software company Intuit, top bank HSBC, and COVID-19 vaccine maker Moderna. And as a leader in the cloud market, it’ll undoubtedly continue to be a top choice for many businesses that expand their presence online. 

Its streaming service is among the top in the industry

Amazon Prime Video has over 175 million subscribers and is among the top streaming services in the world. An important caveat here is that Amazon Prime Video is included within an Amazon Prime subscription, and so these numbers likely would be lower if the company were only offering it as a stand-alone service the way Netflix and Walt Disney do their services. But it’s another example of how Amazon has room to grow in another area — streaming.

Last year, the company secured a deal with the NFL where it would spend a reported $1 billion per year for exclusive rights for Thursday Night Football games. It’s a 10-year deal that starts next year and will help diversify its streaming services; Netflix, for comparison, does not have any live sports available for subscribers to watch. Amazon can spend a lot more money to expand into its streaming business to make it more robust and possibly lure subscribers away from other services. 

Amazon has been investing in various industries

In 2021, Amazon generated $46 billion in cash from its day-to-day operating activities. The year before that, its cash from operations was north of $66 billion. The company is bringing in truckloads of cash every year and that puts it in an excellent position to spend on acquisitions to expand its business even further. Here are the biggest deals the company has made in recent years:

From autonomous driving to supermarkets to an online pharmacy, Amazon has been expanding its reach into various sectors. It can grow deeper into any one of these sectors or it can pursue yet another new one altogether. Either way, given the cash that Amazon generates each year, it won’t struggle to find a new growth avenue to pursue.

Should you invest in Amazon today?

Amazon just continues to get bigger over the years. In 2021, revenue of $469.8 billion was more than 67% higher than the $280.5 billion that the company reported in 2019, before the pandemic emerged. Online shopping is more popular than ever before and even if that slows down in a return to normal, the company can simply shift to other areas of its business, such as pumping more money into Whole Foods or developing its telehealth capabilities. 

For buy-and-hold investors, Amazon is one of the safer growth stocks to hang on to over the long term. The business is a beast when it comes to cash flow, and with so many opportunities for growth, this is an unstoppable company to invest in. Up just 6% in the past year, while the S&P 500 has climbed 14%, the stock has underperformed the markets of late — but that isn’t a trend investors should expect to continue. It may only be a matter of time before this growth stock starts rallying again, and now may be as good a time as any to load up on it. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 charts that show why Amazon is an unstoppable growth stock appeared first on The Motley Fool Australia.

More reading

• Could Amazon help you become a millionaire by 2032?
• Why Amazon stock rocketed off course today
• Will Amazon start paying a dividend?
• 3 differences between you and billionaires, and 1 thing you have in common
• 1 investing strategy to grow your money like magic

David Jagielski has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings, Intuit, and Moderna Inc. and has recommended the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool Australia has recommended Amazon, Netflix, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record its second successive daily decline. At the time of writing, the benchmark index is down 0.5% to 7,450.2 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are charging higher:

Ardent Leisure Group Ltd (ASX: ALG)

The Ardent Leisure share price is up 7% to $1.39. This follows news that the entertainment company has signed an agreement to sell its Main Event business in the United States for A$1.1 billion. Ardent plans to return approximately A$430 million or A$0.90 per share to shareholders following completion of the transaction. The company will now be solely focused on its Australian Theme Parks business.

GQG Partners Inc (ASX: GQG)

The GQG Partners share price is up 5% to $1.47. Investors have been buying the fund manager’s shares following the release of its latest funds under management (FUM) update. GQG had a decent month, with its FUM growing 3.5% over the period to US$92.9 billion. This brought its quarterly net inflows to US$3.4 billion.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price has jumped 11.5% to $17.26. This also follows the release of a FUM update. According to the release, Magellan reported another $1.1 billion of net fund outflows for the period between 11 March and 31 March. However, this is a big improvement on recent trends, which investors appear to believe could be a sign that the worst is now over. Furthermore, thanks to favourable market movements, Magellan’s total FUM actually increased by $0.9 billion

Melbana Energy Ltd (ASX: MAY)

The Melbana Energy share price has surged 26% higher to 17 cents. This morning the energy explorer revealed that a significant oil pay has been defined in the Marti structure. The release also highlights that the volume of oil in place from the first (Amistad) structure has been independently estimated to contain 2.5 billion barrels of oil in place with a combined prospective resource of 119 million barrels of oil.

The post Why Ardent Leisure, GQG, Magellan, and Melbana shares are charging higher appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Magellan jumps, tech shares tumble
• Magellan share price rockets 11% despite continued FUM carnage
• Magellan share price sinks again, down 6%
• ASX 200 (ASX:XJO) midday update: Block and Zip sink, Paladin Energy raises $200m
• Why has the Melbana Energy share price exploded 52% in a month?

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. 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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The Galan Lithium Ltd (ASX: GLN) share price has been enjoying a day in the green today.

In early trade, this ASX lithium share surged 7% to $2.29 before pulling back to the current share price of $2.17. This is 1.4% higher than yesterday’s close. In contrast, the S&P/ASX 200 Index (ASX: XJO) is sliding 0.53% today.

Let’s take a look at what might be driving the Galan Lithium share price today.

Lithium drilling result

Galan reported “drilling success” at the company’s Hombre Muerto West lithium project in Catamarca Province, Argentina. The announcement before market open saw the Galan Lithium share price shoot up in the first hour of trading.

The company revealed it has completed the first diamond drill hole, known as PP-02-22, at the project. Drilling at the site, within the Pata Pila licence area, reached a depth of 450m.

Galan said the result extends the lithium brine potential an additional 800m from existing drill hole PP-01-19 to within 1km of the adjacent Livent tenement boundary.

The results will be included in the company’s project mineral resource update, due for completion in the third quarter of 2022.

Commenting on the results which appear to have spurred the Galan Lithium share price, managing director Juan Pablo Vargas de la Vega said:

This exploration diamond hole has further unlocked the potential of the world-class lithium brine resource held at the HMW Project.

The results have enhanced our hydrogeological modelling, a key to confirmation of Reserve estimates, and delivered further Mineral Resource upside at HMW.

Following the new exploration target areas identified by the recent TEM geophysical survey, we now look forward to aggressively drilling these additional potential HMW Mineral Resource expansion zones from this quarter through the rest of 2022.

Galan also advised it has filled the pilot plant S1 pond with brine. Evaporation testing is ready to start soon. The company said this is a “major milestone” marking the start of large-scale piloting activities at the project.

Galan Lithium share price snapshot

The Galan Lithium share price has exploded almost 240% in the past year while it is climbing nearly 11% year to date.

For perspective, the benchmark ASX index returned nearly 8% in the past year.

Galan Lithium has a market capitalisation of about $657 million.

The post Here’s why the Galan Lithium share price is defying today’s ASX sell-off appeared first on The Motley Fool Australia.

More reading

• What’s boosting the Galan Lithium (ASX:GLN) share price today?
• ‘We are excited’: Why these 2 ASX lithium shares are popping today

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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ASX lithium shares are among the hottest recent investment trends thanks to the looming supply deficit for the battery-making material.

But not all of these miners are set to be winners from surging prices for lithium, according to UBS.

This is despite the spot price for the commodity hitting record highs due to projected demand for electric vehicles (EVs) and green energy projects.

Upgraded lithium forecasts

A number of experts have warned that supply is not keeping up with demand, and even UBS has been forced to upgrade its lithium price forecasts.

“We revise our near-term lithium prices reflecting continued tightness in the market and with no signs yet of easing,” said the broker.

“We lift our 22E spodumene forecast approximately 17% to $4485/t…. Our [long-term] prices remain under review.”

Not all ASX lithium shares are built the same

The surging Liontown Resources Limited (ASX: LTR) share price, Allkem Ltd (ASX: AKE) share price, and Pilbara Minerals Ltd (ASX: PLS) share price may give investors the impression the rising lithium tide will lift all boats equally.

But the broker warned that not every ASX lithium share will necessarily benefit from price rises. This is because there is often a difference between the “spot price” and the “realised price” that a producer receives.

There are several reasons for the gap in the prices. The first is the composition of the ASX lithium miner’s order book. This means the proportion of sales done on a fixed-price agreement compared to those that reference the spot market, explained UBS.

Another factor is the significant discount applied to ASX lithium miners that produce brine versus technical grade carbonate.

A similar issue exists for lithium producers that sell spodumene below the industry’s SC6% benchmark. It’s worth noting that the discount applied to lower grade spodumene is not as great as brine.

Finally, there’s a timing issue. The reported sales by ASX lithium producers reflect realised prices from the previous period. The lag can exaggerate the differences between realised prices and spot prices.

The type of ASX lithium shares that do best in this market

But UBS believes the lithium market will evolve much like the iron ore market, where the industry gravitates closer to spot pricing.

“We draw analogies to the breakdown of the annual iron ore contract where market dynamics evolved to a point where the price difference between spot and contracted pricing made long-term fixed-price agreements untenable,” said UBS.

“There has been clear messaging by (some of) the producers to shift closer to pricing based off spot.”

From this perspective, Allkem may be better placed than others to benefit from rapidly rising spot prices. The miner recently changed its annual contracts that previously had fixed prices. It contracts now use indices to set realised prices with an average bimonthly adjustment.

The post Why not all ASX lithium shares are winners from surging commodity prices appeared first on The Motley Fool Australia.

More reading

• 2 hot ASX lithium stocks brokers rate as buys
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• Is a bubble forming for ASX green metals shares?

Motley Fool contributor Brendon Lau owns Orocobre Limited. 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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The De Grey Mining Limited (ASX: DEG) share price has been heading south over the course of the past month.

Lately, the depreciation in the price of gold has weakened investor sentiment, causing a sell in the gold miner’s shares.

Since this time last month, De Grey shares have lost around 14% in value, making it one of the worst performers across the sector.

In retrospect, fellow miner, Regis Resources Ltd (ASX: RRL)’s share price has fallen by 3% across the same timeframe.

At the time of writing, De Grey shares are swapping hands for $1.17, down 3.31%.

What’s happened to De Grey shares lately?

A common theme with gold mining companies, the De Grey share price has been sold off following the decline in gold prices.

Traditionally, investors flock to the yellow metal as a safe-haven asset when there is uncertainty in the market.

However, with the world slowly moving past COVID-19, and the Russian/Ukrainian war in its second month, it appears investors have regained confidence in the market.

The S&P/ASX 200 Index (ASX: XJO) is up 4.7% in a month, rebounding from its March low of 6,968 points.

This has sent the price of gold to trade around US$1,922 per ounce, down almost 4% since 7 March.

In contrast, when the war was still relatively new, the precious metal soared above the psychological US$2,000 barrier.

As such, De Grey shares were trading at $1.365 at that time.

De Grey share price snapshot

Over the past 12 months, the De Grey share price has repaid relatively flat returns to investors, up 2%.

However, when looking at year to date, its shares have travelled in circles, with a loss of 3% for the period.

On valuation grounds, De Grey commands a market capitalisation of about $1.66 billion, with over 1.4 billion shares on hand.

The post Why has the De Grey share price tumbled 14% in a month? appeared first on The Motley Fool Australia.

More reading

• De Grey (ASX:DEG) share price slides despite ‘impressive’ drill results

Motley Fool contributor Aaron Teboneras 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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The A2 Milk Company Ltd (ASX: A2M) share price is pushing higher on Thursday.

In afternoon trade, the struggling infant formula company’s shares are up 1% to $5.06.

While this gain is positive, it is little consolation for shareholders who have watched the A2 Milk share price fall 36% over the last 12 months.

Where next for the A2 Milk share price?

Unfortunately for shareholders, the small number of brokers that are bullish on the A2 Milk share price just got even smaller.

Up until recently, the team at Citi were positive on A2 Milk and had maintained a buy rating on its shares since the release of the company’s full year results for FY 2021 in August.

At that point, the broker had a buy rating and $7.20 price target on its shares and was encouraged by improvements in its inventory levels and the strength of its brand in China.

However, Citi has now become bearish on the company’s prospects and has downgraded its shares to a sell rating and slashed the price target on them to $4.80.

Based on the current A2 Milk share price, this implies potential downside of 5.1%.

Why is Citi bearish?

Citi made the move largely on concerns that COVID lockdowns impacting Chinese ports could cause supply issues in the country. It also highlights that recent reseller pricing on Chinese ecommerce platforms has been weak, which could be an indication of softening demand.

In addition, Citi has recently noted that dairy processor Synlait Milk Ltd (ASX: SM1) released its half year results recently. Within its presentation, A2 Milk’s partner advised that an onsite audit will be conducted by the Ministry for Primary Industries on behalf of China’s SAMR in June/July. This is later than previously expected and Citi has warned that there is no certainty that A2 Milk will secure approval again.

If approval were not granted, it would be a huge blow given that it would shut out A2 Milk’s China label products from mother and baby stores and domestic online channels. These make up over a third of sales at present. The broker also fears that it would damage its brand and potentially sales of its English label product.

Though, Citi concedes that should it gain approval, it could position it to win a greater share of the Chinese market.

Time will tell what happens, but Citi isn’t willing to hold its shares while it waits to find out.

The post Why this broker is bearish on the A2 Milk share price appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to sell today
• Why A2 Milk, IGO, Lynas, and Sayona shares are dropping
• What happened to the A2 Milk share price in March?
• Could the A2 Milk share price be in for a better month in April?
• What was the highest ever A2 Milk (ASX:A2M) share price?

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. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended A2 Milk. 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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ASX dividend shares that are paying high-income yields to investors may be attractive in the current environment.

Interest rates are expected to go higher this year. But the dividend yields could still be much higher than bank interest rates.

According to analyst forecasts, some businesses are expected to pay particularly high dividend yields over the next year or two. Here are two:

Adairs Ltd (ASX: ADH)

Adairs describes itself as Australia’s largest specialty retailer of home furnishings and home decoration products. It operates three brands – Adairs, Mocka, and Focus on Furniture. Mocka is a home and living products designer and retailer.

It’s currently rated as a buy by the broker Morgans, with a price target of $3.50. That implies a potential rise of around 21% over the next year on its current share price of $2.88. The broker noted there continues to be good demand for its products.

Since the start of 2022, the Adairs share price has fallen by almost 30%. This has boosted the estimated future dividend yield from the ASX dividend share.

At the current Adairs share price, Morgans thinks Adairs could pay a grossed-up dividend yield of 9.4% in FY22 and 12.9% in FY23.

Adairs plans to open more stores, upsize some existing stores, grow its online sales and become more efficient. The company points to the growth of its overall floorspace and its membership as positives that can help sales.

Morgans thinks the Adairs share price is valued at 9x FY22’s estimated earnings and 7x FY23’s estimated earnings.

Accent Group Ltd (ASX: AX1)

Accent Group is one of the largest retailers of shoes in Australia. It has a mixture of its own brands and also acts as the distributor for many other global shoe brands.

Some of this ASX dividend share’s brands include The Athlete’s Foot, Dr Martens, Glue Store, Hoka, Hype, Kappa, Nude Lucy, Merrel, Platypus, Skechers, Stylerunner, and Reebok.

The company’s first half of FY22 was impacted by mandated store closures. But, after the wave of the Omicron variant, the company said that like for like sales in the four weeks between 24 January and 20 February “improved significantly” and were in line with last year.

It also continued to drive full price, full margin sales. Over the first eight weeks of the second half, the gross profit margin percentage was “in line with expectations and ahead of the prior year”.

The ASX dividend share is working on expanding its store network, growing its online sales, and adding more quality brands.

UBS currently rates it as a buy, with a price target of $2.50. That implies a potential rise of 59% on its current price of $1.57. The broker notes the high level of store openings that the company is undertaking.

On the broker’s numbers, the Accent share price is valued at 11x FY23’s estimated earnings, with a potential grossed-up dividend yield of 11.7% in FY23.

The post 2 ASX dividend shares expected to pay mega income yields appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy in April 2022
• 2 fully franked ASX dividend shares experts rate as buys
• Analysts name 2 ASX dividend shares with fully franked yields to buy
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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 ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Accent Group. 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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