Day: 8 May 2023

The share price of S&P/ASX 200 Index (ASX: XJO) giant QBE Insurance Group Ltd (ASX: QBE) leapt to long-forgotten heights on Monday. The stock peaked at a near-decade high of $15.64 earlier today.

Unfortunately, the QBE share price has since slumped to trade at $15.31 this afternoon. That’s 0.26% lower than its previous close.

So, what might the future hold for the ASX 200 insurance share? Let’s take a look.

Is this ASX 200 insurance share still in the buy zone?

The QBE share price has been on a roll lately, with the most recent news from the company being its financial year 2022 earnings, released in February.

The insurance provider posted a combined operating ratio (COR) of 93.7% – an improvement on the prior year’s 95% COR. Meanwhile, it posted a 13% growth in gross written premium (GWP).

Looking forward, the company expects further improvement, with its financial year 2023 Plan Group COR guidance sitting at around 93.5% and its GWP growth tipped to be in the mid-to-high single digits.

Not to mention, its investment portfolio has seen improvements on the back of interest rate hikes, while its premiums have largely been lifted in line with inflation.

All that means the company could have the potential to thrive in the current environment.

And the ASX 200 insurance provider isn’t the only one that’s hopeful of its future – many experts are bullish on its shares.

What do experts say?

Brokers and experts broadly appear hopeful for the QBE share price.

UBS, Goldman Sachs, and Morgans all have buy ratings on the stock, with respective price targets of $18, $17.45, and $16.98. That represents between 11% and 18% of potential upside.

Morgans thinks the share is cheap right now. It also expects benefits from rate hikes are yet to be felt in the ASX 200 company’s insurance book, my Fool colleague James Mickleboro reports.

UBS, meanwhile, expects strong premium prices to bolster the QBE’s bottom line.

Speaking of, Goldman Sachs notes the company’s well-capitalised balance sheet could bode well in the current uncertain economic environment.

Finally, Airlie senior investment analyst Joe Wright is also bullish, as The Motley Fool Australia’s Tony Yoo reports. Wright recently wrote for the fund manager’s blog:

We continue to believe QBE is underearning as margins for both the North American business unit, and more recently the Lloyd’s syndicates, have dragged on group performance.

QBE share price snapshot

The QBE share price has been on a roll lately – the ASX 200 insurance stock has soared 23% over the last 12 months. It’s also gained 17% since the start of 2023.

Meanwhile, the ASX 200 has risen 5% year to date and 2% since this time last year.

The post Up 23% in the past year. Is it too late to buy this ASX 200 insurance share? appeared first on The Motley Fool Australia.

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More reading

• Perfect balance: 2 ASX 200 shares set to surge while paying dividends
• 2 ASX 200 dividend shares to buy now: brokers
• Leading brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Friday
• Morgans says these are among the best blue chip ASX 200 shares you can buy

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 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 BHP Group Ltd (ASX: BHP) share price has seen plenty of volatility over the past five years. There have been big changes in iron ore earnings amid changes in demand from China, which affected the iron ore price.

The iron ore price is drifting towards US$100 per tonne after being above US$120 per tonne for quite a lot of 2023.

BHP does have exposure to other commodities, including coal, copper and nickel. Management has recently increased the company’s exposure to the decarbonisation commodities of copper and nickel after completing the acquisition of OZ Minerals.

Why does BHP want more exposure to copper (and nickel)?

BHP CEO Mike Henry said:

This acquisition strengthens BHP’s portfolio in copper and nickel and is in line with our strategy to meet increasing demand for the critical minerals needed for electric vehicles, wind turbines and solar panels to support the energy transition.

Combining our two organisations will provide options for growth, bring new talent and innovation to unlock these resources in a sustainable way, and deliver value to shareholders and communities.

He went on to say that BHP can “establish a copper province in South Australia” with the Olympic Dam, Prominent Hill and Carrapateena assets.

BHP chief operating officer Edgar Basto said that South Australia has the potential to be a “major supplier of copper to meet the world’s increasing demand for copper”.

How much is demand going to grow?

There are various projections out there, but things are looking positive for copper, which could help the BHP share price.

As reported by CNBC, copper could go through a “generational shift in demand as decarbonisation ramps up”, according to BNY Mellon lead portfolio manager Al Chu. The fund manager said:

Copper typically is used as a construction metal for wiring for building, wiring for machinery and what not, but if we look at the decarbonisation net zero energy transition trend, copper is the new oil.

Is it solar power, is it wind, is it EVs, is it any form of renewable energy? Every renewable energy pretty much needs copper, because if you’re talking about electrifying something and transmitting electricity, you need copper.

No straight line

Part of the problem, according to Chu, is that there has been a decline in the grade/quality of copper over the past 20 years. It also takes a long time to bring a new copper mining project online. Chu went on to say:

A lot of these reserves and deposits are found in very, very hard places to produce – Congo, Inner Mongolia – these are not in very developed regions where you say ‘oh it’s really easy, let’s build a mega-mine.

When you look at the long-term secular story, you can just see strong demand. A lot of people focus on lithium as the kind of energy transition metal, but I think we should be much more focused on copper, because I think that is the real pinch point, the real choke point for the energy transition story.

But there’s only so much those markets can do because the incremental demand from renewables isn’t a small bump up in demand, it’s almost a multiyear tsunami of demand coming through that we’re not thinking about, so it’s going to be all hands on deck but absolutely, the price has to go up.

He thinks that the copper price will keep rising until “it incentivises much larger exploration cycles or a ramp-up of secondary markets and copper recycling.”

While demand for copper may not go up in a straight line, this could be a promising development for BHP’s copper division.

BHP share price snapshot

Since the start of 2023, BHP shares are down by 1.7%.

The post Can copper be the next big boost for the BHP share price? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• If I invest $10,000 in BHP shares how much passive income will I receive?
• Analysts name 2 ASX 200 dividend shares to buy for passive income
• 4 ASX 200 shares just upgraded by brokers
• Why the iron ore price is ‘not out of the danger zone’

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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S&P/ASX 200 Index (ASX: XJO) gold shares have delivered some super-sized returns over the past six months.

The big gold stocks, and indeed many of the junior miners and explorers, have benefited from a fast-rising gold price.

Bullion, a classic haven asset, has been on a tear since November amid ongoing geopolitical uncertainties, sticky inflation in the world’s top economies, and global recession fears, among other factors.

Indeed, gold has managed to deliver positive returns in five of the last seven recessions.

On 7 November gold was trading for US$1,676 per ounce. Today that same ounce is worth US$2,017. That’s up 20% in just six months and fast approaching new record highs.

How have ASX 200 gold shares performed?

As you’d expect, a 20% surge in the price of the yellow metal they dig from the ground has been a boon to ASX 200 gold shares.

Over the past six months the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold stocks outside of the ASX 200 – has surged 51%. That compares to a six-month gain of 4.5% posted by the ASX 200.

As for some of the top Aussie gold miners, here’s how they’ve tracked over the six months:

• The Regis Resources Ltd (ASX: RRL) share price is up 39%
• The Northern Star Resources Ltd (ASX: NST) share price has gained 48%
• The Evolution Mining Ltd (ASX: EVN) share price has leapt 82%
• The Gold Road Resources Ltd (ASX: GOR) share price is up 39%

I don’t think you’ll hear many shareholders complaining about those returns!

Of course, these gains have all been banked.

The big question now is, can ASX 200 gold shares continue to outshine the benchmark?

What’s next for the gold price in 2023?

The first quarter Gold Demand Trends report from the World Gold Council, released on Friday, reveals a mixed picture for Q1 but indicates a potentially strong year ahead for bullion and ASX 200 gold shares.

On the negative side of the ledger, demand in India, the world’s most populous nation, fell steeply over the quarter. That was driven by record-high gold prices in Indian rupee terms, which impacted both investment and jewellery consumption during the quarter.

Gold-backed exchange-traded funds (ETFs) also recorded a modest 29 tonne outflow over the quarter. Though that trend reversed in March with renewed ETF inflows as investors turned to the haven asset amid the US banking crisis.

On the plus side for the outlook for gold demand – and by connection ASX 200 gold shares – central bank appetite for bullion remains voracious.

According to World Gold Council, central banks added 228 tonnes of bullion to their reserves. That’s a record amount for the first quarter.

“Against the backdrop of turmoil in the banking sector, ongoing geopolitical tensions and a challenging economic environment, gold’s role as a safe haven asset has come to the fore,” said Louise Street, senior markets analyst at the World Gold Council.

Street added:

In this landscape, it is likely that investment demand will grow this year, especially with waning headwinds from the strong US dollar and interest rate hikes. Positive demand for gold ETFs has continued in Q2 so far, and the looming threat of developed market recession may be the trigger for inflows to accelerate later in the year.

Central bank buying is likely to remain strong and will be a cornerstone of demand throughout 2023 – even if at lower levels than the record highs seen last year.

Should bullion demand indeed remain resilient, ASX 200 gold shares are well-positioned to keep outperforming.

The post Why these booming ASX 200 gold shares could continue to outshine 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
• 3 ASX 200 mining stocks leaping to new 52-week highs today
• Here are the top 10 ASX 200 shares today
• ‘Additional growth options’: Why the Northern Star share price is flying today
• 5 things to watch on the ASX 200 on Thursday

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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Warren Buffett and Berkshire Hathaway co-founder Charlie Munger were in the spotlight on Saturday.

The two legendary investors, both in their 90s, didn’t miss a beat at Berkshire Hathaway’s annual general meeting. The event was attended by a massive crowd of some 40,000 people at a convention centre in Omaha, in the US state of Nebraska.

Among the highlights on the day, Warren Buffet – well-known as a value investor – sounded off on the ongoing US banking crisis.

What’s going on with Warren Buffett and bank stocks?

The Oracle of Omaha began divesting Berkshire’s sizeable holding of bank stocks in 2020.

And with the banking crisis that erupted in the US and Europe in March, that move looks to have been prescient.

The collapse of First Republic – the biggest bank failure since the 2008 GFC – followed on the heels of numerous other regional bank implosions in the US, including Silicon Valley Bank and Signature Bank. Financial contagion from the collapses led to a similar liquidity crunch at Credit Suisse, which was then scooped up by UBS.

Today Warren Buffet really only expresses confidence about one bank stock. Namely, Bank of America Corp (NYSE: BAC), in which he holds a 13% stake.

“I like Bank of America and I like the management,” he said, referring to long-time Bank of America CEO Brian Moynihan.

Drilling into First Republic, he said the bank’s long-term, low fixed-rate mortgages were “a crazy proposition”.

“It was doing it in plain sight and the world ignored it ‘til it blew up,” he said (quoted by Bloomberg). “The incentives in bank regulation are so messed up and so many people have an interest in having them messed up… So we are very cautious in a situation like that about ownership.”

And Warren Buffett was adamant that the banks’ bosses be held to account for their mistakes.

“The situation in banking is very similar to what it’s always been in banking – the fear is contagious, always,” he said. Adding that penalties should “hit the people that caused the problems”.

The Berkshire CEO said shareholders of bad banks should lose their investments. “We don’t know where shareholders of banks are going,” he said. “Banking can have all kinds of new inventions, but it needs to have old value.”

Should we be cautious of ASX 200 bank stocks?

To date, the banking crisis has largely been contained to the US and Europe.

But should we worry about the health of S&P/ASX 200 Index (ASX: XJO) bank stocks, which count as the best capitalised in the world?

Perhaps.

Rob Shears, investment manager at Valor Private Wealth, points to the concerns Warren Buffett and Charlie Munger raised on bank loans to the real estate sector (courtesy of The Australian Financial Review).

“The banks extend and pretend. But we are starting to see the consequences of people who could borrow at 2.5%, see that it doesn’t work at higher rates and hand [the property] back,” Warren Buffett said. “Berkshire has never been active in commercial real estate.”

Sounding a warning note for potential problems ahead for ASX 200 bank stocks, Shears said:

The things that Warren and Charlie are warning about are things that Aussie investors have a lot in their industry super funds.

So banks are problematic in Australia, because of the residential property bubble. Commercial real estate, it’s still part of the Aussie banks and if you go around the city in Sydney and Melbourne, the offices are still empty.

Those problems may loom on the horizon.

But the big four bank stocks are all well into the green in late morning trade this Monday.

The post Warren Buffett is ‘very cautious’ about investing in bank stocks. Should you be? appeared first on The Motley Fool Australia.

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More reading

• Fortescue’s Twiggy could wipe this ASX 300 share from the bourse. Here’re all the details
• ASX lithium shares are off and racing today. What’s behind the boost?
• 2 exciting ASX growth shares I’d buy and hold to 2030
• I think these 2 ASX small cap shares could make big returns
• Here’s what you need to know about the 70 cents Westpac dividend

Bank of America is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Bank of America and Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. 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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Wyloo Metals – a private company owned by Fortescue Metals Group Limited (ASX: FMG) founder and chair Andrew ‘Twiggy’ Forrest – has raised the stakes in its battle to takeover S&P/ASX 300 Index (ASX: XKO) mining share Mincor Resources NL (ASX: MCR).

It’s declared its intent to delist the takeover target if its voting power comes in at less than the 90% needed to kick off a compulsory acquisition.

Wyloo put forward a $1.40 per share bid in March, valuing the ASX 300 miner at $760 million. The Mincor board continues to recommend shareholders vote in favour of the acquisition.

Interestingly, Mincor stock is currently trading higher than the private entity’s bid. Its share price is $1.4025 right now, marking a 0.18% gain on its previous close.

Let’s take a closer look at the latest on the takeover currently underway by the Fortescue boss’ private mining company.

Fortescue boss’ Wyloo hopes to delist ASX 300 share

Wyloo appears to have changed tack in its takeover battle for ASX 300 nickel share Mincor. The suitor has so far acquired a 61.6% interest in the company.

It announced it’s changed its mind on the takeover target’s continued listing on the Aussie bourse today.

If Wyloo’s interest in Mincor doesn’t reach 90% by the end of the offer period – currently set to close on 22 May – it will seek to remove the ASX 300 stock from the market. That is, if the suitor believes it can satisfy all requirements to do so.

If it were to delist, anyone left holding stock in the company would no longer be able to sell their stake on the market. That has serious liquidity implications.

Wyloo declared its $1.40 per share offer for Mincor ‘best and final’ in the absence of a competing proposal after the ASX 300 miner withdrew its guidance.

Mincor scrapped its earnings forecast and announced it’s been delivering off-specification product to BHP Group Ltd (ASX: BHP) amid the ramp-up of its Northern and Southern operations in late March.

Mincor share price snapshot

The Mincor share price has had a rough trot as of late.

The stock has plunged 5% so far this year. It’s also currently 35% lower than it was this time last year.

For comparison, the ASX 300 has gained 5% year to date and 2% over the last 12 months.

The post Fortescue’s Twiggy could wipe this ASX 300 share from the bourse. Here’re all the details appeared first on The Motley Fool Australia.

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More reading

• Why the iron ore price is ‘not out of the danger zone’
• Here’s what brokers are saying about the Fortescue share price in May
• Own Fortescue shares? You may have missed this week’s ‘game changer’ moment
• Why did the Fortescue share price tumble 7% in April?
• Dalio says US and China ‘on brink of war’. Which ASX shares could be impacted?

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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It’s been a pleasant start to the week for the S&P/ASX 200 Index (ASX: XJO) as trading kicks off this Monday morning. At the time of writing, the ASX 200 has put on a healthy 0.67%, lifting the index above 7,268 points. But let’s talk about ASX lithium shares.

Lithium stocks seem to be one of the areas of choice today. Most are having a stunning start to the week. Take the flagship ASX lithium share Pilbara Minerals Ltd (ASX: PLS). Pilbara shares are currently up by a happy 5.45% at $4.64 each:

Core Lithium Ltd (ASX: CXO) is also doing well, up 5.1% at $1.01 a share. Liontown Resources Ltd (ASX: LTR) is a little more muted so far today but still has added a robust 1.75% at $2.90 a share. Meanwhile, Lake Resources NL (ASX: LKE) has stormed 4% higher to 52 cents a share.

So what’s going on in the lithium space that is seeing these ASX lithium shares lead the ASX 200’s winners so far this Monday?

Why are ASX lithium shares on fire this Monday?

Well, there’s no concrete reason we can point to, unfortunately. However, there is some discussion out there that might explain why ASX lithium shares are having such a cracker day.

According to reporting in the Australian Financial Review (AFR) this morning, ASX broker Morgan Stanley has come out and stated that it believes lithium markets have hit a “turning point” following recent weakness in the sector.

As my Fool colleague Brooke noted last month, lithium prices have been on the slide over most of 2023 so far. This slump has been driven by falling demand for electric vehicles in the Chinese market, thanks to the winding up of government subsidies.

But Morgan Stanley noted that “China carbonate prices have bounced 30 per cent from their lows, and hydroxide prices have rebounded by 20 per cent”.

Here’s what Morgan Stanley commodities strategist Marius van Straaten had to say:

The turning point in lithium markets? Yes, it looks like that for now at least…

Although China’s electric vehicle sales and battery production are back in growth mode after a lacklustre start of the year, cathode and battery cell producers are still not fully back buying in the spot market, but sentiment is clearly improving, and their lithium inventories appear to have eroded.

The broker sees lithium prices becoming tighter over the remainder of the 2023 calendar year.

So this sentiment might be behind the strong showing that we are seeing with most ASX lithium shares so far this Monday. Let’s see how this popular but volatile corner of the ASX market fares over the rest of the week.

The post ASX lithium shares are off and racing today. What’s behind the boost? appeared first on The Motley Fool Australia.

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More reading

• Here are the 10 most shorted ASX shares
• Why did ASX lithium shares dominate the market on Friday?
• Here are the top 10 ASX 200 shares today
• Why ANZ, Block, Pilbara Minerals, and SSR Mining shares are storming higher
• 3 ASX 200 mining stocks leaping to new 52-week highs today

Motley Fool contributor Sebastian Bowen 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 ASX growth share part of the market has been punished over the last year and a half as investors worried about the effects of inflation and higher interest rates on the underlying value of businesses.

Interest rates can act like gravity on asset valuations – the higher they go, the harder it pulls down (in theory) on share prices.

The share prices of both of the businesses that I’m going to talk about have dropped at least 18% from their peaks in 2021, yet the businesses have a really strong, profitable outlook.

Xero Limited (ASX: XRO)

Xero is a leading cloud accounting software business. The business has done very well at growing into a global business. At the end of September 2022, it had 3.5 million subscribers (which was a 16% rise year over year).

In the FY23 half-year result, Australia saw 126,000 net subscriber additions to reach a total of 1.47 million subscribers. New Zealand saw 24,000 net subscriber additions to reach a total of 536,000, the UK experienced 44,000 net subscriber additions to reach 894,000 subscribers, North America saw 15,000 net subscriber additions to reach 354,000 subscribers and the ‘rest of the world’ saw 16,000 net subscriber additions to reach 242,000 subscribers.

It’s clear that the business is seeing success around the world. I think its time-saving and automation tools will continue to attract new subscribers for years to come.

The business has an extremely high retention rate, which is a good sign that these new subscribers will stay for a long time. It also continues to see a rise in the average revenue per user (ARPU), which rose 13% year over year in HY23.

The ASX growth share has recently committed to becoming more profitable, balancing growth and increasing margins.

By 2030, I think the ASX growth share could be making a very large amount of profit, and I believe this will translate into good shareholder returns for Xero as the market recognises how profitable the underlying business is.

Altium Limited (ASX: ALU)

Altium is an electronic PCB software developer. It also has a few other growing segments, such as Octopart – a search engine for electrical parts.

The company’s growth rate slowed during the COVID-19 period, but it has bounced back strongly. In the first half of FY23, it saw revenue growth of 17% and net profit after tax (NPAT) growth of 30% to US$29.6 million. For FY23 as a whole, it’s expecting total revenue growth of 15% to 20%.

By FY26, it’s targeting total revenue of US$500 million and an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin of between 38% to 40%. In the HY23 result, the underlying EBITDA margin was 36.2%.

A growing proportion of the company’s revenue is recurring revenue, which is good for longer-term profit margins and earnings visibility.

There is a growing amount of advanced electronics in the world, such as cars, robot vacuum cleaners, phones and so on. I think this sets up Altium for long-term future success.

Management is aiming for Altium to become the world’s largest ‘manufacturer’ of electronics but without owning any factories, in the same way that Uber is a taxi company that doesn’t own taxis and Airbnb is the world’s largest accommodation provider but owns no real estate.

As it grows, I think the business can become even more profitable, have an even more loyal subscriber base and continue to pay growing dividends.

The post 2 exciting ASX growth shares I’d buy and hold to 2030 appeared first on The Motley Fool Australia.

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More reading

• Morgans names more of the best ASX 200 stocks to buy in May
• These fantastic ASX 200 tech shares have been named as buys by analysts
• ‘Under the radar success’: 3 quality ASX 200 growth shares to buy right now
• Top ASX shares to buy in May 2023
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Airbnb, Altium, Uber Technologies, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Airbnb. 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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Many small-cap ASX shares don’t get a lot of attention, but they may be able to achieve stronger returns than blue-chip ASX shares.

A business that goes from a market capitalisation of $200 million to $500 million represents an impressive gain. But $500 million would still count as a relatively small business compared to names like Telstra Group Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA).

Certainly, it can be a much harder task for a business worth $20 billion to grow to $50 billion.

Yet just because a business is small, it doesn’t automatically mean that it’s going to grow significantly. However, I think the following two can generate market-beating returns over the next three to five years.

Dusk Group Ltd (ASX: DSK)

Dusk describes itself as a specialist in home fragrance products, offering “a range of Dusk branded premium quality products at competitive prices”. Dusk designs its product range which is exclusive to the company.

Its offerings include candles, ultrasonic diffusers, reed diffusers, and essential oils, as well as fragrance-related homewares. The goal of the company is to be “customers’ preferred destination for home fragrance products and for their gifting needs”.

I think the dividend income from the small-cap ASX share alone could be very attractive. Certainly, if the dividend income can beat the returns of the ASX share market, then we don’t need to rely on strong capital gains.

Commsec numbers suggest the dividend per share could be 14 cents, which would be a grossed-up dividend yield of 13%. By FY25, the business could pay a dividend per share of 18 cents per share which would be a grossed-up dividend yield of 16.8%.

The business could generate earnings per share (EPS) of 19.9 cents in FY23, which suggests the Dusk share price is valued at under eight times FY23’s estimated earnings. At the end of the first half of FY23, it had net cash of $32.9 million, meaning its balance sheet is in a strong position.

The business is planning to grow by launching new products, expanding its store network, increasing benefits of scale, and long-term growth of online sales.

Universal Store Holdings Ltd (ASX: UNI)

This small-cap ASX share owns a portfolio of “premium youth fashion brands and omni-channel retail and wholesale businesses”. Those brands include Universal Store, THRILLS, and Perfect Stranger. It has more than 90 physical stores with a target market of 16 to 35-year-olds.

The retail business may be less impacted by higher interest rates because not many of its customers may have (large) mortgages.

Universal Store is seeing increasing profit margins as it grows, which is promising as it becomes larger. In the first half of FY23, group sales grew by 34.5% to $145.7 million and underlying earnings before interest and tax (EBIT) increased 43.2% to $28.5 million.

By the end of FY23, it’s looking to have between 101 to 103 group stores across the three brands.

Commsec numbers suggest Universal Store earnings and its dividends are going to keep rising between FY23 to FY25. It’s valued at less than 11 times FY23’s estimated earnings and under eight times FY25’s estimated earnings – suggesting 34% growth between FY23 to FY25.

The dividends could also be impressive in the coming years. The small-cap ASX share’s grossed-up dividend yield in FY23 could be 8.3%, while the FY25 grossed-up dividend yield could be 11.4%.

The post I think these 2 ASX small cap shares could make big returns appeared first on The Motley Fool Australia.

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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 Telstra Group. 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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The Westpac Banking Corp (ASX: WBC) dividend has just been declared and the bank’s FY23 half-year result announced.

The ASX bank share had a pleasing six months to 31 March 2023, with the bank benefiting from slightly lower operating costs and stronger lending profitability. Net profit after tax (NPAT) jumped by 22% to $4 billion.

Westpac’s stronger profit allowed the bank to pay a larger dividend to shareholders.

Westpac dividend

The ASX bank share’s board decided to declare a fully franked dividend per share of 70 cents. This represents an increase of 15% year over year. It also represents an increase of 9.4% compared to the final dividend of FY22.

Westpac’s dividend has an ex-dividend date of 11 May 2023. This means if investors want to receive the dividend, they need to own the shares before this date. With that cut-off only a few days away, interested investors need to be quick and grab shares before the end of trading on Wednesday, 10 May 2023.

The payment date for the 70 cents per share Westpac dividend is 27 June 2023, so shareholders will only need to wait for about six weeks to get their payout.

If shareholders want to use the dividend reinvestment plan (DRP), the election cut-off date is Monday, 15 May 2023 at 5pm (Sydney time).

Can the payment to shareholders keep growing?

There are a couple of positive signs to forecast the Westpac FY23 final dividend could be bigger than the FY22 final dividend.

The bank’s balance sheet is strongly positioned. Its common equity tier 1 (CET1) capital ratio was 12.3%, which was above its target range of 11% to 11.5%. In dollar terms, it has $3.6 billion of capital above the top end of its target range.

This is what the bank said regarding its outlook:

It’s been one year since the RBA announced the first rate rise of the current tightening cycle. This has been difficult for many customers and more are calling us to discuss their situation. The bank is in a good position to help.

At a macro level, our loan portfolios remain healthy. Most mortgage customers are ahead on repayments. Offset balances were little changed and mortgage delinquency levels are low.

Interest rates are now closer to their forecast peak, but we are focused on how long they stay high and what this means for household budgets and discretionary spending. We expect to see more stress in the period ahead, particularly in small business.

While the Australian economy remains resilient with low unemployment and high population growth, it is expected to slow over the remainder of 2023. Credit growth – both housing and business – will ease. Intense mortgage competition is expected to negatively impact industry and Westpac’s margins in the next half.

Westpac enters this environment from a position of strength. We’ve set the balance sheet for the tougher outlook. We continue to run the bank conservatively, with the flexibility to support growth and handle the more challenging conditions.

So, while the competitive pressures may be a headwind, Westpac’s business continues to be strong, which could be good news for the next Westpac dividend.

The post Here’s what you need to know about the 70 cents Westpac dividend appeared first on The Motley Fool Australia.

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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 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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Lynas Rare Earths Ltd (ASX: LYC) shares are soaring after the company announced a major win for its Malaysian facility.

It’s now allowed to keep operating the facility’s cracking and leaching plant until the start of 2024.

However, the rare earths producer’s battle to remove the recently-imposed restrictions entirely is still ongoing.

Right now, Lynas shares are trading at $7.37 apiece, 12.01% higher than the stock’s previous close.

Let’s take a closer look at what’s going on with the S&P/ASX 200 Index (ASX: XJO) rare earths stock on Monday.

Lynas announces extension on Malaysian ban

The Lynas share price is taking off on news the company will be allowed to continue importing and processing lanthanide concentrate in Malaysia until 1 January 2024. That’s six months later than its previous cut-off – 1 July 2023.

That means a shutdown of the entire Malaysian plant will be avoided, with the company using the extra time to secure new feedstock.

Lynas’s Malaysian facility is the world’s largest single rare earths processing plant.

The company’s licence to operate in Malaysia was renewed by the country’s Department of Atomic Energy in February. However, a condition that it may not import and process lanthanide concentrate – announced in 2020 – remained. The ban was imposed amid concerns about radioactive waste.

The rare earths producer previously said the ban would force it to temporarily shut down the entire Malaysian facility from July as it transitioned to using feedstock from its up-and-coming Kalgoorlie Rare Earths Processing Facility.

Lynas appealed to the Malaysian Minister of Science, Technology, and Innovation (MOSTI) to overturn the ban in February. Aside from extending the cut-off date, the MOSTI Minister has dismissed the company’s appeals.

Lynas notes Malaysia offers legal avenues to review the licence conditions. It plans to seek a review into such avenues to ensure it’s “treated fairly and equitably as a Foreign Direct Investor and as a significant employer and contributor to the Malaysian economy”.

Lynas Rare Earths share price snapshot

The Lynas share price is having a rough slog as of late.

Even with today’s big jump, the stock has slumped 6% so far this year. It’s also 18% lower than it was this time last year.

For comparison, the ASX 200 has risen 4% year to date and 2% over the last 12 months.

The post Why is ASX 200 share Lynas Rare Earths leaping 12% on Monday? 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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