Veteran fund manager Geoff Wilson, the chair of Wilson Asset Management, has made a final plea to investors imploring them to oppose proposed tax changes affecting ASX dividend shares and franking arrangements.

Earlier this year, the federal Labor government proposed legislation that would stop companies from paying franked special dividends funded via capital raisings.

The legislation also seeks to stop companies from paying fully franked dividends to participating shareholders as part of an off-market share buyback.

The legislation has been open for public comment in recent months.

Submissions regarding the capital raisings and franking component of the legislation closed on 5 October. Submissions regarding the off-market share buybacks component close this Friday.

Wilson has vehemently opposed the changes, saying the cost could ‘could run into the billions’.

What did Wilson say to shareholders?

In a letter to shareholders of his listed management companies (LICs) yesterday, Wilson said the proposed new rules carry “significant unintended consequences”.

He encouraged investors to submit their views to the federal treasury department.

He even offered them a template to use if they can’t find their own words. It contains some of the fund manager’s key points of disagreement.

The template states the proposed changes to franking credits “undermine a system that has supported Australian companies and investors through more than three decades of economic stability and growth”.

It says the system “has encouraged Australian companies to invest in and pay corporate tax in Australia and emboldened Australians to invest locally”.

Changes could see franking ‘dismantled beyond repair’

Wilson said the changes were “poorly constructed” and he wanted to work with the government:

We are eager to work with the current government on behalf of our shareholders to prevent the unintended consequences of these changes to the Australian franking system before it, and its enormous benefits, are dismantled piece by piece beyond repair.

We are currently preparing our submission, which we look forward to sharing with you when it is complete.

Shareholders were given a link to Wilson Asset Management’s submission regarding the proposed changes to franking credits and capital raisings.

Why is the government doing this?

The Federal Treasurer, Jim Chalmers, reckons the new rules are “a very minor measure”.

He says it simply closes a loophole used by companies to pay out excess franking credits on their books.

The central argument is that franking credits should only apply to dividends from realised profits.

The S&P/ASX All Ordinaries Index (ASX: XAO) closed down 0.86% on Wednesday.

The post Why Friday could be D-day for ASX dividend shares and franking credits appeared first on The Motley Fool Australia.

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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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Is investing $5 a day in ASX dividend shares enough to fund a generous passive income for life? That’s a harder question to answer than might first appear.

Let’s start at the beginning. ASX shares can indeed provide passive income. This comes in the form of dividend payments and franking credits.

ASX dividend shares usually dole out their dividend payments every six months. These payments are not guaranteed and are decided upon by the company in advance.

It’s not uncommon to see a company raise its dividends over time, but it’s also not unusual to see a company’s dividends fall if it is going through a tough time.

But how long would an investor have to invest $5 a day to fund a generous passive income?

Can $5 a day get you generous passive income?

Well, $5 a day equates to $35 a week, or $1,825 a year.

Let’s make some assumptions. We’ll start with an ASX share with a 4% dividend yield. That means that $100 invested gets an investor $4 per year in dividend payments.

4% seems like a happy ASX medium to use. Commonwealth Bank of Australia (ASX: CBA) is currently offering a dividend yield of 3.62%, and National Australia Bank Ltd (ASX: NAB), 4.91%. BHP Group Ltd (ASX: BHP) has a trailing yield of 9.9% right now, whereas Woolworths Group Ltd (ASX: WOW) is sitting at 2.68%. So 4% looks like a fair averge.

We’ll use a compound annual return rate of 7.94% for our investments. That’s the annual return, including dividend income that the S&P/ASX 200 Index (ASX: JXO) has delivered on average since August 2001.

If if an investor invests $5 a day for 10 years, compounded monthly, and reinvests all dividends received, they will end up with $27,628 at the end of that period. At a 4% yield, that would give our investor an annual passive income of approximately $1,105. Nothing to turn one’s nose up against, but hardly ‘generous’.

But, what about after 20 years? Or 30?

Well after two decades, our investor will have a total of $86,648 in capital, providing $3,466 in income. After 30, that would rise to $213,426, with $8,537 in income.

If an investor started doing this when they were 20, by the time they reached a retirement age of 65 (so after 45 years), they would have a lump sum of $723,001, providing an annual income stream of $28,920. That’s getting a lot more generous.

The post Is investing $5 a day in ASX dividend shares enough to fund a generous passive income for life? appeared first on The Motley Fool Australia.

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• Is the SPDR S&P/ASX 200 Fund (STW) an ETF?
• Bought $1,000 of CBA shares 10 years ago? Here’s how much dividend income you’ve received
• 10 ASX shares to buy in 2023
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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 S&P/ASX 200 Index (ASX: XJO) spent a second consecutive day in the red on Wednesday. The index closed today’s trade 0.85% lower at 7,229.4 points.

And once again, it was the tech sector leading the market’s tumble. The S&P/ASX 200 Information Index (ASX: XIJ) dropped 3.3% today following a rough night for the tech-heavy NASDAQ index.

The Nasdaq Composite Index (NASDAQ: .IXIC) dropped 2% while most of Australia slept.

The S&P/ASX 200 Energy Index (ASX: XEJ) also weighed heavily today, falling 2% as oil prices hit their lowest point of the year so far.

The Brent crude oil price slumped 4% to US$79.35 a barrel overnight while the US Nymex crude oil price fell 3.5% to US$74.25 a barrel.

But not all was dire on the market today. Miners had a good day’s trade, with the S&P/ASX 200 Materials Index (ASX: XMJ) lifting 0.2%.

It was the only gainer, however, with 10 of the ASX 200’s 11 sectors closing lower. But which stock outperformed all others to post Wednesday’s biggest gain? Keep reading to find out.

Top 10 ASX 200 shares countdown

The best performing ASX 200 share today was none other than coal stock Coronado Global Resources Inc (ASX: CRN). It posted a 3% gain despite no word from the company.

Though, as my Fool colleague James reports, Macquarie tipped the stock to gain nearly 50% earlier this week.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Coronado Global Resources Inc (ASX: CRN)	$2.06	3%
Champion Iron Ltd (ASX: CIA)	$7.10	2.75%
Kelsian Group Ltd (ASX: KLS)	$5.53	2.41%
NIB Holdings Limited (ASX: NHF)	$7.23	2.41%
Fortescue Metals Group Limited (ASX: FMG)	$21.17	2.27%
Pilbara Minerals Ltd (ASX: PLS)	$4.71	2.17%
QBE Insurance Group Ltd (ASX: QBE)	$13.24	1.92%
Insurance Australia Group Ltd (ASX: IAG)	$4.86	1.89%
Eagers Automotive Ltd (ASX: APE)	$11.85	1.8%
Magellan Financial Group Ltd (ASX: MFG)	$9.36	1.74%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Why have 100,000 new investors been buying Fortescue shares over the past 3 years?
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• I’d buy 1,000 shares of this ASX 200 stock for $800 in monthly passive income
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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 Insurance Australia Group. The Motley Fool Australia has recommended Macquarie Group and Nib Holdings 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 Qantas Airways Limited (ASX: QAN) share price avoided the market selloff on Wednesday.

The airline operator’s shares finished the day 1.5% higher at $6.27. This compares favourably to the ASX 200 index, which closed the day 0.85% lower.

Following today’s gain, its shares are now up 22% over the last 12 months.

Why did the Qantas share price take off?

Investors were buying the airline’s shares on Wednesday after the company was the subject of a bullish broker note out of Morgans.

According to the note, the broker has initiated coverage on the company with an add rating and $8.50 price target.

Based on the current Qantas share price, this implies potential upside of almost 36% for investors over the next 12 months. That’s despite its shares trading within a few cents of their 52-week high.

‘Unwarranted’ discount

Morgans believes that the Qantas share price is trading at an “unwarranted” discount given the significant improvements in its earnings. It said:

The discount being applied to QAN is unwarranted, in our view. Solid value exists in QAN given we expect further EBITDA growth over FY24/25 and think pent-up demand to travel will underpin a healthy demand environment for some time.

The broker highlights that its shares are trading just over 6x forward earnings, which is a big discount to historical averages. The broker explained:

QAN is trading on an FY23F EV/EBITDA and PE of 2.9x/6.3x, which is a ~24%/30% discount to its historical 5-year pre-COVID average multiples of ~3.8x/9.0x, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings). QAN’s balance sheet strength also positions it extremely well for its upcoming “EBIT-accretive” fleet reinvestment, whilst leaving significant headroom for further capital management.

All in all, Morgans appears to believe that Qantas’ shares still have plenty of room to ascend into the clouds from here.

The post Qantas share price trades at ‘unwarranted’ discount and could soon take off: Morgans appeared first on The Motley Fool Australia.

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More reading

• Qantas share price takes off despite ACCC warning
• Can the Qantas share price fly even higher in December?
• Why did the Qantas share price take off in November?
• Why is the Qantas share price smashing the ASX 200 on Tuesday?
• The Qantas share price is flying again. Why this fundie is concerned

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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