Day: 22 March 2023

The Pilbara Minerals Ltd (ASX: PLS) share price is storming ahead today.

Pilbara shares are rising nearly 3.27% to $3.635. However, in earlier trade, Pilbara shares were up 5%. For perspective, the S&P/ASX 200 Index (ASX: XJO) is lifting 0.92% today.

Let’s take a look at why Pilbara Minerals shares are on the rise today.

What’s going on?

Pilbara is not the only ASX lithium share in the green today. Mineral Resources Ltd (ASX: MIN) shares are up 3.27%, while Allkem Ltd (ASX: AKE) shares are rising 2.82%.

ASX lithium shares including Pilbara appear to be following in the footsteps of multiple US lithium shares overnight.

Lithium giant Sociedad Quimica y Minera de Chile (NYSE: SQM) rose 5.7% on the New York Stock Exchange overnight, Albemarle Corporation (NYSE: ALB) shares jumped 4.5% and Livent Corp (NYSE: LTHM) lifted 2.25%.

This followed a visit from high-profile California Governor Gavin Newsom touting lithium as “white gold”. He said in quotes cited by CNBC:

The entire industry has moved in this space. We want to dominate. We see this as the greatest economic opportunity, and we want to dominate in this space, and we’re doing that

Meanwhile, data from Asian Metal, cited by Bloomberg overnight, shows the lithium price surged by more than 1,300% in two years.

On the flip side, the data also showed the lithium price in China has halved in four months.

Higher global supply of lithium and China’s EV sector moderating could be reasons for this fall, the publication noted.

Morgans has recently recommended investors buy the Pilbara Minerals share price and placed a $4.70 price target on its shares. As my Foolish colleague James reported, Morgans believes demand from China could lift from March.

However, as my Foolish colleague Sebastian reported yesterday, UBS has recently placed a neutral rating on Pilbara Minerals shares. UBS believes new lithium supply could double between 2022 and 2025, potentially weighing on the lithium price.

Pilbara Minerals share price snapshot

The Pilbara Minerals share price has risen 21% in the last year.

Pilbara has a market capitalisation of about $10.9 billion based on the current share price

The post Why is the Pilbara Minerals share price having such a top run 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 Tuesday
• These ASX lithium shares are a buy despite explosive supply forecast: UBS
• Buy Pilbara Minerals and this high yield ASX dividend share: analysts
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Buy these ASX growth shares this week: experts

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 top end of town might not be where most market watchers turn to hunt down whopping returns, but some brokers appears hopeful the share price of $139 billion giant CSL Limited (ASX: CSL) could break the mould.

Indeed, they’ve tipped the S&P/ASX 200 Index (ASX: XJO) healthcare icon to soar as much as 22% from its current levels. That’s on top of the 8.5% gain it’s posted over the last 12 months.

Right now, the CSL share price is trading at $286.40. That’s 0.49% higher than its previous close.

For comparison, the ASX 200 has lifted 0.88% today and dropped 4% since this time last year.

So, what might the future hold for the CSL share price? Let’s take a look at what these bullish brokers are forecasting.

Is the CSL share price a buy right now?

There’s a lot to like about CSL shares, according to these experts.

The biotech icon impressed with the release of its first-half earnings last month. It posted a 19% jump in revenue, a 10% improvement in post-tax profit prior to amortisation on a constant currency basis, and lifted its dividend to US$1.07 per share.

It also revealed record plasma collections – a factor that could boost its revenue further in the future, Citi noted.

The broker retained its buy rating and forecast the stock to gain a notable 22% to $350 on the back of its results, my Fool colleague James reported.

Meanwhile, Morgans tips the company’s earnings to continue growing in the coming years as its interest expenses fall and sales at its Behring and Vifor businesses rise.

The broker has a $337.92 price target – a potential 18% gain – and an add rating on CSL shares.

Though, not all are convinced the ASX 200 healthcare monolith represents a good buy right now.

Goldman Sachs has a neutral rating and a $314 price target on the share. Though, that still represents a 9% upside.

The post Does the CSL share price really offer 22% upside right now? appeared first on The Motley Fool Australia.

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More reading

• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• Analysts say these ultra high quality blue chip ASX 200 shares are buys
• Why is the CSL share price smashing the ASX 200 on Thursday?
• Here’s how much I’d need to invest in CSL shares to generate a $300 monthly income
• 5 ASX 200 shares that inflation can’t touch: expert

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 CSL and Goldman Sachs Group. 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 Endeavour Group Ltd (ASX: EDV) share price is rising with the market on Wednesday.

In morning trade, the drinks company’s shares are up over 1% to $6.67.

Where next for the Endeavour share price?

It could be onwards and upwards from here according to a couple of leading brokers.

Goldman Sachs, for example, is bullish on the company and has recently put a buy rating and $7.80 price target on its shares.

Based on the current Endeavour share price, this implies potential upside of 17% for investors from current levels. In addition, Goldman expects dividend yields of approximately 3.3% in FY 2023 and 3.6% in FY 2024.

The broker is positive largely due to Endeavour’s leadership position in a defensive category. It commented:

We remain positive on EDV given its clear leadership in a resilient category with proven strong sales execution and high consumer loyalty. We believe that the company’s investments in digitalization enabling targeted pricing and promotions as well as increasing automation of cost items will provide the operational agility required in a fast changing consumer environment. Additionally, our sensitivity analysis suggests that the risk of NSW gaming regulatory risk is largely factored in and hence more clarity around execution could provide upside catalysts.

Who else is bullish?

Another broker that is bullish is Morgans. In fact, its analysts named the company on the broker’s best ideas list again this month with an add rating and $7.80 price target.

Morgans believes recent weakness in the Endeavour share price has created a buying opportunity for investors. It commented:

We believe the share price weakness over the past six months on the back of an uncertain regulatory environment (eg, potential introduction of cashless gaming cards in NSW) has shifted the balance of risks to the upside with EDV’s underlying business remaining strong. The company possesses a broad network of retail liquor stores/hotel venues, well-known brands (eg, Dan Murphy’s and BWS) and dominant market positions.

The post Why brokers tip double-digit gains from the Endeavour share price appeared first on The Motley Fool Australia.

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More reading

• 2 of the best defensive and safe ASX 200 shares to buy now: broker
• Morgans names 3 of the best ASX shares to buy in March

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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If you’re looking to cash in on the New Hope Corporation Limited (ASX: NHC) dividend, read on.

The S&P/ASX 200 Index (ASX: XJO) coal stock reported its half-year results yesterday.

And the board declared both a fully franked ordinary interim dividend as well as a special cash dividend, also fully franked at 30%.

Here’s the skinny.

What’s happening with the New Hope dividend?

On the back of surging coal prices, the miner reported some eye-popping results for the six months ending 31 January, enabling a generous dividend payout.

Highlights of those results included net profit after tax (NPAT) of $669 million. That was up a stellar 103% from the prior corresponding half-year period.

Net cash from operating activities surged even more, up 117% year on year to $984 million.

The very strong half-year enabled the New Hope board to declare a 30 cents per share ordinary dividend and a 10 cents per share special dividend.

At the current New Hope share price of $5.40, that works out to a forward yield (as this has yet to be paid) of 7.4%.

The coal miner also paid a final, fully franked dividend of 56 cents per share on 20 December.

Taken together with the 40 cents per share total interim dividend and that works out to 96 cents per share. Meaning New Hope shares offer a fully franked yield (partly trailing, partly forward) of 17.8%.

If you’d like to receive the 40 cents per share interim payout, be aware that New Hope trades ex-dividend on 17 April.

Eligible investors should receive that payout on 3 May.

New Hope share price snapshot

As you can see in the chart below, the New Hope share price, up 2% in morning trade today, has gained 71% over the past 12 months.

And remember, that’s just the share value appreciation. It doesn’t include the 96 cents of New Hope dividend payouts. Add that in (even without the franking tax benefits) and the ASX 200 coal miner’s full-year shareholder returns top 100%.

The post Want to land the outsized New Hope dividend? Here’s what you need to know appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Why Domino’s, Incitec Pivot, Mincor, and New Hope shares are racing higher
• New Hope share price rockets 6% as half-year profits double
• Guess which ASX 200 coal share just posted a 100% profit jump

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 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 Allkem Ltd (ASX: AKE) share price is having a strong session.

In morning trade, the lithium miner’s shares are up over 3% to $10.62.

However, despite this, the Allkem share price remains down materially from its record high of $16.75.

Can the Allkem share price keep rising?

The good news is that despite being bearish on lithium prices and forecasting them to pullback significantly next year, Goldman Sachs is very bullish on Allkem’s shares.

This is due to its belief that the company’s production growth and downstream optionality will keep its earnings strong and offset the pressure caused by lower lithium prices.

According to a note from Monday, its analysts have retained their buy rating and $15.40 price target on its shares. This implies potential upside of 45% for investors from current levels over the next 12 months.

Commenting on its production growth, the broker 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. This drives our forecast for the company’s equity LCE production growth of >4x by FY27E, supporting earnings rebounding to near current record levels despite the declining lithium price environment.

In addition, the broker highlights that the market is undervaluing its assets. This is despite its competitive brine cost curve position. It adds:

Allkem has the largest lithium metal contained resource base amongst our coverage when factoring in South American brine assets and second largest reserve (excluding Olaroz due to ongoing reserve re-modelling). However, AKE’s aggregate resource is trading at a significant discount to peers, despite a competitive brine cost curve position.

All in all, Goldman appears to see recent weakness in the Allkem share price as a great buying opportunity for investors.

The post Allkem share price can jump 45% even if lithium prices fall: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• These ASX lithium shares are a buy despite explosive supply forecast: UBS
• Leading brokers name 3 ASX shares to buy today
• Why are ASX 200 lithium shares falling so hard today?
• Top brokers name 3 ASX shares to buy next week
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Allkem. 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 current ANZ Group Holdings Ltd (ASX: ANZ) share price is low enough that it could offer an exceptionally high dividend yield.

The ASX dividend share has seen a 12% fall since 9 February 2023.

When a share price falls 10%, it boosts the dividend yield by 10%. For example, if the dividend yield used to be 9%, and the share price falls 10%, then the dividend yield becomes 9.9%.

First, let’s look at how much passive income ANZ shares are expected to pay out in FY23.

Dividend projection

The dividend forecast on Commsec suggests that ANZ shares could pay an annual dividend per share of $1.60 in the 2023 financial year.

At the current ANZ share price, this projected dividend could equate to a grossed-up dividend yield of 10% in FY23.

In fact, Commsec numbers are suggesting that the dividend could increase further in FY24 to $1.64 per share and rise again in FY25 to $1.65 per share.

Those predictions mean that the ANZ grossed-up dividend yield could be 10.3% in FY24 and 10.4% in FY25.

So, a double-digit yield is projected for this financial year and the following two financial years.

Is this a good time to buy ANZ shares?

For investors that want to buy ANZ shares, then this is one of the better times of the last 52 weeks to consider buying shares. It has been a lot higher than today over the last year.

There is a lot of volatility going on in the global share market, particularly with banks.

I’m not an expert on the banking problems in the northern hemisphere, but I think the recent examples of Silicon Valley Bank and Credit Suisse have shown how quickly things can go wrong.

I don’t believe ANZ, or any of the S&P/ASX 200 Index (ASX: XJO) bank shares, are as vulnerable because Australian banks are well-capitalised. They were strong during the COVID-19 period and that seems to be continuing.

The ASX bank share revealed that at 31 December 2022, its common equity tier 1 (CET1) ratio was 12.2%.

It also revealed that its credit quality was good. Looking at the loans that were at least 90 days past due, as a percentage of the overall portfolio, it “continued to reduce” – there was a drop in arrears of the Australian housing portfolio, down 3 basis points to 55 basis points in the first quarter of FY23.

ANZ also reported a $7 billion increase in Australian net loans and advances over the three months to 31 December 2022. It also saw that all divisions experienced an increase in customer deposits, including increased flows into term deposits.

The ASX bank share is also benefiting from higher interest rates because its boosting ANZ’s lending margins.

However, this may be the best it gets in terms of operating conditions. I think arrears are going to increase as a result of the much higher interest rates. There may also be the potential for lending competition to lower the sector’s lending margins again.

My conclusion on the ANZ share price

I don’t think it’s going to get much better for ANZ’s earnings from here. I’m not sure there’s going to be much benefit from the Suncorp Group Ltd (ASX: SUN) banking acquisition in per-share terms. I think it could be a distraction for management.

ANZ shares could offer very large dividend income because it’s only valued at 9 times FY23’s estimated earnings, according to Commsecs. But, I wouldn’t expect much profit growth in FY24 or FY25 compared to FY23. It looks cheap, and it may benefit from a valuation boost from this low level. But I think there are other ASX dividend shares that could achieve stronger long-term growth.

The post ANZ shares could offer a dividend yield of 10% in FY23, is it a buy? appeared first on The Motley Fool Australia.

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More reading

• 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
• Forget term deposits and buy these ASX 200 dividend shares: analysts
• Where I would go hunting for defensive ASX 200 shares with upside
• 2 ASX 200 bank shares to buy after the selloff: experts

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 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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Domino’s Pizza Enterprises Ltd (ASX: DMP) shares have dived in the last month, but is now the time to buy?

The Domino’s share price has fallen 31% in a month and is now fetching $48.71. However, in Tuesday’s trade, the company’s share price lifted 5.57%. For perspective, the S&P/ASX 200 Index (ASX: XJO) lifted 0.83% yesterday.

Let’s take a look at the outlook for Domino’s in the next 12 months.

Can Domino’s shares go higher?

Analysts at Barrenjoey have upgraded Domino’s to an overweight rating from neutral.

Domino’s shares appeared to rebound yesterday on the back of this news, as my Foolish colleague James noted.

The pizza chain operator’s shares have fallen to an attractive level, Barrenjoey believes.

Barrenjoey has placed a $59 price target on Domino’s shares over 12 months. This implies an upside of 21% based on Tuesday’s closing price.

Analysts believe Domino’s margins will recover as inflation pressures ease, the Financial Review reported.

The Domino’s share price hit an all-time high of $161.98 in September 2021. Barrenjoey founding principal Tom Kierath believes it may not reach this level again before 2030. He said:

While it may not see those levels this decade, at $45 we think the market is currently pricing significantly lower growth.

The team at Morgans has also recently placed an add rating on Domino’s with a $70 price target. Morgan’s is also optimistic Domino’s could recover as inflation alleviates.

Domino’s reported a 14.3% drop in earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half of FY23. The company’s board cut the company’s dividend by 23.8% to 67.4 cents per share.

Domino’s share price snapshot

The Domino’s share price has descended 42% in the past 52 weeks and 26% year to date.

Dominos has a market capitalisation of about $4.3 billion at the current time.

The post Time to bite into ‘cheap’ Domino’s shares: expert  appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Domino’s, Incitec Pivot, Mincor, and New Hope shares are racing higher
• Warren Buffett rakes in $9 billion in annual dividend income. Should I buy ASX dividend shares right now?
• 3 ASX growth stocks down 40%-65% to buy now and hold
• These 3 ASX shares just halved. I would buy one of them: experts

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 Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Domino’s Pizza Enterprises. 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 for dividends, then the ASX 200 shares listed below could be worth considering.

Here’s why analysts at Goldman Sachs say these ASX 200 dividend shares are right now:

Telstra Corporation Ltd (ASX: TLS)

The first ASX 200 dividend share to look at is telco giant Telstra.

After many years of struggling, Telstra is back on form and targeting solid and sustainable growth over the coming years. This will be underpinned by its T25 strategy, which has just replaced the very successful T22 strategy.

Goldman Sachs is a fan of the company and believes it is well-placed in the current environment thanks to rational competition, price increases, and its cost cutting plans.

The broker is expecting this to lead to fully franked dividends of 17 cents per share in FY 2023 and then 18 cents per share in FY 2024. Based on the current Telstra share price of $4.12 this equates to yields of 4.1% and 4.35%, respectively.

Goldman has a buy rating and $4.60 price target on the company’s shares.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that has been tipped as a buy is Westpac.

Although there are concerns over the state of the global banking sector, Goldman Sachs believes Australian banks are safe from the crisis. It highlights the strong liquidity that the big four banks have in comparison to requirements.

In light of this, the broker continues to believe that Westpac is well-placed to deliver solid earnings growth in the coming years. This is thanks to its cost reduction plans and positive exposure to rising interest rates.

Goldman expects this to lead to fully franked dividends of 147 cents per share in FY 2023 and 156 cents per share in FY 2024. Based on the current Westpac share price of $21.42, this will mean yields of 6.85% and 7.3%, respectively.

Goldman Sachs has a conviction buy rating and $27.74 price target on its shares.

The post Buy these ASX 200 dividend shares for income: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Which ASX 200 big four bank share could be the safest to hold?
• Want high income right now? These are the ASX dividend shares I would buy
• Boost your passive income with Westpac and this ASX 200 dividend share: experts
• ASX 200 bank shares shrug off global banking turmoil to leap higher

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 Group. 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Capital H Management portfolio manager Harley Grosser casts his eyes over three ASX shares that are now going for a huge discount.

Bargain buy or value trap?

The Motley Fool: Let’s examine three ASX shares that have been devastated this year, and see if you think each of these fallen stars is now a bargain to pick up or if you’d stay away.

The first one is Mighty Craft Ltd (ASX: MCL), a small-cap ASX stock that’s plunged about 40% since last Easter.

Harley Grosser: Mighty Craft’s an incubator and investor in beverage brands. We have met with them and quite like the business. Their star brand is Better Beer, which was started by the social media group Inspired Unemployed, which has got a massive following online. They just actually announced a restructure there, but Mighty Craft [still] owns 33% of Better Beer. 

So we don’t own Mighty Craft at the moment. But I think if you watch the performance of Better Beer, that’s probably the key there. Because if they continue on this trajectory, which has been just phenomenal growth every month, then MCL’s a relatively cheap way to gain exposure there.

I think there were a couple of options — [one] was to sell their stake and cash out, but it seems like Better Beer’s decided to raise more money and go even harder. So we don’t own it, but we’ll keep watching how Better Beer performs.

MF: I’m not a beer drinker myself, so I don’t fully understand how such a small brand can take off so fast.

HG: Yeah, me too. I don’t drink it either, but I have a lot of mates that all of a sudden have stocked their fridges with Better Beer, so they’re doing something right.

MF: Next one is Dusk Group Ltd (ASX: DSK), which is down about 40% since last Easter as well.

HG: Yeah, they’re a candle retailer and they’ve got a good business in their own niche. 

We took a view that we would just be avoiding retailers completely, probably around April of 2022 when we started to get concerns around inventory positions. And to be fair to retailers, it must have been a very hard time to manage inventory from the switch from in-store to online, then back now to in-store. 

But on the other side of that, we’re happy to start looking at opportunities, and I think Dusk is a good brand and it’s a business that we would own at the right price. 

Their first half numbers were still a little bit messy as everything normalises, but it’s on our radar as one we would buy if it got to the right price. But it’s not there yet for us.

MF: The third one is Redbubble Ltd (ASX: RBL), which has really taken a hammering. It’s down 93% since the start of last year. What do you think?

HG: Yeah, we never invested in Redbubble. Years ago we looked at it and we did talk to some of the artists that used the platform, and we didn’t think it was going to be a long-term winner. 

And then COVID just proved us really, really wrong there. The stock just took off. Obviously, since then, it’s all unwound. 

For us, I know it’s probably not the perfect answer, but we like to invest in [a] business that we can understand and then have a reasonable chance of forecasting. So Redbubble’s been smashed and it might be the bargain of century, but it’s too hard for us to try to model out what it looks like in three, four, five years. 

So it might look cheap, but it’s just one that we have to put in the “too hard” basket and say no to.

The post Here’s one hot, one lukewarm and one cold ASX share: fundie appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Dusk Group and Redbubble. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Redbubble. The Motley Fool Australia has recommended Dusk 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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There are some compelling S&P/ASX 200 Index (ASX: XJO) dividend shares that have been sold down over the last year or two. With an expected recovery of earnings and dividends in the coming years, they could be leading opportunities to consider today.

One of the most useful things about a share price decline is that it boosts a share’s future dividend yield.

For example, if a business with a 6% dividend yield suffers a 10% drop, the dividend yield becomes 6.6%. Plus, buying at a lower price is more attractive and more likely to produce positive capital returns.

With that in mind, there are two ASX 200 dividend shares that could be turnaround ideas.

Inghams Group Ltd (ASX: ING)

Many readers may know of Inghams as one of Australia’s largest poultry businesses. To put into context how much chicken we’re talking about, the comany’s FY23 first half revealed that its group core poultry volume was 235.7 kilotons (kt).

The business recently reported its FY23 half-year result. It showed that underlying net profit after tax (NPAT) was down 13.1% year over year to $26.6 million, but it was an increase of 885.2% half-on-half.

Inghams has been dealing with various operational challenges, including supply chain disruptions and broad inflationary pressures. But, it’s now starting to recover and says that strong long-term demand remains with “key long-term trends intact”.

It’s seeing “healthy growth in poultry demand” as customers return to pre-COVID patterns. It’s also benefiting from a favourable pricing environment, so Inghams is benefiting from a higher average selling price. The poultry business said that it will “pass on further price increases as required”.

Ingham’s half-year dividend was 4.5 cents per share.

With the ongoing recovery, the business is expected to achieve earnings per share (EPS) growth and dividend growth to FY25.

Using the current Commsec estimates, the Inghams share price is valued at under 12x FY25’s estimated earnings, with a possible FY25 grossed-up dividend yield of 8.2%.

As one of the biggest operators in the country, I think it has a number of scale benefits which other competitors may find hard to compete with.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is a business that invests in fund managers in Australia, and has recently expanded to internationally-based fund managers too.

The ASX 200 dividend share provides seed funding, global institutional and retail distribution, and industrial grade middle office and infrastructure. Taking care of back office tasks allows fund managers to focus on delivering investment returns to clients.

The Pinnacle share price is down around 30% from 18 January 2023 and almost 60% lower from November 2021.

It makes sense the fund manager is suffering during a period of market volatility and declines, because these conditions are hurting the funds under management (FUM). In turn, the lower FUM hurts the revenue and NPAT.

However, I don’t think the share market is going to be declining forever, nor do I think the investment environment will be uncertain forever. I believe there will be better times ahead for fund managers.

The ASX 200 dividend share’s profit is expected to rise in FY24 and FY25.

According to Commsec, the Pinnacle share price is valued at 18x FY24’s estimated earnings and 16x FY25’s estimated earnings. The FY25 grossed-up dividend yield could be 7.6%.

The post Why I think these 2 ASX 200 dividend shares offer excellent buying right now appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
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• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 1 reason to avoid the stock market, and 3 great reasons to invest today

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 Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management 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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