Month: May 2022

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.

Warren Buffett probably ranks as the most frequently quoted investor in history. One of his most famous statements seems especially applicable in the current market environment: “Be fearful when others are greedy. Be greedy when others are fearful.”

There’s no question that many investors are fearful as a result of the stock market’s volatility. However, true to form, Buffett is showing some signs of being greedy. Here are three stocks that Buffett is betting on big time right now.

1. Chevron

Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) added to its positions in only a handful of stocks in the fourth quarter of 2021. Chevron (NYSE: CVX) was one of them. And Berkshire’s regulatory filing for its first-quarter results reveals that Buffett is still a fan of the oil and gas stock. As of the end of Q1, Berkshire owned $25.9 billion of Chevron shares.

There’s no mystery behind why Buffett likes Chevron these days. Russia’s invasion of Ukraine disrupted energy markets. Demand is picking up with fewer travel restrictions related to COVID-19. Oil prices have soared as a result of these factors.

Unsurprisingly, Chevron stock has trounced the market. Based on Berkshire’s increased stake in the company during the first quarter, Buffett seems to think this outperformance can continue. He could very well be right.

Chevron stands as one of the strongest oil companies from a financial perspective. It’s also expanding into clean energy with the pending acquisition of Renewable Energy Group. 

2. Occidental Petroleum

While Chevron is Buffett’s favorite oil stock, it’s not his only one. Berkshire has also been busy scooping up shares of Occidental Petroleum (NYSE: OXY).

In Berkshire’s Q1 regulatory filing, the company revealed that it had bought Occidental preferred stock, along with warrants to buy up to 83.86 million shares of common stock. Last week, another regulatory filing disclosed that Berkshire now owns 142.3 million Occidental shares. 

Occidental should benefit from many of the same tailwinds as Chevron. Like Chevron, Oxy is also ramping up its clean-energy initiatives, including carbon capture projects.

Buffett probably especially likes the Occidental preferred stock that Berkshire owns. Those shares pay a juicy dividend yield of 8%. It won’t take much share appreciation for this investment to pay off nicely.

3. HP

Tech stocks haven’t exactly been Buffett’s forte in the past. He’s had a few successes but some notable flops, as well. However, this mixed record didn’t deter Berkshire from opening a huge position in HP (NYSE: HPQ) recently.

Early last month, Berkshire purchased nearly 121 million shares of HP. It now stands as the largest shareholder of the technology giant, owning around 11% of its outstanding shares.

Why does Buffett (or one of his investment managers) like HP so much? The most likely reason is that the stock is cheap. Even with the boost provided by the revelation of Berkshire’s stake, HP’s shares trade at only 8.6 times expected earnings.

Buffett probably also likes HP’s dividend yield of 2.7%. And he’s a fan of share buybacks. HP plans to repurchase at least $4 billion of its stock this year. 

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

The post 3 Stocks Warren Buffett Is Betting on Big Time Right Now appeared first on The Motley Fool Australia.

More reading

• Worried about inflation? Here’s what Warren Buffett says Berkshire Hathaway is doing

Keith Speights has positions in Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway (B shares) and HP. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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It’s been a stormy month on the Aussie stock market so far in May. So we asked our Foolish contributors to compile a list of ASX shares that experts reckon have a fine outlook with a strong chance of dividend windfalls over the long range. Here is what the team came up with.

7 best ASX dividend shares for May 2022 (smallest to largest)

• Adairs Ltd (ASX: ADH), $433.43 million
• Elders Ltd (ASX: ELD), $2.21 billion 
• Brickworks Limited (ASX: BKW), $3.33 billion
• Wesfarmers Ltd (ASX: WES), $55.3 billion
• Macquarie Group Ltd (ASX: MQG), $67.22 billion
• Westpac Banking Corp (ASX: WBC), $83.29 billion
• BHP Group Ltd (ASX: BHP), $227.55 billion

(Market capitalisations as of 13 May 2022)

Why our Foolish writers love these ASX dividend shares

Adairs Ltd 

What it does: Adairs is a leading ASX retail company operating in the homewares space. It owns traditional brick-and-mortar stores nationally as well as a thriving e-commerce platform.

By Sebastian Bowen: Adairs was definitely something of a COVID winner, and experienced a notable uplift in sales and profits over 2020 and into 2021. The company has been struggling somewhat in 2022 though, with a meaningful share price reduction of close to 40% over the year to date.

However, this has pushed up Adairs’ fully-franked dividend yield to more than 7%. Even if Adairs trims its dividends moving forward, it’s still arguably likely to have a robust dividend yield at the current share price of $2.51. Thus, this often-overlooked dividend share could well be worth a look in May.

Motley Fool contributor Sebastian Bowen owns shares of Adairs Ltd.

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Elders Ltd 

What it does: Elders is a 180-year-old agricultural business that provides a range of products and services to support rural communities across Australia and New Zealand.

By Mitchell Lawler: Elders is one ASX dividend share that has continued to go from strength to strength amid the disruption around the world. The Australian agricultural business enjoyed a 22% revenue uplift over the past year as the industry experiences better than usual conditions.

The latest forecasts from the Australian Bureau of Agricultural and Resource Economics (ABARES) suggest the good conditions will persist between June and August. Specifically, there’s a 75% chance of rainfall totals of more than 50mm across much of the company’s key operational regions.

Recently, Goldman Sachs highlighted its conviction buy rating on Elders shares – accompanied by a $17.65 price target, compared to the current $13.99 per share. The company currently offers a dividend yield of 3.00%.

Motley Fool contributor Mitchell Lawler owns shares of Elders Ltd.

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Brickworks Limited 

What it does: Brickworks is not only the largest brickmaker in Australia, but also specialises in other building products as well as property and investments.

By Tristan Harrison: Brickworks has been operating for several decades. It’s a major player both in Australia and in the United States.

In terms of dividends, Brickworks hasn’t cut its payment for more than four decades. Management is proud of the company’s reliability as a dividend payer to shareholders.

The business is seeing growth within its industrial property trust, with properties being built on excess Brickworks land. Over the next few years, Brickworks is expecting the trust to complete building properties that add $60 million of gross rental and $1.5 billion of leased asset value to the trust.

The trailing, grossed-up dividend yield on Brickworks shares is around 4.00% based on Friday’s closing share price of $22.15.

Motley Fool contributor Tristan Harrison does not own shares of Brickworks Limited.

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Wesfarmers Ltd 

What it does: Wesfarmers is a retail conglomerate that operates some of Australia’s favourite brands including Bunnings, Kmart, and Officeworks.

By Brooke Cooper: An oldie but a goodie, Wesfarmers has been a blue-chip staple among ASX investors for decades. Wesfarmers is also a consistent dividend-paying stock. It’s been handing investors back a portion of its profits since the 1980s.

Broker Morgans believes Wesfarmers has a strong management team and a healthy balance sheet. It also expects the company’s Bunnings brand will continue to attract customers despite uncertain economic conditions.

On top of that, Morgans is expecting the Wesfarmers dividend to grow to a fully-franked, $1.81 per share in the 2023 financial year.

Motley Fool contributor Brooke Cooper does not own shares of Wesfarmers Ltd.

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Macquarie Group Ltd 

What it does: Macquarie is among Australia’s largest banks and is primarily involved in investment, commercial banking and asset management.

By Aaron Teboneras: The Macquarie share price has fallen by almost 10% in the past week and could be trading at bargain levels, according to Morgans.

The investment bank delivered its FY22 results earlier this month, reporting double-digit growth across key financial metrics. However, this wasn’t enough to stop its shares from falling due to the market’s lofty expectations.

Nonetheless, the board decided to increase its final dividend by 4.5% to $3.50 for the full year ending 31 March.

The team at Morgans upgraded its outlook on Macquarie shares to ‘add’ from ‘hold’. In addition, the broker raised its 12-month price target by 2.6% to $215 apiece.

Based on Friday’s closing price of $183.11, this represents a potential upside of almost 18% for investors.

Motley Fool contributor Aaron Teboneras does not own shares of Macquarie Group Ltd.

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Westpac Banking Corp 

What it does: Westpac is Australia’s oldest banking and financial services group and is one of the largest banks listed on the ASX. 

By James Mickleboro: I think Westpac could be a dividend share to buy in May, particularly given the recent release of the bank’s half-year results. The update revealed cash earnings of almost $3.1 billion and an interim fully franked dividend of 61 cents per share. Both were ahead of the market’s expectations for the period.

But in my opinion, the main reason to be positive is that the bank continues to target a cost base of $8 billion in FY2024, down from $13.3 billion in FY 2021 (including $2.3 billion of one-offs). This is despite two of its peers admitting defeat on their own cost-reduction targets this month due to inflation. If Westpac delivers on this, it should be supportive of earnings and dividend growth in the coming years.

At present, Citi is forecasting fully franked dividends of $1.23 per share in FY2022, $1.55 per share in FY 2023, and $1.80 per share in FY2024. Based on the current Westpac share price at the time of writing, this will mean yields of 5.1%, 6.4%, and 7.5%.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp.

BHP Group Ltd 

What it does: BHP is one of the world’s biggest miners and is involved in a diversified array of natural resources including iron ore, metallurgical coal, and copper.

By Bernd Struben: On the back of soaring commodity prices, BHP has become a star dividend payer, currently paying a 10.7% trailing dividend yield.

Plato Investment Management’s Peter Gardner believes there’s more to come.

“The big Australian is in a really good position to continue delivering big dividends… During the recent reporting season, BHP announced a record first-half dividend of $1.50 per share, fully franked,” he said. “This dividend was announced along with increasing revenues, increasing earnings, and increasing profit.”

Gardner also believes BHP’s pending merger deal with Woodside Petroleum Limited (ASX: WPL) would be “a tax-effective income opportunity for BHP shareholders”.

Motley Fool contributor Bernd Struben does not own shares of BHP Group Ltd.

The post Top ASX dividend shares to buy in May 2022 appeared first on The Motley Fool Australia.

More reading

• 4 ASX shares of the most trusted brands in Australia
• 2 ASX 200 dividend shares to buy according to a top broker
• Where next for the Wesfarmers share price?
• The Boral share price has been smashed 10% so far in May. What’s happening?
• Own ASX 200 retail shares? Here’s how the majors are tackling climate change

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO and Brickworks. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Brickworks, and Wesfarmers Limited. The Motley Fool Australia has recommended Elders Limited, Macquarie Group Limited, and Westpac Banking Corporation. 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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If you’d like to make some investments but aren’t sure which shares to buy, you could look at exchange traded funds (ETFs) instead. This increasingly popular asset class allows you to invest in large groups of shares from particular indices or sectors through a single investment.

But which ETFs could be in the buy zone? Two that are very popular are listed below. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF for investors to look at is the BetaShares Asia Technology Tigers ETF. This ETF tracks the performance of an index comprising around 50 of the biggest and brightest technology shares in Asia.

These are the tigers of the Asian economy and include the likes of Alibaba, Baidu, JD.com, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent.

As the Asian tech sector is expected to remain a growth sector for some time to come, this could make the BetaShares Asia Technology Tigers ETF a great option for long-term focused investors. Particularly after recent weakness dragged many of these companies (and therefore the ETF) down materially from their highs.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF that investors might want to look at is the VanEck Vectors Morningstar Wide Moat ETF, especially if you’re after high quality and defensive companies to invest in.

That’s because this ETF aims to invest in a collection of companies that are deemed to be fairly valued and have sustainable competitive advantages or moats (hence the ETF’s name).

The VanEck Vectors Morningstar Wide Moat ETF also has around 50 shares among its holdings. These include Adobe, Amazon, Boeing, Campbell Soup, Constellation Brands, Lockheed Martin, Microsoft, Walt Disney, and Wells Fargo.

The post Here are 2 fantastic ETFs for ASX investors to buy in May appeared first on The Motley Fool Australia.

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• Here are 2 ETFs delivering breakneck ASX performance
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• 3 high quality ETFs for ASX investors to buy today

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 BetaShares Asia Technology Tigers ETF and VanEck Vectors Morningstar Wide Moat ETF. 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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With interest rates rising, Australians are about to tighten their belts and watch their spending.

If you have less money to play with, then naturally you will be more careful where you spend it.

As such, it’s interesting to analyse the latest update to the Roy Morgan’s Australia’s most trusted brands rankings.

As the economy slows down, which are the brands best placed to attract customers and revenue?

ASX shares that have the most trustworthy brands

For the year ending March, incredibly the top six most trusted brands had not changed from the previous quarter:

1. Woolworths Group Ltd (ASX: WOW)
2. Coles Group Ltd (ASX: COL)
3. Bunnings Warehouse
4. Aldi Australia
5. Kmart
6. Qantas Airways Limited (ASX: QAN)

While Aldi is privately owned, Bunnings and Kmart are both brands operated by the Wesfarmers Ltd (ASX: WES) conglomerate.

Roy Morgan chief Michele Levine noted the rising cost of living would challenge businesses looking to maintain trust and minimise distrust.

“The last two years have proven to be good ones for Australia’s supermarkets and big retailers,” she said. 

“Coles, Woolworths, Aldi, Bunnings Warehouse and Kmart have consistently ranked in the top five most trusted brands in Australia and this trend hasn’t changed in the early months of 2022.”

Woolworths and Wesfarmers shares have sunk so far this year, by around 2% and 17% respectively.

The Coles and Qantas share prices have fared better, with both ASX shares moving around 2.6% upwards.

US company makes huge strides in Australia

The huge mover in the latest survey was Apple Inc (NASDAQ: AAPL).

The technology provider moved up six places to be rated the ninth most trusted brand among Australians.

“Respondents who trust Apple noted several aspects of Apple’s services that stand out including that ‘their privacy and security is much higher of a priority than competitors’,” said Levine.

“‘Apple’s technology is useful and designed well – I use them extensively at home’, ‘I have used Apple’s products my entire working career’ and ‘They have always tried to develop user-centred products’.”

Apple shares have suffered the wrath of investors in the rotation away from high-growth stocks, falling almost 22% for the year so far.

The post 4 ASX shares of the most trusted brands in Australia appeared first on The Motley Fool Australia.

More reading

• ‘Safe haven’: Why this broker backs Woolworths shares amid recent turbulence
• Where next for the Wesfarmers share price?
• Will Microsoft and Apple shares finally give way in the stock market’s downturn?
• Own ASX 200 retail shares? Here’s how the majors are tackling climate change
• Analysts name 2 ASX dividend shares to buy to beat inflation

Motley Fool contributor Tony Yoo 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 Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Apple. 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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Despite a strong finish to the week, the S&P/ASX 200 Index (ASX: XJO) recorded a sizeable decline last week. The benchmark index fell 1.8% over the five days to 7,075.1 points.

Fortunately, not all shares dropped with the market. Here’s why these were the best performers on the ASX 200 last week:

PolyNovo Ltd (ASX: PNV)

The PolyNovo share price was the best performer on the ASX 200 last week with a whopping 44.4% gain. This was driven by countless announcements revealing that the heavily shorted medical device company’s chairman, David Williams, had bought shares on-market. This may have spooked short sellers into buying shares to close their positions.

Lifestyle Communities Limited (ASX: LIC)

The Lifestyle Communities share price was on form and charged 11.2% higher over the period. This was driven by a positive response from brokers to a trading update. That update revealed that the land lease communities company has reaffirmed its forecast to deliver 1,100 to 1,300 new home settlements and 450 to 550 resale settlements attracting a deferred management fee between FY 2022 and FY 2024. Goldman Sachs responded by reiterating its conviction buy rating and $24.65 price target.

TPG Telecom Ltd (ASX: TPG)

The TPG share price was a positive performer and pushed 8.6% higher last week. This followed a positive reaction to news that the telco has signed a binding agreement to sell 100% of its passive mobile tower and rooftop infrastructure. TPG is selling the infrastructure to OMERS Infrastructure Management for $950 million. These funds are expected to be used by TPG to pay down its existing debt.

IPH Ltd (ASX: IPH)

The IPH share price wasn’t far behind with a 7.4% gain. This was despite there being no news out of the intellectual property services company. This latest gain means the IPH share price is now up by a sizeable 22% over the last 12 months despite the market volatility.

The post These were the best performers on the ASX 200 last week appeared first on The Motley Fool Australia.

More reading

• These were the worst performers on the ASX 200 last week
• Here are the top 10 ASX shares today
• Why did the Telstra share price rebound nearly 2% on Friday?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why is the Magellan share price up 7% today?

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 POLYNOVO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended IPH Ltd. The Motley Fool Australia has recommended IPH Ltd and TPG Telecom Limited. 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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Woolworths Group Ltd (ASX: WOW) shares are outperforming the broader market in 2022, and they’re well-positioned to continue their trajectory, according to one expert.

BW Equities’ Tom Bleakly recently labelled the supermarket giant’s stock a ‘buy’ saying it (and its peers) have managed to shake off recent disruptions.

At the closing bell yesterday, the Woolworths share price was up 1.16% at $37.64. That’s 2.3% lower than it was at the start of the year.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has slumped 7% so far this year.

So, what is it that the expert thinks Woolworths shares have going for them? Let’s take a look.

Here’s why this expert is backing Woolworths shares

Woolworths has faced numerous challenges this year, but its shares are still worth looking at, according to Bleakly.

He recently told The Bull he was impressed by the company’s recent earnings. Particularly, considering the notable supply chain issues it’s been facing.

Of course, the 13 weeks to 3 April saw major flood events in Australia as well as the worst of the Omicron outbreak.

That saw absenteeism surge in the company’s fulfilment centres, as well as the closure of stores and lesser product availability.

Still, Woolworths reported more than $15 billion of group sales for the period. That was a 9.7% increase on those of the prior comparable quarter.

Additionally, Bleaky believes the stock is in the right spot to ward off recent market turbulence.

The ASX 200 has been on a rollercoaster the last few weeks, seemingly spurred by Australia’s inflation rate hitting 5.1% in late April, followed by the nation’s first rate rise in 11 years in early March.

Bleaky commented that Woolworths’ home sector has been a “safe haven” in the turbulence.

Indeed, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) has fallen just 1.6% since the start of this year, besting the performance of the Woolworths share price.

The post ‘Safe haven’: Why this broker backs Woolworths shares amid recent turbulence appeared first on The Motley Fool Australia.

More reading

• Own ASX 200 retail shares? Here’s how the majors are tackling climate change
• What’s with the Woolworths share price on Wednesday?
• Is the Woolworths share price good value right now?
• Which ASX supermarket shares could win (and lose) as higher inflation hits shelves?
• Here’s how the Woolworths share price stacked up in April

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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Once upon a time, Appen Ltd (ASX: APX) was an ASX market darling sitting alongside four other constituents of the WAAAX group.

For many years, the AI training data company was a crown jewel among a bucket of ASX tech shares. From 2017 to 2019, revenue growth accelerated at a tremendous rate — with Appen posting growth of 33%, 62%, and 97% in each successive year.

However, the company’s growth became derailed during the COVID-19 pandemic. In 2020, revenue growth slowed to 47% before reducing to a limp last year at a pace of 10%. Consequently, the Appen share price has been obliterated from its all-time high in 2020 — falling 83%.

So, why would anyone consider acquiring Appen now?

Primed for higher interest rates

Distressed valuations over the past couple of years have created an ideal merger and acquisition (M&A) environment. In fact, last year was a record high for M&As, topping $5 trillion in deal volume. Not to be left out, the ASX had its fair share of the action with aggregate transaction value hitting $130.5 billion.

While strong activity has continued into this year, private capital now is now searching for deals in a rising rate environment. As such, dealmakers might show a greater interest in companies with minimal debt and a decent amount of cash.

Additionally, a solid track record of profitability is a must. We have already seen the ramifications on ASX shares that are loss-making in this macroeconomic climate. And most important, the company needs to display signs of being fundamentally ‘undervalued’ by the market.

When it comes to Appen on the ASX, in my view, the unloved tech company ticks these boxes.

How ASX-listed Appen shapes up

For all of its listed life, Appen has been profitable on a trailing 12-month basis. And while the company’s earnings have been in decline since mid-2020, this has coincided with several acquisitions and top-line growth across new markets.

Possibly the key to any potential Appen appeal is its immaculate balance sheet. At the end of December 2021, debt was zilch while cash and cash equivalents sat at US$47.9 million. For reference, automotive industry software company Infomedia Limited (ASX: IFM) received a takeover approach this morning, sporting a similar-looking balance sheet.

The final reason why I think ASX-listed Appen could be a potential takeover target is the valuation. Slowing growth and downgraded guidances have sapped investors of their confidence in the Appen share price.

As a result, the company trades on a price-to-earnings (P/E) ratio of 19 times — compared to the industry average of 30 times. Similarly, Appen’s price-to-book (P/B) ratio is the lowest it has been as a listed company at 1.4 times.

These factors don’t take into consideration how future performance could adjust the company’s valuation. However, I think private capital could be tempted to take a chance if Appen can continue to run at profit, pay a dividend, and trade at a relatively cheap valuation.

The post Here’s why I think ASX-listed Appen could be a potential takeover target appeared first on The Motley Fool Australia.

More reading

• The Appen share price is charging 6% higher on Friday
• How much further can ASX 200 tech shares tumble? Macquarie weighs in
• What’s up with the Appen share price on Wednesday?
• 5 things to watch on the ASX 200 on Tuesday
• These are the 10 most shorted ASX shares

Motley Fool contributor Mitchell Lawler has positions in Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd and Infomedia. The Motley Fool Australia has recommended Infomedia. 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 talk of an earlier coal exit has increased this month after Mike Cannon-Brookes bought into AGL Energy Limited (ASX: AGL) shares in a bid to shut down its coal fired-power plants sooner.

The tech billionaire snapped up an 11.28% stake in the company with the intent to block its planned demerger. He, alongside notable climate organisations, believes the split will prolong the lifespan of the company’s coal assets and drive its value down.

But would an earlier than planned coal exit be detrimental to the AGL share price, as the company argues? Let’s take a look.

As of Friday’s close, the AGL share price is $8.40, 0.84% higher than its previous close.

The S&P/ASX 200 Index (ASX: XJO) also traded in the green on Friday. It finished the day 1.93% higher.

Could earlier coal closures aid the AGL share price?

The argument for dumping coal

The AGL share price has tanked 68% over the last five years and climate activists argue the company’s refusal to ditch coal has been a major driver of its downfall.

And its shareholders arguably appear to agree. 55% of AGL investors called for the company to implement short and long-term emissions targets in line with the Paris Agreement last year.

Such targets would force the company to ditch coal by 2030, says the Australasian Centre for Corporate Responsibility (ACCR).

On the other hand, the AGL share price tumbled 6% last month after a unit at its Loy Yang A power station faulted.

It was the second time the company had announced such news in 2 years. The first outage cost $105 million.

The plant is earmarked to close by 2045 at the latest – 12 years after the Bayswater power station will be shuttered.

Thus, ageing coal assets might continue weighing on the stock for the foreseeable future.

Additionally, it’s predicted closure dates go against the National Energy Market Operator’s expectations. Its Step Change scenario predicts most coal will be scrapped from the national energy market by 2030.

The company rebutted such a speedy exit from coal after the regulator released the scenario in December.

The case against earlier coal closures

On the other hand, the company’s management reportedly believes an earlier exit from coal is an “engineering impossibility”.

It claims ditching coal by 2030 would cost $30 billion and force it to double the speed in which it takes to build wind farms over the coming five years.

Of course, a $30 billion hit to AGL’s bottom line would likely also dint its share price.

Instead, it believes demerging AGL Energy into a retailer and a generator will offer greater value for shareholders.

Following the demerger, the company’s retail business – AGL Australia – would be less exposed to risks associated with coal.

AGL Australia will boast net zero emissions on listing under the plan.

The post How dependant on coal closure is the AGL share price? appeared first on The Motley Fool Australia.

More reading

• AGL share price lifts despite Greenpeace accusing leadership of being ‘caught with their pants down’
• Is Cannon-Brookes getting ready to pitch a third takeover bid for AGL shares?
• Own AGL shares? Expert warns Cannon-Brookes’ stake might not be all it seems
• Cannon-Brookes warns AGL dividends at risk from demerger
• AGL share price makes partial recovery as expert declares demerger favourable

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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If I were fortunate enough to have $10,000 sitting idle in a savings account, I would look to put it to work in the share market.

After all, even with rates rising, the potential returns on offer are vastly superior to the interest rates most bank accounts offer right now.

In addition to this, with the market down materially from its recent high, there are a lot of high-quality companies trading at discounted prices.

But which shares could be buys? Here are two ASX 200 shares I would invest my funds into:

Goodman Group (ASX: GMG)

The first ASX 200 share that I would buy with these funds is Goodman Group. It is an integrated commercial and industrial property company that owns, develops, and manages industrial real estate across 14 countries.

Demand has been incredibly strong for its properties, which has underpinned stellar rental income growth for over a decade. The good news is that this looks set to continue in the coming years. This is being underpinned by long-term demand for industrial space from increasing e-commerce penetration and supply chain modernisation and its development work in progress of $12.7 billion. The latter comprises 81 projects with a forecast yield on cost of 6.7%.

And while Goodman’s shares trade at a premium to other property companies, I believe this is justified due to its quality and positive growth outlook. For example, Goldman Sachs estimates that Goodman will grow its earnings per share (EPS) by an average of 13% per annum from FY 2022 to FY 2024. This is well ahead of industry averages.

TechnologyOne Ltd (ASX: TNE)

Another ASX 200 share that I would invest $10,000 into is TechnologyOne. It is an enterprise resource planning (ERP) software company servicing the government, financial services, health, education, and utilities and managed services markets.

TechnologyOne has been growing at a solid rate for more than two decades and I believe it is well placed to continue this trend in the coming years. This is thanks to its leadership position in key verticals, the stickiness of its products, and its recent shift to a software-as-a-service (SaaS) focused business model.

Management expects the latter to underpin very strong high margin, recurring revenue growth in the coming years. For example, TechnologyOne is targeting SaaS annual recurring revenue (ARR) of $500 million by FY 2026. This will be more than double the $192.3 million it recorded in FY 2021 and represents a five-year compound annual growth rate of 21%.

In light of this strong growth outlook, I believe its shares are attractively priced at 30x estimated FY 2023 earnings.

The post Why I would invest $10,000 into these ASX 200 shares right now appeared first on The Motley Fool Australia.

More reading

• Goodman share price charges higher following bullish broker note
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Wednesday
• Analysts name 2 profitable ASX growth shares with 40%+ upside
• Broker names 3 more ‘champion’ ASX 200 shares to buy and hold

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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If you’re wanting to add some ASX 200 dividend shares to your portfolio, then it could be worth considering the two listed below.

Here’s why a leading broker thinks they could be top options for income investors:

Macquarie Group Ltd (ASX: MQG)

The first ASX 200 dividend share to look at is investment bank Macquarie.

It recently released its full-year results for FY 2022 and revealed a net profit after tax of $4.7 billion. This was up a staggering 56% over the prior corresponding period. And while it will be hard to top this in FY 2023, the team at Morgans remain positive and see plenty of value in its shares.

Last week the broker put an add rating and $215.00 price target on the bank’s shares.

Morgans commented: “We anticipate some near-term earnings volatility over FY23 but we like MQG’s favourable longer-term growth profile and consistent history of delivering strong returns (~15% average ROE over time).”

Its analysts expect a $7.07 per share dividend in FY 2023 and then $7.47 per share dividend in FY 2024. Based on the current Macquarie share price of $183.11, this will mean yields of 3.9% and 4.1%, respectively.

South32 Ltd (ASX: S32)

Another ASX 200 dividend share to look at is South32. It is diversified mining and metals company producing a range of commodities including alumina, aluminium, bauxite, coal, copper, manganese, nickel, and silver across operations in Australia, Southern Africa and South America.

Morgans is a big fan of the company. It currently has an add rating and $6.10 price target on the miner’s shares.

The broker commented: “We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.”

In respect to the latter, the broker is forecasting fully franked dividends per share of 25.8 cents in FY 2022 and 35.3 cents in FY 2023. Based on the current South32 share price of $4.41, this represents yields of 5.85% and 8%, respectively, over the next couple of years.

The post 2 ASX 200 dividend shares to buy according to a top broker appeared first on The Motley Fool Australia.

More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Hoping to bag the next Macquarie dividend, here’s what you need to do
• Why did the South32 share price beat the other ASX 200 miners today?
• Broker says South32 share price is great value and one of the ‘best’ options for investors
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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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