Coles Group Ltd (ASX: COL) is one of the larger businesses on the ASX. But is Coles or rival Woolworths Group Ltd (ASX: WOW) a better ASX dividend share?

Coles is the smaller business of the two. Coles has a market capitalisation of $25 billion, according to the ASX, while Woolworths has a market capitalisation of around $45.7 billion.

But it isn’t the size of the business that decides its dividend credentials.

Dividend yield

The size of the dividend yield can be an important factor for investors focused on income.

Different analysts have different expectations for the business and what dividends it might pay over the next couple of years.

Morgans thinks that Coles is going to pay a grossed-up dividend yield of 4.7% in FY22. In FY23, Morgans thinks the company will then pay a grossed-up dividend yield of 4.9%.

Meantime, the broker has estimated a grossed-up dividend yield of 3.3% for Woolworths in FY22. Morgans also projects dividend growth from Woolworths in FY23, forecasting a grossed-up dividend yield of 3.9% in FY23.

Coles has a materially higher dividend yield than Woolworths, according to Morgans’ projections.

Recent dividend growth

The most recent result from both of these businesses was the FY22 half-year result.

There wasn’t any growth from either of them but Coles, again, did better on the dividend front.

In the report for the first six months of FY22, Coles decided to maintain its interim dividend at 33 cents per share despite a slight reduction in its earnings per share (EPS).

Meanwhile, Woolworths declared an interim dividend of 39 cents per share. Woolworths said this was a 2.5% reduction after excluding Endeavour Group Ltd (ASX: EDV). Woolworths’ continuing operations (before significant items) EPS fell 5.1% to 64.3 cents.

In the most recent results, Coles provided shareholders with more dividend stability than Woolworths did.

Recent sales growth

One of the best ways that an ASX dividend share can most likely provide stability and growth of the dividend is by growing revenue and profit.

Both businesses recently released their third-quarter trading updates.

In its Australian food division, Woolworths reported sales growth of 5.4% to $11.4 billion. Whereas Coles supermarkets saw sales growth of 4.2% to $8.2 billion.

Total Woolworths continuing operations sales increased 9.7%, largely thanks to its business to business division. Coles’ total sales increased 3.9% to $9.3 billion.

In terms of sales growth, Woolworths did a little better than Coles.

Coles share price valuation

While the price-to-earnings (P/E ratio) isn’t everything, it can show which business is better value if they are similar businesses in terms of growth and/or quality.

According to Morgans, the Woolworths share price is valued at 32 times FY22’s estimated earnings and 27 times FY23’s estimated earnings.

Morgans’ estimates imply that the Coles share price is valued at 25 times FY22’s estimated earnings and 24 times FY23’s estimated earnings.

While Woolworths may have a claim to be a higher-quality business than Coles, I think the lower valuation makes up for it. The higher dividend yield and stability make me believe that Coles is the better ASX dividend share than Woolworths right now.

The post Why I think Coles is a better ASX dividend share than Woolworths appeared first on The Motley Fool Australia.

More reading

• Is the Telstra share price cheap compared to other ASX 200 shares?
• 2 top ASX dividend shares analysts are tipping as buys this month
• Why are the dividends from Woolworths shares still so small?
• 4 ASX shares of the most trusted brands in Australia
• ‘Safe haven’: Why this broker backs Woolworths shares amid recent turbulence

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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Copper Mountain Mining Corp (ASX: C6C) share price is soaring today.

The explorer’s share price has jumped almost 15% to $2.97 at the time of writing. In contrast, the S&P/ASX 200 Index (ASX: XJO) is up 1.01% today.

With no price-sensitive news released by the ASX mining share today, let’s take a look at what has been happening to this company lately.

Copper prices lift overseas

Copper prices bounced in overseas markets on Tuesday amid the hope China could soon end its stringent COVID-19 lockdowns. According to mining.com, copper prices hit $4.28 per pound at one point on the Comex market in New York.

Commerzbank analyst Daniel Briesemann said:

Shanghai is coming out of lockdown gradually and that is giving rise to demand hopes for cyclical commodities in particular.

Copper Mountain shares followed in the footsteps of overseas listings. The company’s share price soared 18.08% on the Frankfurt Stock Exchange yesterday and 17.9% on the Tokyo Stock Exchange.

What else might be impacting the ASX mining share price?

The company’s flagship project is the Copper Mountain Mine in Southern British Columbia. Copper Mountain also owns the Eva Copper Project in Queensland.

Last week, the company hosed down media speculation the company was planning to sell the Eva Copper Project. In a statement released to the market, Copper Mountain said:

The company’s policy is not to comment on market speculation. The company notes that it regularly reviews strategic opportunities to enhance shareholder value, and that there are no pending transactions with respect to the Eva Copper Project of any nature to note at this time.

Share price snapshot

The Copper Mountain share price has lost nearly 40% over the past 12 months and is down 18% in the year to date.

While the company’s shares have lost nearly 22% in the past month, they are currently enjoying a reversal of fortune, trading 6% higher over the past week.

In comparison, the benchmark ASX 200 index has climbed 1% in a year.

The post Why is this ASX mining share surging 15% today appeared first on The Motley Fool Australia.

More reading

• Why I think Coles is a better ASX dividend share than Woolworths
• Why is the Magellan share price marching higher today?
• A2 Milk share price wavers amid class action news
• When might the dividend drought break for AMP shares?
• Experts name 2 ASX dividend shares to buy with big fully franked yields

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 Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price is marching higher during the lunch hour on Wednesday.

Magellan shares closed yesterday at $14.56. They are currently trading for $14.85, up 1.96% after earlier posting gains of almost 5%.

Here’s what looks to be piquing ASX investors’ interest in the specialist funds manager today.

Barclays ups investment in Barrenjoey

The Magellan share price is in the green today. It follows an announcement that British headquartered bank Barclays has invested another $75 million cash in Aussie financial services firm Barrenjoey.

Magellan launched Barrenjoey in September 2020. Barclays invested $45 million in the start-up at the time.

The increased investment by Barclays sees Magellan’s shareholdings of Barrenjoey slip to 36.4% from 40%. It brings Barclays’ holdings up to 18.2% from 9.9%.

Magellan said it remains “committed to the long-term success of Barrenjoey”.

What did management say?

Commenting on the $75 million cash investment, Paul Compton, president of Barclays Bank, said:

We are delighted to have the opportunity to increase our shareholding with Barrenjoey. Since our foundation investment in September 2020, Barrenjoey management has delivered on their plans and we have a strong working relationship across our respective platforms.

Providing global solutions and products to the Australian client base is at the core of our strategic partnership and this investment will only strengthen it further.

Brian Benari, CEO of Barrenjoey, added:

Our strategic partnership with Barclays has been instrumental to our early success, leveraging their global investment banking and securities franchises and balance sheet.

Importantly, given the rapid growth of our Markets business and the launch of our Fixed Income Derivative and Equity Financing businesses, Barclays’ investment further reinforces our joint commitment to support our Australian and global client base.

Magellan share price snapshot

The Magellan share price has sold off sharply over the past 12 months, down 68%. That compares to a 1% gain posted by the S&P/ASX 200 Index (ASX: XJO) over the full year.

The post Why is the Magellan share price marching higher today? appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares I have supreme confidence in: fund manager
• Why is the Magellan share price up 7% today?
• ASX 200 midday update: Magellan names its new CEO, Link shares crash
• Why is the Magellan share price charging higher today?
• Why A2 Milk, Imugene, Liontown, and Magellan shares are tumbling lower

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 Scott Phillips.

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The A2 Milk Co Ltd (ASX: A2M) share price is rangebound so far on Wednesday, now trading 0.24% higher at $4.16.

Reports have surfaced that A2 Milk is set to face a further class action from shareholders for allegedly engaging in misleading and deceptive conduct.

What’s the situation?

Shine Lawyers has launched a class action on behalf of Australian and, now, New Zealand A2 Milk shareholders.

Shine had previously filed a class action proceeding against the company in the Supreme Court of Victoria in November last year. It followed similar action by Slater & Gordon lawyers in October.

Today, Shine Lawyers is moving to include New Zealand shareholders in its class action. It said the proceedings apply to shareholders “who suffered losses after acquiring A2 Milk shares (A2M) on the ASX or on the NZX following a 62% drop in market value in FY21”.

Shine advised shareholders who acquired shares between 19 August 2020 and 7 May 2021 may be eligible to join the class action.

A statement from the legal firm said:

The class action alleges that between 19 August 2020 and 7 May 2021, A2M engaged in misleading and deceptive conduct, breaching its continuous disclosure obligations, and failing to adequately disclose future trade plans.

It is further alleged that by 19 August 2020, A2M was, or ought to have been aware that their FY21 guidance, and subsequent representations, did not adequately take into account a number of factors known to A2M which ultimately impacted the Company’s financial performance, resulting in a 62% drop in market value in FY21. 

These include a decline in daigou sales from the company’s cross border e-commerce channel (CBEC) and the corresponding decline in CBEC business due to this impact, Shine says.

Philip Skelton QC said that investors were “unable to make informed decisions as to whether to buy, sell or retain A2 Milk shares” due to the company’s moves, meaning “many investors lost substantial sums as a result of acting on that misleading information”, as reported by The Australian.

A2 Milk response

A2 Milk issued a statement today, confirming it has been notified a proceeding has been filed against the company in the High Court of New Zealand. It said:

The Company considers that it has at all times complied with its disclosure obligations, denies any liability and will vigorously defend the proceedings.

A2 Milk share price snapshot

In the last 12 months, the A2 Milk share price has slipped more than 19% into the red after incurring a 24% loss this year to date.

Losses have extended over the past month of trade too with shares sliding another 11.5% in that time.

The post A2 Milk share price wavers amid class action news appeared first on The Motley Fool Australia.

More reading

• Why is the A2 Milk share price falling today?
• Why A2 Milk, Gold Road, GrainCorp, and Monash IVF shares are dropping
• Which is the better beaten-up buy, Bubs or A2 Milk shares?
• Why A2 Milk, Imugene, Liontown, and Magellan shares are tumbling lower
• A2 Milk share price sinks to multi-year low following broker downgrade

Motley Fool contributor Zach Bristow 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 Scott Phillips.

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Those invested in AMP Ltd (ASX: AMP) shares for the dividends have likely been bitterly disappointed over the last few years.

Aside from a special dividend paid in 2020, the S&P/ASX 200 Index (ASX: XJO) company hasn’t handed investors a portion of its profits since 2019.

Previously, the financial services provider said it would reinvestigate potential dividends following its demerger.

But, with its plan to split now scrapped, when might investors hear word of a dividend from AMP? Let’s take a look.

When might AMP shares next pay a dividend?

The last few years have been tough on AMP and its share price. The company’s stock has tumbled 77% over the last five years. It’s trading at $1.13 today.

For those who missed it, the company’s downfall was seemingly spurred by the financial services royal commission. The decision to drop its dividends in financial year 2018 and ditch them entirely in financial year 2019 only exacerbated the pain.

Ultimately, the embattled company came up with a plan to return to growth by splitting in two. AMP noted it would review its capital management strategy and dividends following the demerger.

It was to break into AMP Limited and AMP Capital’s private markets business, the latter dubbed Collimate Capital.

If that name sounds familiar, it’s likely because the business was recently sold for around $2 billion. Thus, the demerger won’t be going ahead.

So, when will the company consider paying dividends now? Well, that’s ultimately a mystery.

However, it’s expecting to hand most of the proceeds of the Collimate Capital sale to shareholders.

That will likely see AMP undergoing an on-market share buyback or capital return. The latter could take the form of a special dividend, reports The Motley Fool’s Brendon Lau.

Additionally, the company’s annual general meeting this Friday might provide more answers on future dividends. As might its half-year results, set to drop in August.

It might be worth keeping hopes low for now, though.

Back in January, my Fool colleague James Mickleboro reported broker Citi wasn’t expecting AMP shares to pay a dividend until financial year 2024.

The post When might the dividend drought break for AMP shares? appeared first on The Motley Fool Australia.

More reading

• What was the highest ever AMP share price?
• Why this top broker says the AMP share price is 27% over-valued
• Top brokers name 3 ASX shares to sell next week
• Could the worst now be over for the AMP share price?
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor Brooke Cooper 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 Scott Phillips.

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Looking for dividend shares to buy this month? Then have a look at the ones listed below that have been given buy ratings and tipped to pay big dividends.

Here’s what you need to know about these dividend shares:

Australia and New Zealand Banking Group (ASX: ANZ)

This banking giant could be a dividend share to buy. Particularly given the positive outlook for interest rates in Australia and its solid performance so far in FY 2022. In respect to the latter, ANZ recently released its half-year results and reported cash earnings from continuing operations of $3,113 million. This represents a 4% increase over the prior corresponding period.

In response to its half-year update, the team at Citi maintained their buy rating and $30.75 price target on the bank’s shares.

In addition, the broker has pencilled in fully franked dividends per share of 147 cents in FY 2022 and then 170 cents in FY 2023. Based on the current ANZ share price of $25.85, this implies yields of 5.7% and 6.6%, respectively, over the next two years.

BHP Group Ltd (ASX: BHP)

Another ASX dividend share to look at is mining giant BHP. It is one of the world’s largest miners with a portfolio of world class operations across a number of commodities.

Thanks to strong commodity prices, these operations are generating high levels of free cash flow. And with BHP’s balance sheet remaining robust, the majority of this free cash flow is likely to find its way to shareholders in the form of dividends.

Citi is also very positive on BHP and has a buy rating and $56.00 price target on its shares.

It recently commented that there is “too much cash flow to ignore.” The broker expects this to underpin fully franked dividends per share of ~$4.86 in FY 2022 and then ~$4.89 in FY 2023. Based on the current BHP share price of $46.99, this implies yields of 10.3% and 10.4%, respectively.

The post Experts name 2 ASX dividend shares to buy with big fully franked yields appeared first on The Motley Fool Australia.

More reading

• 2 ASX shares I have supreme confidence in: fund manager
• Is the Telstra share price cheap compared to other ASX 200 shares?
• Already down 7% in 2022, is the ANZ share price cheap?
• How big is the BHP dividend yield going to be in 2022 and 2023?
• Which ASX 200 mining share has the highest dividend yield in May?

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 Scott Phillips.

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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.

What happened

Shares of several U.S.-based electric vehicle (EV) companies are moving higher today and investors can probably thank Rivian Automotive (NASDAQ: RIVN) for that. Shares of Rivian jumped as much as 11.2% in early trading today, and that helped the stocks of other EV names, including Lucid Group (NASDAQ: LCID) and Nikola (NASDAQ: NKLA), to also move higher by 6% and 6.8%, respectively. 

All three stocks cooled down somewhat after the early jumps. As of 12:20 p.m. ET, shares of Rivian, Lucid, and Nikola were holding gains of 8.6%, 1.6%, and 2.2%, respectively. And there was good reason as to why Rivian remained the strongest of the group. 

So what

After the entire EV sector has seen recent stock declines driven by manufacturing and cost headwinds, Rivian CEO RJ Scaringe injected some new confidence with a filing yesterday showing he just bought more than $1 million worth of his company’s stock. Investors often say that there can be many reasons to sell, but there’s only one reason why an insider adds to holdings of their company’s common stock — they expect it will move higher. 

In a note that seems to support Scaringe’s thoughts, widely followed Morgan Stanley analyst Adam Jonas just maintained the equivalent of a buy rating on Rivian shares. Though the analyst lowered the stock’s price target from $85 to $60 per share, that still represents an increase of more than 140% above Monday’s closing price. 

Now what

Earlier this year, Rivian and Lucid both sharply reduced vehicle production targets for 2022. But both also just maintained those reduced projections when they reported first-quarter results. Rivian had said that even though it had the equipment and processes in place to produce 50,000 of its electric vehicles this year, it only expects to make 25,000 due to parts shortages from supply chain constraints. 

In the Morgan Stanley note, Jonas said he doesn’t even expect Rivian to hit that target. He believes the company may only produce 15,500 vehicles this year. He has also reduced production estimates for 2023, 2025, and 2030. But based on his price target, he still believes there is plenty of upside for the shares with his more conservative view looking ahead. 

Beyond solving near-term supply chain issues, Rivian and Lucid expect to grow production in the next several years with new manufacturing plants being brought online. After the CEO showed he also seems to think that growth will lead to a rising stock price, investors took up several names in the sector today. 

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

The post Why Rivian is helping drive electric vehicle stocks higher today appeared first on The Motley Fool Australia.

More reading

• When might the dividend drought break for AMP shares?
• Experts name 2 ASX dividend shares to buy with big fully franked yields
• ASX 200 energy shares in focus amid frightening global supply crisis
• ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles
• ‘Too early to brake for the next exit’: What this top broker likes about Transurban shares

Howard Smith has positions in Lucid Group, Inc. and Nikola 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 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 Scott Phillips.

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

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S&P/ASX 200 Index (ASX: XJO) energy shares are in focus as the companies’ management present their views at the Australian Petroleum Production and Exploration Association (APPEA) industry conference today.

The burning topic, as you’d expect, is the global energy crisis. A crisis that saw Brent crude oil rocket to US$128 per barrel in March and continue to trade at US$113 per barrel today. Similar supply shortages amid resurgent demand sent LNG and coal prices to all-time highs this year.

Net zero ambitions collide with global conflicts

Environmentalists and activist investors have been pushing hard to stymie the development of new fossil fuel projects, eyeing a world with net-zero emissions by 2050.

While addressing global warming is obviously important, the lack of new exploration and development in recent years has left the world open to today’s crisis, according to managers of the ASX 200 energy shares.

And that’s really come to the forefront following oil-rich Russia’s invasion of Ukraine and the resulting embargos on Russian energy exports.

Global energy scarcity ‘frightening’

Addressing the APEA conference, Santos Ltd (ASX: STO) CEO Kevin Gallagher said (courtesy of The Australian):

We are watching an energy crisis play out in Europe right now, but we have on our doorstop a prime example of what happens if the energy transition is focused only on stopping new oil and gas projects.

We’ve had a decade of moratoriums, shutdowns and lockouts in resource-rich states and territories. And, as I have said for a number of years, the resulting scarcity of new developments today is frightening, with forecasts of tight supply over coming years.

Meg O’Neil, CEO of ASX 200 energy share Woodside Petroleum Limited (ASX: WPL), said the world hasn’t experienced this level of energy crisis in 50 years:

I think Russia’s invasion of Ukraine really has catalysed the energy security conversation in a way that it’s not been done since the 1970s with the Arab oil embargo.

Nations and political leaders first and foremost think about their home patch before thinking about their role in the global world. And the short-term implication is that there are challenges on reliability and challenges on affordability.

APPEA chairman Ian Davies added that halting new oil and gas projects has had no impact on global emissions levels:

The focus of our opponents on stopping fossil fuel projects has had no effect on consumer demand, and no effect on emissions reduction. What it has done is to push fossil fuel developments to places such as the Middle East and Russia. This has created a supply crunch and has raised prices, hurting people and economies around the globe.

ASX 200 energy shares investing in carbon capture

While not everyone is convinced by the technology, Santos has carbon capture projects running at 27 locations across the world.

“The new focus on stopping oil and gas projects in environmentally responsible jurisdictions such as Australia is centred around discrediting a proven technology for low-cost, large-scale emissions reduction – carbon capture and storage,” Gallagher said (quoted by The Australian).

“Yet CCS has been done before. We are doing it now in 27 commercial projects around the world. And it works,” he added.

How have these ASX 200 energy shares been tracking

With some strong tailwinds thrown up by soaring energy prices, Santos shares have gained 25.4% year-to-date.

Rival ASX 200 energy share Woodside has performed even better, with shares up 36.6% in 2022.

That compares to a year-to-date loss of 5.6% posted by the ASX 200.

The post ASX 200 energy shares in focus amid frightening global supply crisis appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• The Santos share price lifts amid joint venture news
• Woodside share price rises after merger clears final regulatory hurdle
• Brokers name 2 ASX 200 mining shares to buy
• 5 things to watch on the ASX 200 on Tuesday

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 Scott Phillips.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) has followed the lead of Wall Street and is charging higher. The benchmark index is up 0.8% to 7,168.5 points.

Here’s what is happening on the ASX 200 today:

Fortescue’s leadership changes

The Fortescue Metals Group Limited (ASX: FMG) share price is pushing higher today. This follows the announcement of a raft of leadership changes that are being made as part of its evolution into a global green renewables and resources company. One key change will see Dr Andrew “Twiggy” Forrest AO return to lead Fortescue as its Executive Chairman. He will oversee the iron ore business for an interim period to help drive the company’s transition when its current CEO, Elizabeth Gaines, concludes her tenure in August.

Boral downgrades earnings guidance

The Boral Limited (ASX: BLD) share price is sinking today after the building products company revealed that its earnings have taken a hit from recent inclement weather and higher energy prices. This means that Boral will fall short of its underlying earnings before interest and tax (EBIT) guidance of $145 million and $155 million.

BlueScope upgrades its earnings guidance

The BlueScope Steel Limited (ASX: BSL) share price is pushing higher after the steel producer upgraded its earnings guidance. Thanks to strong demand, the steel producer has lifted its underlying EBIT guidance for the second half of FY 2022 to between $1.375 billion to $1.475 billion. This compares to its prior guidance of $1.2 billion to $1.35 billion.

ASX 200 best and worst performers

The best performer on the ASX 200 on Wednesday has been the Megaport Ltd (ASX: MP1) share price with a 5.5% gain following a rebound in the tech sector. Going the other way, the Eagers Automotive Ltd (ASX: APE) share price is the worst performer with a 6% decline. This follows a trading update which revealed strong demand but tough supply conditions.

The post ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles appeared first on The Motley Fool Australia.

More reading

• Here’s why the Eagers share price is sliding today
• ‘Strong demand’: Bluescope share price strengthens on guidance upgrade
• Boral share price down 3% on earnings hit
• Why I think these are the best ASX dividend shares to buy right now
• Fortescue share price on watch after Twiggy returns to top job

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 positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares of Transurban Group (ASX: TCL) are lifting in early trade on Wednesday and are now fetching $14.22.

The Transurban share price has been on a gradual walk northwards these past few months. Transurban shares are now clipping a 4% gain since trading resumed in January.

Top broker remains bullish on Transurban shares

In a recent note, analysts at major investment bank JP Morgan retained its overweight rating on Transurban. The broker values the company at $15.85 per share.

Sharing its investment thesis on the company, JP Morgan noted Transurban’s wide geographical footprint which spans several jurisdictions.

“[Transurban] has the largest portfolio of toll roads in Australia, and its traffic growth is relatively predictable and has historically materially outpaced GDP growth,” the broker said.

“Traffic growth per year has typically been 2-4% and has averaged 3%, but going forward we expect 2%,” it went on to add.

“We believe development completions (WCX, NCX) will be cash flow accretive coupled with built-in annual toll increases of at least CPI or 4%.”

JP Morgan notes one other factor, which is Transurban’s apparently ‘underappreciated’ dividend which appears juicier when looking into the future. This might be just what investors who hold Transurban shares want to hear.

The broker argues the outlook for Transurban’s dividend is “materially improving from FY23”. This is based on several factors, including “inflation linked tolls; and structural changes to traffic flow through.”

“We forecast a dividends per share compound annual growth rate (CAGR) of 10% p.a. over FY21-FY31 believing this has been underappreciated.”

Sentiment tilted to bullish

Six other analysts join JP Morgan in rating Transurban shares a buy right now. Whereas five and three brokers say it’s a hold and sell, respectively, per Bloomberg data.

The consensus price target from this list is $14.27 per share. This places questions on whether Transurban shares are at fair value right now or not.

In the last 12 months investors have rallied Transurban by 3%. Meanwhile, the wider S&P/ASX 200 Index (ASX: XJO) market has settled on a 1% gain.

The post ‘Too early to brake for the next exit’: What this top broker likes about Transurban shares appeared first on The Motley Fool Australia.

More reading

• The Transurban share price has leapt 13% in 2 months. Too late to buy?
• Macquarie picks ASX 200 shares to buy in this volatile environment
• Broker names 3 ‘champion’ ASX 200 shares to buy and hold
• What drove the Transurban share price higher on Monday?
• 2 ASX dividend shares analysts have named as buys for income investors

Motley Fool contributor Zach Bristow 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 Scott Phillips.

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