If you’re interested in adding some ASX growth shares to your portfolio, you may want to look at the two listed below.

These growth shares have recently been named as buys by experts. Here’s what they are saying about them:

Cochlear Limited (ASX: COH)

The first ASX growth share that has been named as a buy is Cochlear. It is one of the world’s leading hearing solutions companies.

Due to its portfolio of world class products in an industry with high barriers of entry, Cochlear has been tipped to grow strongly over the long term. Particularly given how the industry is benefiting from favourable tailwinds such as ageing populations.

Goldman Sachs is bullish on Cochlear and has a buy rating and $247.00 price target on its shares. Its analysts believe the company is well-placed to hit the top end of its guidance in FY 2023. The broker said:

In our view, the backdrop for this year appears relatively more favourable, and we see clear scope for COH to deliver at the upper-end of another solid guidance (+8-13% to $290-305m, with further accretion possible from the Oticon Medical transaction, which is yet to close).

IDP Education Ltd (ASX: IEL)

Another ASX growth share that has been named as a buy is IDP Education. It is a language testing and student placement company and a co-owner of the IELTS test.

The IELTS test is the English test that is trusted by more governments, universities, and organisations than any other. This puts the company in a great position to benefit from the growing number of people learning English globally.

Goldman Sachs is also a big fan of IDP Education. Last week, the broker reiterated its buy rating and $36.00 price target on the company’s shares. Its analysts believe that IDP’s shares are trading at an attractive level based on its growth potential. It said:

IEL is trading c.10% below its 5-yr average P/E. The stock is trading at a relatively undemanding 2.2x PEG based on its historic FY22 PE of 79x and forecast 35% FY22-25E 3-yr EPS CAGR.

The post Are these the ASX growth shares to buy for 2023? appeared first on The Motley Fool Australia.

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• 11 ASX shares that make Abrdn’s World Cup team
• Worried about a stock market crash? I’d buy these 5 rock-solid ASX shares to ride it out
• Experts name 3 of the best ASX growth shares to buy in November
• Which are the best ASX 200 shares to buy now for 2023?
• Morgans names 2 fast-growing ASX 200 shares to buy now

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 Cochlear Ltd. and Idp Education Pty Ltd. The Motley Fool Australia has recommended Cochlear 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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I think that ASX dividend shares are a great way to build a nest egg and live off the dividends. Investors that are getting ready to retire will want to know about how effective businesses can be for passive income.

In my opinion, businesses are very capable of producing dividends and growth because of what they do with their profit.

A company will hopefully generate a profit each year. It can then decide to pay some of that out as dividends and keep the rest to re-invest and grow the business. For example, it could decide to pay out perhaps half of its net profit and re-invest the other half.

While a lot of businesses do pay dividends, there are only a few that pay out all of their annual operating profit each year (such as Deterra Royalties Ltd (ASX: DRR) and Charter Hall Long WALE REIT (ASX: CLW)).

But, this financial flexibility allows investors to spend all of their dividends, if they want to, and still potentially experience a bigger payout a year later.

How dividend yields are boosted

When savers utilise a term deposit to get a safe return, the quoted interest rate is how much of a return they’ll get at the end of the period. Some savers may need to pay some tax on that interest when they do their tax returns.

However, fully franked dividends from ASX dividend shares offer investors a very interesting form of passive income.

A business like Telstra Corporation Ltd (ASX: TLS) could have a fully franked dividend yield of 4.25%. But, that dividend also comes with franking credits.

It’d be useful to read the above linked explainer about franking credits. But, it’s essentially the corporate tax paid by a company which is then ‘attached’ to the dividend for the shareholder as a refundable tax offset. This is so that the profit generated by the company isn’t doubled taxed – once at the company level and then once at the individual level.

For low tax rate individuals, (some) franking credits can be refunded when the tax return is done. Franking credits reduce the tax owed by an individual with a higher taxable income and tax rate.

The Telstra fully franked dividend yield turns from 4.25% into a grossed-up dividend yield of 6%. Franking credits make up almost a third of the total grossed-up yield, or said another way they can boost the cash yield by almost half.

But, it’s important to remember that an ASX dividend share isn’t worth buying just because it pays fully franked dividends.

Compound interest can do the heavy lifting

For investors that are a long way away from retiring, compounding can help grow a portfolio.

While it’s impossible to say what the future returns of the share market will be, historically the ASX share market has returned an average return per annum of around 10%.

Using the Moneysmart calculator, starting at $0 and investing $1,000 a month for 25 years turns into $1.18 million if it returned 10% per annum.

Generating annual dividends of $70,000

The dividend yield and the size of the portfolio determine how much annual dividend income is generated.

For example, a $1.5 million portfolio with an average dividend yield of 5% would generate $75,000 of annual dividends.

But, a $1 million portfolio with a 7% dividend yield would make $70,000 of annual dividends.

Higher dividend yields aren’t necessarily riskier than a lower dividend yield, but it could suggest the business is in a more volatile industry.

I have written a number of articles in recent weeks about potential (retirement) ASX dividend shares like this one, this one and this one.

In one of the articles, I reference Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which has grown its dividend every year since 2000, though dividends are not guaranteed. It has a grossed-up dividend yield of 3.7%.

I also mentioned Metcash Limited (ASX: MTS), the supplier of IGAs, which has a grossed-up dividend yield of 7.3%.

By FY24, Wesfarmers Ltd (ASX: WES), the owner of Bunnings and Kmart, could pay a grossed-up dividend yield of around 6%.

Then there’s a name like BHP Group Ltd (ASX: BHP) – the ASX’s biggest company – which is projected to pay a grossed-up dividend yield of 10% in FY23 according to Commsec. But, with how resource prices change, the dividend yield could be smaller in FY24.

The post Almost ready to retire? How to generate $70k per year of passive income from ASX dividend shares appeared first on The Motley Fool Australia.

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More reading

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• 3 reasons this fundie is still bullish on ASX mining shares
• Could buying Wesfarmers shares give you $10,000 in annual dividend income by retirement?
• BHP share price has ‘no upside’: Goldman Sachs
• ‘Rare opportunity’: Expert explains why he just added this ASX 200 share

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. 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 Telstra Corporation Limited, Washington H. Soul Pattinson and Company Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended Metcash 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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If you’re looking to boost your income portfolio next week, then you may want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share that has been tipped as a buy for income investors is Baby Bunting.

It is a leading baby products retailer with a growing store network across Australia and New Zealand.

Morgans remains positive on Baby Bunting despite “an unwelcome surprise” from margin weakness just two months after management “expressed an ambition to hold or increase its gross margins in FY23.”

This is because the broker believes that the significant share price weakness since its update has more than compensated for this disappointment. Especially given how some of these margin pressures are transitory and its “compelling opportunities to grow its share of a growing market.”

Morgans has an add rating and $3.60 price target on its shares. As for dividends, the broker is forecasting fully franked dividends per share of 14 cents in FY 2023 and then 16 cents in FY 2024. Based on the current Baby Bunting share price of $2.60, this will mean yields of 5.4% and 6.15%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share that has been tipped as a buy is Transurban.

It is one of the world’s leading toll road operators with a portfolio of important roads and a lucrative pipeline of development projects. The former include CityLink in Melbourne, the Cross City Tunnel in Sydney, and AirportlinkM7 in Brisbane.

JP Morgan is a fan of the company and has a buy rating and $15.00 price target on its shares. The broker has been pleased with improving traffic trends and highlights the company’s positive exposure to inflation.

As for dividends, JP Morgan expects dividends per share of 60 cents in FY 2023 and then 63 cents in FY 2024. Based on the current Transurban share price of $14.28, this implies yields of 4.2% and 4.4%, respectively.

The post Buy these ASX shares for their dividends: analysts appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares Macquarie just recommended its clients buy
• 3 ultra-high-yield ASX dividend shares you might regret not buying at these prices
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• Experts say these ASX dividend shares are buys today
• Here’s why the Transurban share price can ‘reap the benefits’: expert

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

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Perhaps no ASX 200 dividend share has gotten more attention in recent years than Fortescue Metals Group Limited (ASX: FMG).

Fortescue shares are notoriously volatile. This iron-ore mining company has fluctuated between $14.50 and $22.99 a share over just the past 12 months, after all.

But no one can take the fact that Fortescue has been absolutely pouring cash into shareholders’ pockets in recent years.

But exactly how much cash are we talking about for 2022? That’s what we’ll answer today.

How much income would $20,000 worth of Fortescue shares have yielded in 2022?

Let’s assume an investor bought $20,000 worth of Fortescue shares at the start of 2022. The company finished up 2021 trading at a share price of $19.21, so we’ll use that as our benchmark.

So $20,000 would have bagged our hypothetical investor 1,041 Fortescue shares at this price, with a little change left over.

Fortescue has once again funded two dividend payments for its shareholders over this year. The first was the interim dividend from March, worth 86 cents per share. The second was the September final dividend that came in at $1.21 a share. Both payments were fully franked.

These dividends equate to the second-highest annual dividend Fortescue has ever paid. The highest was in 2021, which saw an interim dividend of $1.47 per share, and a final dividend of $2.11.

So our 1,041 Fortescue shares would have granted our investor a payment of $895.26 in dividend income. The final dividend would have yielded up another $1,259.61, bringing the total for 2022 to $2,154.87.

That represents a very healthy yield on our cost base of 10.78%. Including Fortescue’s full franking, that grosses up to a pleasing 15.39%.

Fortescue has had a mildly disappointing year, share price-wise, though. Currently, the miner’s shares are down 4.58% year-to-date. Saying that, investors are still up by 10.18% over the past 12 months though. Over the past five years, Fortescue has appreciated by a whopping 316%.

The post If you bought $20,000 worth of Fortescue shares this year, here’s how much dividend income you’d have appeared first on The Motley Fool Australia.

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More reading

• Skin in the game: The ASX share in my portfolio I’m most excited about
• Here are the top 10 ASX 200 shares today
• Why did ASX 200 retail shares lead the market to fresh 25-week highs today?
• Why is the Allkem share price diving 8% today?
• Here are the 3 most heavily traded ASX 200 shares on Friday

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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