Month: October 2022

The Pilbara Minerals Ltd (ASX: PLS) share price is charging higher on Tuesday.

In morning trade, the lithium miner’s shares are up a decent 4% to $4.99.

This means the Pilbara Minerals share price is now up over 40% since the start of the year.

Why is the Pilbara Minerals share price charging higher today?

The catalyst for the rise in the Pilbara Minerals share price on Tuesday has been the release of an update on the company’s upcoming spodumene concentrate auction.

According to the release, the company has accepted a bid for the spodumene concentrate before the auction has even begun for a shipment that is expected from mid-November.

And the good news is that the lithium price that Pilbara Minerals has accepted is higher than it received at last month’s auction via the digital Battery Material Exchange (BMX) platform.

What is the latest lithium price?

The release reveals that the company received and accepted a pre-auction offer of US$7,100/dmt (SC5.5, FOB Port Hedland basis) for a shipment of 5,000dmt on a 5.5% lithia basis. This represents a total consideration of US$35.5 million for the shipment.

Management also highlights that the offer of US$7,100/dmt equates to an approximate price of US$7,830/dmt on a SC6.0 CIF China equivalent basis after adjusting for lithia content on a pro rata basis and freight costs.

This compares favourably to last month’s winning auction bid of US$7,708/dmt on a SC6.0 CIF China equivalent basis.

Overall, this appears to demonstrate that demand for lithium remains strong, which could bode well for prices in the coming quarters.

The post Pilbara Minerals share price jumps on strong lithium auction results appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why are these ASX 200 lithium shares smashing it on Monday?
• What’s the outlook for ASX battery metals shares in Q2?
• If I’d invested $5,000 in these 5 ASX shares five years ago, here’s what I’d have now
• Why BrainChip, Emeco, Harvey Norman, and Pilbara Minerals shares are dropping

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.

Stocks jumped out to a strong start to the new week as investors took some solace from measures taken internationally to calm bond markets in Europe and elsewhere. As of 10 am ET Monday, the Nasdaq Composite (NASDAQINDEX: ^IXIC) was leading the way higher, climbing by more than 3%.

Adding to the already considerable volatility that investors have become accustomed to lately, third-quarter earnings season is ramping up, and some much-watched companies are on tap to reveal their latest financial results this week.

Reports from Tesla (NASDAQ: TSLA) always draw attention not just from stock market aficionados but also from the general car-buying public, while tens of millions of Americans watch streaming video on Netflix (NASDAQ: NFLX) daily. What these two companies say in their reports could help determine whether the Nasdaq hangs onto its early gains or moves downward to new lows for the year.

Netflix starts things off

Netflix will be the first of these two stocks to report, with the streaming video pioneer scheduled to release its Q3 numbers after the end of regular trading on Tuesday. The stock is up more than 5% Monday morning, but shareholders are watching Netflix try to navigate a particularly challenging time in its history.

After a period of spectacular growth that only accelerated during the early years of the COVID-19 pandemic, Netflix has more or less plateaued. The company anticipates that its sequential revenue will actually decrease from where it was three months ago, with year-over-year gains falling to less than 5%. After two straight quarters during which its global paid membership numbers fell, Netflix is hopeful that it will be able to return to growth, but management’s forecast for the addition of one million new memberships in Q3 is hardly the pace of expansion that Netflix shareholders have come to expect.

One big question will be how the introduction of a new ad-supported tier will affect viewer numbers. That won’t show up in the third-quarter results, as the company isn’t rolling out the offering to prospective subscribers until early November. Bullish investors are optimistic that the “basic with ads” service at less than half the price of its standard subscription will be appealing, but it could also remove one of the key features that distinguishes Netflix from many of its chief rivals.

Netflix stock is down by two-thirds from its peak, but it has also bounced back by more than 50% from its lowest level of the year. That makes now a critical time for shareholders, and the company will have to build up more confidence among its investor base to keep the stock in recovery mode.

Tesla looks to move forward

Tesla is scheduled to report its third-quarter financial results on Wednesday afternoon. The stock was up nearly 6% early Monday amid a broader Nasdaq rally, and shareholders hope that the EV pioneer can keep rebounding from its pullback of more than 30% in the past four weeks.

Investors already know some of the automaker’s key Q3 figures because it releases each quarter’s production and delivery numbers in the opening days of the next one. Tesla’s report on those figures in early October spooked many of its shareholders, as there was a roughly 22,000 gap between the number of electric vehicles it produced and the smaller number it delivered to customers. The automaker put the blame for that big disparity on logistical challenges and assured investors that those deliveries would get completed early in the fourth quarter. But that wasn’t enough to assuage the market’s broader concerns.

Tesla hasn’t been immune to supply chain disruptions and cost pressures, but the one thing that investors have counted on is strong demand for its EVs. If Tesla’s Q3 financials and explanations make it clear that people are still as interested in buying those vehicles as they have been in the past, then the stock could rise further after the report. However, if the report suggests that macroeconomic pressures are leading some prospective Tesla customers to reconsider their planned purchases, that would pose a new problem for the company to overcome.

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

The post Tesla and Netflix will make or break the Nasdaq this week appeared first on The Motley Fool Australia.

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More reading

• Why Tesla shares started trading this week up 8%
• How does Tesla make money?
• Netflix stock could be on the verge of a massive turnaround
• 97 reasons to double down on Netflix stock
• Why Netflix was a US stock market star on Thursday 

Dan Caplinger 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 Tesla. 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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It’s a big day for one of the more popular index exchange-traded funds (ETFs) on the ASX today. If you own units of the Vanguard MSCI Index International Shares ETF (ASX: VGS), then congratulations are in order. That’s because today, you are set to receive your next dividend distribution.

Many investors might associate dividend payments with ASX shares. But exchange-traded funds pay out dividends, too (although they are usually called distributions).

Most ETFs, including this one from Vanguard, are structured as a trust. This means that they are obliged to pass on any dividend income they receive from the shares that they hold to investors.

Since the Vanguard International Shares ETF holds many dividend-paying shares within it, investors are entitled to receive their fair share of these dividends in the form of ETF distributions.

This fund is rather large in scope. It holds close to 1,500 individual companies hailing from more than 20 advanced economies around the world. These include Japan, the United Kingdom, Canada, Europe, and Singapore.

But the lion’s share (by far) comes from the United States. More than 70% of the Vanguard International Shares ETF’s portfolio is weighted towards US companies. The largest of these include well-known names like Apple, Microsoft, Johnson & Johnson, Procter & Gamble and Exxon Mobil.

Payment incoming for Vanguard International Shares ETF

All of these companies are long-term dividend payers. US companies typically pay dividends every quarter, and the Vanguard International Shares ETF does as well.

As we discussed earlier, the latest of these is coming investors’ way today. This latest payment will come in the form of a 34.83 cents per unit distribution. That’s slightly above the 34.29 cents per unit distribution that was received for the same quarter last year.

But investors would have needed to own units of the ETF before the ex-dividend date of 3 October to be eligible for payment today.

Today’s distribution brings the total dividend distributions that this ETF has paid out over the past 12 months to $1.74 per unit. That gives the Vanguard VGS ETF a trailing dividend distribution yield of 1.9% on the current unit price of $91.15.

The post The Vanguard MSCI Index International Shares ETF (VGS) dividend is being paid today. Here’s the tea appeared first on The Motley Fool Australia.

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More reading

• The AUD is sinking, so is this a good time to buy Vanguard International Shares (VGS) ETF?
• Invest globally with these fantastic ASX ETFs
• Why has the Vanguard Index International Shares ETF been getting hammered lately?
• Has the Vanguard MSCI Index ETF (VGS) been growing its dividends?
• Want to invest globally? Here are 2 international ETFs for ASX investors

Motley Fool contributor Sebastian Bowen has positions in Apple, Johnson & Johnson, Microsoft, and Procter & Gamble. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and 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 recommended Apple 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 Treasury Wine Estates Ltd (ASX: TWE) share price is rising on Tuesday.

In morning trade, the wine giant’s shares are up 1% to $12.83.

Why is the Treasury Wine share price rising?

Investors have been bidding the Treasury Wine share price higher for a couple of reasons.

One is a rebounding ASX 200 index after a very strong session of trade on Wall Street overnight.

The other reason is the release of a first quarter trading update at the company’s annual general meeting today.

How is Treasury Wine performing?

The good news for shareholders is that the current uncertain economic environment has not impacted wine purchases.

Treasury Wine’s chief executive officer, Tim Ford, revealed that trading conditions and its earnings during the first quarter were in line with expectations. He commented:

Demand for Premium and Luxury wine has remained consistent across all of our key markets throughout the first quarter, reflecting ongoing category premiumisation trends.

We will continue to closely monitor the consumer and trading environment, confident that the strengths of our brand portfolios, the historic resilience of the category through past economic downturns and the flexibility of our business model leaves us well placed to react to any changes that may arise.

And with the inflation and cost outlook remaining in line with previous expectations, Ford notes that the company is on track to deliver strong growth and EBITS margin expansion towards its long-term target of 25% in FY 2023. He concludes:

After two years of significant change, we enter F23 confident that we are absolutely on the right path towards the delivery of the TWE 2025 strategy and our ambition to be the world’s most admired premium wine company.

The post Treasury Wine share price climbs on strong Q1 performance appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Analysts say these ASX growth shares are buys
• Experts name 2 ASX 200 shares to buy before the market takes off
• 5 things to watch on the ASX 200 on Friday
• Not all ASX 200 shares are getting hammered today. Here are some winners

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 Treasury Wine Estates 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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The Rio Tinto Limited (ASX: RIO) share price is on the move on Tuesday morning.

At the time of writing, the mining giant’s shares are up 0.5% to $94.71.

This follows the release of the miner’s third quarter update.

How did Rio Tinto perform during the third quarter?

For the three months ended 30 September, Rio Tinto reported iron ore production of 84.3Mt and iron ore shipments of 82.9Mt. While the latter was up 4% quarter on quarter, it was still a touch short of expectations. The consensus estimate was for iron ore shipments of 84.5Mt.

Also falling a touch short of expectations was its aluminium production of 759kt. This was up 4% but short of consensus estimates of 776kt.

Unfortunately, it was the same for alumina production and bauxite production. The former came in 1% lower at 1,838kt, which was well-below consensus estimates of 1,982kt. Whereas the latter was down 3% to 13.7Mt, which missed the consensus estimate of 14.1Mt.

Rounding things out, mined copper rose 9% to 138kt, titanium dioxide slag was up 6% to 310kt, and iron ore pellets production rose 7% to 2.8Mt.

Management commentary

Rio Tinto’s chief executive, Jakob Stausholm, appeared to be pleased with the quarter. He said:

Delivering the full potential of our assets remains a priority: production improved versus the prior quarter across most of our sites, particularly where we have implemented the Rio Tinto Safe Production System (RTSPS).

The chief executive notes that the company has also been busy working on future projects, such as a potential lithium mine. He explained:

We progressed our excel in development objective, commissioning some major projects and advancing the next tranche of Pilbara mines, agreeing to enter a joint venture with Baowu to develop Western Range and modernising the joint venture covering the Rhodes Ridge project in the East Pilbara, unlocking a pathway to develop this significant, high quality resource.

We also approved growth capital for underground mining at Kennecott, early works funding at Rincon Lithium and continue to progress Oyu Tolgoi. Our proposal to take Turquoise Hill Resources private has unanimous support of the Turquoise Hill Board who have recommended shareholders vote in favour of the transaction.

We continue to deliver our strategy with decarbonisation at its centre. Last week we announced a partnership with the Government of Canada to invest up to C$737 million over eight years to decarbonise our Rio Tinto Fer et Titane operations in Québec, and to position the business as a centre of excellence for critical minerals processing.

Outlook

Despite the softer than expected production, Rio Tinto has left the majority of its FY 2022 production guidance unchanged, which may be supporting the Rio Tinto share price this morning.

However, it now expects iron ore shipments at the bottom end of its guidance range of 320Mt to 335Mt. Positively, its iron ore cost guidance of US$19.5-US$21.0 per tonne remains unchanged despite this.

The only real change to guidance has seen Rio Tinto reduce its refined copper production guidance to 190kt to 220kt from 230kt to 290kt. This has led to its copper C1 unit cost guidance in 2022 being revised 20 US cents higher to the range of 150 to 170 US cents per pound.

The post Rio Tinto share price higher on mixed Q3 update appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Own Rio Tinto shares? Here’s what to expect from the mining giant’s Q3 update
• Opportunities across the mining sector: Expert names ASX 200 shares to buy
• Do you want the good news or the bad news on the iron ore price?
• Could Rio Tinto be coming for your ASX lithium shares?

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

Tesla (NASDAQ: TSLA) shareholders had a rough day Friday with the stock dropping 7.5%. But the electric vehicle leader’s shares rose more than 8% on Monday morning to kick off the new trading week. As of 1:35 p.m. ET, the stock was still up by 7.2%. 

So what

Last week’s plunge dropped Tesla to about 50% of its early January high, and some investors may have decided that was the time to buy. Tesla has already reported that it produced almost 366,000 vehicles in the third quarter, including a record 83,135 from its newly upgraded plant in Shanghai, China. But some analysts are also wondering how the stronger dollar might impact its earnings. The company will report its third-quarter results on Wednesday after the market closes. 

Now what

But news out of Chinese electric vehicle maker BYD Monday apparently helped convince investors that Tesla’s Q3 results will be better than some expect. The Warren Buffett-backed company reported better third-quarter results than expected, according to a Barron’s report. BYD’s operating profit soared by 60% compared to the second quarter. 

Tesla is expected to report a Q3 operating profit of $3.9 billion, which would represent a 56% jump from the previous quarter. The strong results of its competitor in the important China market bode well for Tesla. Both companies have had to deal with COVID-19 lockdowns in the country, which added to their operating expenses as supply chains and operations were impacted.  

Now Tesla investors have reason to think that it will meet or beat expectations. The risk of foreign currency impacts wouldn’t be an operational issue, and investors are counting on Tesla’s operating performance to grow the company. On Monday, investors apparently felt Tesla shares had dropped far enough, especially if, as they now expect, its operating performance report shines on Wednesday. 

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

The post Why Tesla shares started trading this week up 8% appeared first on The Motley Fool Australia.

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More reading

• How does Tesla make money?
• Why Tesla stock fell today
• Why Tesla shares dropped Wednesday
• Why Twitter stock skyrocketed today
• Tesla just missed delivery estimates. Here’s why it’s time to buy

Howard Smith has positions in BYD and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and BYD. 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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This year has not been kind to the BetaShares Asia Technology Tigers ETF (ASX: ASIA). This technology-focused ASX exchange-traded fund (ETF) was arguably a favourite of growth investors for many years, thanks to some impressive returns in its early days.

But this year has been especially brutal for this ETF. Since the dawn of 2022, BetaShares Asia Technology Tigers units have lost a painful 35%. That’s based on yesterday’s closing price of $6.15.

Since the ETF’s all-time high of over $14 a unit that we saw back in early 2021, the fund is down more than 56%.

Now, one might assume this may have something to do with China. After all, the world’s second-largest economy has arguably been undergoing some changes in investors’ perceptions in the past year or two.

Between trade wars with the United States, tensions over the Taiwan Straight, and the country’s zero-COVID policies, investors have had a lot of fat to chew.

But exactly how exposed to the Chinese market is the BetaShares Asia Technology Tigers ETF?

How exposed is the BetaShares Asia Technology Tigers ETF to China?

Well, let’s go to the source. According to the provider, as of 30 September, the Asia Tigers ETF’s portfolio was weighted 55.2% towards companies domiciled in China. That was far higher than any other country. That includes Taiwan at 20.2% and South Korea at 15.9%.

We can see this reflected in the ETF’s major holdings. Chinese e-commerce giant Alibaba Group was by far the fund’s largest individual holding. It accounted for a whopping 10.2% weighting in its portfolio.

Another Chinese giant – Tencent Holdings – made up 9.3%, while Pinduoduo Inc and JD.com Inc accounted for a further 6.1% and 5%, respectively.

So we can rather decisively conclude that this ETF is heavily exposed to the Chinese markets.

And this partly explains why this ETF has had such a rough trot in 2022 thus far. Alibaba stock is down a nasty 36.35% so far this year. Tencent is faring even worse, sitting at a 45.5% loss.

Thus, it seems that the Asia Tigers ETF has been hit hard by its heavy exposure to the Chinese markets in 2022 so far. But who knows what the future might bring.

The BetaShares Asia Technology Tigers ETF charges a management fee of 0.67% per annum. It has now returned an average of 3.21% per annum since its inception in September 2018.

The post How exposed is the Asia Technology Tigers ETF to China? appeared first on The Motley Fool Australia.

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• Invest globally with these fantastic ASX ETFs
• 2 exciting tech ETFs for ASX investors to buy before the market rebounds
• Should you really be buying ASX shares in this market?
• Down 30% in 2022, what’s next for the BetaShares Asia Technology Tigers ETF?

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 positions in and has recommended JD.com and Tencent Holdings. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF and JD.com. 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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All eyes will be on the Tyro Payments Ltd (ASX: TYR) share price on Tuesday after the company confirmed it’s in the sights of S&P/ASX 200 Index (ASX: XJO) banking giant Westpac Banking Corp (ASX: WBC).

It follows weeks of speculation the fintech could be a takeover target for the big four banks. The ASX 200 giant could seek to benefit from the smaller company’s tech offerings.

The Tyro share price was trading at $1.56 as of Monday’s close.

Let’s take a closer look at the latest news from the All Ordinaries Index (ASX: XAO) tech stock.

Tyro share price in focus amid Westpac takeover talks

The Tyro share price is on watch amid news the company has been approached by several parties looking to strike an acquisition deal. Those include ASX 200 big four bank Westpac.

The value of any potential takeover bid isn’t clear. Though, Tyro knocked back a $1.27 per share takeover offer last month. It said the bid was “highly opportunistic” and undervalued the company.

Morgan Stanley reportedly believes an offer in the range of $2 per share and $2.50 per share would represent fair value.

It’s also worth noting the company’s major shareholder, Grok Ventures – the investment vehicle of Atlassian Corporation (NASDAQ: TEAM) billionaire Mike Cannon-Brookes – supported the $1.27 per share offer.

Tyro today confirmed the takeover talks in response to media speculation. It said all discussions are neither definite nor advanced and don’t offer any certainty of a future bid or transaction.

However, if a bid from Westpac proves successful, it could impact the smaller company’s deal with Bendigo and Adelaide Bank Ltd (ASX: BEN), the Australian Financial Review notes.

That deal brought Tyro $5.2 billion of transactions last financial year, representing around 15% of the company’s total transaction value.

The Tyro share price has suffered amid a broader tech sell-off in 2022, dumping 47% year to date. It has also fallen 62% over the last 12 months.

The post Tyro share price on watch as Westpac takeover approach confirmed appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 dividend shares have been named as buys by analysts
• Are Westpac shares a buy ahead of next month’s full-year results?
• Top ASX dividend shares to buy in October 2022
• Income investors should buy these ASX dividend shares next week: experts
• Top broker says ‘we struggle to see CBA underperforming peers’. Here’s why

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 positions in and has recommended Atlassian and Tyro Payments. The Motley Fool Australia has recommended Tyro Payments 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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Sayona Mining Ltd (ASX: SYA) shares have surged 65% in the year to date.

The lithium miner’s share price has rocketed from 13 cents at market open on 4 January to 21.5 cents at Monday’s close.

Let’s take a look at what I would have now if I had invested $5,000 in this ASX lithium share at the start of the year.

Good investment?

Sayona Mining shares were available for 13 cents at market open on the first day of trading in 2022, 4 January.

Imagine I had invested $5,000 in Sayona Mining on this day. I would have walked away with 38,461 shares at this price with 7 cents left over

Now, these shares are worth 21.5 cents a share, based on the share price at the time of writing.

My investment would now be worth just over $8,269. So I would have made more than $3,000.

Looking at the bigger picture, on 19 April, Sayona Mining shares were fetching 38 cents. At this point, my investment would have been worth $14,618.18.

However, back on 22 February, my Sayona shares would have been worth just 11 cents. At this point, I would have had only $4,230.71 remaining out of my $5,000 investment.

However, overall, if I had invested in Sayona at the start of this year, I would be pleased with my investment.

Sayona Mining has not paid any dividends to date. However, as my Foolish colleague Tristan noted recently, this could change if the company generates operating profit.

Sayona share price snapshot

Sayona Mining shares have soared nearly 39% in the past year. However, they have lost nearly 26% in the past month.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed 10% year to date.

Sayona has a market capitalisation of nearly $1.8 billion based on the current share price.

The post If you’d bought $5,000 of Sayona Mining shares at the start of 2022, congratulations! Here’s what you’d have today appeared first on The Motley Fool Australia.

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More reading

• Why are these ASX 200 lithium shares smashing it on Monday?
• The Sayona Mining share price has dumped 24% since joining the ASX 200. What’s happening?
• Can ASX 200 lithium shares bank on the price of lithium to keep soaring?
• During a dismal quarter for the ASX 200, Sayona Mining shares stormed 60% higher. What’s next?
• The Sayona Mining share price crashed 20% in September, but now…

Motley Fool contributor Monica O’Shea 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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S&P/ASX 200 Index (ASX: XJO) dividend shares are an effective way to achieve investment income. There are a number of names that could pay a grossed-up dividend yield of more than 6%, or even 10%. But, there’s a question worth asking about dividends – is it truly passive income?

First, let’s consider what the term actually means and why we may want that sort of money.

What is passive income?

The Motley Fool’s definition page describes it as this:

Passive income is a regular flow of money that requires little ongoing time and effort to earn. This is in contrast to the active income you earn from performing a service, like the wages you earn from carrying out your regular day job.

We can only work so much, so our total earnings are limited to a point. However, investing in ASX 200 dividend shares can allow our total income to increase further. We don’t need to do any direct work for that ASX share’s profit to be generated or the dividend to be paid.

I have taken on a dividend share investing strategy with my own portfolio, though I’m not just looking for maximum yields. I’m investing in businesses that I think can provide a mixture of long-term capital growth as well as good dividend income over time.

The idea is that once I have invested in an ASX dividend share, the dividends can roll in and I don’t need to do more work to make that money roll in.

One day, I hope that my portfolio can pay me a significant amount in dividends every year, enough that it could pay for my living expenses. That’s many years down the road though.

Is it passive income for me?

It’s somewhat hard to say if it’s completely passive for me because there are three different angles I could take.

My job involves reading and writing about ASX shares all the time, so I do spend way more time than “nothing” actually looking at the share market in general. But I only own a few of the thousands of potential investments on the ASX, so only a small part of my work is actually writing about the shares I own.

Second, I enjoy reading about shares. Even if I stopped working in the field, I’d still want to read about what’s going on in the business world. I guess you’d call my interest a hobby if I were working in a different industry.

But, in terms of how much time I actually put into checking my portfolio and so on, I generally don’t look at how the share prices perform day to day in terms of reviewing performance. I don’t think checking my portfolio more regularly will make my shares perform better, or help my mindset. But, I do scan through prices when I’m buying my next parcel of shares, to choose what I think is the best value (or best dividend opportunity).

However, there are at least a couple of announcements each year that I do like to look at – the half-year result and the full-year result. I think it’s good to be knowledgeable about the latest dividend announcement, how things are going, and so on. Keeping this in mind helps me decide which ASX shares I want to buy next and informs me how large the next dividend payment is going to be.

Why I’ve chosen reliable ASX dividend shares

I have built my portfolio to be focused on names that can hopefully provide consistent (and, hopefully, growing) dividend income.

Some of the ASX 200 dividend shares in my portfolio include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Brickworks Limited (ASX: BKW), both of which have ongoing streaks of dividend growth.

Other businesses in my portfolio are also building a reputation for dividend growth, including Rural Funds Group (ASX: RFF) and Duxton Water Ltd (ASX: D2O). Plus, I do own some listed investment companies (LICs).

For many of the names in my portfolio, I think I could leave them alone for three or five years and not need to worry about them while receiving attractive dividend income.

I’ve chosen names I think can provide me with largely stress-free dividend income. I think these names can hopefully provide more resilient dividends than the wider market due to their business models, strategies, and assets.

I have also chosen the names in my portfolio where I believe I’d be more enthusiastic to buy shares at a cheaper price, rather than worried about a drop in the price. Short-term market movements aren’t going to influence my thinking.

The post When it comes to ASX 200 dividend shares, is there any such thing as truly passive income? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Baby Bunting, Brickworks, Core Lithium, and Dreadnought Resources are pushing higher
• Which ASX All Ords shares could perform well in a recession?
• Want to collect BIG dividends every month? Buy these 3 ASX shares
• 2 ASX defence shares soaring on big news today

Motley Fool contributor Tristan Harrison has positions in Brickworks, DUXTON FPO, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company 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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