Month: October 2022

The bear market is becoming a passive-income investor’s dream
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.

A bear market can be brutal for investors. The more than 20% decline in stock prices has many investment portfolios well off their recent peak.

However, bear markets can be a blessing in disguise if you own dividend-paying stocks. That’s because there’s an inverse relationship between stock prices and dividend yields. With the bear market taking stock prices down sharply, dividend yields are soaring. That allows investors to reinvest their dividends at higher yields. They can also use their idle cash to generate more income. That can enable investors to supercharge their passive income.

Get more out of your reinvested dividends

Some investors automatically reinvest their dividends, while others manually invest that cash as they see fit. Either way, a bear market turns that dividend income into even more passive income.

For example, if an investor owned 100 shares of Crown Castle (NYSE: CCI), a leading real estate investment trust (REIT) focused on communications infrastructure, they’d receive $147 per quarter in dividends. If they reinvested that money into buying more shares of Crown Castle earlier this year when shares had a 2.6% dividend yield, it would boost their annualized dividend income by $3.80.

However, with shares falling more than 20% this year, the stock now yields 4%. Because of that, if an investor reinvested the company’s $147 quarterly dividend payment at that yield, it would add $5.88 of annualized incremental dividend income. While $2 of additional annual dividend income might not sound like much, it adds up as it gets reinvested and compounded over the years. Crown Castle expects to grow its dividend by 6% to 8% per year, powered by increasing demand for communications infrastructure to support the build-out of 5G networks.

Meanwhile, Crown Castle shareholders who don’t automatically reinvest their dividends have the flexibility to invest that money into an even higher-yielding opportunity. For example, they could buy shares of VICI Properties (NYSE: VICI), a REIT focused on experiential real estate. It currently yields 5.1%. Because of that, an investor could turn their $147 Crown Castle dividend payment into a $7.50 and growing passive income stream by purchasing shares of the higher-yielding VICI Properties. The casino owner has recently increased its payout by 8%, its fifth raise since its formation.

Turn idle cash into an attractive passive income stream

In addition to earning more income by reinvesting dividends, bear markets allow investors to turn cash sitting on the sidelines into a passive income stream.

For example, shares of Agree Realty (NYSE: ADC) have fallen more than 15% from their recent high. That has pushed up the REIT’s dividend yield to 4.1%. At that rate, an investor could turn $1,000 of idle cash into a $3.40 monthly passive income stream ($41 annualized) since it pays a monthly dividend. That income stream will likely steadily rise in the coming years. Agree Realty has grown its dividend payment by 7.8% over the past year and at a 5.5% annual rate over the last decade. The REIT has a solid financial profile, giving it the flexibility to continue acquiring income-producing real estate to keep growing the dividend.

Meanwhile, the bear market has brutalized shares of Digital Realty (NYSE: DLR). The data center REIT’s stock is down over 40%, pushing its dividend yield above 5%. That would turn a $1,000 investment into a $50 (and growing) annual passive income stream. The company increased its payout by 5% earlier this year, marking its 17th straight year of giving investors a raise. With a strong balance sheet and a large pipeline of data centers under development, Digital Realty should be able to continue growing its dividend in the future.

Bear markets can accelerate your passive income

For those fully invested in non-dividend-paying stocks, bear markets are a difficult time. However, they’re an opportunity for those with cash or income-producing assets. Bear markets can accelerate investors’ capacity to generate passive income because they can turn dividend income and idle cash into bigger income streams. That can enable investors to make more money in the future, putting them even closer to reaching their financial goals.

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

The post The bear market is becoming a passive-income investor’s dream appeared first on The Motley Fool Australia.

.

More reading
Matthew DiLallo has positions in Crown Castle, Digital Realty Trust, and VICI Properties Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Crown Castle and Digital Realty Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended VICI Properties Inc. 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.

from The Motley Fool Australia https://ift.tt/7ckK6Z8
10 October 2022
Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here’s the lowdown
The three months ended 30 September were rough on the broader market. Yet Wesfarmers Ltd (ASX: WES) shares gained over the period.

After closing June trading at $41.91, the Wesfarmers share price was $42.72 at the end of September. That marks a 1.93% gain for the most recent quarter.

Indeed, at its highest point of the quarter, the S&P/ASX 200 Index (ASX: XJO) retail-focused conglomerate’s stock was swapping hands for $49.27 – 17.5% higher than its June close.

Meanwhile, the ASX 200 tumbled 1.43% over the September quarter.

So, what pushed the Wesfarmers share price to outperform the market? Let’s take a look.

What went right (and wrong) for Wesfarmers shares in Q1?

Certainly, the September quarter was rough on both the ASX 200 and Australians’ back pockets.

The Reserve Bank of Australia hiked interest rates from 0.85% to 2.35% over that period while high energy prices and inflation also took their toll on consumers.

Of course, what’s bad for consumers is generally also bad for S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) shares. And such impacts seemingly took their toll late in the quarter.

However, Wesfarmers’ full-year earnings, released in August, surpassed expectations.

The company posted $36.8 billion of revenue – up 8.5% year on year — and $3.6 billion of earnings before interest and tax, down 3.8%. Its after-tax profits slumped 1.2% to $2.35 billion.

The ASX 200 favourite also upped its full-year dividend offering by 1.1%, declaring a $1 final dividend. That was paid out last week.

Finally, it revealed the first seven weeks of financial year 2023 had brought continually robust trading conditions and benefits for both the company’s retail businesses – including iconic Aussie hardware store Bunnings – and its industrial businesses.

That might have bolstered the market’s hopes for the stock just in time for a September downturn.

The Wesfarmers share price tumbled 9% last month compared to the ASX 200’s 7.3% slump.

And while the stock outperformed over the September quarter, it closed the period nearly 29% lower than it started 2022. For comparison, the ASX 200 dumped close to 15% over the first nine months of the year.

The post Despite the recent market rout, Wesfarmers shares actually delivered in Q1. Here’s the lowdown appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/pzscnAf
10 October 2022
3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys
This year has seen investors sell off a wide array of ASX shares. Yet, amid the sell-off, one fund manager has named some businesses it thinks are opportunities.

L1 Capital is a fund manager that operates the listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF).

The fund manager thinks the recent market sell-off is presenting some “exceptional opportunities”. At present, its median portfolio investment now has a projected FY23 price/earnings (P/E) ratio of 9.7 times, according to its monthly update for September.

L1 said:

While these periods of heightened market volatility can be unnerving, we continue to believe that taking a 2-year view and focusing on enduring investment fundamentals (cash flows, industry structure, management, operating trends and balance sheet) will deliver strong absolute and relative returns.

We continue to find both safety and value in low P/E stocks with undergeared balance sheets and strong cashflow generation. In contrast, we believe high P/E stocks and ‘expensive defensives’ look crowded, risky and unappealing.

What are some examples of the ASX shares L1 is talking about?

The fund manager also outlined some of the companies in its portfolio.

Here are three of the names the fund manager noted:

BlueScope Steel Limited (ASX: BSL)

BlueScope is a steelmaking business in Australia and the US. Steel ‘spreads’ have been falling, but are still “healthy” and starting to “stabilise as the arbitrage on importing steel has now largely been eroded”, according to L1 Capital.

The fund manager pointed to the positives of BlueScope’s plan to grow its US operations with the company planning a capacity expansion. It also noted the acquisition of the US’s second-largest metal coating/painting company Coil Coatings and the establishment of BlueScope Recycling from its acquisition of the MetalX recycling business.

The fund manager pointed out that it has a “strong net cash balance sheet”, so its share buyback is expected to continue, as well as investment in the US and Australian businesses.

L1 said that BlueScope is valued at just six times FY23’s consensus estimated earnings. ‘Consensus’ means the collective average of different expert projections. The fund manager thinks the market is “significantly” undervaluing the business.

Sandfire Resources Ltd (ASX: SFR)

L1 pointed out copper prices are under pressure because of a weaker global economic backdrop. That’s despite the physical copper market continuing to remain “tight”. The fund manager attributes the supply issues to ongoing production challenges in Chile, the number one global producer. This ASX share has seen a decline over the past few months. Indeed, the Sandfire Resources share price is down 30% over the last six months.

In February, Sandfire completed the “transformational” acquisition of the MATSA mine in the south of Spain and is currently developing the Motheo copper mine in Botswana.

L1 said:

We believe the commencement of Motheo production in FY24 will deliver a step-change in free cash flow for the company as capital expenditure declines and the operating cash flow from the mine expands. We see compelling value upside in Sandfire with the company currently trading at a discount to the acquisition price of MATSA alone, before factoring in any value for its other mining assets, including Motheo.

James Hardie Industries plc (ASX: JHX)

Another pick was this ASX building materials company that also has a big presence in the US. L1 describes it as the US market leader in fibre cement siding.

The fund manager attributed its recent share price decline to the expectation that US housing demand is going to drop because of higher interest rates.

Around 65% of the group’s revenue comes from repair and remodelling, while 35% is from new housing.

L1 is confident in James Hardie’s ability to continue to grow market share “for many years to come”.

The fund manager said about the ASX share:

We believe the market correction has provided us the opportunity to invest in a very high-quality company with a decade of structural growth ahead of it at a very attractive valuation. James Hardie currently trades on a FY23 consensus P/E of only ~13x relative to its long-term average of 20x-25x. While we expect US housing starts to be negatively impacted by the steep rise in interest rates, at this valuation, we believe the market is implicitly assuming a ~40% decline in James Hardie earnings. This would be a similar impact to what the company suffered during the GFC, however, the business mix at that time was much more cyclical, with a ~60-65% skew to new housing.

The post 3 beaten-up ASX shares this fund manager thinks are ‘compelling’ buys appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor Tristan Harrison has positions in L1 LS FUND FPO. 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.

from The Motley Fool Australia https://ift.tt/nQkmoIT
10 October 2022
It was a rocky quarter for Rio Tinto shares. What now?
The Rio Tinto Limited (ASX: RIO) share price has seen plenty of volatility over the last few months.

Let’s look at how the ASX mining share has performed.

In the three months to September 2022, the Rio Tinto share price dropped 9%. The S&P/ASX 200 Index (ASX: XJO) only fell by 1.4% over those three months.

In October to date, Rio Tinto shares have gone up by 3.5%. The ASX 200 has gone up by 4.5% this month.

What could be next for the ASX mining share?

Over the last six months, it has declined by around 18%. Why?

It’s important to remember that the ASX mining share is a (very large) commodity-focused business that relies on selling commodities to customers. Higher revenue because of the resource price should mean more profit, a lower resource price should mean less profit. The Rio Tinto share price can be moved by investors on expectations about its profit.

The iron ore price has been drifting lower over the last few months – not good news for Rio Tinto shares.

While Rio Tinto is involved with other commodities, such as copper, its iron ore business has been the crown jewel in terms of generating profit in recent times. So, it seems that investors are expecting lower profitability for Rio Tinto in the shorter term.

But, the price of the commodity is only one part of the equation. The amount of production is the other main factor. If the price of the commodity stays the same, but Rio Tinto lifts its production by 5%, then the revenue can grow.

Rio Tinto is scheduled to release its 2022 third-quarter production report on 18 October 2022. Depending on whether the production meets expectations or not, the Rio Tinto share price could react positively or negatively. Only time will tell what the actual numbers are and how the market reacts.

Is the Rio Tinto share price a buy?

Different experts have different opinions on the ASX mining share.

For example, the broker Morgan Stanley has an overweight rating on the business with a price target of $118.50. That implies a possible rise of more than 20% over the next year if the broker is right.

The broker thinks that it’s a good move by Rio Tinto to expand in lithium because of the expected long-term growth in demand, plus the ASX mining share could expand its presence in the lithium value chain.

However, then there’s a broker like UBS which is not so optimistic about the short-term future of the Rio Tinto share price. It has a price target of just $90. That implies that the miner could fall by another 7%.

The post It was a rocky quarter for Rio Tinto shares. What now? appeared first on The Motley Fool Australia.

.

More reading
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 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.

from The Motley Fool Australia https://ift.tt/TCAOQls
10 October 2022
Here are the 10 most shorted ASX shares
At the start of each week, I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:
- Flight Centre Travel Group Ltd (ASX: FLT) is still the most shorted share on the ASX despite its short interest easing to 14.6%. Concerns over the travel market recovery have been weighing on this travel agent’s shares.
- Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 14.4%. Short sellers may be targeting this betting technology company due to intense competition in the industry and the lofty multiples its shares trade on.
- Block Inc (ASX: SQ2) has seen its short interest rise to 11.1%. Concerns over the prospect of a global recession and regulatory pressure in the BNPL industry could be putting pressure on its shares.
- Lake Resources N.L. (ASX: LKE) has short interest of 10.1%, which is down week on week. Doubts over this lithium developer’s DLE technology appears to be a key reason for the high level of short interest.
- Megaport Ltd (ASX: MP1) has seen its short interest rise to 10%. This may be due to valuation concerns and ongoing weakness in the tech sector.
- Magellan Financial Group Ltd (ASX: MFG) has entered the top ten with short interest of 8.3%. This fund manager has been bleeding funds under management this year. Short sellers don’t appear confident this trend will stop.
- Nanosonics Ltd (ASX: NAN) has short interest of 8.2%, which is up slightly week on week again. Short sellers have been targeting this infection prevention company due to a highly disruptive business model change in the key US market.
- Domino’s Pizza Enterprises Ltd (ASX: DMP) is a new entry in the top ten with 8.2% of its shares held short. Inflationary pressures have been weighing on the pizza chain operator’s performance this year.
- Breville Group Ltd (ASX: BRG) has seen its short interest rise to 7.9%. This high level of short interest may have been driven by concerns over what the uncertain economic backdrop could mean for consumer spending.
- Perpetual Limited (ASX: PPT) has seen its short interest rise to 7.7%. This fund manager’s shares have been hammered this year. Unfortunately, it appears as though short sellers see more pain ahead.
The post Here are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betmakers Technology Group Ltd, Block, Inc., MEGAPORT FPO, and Nanosonics Limited. The Motley Fool Australia has positions in and has recommended Block, Inc. and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Dominos Pizza Enterprises Limited, Flight Centre Travel Group Limited, and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/2bOTIhR
10 October 2022
Have Telstra shares been a good investment so far this financial year?
The Telstra Corporation Ltd (ASX: TLS) share price is an interesting one considering the telecommunications business has a reputation for being a defensive ASX share.

Why could it offer more stability than the S&P/ASX 200 Index (ASX: XJO)? Because its customers pay regularly, such as monthly or quarterly. Relatively consistent revenue can mean fairly consistent net profit after tax (NPAT) and cash flow. That’s the theory anyway.

Certainly, I think people will keep paying their phone bills over other spending categories.

So, how has the Telstra share price performed in recent times?

Recent performance

Since the beginning of 2022, the Telstra share price has declined by 9% while the ASX 200 has declined by 10.9%. The telco takes the win here, slightly.

Looking at the performances in the first quarter of FY23, Telstra shares were flat. The ASX 200 dropped by 1.4%. Another win for the telco.

In October, the Telstra share price is down 0.26%, while the ASX 200 is up 4.5%.

I’d suggest that much of the movement in share prices we’ve seen for Telstra — and many other ASX shares — could be pinned on inflation and rising interest rates. These two factors spark uncertainty. But, in terms of the telco being defensive, it did manage to provide less downside than the ASX 200.

What could have affected the Telstra share price?

Investors usually judge a company by looking at its net profit, growth, and outlook of the business.

The telco told investors that, on a guidance basis, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.4% to $7.3 billion, underlying earnings per share (EPS) increased 48.5% to 14.4 cents, and free cash flow went up 5.9% to $4 billion. Total income dropped 4.7% to $22 billion.

A particular highlight was that the mobile business saw EBITDA growth of 21.2%. Meantime, postpaid handheld average revenue per user (ARPU) grew 2.9% with 6.4% mobile services revenue growth. Telstra also added 155,000 net retail postpaid handheld services.

In FY23, total income is expected to be between $23 billion to $25 billion. Underlying EBITDA is expected to be between $7.8 billion to $8 billion.

One of the most interesting things to me about the Telstra share price is that the company has announced it’s going to increase prices in line with CPI inflation. Not only can it grow revenue through 5G services, but it can grow its ARPU by increasing its prices. Indeed, it could increase prices each year.

Brokers rate the Telstra share price as a buy

A number of brokers rate the telco as a buy.

For example, Morgan Stanley has an overweight rating on the business, with a price target of $4.60. It thinks that Telstra can benefit from subscribers who move to Telstra after the Optus data hack.

Morgans rates Telstra shares as add. One of the reasons it’s optimistic is that the telco’s assets may be undervalued. The broker has a price target of $4.60. Telstra shares closed trading on Friday at $3.84 apiece.

The post Have Telstra shares been a good investment so far this financial year? appeared first on The Motley Fool Australia.

.

More reading
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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/k8I9XwQ
10 October 2022
Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why
The Pilbara Minerals Ltd (ASX: PLS) share price has been one of the best performers in the S&P/ASX 200 Index (ASX: XJO) over the last few months.

In the three months to 30 September 2022, the ASX lithium share has seen its share price gain 99%. Between 30 June 2022 to today, it’s up an impressive 137%.

What’s going on?

Many ASX shares saw their share prices plummet in the first half of 2022 as markets tried to work out what businesses were worth in this period of high inflation and rising interest rates.

Inflation can increase company costs and hurt demand. But why do interest rates matter? Billionaire Ray Dalio once said:

It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

But while many ASX shares are fairly close to their June lows. The Pilbara Minerals share price has charged higher. For starters, it’s benefiting from the growing demand for electric vehicles.

I think there are key factors worth noting over the last few months.

Strong lithium price

The ASX lithium share has been utilising a digital auction platform called the Battery Material Exchange (BMX) to sell some of its production.

On 23 June 2022, just before the FY23 first quarter, it auctioned 5,000 dry metric tonnes (dmt) of spodumene concentrate and accepted a price of US$6,350 per dmt.

On 13 July 2022, it sold 5,000 dmt for a price of US$6,188 per dmt.

On 2 August 2022, it sold 5,000dmt for US$6,350 per dmt.

On 20 September 22, it sold 5,000dmt for US$6,988 per dmt.

Despite all the worries about the global economy, the lithium price has stayed strong in the first few weeks of the FY23 first quarter and then kept growing.

The commodity price is key for the business because a higher resource price can largely add straight onto its net profit after tax (NPAT) and cash flow. It costs roughly the same to produce the resource, so more revenue for that production is just extra money for the company.

I think this came through in the company’s FY22 result, which was another positive catalyst for (or supportive of) the Pilbara Minerals share price.

FY22 report

The ASX lithium share reported it shipped 361,035 of spodumene concentrate, representing a 28% year-over-year increase.

Revenue grew by 577% to $1.2 billion. The statutory NPAT jumped to $561.8 million, a huge increase from the FY21 statutory loss of $51.4 million.

The FY23 outlook was promising. The company has approved expansion to grow production by a further 100,000 tonnes per annum to a combined 640,000 tonnes to 680,000 tonnes per annum. It’s now also progressing towards a final investment decision to expand production to one million tonnes per annum.

The Pilbara Minerals managing director Dale Henderson said:

The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production growth off a performing operating base. Further, chemicals participation with our downstream JV with [South Korean company] POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future lies ahead for our business and our shareholders.

The post Amid the doom and gloom, Pilbara Minerals shares delivered 100% gains in Q1. Here’s why appeared first on The Motley Fool Australia.

.

More reading
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 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.

from The Motley Fool Australia https://ift.tt/BaCtEkx
10 October 2022
Why analysts say these ASX 200 dividend shares are buys
If you’re looking for additions to your income portfolio, then the two ASX 200 dividend shares listed below could be worth considering.

Both shares have been rated as buys by analysts and tipped to provide attractive yields in the coming years. Here’s what you need to know:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX 200 dividend share for income investors to look at is the Charter Hall Social Infrastructure REIT.

This real estate investment trust is focused on investing in social infrastructure properties such as bus depots, government facilities, police and justice services, and childcare centres.

Analysts at Goldman Sachs are very positive on the company due to its solid outlook, sky high occupancy rate, and long leases. They have put a conviction buy rating and $4.20 price target on its shares.

The broker is expecting this to underpin growing dividends in the coming years. For example, it is forecasting dividends per share of 17.3 cents in FY 2023 and 18 cents in FY 2024. Based on its current share price of $3.23, this implies yields of 5.35% and 5.6%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another ASX 200 dividend share that has been tipped as a buy is QBE. It is of course one of the world’s largest insurance companies.

Analysts at Morgans are very positive on the company due to rising premiums and cost reductions. It recently retained its add rating with a $14.93 price target on its shares.

Morgans notes that with “strong rate increases still flowing through QBE’s insurance book, investment yields improving and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years.”

It also expects this to lead to a big increase in dividend payments from next year. Morgans is forecasting a 41.5 cents per share dividend in FY 2022 and then a 76.5 cents per share dividend in FY 2023. Based on the latest QBE share price of $11.73, this equates to yields of 3.5% and 6.5%, respectively

The post Why analysts say these ASX 200 dividend shares are buys appeared first on The Motley Fool Australia.

.

More reading
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.

from The Motley Fool Australia https://ift.tt/7VCYEnG
10 October 2022
Have ASX 200 retail shares been worth buying so far in FY23?
The S&P/ASX 200 Index (ASX: XJO) retail shares have suffered a sell-off during 2022. But, could FY23 be the year of opportunistic bargain-hunting?

Let’s have a look at some of the declines we’ve seen so far this calendar year.

Performance so far this year

The Wesfarmers Ltd (ASX: WES) share price has fallen by more than 25% this year, though it’s up 6.4% since the end of June 2022.

The JB Hi-Fi Limited (ASX: JBH) share price is down 17.6% in 2022, but it’s 4.6% higher in FY23.

The Harvey Norman Holdings Limited (ASX: HVN) share price is down 17.5% for the year yet it has risen 12% from the end of June 2022.

The Woolworths Group Ltd (ASX: WOW) share price has fallen 13% in 2022 and is down 6.3% in FY23.

The Premier Investments Ltd (ASX: PMV) share price has fallen 21% in 2021 but it’s up 25% since 30 June 2022.

How does the ASX 200 Index compare to all of these numbers? In 2022 to date, it’s down by 10.9%. Since 30 June 2022, it’s up by 3%. So, largely, ASX 200 retail shares have performed worse in 2022 but have done better over the past three and a bit months.

Should investors be looking at ASX 200 retail shares?

That’s the big question.

There are plenty of other retailers outside the ASX 200 that have also suffered sizeable falls like Nick Scali Limited (ASX: NCK), Adairs Ltd (ASX: ADH), Universal Store Holdings Ltd (ASX: UNI), Best & Less Group Holdings Ltd (ASX: BST), and Shaver Shop Group Ltd (ASX: SSG).

Yet every retailer is different. The revenue and net profit after tax (NPAT) growth performance of Wesfarmers is likely to be quite different to JB Hi-Fi’s.

I also think it’s likely that FY23 and perhaps FY24 won’t show the strength that FY20 and FY21 did. Households may not have as much money to spend in the retail sector because of the impacts of inflation and rising interest rates.

However, some of these retailers have seen their share prices drop 30%, 50%, or even more.

Businesses are naturally going to try to find ways to protect and grow their profits. Same-store sales may decline, but retailers can open new stores which might lessen the overall blow. They can also sell more items online. Retailers can expand their ranges and look to grow internationally. They may be able to find ways of being more efficient with costs.

It’s possible that retail sales may not fall as much as some investors are expecting.

Another thing that could work in retailers’ favour this year is that many of them could report strong growth in the first half of FY23. Don’t forget, a year ago, a substantial portion of the Australian population was under lockdowns. This also meant that many retail stores faced restrictions.

Currently, we’re seeing good trading updates from businesses for the first few weeks of FY23. Examples include Wesfarmers, Premier Investments, and Shaver Shop.

So, in summary, I think that generally, ASX 200 retail shares could be long-term opportunities. However, there could still be plenty of volatility and FY23 may well show sizeable profit declines for a number of them. But I think we may have already seen the worst of the share price pain.

The post Have ASX 200 retail shares been worth buying so far in FY23? appeared first on The Motley Fool Australia.

.

More reading
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 ADAIRS FPO and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, Harvey Norman Holdings Ltd., and Wesfarmers Limited. The Motley Fool Australia has recommended JB Hi-Fi Limited and Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/5P2fet6
10 October 2022
5 things to watch on the ASX 200 on Monday
On Friday, the S&P/ASX 200 Index (ASX: XJO) finished an improved week with a day in the red. The benchmark index fell 0.8% to 6,762.8 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to start the week deep in the red. This follows another selloff on Wall Street on Friday night. According to the latest SPI futures, the ASX 200 is expected to open the day 61 points or 0.9% lower this morning. On Wall Street, the Dow Jones was down 2.1%, the S&P 500 dropped 2.8%, and the NASDAQ tumbled 3.8%. Strong US employment data has given rate hike bets a boost.

Oil prices jump

Energy producers such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a great start to the week after oil prices jumped on Friday night. According to Bloomberg, the WTI crude oil price was up 4.2% to US$92.64 a barrel and the Brent crude oil price rose 3.5% to US$97.92 a barrel. This was an increase of approximately 15% and 10%, respectively, for the week. OPEC’s massive production cut plan was behind the rise.

Tech shares to fall

It could be a very difficult day for tech shares such as Block Inc (ASX: SQ2) and Xero Limited (ASX: XRO) on Monday. This follows a selloff on the tech-focused NASDAQ index on Friday night after the release of US employment data. The Block share price on the NYSE ended the session down by over 7%. This doesn’t bode well for its ASX shares today.

Seek rated as a sell

The Seek Limited (ASX: SEK) share price could be overvalued according to analysts at Goldman Sachs. This morning the broker has slapped a sell rating and $20.70 price target on the job listings giant’s shares. It said: “[W]e continue to believe that Seek is the most cyclical of our classifieds coverage, with a downturn in volumes likely to drive lower depth adoption.”

Gold price falls

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price dropped on Friday. According to CNBC, the spot gold price was down 0.7% to US$1,709.3 an ounce during the session. Strong US jobs data spurred Fed rate hikes bets and put pressure on gold.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

.

More reading
Motley Fool contributor James Mickleboro has positions in SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/d5wLBTs
10 October 2022