On Monday, the Pointsbet Holdings Ltd (ASX: PBH) share price came under significant pressure.

The sports betting company’s shares lost 20% of their value to end the day at $1.46.

They have continued to fall again on Tuesday and are currently down 7% to $1.35.

This means Pointsbet shares are now down 45% over the last 12 months.

Why did the Pointsbet share price crash into the red?

Investors were selling down the sports betting company’s shares after it announced the sale of its US business.

Pointsbet has agreed to sell its US operations to Fanatics Betting and Gaming for US$150 million ($222 million).

Once complete, Pointsbet will retain both its Australian and Canadian businesses. Furthermore, shareholders will receive the net proceeds of the sale directly in the form of capital returns. The company estimates these returns will have a value of between $1.07 and $1.10 per share.

Should you invest?

The team at Bell Potter has been looking at the news. And while it doesn’t appear overly impressed, it still sees value in Pointsbet shares following recent weakness.

In response to the news, the broker has retained its speculative buy rating with a heavily reduced price target of $2.00. This implies potential upside of 48% for investors over the next 12 months.

The broker explains that it now values Pointsbet shares with a sum of the parts model. It ascribes a 72 cents per share valuation to the Australian business and a modest 8 cents per share valuation to the Canadian business. The balance reflects the proposed capital return from the US business sale. It explains:

Following this announcement we move to a sum-of-the-parts valuation and assume the sale of the US business proceeds and $1.085 – the mid point of the range – is returned to shareholders. On top of that we assume a A$220m valuation for the Australian business ($0.72 per share), a token A$25m valuation for the Canadian business (A$0.08 per share) and cash of $35m ($0.11 per share). This equates to a valuation of $2.00 per share which is a 31% decrease on our previous valuation of $2.90. At a $2.00 valuation the expected return is still >30% so we retain our BUY (Spec.) recommendation.

Bell Potter also highlights that the value of the remaining assets is far less than what the company was rumoured to be selling them for just a few months ago. It said:

At the current share price the implied valuation for the Australian and Canadian businesses combined is <A$100m which is too low in our view especially when there was speculation of a sale price for the Australian business of >A$200m a few months ago.

The post Does the US business sale make Pointsbet shares dirt cheap? appeared first on The Motley Fool Australia.

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More reading

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• Are AGL shares going to become a dividend machine?
• ‘Bright outlook’: 2 ‘high quality’ ASX 200 shares to pounce on now 
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• 2 dividend income beasts with big growth ideas

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Many ASX dividend shares can pay investors a solid dividend yield. Indeed, there are some names that have an impressive payout growth streak going on.

Of course, nothing is guaranteed with dividend payments — they aren’t like term deposits. But if a business can grow its dividend per share year after year then it can be very rewarding, and a fine protection against inflation.

We can’t know for sure which businesses are going to increase their payouts, but their past records can indicate how committed a company is to increasing shareholder returns over time. Below, I’m going to talk about two of the companies with the longest dividend growth streaks.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I’d describe Soul Pattinson as the ASX dividend share with the strongest dividend record. It has grown its dividend every year since 2000. The business has also paid some sort of dividend every year since it listed more than 100 years ago.

As we can see on the graph above, the dividend growth rate has picked up in the last couple of results. The recent FY23 half-year result showed a 24.1% increase in the interim dividend.

Soul Pattinson pays its dividend from the cash flow it receives from its investment portfolio of ASX shares, private businesses, and structured debt. Some of its biggest investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), and Macquarie Group Ltd (ASX: MQG).

After paying its dividend, the ASX dividend share can then re-invest in more opportunities.

One of the company’s goals is to keep growing the dividend. Another objective is to outperform the market.

Using the company’s last two declared dividends (including the special dividend), it has a grossed-up dividend yield of 4%.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the world’s largest pathology businesses with a significant presence in Australia, the US, the UK, and Germany.

People can’t decide when to get sick based on economic cycles so ASX healthcare shares can provide shareholders with resilient earnings and dividends. As well, the increasing populations — and their ageing — in those major markets certainly provide a useful tailwind for healthcare earnings.

The ASX dividend share has grown its dividend each year since 2013, so its growth streak has been going on for around a decade now.

The company’s non-COVID testing revenue continues to grow, which bodes well for future profit generation and larger dividends. The business has a stated “progressive dividend policy”, meaning the board wants to grow the dividend each year, if possible.

The business continues to make bolt-on acquisitions, such as its two recent acquisitions in Germany that, between them, are expected to add €115 million (A$186.6 million) of revenue in FY24.

As well, the company’s expansion into artificial intelligence and its partnership with Microba Pty Ltd (ASX: MAP) in microbiome testing could boost Sonic Healthcare over time.   

Sonic Healthcare’s trailing grossed-up dividend yield is also 4%.

The post 2 ASX dividend shares aiming to give investors a payrise every year appeared first on The Motley Fool Australia.

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More reading

• 4 ASX companies that own CSL shares (and lots of them!)
• Turning ASX shares into a $40,000 annual passive income generator
• It’s still rare to find a term deposit paying over 5%. Why not buy ASX dividend shares instead?
• Why did the Washington H Soul Pattinson share price just smash a new 52-week high?
• How my ASX share portfolio is ready for a stock market crash

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Sonic Healthcare and TPG Telecom. 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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AGL Energy Limited (ASX: AGL) shares have taken a big dive since 2020, but could this lower valuation mean the future dividend yield is really appealing?

When the share price goes down, the dividend yield goes up, assuming the dividend payment doesn’t change in size.

I’ll give you an example – if a share had a 5% dividend yield and then the share price drops 10%, it would increase the dividend yield to 5.5%.

However, a heavy fall in a share price can suggest that operating conditions have worsened significantly, which could mean that a lower profit and lower dividend are possible.

In the FY23 half-year result, AGL’s underlying net profit after tax (NPAT) dropped 55% to $87 million, while the interim dividend was halved to just 8 cents per share.

However, with management commentary and analyst projections reflecting a positive future, could AGL shares be a future dividend machine?

Dividend projections

FY23 is not expected to be a very profitable year (after what was seen in HY23) for AGL, and the estimate on Commsec suggests that AGL shares could pay an annual dividend per share of 27 cents. That would be a dividend yield of just 3% – nothing to get excited about considering (safe) term deposits offer an interest rate of above 4%.

But, the company pointed out with its HY23 result that wholesale electricity pricing was “elevated compared to prior periods with AGL expected to benefit as historical contract positions are reset in FY24 and FY25. Additionally, sustained periods of higher wholesale electricity prices are expected to flow through to retail pricing outcomes.”

A profit recovery in FY24 and FY25 could enable the business to pay much bigger dividends in the next two financial years.

In the 2024 financial year, the projection on Commsec suggests AGL shares might pay an annual dividend per share of 56 cents, which would be a dividend yield of 6.4%.

There could be an even bigger dividend in FY25 according to the Commsec projection. There could be a dividend per share of 70 cents, which would be a dividend yield of 7.9%. This would be a better dividend yield than what’s offered by names like Telstra Group Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) in FY25, according to the Commsec estimates. Though there’s more to the consideration of an investment than just the dividend yield of course.

It’s very promising for AGL shares that both earnings and the dividend could rise strongly over the next two years.

Forecasts are not guaranteed

Just because experts have pencilled in these potential dividend payments, it doesn’t mean they’re a confirmed thing. AGL has to generate the profit before it can pay it out.

On top of that, AGL has committed to the decarbonisation of its energy generation efforts, which could cost billions for the business to build all of the transmission assets, solar panels, batteries and so on. It will need to keep at least some of its generated profit to re-invest in power generation to ensure it doesn’t take on too much debt to fund the spending.

But, if AGL is able to achieve the projected earnings per share (EPS) of 95.5 cents in FY25, this would mean the AGL share price is valued at just 9 times FY25’s estimated earnings.

The post Are AGL shares going to become a dividend machine? appeared first on The Motley Fool Australia.

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More reading

• 9 directors have bought up AGL shares in 2023. Should you jump in too?
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• Here’s how much I would need to invest in AGL shares to achieve $150 in monthly income

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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The volatility that ASX investors suffered over the past 18 months is not expected to wane anytime soon.

That’s why multiple experts are urging punters to back “quality” ASX shares rather than fall into the trap of becoming too speculative for quick riches.

A pair of advisors this week rated two such stocks as buys:

‘A discounted energy stock’

The Santos Limited (ASX: STO) share price has plunged 11.1% over the past 12 months.

That makes it a bargain buy, according to Bell Potter investment advisor Christopher Watt.

“In our view, Santos remains a discounted energy stock with the lowest implied oil price,” Watt told The Bull.

“The energy giant reported a solid first quarter production result in fiscal year 2023.”

Santos’ outlook is pleasing to Watt.

“The company retained fiscal year 2023 guidance,” he said.

“Santos is geographically diversified. Also, it offers a diversified product mix across LNG, domestic gas, crude oil and liquids.”

A 4.7% dividend yield also helps the buy case.

The team at Macquarie Group Limited (ASX: MQG) agrees with Watt’s bullishness.

The Motley Fool reported a fortnight ago that those analysts had a price target of $9.95 for Santos. That’s about a 40% upside from the current level.

The company with everything going for it

Industrial real estate manager Goodman Group (ASX: GMG) is Medallion Financial Group private client advisor Stuart Bromley’s pick.

The business has many tailwinds.

“It has high quality properties, blue chip tenants, an occupancy rate of 99% and long average lease expiries,” he said.

“Competition is modest and rental growth is accelerating.”

The market has certainly woken up to Goodman’s potential, sending the share price 16% up so far this year.

Bromley is confident the business is incubating further growth.

“The company continues to build, as it progresses $13.9 billion of existing projects,” he said.

“The gearing ratio is lower than other more exposed property plays. The company offers a bright outlook.”

Citigroup Inc (NYSE: C) analysts concur.

“Its analysts are forecasting double-digit earnings per share growth out until at least FY 2025,” reported The Motley Fool last week.

“It’s no surprise, then, to learn that Citi has a buy rating on its shares with a $24.00 price target.”

The target of $24 represents about a 20% premium on current levels.

The post ‘Bright outlook’: 2 ‘high quality’ ASX 200 shares to pounce on now  appeared first on The Motley Fool Australia.

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More reading

• I think this ASX 200 share is heavily underrated by the market
• 5 things to watch on the ASX 200 on Monday
• Here are 3 ASX 200 blue chip shares that analysts love
• Santos shares are down 10% in a year. Have the dividends been worth it?
• 2 ASX 200 stocks surging ahead following guidance upgrades

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tony Yoo has positions in Macquarie Group. 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 Australia has recommended Goodman 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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