Day: 23 January 2023

If you’re looking for dividend shares to buy this week, then the two listed below could be worth checking out.

Both have recently been named as buys by analysts at Morgans and tipped to provide very attractive yields. Here’s what you need to know about them:

Dexus Industria REIT (ASX: DXI)

The first dividend share that Morgans is tipping as a buy is this industrial and office property company.

Morgans likes Dexus Industria due to its belief that it is well-placed for growth thanks to strong demand in the industrial market.

The broker currently has an add rating and $3.26 price target on the company’s shares. It commented:

DXI’s key industrial markets remain robust with the outlook for solid rental growth backed by strong tenant demand. The development pipeline also provides near and medium term upside potential. A key focus will be the leasing up of the business park assets and a potential divestment could be a positive catalyst. While the portfolio remains well positioned we acknowledge there will be near-term uncertainty around interest rates.

As for dividends, the broker is forecasting dividends per share of 16.4 cents in FY 2023 and 16.6 cents in FY 2024. Based on the current Dexus Industria share price of $3.03, this will mean yields of 5.4% and 5.5%, respectively.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share that has been named as a buy for income investors by Morgans is HomeCo Daily Needs.

HomeCo Daily Needs is a property investment company with a focus on metro-located, convenience-based assets across neighbourhood retail, large format retail, and health and services.

Morgans has an add rating and $1.52 price target on its shares. The broker explained why it is bullish. It said:

HDN’s portfolio is valued at around $4.7bn across +50 assets with exposure to Large Format Retail; Neighbourhood; and Health & Services properties. Over the medium term it expects to reweight towards Neighbourhood. Portfolio metrics are solid: weighted average cap rate 5.3%; weighted average lease expiry 5 years and occupancy 99%. HDN offers investors an attractive distribution yield which is underpinned by contracted rental income. Sites are also in strategic locations with strong population growth. The portfolio has exposure to ‘last mile’ logistics, as well as a significant land bank with future development potential (38% site coverage with a ~$500m development pipeline).

As for dividends, the broker is forecasting dividends per share of 8.3 cents in FY 2023 and 8.5 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.31, this will mean dividend yields of 6.3% and 6.5%, respectively.

The post These top ASX dividend shares are buys: Morgans appeared first on The Motley Fool Australia.

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More reading

• Boost your passive income with these buy-rated ASX dividend shares: experts

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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One of the consequences of depressed share markets, like we have seen in the past year or so, is that the tools that people use to invest become underutilised.

ASX shares of investment companies certainly have fallen out of favour in recent times. Investment technology platforms have not lit the world on fire either.

However, at least with those fintech stocks many investors are hoping for long-term growth as they scale up and gain market share.

The three big names in this platform category are Netwealth Group Ltd (ASX: NWL), Hub24 Ltd (ASX: HUB) and Praemium Ltd (ASX: PPS).

Just this week Shaw and Partners portfolio manager James Gerrish was asked on his Market Matters Q&A which of these stocks he would buy right now:

Disappointing results for Netwealth

Unfortunately 2022 ended poorly for all concerned, but it was especially worrying for the biggest player.

“It was a disappointing quarter for all of the investment platform companies and Netwealth was the hardest hit,” Gerrish said.

“While they are still seeing funds under administration (FUA) growth, the $2.1 billion of net inflows fell short of expectations of ~$3 billion.”

The miss in expectations was caused by low general investor sentiment for stock markets.

Considering these hiccups, Gerrish feels, the two larger platform providers still seem overvalued.

The Netwealth share price has dipped 24.5% over the past 12 months, while Hub24 has taken a 12.9% hit.

“Overall, Netwealth is a great business, but like its peers, they need scale to justify the ~39x price to expected earnings,” said Gerrish.

“Hub24 trades on ~35x.”

Last man standing

That leaves the smallest player out of the trio, Praemium.

Compared to its bigger rivals, Praemium shares are going for dirt cheap.

“The smallest of the bunch, Praemium trades on nearly 14x — a discount we don’t believe is justified.”

The company has seen its shares suffer massive discounting relative to Netwealth and Hub24, almost halving in value over the past 12 months.

Gerrish revealed that he overwhelmingly prefers Praemium out of the platform trio. In fact, his team possesses the shares in its emerging companies portfolio.

But he would also become interested in the other two fintech stocks if they suffered a dip.

“We would consider either into a pullback.”

The post Which ASX fintech stock is hot to buy right now? appeared first on The Motley Fool Australia.

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More reading

• 3 all-star ASX 200 shares ECP is going all-in on
• 3 ASX All Ords shares getting hammered on disappointing results
• Why Alumina, Netwealth, Nickel Industries, and Paladin Energy shares are falling today
• 3 ASX 200 shares making big moves following trading updates
• Why HUB24, Lovisa, Redbubble, and Warrego shares are sinking today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24, Netwealth Group, and Praemium. The Motley Fool Australia has positions in and has recommended Hub24 and Netwealth Group. The Motley Fool Australia has recommended Praemium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX lithium shares seem to be one of the market’s most exciting sectors at the moment.

Between 23 June 2022 to 9 November 2022, the Pilbara Minerals Ltd (ASX: PLS) share price went up by around 170%.

However, Pilbara Minerals shares fell by 34% to 3 January 2023. Since 3 January, Pilbara Minerals shares have risen by more than 25%.

Other ASX lithium shares have seen similar patterns, including Allkem Ltd (ASX: AKE), Core Lithium Ltd (ASX: CXO), IGO Ltd (ASX: IGO), Sayona Mining Ltd (ASX: SYA), and Mineral Resources Ltd (ASX: MIN).

My thoughts on the lithium sector

Volatility is common on share markets. It doesn’t surprise me when investors regularly shift between euphoria and fear on particular businesses. The wider share market occasionally goes through large bumps as well.

It makes sense that the lithium sector creates a lot of excitement. KPMG has estimated the world will need to manufacture more than two billion electrical vehicles to “accommodate world demand and fully transition away from internal combustion engine vehicles by 2050″.

Of course, electric vehicles are just one use for lithium. Home batteries and large-scale batteries could increase demand too.

More supply is very likely to come online in the coming years, including the Mt Holland project that Wesfarmers Ltd (ASX: WES) is working on in Western Australia.

If lithium prices stay this high for longer, then it will drive more supply.

But it takes time for that supply to appear, so 2023 could still see a very healthy lithium price. Each ASX lithium share has its own customers, contracts, and method of selling its production.

For example, Pilbara Minerals is benefiting from increased prices from its major offtake customers, as well as a much higher price from the Battery Material Exchange (BMX) platform auctions compared to a year ago.

Strong cash flow and demand

I think that the businesses that are already producing lithium are in a really good place. They are producing enormous cash flow and are reaping the benefits. I think that strong cash flow will continue for (at minimum) the majority of the year.

In the three months to December 2022, we saw Pilbara Minerals increase its cash balance by $851 million.

Hopefully, the ones that aren’t producing lithium at the moment will still get to reap the rewards of a good lithium price when they do start producing meaningful output.

In the latest Allkem quarterly update, it said that it expects the average price of lithium carbonate in the third quarter of FY23 to be in line with the second quarter. The ASX lithium share also pointed out:

EV sales growth is expected to remain robust in 2023 given strong order books and potential pent-up demand. Supportive government targets and policies announced globally (including subsidies or tax incentives) continue to ensure strong fundamentals for future growth.

Foolish takeaway

Overall, I think it could be a good year for the ASX lithium share sector as I don’t think enough supply will come online this year to drive down the price substantially.

The post My top predictions for ASX lithium shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Brokers name 3 ASX shares to buy now
• Wesfarmers shares: A potential source of secondary income
• Why Fisher & Paykel, Pilbara Minerals, Resolute, and Whitehaven Coal are storming higher

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 Wesfarmers. 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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As much as you might be a long-term investor, there is no escaping the fact that the stock markets are now not the same as they were four, two or even one year ago.

The Motley Fool’s own chief investment officer Scott Phillips admitted as much this month, when he cited the return of inflation and higher interest rates as changing the way you pick ASX shares to buy.

“Inflation matters because pricing power matters. If you are a business that can’t pass on higher costs, you have no choice but to deliver lower margins, [and] lower profits,” he said on the Your Wealth podcast.

“Rates matter to the price of the assets that I buy…, rates matter to the amount of debt a company can affordably carry and what it can do with that debt; and what my investment thesis looks like with those rates.”

He likened these conditions to a return to the 1980s and the early 1990s. 

Back to the “old normal”, if you will, after leaving behind a decade of near-zero interest rates and inflation.

So there are some ideas about what to seek in a business. But what are the attributes to avoid like the plague in this new era?

Airlie Funds portfolio manager Emma Fisher helpfully had some ideas this week:

Stay away from companies that exhibit these behaviours

Fisher, in an Airlie video, highlighted two traps that she would avoid when picking stocks for this year.

The first is debt.

Fisher cited two reasons why debt is such a negative right now compared to just eight months ago.

“If you’ve got a lot of debt, interest rates have gone up, it’ll cost you more to service that debt — so your profits are going to fall,” she said.

“The second one is around operational flexibility. Ideally, at this point in the [economic] cycle, you want to have a mountain of cash you’re sitting on as a business.”

With recessions likely looming around the world, having that cash buffer will be a huge advantage to any company — especially if competitors are struggling with servicing their loans.

The second red flag to avoid is excessive inventory levels.

“A lot of businesses — particularly retailers and consumer brands — going into the pandemic, demand was elevated and supply chains were tight. So businesses put in huge orders in order to get stock.”

But now all that stock is now sitting there while supply chains have resumed normal operations.

“You’ve got a lot of companies that are sitting on very elevated inventory levels, potentially heading into a softening demand environment,” said Fisher.

“Throw in some debt, and that can be a really toxic combination of factors.”

The post 2 traps to avoid when buying ASX shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• How much profit could Telstra shares make in 2023?
• My top predictions for ASX All Ords shares in 2023
• 2 excellent ASX passive income shares to buy next week: analysts

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

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week with a decent gain. The benchmark index rose 0.3% to 7,452.2 points.

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

ASX 200 expected to rise gain

The Australian share market looks set to rise again on Monday following a strong finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 34 points or 0.45% higher this morning. On Wall Street, the Dow Jones was up 1%,the S&P 500 rose 1.9%, and the NASDAQ jumped 2.65%.

Oil prices rise

It could be a good start to the week for ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after a solid finish to last week for oil prices. According to Bloomberg, the WTI crude oil price was up 1.3% to US$81.64 a barrel and the Brent crude oil price rose 1.7% to US$87.63 a barrel. Oil prices rose on Chinese demand optimism.

Tech shares on watch

It could be a great session for tech shares such as Altium Limited (ASX: ALU) and Xero Limited (ASX: XRO) on Monday after their US peers stormed higher on the Nasdaq Friday. Jeff Kilburg, the founder and CEO of KKM Financial, told CNBC: “You’re seeing more weight go into some of the beat-up technology and because people are becoming a little bit more thoughtful of opportunity in the absolute tech wreck we saw in 2022.”

South32 quarterly

The South32 Ltd (ASX: S32) share price will be on watch today when the mining giant releases its quarterly update. According to a note out of Goldman Sachs, its analysts expects South32 to report copper production of 17kt, met coal production of 1,450kt, alumina production of 1,402kt, and nickel production of 11kt.

Gold price edges lower

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price edged lower on Friday. According to CNBC, the spot gold price fell 0.15% to $1,925.33 per ounce after the US dollar firmed. However, this couldn’t stop the precious metal from recording its fifth successive weekly gain.

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

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More reading

• Top brokers name 3 ASX shares to buy next week
• My top predictions for ASX All Ords shares in 2023
• How to find undervalued ASX shares to buy now and hold in 2023
• Guess which ASX energy share has exploded 110% in 2 days?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Altium and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium and Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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