Day: July 11, 2022

2 excellent ASX dividend shares rated as buys by experts

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted by the gains of ASX mining shares

An executive in a suit smooths his hair and laughs as he looks at his laptop feeling surprised and delighted by the gains of ASX mining shares

Investors that are looking for dividend options might want to check out the two ASX shares listed below.

Both of these ASX dividend shares have recently been tipped as buys with attractive yields. Here’s why analysts are bullish:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting could be a dividend share to buy. It is a baby products retailer with a growing presence both online and through its growing collection of national superstores.

Citi is a fan of the company and believes it is well-placed to navigate the tough consumer environment thanks to its strong position in a less discretionary category. It also sees recent expansions into new areas as positives. The broker commented:

We see Baby Bunting well placed to outperform the broader small cap retail sector this year given the non-discretionary nature of its category. […] Further, the stocks growth prospects are in some respects less risky than other high multiple retailers who are relying more on new markets and acquisitions. […] we see growth into toys and babywear categories as a positive for Baby Bunting and provides another strategy for the company to complement its i) rollout, ii) exclusive brands and private label growth, iii) supply chain initiatives.

Last week, its analysts retained their buy rating and $6.22 price target on its shares.

As for dividends, Citi is forecasting fully franked dividends per share of 16 cents in FY 2022 and 19 cents in FY 2023. Based on the current Baby Bunting share price of $4.32, this will mean yields of 3.7% and 4.4%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another ASX dividend share that could be in the buy zone is insurance giant QBE.

The team at Morgans recently named the company as one of its best ideas for the month. The broker likes the insurer due to its cheap valuation and positive outlook. Morgans has an add rating and $14.76 price target on the company’s shares.

The broker commented:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~14x FY22F PE.

In respect to dividends, the broker has pencilled in a 41.4 cents per share dividend in FY 2022 and then a 66.3 cents per share dividend in FY 2023. Based on the latest QBE share price of $11.92, this equates to yields of 3.5% and 5.6%, respectively

The post 2 excellent ASX dividend shares rated as buys by experts appeared first on The Motley Fool Australia.

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

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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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 Baby Bunting. 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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I think the 16% drop in 2022 makes this Vanguard ETF a buy

A cute young girl wears a straw hat and has a backpack strapped on her back as she holds a globe in her hand with a cheeky smile on her face.

A cute young girl wears a straw hat and has a backpack strapped on her back as she holds a globe in her hand with a cheeky smile on her face.

The Vanguard MSCI Index International Shares ETF (ASX: VGS) has seen a sizeable drop in 2022. It’s down by around 16% since the start of 2022.

For an exchange-traded fund (ETF), that’s a pretty hefty drop considering it represents a whole group of businesses.

How many businesses are in the VGS ETF? More than you can count on two hands, or even 100 hands. At the end of May 2022, there were 1,474 businesses in the ETF’s portfolio.

That’s a lot of underlying diversification in just one investment. The diversification is one of the main reasons to like the Vanguard MSCI Index International Shares ETF in my opinion.

The purpose of this ETF is about providing exposure to many of the world’s largest companies listed in major developed countries, according to Vanguard. Vanguard is one of the world’s largest asset managers and aims to provide cheap investment options for investors.

There are a few different reasons why I think this could be a good time to consider this compelling ETF, besides the high level of its holdings.

Geographic and industry diversification

One of the attractive things about this ETF is how the holdings come from around the globe. Of course, the US still gets the lion’s share (70%) of the allocation because that’s where a majority of the world’s biggest businesses are. But I like that approximately 30% of the portfolio is invested in other markets.

The following countries have an allocation of at least 2%: Japan (6.2%), the UK (4.5%), Canada (3.7%), France (3.2%), Switzerland (2.9%), and Germany (2.3%).

There are also a number of other countries with a weighting of more than 0.5%: the Netherlands, Sweden, Hong Kong, Denmark, Italy, and Spain.

But it’s not just geographic diversification that the ETF offers. It’s also spread across a wide array of industries. This means that during times like 2022, some gains in some industries (like energy) can offset the decline in other sectors (like IT).

I think the risks are lowered with the VGS ETF being invested across a number of sectors. At the end of May 2022, there were five sectors that had a double-digit weighting: IT (21.8%), healthcare (13.5%), financials (13.4%), consumer discretionary (10.8%), and industrials (10%).

Cheaper valuation

It’s easy enough to say a lower price is better.

However, with rising interest rates, the price of many businesses looks more compelling when looking at the price/earnings (P/E) ratio.

I think that a lower P/E ratio is more attractive when it comes to an index fund like this one.

At the end of May 2022, Vanguard MSCI Index International Shares ETF had a P/E ratio of 17.4 times. I think that’s a reasonable number considering the quality of its portfolio.

Quality holdings

Many companies in the VGS portfolio have attractive long-term growth potential, featuring numerous industry leaders in the US or even globally.

I’ll list the top 10 holdings: Apple, Microsoft, Alphabet, Amazon.com, Tesla, Johnson & Johnson, UnitedHealth, Nvidia, Meta Platforms, and Berkshire Hathaway.

To highlight how financially strong the businesses in the portfolio are, let’s look at the return on equity (ROE) ratio. This essentially measures the profit generation of the business, compared to how much shareholder money is invested/retained in the business. At May 2022, the Vanguard MSCI Index International Shares ETF had a ROE of 18.1%. That’s attractive in my opinion.

Foolish takeaway

While it’s possible that the VGS ETF could drop further, I believe this lower level now represents a good, long-term buying opportunity. Plus, it has an annual management fee of 0.18%, which is good value for what it offers in my opinion.

The post I think the 16% drop in 2022 makes this Vanguard ETF a buy appeared first on The Motley Fool Australia.

Should you invest $1,000 in Vanguard Msci Index International Shares Etf right now?

Before you consider Vanguard Msci Index International Shares Etf, you’ll want to hear this.

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

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

See The 5 Stocks
*Returns as of July 7 2022

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Microsoft, Nvidia, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and UnitedHealth Group and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Nvidia, and Vanguard MSCI Index International Shares 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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The Lynas share price soared 53% in the 2022 financial year. Here’s what happened

mining worker making excited fists and looking excited

mining worker making excited fists and looking excited

The Lynas Rare Earths Ltd (ASX: LYC) share price was a true outperformer in the 2022 financial year (FY22).

The S&P/ASX 200 Index (ASX: XJO) rare earths producer kicked off FY22 trading for $5.71. By the closing bell on 30 June 2022, it was trading for US$8.73, a gain of 53% over the 12 months.

That performance is even more impressive with the ASX 200 itself falling some 10% in FY22.

Based out of Perth, Lynas is the second-largest producer of rare earths on the planet. It also counts as the only significant rare earths producer outside of China. The company’s Australian concentration plant is located at Mt Weld, Western Australia. It has an advanced materials plant in Malaysia’s Gebeng Industrial Park.

Lynas share price hits multi-year high in FY22

If not for the big retrace in June, which saw the Lynas share price fall 11% amid a wider market sell-off among materials and resources shares, the numbers for FY22 would be even hotter.

In fact, on 4 April, the company hit multi-year highs, closing at $11.39 per share.

The Lynas share price has certainly benefited from the West’s push to break China’s monopoly on rare earths, which consist of 17 different elements.

The various metals are critical for the production of all sorts of technology, from computers and smartphones to a range of modern military hardware. That’s seen the Australian Federal Government list rare earths among its critical mineral designations.

It’s also seen investors turn their attention to ASX rare earths explorers and producers as the price of rare earth elements has rocketed.

Record quarterly sales amid higher prices

In April the Lynas share price received a boost when the company reported exceptionally strong quarterly results for the three-month period ending 31 March.

Sales and production were both up as were the prices it obtained for its products.

Lynas reported quarterly sales revenue of $327.7 million. That was an increase of 61.7% from the same quarter in FY21 and a new quarterly record.

The company also realised a 17.5% year-on-year increase in its total rare-earth-oxide (REO) production and a 24.1% increase in its Neodymium-Praseodymium (NdPr) production, setting another quarterly record.

This came as the average selling price it achieved came in at $64.7 per kilogram, up more than 82% year-on-year.

The post The Lynas share price soared 53% in the 2022 financial year. Here’s what happened appeared first on The Motley Fool Australia.

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

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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Motley Fool contributor Bernd Struben 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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Could the Nickel Industries share price more than double from here?

A man pulls a shocked expression with mouth wide open as he holds up his laptop.

A man pulls a shocked expression with mouth wide open as he holds up his laptop.

It’s been a rough time of late for the Nickel Industries Ltd (ASX: NIC) share price. Nickel Industries (formerly known as Nickel Mines) ended up closing at 94 cents a share today, down 1.57% from Friday’s close of 96 cents. That puts the company’s shares down around 35% year to date, as well as down more than 10% over the past 12 months.

So why have Nickel Industries shares been in the wars of late? There have been a few things going on in the nickel space. As my Fool colleague Monica looked into last month, nickel markets were roiled earlier this year when nickel was caught in a short squeeze. This saw a dramatic spike, followed by a plunge, in the nickel price.

That overshadowed what was arguably a positive quarterly result in late April. This saw Nickel Industries report a 10.7% rise in nickel production, as well as an 18.7% lift in earnings before interest, tax, depreciation, and amortisation (EBITDA) to US$81.7 million.

So after such a rough patch for Nickel Industries, what might the future hold for this nickel miner?

Is the Nickel Industries share price a buy today?

Well, one broker reckons the Nickel Industries share price could more than double its current level over the next 12 months. As my Fool colleague James covered last week, ASX broker Bell Potter is currently very bullish on Nickel Industries shares.

The broker currently rates the company as a “buy”, with a 12-month share price target of $2 a share. That would represent an upside of almost 113% on the last share price.

Here’s some of what Bell Potter said about the company:

Despite rising input costs in CY22 [the 2022 calendar year], NIC has been able to maintain and expand margins and following the successful commissioning of the Angel Nickel Project, NIC is on track for earnings growth of over 60%…

NIC is trading on undemanding valuation multiples and remains one of our Top Picks for CY22.

So that’s a pretty unambiguously bullish opinion there from Bell Potter. No doubt investors would be delighted to hear it too. But we shall have to wait and see what the next 12 months hold in store for this company.

At the current Nickel Industries share price, this ASX 200 nickel share has a market capitalisation of $2.56 billion, with a dividend yield of 2.97%.

The post Could the Nickel Industries share price more than double from here? appeared first on The Motley Fool Australia.

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

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

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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 Scott Phillips.

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