Day: September 25, 2022

4 reasons I added Wesfarmers shares to my portfolio

Four people on the beach leap high into the air.

Four people on the beach leap high into the air.

I’ve added Wesfarmers Ltd (ASX: WES) shares to my ASX share portfolio in the last year. At more than a century old, the ASX 200 retail and industrial conglomerate is one of the oldest companies in Australia.

So why have I chosen this old giant of the ASX? Let’s discuss four reasons…

Why I have added Wesfarmers shares to my ASX portfolio

1. Wesfarmers is one of the most diversified ASX blue chip shares

Although Wesfarmers is just one company, in reality, it is more like a dozen. Wesfarmers has so many operations, it’s hard to give them all credit. There are the retailing powerhouses of Bunnings, OfficeWorks, Kmart and Target to consider.

But Wesfarmers also owns Covalent Lithium, Klenheat Gas, the Workwear Group, Wesfarmers Chemicals, Energy & Fertilisers, and most recently, the old API Group, which owns the Priceline pharmacy chain.

I think this disparate group of companies gives Wesfarmers an incredible edge when it comes to diversification.

2. Performance

When we boil down investing, it’s really only performance that matters in the long run. And in this respect, I have been heartened by Wesfarmers’ long history of delivering returns to its shareholders. Just take the past five years.

Since September 2017, the Wesfarmers share price has appreciated by just over 46%. In stark contrast, the S&P/ASX 200 Index (ASX: XJO) has only gained around 15.6% over the same period. Thus, I’d have much rather owned Wesfarmers over the past five years than an ASX 200 index exchange-traded fund (ETF).

3. Wesfarmers shares are dividend heavyweights

ASX investors love their dividends, and so do I. That further adds to my attraction for Wesfarmers shares. This company has a long and proud history of paying its shareholders hefty and fully franked dividend payments.

The $1.80 per share in dividends investors will enjoy in 2022 comes in above the $1.78 paid out last year. That again was greater than the $1.70 total for 2020. That’s a streak I’m happy to be a part of.

4. A stellar management team

In my view, Wesfarmers’ management has proven time and time again that they are a steady hand on the tiller.

From the successful spinoff of Coles Group Ltd (ASX: COL) in 2018 to the entry into lithium, before it was cool, Wesfarmers’ management has clearly got a clue as to how to run a successful conglomerate. Again, we can also point to the company’s share price performance for further proof.

The post 4 reasons I added Wesfarmers shares to my portfolio appeared first on The Motley Fool Australia.

Should you invest $1,000 in Wesfarmers Limited right now?

Before you consider Wesfarmers Limited, 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 Wesfarmers Limited 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 September 1 2022

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. 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 and Wesfarmers 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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2 surprising ASX shares to buy for the energy transition: Wilsons

A female superhero dressed in shiny green with a mask leaps in the sky with leg and arm outstretched in a leaping action.A female superhero dressed in shiny green with a mask leaps in the sky with leg and arm outstretched in a leaping action.

The transition of energy sources from fossil fuels to renewables is one of the big investment themes of the current generation.

In a recent memo to clients, Wilsons analysts recognised the massive amount of capital required for this momentous change.

“Getting to net-zero over the next three decades requires approximately US$130 trillion in clean energy investment from now until 2050, according to the International Renewable Energy Agency,” said Wilsons equity strategist Rob Crookston.

“The transition involves more energy storage and a higher uptake of electric vehicles, both of which will create a higher demand for batteries, specifically lithium-ion batteries.”

So when most people think of ASX shares to invest in this theme, they think of green energy producers and lithium miners.

But Wilsons implored investors to think outside the square.

‘An essential commodity in the coming decades’

Wilsons analysts reminded investors that lowering carbon emissions is “a complex long-term global issue”.

“The outlook for turning emissions around is likely to be a mix of energies, not one solution.”

Therefore natural gas, according to Wilsons analysts, will be an essential commodity in the coming decades as the world transitions to renewables. 

“Gas burns more efficiently than coal or oil and emits significantly fewer greenhouse gases than other fossil fuels while being a reliable source of energy,” said Crookston.

“According to the International Energy Agency (IEA), natural gas will have a greater share of the global energy mix in the future as oil and coal’s relative share declines and renewables increase.”

Even though it is still a fossil fuel, natural gas will “play a key role” as a baseload power source while solar and wind generators — and energy storage technology — improve their reliability.

Crookston cited IEA projections that natural gas will end up replacing coal as the world’s second most critical energy source by the mid-2030s.

“Typically, global infrastructure is better prepared to transition to gas than renewables at present, making it more cost-effective for countries in the short-term,” he said.

“Thus, it can play a crucial role in supporting the transition to renewable energy.”

Gas prices will remain elevated

So which ASX shares is the Wilsons team favouring to play on the gas thematic?

In their focus portfolio, Crookston mentioned that the key exposures are through Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS).

“We think the current demand-supply dynamics are favourable for oil and gas prices over the medium-term, especially in an environment where demand can remain steady through the transition.”

He forecasts that, at current spot prices, Woodside has a 71% upside in earnings per share to consensus forecasts for the 2024 financial year. Santos has a 56% premium for the same period.

The Santos share price is up 13.5% year to date, while paying out a 2.6% dividend yield. Woodside shares are more than 40% higher than where they started 2022, while providing a whopping 9.6% yield.

The post 2 surprising ASX shares to buy for the energy transition: Wilsons 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 September 1 2022

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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 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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Here’s why experts say these ASX dividend shares are buys

A couple working on a laptop laugh as they discuss their ASX shares portfolio

A couple working on a laptop laugh as they discuss their ASX shares portfolio

Are you wanting to add some new dividend shares to your income portfolio? If you are, then the two listed below could be good options.

Analysts have recently rated these dividend shares as buys. Here’s what you need to know about them:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share for income investors to look at is Baby Bunting.

It is a baby products retailer which has carved out a dominant position in this less discretionary category over the last decade.

But management isn’t settling for that. It continues to see opportunities to expand its network and also its offering.

The team at Morgans likes what it sees and is very positive on the company. So much so, it has an add rating and $5.00 price target on its shares. It commented:

As the only specialist retailer in the baby category with a national omni-channel presence, we see potential for BBN to increase its 14% share of a $3.5bn market over the medium to long-term.

The broker believes this leaves Baby Bunting well-placed for further earnings and dividend growth in the coming years.

For example, the broker is forecasting fully franked dividends per share of 17 cents in FY 2023 and 19 cents in FY 2024. Based on the current Baby Bunting share price of $3.85, this will mean yields of 4.4% and 4.9%, respectively.

Bank of Queensland Limited (ASX: BOQ)

Another ASX dividend share for income investors to consider is Bank of Queensland.

Thanks to the recent acquisitions of ME Bank and Virgin Money Australia, it is now one of the largest banks outside the big four.

Analysts at Citi are fans of Bank of Queensland. The broker expects cost synergies from the ME Bank acquisition to be supportive of earnings growth even if mortgage loan growth slows as rates rise.

Citi has a buy rating and $8.75 price target on the bank’s shares.

As for dividends, the broker is forecasting fully franked dividends per share of 46 cents in FY 2022 and then 50 cents per share in FY 2023. Based on the current Bank of Queensland share price of $6.75, this will mean big yields of 6.8% and 7.4%, respectively.

The post Here’s why experts say these ASX dividend shares are buys 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 September 1 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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