Day: 22 March 2023

ASX big four banks finished the day in the green, although there appeared to be an afternoon sell-off.

At the close of trade, Commonwealth Bank of Australia (ASX: CBA) shares were up 0.64% today, and National Australia Bank Ltd (ASX: NAB) shares closed 0.14% ahead. Westpac Banking Corp (ASX: WBC) shares were up just 0.04% at the close, while ANZ Group Holdings Ltd (ASX: ANZ) shares were 0.44% higher.

However, earlier in the day, CBA shares leapt 1.75%, NAB shares rose 1.42%, Westpac shares jumped 1.42%, and ANZ shares elevated 1.54%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) climbed 0.87% today.

Let’s take a look at what may have impacted ASX big four bank shares today.

What’s happened?

ASX bank shares appeared to rise this morning following financial fears in global markets easing overnight.

Bank of America Corp (NYSE: BAC) shares rose 3% on the New York Stock Exchange (NYSE: BAC) lifted 3.03% on Tuesday in the USA, while Wells Fargo & Co (NYSE: WFC) shares lifted 2.67%.

The shares of First Republic Bank (NYSE: FRC) shares soared 29%, rebounding from major losses in the last couple of weeks.

However, some of these shares fell in after-hours trade in the United States. For example, First Republic Bank shares slid 9% in after-hours trade, while Bank of America shares fell 0.07% into the red.

This may have weighed on ASX banking shares in afternoon trade today.

Just ahead …

All eyes are on the US Fed Reserve ahead of a rates decision, due on Wednesday US-time.

Commenting on the upcoming decision, Standard Chartered head of G10 FX research Steve Englander told Reuters:

The banking sector’s near-death experience over the last two weeks is likely to make Fed officials more measured in their stance on the pace of hikes.

Meanwhile, Goldman Sachs analysts remained “confident” on the health of the ASX 200 bank shares, as my Foolish colleague James reported this morning.

Commenting on the big four, the broker said:

We remain confident in the health of the banking sector in Australia given:

i) a single, national regulator, with most of the Australian listed banks subject to the Liquidity Coverage Ratio (LCR); ii) balance sheet mix, which sees only a relatively small part of their balance sheets in a marked-to-market environment; iii) Australian bank regulatory capital positions are MTM for the impact of rate rises, and iv) strong capital positions, with fully-loaded CET1 ratios at close to 18%.

ASX 200 banking shares have been attracting a rise in investor interest recently following the banking turmoil and Europe and the United States.

As my Foolish colleague Bernd reported today, online trading of Westpac shares has lifted 350% week on week, while CBA share trading has risen 114%.

The post ASX big four bank shares close the day ahead as financial fears linger appeared first on The Motley Fool Australia.

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More reading

• Could owning NAB shares soon include a slice of Credit Suisse?
• Why New Hope, Pilbara Minerals, Westpac, and Zip shares are pushing higher
• Goldman ‘remains confident in the health’ of ASX 200 bank shares and names it top pick
• Online trading in these ASX 200 bank stocks is surging. Here’s why
• ANZ shares could offer a dividend yield of 10% in FY23, is it a buy?

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 recommended Westpac Banking. 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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Lithium shares on the ASX were a mixed bag today, with several finishing the day in the green.

However, it wasn’t all rosy for lithium, with several lithium explorers sliding into the red.

Overall, Australian shares were moving in a positive direction today, with the S&P/ASX 200 Index (ASX: XJO) lifting 0.87%.

Let’s take a look at what weighed on ASX lithium shares today.

What happened to ASX lithium shares?

Lithium shares that finished in the green today included:

• Pilbara Minerals Ltd (ASX: PLS), leapt 2.27%
• Allkem Ltd (ASX: AKE), rose 1.56%
• Mineral Resources Ltd (ASX: MIN), jumped 1.99%
• Piedmont Lithium Inc (ASX: PLL), lifted 5.77%.

Lithium shares that fell included:

• Core Lithium Ltd (ASX: CXO) fell 3.66%
• Sayona Mining Ltd (ASX: SYA) slid 2.44%
• Lake Resources N.L. (ASX: LKE) fell 2.94%

Multiple ASX lithium shares appeared to follow the pattern of USA shares overnight. For example, Albemarle Corporation (NYSE: ALB) shares lifted 4.5%, while Livent Corp (NYSE: LTHM) rose 2.25% and Sociedad Quimica y Minera de Chile (NYSE: SQM) soared 5.7%.

Piedmont Lithium was a top performer among ASX shares today, and it also happens to have a NASDAQ listing.

Momentum in the USA may have been driven by an upbeat outlook from high-profile California governor Gavin Newsom. Speaking during a visit to the Lithium Valley, he said:

California is poised to become the world’s largest source of batteries, and it couldn’t come at a more crucial moment in our efforts to move away from fossil fuels. The future happens here first – and Lithium Valley is fast-tracking the world’s clean energy future.

However, not all news on the lithium sector was bright overnight. According to Asian Metal Inc data reported on Bloomberg overnight, lithium prices in China have halved in four months. This could be due to more global supply and China’s EV sector moderating, the publication noted.

That said, China’s lithium prices have still exploded more than 1,300% in the last two years, before retreating.

Meanwhile, Pilbara Minerals also benefited from a positive broker update from Macquarie this morning. Macquarie has maintained an outperform rating on Pilbara shares with a $7.50 price target. As my Foolish colleague James noted, Macquarie remains positive on the lithium industry.

Further, Goldman Sachs is also optimistic about Allkem shares. In a note to investors on Monday, Goldman kept a buy rating on Allkem shares with a $15.40 price target.

Commenting on Allkem, Goldman said:

Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis.

The post What was with ASX lithium shares today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Top brokers name 3 ASX shares to buy today
• Why New Hope, Pilbara Minerals, Westpac, and Zip shares are pushing higher
• Why is the Pilbara Minerals share price having such a top run today?
• Is the Core Lithium share price a buy at 84 cents?

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 Macquarie Group. 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 green on Wednesday, lifting 0.87% to close at 7,015.6 points.

It came as the market prepared to learn of the United States Federal Reserve’s next interest rate move. Meanwhile, investors around the globe appear to have regained some confidence following recent banking chaos, which continued this week with UBS’s planned acquisition of Credit Suisse.

Back home, the S&P/ASX 200 Energy Index (ASX: XEJ) outperformed today, gaining 4.2% amid rising oil prices. The price of the black liquid improved around 2% overnight.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) also performed well, lifting 1.3% today.

But not all sectors were winners. The S&P/ASX 200 Real Estate Index (ASX: XRE) posted a 0.4% tumble and gold shares slumped alongside the yellow metal’s value amid improved confidence in the banking sector.

So, with all that covered, let’s take a look at which ASX 200 shares posted the biggest gain on Wednesday.

Top 10 ASX 200 shares countdown

For the second consecutive day, New Hope Corporation Limited (ASX: NHC) took out the index’s top spot. Its share price gained 5.3% today to close at $5.60.

The coal producer posted its first-half earnings yesterday, revealing its profits doubled over the period.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
New Hope Corporation Limited (ASX: NHC)	$5.60	5.26%
Woodside Energy Group Ltd (ASX: WDS)	$32.80	5.2%
Beach Energy Ltd (ASX: BPT)	$1.35	4.65%
Domain Holdings Australia Ltd (ASX: DHG)	$3.40	4.29%
Magellan Financial Group Ltd (ASX: MFG)	$8.32	3.87%
AUB Group Ltd (ASX: AUB)	$25.75	3.58%
Webjet Limited (ASX: WEB)	$6.94	3.58%
Karoon Energy Ltd (ASX: KAR)	$2.04	3.55%
Costa Group Holdings Ltd (ASX: CGC)	$2.36	3.51%
Block Inc (ASX: SQ2)	$115.15	3.5%

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

• Rising Flight Centre share price delivers 25% gains to SPP investors in a week
• Invested $1,000 in this ASX 200 share two years ago? Here’s how much passive income you’ve earned
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why is the Zip share price soaring 7% today?
• Why is the New Hope share price up 5% and leading the ASX 200 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 positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Aub Group and Costa Group. 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 Sandfire Resources Ltd (ASX: SFR) share price was a positive performer on Wednesday.

The copper miner’s shares ended the day almost 3% higher at $5.77.

This compares favourably to the ASX 200 index, which closed the day almost 0.9% higher at 7,015.6 points.

Can the Sandfire share price keep rising?

One leading broker that believes this copper miner’s shares have plenty left in the tank is Morgans.

According to a note from the start of this month, the broker has put an add rating and $6.50 price target on its shares.

Based on the current Sandfire share price, this implies potential upside of almost 13% over the next 12 months.

Past the point of peak investor concern

While Morgans acknowledges that things have been tricky for Sandfire over the last 12 months, it believes the worst is now behind it. The broker commented:

SFR has been a complex proposition as it navigates major change to its production base/geographic exposure, balance sheet and share register. The halving in European power prices (from peak), strong execution at Motheo (mitigating ‘Africa risk’) and the shoring up of the balance sheet suggests SFR is well past the point of peak investor concern, reflected in recent strength.

Another positive, according to Morgans, is that the ASX 200 index will soon lose a fellow copper miner, OZ Minerals Limited (ASX: OZL). It is in the process of being acquired by BHP Group Ltd (ASX: BHP).

If this deal completes, it will leave Sandfire as the only major copper producer on the ASX 200 index. It suspects that this could lead to “the likely re-cycling of copper hungry funds out of OZL by mid-year – support ongoing interest/ price performance in SFR.”

A final positive is that with the broker forecasting an improvement in margins in the near future, it believes that dividends could be back on the menu soon. It adds:

We forecast growth in MATSA’s margins into FY24 and in group EBITDA through to FY25, supporting incremental de-gearing and the ability to re-consider dividends from FY24.

All in all, the broker appears to believe this makes the Sandfire share price good value at current levels.

The post Here’s what Morgans is saying about the Sandfire share price appeared first on The Motley Fool Australia.

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More reading

• 3 top ASX mining shares I’d buy right now
• Here are the top 10 ASX 200 shares today
• 3 ‘quality’ ASX shares to buy now before they rocket: experts
• Sandfire share price slides as profits turn to losses

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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The Xero Limited (ASX: XRO) share price has seen plenty of pain since inflation and interest rates went crazy. It’s still down more than 40% compared to its November 2021 price.

However, in the last 12 months, Xero shares are only down by 9%. The company’s share price has been rising in recent weeks as the business revealed its plans to become more profitable. That’s one of the main reasons why I think Xero shares can do better than the market this year, next year, and beyond.

Rising profit margins

One of the big things that many investors are typically hoping for is profit growth from their investments.

Xero has made very little profit since it listed on the ASX. For a long time, the ASX tech share hasn’t been bothered about trying to make a profit. It has focused on long-term growth and global expansion. And that has been a worthwhile activity.

But, while Xero has been achieving a strong gross profit margin for some time, it also wants to improve its operating profit margins as well.

Earlier in March, the company announced a plan to reduce costs and drive “disciplined growth”. This will involve reducing its job count by between 700 to 800 roles.

In FY23, it’s expecting its operating expenses as a percentage of operating revenue to be “towards the lower end of a range” between 80% to 85%. That excludes restructuring charges associated with the program of between $25 million to $35 million.

Management is targeting an operating expense-to-revenue ratio in FY24 of around 75%. With that in mind, FY24 could show a big improvement in profit.

I think that a demonstration of improving profitability will encourage investors and send the Xero share price even higher.

Strong revenue growth

I also think one of the biggest drivers of the Xero share price will be its ability to keep growing revenue.

Increasing scale can have such a positive effect on a business with a gross profit margin of around 87%.

In the FY23 first half, it saw operating revenue increase by 30% to $658.5 million. This was partly driven by a 16% increase in total subscribers to 3.5 million, while average revenue per user (ARPU) grew by 13% to $35.30.

It helps that the business has been able to increase subscription prices. In November 2022, it reported that its annualised monthly recurring revenue (AMRR) had grown 31% year over year to $1.48 billion. This suggests that some revenue growth is already locked in for the next result.

The global economy is a big place for the ASX tech share to expand into. Indeed, there are still many more businesses in Australia, the UK, South Africa, and so on that could go digital.

High levels of customer loyalty

However, I don’t think there’s much point in winning lots of subscribers if the business loses them quickly afterwards — that’s essentially a waste of marketing resources.

But, if a business has a high retention rate, then that bodes well. If a company had a retention rate of 80%, meaning it loses 20% of its customers in a year, it would need to replace the equivalent of its whole customer base after five years. A retention rate of 90% would mean losing 10% of its customer base, so it’d have to replace its customer base every 10 years.

In the FY23 half-year result, Xero said its retention rate was over 99%.

This high level of customer loyalty means Xero’s customers seem to love its software, and that Xero can implement profit-boosting price increases with little negative effect.

Xero share price snapshot

Since the start of the year, the Xero share price has risen by 28% and I think it can comfortably beat the market from here to the end of 2024 because of all the factors above.

The post 3 reasons why I think the Xero share price is a top buy today appeared first on The Motley Fool Australia.

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More reading

• Goldman Sachs names 5 of the best ASX tech shares to buy now
• Brokers name 3 ASX shares to buy now
• 3 ASX All Ords tech shares rebounding strongly from the SVB fallout (and 2 still tumbling)
• If I’d invested $5,000 in Xero shares a week ago, here’s how much I’d have now!
• Top ASX 200 tech shares to buy right now: Morgans

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 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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There are plenty of ASX dividend shares to choose from on the Australian share market.

Two that have been given the approval from brokers are listed below. Here’s what you need to know:

Centuria Industrial Reit (ASX: CIP)

The first ASX dividend share to consider is Centuria Industrial.

It is an industrial-focused property company that owns a portfolio of high quality industrial assets. This comprises 88 high-quality, fit-for-purpose industrial assets worth a total of $3.9 billion. These assets are situated in key in-fill locations and close to key infrastructure.

One top broker that is a fan of Centuria Industrial is UBS. It likes the company due to its exposure to the logistics sub-sector and suspects it could help it outperform guidance in FY 2023.

As for dividends, the broker is forecasting dividends per share of 16 cents in FY 2023 and FY 2024. Based on the current Centuria Industrial share price of $3.03, this represents yields of 5.3% in both financial years.

UBS also sees plenty of upside for its shares with its buy rating and $3.68 price target.

HomeCo Daily Needs REIT (ASX: HDN)

Another ASX dividend share to look at is property company HomeCo Daily Needs. It is focused on convenience-based assets across the target sub-sectors of Neighbourhood Retail, Large Format Retail and Health & Services.

The team at Morgans is positive on the company. It highlights that HomeCo Daily Needs has a significant development pipeline valued at over $500 million and expects this to be supportive of solid growth in the future.

In respect to dividends, Morgans is forecasting dividends per share of 8.3 cents in FY 2023 and 8.4 cents in FY 2024. Based on the current HomeCo Daily Needs share price of $1.20, this will mean dividend yields of 6.9% and 7%, respectively.

Morgans has an add rating and $1.50 price target on its shares.

The post Get a passive income boost with these ASX dividend shares: experts appeared first on The Motley Fool Australia.

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More reading

• Buy NAB and this ASX passive income share: analysts
• ASX investors: How to earn $533 each month in passive income
• My 3 best forms of passive income for 2023
• Experts name 2 ASX All Ords shares to buy after their excellent results
• These excellent ASX dividend shares are buys: Morgans

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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The Zip Co Ltd (ASX: ZIP) share price is storming ahead on the market today.

Zip shares are currently up 7.29%, trading at 51.5 cents a share. For perspective, the S&P/ASX 200 (ASX: XJO) is 0.92% in the green today.

Let’s take a look at what could be lifting the Zip share price.

What’s going on?

Zip is not the only ASX buy now, pay later (BNPL) charging higher today. The Block Inc (ASX: SQ2) share price is 4.11% higher, while Sezzle Inc (ASX: SZL) shares are gaining 4.72%.

ASX BNPL shares appear to be following in the footsteps of their United States counterparts. Overnight, Affirm Holdings Inc (NASDAQ: AFRM) shares surged 13.02% on the NASDAQ, while Block’s New York Stock Exchange listing Block Inc (NYSE: SQ) jumped 3.97%. Paypal Holdings Inc (NASDAQ: PYPL) shares also rose 4.79%.

ASX financial shares are having a good day on Wednesday, with the S&P/ASX 200 Financials Index (ASX: XFJ) up 1.15%.

This follows a surge in bank stocks overnight ahead of the US Federal Reserve’s decision on interest rates, due on Wednesday US time (early Thursday morning Australian time). The US S&P 500 Index lifted 1.3%.

Standard Chartered head of G10 FX research Steve Englander, cited by Reuters, said:

The banking sector’s near-death experience over the last two weeks is likely to make Fed officials more measured in their stance on the pace of hikes.

Meanwhile, Zip co-founder Peter Gray recently revealed the company has a “very strong platform” to accelerate, during an interview with my Foolish colleague James. He said, “We remain confident that we have sufficient liquidity and funding to see us through to group positive cash EBTDA during H1 FY24.”

Broker Shaw and Partners has recently reiterated a buy rating on Zip shares with a $2.02 price target.

Zip share price snapshot

The Zip share price has fallen 66.3% in the last year. However, it has lifted 7.29% in the last week.

Zip has a market capitalisation of about $394 million based on the current share price.

The post Why is the Zip share price soaring 7% today? appeared first on The Motley Fool Australia.

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More reading

• Why New Hope, Pilbara Minerals, Westpac, and Zip shares are pushing higher
• Here are the 10 most shorted ASX shares this week
• ‘Very strong platform to accelerate’: Has the Zip share price been oversold?
• 3 ASX All Ords tech shares rebounding strongly from the SVB fallout (and 2 still tumbling)
• Zip ‘is resilient and stands up well’

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 positions in and has recommended Affirm, Block, PayPal, and Zip Co. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended PayPal. 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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Shares in National Australia Bank Ltd (ASX: NAB) are shimmering a pleasant shade of green on Wednesday.

Their positive move mirrors the reception US bank stocks received during trade on Wall Street overnight, as fears of more bank runs temper. Deposit outflows from regional banks are believed to be ‘stabilising’, thanks to the US Federal Reserve’s freshly instituted lending facilities.

However, the fate of Credit Suisse — formerly Switzerland’s second-largest bank — has already been sealed. After succumbing to a liquidity crunch, Credit Suisse is now being engulfed by the larger Swiss investment bank, UBS, for 3 billion Swiss Francs (A$4.8 billion).

Now, a handful of people are ruminating on the future of Credit Suisse’s private banking arm in Australia.

Could NAB take a bite of the fallen giant?

The dust has hardly settled on UBS’s takeover of Credit Suisse and already there are more questions than answers. One of which is: what will happen to the bank’s operations in Australia?

It is uncertain whether UBS will retain all of the baggage that comes along with the deal. Some are speculating that sales could be made to fortify the merged business. Especially in Australia due to UBS already holding a prominent position in the market.

In an interview with The Australian, NAB private wealth executive Michael Saadie suggested that a deal for the local private bank arm of Credit Suisse isn’t out of the question. In fact, Saadie implied it would be ignorant to not consider it, stating:

If they were put on the market, it would be remiss of me and the leadership team not to be lifting the bonnet on it. I can’t really comment but they’re [Credit Suisse’s Australian private bank] the sorts of opportunities that I think all players would have to have a look at.

Credit Suisse wouldn’t be the first acquisition of a foreign bank’s Australian operations if it were to eventuate. In June 2022, the Aussie banking major added Citigroup’s consumer business for $1.2 billion, sending NAB shares higher on the day.

It is believed the Swiss bank held an estimated $28 billion of assets under advice in Australia. However, that figure may have altered as some clients look to take their money elsewhere amid the turbulence.

How are NAB shares travelling so far this year?

The big four bank constituent is down 3.7% since the start of 2023, making it the second worst-performing member of the bunch. The only major with a more disappointing return so far is Westpac Banking Corp (ASX: WBC), which is down 4.8%.

However, NAB’s first-quarter update in February was rather positive. The release showed cash earnings had grown 18.7% and the bank’s net interest margin inched another 12 basis points higher to 1.79%.

The post Could owning NAB shares soon include a slice of Credit Suisse? appeared first on The Motley Fool Australia.

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More reading

• Online trading in these ASX 200 bank stocks is surging. Here’s why
• Which ASX 200 big four bank share could be the safest to hold?
• ASX 200 bank shares shrug off global banking turmoil to leap higher
• Why I’d be happy to invest in these ASX 200 bank shares today
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Motley Fool contributor Mitchell Lawler 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 Westpac Banking. 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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Next week, the latest Fortescue Metals Group Ltd (ASX: FMG) dividend will be paid to eligible shareholders.

When the mining giant released its half-year results last month, it reported a 4.7% decline in net profit after tax to US$2.37 billion. This was driven by weaker iron ore prices, which offset record half-year iron ore shipments.

In light of its softer profits, the Fortescue board elected to cut its interim dividend by 12.8% to 75 Australian cents per share. It is this dividend that will be hitting shareholder bank accounts next Wednesday.

What’s next for the Fortescue dividend?

According to a note out of Goldman Sachs, it expects strengthening iron ore prices to be supportive of a bigger final dividend.

The broker expects a full-year fully franked dividend of US$1.18 (A$1.76) per share in FY 2023. This implies a final dividend of A$1.01 per share.

And based on the current Fortescue share price of $20.93, this equates a generous 8.4% dividend yield for investors.

What about FY 2024?

Unfortunately, it appears that the good times could soon be coming to an end for the Fortescue dividend due to its decarbonisation plans.

With Fortescue planning to spend billions on its Fortescue Future Industries business, this is expected to eat into its free cash flow and put pressure on its dividend payments.

For example, Goldman Sachs expects the Fortescue dividend to more than halve in FY 2024 to 62 US cents (93 Australian cents) per share. This will mean a more modest fully franked yield of 4.4% for investors if Goldman’s forecast proves accurate.

It is partly because of this that Goldman Sachs currently has a sell rating and $15.50 price target on its shares. This suggests potential downside of 26% over the next 12 months.

The post How big will the Fortescue dividend be in 2024? appeared first on The Motley Fool Australia.

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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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The Qantas Airways Limited (ASX: QAN) share price is in the air on Wednesday amid the company’s latest update – and, boy, is it a milestone one.

After returning to profit last half, the national carrier is setting its sights on a COVID recovery in the April quarter. That’s when its Australian capacity is expected to finally surpass 2019 levels. And that’s just the start.

The Qantas share price is up 1.03% right now, trading at $6.395. That’s more than 170% higher than it was when it found itself in the pits of pandemic despair almost three years ago to the day.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.96% at the time of writing.

Let’s take a look at the steps the now-profitably airline is taking to grow.

All aboard! Qantas eyes major capacity growth

Owners of Qantas shares, rejoice! The airline is on an upwards trajectory and flying on schedule.

Its latest industry update comes just weeks after the flying kangaroo posted a $1 billion profit for the six months ended December. It also reduced its debt levels by $1.5 billion over the half, ending the period at $2.4 billion.

Turning to 2023, Qantas said it recorded the most on-time arrivals of any Australian airline in February.

That’s after the airline saw just 18.3% of flights arriving late in January, according to Australian Competition & Consumer Commission (ACCC) data, compared to peers Virgin Australia – 26.2% of flights arrived late – and Regional Express Holdings Ltd (ASX: REX) – 18.9% of flights ran late. Though, Qantas’ budget leg Jetstar saw 34.6% of its January flights arriving later than scheduled.

Such recent “strong operational performance” means Qantas is confident to launch more planes, according to today’s release.

The group expects its domestic capacity to reach 102% in the April quarter. That’s up from 98% in the current quarter. Meanwhile, it will expand many of its international services next week.

Looking further ahead, it plans to grow its domestic and international flying capacity by around 15% over the next six months.

Not to mention, Qantas and Jetstar are expecting to fly “several million” travellers in the Easter school holiday period, with more than 700,000 flying over the long weekend.  

Australian flight prices ease from record highs

All that comes as ACCC data finds the cost of flying has eased from record highs posted in December amid lower jet fuel prices.

Australian discount fares fell 34% in January, but average revenue per passenger remained 13% higher than pre-pandemic levels.

Qantas share price outperforms ASX 200

The Qantas share price has outperformed in recent months, gaining 7.4% year to date. It’s also 27.1% higher than it was this time last year.

Comparatively, the ASX 200 has gained 1% since its first close of 2023 and has fallen 4.4% over the last 12 months.

The post Refuelled with profits, how ASX 200 favourite Qantas plans to stick the landing on growth appeared first on The Motley Fool Australia.

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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 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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