ANZ Group Holdings Ltd (ASX: ANZ) shares were on form on Friday.

The banking giant’s shares rose 1.5% to $23.80 after the market responded positively to its half-year results.

As a reminder, ANZ reported a record half-year cash profit for the six months ended 31 March.

Its first-half cash earnings from continuing operations came in 12% higher than the prior half at $3,821 million. This was thanks to solid performances across the board and allowed the bank to declare an 81 cents per share fully franked dividend.

What did analysts say about the result?

Goldman Sachs has been looking over the result. While ANZ’s result was slightly ahead of consensus estimates, it was short of its own. It commented:

ANZ’s 1H23 cash earnings were up 23% on pcp and 4% below GSe, with the miss driven by higher expenses, partially offsetting a lower BDD charge, with revenues broadly as expected. The proposed final DPS of A81¢ implied a payout ratio of 64% (non-discounted DRP, which is to be neutralised via an on-market purchase), while the 1H23 CET1 ratio was 13.2% (12.1% on a pro-forma basis; 18.9% globally-harmonised).

In light of this, the broker has revised its earnings estimates lower for “FY23/24/25E EPS by -2.1%/-2.3%/-1.0%.”

Can ANZ shares keep rising?

Although Goldman only has a neutral rating on the bank’s shares, it does appear to believe they could be undervalued.

According to the note, the broker has a neutral rating and $26.17 price target on its shares. This implies potential upside of 10% from current levels.

In addition, Goldman is forecasting fully franked dividend yields of 6.8% per annum all the way through to at least FY 2025.

The broker summarises:

Today’s result provided further evidence of success for ANZ in improving the profitability of its Institutional business. Coupled with current market competitive dynamics, which we would characterise as still a tailwind for NIMs in Institutional, against a rising headwind for NIMs in Retail, ANZ’s business mix appears well-placed positioned.

That said, previous cycles have shown us that ANZ’s Institutional profitability can inflect suddenly, albeit we note the business mix today has evolved significantly versus where it was through the Global Financial Crisis. Risks appear evenly balanced and with our revised TP offering only 14% upside (ex-dividend adjusted; middle of ANZ Financials), we stay Neutral.

Overall, Goldman isn’t rushing in to buy ANZ shares, but appears to believe they could rise from here.

The post Is it time to buy ANZ shares after its strong results? appeared first on The Motley Fool Australia.

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• Why ANZ, Block, Pilbara Minerals, and SSR Mining shares are storming higher
• Banking crisis continues: What’s up (and down) with ASX 200 bank shares today?
• Everything you need to know about the 81 cents ANZ dividend
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• ANZ share price on watch after record result beats expectations

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 good news for income investors is that there are a large number of quality ASX 200 dividend shares to choose from on the Australian share market.

Two that have been tipped as best buys by analysts at Morgans in May are listed below. Here’s what the broker is saying about them:

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that Morgans has on its best ideas list is insurance giant. The broker currently has an add rating and $16.96 price target on its shares.

It believes QBE is attractively priced, particularly given how rate increases are still flowing through its insurance book. In addition, the broker highlights its cost reductions plans and strong balance sheet as reasons to be positive. It explained:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on 8x FY24F PE.

Morgans is expecting this to underpin dividends per share of approximately 83 cents in FY 2023 and 94 cents in FY 2024. Based on the current QBE share price of $15.35, this will mean yields of 5.4% and 6.1%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that Morgans has on its best ideas list this month is banking giant Westpac. The broker has an add rating and $25.80 price target on its shares.

Its analysts are positive on Westpac due to their belief that Australia’s oldest bank is well-placed to deliver the best return on equity improvement in the sector. It is expecting this to underpin some big dividend yields in the coming years. It commented:

We view WBC as having the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful. The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book. Yield including franking is attractive for income-oriented investors, while the ROE improvement should deliver share price growth.

The broker is forecasting fully franked dividends per share of $1.53 per share in FY 2023 and $1.59 per share in FY 2024. Based on the current Westpac share price of $21.35, this will mean yields of 7.15% and 7.45%, respectively.

The post Morgans names the best ASX 200 dividend shares to buy in May appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 Corporation. 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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With Australian consumers and businesses reeling after 11 interest rates rises in the past year, resilience is critical when buying ASX shares right now.

The team at QVG Capital agrees, saying in a recent memo to clients that it’s currently keen on investing in companies that can maintain earnings growth through difficult economic times.

“Examples of these sorts of stocks include Lovisa Holdings Ltd (ASX: LOV), Corporate Travel Management Ltd (ASX: CTD) and regional construction materials and commercial property developer Maas Group Holdings Ltd (ASX: MGH),” read the memo.

“The commonality among all these companies is that we believe they can generate double-digit, organic, through-the-cycle earnings growth.”

Don’t fall for the svengali chief executive

So how does one spot these resilient businesses?

For one, the QVG team has “a strong preference” for founder-led businesses.

“Or, in the case of Lovisa, ones where a major shareholder is actively engaged in the business,” the memo read.

“We tend to find companies with founders or ‘motivated insiders’ at the helm or on the board are more rational and patient when it comes to capital allocation.”

The analysts confessed that they have made grave mistakes in the past becoming dazzled by “professional CEOs with a mandate for growth”.

“Their short tenures, lack of true alignment and asymmetric incentive structures (heads I win, tails you lose) means they’re more likely to push too hard for growth, sometimes via transformative acquisition,” read the memo.

“We’ve learnt the hard way a ‘transformative’ acquisition often means we should ‘transform’ off the register.”

Are you sick of Zoom? You’re not the only one

Corporate Travel Management is a stock that the QVG team has “materially increased” its position in over the past month.

“The past 5 years have not been easy for CTD as they were hit with a much publicised short-report and then COVID. 

“Despite this they were the only large-listed travel company to not raise capital through COVID and are now poised to deliver earnings per share 25% ahead of pre-COVID levels.”

According to the QVG memo, travel is conventionally “a GDP-plus” industry.

And business travellers are itching to take off at the moment.

“With many of our portfolio companies flagging the limitations of Zoom for winning business and collaboration, we believe Corporate Travel Management can sustain high levels of organic revenue and earnings growth in the future as corporate travel continues to recover.”

Corporate Travel shares have risen an impressive 39% year to date.

The post ‘We’ve learnt the hard way’: 3 ASX shares that can grow in tough times appeared first on The Motley Fool Australia.

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More reading

• Why these ASX 300 retail shares could be immune to rising interest rates
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• ‘Under the radar success’: 3 quality ASX 200 growth shares to buy right now
• These were the best-performing ASX 200 shares in April
• These ASX 200 growth shares could generate big returns: broker

Motley Fool contributor Tony Yoo has positions in Corporate Travel Management. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Corporate Travel Management and Lovisa. 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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A couple of gold coins likely won’t get you much these days. But I reckon with just $3 a day, I could build a portfolio of S&P/ASX 200 Index (ASX: XJO) shares capable of providing more than $300 of monthly dividend income.

And all it would take to execute my plan is consistency, time, and patience.

How I’d turn $3 a day into $370 of monthly dividend income

Albert Einstein once called compound interest “the eighth wonder of the world”. Indeed, it’s a pretty incredible phenomenon.

Compounding, to put it simply, is realising gains on your gains. By realising small returns over a long period of time, wealth can compound to an astronomical extent.

By taking advantage of compounding, I believe I could turn $3 each day – or around $1,000 a year – into a reliable income by investing in ASX 200 dividend shares.

Let’s do the math

The average ASX 200 share also offered a 4.61% dividend yield at the end of April, according to S&P Global data.

Of course, past performance isn’t an indicator of future performance. But let’s just assume the index will continue providing dividends at that same rate for the next 30 years.

By setting aside $3 a day and investing the resulting cash in ASX 200 shares once a year, also reinvesting all the dividends I receive in that time, I could boast a portfolio worth around $72,300 by the year 2043. That’s not bad, considering I’d have invested just $32,850 in that time.

At that point, my figurative portfolio could be bringing in around $278 of dividend income a month – assuming my annual yield stays at 4.61%.

And that’s also before considering any share price gains I might also realise.

The ASX 200 has boasted an annualised capital return of around 4.1% since April 2018. I reckon that could push my monthly dividend income way higher than my $300 target.

Though, these equations haven’t considered a number of important factors, such as brokerage fees or tax. Not to mention, no investment is guaranteed to provide returns.  

Still, the returns that can feasibly be realised from a consistent and long-term investing strategy are eye-opening.

What if you’re not that into stock picking…

Of course, not every investor will have the time and patience to diligently build their portfolio from scratch. It’s also worth noting that building a portfolio in small increments isn’t likely conducive to diversification.

Fortunately, investing in exchange-traded funds (ETFs) like the Betashares Australia 200 ETF (ASX: A200) can provide exposure to the entire index with just one purchase.

The post Investing just $3 a day in ASX 200 shares could provide $300 of monthly dividend income. Here’s how appeared first on The Motley Fool Australia.

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• The cheapest index fund on the ASX revealed

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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