Author: openjargon

The good news for income investors is that there are lots of dividend stocks to choose from on the benchmark ASX 200 index.

But which ones could be in the buy zone this month? Two that analysts are tipping as top buys are listed below. Here’s what they are saying about them:

Elders Ltd (ASX: ELD)

Analysts at Morgans think that agribusiness company Elders could be a quality option for income investors.

While it is having a reasonably tough time this year, the broker believes it will bounce back strongly in FY 2025. After which, it thinks it will be onwards and upwards for the company. It explains:

ELD is one of Australia’s leading agribusinesses. It has an iconic brand, 185 years of history and a national distribution network throughout Australia. With the outlook for FY25 looking more positive and many growth projects in place to drive strong earnings growth over the next few years, ELD is a key pick for us. It is also trading on undemanding multiples and offers an attractive dividend yield.

Morgans is forecasting partially franked dividends of 26 cents per share in FY 2024 and then 38 cents per share in FY 2025. Based on the current Elders share price of $8.86, this will mean dividend yields of 3% and 4.3%, respectively.

The broker has an add rating and $9.00 price target on its shares.

Super Retail Group Ltd (ASX: SUL)

Over at Goldman Sachs, its analysts think that Super Retail could be an ASX 200 dividend stock to buy right now. It is the owner of popular store brands BCF, Supercheap Auto, Macpac, and Rebel.

Goldman likes the company due to its belief that it is positioned to handle the tough economic environment. This is thanks partly to its huge loyalty program. The broker explains:

We believe SUL will display resilience in a softer economic environment that is built upon its competitive advantage of high loyalty (~11.0m active members accounting for >75% of sales) and this will be further bolstered as the company launches the Rebel loyalty program and continues to build personalisation capabilities. Hence, we are Buy-rated on SUL.

Its analysts expect Super Retail to be in a position to pay fully franked dividends per share of 67 cents in FY 2024 and then 73 cents in FY 2025. Based on its current share price of $14.23, this will mean yields of 4.7% and 5.1%, respectively.

The broker has a buy rating and $17.80 price target on its shares.

The post Analysts say these ASX 200 dividend stocks are top buys this month appeared first on The Motley Fool Australia.

More reading

• 3 top ASX 200 income stocks to buy now
• 5 ASX dividend shares to buy next week
• Morgans names the best ASX stocks to buy in July
• Is this the best dividend share in the ASX 200?
• 3 cheap ASX passive income shares I’d buy to target $1,000 a month

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 positions in and has recommended Goldman Sachs Group and Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

AI stocks, otherwise known as shares exposed to the mega artificial intelligence tailwind, are currently attracting the attention of ASX investors.

The big ones aren’t in Australia — they’re mostly listed on the NASDAQ-100 Index (NASDAQ: NDX) in the United States, and several are constituents of the much-lauded Magnificent Seven, such as NVIDIA Corp and Microsoft Corp.

AI is certainly the next big thing in technology, but more than that, it’s also seen as a potential answer to the longstanding issue of poor productivity growth in Western economies.

Henry Fisher of CMC Invest says demand for AI technology “could be a defining trend this decade”.

In a blog on asx.com.au, Fisher outlines some tips for investors interested in AI stocks to consider.

We summarise a few of them here.

6 tips for buying AI stocks

1. Understanding the AI ecosystem

AI comes in many forms — generative AI, cloud computing, robotics, AI chips (graphics processing units), data centres, and more. “Given the range of investment options, it’s important for investors to deepen their understanding of the AI landscape, as there isn’t a one-size-fits-all approach,” Fisher says.

2. It’s early days for AI stocks

Fisher says investing early in new technologies can be risky. He points out that only 48% of dot-com companies survived past 2004, and many that did suffered significant share price falls.

He comments:

Today’s AI landscape may have long-term winners and failures, and new AI companies may emerge down the line. Balancing these risks involves considering the uncertain timeline ahead and managing fears of missing out.

3. But AI is going to evolve quickly

The speed of AI’s development and adoption is a key factor to consider, says Fisher.

The internet and mobile phones pave the way for AI tools to reach people even faster and become more integrated into everyday life. Grasping the exponential qualities of the AI trend is essential, as is evaluating the potential risks and rewards associated with the pace of its proliferation.

4. Picks and shovels AI stocks

Picks and shovels shares are companies that provide the tools and services an industry needs. Fisher reminds investors that AI stocks will include picks and shovels businesses.

For AI, this could mean businesses like chip makers and data centres. These investments can be strategic, as they could benefit from the broader trend while maintaining diversified revenue streams. 

However, just as computers have shrunk from the size of a room to the size of our hand, AI hardware could also evolve over time. The tools powering AI in five or 10 years may differ from today’s.

As we recently reported, Australia’s biggest real estate investment trust (REIT) Goodman Group (ASX: GMG) is leaning into the AI trend by building the data centres required to make it work.

AI was a significant tailwind for Goodman in FY24, with the share price rising 73.1%, partly due to AI hype.

5. ETFs provide diversification

Fisher says AI-focused exchange-traded funds (ETFs) could be a strategic way to tap into the trend but warns:

Investors should be aware that holdings and strategies can vary widely among ETFs: some may include big tech names, where AI is just one component of a diversified business, while others may combine AI with other technology themes.

6. Competitive landscape

Fisher says the AI landscape is crowded, comprising approximately 75,700 companies. He questions what a ‘competitive advantage’ may look like in such a new world.

Start-ups with disruptive ideas can do more with less, with AI taking on a range of tasks and freeing up employees.

Meanwhile, big tech players could leverage their network effects and economies of scale to integrate AI into their existing platforms.

Competition is pivotal because, in the world of AI, one company’s software update can put another company out of business.

Foolish takeaway on AI stocks

Fisher says AI is rapidly changing by nature. This means investors must be on top of evolving trends and willing and able to switch investment strategies quickly.

He recommends undertaking thoughtful research before selecting which AI stocks to invest in.

“A long-term, diversified approach to AI through ETFs is a consideration,” he said.

The post ‘Defining trend this decade’: 6 tips for buying AI stocks appeared first on The Motley Fool Australia.

More reading

• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• Could investing $10,000 in ASX shares make you a millionaire?
• Top 5 investment themes exciting ASX shares investors in FY25
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Why did the Nasdaq Index take a dive on promising US inflation data?

Motley Fool contributor Bronwyn Allen has positions in Goodman Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Goodman Group, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have $5,000 to invest in the share market but aren’t a fan of picking stocks, then exchange-traded funds (ETFs) could be worth considering.

That’s because ETFs remove the need to pick stocks and instead give you a slice of a group of shares. In some cases this can be hundreds or even thousands of stocks in one fell swoop.

But which ASX ETFs could be quality options for a $5,000 investment in July? Let’s take a look at three funds that could be quality additions to a portfolio. They are as follows:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Many investors see Warren Buffett as a role model when it comes to investing. And it isn’t hard to see why. The Oracle of Omaha has beaten the market by a large margin over multiple decades.

This has been underpinned by Buffett’s focus on buying companies with wide moats and fair valuations. Well, the good news is that the VanEck Vectors Morningstar Wide Moat ETF has been designed around this focus.

It focuses on investing in high quality companies with sustainable competitive advantages (wide moats) and fair valuations. And with this ASX ETF smashing the market over the last decade, this tried and tested strategy continues to deliver the goods for investors.

Betashares Global Cash Flow Kings ETF (ASX: CFLO)

Another ASX ETF that could be a good option for your hard-earned money is the Betashares Global Cash Flow Kings ETF.

Betashares highlights that this ETF could serve as a core exposure to global equities or alongside existing low-cost passive global ETFs to enhance a portfolio’s emphasis on cash-generating companies. So much so, it has recently named it as one to consider buying when interest rates start to fall.

It focuses on global companies with strong free cash flow, which could be a very good thing. Betashares notes that companies that generate high levels of free cash flow historically have tended to outperform broad global equity benchmarks over the medium to long term.

Among its holdings are Google parent Alphabet (NASDAQ: GOOG), payments giant Visa (NYSE: V), and cyber security leader Accenture (NYSE: ACN).

Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)

Finally, the Vanguard All-World ex-U.S. Shares Index ETF could be a good option for a $5,000 investment.

It offers investors access to a whopping ~3,500 companies listed in developed and emerging markets across the globe. However, as its name indicates, it excludes companies from the United States.

This means it could be a good complement to popular US-centric ETFs, if you already own them.

Among this ASX ETF’s holdings are companies such as HSBC Holdings, LVMH Moet Hennessy Louis Vuitton, Samsung, and Taiwan Semiconductor.

The post Where to invest $5,000 into ASX ETFs in July appeared first on The Motley Fool Australia.

More reading

• Which US shares are ASX investors buying in 2024?
• Prediction: 2 US stocks that will be worth more than Nvidia 5 years from now
• Overinvested in ASX-focused ETFs? Here are three alternatives
• Does the VanEck Wide Moat ETF really have an 8% dividend yield?
• Buy and hold these ASX ETFs for 10 years+

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. 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 positions in and has recommended Accenture Plc, Alphabet, Taiwan Semiconductor Manufacturing, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended HSBC Holdings and has recommended the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool Australia has recommended Alphabet and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wouldn’t it be nice to generate a lasting source of income without having to ever break a sweat?

Well, the good news is that it is possible and the Australian share market is a great place to generate passive income.

This is because there are plenty of ASX shares that distribute a portion of their profits each year in the form of dividends.

Passive income from the share market

In light of the above, if I had $20,000 stashed away in a Commonwealth Bank of Australia (ASX: CBA) bank account or under my bed, I would consider putting it to work in the share market.

However, while it would be tempting to start reaping the rewards of my investment immediately, I think the smarter move is to let my investment compound.

After all, if I can grow my $20,000 into something larger, the potential passive income I generate will also be larger.

Nothing is guaranteed in the share market, but it is widely accepted that a 10% per annum return is possible. This is in line with the historical return of the share market.

With a 10% per annum return, my $20,000 would grow to become worth approximately $135,000 in 20 years. At that point, it could now be worth considering turning it into a source of passive income.

If I were able to build a portfolio of ASX dividend stocks with an average dividend yield of 6%, my $135,000 would pull in dividends of $8,100 a year. That’s the equivalent of $675 a month if distributed evenly across the months.

Should I keep going for longer? Let’s see what would happen if I did.

30-year timeframe

If I were to let my $20,000 compound at 10% per annum for 30 years instead of 20 years, it would grow to a sizeable $350,000.

The passive income on this amount would be significantly more. As before, with an average 6% dividend yield, I would be looking at dividends of $21,000 per annum.

This equates to monthly passive income of $1,750, which is more than double what I would have received if I stopped the process 10 years earlier.

It is also worth noting that my investment portfolio would continue to compound, albeit at a slower rate, after withdrawing dividends each year. This means that my income stream continues to grow year after year without having to lift a finger.

Overall, I believe this demonstrates just how wealthy you can become when you put your spare capital to work in the share market.

The post $20,000 stashed away? Here’s how I’d use it to target a $1,750-a-month passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX consumer discretionary shares led the ASX 200 market sectors last week with a 3.81% gain over the five trading days.

Meantime, the S&P/ASX 200 Index (ASX: XJO) swished 2.19% higher to finish the week at 7,959.3 points. The market benchmark hit a new record high during intraday trading on Friday at 7,969.1 points.

This followed positive inflation news out of the United States, which lifted hopes of interest rate cuts in the world’s biggest economy soon.

Eight of the 11 market sectors finished the week in the green.

Let’s review.

Consumer discretionary shares led the ASX sectors last week

Among the heavyweights of the ASX 200 consumer discretionary sector, Wesfarmers Ltd (ASX: WES) shares lifted a hefty 4.51% to finish the week at $68.57.

Shares in gaming technology company Aristocrat Leisure Limited (ASX: ALL) rose by 3.85% to $52.92. The Lottery Corporation Ltd (ASX: TLC) share price rose 2.48% to $4.96.

There was no price-sensitive news out of these top three companies in the ASX 200 retail sector last week.

JB Hi-Fi Ltd (ASX: JBH) shares smashed it despite news of a legal scuffle. The JB Hi-Fi share price rose 5.95% to finish on Friday at $66.11 per share.

Furniture retailer Harvey Norman Holdings Limited (ASX: HVN) shares lifted 4.09% to $4.45 apiece.

ASX 200 travel share Flight Centre Travel Group Ltd (ASX: FLT) took off 3.1% and landed at $21.95 per share.

Premier Investments Limited (ASX: PMV), owner of Just Jeans and Smiggle, rose 3.74% to finish at $30.52 per share on Friday.

There was no further news last week on the proposal from Myer Holdings Ltd (ASX: MYR) to acquire Premier’s Apparel Brands business in exchange for new Myer shares. It’s a watch and wait for now.

Other consumer discretionary shares that performed well last week included Lovisa Holdings Ltd (ASX: LOV) shares. The Lovisa share price rose by 5.36% to finish the week at $33.42.

Lovisa was the No. 1 ASX retail share for share price growth in FY24 with a 70.3% capital gain.

Last week, we discussed the fact that ASX retail shares rose by a healthy 19.29% in FY24 amid a serious cost of living crisis. That was more than twice the growth rate of the ASX 200 benchmark.

David Rumbens, a partner at Deloitte Access Economics, provided an answer on why this happened.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sector	Change last week
Consumer Discretionary (ASX: XDJ)	3.81%
A-REIT (ASX: XPJ)	3.27%
Communication (ASX: XTJ)	2.94%
Financials (ASX: XFJ)	2.76%
Healthcare (ASX: XHJ)	2.32%
Industrials (ASX: XNJ)	1.88%
Consumer Staples (ASX: XSJ)	1.33%
Information Technology (ASX: XIJ)	1.18%
Energy (ASX: XEJ)	(0.4%)
Materials (ASX: XMJ)	(0.57%)
Utilities (ASX: XUJ)	(0.66%)

The post Here’s how the ASX 200 market sectors stacked up last week appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
• Investing in ASX shares? Why CEO pay DOES matter when misaligned
• How I’d aim to build a $75,000 income from ASX shares and never work again!
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Xero shares doubled the ASX 200 return in FY24. What’s next in FY25?

Motley Fool contributor Bronwyn Allen has positions in Harvey Norman. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lottery, Lovisa, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman and Wesfarmers. The Motley Fool Australia has recommended Flight Centre Travel Group, Jb Hi-Fi, Lovisa, and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.