Day: 21 November 2022

This ASX hydrogen share has soared ahead in recent times, but could it go even higher?

The ReNu Energy Ltd (ASX: RNE) share price has soared 50% since 7 November and is currently trading at 6 cents.

Let’s take a look at the outlook for this ASX hydrogen share.

What’s ahead?

ReNu Energy shares have been lifting in the past couple of weeks amid hydrogen project news.

On 9 November, ReNu advised that superannuation fund HESTA had agreed to a non-binding term sheet to invest up to $100 million in the company’s green hydrogen projects.

Commenting on the deal, ReNu CEO Greg Watson said:

Our task now is to advance to definitive agreements as soon as possible and progress commercial discussions with our project partners for green hydrogen offtake.

Meanwhile, on 17 November, ReNu advised it had signed a memorandum of understanding (MOU) with Australian Pacific Airports to develop a green hydrogen project at Launceston Airport.

Peak Asset Management executive director Niv Dagan recommends the ReNu Energy share price as a buy. Commenting on The Bull, Dagan said:

The company invests in renewable and clean energy technologies. Also, it identifies and develops hydrogen projects. RNE acquired Countrywide Hydrogen in February 2022.

The company continues to progress its hydrogen projects.

Trading halt

ReNu Energy shares are in a trading halt today at the company’s request. The company’s share price is on ice ahead of a capital raising. In a statement, ReNu Energy said:

The company requests that the trading halt remain in place until the commencement of
trading on Wednesday, 23 November 2022 unless before that time it makes an
announcement in relation to the Capital Raising to the market or requests that the trading
halt be lifted.

Share price snapshot

The ReNu Energy share price has descended 57% in the past year, while it has lost 26% year to date.

For perspective, the ASX 200 has fallen more than 3% in the last year.

This ASX hydrogen share has a market capitalisation of nearly $22 million based on the current share price.

The post Up 50% in 2 weeks, this ASX hydrogen share is still a buy: expert appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX energy share just exploded 150% on a green hydrogen deal with Hesta?

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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The Magellan Financial Group Ltd (ASX: MFG) share price has been on a rollercoaster in recent weeks after the market reacted to news the company’s former star-stock picker offloaded a huge parcel of its securities.

An entity associated with Magellan co-founder Hamish Douglass – who stepped down as the company’s chair earlier this year before returning in a consultancy role – sold 13 million of the company’s shares earlier this month.

The Magellan share price tumbled 5% in the days following the sale. Since then, it has posted a 9% gain. Right now, stock in the fund manager is swapping hands for $9.91 apiece.

So, should investors follow the lead of the notable insider and sell down their holdings in the S&P/ASX 200 Index (ASX: XJO) financials icon? Here’s what one fundie reckons.

Why this fundie tips Magellan shares as a sell

News that Douglass sold a $118 million parcel of Magellan shares might not have left a long-term sour taste in the market’s mouth, but it did raise the eyebrows of one fundie.

Peak Asset Management founder and executive director Niv Dagan believes it’s time to sell out of the company, as per The Bull.

One reason behind his bearishness is Douglass’ recent sale, which the insider told the market was for “family diversification purposes”.

Another was the fund manager’s notable outflows.

Magellan experienced $2.4 billion of net outflows in October. Of that, $400 million was retail, and $2 billion was institutional. It followed the company’s $3.6 billion September outflow and its $1.3 billion August outflow.

Though, October wasn’t all bad. A weaker Aussie dollar and market strength saw the company boast $51 billion of funds under management at the end of October. That’s up from $50.9 billion on 30 September.

Finally, Dagan cited the company’s embattled share price as another reason he thinks the stock is a sell.

The Magellan share price has lost nearly half its value in 2022. It started the year trading at $19.40.

The post Hamish Douglass has been selling down his Magellan shares. Should you? appeared first on The Motley Fool Australia.

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More reading

• The Magellan share price has caved 50% so far this year. Are directors seriously asking for a pay rise?
• Here are the top 10 ASX 200 shares today
• 5 of the craziest things making news on the ASX this week
• Amidst the ongoing tech stock wreck, value shares are everywhere. There’s just one catch…
• Why Magellan, News Corp, REA, and Whitehaven Coal shares are dropping today

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 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.

From time to time, Wall Street provides a not-so-subtle reminder to the investing community that stocks can move lower.

Since achieving their all-time closing highs between mid-November 2021 and the first week of January 2022, the ageless Dow Jones Industrial Average (DJINDICES: ^DJI), widely followed S&P 500 (SNPINDEX: ^GSPC), and growth stock-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have respectively plummeted by as much as 22%, 28%, and 38%. This means all three major U.S. indexes have had at least a brief taste of a bear market in 2022.     

Regardless of how long you’ve been investing, bear markets can make you question your resolve to stay the course. In particular, the 2022 bear market has a lot of folks wondering where the bottom might be. Although no indicator, metric, or statistic has accurately predicted the start or finish of every bear market, one telltale bear market indicator does have an exceptionally strong track record of forewarning investors.

This bear market metric indicates more trouble is ahead for Wall Street

Looking back as far as 1870, the S&P 500 Shiller price-to-earnings (P/E) ratio has foretold the coming of five bear markets. The Shiller P/E, also known as the cyclically adjusted price-to-earnings ratio (CAPE ratio), takes into account inflation-adjusted earnings from the previous 10 years.        

While on the surface the Shiller P/E is just another valuation tool, it’s accurately predicted a coming bear market anytime it’s crossed above 30 and sustained that level. This includes peaking above 30 in 1929 ahead of the Great Depression, topping out at 44 during the dot-com bubble, surpassing 30 in the third quarter of 2018 and just prior to the coronavirus crash, and once more (briefly) surpassing 40 during the first week of 2022. The short version is that anytime the S&P Shiller P/E ratio tops 30 during a bull market, a decline in the S&P 500 of at least 20% eventually follows (key word, “eventually”).

S&P 500 Shiller CAPE Ratio data by YCharts.

But the Shiller P/E ratio can be just as useful forecasting where a bear market will bottom. With the exception of the financial crisis (2007-2009), a number of double-digit percentage retracements in the S&P 500 over the past quarter of a century have found their bottom when the S&P 500 Shiller P/E hit 22 (give or take a point or two in each direction). This isn’t all that surprising given that professional and everyday investors often become more critical of stock valuations during bear market declines.

I’m sorry to say, but this telltale bear market indicator is, once more, sounding a warning that the broader market has yet to find its bottom — at least if history proves accurate. The latest bounce following a lower-than-anticipated U.S. inflation rate briefly pushed the S&P Shiller back above 29.  Though anything is possible, no bear market has ever bottomed with the Shiller P/E as high as it is now.

Considering that a number of high-profile companies have begun to temper their outlooks, all signs would appear to point to a bumpy road for equities to end 2022 and/or begin 2023.

This “warning” is your opportunity to pounce

Although the S&P Shiller P/E ratio has a time-tested track record of being right, it’s not perfect. But there is something that does have a perfect track record: The S&P 500 itself.

As I’ve previously pointed out, time is the greatest ally investors have. Trying to predict where the market will be a year from now is nothing more than a crapshoot. However, the longer you hold, the greater your chance of being correct and building wealth.

According to data compiled by market analytics company Crestmont Research, there’s hasn’t been a 20-year rolling period since 1900 where the S&P 500 has failed to deliver a positive total return, including dividends paid. In other words, if you hypothetically bought and held an S&P 500 tracking index for 20 years, you made money 103 out of 103 times (with every year from 1919 through 2021 representing the end years for these rolling 20-year periods). Most of the time, investors made a boatload of money, with more than 40% of these 103 end years resulting in an average annual total return of at least 10.8%. 

If you’re worried about “getting in too early,” consider this: There have been 39 separate double-digit percentage declines in the S&P 500 since the beginning of 1950. With the exception of the current bear market, all 38 previous crashes, corrections, and bear markets were eventually cleared away by a bull market.  Once again, it doesn’t really matter when you buy, so long as you give your investment(s) ample time to play out and prove your thesis correct.

I should also state that this isn’t unique to the S&P 500. Every crash, correction, and bear market in the Dow Jones Industrial Average and Nasdaq Composite were also eventually whisked away by bull markets.

In short, if the Shiller P/E ratio is sounding a warning, it’s often a great time for opportunistic long-term investors to pounce.  

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

The post This Telltale bear market indicator is sounding a warning, once again appeared first on The Motley Fool Australia.

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More reading

• Hamish Douglass has been selling down his Magellan shares. Should you?
• Is this ASX 200 share the gift that keeps on giving?
• To $300 and beyond! Why this top broker says CSL shares are a buy right now
• Why Telstra shares have 16% upside right now: fundie
• Why is the Lake Resources share price smashing the ASX 200 on Monday?

Sean Williams 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.

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

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S&P/ASX 200 Index (ASX: XJO) share Lovisa Holdings Ltd (ASX: LOV) looks to be the gift that keeps on giving this calendar year.

Having reached all-time highs last Thursday, shares in the ASX 200 fashion jewellery retailer are up 1.9% during the lunch hour today, though still a touch below the record highs.

In a year that’s seen the benchmark index slide 6%, the 22% gains posted by Lovisa Holdings certainly shine brightly. And the ASX 200 share also pays a 3.1% trailing dividend yield, 30% franked.

What’s driving investor interest in the ASX 200 retail share?

Investors look to be driving up the Lovisa share price on the back of strong sales growth.

As The Motley Fool reported on Friday, the first 19 weeks of the 2023 financial year have seen the ASX 200 share continue to grow global comparable store sales. Sales were up 16.1% compared to the 2022 financial year over the same period.

The sales metrics were based on stores that were open and trading and excluded stores that were temporarily shuttered due to pandemic lockdowns in either financial year.

Total sales for this period increased by 60% on FY22.

The ASX 200 retail share also looks to be getting a lift from its continuing global expansion.

Year to date, Lovisa has closed 14 stores and opened 61 new stores, for a net increase of 47 shops. The company’s footprint now reaches 26 countries and a total of 676 stores.

“Compared to this time last year, we are currently trading over 100 more stores in five additional markets, with our first stores in Italy, Mexico and Hungary also due to open in coming weeks,” Lovisa reported.

How has the Lovisa share price performed longer-term?

We always like to take a step back and see how longer-term investors may have fared with ASX 200 shares.

And in Lovisa Holdings’ case, the answer is “quite well”.

Over the past five years, shares in the jewellery retailer have gained 320%. That compares to a 19% gain posted by the ASX 200 over the same time frame.

The post Is this ASX 200 share the gift that keeps on giving? appeared first on The Motley Fool Australia.

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More reading

• Lovisa share price charges to record high on 60% sales boost
• Here are the top 10 ASX 200 shares today
• Why did these ASX 200 shares just crack new, multi-year highs?
• How I’d build a portfolio by investing in top ASX shares now

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa Holdings Ltd. The Motley Fool Australia has recommended Lovisa Holdings Ltd. 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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CSL Limited (ASX: CSL) shares having a positive start to the week.

In afternoon trade, the biotherapeutics company’s shares are up 1% to $297.29.

This leaves CSL’s shares on the cusp of breaking through the $300 mark once again.

Where are CSL’s shares heading?

The good news for investors is that one leading broker believes that CSL’s shares can rise beyond the $300 mark and keep on climbing.

According to a note out of Citi, its analysts have retained their buy rating and $340.00 price target on the company’s shares.

Based on where its shares trade today, this implies potential upside of over 14% for investors over the next 12 months.

What did the broker say?

Citi notes that the company recently held its research and development (R&D) day.

Its analysts highlight that CSL plans to continue spending over US$1 billion on its R&D activities each year for the foreseeable future. And with exciting potential therapies such as CSL 112 in its pipeline, it’s hard to argue against this level of investment.

Citi commented:

CSL held its annual event updating the market on its R&D programs. The R&D budget is significant at US$1.16bn in FY22 or ~11% of revenue. CSL will continue to spend ~10-11% of revenue on R&D annually. The pipeline now includes assets from recently acquired Vifor with two assets in Phase 3. Our $340 TP includes $22.40 for the R&D portfolio (down from $23 on delays) – the main asset remains CSL112 (cardiovascular) at $20/share on which we will get Phase 3 data in Q1 CY24. Maintain Buy, $340 TP.

The post To $300 and beyond! Why this top broker says CSL shares are a buy right now appeared first on The Motley Fool Australia.

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More reading

• Are these the very best ASX 200 shares to buy for 2023?
• How much dividend income will $20,000 worth of CSL shares buy right now?
• Considering CSL shares? Broker says this other ASX 200 healthcare share has 30% upside
• Experts name 2 ASX 50 shares to buy
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?

Motley Fool contributor James Mickleboro has positions in CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. 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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The Telstra Group Ltd (ASX: TLS) share price is slightly in the green today but could it have more upside in the future?

Telstra shares are climbing 0.25% today and are currently trading at $3.95. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.025% at the time of writing.

Let’s take a look at the outlook for the Telstra share price.

What’s ahead?

The team at Morgans believe Telstra is in “good shape” and is tipping its share price to go higher.

Morgans has placed an add rating on the company’s share price with a $4.60 price target. This implies an upside of 16% based on the current share price.

Analysts are optimistic on the Telstra share price in light of its restructure, which could unlock value in its assets. The broker said:

After a major turnaround, TLS has emerged in good shape with strong earnings momentum and a strong balance sheet. In late CY22 shareholders vote[d] on Telstra’s legal restructure, which opens the door for value to be released.

TLS currently trades on ~7x EV/EBITDA. However some of TLS’s high quality long life assets like InfraCo are worth substantially more, in our view. We don’t think this is in the price so see it as value generating for TLS shareholders. 

Telstra’s corporate restructure will involve a legal reorganisation where multiple subsidiaries will sit under the new Telstra Corp. These will include Telstra International, Amplitel, InfraCo and Serve Co.

The legal restructure is due to be complete on 1 January 2023.

Telstra transitioned to new CEO Vicki Brady at the start of September.

Telstra share price snapshot

The Telstra share price has descended 3% in the past year, while it has fallen 6% in the year to date.

For perspective, the ASX 200 has fallen nearly 3% in the last year.

Telstra has a market capitalisation of more than $45 billion based on the current share price.

The post Why Telstra shares have 16% upside right now: fundie appeared first on The Motley Fool Australia.

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More reading

• Ballin’ on a budget: The best ASX shares to buy for under $5
• 3 key things I look for when buying ASX dividend shares
• Experts name 2 ASX 50 shares to buy
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?
• How to have your ASX 200 dividend cake and eat it too

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 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.

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The S&P/ASX 200 Index (ASX: XJO) has had a very shaky start to the week as it currently stands. After initially shooting higher this morning, the ASX 200 has retreated at the time of writing, dropping 0.08% to back under 7,150 points.

But the same can’t be said of the Lake Resources NL (ASX: LKE) share price.

Lake Resources shares have had a dream start to the trading week. This ASX 200 lithium share closed at $1.05 last week. But the company opened this morning at $1.08 and climbed all the way to $1.11. Lake Resources has since settled down a little. But it is still going for $1.07 at present, up a decent 1.62% for the day thus far.

So why is the Lake Resources share price doing so well when the rest of the market is stuck in the doldrums?

Why are Lake Resources shares outperforming the ASX 200 today?

Well, there is some news out of Lake Resources itself today that is probably driving these positive returns for the company’s shares.

According to an ASX release from this morning, Lake Resources has patched up a dispute with Lilac Solutions. Both parties have an interest in the Kachi lithium project in Argentina. Lilac provides the technology that enables Lake to extract lithium chloride from brine at the project.

But both Lake and Lilac have been in dispute over the agreed timelines for the project. But no longer. Lake Resources has told investors today that it has signed a “contract amendment” that puts the dispute to bed.

Here’s some of what the release said:

[Lake Resources] is pleased to advise that a contract amendment has been signed to resolve the dispute between Lilac Solutions… and Lake Resources…

This amendment allows the teams to reset the relationship and jointly focus on delivery of the world class Kachi Project which will lead the industry in terms of high-quality Lithium produced with a minimal environmental footprint.

In resolving the dispute, Lake and Lilac have agreed to an amended timeline which both are confident can be achieved; as before, Lake will have certain buy back rights if Lilac does not meet agreed testing criteria in a timely manner.

So it seems that this good news is the reason behind the Lake Resources share price’s outsized performance so far this Monday.

Other ASX lithium shares in the green so far today include Pilbara Minerals Ltd (ASX: PLS), Core Lithium Ltd (ASX: CXO) and Liontown Resources Ltd (ASX: LTR).

The post Why is the Lake Resources share price smashing the ASX 200 on Monday? appeared first on The Motley Fool Australia.

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• Why is the Liontown share price having such a roaring start to the week?
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• 3 ASX 200 shares that hiked their dividends by more than 100% this year
• Of all the ASX 200 miners, here’s why I decided to buy Fortescue shares
• Which are the best ASX lithium shares to buy now for 2023?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Liontown Resources Ltd (ASX: LTR) share price is roaring on Monday.

In afternoon trade, the lithium developer’s shares are up 3.5% to $2.04.

This compares to a 0.1% decline by the ASX 200 index.

Why is the Liontown share price rising today?

There appear to have been a couple of catalysts for the rise in the Liontown share price on Monday.

The first is a rebound in the lithium industry, which has seen a number of lithium shares beat the market so far today.

For example, Allkem Ltd (ASX: AKE) shares are up 1%, Core Lithium (ASX: CXO) shares are up 1%, and Lake Resources N.L. (ASX: LKE) shares are up 2%.

What else?

Also potentially giving the Liontown share price a boost was the release of its Environmental, Social and Governance (ESG) report this morning.

Liontown’s managing director and CEO, Tony Ottaviano, spoke about the rapid progress the company has made with the Kathleen Valley Lithium Project and the equally rapid progress it has made with its ESG commitments. He commented:

I am delighted to say our ESG progress has been equally as rapid, reinforcing our vision to be an ESG leader and a globally significant provider of battery minerals for the rapidly growing clean energy market.

To achieve this vision, we are committed to developing natural resources responsibly, in a way that creates social, environmental and economic value. Central to this is our landmark Native Title Agreement, signed in November 2021 with the Tjiwarl People, the Traditional Owners of the land on which we are developing the Kathleen Valley mine.

Given how important ESG is becoming, particularly in the mining sector, investors appear pleased with this report.

The post Why is the Liontown share price having such a roaring start to the week? appeared first on The Motley Fool Australia.

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More reading

• Why is the Lake Resources share price smashing the ASX 200 on Monday?
• The future of ASX lithium shares: Are investors looking through rose-coloured glasses?
• Why did ASX lithium shares have a dream run on Monday?
• Here are the top 10 ASX 200 shares today
• Why is the Liontown share price roaring 7% higher?

Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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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The Woodside Energy Group Ltd (ASX: WDS) share price is sinking despite the broader market’s day in the green. Right now, the oil and gas producer’s stock has slipped 1.29% to trade at $37.40.

Comparatively, the S&P/ASX 200 Index (ASX: XJO) is down just 0.01% at the time of writing. Though, the S&P/ASX 200 Energy Index (ASX: XEJ) is currently one of the ASX 200’s worst-performing sectors, falling 0.87%.

Let’s take a look at what might be dragging on the Woodside share price on Monday.

What’s weighing on the Woodside share price today?

The Woodside share price is underperforming alongside those of many of its fellow ASX 200 energy giants.

The stock is currently the energy sector’s third worst performer, behind that of Beach Energy Ltd (ASX: BPT) and Ampol Ltd (ASX: ALD). They’ve each fallen around 1.6%.

Meanwhile, shares in both Santos Ltd (ASX: STO) and Washington H Soul Pattinson and Co Ltd (ASX: SOL) have slumped 0.6%.

Their suffering comes amid tumbling oil prices. The Brent crude oil price fell 2.4% to US$87.62 a barrel on Friday while the US Nymex crude oil price slipped 1.9% to US$80.08 a barrel. That leaves them down 8.7% and 10% respectively week-on-week.

The commodity’s struggles come amid concerns of lower Chinese demand and US interest rate hikes, Reuters reports.

China recently flagged it will ease certain COVID-19 restrictions. However, cases in the nation have been growing recently.

Additionally, a strengthening US Dollar has made oil more expensive to those trading in different currencies. That has also likely weighed on the black liquid’s value.

That might be what’s dragging on the Woodside share price. Much of the company’s earnings are reliant on the price of oil. Thus, a lower oil price generally means fewer profits.

Woodside’s realised oil price more than doubled over the six months ended 30 June to US$96.40 per barrel of oil equivalent, driving its profits for the period to US$1.6 billion.

The post Why is the Woodside share price sinking on Monday? appeared first on The Motley Fool Australia.

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More reading

• Why these 3 ASX 200 shares have done ‘particularly well’ and remain top holdings into 2023: fund manager
• 5 things to watch on the ASX 200 on Monday
• Why did the Woodside share price lag the ASX 200 today?
• 5 things to watch on the ASX 200 on Friday
• Which stocks are in the Vanguard Australian Shares Index ETF (VAS) right now?

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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended 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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The Vanguard MSCI Index International Shares ETF (ASX: VGS) is one of the most popular exchange-traded funds (ETFs) on the ASX, with the ETF worth $5.1 billion at last count. But, could it be a good source of dividends with franking credits?

I think it’s important to remember how an ETF operates. The ETF just delivers the return of the underlying investments. ETFs also pass through all of the investment income they receive from the underlying businesses.

What shares does the Vanguard MSCI Index International Shares ETF own?

This investment seeks to track the return of the MSCI World Ex-Australia Index. The idea is that it provides exposure to many of the world’s “largest companies listed in major developed countries. It offers low-cost access to a broadly diversified range of securities that allows investors to participate in the long-term growth potential of international economies outside Australia”.

Due to the size of the United States businesses, all of the biggest holdings are US listings.

Let’s look at the top 10 holdings at the end of October 2022: Apple, Microsoft, Alphabet, Amazon.com, Tesla, UnitedHealth, Exxon Mobil, Johnson & Johnson, Berkshire Hathaway and JPMorgan Chase.

But, the holdings come from a number of countries including Japan, the United Kingdom, Canada, France, Switzerland, Germany, the Netherlands, Sweden, Spain, Italy, Denmark, Singapore and so on.

Are VGS dividends fully franked?

It’s important to recognise that the ETF excludes Australian shares from its investment portfolio.

Franking credits are only generated and paid by companies that are part of the Australian taxation system. This means that the ETF doesn’t invest in any ASX shares that generate/pay franking credits.

So, not only are the distributions paid by Vanguard International Shares ETF not fully franked, they’re not franked at all.

What’s the dividend yield of the Vanguard International Shares ETF?

After the 12% drop in the unit price in 2022 date, the dividend yield has seen a boost. But, it’s still fairly low.

According to Vanguard, the ETF has a dividend yield of 2.1%. The ETF pays quarterly, though the distributions aren’t split evenly every quarter because the underlying businesses themselves don’t pay equal dividends each quarter or half-year.

But, if the underlying businesses are collectively growing their dividends to investors, then the ETF can grow its income distribution over time as well.

Snapshot of recent movements

The Vanguard International Shares ETF has gone up by 7% since the end of September 2022.

The post Are Vanguard International Shares ETF dividends fully franked? appeared first on The Motley Fool Australia.

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More reading

• 3 top ETFs for ASX investors to buy and hold for a decade
• Over half of millennials own shares. Here are 3 ASX share ideas to start your own portfolio
• 3 excellent ETFs for ASX investors to buy next week
• These 10 predictions could help you profit from the stock market regardless of inflation, interest rates or even another bear market
• Does the Vanguard International Shares ETF contain ‘good’ quality companies?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Apple, Berkshire Hathaway (B shares), JPMorgan Chase, Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and UnitedHealth Group and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, Berkshire Hathaway (B shares), 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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