Stock Pick

Month: October 2022

  • Qantas share price soars 12% on stellar market update

    A woman reaches her arms to the sky as a plane flies overhead at sunset.

    A woman reaches her arms to the sky as a plane flies overhead at sunset.The Qantas Airways Limited (ASX: QAN) share price is taking off on Thursday morning.

    At the time of writing, the airline operator’s shares are up 12% to $5.78.

    Why is the Qantas share price soaring?

    Investors have been bidding the Qantas share price higher today after the company released an impressive market update.

    According to the release, strong travel demand is accelerating Qantas’ recovery from the COVID crisis, which allowing the company to keep investing for customers and its people while also strengthening its balance sheet.

    Based on forward bookings, current fuel prices, and latest assumptions about the second quarter, the company expects underlying profit before tax of between $1.2 billion and $1.3 billion for the first half of FY 2023.

    This follows five consecutive halves of heavy losses due to the pandemic and cumulative statutory losses of $7 billion.

    Another positive is that Qantas expects its net debt to fall to between $3.2 billion and $3.4 billion at 31 December, which is below the bottom of the target range of $3.9 billion.

    The release also reveals that the Qantas Loyalty business is expected to post record earnings for the first half. This puts the business on track to reach its FY 2023 EBIT target of $425 million to $450 million.

    Market conditions

    Qantas also provided investors with an idea of what is happening in the travel market right now.

    It advised that domestic travel demand remains strong across all categories. Revenue intakes for business purposes are over 100% of pre-COVID levels and leisure intakes have further strengthened to over 130%. Qantas’ yields from international markets are also very strong but are expected to moderate as Qantas and other carriers steadily increase capacity.

    Group International capacity is now expected to increase from 61% of pre-COVID levels in first half of FY 2023 to 77% in the second half. This is largely determined by the ability to return additional A380s from storage and required maintenance, as well as the delivery of new aircraft.

    Group Domestic capacity will be 94% of pre-COVID levels for the first half, growing to around 100% for the second half. This is six percentage points below previous capacity guidance, which is due to management’s plan to protect the sustained improvement in operational performance as the broader industry recovers.

    Speaking of which, Qantas’ on time performance and cancellations have continued to improve. October’s on time performance is currently 75% and cancellations are at just 1.7%. The latter is market leading and better than pre-COVID levels. Mishandled bags remain low at 6 per 1000 passengers in September and into October.

    And while things haven’t been quite as positive for the Jetstar business, the release notes that its performance has improved greatly this month.

    Management commentary

    Qantas CEO, Alan Joyce, commented:

    It’s been a really challenging time for the national carrier but today’s announcement shows how far we’ve come. Since August, we’ve seen a big improvement in our operational performance and an acceleration in our financial performance.

    It’s clear that maintaining our pre-COVID service levels requires a lot more operational buffer than it used to, especially when you consider the sick leave spikes and supply chain delays that the whole industry is dealing with. That means having more crew and more aircraft on standby and adjusting our flying schedule to help make that possible, until we’re confident that extra support is no longer needed.

    Qantas’ operations are largely back to the standards people expect, and Jetstar’s performance has improved significantly in the past few weeks and will keep getting better with the extra investments we’re making.

    The post Qantas share price soars 12% on stellar market update appeared first on The Motley Fool Australia.

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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 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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  • Broker says Lake Resources share price can double in 12 months

    A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today

    A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today

    The Lake Resources N.L. (ASX: LKE) share price is dropping on Thursday.

    In morning trade, the lithium developer’s shares are down 2% to 99 cents.

    Where next for the Lake Resources share price?

    Today’s decline by the Lake Resources share price could be short-lived according to a broker note out of Bell Potter this morning.

    The note reveals that the broker remains very positive on the lithium developer following the announcement of a new offtake agreement and equity investment.

    This has seen Bell Potter retain its speculative buy rating with a slightly trimmed price target of $2.52.

    Based on the current Lake Resources share price, this suggests that investors could more than double their money over the next 12 months.

    Though, Bell Potter warns that its speculative risk rating recognises a higher level of risk and volatility of returns.

    What did the broker say?

    Bell Potter highlights that Lake Resources has signed a conditional 25ktpa offtake and 10% equity agreement with SK On. This follows a recent deal with WMC Energy, which is also conditional, for the same offtake and equity.

    It was pleased with the agreements and is now waiting for a successful demonstration of the DLE technology to de-risk matters.

    It commented:

    LKE’s Kachi lithium project in Argentina is strategic in terms of scale, applied technology and uncommitted product offtake. Demonstrating the feasibility of ion exchange lithium extraction is key to de-risking the project; with success likely to disrupt traditional brine lithium production. The technology also brings significant ESG benefits including less land disturbance and water consumption. Key near term value catalysts include Kachi demonstration plant performance and a definitive feasibility study by the end of 2022, then progressing through to product qualification, binding offtake and financing from early 2023 for a subsequent final investment decision.

    The post Broker says Lake Resources share price can double in 12 months appeared first on The Motley Fool Australia.

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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 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’d invested $5,000 in Vanguard’s VAS ETF at the start of 2022, here’s what I’d have now

    A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.A woman wearing dark clothing and sporting a few tattoos and piercings holds a phone and a takeaway coffee cup as she strolls under the Sydney Harbour Bridge which looms in the background.

    The Vanguard Australian Shares Index ETF (ASX: VAS) has seen plenty of volatility this year, along with the global share market.

    For readers who don’t know, this exchange-traded fund (ETF) is an investment that tracks the S&P/ASX 300 Index (ASX: XKO). This means it aims to track the combined return of 300 of the biggest businesses in Australia.

    It gives investors exposure to names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL) and National Australia Bank Ltd (ASX: NAB).

    The ASX has not been immune to declines

    While some share markets have seen more pain this year, the ASX has experienced its fair share of a drop. The United States share market has fallen even further because of the high weighting toward technology names. Tech valuations have typically been hit harder because of inflation and rising interest rates.

    But, getting back to the Vanguard Australian Shares Index ETF, since the start of 2022 it has actually dropped by 15% in value.

    That means that $5,000 would have fallen by $750 to $4,250. Ouch.

    But, remember that short-term movements are not necessarily important. Hopefully, many investors have chosen to put their money to work in the share market for longer than 10 months. What happens in 2022 isn’t really important if an investor’s timeframe is thinking ahead to 2040 or even 2030.

    It is common for the ASX share market to go through periods of volatility, we just don’t know when they’re going to happen. But, it may be possible to find attractive investment opportunities at times like this.

    Don’t forget about the investment income

    Australian companies like to pay dividends to investors, partly so they can unlock the tax-effective franking credits.

    As an ETF, the Vanguard Australian Shares Index ETF should pass through to investors the dividends and distributions that it receives. So, while the unit price of Vanguard Australian Shares Index ETF has dropped 15%, the distributions mean the total return has been less painful.

    There have been three distributions announced in 2022. Including the quarterly payment due on 18 October 2022, this amounts to approximately $5.61 per unit. This equates to another 5.85% of return (not including franking credits).

    That would give a cash return of just over $290, meaning investors would have $4,542.50 at the time of writing.

    What’s next for the Vanguard Australian Shares Index ETF?

    ETFs track the returns of the underlying investments. So, this ETF’s upcoming performance will be entirely decided by the returns generated by the ASX’s blue chips.

    There will be a couple of big factors that affect the shorter-term returns.

    For the big miners, it could depend on what direction the iron ore price goes.

    With the ASX bank shares, rising interest rates could be the most important thing. On the one hand, higher rates may increase lending margins, but in the longer term it may lead to higher loan arrears. Will the positive or negative side impact the banks (and investor sentiment) more?

    Due to the sector make-up of the ASX, I don’t think the Vanguard Australian Shares Index ETF is going to fall as much as the Betashares Nasdaq 100 ETF (ASX: NDQ), which is largely tech. The Betashares Nasdaq 100 ETF is down by 27% this year.

    The post If I’d invested $5,000 in Vanguard’s VAS ETF at the start of 2022, here’s what I’d have now appeared first on The Motley Fool Australia.

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    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 BETANASDAQ ETF UNITS and CSL Ltd. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. 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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  • Building a share portfolio as a young investor? Here’s where I’d start

    A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.

    Starting to invest in ASX shares as a beginner can seem daunting. There is a lot of information out there. Hopefully, by the end of this article, things will seem a little clearer.

    I think a better way of thinking about shares is actually to call them businesses – when we talk about the share market, we’re really just talking about the business market.

    Shares are not just gambling chips that move around in price for no reason over the years. We’re talking about, and are able to buy, small pieces of businesses.

    Long-term returns have been good

    Past performance is not a reliable indicator of future returns. However, over the ultra-long-term, ASX shares have typically returned an average of 10% per annum. Of course, that’s just an average. One year might see a 10% fall and another year could see a 20% rise.

    Readers can play around with this tool from Vanguard which shows how well different asset classes have performed over time.

    Compounding is a very powerful tool when it comes to building wealth. Compounding simply means when interest earns interest. Over many years, it can build into very large numbers. Moneysmart has a useful compound calculator that people can use.

    For example, $1,000 turns into almost $2,600 after a decade of returns of an average of 10% per year. After 20 years it’s over $6,700. In 30 years, it could reach $17,449. After 40 years it could grow to more than $45,000.

    What to invest in?

    That’s a key question. There are thousands of different potential investments on the ASX.

    Operating companies, listed investment companies (LICs) and exchange-traded funds (ETFs) are all options.

    By operating companies, I simply mean a business that tries to make a profit by offering a product or service. Readers may have heard of names like Telstra Corporation Ltd (ASX: TLS), National Australia Bank Ltd (ASX: NAB) or BHP Group Ltd (ASX: BHP).

    One way of starting investing is by going with a business that an investor has heard of, and perhaps uses. Names like Temple & Webster Group Ltd (ASX: TPW), Bunnings (owned by Wesfarmers Ltd (ASX: WES)) and Adore Beauty Group Ltd (ASX: ABY) may all be familiar.

    But, when investing in individual names, I think it’s important for young investors, and all investors, to think long term. Read up on what the business plans are. Listening to investor podcasts or reading websites, like this one, can be useful in learning about companies and generally learning about investing.

    Keep in mind the idea of diversification – don’t put all your eggs in one basket. Also, volatility is normal, prices of individual shares can move significantly each week. We can view volatility simply – it’s the price the market is willing to buy our shares from us, we don’t have to accept or worry about that price if we’re not looking to sell.

    Try to pick businesses that are exposed to different risks, different tailwinds and so on. That way, if something goes wrong for a sector, it’s not the whole portfolio that goes down. For example, an investor shouldn’t make their entire portfolio banks, buy now, pay later providers, or iron ore miners.

    Exchange-traded funds (ETFs)

    ETFs can be a good place to get started with investing because they’re funds that allow us to buy a whole group of businesses/shares at once, giving instant diversification. Some ETFs are focused on the global share market, such as Vanguard MSCI Index International Shares ETF (ASX: VGS) and VanEck Morningstar Wide Moat ETF (ASX: MOAT).

    Others can give us access to ASX shares such as Vanguard Australian Shares Index ETF (ASX: VAS).

    Foolish takeaway

    Remember that investing is a long-term activity, we should invest with years in mind.

    I’ll mention a couple of things I try to keep in mind when picking an investment. One is, don’t put money into things I don’t understand. That way, it’s easier to judge the updates that happen.

    Another thing I keep in mind is – pick shares that I would want to buy more of if they fell. Don’t let price movements decide for you whether an investment is good. I get excited when shares in my portfolio drop in price, because I believe it’s better value. If a small biotech, company X which I didn’t understand, were to drop 30%, then I’d have less confidence about whether it’s worth buying.

    Good luck to all new/young investors. Some (easy-to-understand) ASX shares have fallen hard recently because of higher interest rates and inflation, so I think now is a good time to start.

    The post Building a share portfolio as a young investor? Here’s where I’d start appeared first on The Motley Fool Australia.

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    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 Temple & Webster Group Ltd and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited, Temple & Webster Group Ltd, VanEck Vectors Morningstar Wide Moat ETF, 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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  • Experts name 2 ASX dividend shares to buy now

    A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.

    A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.

    Are you looking for dividends shares to buy? If you are, then take a look at the two listed below which are rated as buys.

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

    Janus Henderson Group (ASX: JHG)

    The first ASX dividend share to look at is fund manager Janus Henderson.

    Although Janus Henderson has been facing a number of challenges, the team at Bell Potter believes that now could be the time to buy before the tide turns.

    Bell Potter said:

    Falls in investment markets have reduced AUM and profitability. The appearance of an activist investor has not led to corporate activity which may have disappointed some investors. The change of CEO means a new strategy and that will take time to deliver tangible results.

    But now might be a good time to revisit: markets should start to recover; the company has a new direction and there is still the prospect of M&A (we feel JHG could easily be swallowed by a larger group).

    The broker has a buy rating and $43.50 price target on the company’s shares.

    As for dividends, Bell Potter is forecasting dividends per share of 190 cents in FY 2022 and 172 cents in FY 2023. Based on the current Janus Henderson share price of $31.54, this will mean yields of 6% and 5.45% respectively.

    Medibank Private Ltd (ASX: MPL)

    Another ASX dividend share that has been tipped as a buy is private health insurer Medibank.

    Analysts at Citi were pleased with Medibank’s full year results in August. It expects this strong form to continue thanks to the Medibank Health business, which is targeting a profit growth rate of at least 15%, and higher interest rates.

    Citi commented:

    Medibank’s PHI business is performing well and we forecast an outlook of largely stable margins paired with reasonable top line growth. Medibank Health is also targeted to grow profit at a rate of at least 15% and higher interest rates should provide a reasonable tailwind for investment income. This keeps us attracted to the Medibank story despite value being reasonable rather than cheap.

    The broker has a buy rating and $4.00 price target on the company’s shares.

    Pleasingly, Citi is also expecting Medibank’s shares to provide attractive dividend yields in the near term. Its analysts are forecasting fully franked dividends of 15.9 cents per share in FY 2023 and 16.3 cents per share in FY 2024. Based on the current Medibank share price of $3.52, this will mean yields of 4.5% and 4.6%, respectively.

    The post Experts name 2 ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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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 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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  • ASX investors, STOP reading economic forecasts: economist

    A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason todayA woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today

    Three economists went target shooting. The first missed by a metre to the right. The second missed by a metre to the left. 

    The third exclaimed “we got it!”.

    So goes an old joke told among economists themselves, according to AMP Ltd (ASX: AMP) chief economist Dr Shane Oliver.

    The trouble with a year like 2022 is that ASX shares have been driven up and down by external economic concerns, such as inflation, interest rates, and oil prices.

    Even though stocks represent ownership of companies, business performance seems to have taken a backseat to “macro” issues for impact on share prices.

    If the market thinks the world is headed for a recession, ASX shares have plunged on those fears. If investors think interest rates might stop rising, stock prices have rallied on that hope.

    But the point of the above joke is that economists know nothing… at least about the future, anyway.

    Throw out the economic forecasts

    Oliver, who is one of the most prominent economists in the country, therefore urges investors to ignore economic forecasts.

    “In the quest to be right, the danger is that clinging to a forecast will end up losing money,” he said in a memo to AMP clients.

    “As [prominent investment researcher] Ned Davis has pointed out, for investors the key is to make money, not to be right with some forecast.”

    The trouble is, forecasters are human.

    “Forecasters, like everyone, suffer from psychological biases: the tendency to assume the current state of the world will continue; the tendency to look mostly for confirming evidence; the tendency to only slowly adjust forecasts to new information; and excessive confidence in their ability to forecast accurately.”

    Moreover, point forecasts, such as that the S&P/ASX 200 Index (ASX: XJO) will be 7000 points by the end of the year, don’t provide any information about risks.

    “They are conditional upon information available when the forecast is made. As new information appears, the forecast should change,” said Oliver.

    “Setting an investment strategy for the year based on forecasts at the start of the year and not adjusting for new information is a great way to lose money.”

    Why do we crave forecasts though?

    So if economic and market forecasts are such baloney, why do investors see so much of it?

    This also goes back to human urges.

    “Fundamentally, people hate uncertainty and will try to remove it. So, precise quantified forecasts seem to provide a degree of certainty in an otherwise uncertain world,” said Oliver.

    “And if we don’t have the expertise, the experts must know.”

    Another behavioural tendency that gives so much credence to forecasters is loss aversion. This is where humans feel the pain of loss so much more than the joy of an equal amount of gain.

    “This leaves us more risk averse, and it also leaves us more predisposed to bad news stories as opposed to good,” said Oliver.

    “Flowing from this, prognosticators of gloom are more likely to be revered as ‘deep thinkers’.”

    Investors should do this instead of reading forecasts

    So rather than read macroeconomic predictions, Oliver suggested sticking to an investment strategy with discipline is far better.

    Investing for the long term was an obvious way to ride out short-term economic bumps.

    Oliver quoted US investment professional Charles Ellis, who observed in the 1970s that, for most investors, investing is a “loser’s game”.

    A loser’s game is where whoever makes fewer mistakes wins.

    “Amateur tennis is an example where the trick is to avoid stupid mistakes and win by not losing,” said Oliver.

    “The best way for most investors to avoid losing at investments is to invest for the long term. Get a long-term plan that suits your level of wealth, age, tolerance of volatility, etc. — and stick to it.”

    The post ASX investors, STOP reading economic forecasts: economist appeared first on The Motley Fool Australia.

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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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  • ‘High quality’: Fund names 2 obscure ASX tech shares to buy now

    a man wearing spectacles has a satisfied look on his face as he appears within a graphic image of graphs, computer code and technology related symbols while he concentrates on a computer screena man wearing spectacles has a satisfied look on his face as he appears within a graphic image of graphs, computer code and technology related symbols while he concentrates on a computer screen

    What a difference a year makes.

    Twelve months ago, technology shares were riding high, bathing in all the love from the market. It’s the future! How can you go wrong?

    But now the S&P/ASX All Technology Index (ASX: XTX) has crashed 36% year to date and high-growth tech stocks have been abandoned like a sinking ship.

    But does this mean there are some bargains to be nabbed?

    Here are two ASX shares that Celeste Funds Management reckon are ripe for investing at the moment:

    ‘Ballast in the portfolio’ during uncertain times

    As a services provider, Data#3 Limited (ASX: DTL) is rarely mentioned among the more glamorous tech stocks.

    But for the Celeste team, it’s a reliable investment in tough times for the market and the economy.

    “Data #3 [shares] rose 3.5% over the month of September in what was one of the most challenging months in ASX history,” its memo to clients read.

    “While there were no new announcements of note in September, the strong August result saw Data #3 deliver sales of $2,193 million (+12.2% vs pcp) and NPAT of $30 million (+19.1% vs pcp).”

    While most tech shares plunged, the Data #3 share price has actually risen 4.6% so far this year.

    The business has a $6 million backlog of work and showed “no signs of weakening demand”, which investors loved during a time of great economic anxiety.

    “Looking ahead, while cognisant on valuation, we remain positively disposed to Data #3 as it is a high-quality business with a strong balance sheet that should provide ballast in the portfolio during a period of economic volatility.”

    ‘Well placed to grow’ 

    Infomedia Limited (ASX: IFM) is another name not often seen among the higher-profile tech stocks. The business provides software for the automotive parts supply and service industry.

    The share price took a significant hit last month.

    “Infomedia declined by 16.4% over the month after the company closed the data room to several prospective private equity bidders post 15 weeks of due diligence.”

    The Celeste team backed the company’s rejection of the acquisition proposal.

    “This bid was typical of recent form of most private equity bids in Australia which have amounted to little more than time-wasting fishing trips.”

    The analysts retain full faith in Infomedia’s long-term prospects.

    “Infomedia has solid software, solves a problem for the corporate user, and remains well placed to grow under the new CEO,” read the memo.

    “We expect targeted investment in sales and marketing over the next 12 months will boost execution capability in the USA and Europe.”

    Infomedia shares have dropped 21.9% since the start of the year, but it does pay out a 4.7% dividend yield.

    The post ‘High quality’: Fund names 2 obscure ASX tech shares to buy now appeared first on The Motley Fool Australia.

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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 positions in and has recommended 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 South32 dividend is being divvied out today. Here’s what you need to know

    a small girl empties a piggy bank of coins onto a table while her mother looks on in the background.a small girl empties a piggy bank of coins onto a table while her mother looks on in the background.

    Despite what the market may do, it’s set to be a good day for South32 Ltd (ASX: S32) shareholders.

    The time has come for shareholders to dig into the ASX 200 mining company’s latest final dividend.

    Here’s what you need to know about today’s payday.

    It’s raining dividends for South32 shareholders

    Back in August, South32 unveiled its FY22 results. In the process, the ASX 200 miner declared a final dividend of 14 US cents along with a special dividend of 3 US cents.

    Pleasingly for shareholders, both of these dividends are fully franked.

    South32 has used an AUD/USD exchange rate of 67.65 US cents, so the total is equivalent to roughly 25.13 cents in Aussie dollars.

    South32 shares turned ex-dividend for this payment on 15 September. As a result, any South32 shares purchased on or after this date won’t be scooping up today’s payout.

    Unlike its former owner BHP Group Ltd (ASX: BHP), South32 doesn’t have a dividend reinvestment plan (DRP). So, shareholders will be receiving today’s payment in cash.

    Across the financial year, South32 declared total dividends of 25.7 US cents, fully franked. This represents a whopping 272% increase from the total dividends of 6.9 US cents seen in FY21.

    This hefty dividend hike was supported by elevated commodity prices, which helped South32 enjoy a four-fold increase in underlying earnings in FY22, hitting US$2.6 billion.

    In Aussie dollars, South32 will soon have paid out roughly 37.08 cents per share in dividends this year. At current levels, this puts South32 shares on a monster trailing dividend yield of 10.0%. Adding in franking credits, this yield cranks up to 14.3%.

    However, looking ahead, broker Goldman Sachs is forecasting South32 to slash its annual dividends by 44% in FY23 to 14.3 US cents. This represents a prospective forward dividend yield of around 6%.

    What’s next for the South32 share price?

    Earlier this week, Goldman Sachs downgraded its rating on South32 shares from buy to neutral. What’s more, the broker cut its 12-month price target on South32 shares by 21% to $3.70, in line with where shares are trading today.

    This downgrade came after the broker lowered its forecasts for base metals prices. But on a more positive note, Goldman highlighted South32’s supportive dividend yield, share buyback, and compelling long-term base metals growth.

    Morgans, on the other hand, is bullish on the ASX 200 miner. The broker has an add rating and a $5.50 price target on South32 shares. At current levels, this implies potential upside of 49% over the next 12 months.

    Explaining its positive view, Morgans commented:

    Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength). 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.

    South32 share price snapshot

    The South32 share price has bounced around this year and is currently printing a 7.7% fall since the start of 2022.

    Despite sitting in the red, South32 has outperformed the S&P/ASX 200 Index (ASX: XJO), which has tumbled 10.7% in the year to date.

    However, South32 shares are lagging the Big Australian, with BHP shares experiencing a more muted 4.7% fall so far this year.

    The post The South32 dividend is being divvied out today. Here’s what you need to know appeared first on The Motley Fool Australia.

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    Motley Fool contributor Cathryn Goh 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 ASX 200 retail share is going ex-dividend tomorrow

    piggy bank next to alarm clockpiggy bank next to alarm clock

    The Harvey Norman Holdings Limited (ASX: HVN) share price will be on watch tomorrow as the ASX 200 retail share turns ex-dividend.

    As of tomorrow, Harvey Norman shares will be trading without entitlements to the company’s latest fully franked final dividend of 17.5 cents. In other words, Harvey Norman shares will be going ex-dividend.

    This means that today will be the last day to lock in this dividend, which will be paid on 14 November.

    Given that Harvey Norman does not have a dividend reinvestment plan (DRP), shareholders will have no choice but to receive this payment in cash.

    After today, investors shopping for Harvey Norman shares won’t score the company’s latest dividend payment. But they’ll likely be able to scoop up shares at a discount.

    This is because a company’s shares usually fall on the day they turn ex-dividend as the value of the dividend leaves the share price.

    The extent of the fall varies based on investor sentiment and what the market is doing on that particular day. But it typically reflects the size of the dividend payment in question.

    In Harvey Norman’s case, its latest final dividend of 17.5 cents represents a yield of 4.2%. So, the Harvey Norman share price will likely face plenty of downwards pressure tomorrow.

    How did Harvey Norman perform in FY22?

    The ASX 200 retail share handed in its FY22 results on the final day of ASX reporting season in August.

    Total system sales revenue marginally backpedalled by 1.7% from the prior year to $9.6 billion, but still came in 13.0% higher compared to FY20.

    Meanwhile, net profit after tax (NPAT) slipped by 3.6% to $811 million as the company battled COVID lockdowns, supply chain issues, and labour shortages during the year.

    The retailer ended FY22 with 169 franchised Harvey Norman complexes in Australia, 19 franchised Domayne complexes, seven franchised Joyce Mayne complexes, and 109 overseas company-operated stores.

    Despite the reduction in profits, Harvey Norman raised its full-year dividends by 7% to 37.5 cents per share, fully franked. At current levels, this puts Harvey Norman shares on a mighty trailing dividend yield of 9.1%. With the benefit of franking credits, this yield grosses up to a whopping 13.0%.

    What’s the outlook for the Harvey Norman share price?

    Brokers are mostly bullish on the Harvey Norman share price.

    In the wake of the ASX 200 retailer’s FY22 report, Citi retained its buy rating on Harvey Norman shares with a 12-month price target of $4.70. With shares last closing at $4.12, this implies potential upside of 14%. In Citi’s view, official retail data, industry feedback, and retailer trading updates suggest household spending will be resilient into FY23.

    Goldman Sachs also has a buy rating on Harvey Norman shares. Its price target is slightly higher than Citi’s at $4.80, implying potential upside of 17% over the next 12 months. 

    Goldman believes that a slowing macroeconomic and housing market is sufficiently factored into consensus expectations. The broker also believes Harvey Norman is more defensive on competition due to its regional, premium boomer exposure and a higher proportion of bulky items, which are not yet shipped by Amazon (NASDAQ: AMZN).

    However, Macquarie isn’t as keen on Harvey Norman shares. After digesting the retailer’s recent results, Macquarie retained its neutral rating, remaining cautious about the outlook for consumer spending in 2023.

    In terms of dividends, Macquarie is forecasting Harvey Norman to slightly wind back its annual payment in FY23 to 35 cents. Meanwhile, Citi is forecasting a steeper decline to 31 cents. This represents prospective forward dividend yields of 8.5% and 7.5%, respectively.

    The post This ASX 200 retail share is going ex-dividend tomorrow appeared first on The Motley Fool Australia.

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    John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Cathryn Goh 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 Amazon and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended Amazon. 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 must buy now, here are the 3 ASX shares to grab: expert

    a man sits in unhappy contemplation staring at his computer on his desk in a home environment, propping his chin on his hand.a man sits in unhappy contemplation staring at his computer on his desk in a home environment, propping his chin on his hand.

    Ask A Fund Manager

    The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Medallion Financial managing director Michael Wayne explains the nature of businesses behind the ASX shares he would target right now.

    Hottest ASX shares

    The Motley Fool: What are the three best stock buys right now?

    Michael Wayne: Yeah, it’s obviously a difficult one. The companies that we’re choosing to focus on, if you were desperate to put money in the market at the moment — which we’re not necessarily that keen on doing — but if you’re looking to invest at the moment, I think you want to invest in companies with short duration cash flows or short duration earnings.

    By that I mean, the companies that are making money and generating good cash flows in the here and the now. As opposed to some of those long-duration growth names, who have great stories but whose value, a lot of the value embedded, is based on future earnings, three, four, five years out.

    And we saw that particularly with the likes of, say, your Zip Co Ltd (ASX: ZIP)s, for example, or your Afterpays to some extent. These companies have wonderful stories, enormous amount of growth but a lot of that growth isn’t set to convert to cash flow earnings for a number of years to come. Those are the businesses, I think, which are being discarded the quickest and dropping the most harshly — so I think you want to avoid those types of companies.

    The three good businesses that we like in the long-term standpoint, which have come back a fair way. 

    I’ll start with a boring one, if you like, but I think a company like CSL Limited (ASX: CSL), for instance, offers good long-term appeal for a lot of investors. It’s a large company but still delivering double-digit revenue and earnings growth. We expect that to continue to deliver over the years to come, particularly as plasma collections ramp up again in the post-COVID world. Also, rising unemployment in the US could actually be a tailwind for someone like CSL because in the US, when you go and you donate blood, you actually get paid for it. But also, they are a US dollar earner so they generate their revenues and a lot of their earnings in US dollars and you convert that back to an Aussie dollar share price, it’s a tailwind, particularly when you see the Aussie dollar come back as much as it has.

    That’s a business that ticks all the boxes when looking at the balance sheet, looking at the revenues, the earnings, the margins, the number of growth opportunities within that business is phenomenal. We’re comfortable in picking that up in the long-term horizon. 

    Another business reported very well during earnings season is a company called Altium Limited (ASX: ALU) — it’s a tech business. They actually provide the technology which is used to produce plastic circuit boards. The growth of their new product, Octopart, was very strong and management’s conviction in hitting their FY26 targets has increased significantly because this is a business that has transitioned away from their old fee structure towards a more software-as-a-service, annuity-type fee structure. I think that’ll put the company in good stead going forward as well.

    Finally, another interesting tech business, a company called Audinate Group Ltd (ASX: AD8). This is a company which has delivered some very good revenue growth numbers. It’s not profitable just yet but in time, it’s expected that it will turn profitable. They’re looking to target $100 million of earnings by 2025, up from about $46 million in revenue today. That’s a business with a long-term growth path. Effectively, they have a protocol, which is embedded into numerous electronics goods and products around the world. It allows those pieces of equipment to communicate without the need for cords. Just think about outdoor entertainment, sporting events, concerts, that sort of thing. A lot of the technology is used in those places but basically, 80% or 85% of new electronics hitting the market from brands like Toshiba, Bosch for instance, all embed Audinate’s protocol.

    I think, in time, they’re going to not only continue to outperform their opposition but I think the adoption rate is about 15 times the nearest competitor — it’s got a significant competitive advantage there. They’re also now looking to diversify away from a pure reliance on the audio-digital space to the visual-digital space and that also will open up an untapped market for them.

    MF: I’m an Audinate shareholder myself and, I tell you what, it was in some strife back in May but it’s recovered really well since, hasn’t it?

    MW: Yeah, they were caught with a bit of a negative update towards the beginning of the year. They’re one of these businesses who have an enormous order book, so there’s enormous demand in place but they were struggling to meet that demand. They were struggling to get supply of certain chips that they required and they were one of the many victims globally that suffered from the freezing up of the microchip market and the delays in shipping, et cetera. 

    But a lot of that has now been worked through and the company is starting to really ramp it up and be able to overcome some of those hurdles they were facing earlier in the year.

    Fingers crossed it can recover back towards that $10 mark, where it got to briefly a few months ago. I think it’s a good long-term play [with] almost an unregulated monopoly in its space.

    The post If you must buy now, here are the 3 ASX shares to grab: expert appeared first on The Motley Fool Australia.

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    Motley Fool contributor Tony Yoo has positions in AUDINATEGL FPO and CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended AUDINATEGL FPO, Altium, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended AUDINATEGL FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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