Author: openjargon

Investors have pummelled ASX 200 stock Fletcher Building Ltd (ASX: FBU) over FY24, but the building materials company shot the lights out today.

The Fletcher Building share price hit an intraday high of $3.06, up 12.5% on yesterday’s closing price. It retraced some of its gains to close the session at $2.96, up 8.82%.

However, even with today’s gains included, the ASX 200 stock is down a whopping 35.7% over the past 12 months.

The stock was the second-biggest mover among ASX 200 shares behind Xero Ltd (ASX: XRO) today.

What pushed Fletcher Building shares higher on Thursday?

The share price gain follows a report in The Australian that US-based global investment firm Platinum Equity may be interested in buying the New Zealand-based company, which also has operations here.

The Australian reported that Gresham Advisory Partners, Platinum’s financial advisor, is investigating a buyout of all or parts of the Fletcher Building business.

Platinum describes itself as an “alternative asset management firm that invests institutional capital from around the globe”.

It owns 50 companies and specialises in private equity buyouts and investing in the private and public debt of underperforming and undervalued companies.

Platinum already owns other building materials companies. They include Cabinetworks Group, the largest independently owned manufacturer and distributor of kitchen and bathroom cabinets in the United States.

Last year, Platinum also bought the Australasia windows, doors and building products business of JELD-WEN Holding, Inc. (NYSE: JELD) for approximately US$461 million.

ASX 200 stock tumbles 36% in 12 months

As you can see from the chart below, Fletcher Building has had a rough 12 months.

In 2024, the ASX 200 stock has suffered two hefty share price tumbles.

The first was an 8.65% fall on 14 February, when the company emerged from a trading halt and released its 1H FY24 report.

Fletcher Building revealed a net loss after tax of NZ$120 million compared to a net profit after tax (NPAT) of $92 million in 1H FY23. The dividend was suspended.

The company issued FY24 Group EBIT guidance in the range of $540 million to $640 million. It said the mid-point assumed a continuation of materially weaker market conditions for the rest of FY24.

The company said market weakness was especially apparent in the New Zealand residential sector where volumes had declined 20%.

Management also said it would sell its Australian Tradelink business after deciding that “further ownership of the business is not in line with the strategic objectives of Fletcher Building.”

This followed a full review of the business and a $122 million non-cash impairment and write-down in Tradelink’s carrying value.

The company also announced that its CEO, Ross Taylor, had decided to retire and its chair, Bruce Hassall, would be standing down.

The next significant fall for the ASX 200 stock was on 13 May, when the company released a disappointing trading update and downgraded guidance.

The company said it expected to fall short of its EBIT (before significant items) guidance of NZ$540 million to NZ$640 million and now expected EBIT in the range of NZ$500 million to NZ$530 million.

The post Beaten-up ASX 200 stock surges 12% on buyout rumour appeared first on The Motley Fool Australia.

More reading

• ASX 200 shares vs. property: Which has performed better since the COVID crash?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• These 2 ASX shares could win big time in the long term
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Bronwyn Allen 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

National Australia Bank Ltd (ASX: NAB) shares had a tough time on Thursday.

The big four bank’s shares ended the day over 1% lower at $34.40.

Why did NAB shares fall?

This weakness appears to have been driven by a broker note out of Goldman Sachs this morning.

According to the note, its analysts have been looking over the banking sector following the release of updates this month. Commenting on the updates, the broker said:

1H24 reported PPOP/cash earnings were -8%/-9% on pcp but resulted in small upgrades to our FY24E cash EPS forecasts. Four key earnings themes suggested the deterioration in bank fundamentals may be slowing: i) commercial lending pipelines are strong, ii) mortgage NIM headwinds are finding a base and deposits spreads have held up, iii) there were some signs of deteriorating asset quality but it remains better than long-run averages and asset values to support losses (and potentially provision releases), and iv) strong capital positions saw A$2.4 bn of additional capital to be distributed to shareholders versus our pre-result forecasts.

While there clearly were some positives, the broker highlights that fundamentals are weak and valuations are extreme. It adds:

Bank 12-m forward PERs are currently at the 99th percentile, our DCF valuations are 17% below current share prices, and the spread between bank fully-franked yields and the 10-year bond yield is currently at its lowest level in nearly 15 years. While bank PER relative to non-bank industrials remains c. 5% cheaper than the historic average, we think this underestimates the relative deterioration in fundamentals.

In fact, the broker warns that the banks are “close to record expensive.” It adds:

To this end, a simple model that assesses bank relative to non-bank industrial fundamentals (EPS growth, ROE and franking) is currently at the third percentile and so when we adjust relative PERs for this, banks are trading at close to record expensive, i.e. 93rd percentile.

NAB downgraded

In light of the above, the broker has taken its buy rating off NAB shares and downgraded them to neutral with an unchanged price target of $34.04. This is a touch lower than where its shares are currently trading. It commented:

NAB is trading on a 12-mo forward PER of 15.4x, at the 95th percentile versus a 15-year history, and the 15-year average of 12.2x. 2. With the exception of CBA, NAB trades well above its 15-year average versus each of its peers on a 12-mo forward PER basis.

The post Why did NAB shares just get downgraded? appeared first on The Motley Fool Australia.

More reading

• What’s the dividend yield of NAB shares right now?
• Here’s what Wilsons is saying about ANZ, CBA, NAB, and Westpac shares
• An ASX dividend giant I’d buy over NAB shares for 2024
• It was huge week for ASX 200 bank shares. Here’s why
• How much passive income would I make from 200 NAB shares?

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. 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.

Many income-seeking investors may be focused on individual ASX dividend shares. ASX-listed exchange-traded funds (ETFs) could be a useful addition to a portfolio.

An ETF’s dividend yield is dictated by the payments from their underlying holdings. If the businesses inside the ETF collectively have good dividend yields, then the ETF’s yield should also be appealing too.

There aren’t many ASX ETFs paying dividend yields above 5%, but below are four that do have relatively high yields.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The concept of this fund is that it provides low-cost exposure to companies on the ASX with higher forecast dividend yields than other ASX shares.

Diversification is achieved by restricting the proportion invested in any one industry to 40% of the total ETF and 10% in any one company.

It has a total of 71 holdings, with significant positions in companies like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), Wesfarmers Ltd (ASX: WES) and Westpac Banking Corp (ASX: WBC). It gives a lot of exposure to the ASX’s blue-chip shares.

According to the latest Vanguard monthly update, the VHY ETF has an annual management fee of 0.25% and a grossed-up dividend yield of 6.5%.

Australian Top 20 Equity Yield Maximiser Fund (ASX: YMAX)

This fund owns 20 of the largest ASX blue-chip shares, providing quarterly income to investors. It also employs a ‘covered call‘ strategy to enhance dividend income and “partly offset potential losses in falling markets” according to Betashares.

Four companies in the YMAX ETF portfolio have a weighting of at least 7%: BHP (15.4%), CBA (13.6%), CSL Ltd (ASX: CSL) (9.5%), and NAB (7.4%).

This fund has a higher management fee of 0.76% than the VHY ETF, though it also has an even higher grossed-up dividend yield of 9.8%.

Betashares Martin Currie Equity Income Fund (ASX: EINC)

This ASX ETF invests in an actively managed portfolio focused on ASX shares with good income attributes. It aims to provide a stronger dividend yield than the S&P/ASX 200 Index (ASX: XJO) and grow income faster than the rate of inflation.

The fund, managed by Martin Currie, selects “quality Australian companies paying attractive income, and with the potential for long-term income growth.”

It currently has names like APA Group (ASX: APA), Medibank Private Ltd (ASX: MPL), Telstra Group Ltd (ASX: TLS) and Atlas Arteria Group (ASX: ALX) in the portfolio.

Australian Bank Senior Floating Rate Bond ETF (ASX: QPON)

This ASX ETF invests in a portfolio of some of the largest and most liquid senior floating rate bonds issued by ASX bank shares. In other words, it invests in some of the safest bonds Aussie banks have issued, with their yield linked to interest rates.

If the RBA interest rate increases, the income yield rises. However, if the RBA interest rate falls, so does the income payment.

The income is paid monthly and, according to Betashares, is “expected to exceed the income paid on cash and short-dated term deposits.”

The biggest eight bond positions all have a weighting of more than 8%, and those large positions are bonds from ANZ, Westpac, NAB and CBA.

According to BetaShares, the current ‘all-in’ yield is 5.1%. This ETF has an annual management fee of 0.22%.

The post 4 ASX ETFs with yields over 5% appeared first on The Motley Fool Australia.

More reading

• Buy these 4 ASX ETFs for income, growth, or mining exposure
• Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy)
• Where I’d invest $10,000 in dividend stocks
• Buy these excellent ASX ETFs for your income portfolio in May

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 CSL and Wesfarmers. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended CSL and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

With approximately $7.9 billion in assets under management, the iShares S&P 500 ETF (ASX: IVV) is arguably one of the most popular exchange-traded funds (ETFs) on the ASX. It’s certainly one of the most popular international index funds that track shares outside the ASX.

One of the perks of an ASX-based index fund, though, is the dividend income potential it can provide. Even if an ASX-based ETF isn’t geared to provide high levels of dividend payments specifically, most ASX shares fork out relatively high levels of income, not to mention those valuable franking credits.

As such, even investors who opt for a vanilla ASX index fund like the Vanguard Australian Shares Index ETF (ASX: VAS) can expect to receive an annual dividend yield of between 3-5%. That would also come with some franking credits attached too.

But in stark contrast, US shares are famous for their lack of dividends. Many of the largest companies in the US markets don’t even pay a dividend. That includes the likes of Amazon, Alphabet and Berkshire Hathaway.

Indeed, Facebook-owner Meta Platforms made waves earlier this year when it declared its first-ever dividend. Yep, despite its near-US$1.2 trillion market capitalisation, Meta’s maiden dividend came in 2024.

So what kind of divided income can one expect from the iShares S&P 500 ETF?

Does the IVV ETF pay a decent ASX dividend?

Well, this ETF does pay its investors dividend distributions. In fact, those investors enjoy quarterly payments every three months from their IVV units – an unusual thing on the ASX.

Over the past 12 months, the iShares S&P 500 ETF has doled out a total of approximately 66 cents per unit.

That’s a little more than what investors bagged over the preceding 12 months.

At the current ASX IVV unit price of $53.73 (at the time of writing), these distributions give the fund a trailing dividend yield of… 1.23%. Given this ETF holds no ASX shares, its dividend distributions do not come with franking credits attached.

So yes, the IVV ETF does pay an ASX dividend. It just might not be on the scale that most ASX investors would be accustomed to.

Saying that, ASX investors who have held this ETF for a long time arguably don’t have many reasons to complain. What this ETF lacks in dividend firepower, it has certainly made up for when it comes to recent capital growth.

As of 30 April, IVV units have returned an average of 14.17% (growth plus dividends) per annum over the past three years. Over the past five years, investors have enjoyed a 14.69% average annual return, which stretches to 16.24% over the past ten years.

The post Does the iShares S&P 500 ETF (IVV) pay a decent ASX dividend? appeared first on The Motley Fool Australia.

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• 16% per annum: Is the iShares S&P 500 ETF (IVV) too good to turn down?
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• If I’d put $5,000 in iShares S&P 500 ETF (IVV) at the start of 2024, here’s what I’d have now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, Berkshire Hathaway, Meta Platforms, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Berkshire Hathaway, Meta Platforms, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Berkshire Hathaway, Meta Platforms, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Buying what looks like a high-yield ASX dividend stock isn’t always the slam dunk that an investor might hope for. A high dividend yield does indicate that a share may prove to be a lucrative source of dividend income going forward. But it also might be warning investors that the markets are expecting dividend cuts in the future. In other words, a dividend trap in the works.

When looking at ANZ Group Holdings Ltd (ASX: ANZ) shares today, one might wonder which of these camps the ASX bank stock falls into right now.

At first glance, the dividend yield on ANZ shares looks mightily compelling. At the current share price of $28.29 (at the time of writing), this big four bank was trading at a trailing dividend yield of 6.26%.

Unlike most other ASX banks, ANZ’s dividends don’t tend to always come with full franking credits attached anymore. But even so, ANZ’s latest dividend, the upcoming 83-cent interim payment that investors will bag on 1 July, will be partially franked at 65%.

The previous dividend, the December final dividend of 94 cents per share, which contributes to the second half of ANZ’s current yield, was also partially franked at 56%.

So that brings us to the crux. Is this high-yield ASX dividend stock a buy right now?

Should you buy this 6%-yielding stock?

Well, looking at ANZ shares today, I think the answer to this question depends on what kind of investor one might be.

To start with, I don’t believe ANZ shares are a dividend trap right now. Despite the high yield on display. It’s normal for all ASX banks shares to trade with relatively high yields compared to other ASX blue chips.

What’s more, ANZ is one of the big four banks. All four of these ASX stalwarts have mature business models, a loyal customer base, and established market share, honed over decades. They are also heavily regulated to ensure their own stability. All of these factors make ANZ’s earnings base (from which it pays out its dividends) very robust.

As such, I think ANZ shares would be a great addition to any investor who primarily invests in ASX shares for dividend income. Yes, the bank doesn’t offer fully franked dividends. However, its high starting yield would make it a valuable addition to any ASX dividend-focused portfolio.

Income but no growth?

However, saying that, I don’t believe ANZ shares are a great buy right now for anyone who doesn’t prioritise dividend income from their investments. Whilst ANZ shares do offer significant passive income potential, this bank does not have a strong history of delivering capital growth. To illustrate, today ANZ is trading at the same share price it was way back in January 2007.

Since ANZ is arguably one of the weaker members of the big four, I don’t see the company turning this around anytime soon. Sure, ANZ has a robust and mature customer base. But I don’t think the bank has what it takes to steal any meaningful market share from its competitors going forward.

As such, I don’t think ANZ shares are a market-beating investment. It’s my view that investors who are chasing absolute returns, and not just dividend income, would be better off looking elsewhere for their next investment.

The post Is now a good time to buy this high-yield ASX dividend stock? appeared first on The Motley Fool Australia.

More reading

• Here is the earnings forecast through to 2026 for ANZ shares
• Here’s what Wilsons is saying about ANZ, CBA, NAB, and Westpac shares
• How ASX growth shares can become top dividend stocks
• Here’s the ANZ dividend forecast through to 2026
• Why ANZ, Fletcher Building, Macquarie, and Sayona Mining shares are dropping 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.

Two more S&P/ASX 200 Index (ASX: XJO) shares are due to go ex-dividend next week, so if you’re not already an owner and you want to pick up these dividend payments, you’ll need to act quickly.

The ex-dividend date is the first day that a share trades without the next dividend payment attached.

But beware of this strategy.

It sounds like a quick and easy way to secure some extra dividend income, and yes, it certainly is. But there’s a catch (because nothing about investing is that easy!).

The catch is the share price will typically go down on the ex-dividend date. So, don’t think you can simply buy the stock, qualify for the payment, and then sell out for a profit in a couple of quick transactions.

The reason the share price typically goes down on the ex-dividend date is that buyers will not be entitled to the next dividend payment, so the stock is less appealing for purchase.

And, of course, every time a company pays dividends, it loses a tonne of money off its balance sheet. So, that reduces the company’s cash assets, and therefore, it loses a little of its market value.

For existing shareholders, it’s handy to be aware of upcoming ex-dividend dates so you won’t be shocked when the share price drops on the day! So this is important information for you, too.

Next week, there are two ASX 200 shares going ex-dividend. Here are the essential details.

ASX 200 shares going ex-dividend next week

Elders Ltd (ASX: ELD)

This ASX 200 agricultural and consumer staples share will pay an interim dividend of 18 cents per share on 26 June. The payment will come with 50% franking.

The ex-dividend date is next Tuesday 28 May.

Elders reported a 19% decline in revenue to $1,341.8 million for the six months ending 31 March compared to the prior corresponding period (pcp).

Statutory net profit after tax (NPAT) cratered 76% to $11.6 million. The underlying return on capital fell from 16.9% to 11.4% and the underlying earnings per share (EPS) tumbled 72% to 9.1 cents per share.

Elders said its weak half-year report was due to four headwinds: challenging seasonal conditions, cautious client sentiment, softening crop input prices, and lower livestock prices.

However, its real estate services business performed well with gross profits increasing 22.5%.

The ASX 200 share is up 12.3% in the year to date. The Elders share price is $8.43 at the time of writing.

Technology One Ltd (ASX: TNE)

The ASX 200 technology share will pay a record interim dividend of 5.1 cents on 14 June. Investors will benefit from 65% franking.

The ex-dividend date is next Thursday 30 May.

Technology One reported a 16% bump in revenue over the pcp to $244.8 million, with total annual recurring revenue (ARR) up 21% to $423.6 million.

The company’s profit after tax was up 16% pcp to $48 million, so it decided to bump up its interim dividend by 10% this year.

The ASX 200 share is up 15.6% in the year to date. Technology One shares are currently $17.73 apiece.

The post 2 ASX 200 shares trading ex-dividend next week appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
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• Is this ASX 200 tech stock in the buy zone following its results?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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 Technology One. The Motley Fool Australia has recommended Elders and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you’d invested $3,000 in Liontown Resources Ltd (ASX: LTR) shares at this time last year, you’d be nursing some hefty losses.

Hit by another sharp retrace in lithium prices over the latter months of 2023, shares in the S&P/ASX 200 Index (ASX: XJO) lithium stock are down a painful 48.8% over the full year.

But that’s not what we’re here to talk about.

Because a month ago, on 23 April, Liontown shares began a remarkable turnaround.

At the time, you could have snapped up the ASX 200 lithium stock for $1.10 a share.

So, you could have bought 2,727 shares with a $3,000 investment.

Since then the stock has soared 28.6% to today’s $1.41 a share.

That means your 2,727 shares purchased just one month ago would be worth $3845.07 today.

Quite a tidy profit from a stock that proved it’s no falling knife.

Here’s what’s been stoking ASX 200 investor interest.

Why have Liontown shares been on a tear?

The ASX 200 lithium stock ended April with a bang.

On 29 April, Liontown shares closed up 8.0% after the company reported some strong quarterly results.

Liontown is not yet in the production stages of lithium. The miner is currently developing its Kathleen Valley Lithium Project in Western Australia.

And investors reacted positively to news that Kathleen remains on track and on budget for first production by mid-2024.

Management noted that as at 31 March Kathleen was more than 85% complete “on an earned value basis”.

March also saw the miner hit another significant milestone at Kathleen with commissioning commenced at the dry plant towards the end of the month.

Liontown shares received some extra tailwinds two weeks ago, on 10 May, when the company released a new progress update for the project.

The ASX 200 lithium stock reported inking a $71 million agreement with GR Engineering Services Ltd (ASX: GNG) for the Engineering, Procurement and Construction (EPC) contract at Kathleen.

GR Engineering will deliver and commission the project’s Paste Plant facility which will support underground mining operations.

“We are pleased to award the contract for the design and construction of the Paste Plant which will support and further de-risk the planned underground production rates at Kathleen Valley,” Liontown CEO Tony Ottaviano said.

And Motley Fool analyst James Mickleboro noted how this might offer a boost for Liontown shares:

The good news is that this forms part of planned and budgeted next stage of growth capital costs post first production and funding is covered by the recently announced $550 million financing facility.

The post Guess how much a $3,000 investment in Liontown shares ballooned to in just one month appeared first on The Motley Fool Australia.

More reading

• ASX 200 shares vs. property: Which has performed better since the COVID crash?
• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Could Liontown shares roar 30%+ higher?
• What the federal budget means for interest rates and ASX shares

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 recommended Gr Engineering Services. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.