Author: openjargon

Woolworths Group vs Telstra Group shares: Which blue chip is better for passive income?

Looking for steady passive income from your investments? It’s hard to overlook two of Australia’s biggest blue-chip icons: Woolworths Group Ltd (ASX: WOW) and Telstra Group Ltd (ASX: TLS). Both are household names and staples in many portfolios — but which one deserves your cash if dividends and reliable returns are your top priority? Here’s how Woolworths shares stack up against Telstra shares for income-focused investors.

The case for Woolworths Group

Woolworths is a retail giant, dominating the Australian supermarket sector and also owning Big W in Australia plus several New Zealand grocery chains. With its vast network of stores and a brand reputation for reliability, Woolworths has been the go-to for grocery essentials for decades. According to its most recent public description, the company operates over 1,400 stores and employs a huge workforce across Australia and New Zealand.

From a dividend perspective, Woolworths has long been regarded as a defensive play: groceries and essentials tend to be in demand regardless of how the economy is faring, which can mean stable revenues and regular profits.

Top fundamentals include:

• Dividend yield of 2.53% (fully franked at 100%)
• P/E ratio of 41.38, which is on the high side compared to many other blue chips
• Year to date return of 33.6%, showing strong recent share price momentum

Woolworths has a long history of fully franked dividend payments, and its latest dividend was $0.52 per share, paid in September 2026.

The case for Telstra Group

Telstra is Australia’s largest and best-known telecommunications provider, spanning mobile, internet, and enterprise solutions. With a widespread network and a historic reputation for dividend consistency, Telstra is often viewed as a classic income stock. The company has been revamping its operations in recent years, with several subsidiaries under the Telstra Group banner after a 2022 restructure.

For those chasing passive income, Telstra ticks a few appealing boxes:

• Dividend yield of 4.37% (franked at approximately 90%) — comfortably beating Woolworths on headline yield
• P/E ratio of 24.17 — much lower than Woolworths, suggesting a more moderate valuation relative to recent earnings
• Year to date return of 3.1% — more subdued share price growth than Woolworths this year

Recent dividends have been $0.105 per share (final, September 2026) and $0.105 per share (interim, March 2026), mostly fully franked.

Valuation comparison

Here’s how Woolworths and Telstra stack up on the key valuation and dividend figures that matter most to income-oriented investors:

	Woolworths Group	Telstra Group
Market Cap	$46.57 billion	$53.58 billion
P/E Ratio	41.38	24.17
Dividend Yield	2.53% (100% franked)	4.37% (c.90% franked)
Dividend per Share	$0.97	$0.21
Earnings per Share	0.925	0.199

Note: Woolworths’ higher P/E ratio means investors are paying more for each dollar of reported earnings than with Telstra. Woolworths currently has full franking, which can be very valuable for those on lower tax rates or SMSF investors, whereas Telstra’s recent dividends have been about 90% franked.

Recent share price momentum

Looking at the most recent shared closing date of 6 October 2026:

• Woolworths closed at $38.12, down 0.42% on the day, but remains up a very strong 33.6% year to date.
• Telstra closed at $4.81, flat on the day, delivering a year to date return of 3.1%.

Which is the better buy?

For passive income seekers, Telstra Group stands out thanks to its much higher headline dividend yield (4.37% vs Woolworths’ 2.53%), plus a still-solid degree of franking on recent payments. While Woolworths easily takes the lead on recent share price gains, its yield is materially lower and its P/E ratio is far higher, suggesting it may be priced for stronger growth than is typically delivered by supermarket stocks.

That said, Woolworths’ defensive qualities and fully franked dividends remain attractive, especially for those wanting reliability in tougher economic climates. But if my main priority is income — particularly in the form of regular, meaningful cash flow — I’d lean toward Telstra Group right now. The yield is simply more generous, and it trades on a lower earnings multiple, which helps reassure me that I’m not overpaying for those dividends.

The post Woolworths Group vs Telstra Group: Which ASX blue chip pays better passive income? appeared first on The Motley Fool Australia.

More reading

• Here’s the dividend forecast out to 2029 for Woolworths shares
• My favourite ASX passive income shares for retirees
• How much passive income can I earn from a $950,000 superannuation balance?
• 3 defensive ASX shares I’d buy in a market sell-off
• How much must I invest in Telstra shares to earn a $1,000 passive income in 2027?

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Owners of Woolworths Group Ltd (ASX: WOW) shares have seen their dividends bounce around over the past decade or so. But, analysts think the supermarket business could have turned a corner and deliver consistent growth.

Woolworths’ dividend is funded by various segments, including its Australian supermarkets, New Zealand supermarkets, business-to-business (B2B) food suppliers, BIG W, Petstock and more.

Following a 15.4% rise of underlying net profit to $1.6 billion in FY26, Woolworths decided to hike its annual dividend per share by 15.5% to 97 cents.

If the company continues to deliver higher profits, the dividend is likely to continue rising. Let’s have a look at what analysts think could happen with the Woolworths dividend in the coming years.

FY27

According to the projection on Commsec, the supermarket business is forecast to increase its payout by 15% to $1.115 per Woolworths share in FY27. Time will tell whether the business can deliver that level of growth, but the start of the 2027 financial year certainly looked promising.

In the Australian supermarket segment, total sales grew by 7.6% in the first eight weeks of FY27. It said that sales momentum was further strengthened during the period of the Disney Ooshies program, which is estimated to have added between 1.5 to 2 percentage points of additional sales growth. This is the largest and most important division, so strong sales growth is significant for the overall company.

New Zealand food total sales increased by 4.2% in the first eight weeks of FY27, with improved momentum in the fourth quarter reflecting some benefit from Disney Ooshies.

The business also said that BIG W total sales declined “modestly” in the first eight weeks, reflecting ongoing cost-of-living pressures on households, particularly budget customers and weaker trade in the everyday business.

Woolworths expects customers to remain value-focused in the year ahead and it’s committed to limiting the impact of rising costs with low and dependable prices.

The company said it aims to be even more efficient, leveraging technology to be more productive in order to reinvest in itself.

Trading conditions are expected to remain subdued for New Zealand supermarkets and challenging for BIG W.

The projected payout for FY27 translates into a potential grossed-up dividend yield of 4.1%, including franking credits, at the time of writing.

FY28

We’ll see how future financial years play out for the wider economy, but analysts expect the business can continue its dividend growth in future years.

The forecast on Commsec suggests the business could hike its annual dividend per Woolworths share by 7.2% to $1.195 in FY28.

FY29

The earnings and dividend are projected to become even better in the last year of this decade.

The projection on Commsec suggests that the business could hike its annual dividend per share by another 8.1% to $1.292 per share in FY29. That suggests the grossed-up dividend yield could be 4.8%, including franking credits, by the end of the decade.

Hopefully the payouts are more defensive going forwards. But, it’s not the biggest dividend yield around, so there could be other ASX shares that offer better returns.

The post Here’s the dividend forecast out to 2029 for Woolworths shares 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 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.

Atlas Arteria Group (ASX: ALX) shares are $3.82, up 0.4% today and down 20% over 12 months.

Atlas Arteria is a toll roads owner, operator, and developer.

The company owns five toll roads in France, Germany, and the United States.

This year, Atlas Arteria shares paid investors an unfranked annual dividend of 40 cents per share.

According to analyst predictions published on CommSec, Atlas Arteria is expected to pay 37 cents per share in 2027.

Based on today’s share price, that equates to a dividend yield of 9.7%.

That’s more than twice the average 4.2% yield delivered by the S&P/ASX 200 Index (ASX: XJO) last financial year.

How much is that in dividends?

If I bought $15,000 worth of Atlas Arteria shares today, I’d own 3,926 shares.

If the experts are right, and I were to receive 37 cents per share in dividends in 2027, that would equate to $1,452.62.

The experts have also provided a dividend prediction for 2028.

They expect Atlas Arteria shares to pay 44 cents per share in dividends.

On a $15,000 investment, that would give me $1,727.44 in dividends.

That equates to a dividend yield of 11.5%.

Do the experts recommend Atlas Arteria shares?

Atlas Arteria shares have paid 40 cents per share in annual dividends since 2022.

However, that doesn’t guarantee anything about the future.

Before you buy a stock for income, you have to do your research and feel satisfied that the dividend yield is sustainable long term.

Before you start that process, let’s take a look at some expert ratings on the stock.

Morgans has a hold rating on Atlas Arteria shares with a 12-month share price forecast of $4.74.

That implies about 24% potential upside ahead.

In a note, Morgans noted the possibility that IFM Investors might be back with another takeover offer.

IFM offered $4.75 per share in April, with a promise to increase it to $5.10 if its stake rose above 45% by the offer’s closing date.

The Atlas Arteria board rejected the offer.

The offer period closed in July, by which point IFM has increased its stake from 34.5% to 67.4%.

Citi also has a hold rating on Atlas Arteria shares with a 12-month target of $4.80, implying 26% upside ahead.

RBC Capital has a sell rating with a $3.60 target, suggesting a 6% downside ahead.

Macquarie gives Atlas Arteria shares a buy rating with a $4.75 target.

Atlas Arteria share price snapshot

The Atlas Arteria share price has fallen 20% over 12 months and 37% over five years.

The post If I invest $15,000 in Atlas Arteria shares, how much would I get in dividends? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of Motley Fool Money. 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 Macquarie Group. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) shares are down 0.6% to 8,677.3 points on Thursday.

Among the 11 market sectors of the ASX 200, consumer staples is in the lead today, up 1.3%.

The materials and mining sector is the laggard, down 1.6%.

Morgans has released some new notes and ratings for investors to consider.

Let’s take a look.

Megaport Ltd (ASX: MP1)

The Megaport share price is $19.76, down 6.2% today and up 33% over 12 months. 

Morgans has a buy rating and 12-month price target of $27 on this ASX 200 tech share. 

This implies a potential 37% upside ahead.

The broker said: 

MP1 recently raised its FY27 EBITDA guidance by 25%.

The compute and network businesses continue to deliver above expectations and MP1 announced three new AI infrastructure contracts with a Total Contract Value of ~A$1bn.

Collectively these set a glide path for annualised EBITDA in excess of $850m.

We upgrade our EPS forecasts materially. Our Target Price lifts to A$27 per share and we retain our BUY recommendation.

Bank of Queensland Ltd (ASX: BOQ)

The Bank of Queensland share price is $6.40, up 0.4% today and down 12% over 12 months. 

Morgans has a hold rating and 12-month price target of $6.40 on this ASX 200 financial share.

This suggests the bank stock is fully valued.

The broker said: 

We expect a mid-single digit decline in 2H26 earnings (ex notable costs).

Target price reduced to $6.40/sh, as the outlook for ROTE improvement moderates.

At current prices, total potential TSR is c.4.6% (including c.6.3% cash yield).

Hence, we moderate our BOQ rating from ACCUMULATE to HOLD.

Orica Ltd (ASX: ORI)

The Orica share price is $22.85, down 1.9% today and up 7% over 12 months. 

Morgans has an accumulate rating and 12-month price target of $26.52 on this ASX 200 materials share. 

This implies a potential 16% upside ahead.

The broker said: 

ORI has updated the market on its US AN sourcing, non-core land sale, recent acquisitions, cost out program and FY26 business performance. The important point is that the broader business continues to perform strongly, in line with its expectations.

ORI will report its FY26 result on 12 November.

We have trimmed our FY27 NPAT forecast by 3.6% reflecting increased AN sourcing costs in the US, more gradual recovery in Indonesia coal production, plant turnarounds and higher interest costs given the Deer Park sale isn’t going through.

We move to an ACCUMULATE rating with a revised price target of A$26.52.

The post Buy, hold, sell: Orica, Bank of Queensland, Megaport shares appeared first on The Motley Fool Australia.

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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 Megaport. 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.

Lovisa Holdings Ltd (ASX: LOV) shares have crashed into the red in Thursday lunchtime trade.

At the time of writing, the Australian jewellery chain’s shares are down just over 9% to $22.45 a piece.

It’s been a pretty rocky road for the company’s share price over the past year. After suffering a strong sell-off in November last year, and again in February, the ASX consumer discretionary shares have experienced several peaks and troughs.

Over the past 12 months, the shares have fluctuated anywhere between $19.30 and $39.33 each. They’re now down around 23% for the year to date, and 39% lower than this time last year.

Why are Lovisa shares crashing today?

Today’s share price decline appears to be the result of the company’s latest update to the ASX.

Ahead of the market open this morning, Lovisa announced a change to its senior executive lineup.

It said that its group chief financial officer, Chris Lauder, has resigned. He will serve his six-month notice period, and his final day will be Wednesday, the 7th April 2027.

The company confirmed that he is fully supporting an orderly transition and said that it is in search of a successor.

“Lovisa has a very strong global finance team, and the Board will appoint a successor following a global search process,” the company said in its ASX statement.

“A further announcement will be made when a successor is appointed.”

It’s not uncommon for investors to sell up their shares in an ASX company during leadership changes. There are often concerns about increased uncertainty about the company’s near-term direction, and the risk that the changes suggest hidden problems.

The announcement follows a strong FY26 result in August

Today’s news follows the company’s FY26 results, which it posted to the ASX in late August. 

Lovisa confirmed its total revenue increased 17.6% to $938.8 million, while comparable-store sales rose 2% for the year.

The company saw a 14.1% increase in its EBIT, and NPAT climbed 10.7%. The company generated a 21% increase in its operating cash flow, and shareholders also received a boost. Its 86-cent per share full-year dividend represents an 11.7% increase from FY25.

Investors were clearly happy with the result, and the share price spiked to a six-month high soon after the announcement. 

The peak didn’t last for long, though, and the shares soon tumbled downwards again.

What do the experts think of Lovisa shares?

Market Index data shows that, at the time of writing, the majority of brokers have a buy rating on the shares. The $29.09 average target price implies an upside of around 28%, at the time of writing.

The team at Morgans said Lovisa’s FY26 results were strong, with net profit coming in ahead of consensus estimates. They added that Lovisa has ambitious expansion plans, with significant white space for continued network expansion. 

Morgans added that ongoing investment will be needed to expand Lovisa’s multinational network, but the company has the capacity to fund this, and that it expects strong returns. 

Morgans has an accumulate rating and a $31 target price.

Morgan Stanley is more bullish. The broker has a $33.50 target price and said it sees a compelling bull case for the stock based on expansion in the total addressable market, extended store roll-outs, and an increasingly diversified business.

The post Why are Lovisa shares crashing 9% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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 Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) shares are down 0.5% to 8,681 points on Thursday.

Among the 11 market sectors of the ASX 200, consumer staples is in the lead today, up 1.4%.

The materials and mining sector is the laggard, down 2.3%.

Let’s check out some new ratings from the experts.

IDP Education Ltd (ASX: IEL)

The IDP Education share price is $2.12, up 1.9% today. 

Ord Minnett has a buy rating on this ASX 200 consumer discretionary share. 

In a new note, the broker said: 

IDP Education Limited provides student placement services in Asia, Australasia, and internationally. 

IDP Education (IDP) disclosed that it has rejected two unsolicited and non-binding takeover approaches from Blackstone Singapore Pte Ltd, which is part of the global private equity firm Blackstone Inc. The latest proposal offered $2.50 per share in cash.

On our numbers, the bid equates to an FY27 price-to-earnings multiple of approximately 13.2x, but this is on depressed earnings.

Unsurprisingly, IDP’s Board has unanimously rejected the proposal, stating that it “substantially undervalues IDP and is not in the best interest of shareholders”.

The Directors highlighted that it considers the approach highly opportunistic, given the international education sector is facing significant headwinds (we point to policy uncertainty and weaker student visa issuance across key markets), which have temporarily depressed valuations.

Further, it does not factor in the upside from IDP’s multi-year transformation program.

Macmahon Holdings Ltd (ASX: MAH)

The Macmahon Holdings share price is $1.14, up 2% today. 

Ord Minnett has a hold rating on this ASX 200 materials share. 

The broker commented: 

Macmahon Holdings Limited engages in the process of surface mining, underground mining and mining support, and civil infrastructure services to mining companies in Australia and Southeast Asia.

Macmahon Holdings (MAH) has agreed to acquire Aspect Engineering Solutions in a transaction valued at an enterprise value to earnings before interest and tax (EV/EBIT) multiple of approximately 5–6x, depending on the final earn-out.

The deal will be funded from existing cash reserves and includes an upfront payment of $30 million, annual retention payments of $6million over five years, and performance-based earn-outs of $15–30 million.

MAH can choose to settle the retention and earn-out payments in shares rather than cash.

The acquisition looks financially attractive.

After incorporating the acquisition costs and earnings contribution from Aspect into our numbers, our EPS estimates are revised higher by 3% in FY27 and 6% in FY28. Our target price increases to $1.10 from $1.00 following the positive earnings changes.

Transurban Group (ASX: TCL)

The Transurban share price is steady at $12.96 on Thursday.

Morgans has a trim rating on this ASX 200 industrials share. 

The broker said: 

TCL has increased its exposure to the Sydney market via acquisition of additional equity stakes in key tollroads.

While we view positively the deployment by TCL of capital into markets and assets that it knows well, we struggle to see the cashflow benefit for investors at the acquisition price paid particularly in the context of the higher rate environment.

Target price -50 cps to $12.03/s as a result of the forecast update and adjusting our DCF discount rate higher to part-risk for the rise in risk-free rates.

We retain a TRIM rating at current prices, given potential TSR of -3%.

The post Buy, hold, sell: IDP Education, Macmahon Holdings, Transurban shares appeared first on The Motley Fool Australia.

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

Xero Ltd (ASX: XRO) shares have climbed higher in Thursday lunchtime trade.

At the time of writing, the ASX tech shares are up around 3% and are changing hands at $57.70 each.

It’s great news for investors after the stock has suffered considerable losses over the past 12 months.

The shares have fallen around 22% over the past month, are down 49% for the year-to-date, and are also a huge 63% lower than this time last year.

What on earth is going on with Xero shares?

The cloud-based accounting software company has been smashed by a tech-sector wide selloff over the past year. This was driven by concerns that AI could replace the core services of companies like Xero. At the same time, investors were spooked that tech companies had quickly become overinflated and far above fair value.

There was also an investor rotation away from growth stocks and into defensive assets earlier this year, fuelled by ongoing global volatility and inflation concerns.

There hasn’t been any price sensitive news out of the company since May, so there isn’t any indication that the continued share price decline recently is down to any company specific factors.

It’s likely that, more recently, investors have been taking their profits off the table after the shares briefly rebounded in July and part of August.  

Over the past month, there has also been a renewal of macroeconomic pressures. These include the September interest rate hike, higher-than-expected inflation figures, and sky-high 10-year bond yields. 

Is there any upside left for the ASX tech shares? Or can we expect another rebound?

If expert sentiment is anything to go by, we could see a strong share price rebound over the next 12 months.

Market Index data shows the majority of brokers have a buy rating on the stock. The $112 average target price implies an upside of around 92%, at the time of writing.

Data is similar on TradingView. The majority (six out of seven) of analysts have a buy/strong buy rating on Xero shares. The $113.34 average target price implies an upside of around 94%. But some think the shares have the potential to jump 148% higher to $144.40 each, at the time of writing.

Last month, the team at Macquarie Group Ltd (ASX: MQG) flagged that US growth and AI monetisation could act as key catalysts for Xero shares. They added that the acquisition of Melio has dramatically expanded what Xero can chase in terms of market size.

Citi, Morgan Stanley and UBS are also positive on Xero shares. The three brokers both have a buy rating on the stock and forecast a target price of $113.60, $130, and $125 respectively.

Michael Gable from Fairmont Equities is less optimistic. He has a sell rating on Xero shares and is concerned that increasing bond yields and interest rates could continue to be a headwind for technology stocks like Xero.

The post Xero shares crash 63% in a year: Is there any upside left? appeared first on The Motley Fool Australia.

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

Retiring at 60 with $750,000 in superannuation sounds like a pretty good position to be in.

But leaving work seven years before reaching Age Pension age means your savings will need to do more of the heavy lifting.

So, would $750,000 be enough to enjoy a comfortable retirement at 60?

Let’s look at the numbers.

How much superannuation do you need for a comfortable retirement?

According to the Association of Superannuation Funds of Australia (ASFA), a single retiree who owns their home outright needs approximately $56,166 a year to enjoy a comfortable retirement.

That covers everyday living expenses alongside things like private health insurance, leisure activities, holidays, and maintaining a reasonable standard of living.

ASFA also estimates that a single person needs around $630,000 in superannuation at age 67 to fund that lifestyle, assuming some support from the Age Pension.

But our hypothetical retiree wants to finish working at 60. That means funding an additional seven years of living expenses before reaching Age Pension age.

And those seven years could make a meaningful difference to their superannuation balance.

Could dividends cover the costs?

Let’s imagine our retiree invests their $750,000 in a relatively defensive portfolio of dividend-paying ASX shares and other income-producing investments.

This might include shares like Coles Group Ltd (ASX: COL), Telstra Group Ltd (ASX: TLS), and Wesfarmers Ltd (ASX: WES).

If the portfolio generates an average dividend yield of 4%, it would initially provide approximately $30,000 a year in passive income.

That is a reasonable starting point, but it falls short of ASFA’s comfortable retirement estimate.

To cover annual spending of $56,166, our retiree would need to find another $26,166 from their portfolio in the first year. That money would have to come from selling investments.

So, while a 4% dividend yield provides a substantial contribution, investment performance will play an important role in determining how long the retirement savings last.

What would be left at 67?

Let’s consider two scenarios.

In both cases, we will assume annual spending remains at $56,166 and the portfolio continues producing a dividend yield equivalent to 4% of its value.

Scenario 1: No capital growth

In the first scenario, the investments generate their 4% dividend yield but experience no capital appreciation.

Because annual withdrawals are more than the income being generated, the portfolio gradually becomes smaller.

After seven years, the original $750,000 would have fallen to approximately $543,000.

That is around $87,000 below ASFA’s current $630,000 benchmark for a comfortable retirement at 67.

Our retiree would still have substantial savings, but their financial position would be noticeably weaker than when they stopped working.

Scenario 2: 3% annual capital growth

Now let’s imagine the portfolio achieves 3% annual capital growth alongside its 4% dividend yield. That represents a total annual return of approximately 7%.

Under this scenario, the retirement balance would only reduce to approximately $718,000 at age 67.

That is around $88,000 above ASFA’s current benchmark.

Even after funding seven years of retirement, the portfolio would have retained most of its original value.

For me, that demonstrates just how significant investment returns can be when retiring early.

Of course, neither scenario is guaranteed. Dividends can change, markets can fall, and returns rarely arrive at a consistent rate.

It is important to remember that these calculations also exclude inflation, fees, and taxes. In particular, the cost of a comfortable retirement is likely to rise over those seven years, making the comparison with today’s $630,000 benchmark less favourable.

Foolish takeaway

For me, $750,000 would be a promising starting point for retirement at 60.

The numbers suggest that retiring seven years early could be achievable, particularly if investments continue growing alongside their dividend income.

But with potentially decades of retirement still ahead, I would want a reasonable financial buffer to account for rising living costs and periods of weaker investment returns.

The post Is $750,000 in superannuation enough to retire at 60? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Maas Group Holdings Ltd (ASX: MGH) shares plunged more than 20% on Thursday after doubts were raised that data centre aspirant Firmus’ float would get off the ground.

Mega float might sink

Firmus has been in the market trying to get commitments for its initial public offer (IPO), which was rumoured to be priced at $11 per share, valuing the company at $43.7 billion.

But both The Australian and the Australian Financial Review are now reporting that demand for the shares is weak, and that the IPO could be pulled entirely.

This would be bad news for Maas Group, which holds a 3.2% stake in Firmus.

Maas Group Chair Stephen Bizzell recently told the company’s annual general meeting that the company had been increasing its exposure to Firmus.

He said:

During the year and subsequent to financial year end, Maas took meaningful steps to increase its exposure to next-generation infrastructure. This included a strategic investment in Firmus Grid Limited, securing significant electrical infrastructure work supporting the development of AI and data infrastructure in Australia through JLE Group, and the acquisition of commercial property with power availability and grid proximity for future digital and energy infrastructure developments. These initiatives, together with the proposed Construction Materials divestment, represent a clear evolution in the Group’s strategic direction.

Share valuation at risk

Macquarie this week released a new research report into Maas Group, in which it was conservative as to how it valued the company’s Firmus stake.

While saying the 3.2% holding would be worth $4 per share at the $43.7 billion valuation, Macquarie only valued it at $1.42 per share, which reflected the $15.5 billion valuation at the time the investment was made.

The Australian, citing unnamed sources, reported on Thursday that the asking price for Firmus shares had fallen from $11 to $9, then $8.25, while the size of the raise had also fallen, from US$5 billion to US$3 billion.

The report said the IPO could be delayed or shelved altogether.

Maas Group shares fell as low as $4.47 in early trade on Thursday before recovering to be 24.7% lower at $4.81.

Macquarie’s price target on the company was increased from $6.75 to $8.15 this week, largely as a result of the Firmus valuation.

Maas Group also announced this week that the divestment of the construction materials business had formally been completed, and it had been paid $1.61 billion.

The company also remains entitled to receive contingency payments of up to $120 million, subject to the achievement of agreed commercial and operational milestones.

The post How the Firmus float just tanked this company’s share price appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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.

When it comes to artificial intelligence (AI) and initial public offerings (IPOs), there’s never been any shortage of excitement.

Since ChatGPT entered the scene in late 2022, markets have been captivated by the promises of AI.

By now, many people have likely experimented with some form of AI and may be using it to improve efficiency in their personal or professional lives.

Investors in AI-linked companies have clearly benefited. Over the past five years, the tech-heavy Nasdaq has rallied nearly 100%. Nvidia has led the charge, surging by more than 1,000% over this period. 

The chipmaker shows no signs of slowing down. After setting a new all-time high this week, it currently sits on the cusp of becoming the world’s first US$6 trillion company

On the IPO side of things, Elon Musk’s Space Exploration Technologies Corp (SpaceX) debuted on the NASDAQ this year. This was the largest IPO in history, raising nearly US$86 billion. It also crowned Musk the world’s first-ever trillionaire, with his wealth surging even further ahead of his tech-industry rivals.

So, when Australia’s second-largest IPO in history promises to provide Aussie investors with exposure to AI, is the opportunity too good to be missed?

I am, of course, referring to Firmus Technologies, which is set to list on the ASX later this month.

What is Firmus?

Firmus Technologies was founded in 2019 by Oliver Curtis, Tim Rosenfield, and Jonathan Levee. The company originally started out as a Bitcoin mining operation before pivoting to AI infrastructure around 2021-2022.

Today, the company designs, builds, and operates highly energy-efficient, modular, and liquid-cooled data centres, referred to as ‘AI factories’. These factories are fitted with highly sought-after specialist equipment such as Nvidia’s graphics processing units (GPUs), which are rented to companies.

With Meta Platforms, Nvidia, and OpenAI as customers and Nvidia as a supplier, many of the biggest names in tech are part of the ecosystem.

Given the scale of demand for data centres driven by the global AI boom, it’s easy to see why this IPO has gathered so much attention.

As Regal Partners’ Phil King put it, “Firmus is incredibly lucky. It’s in the right spot at the right time for the biggest technology revolution we have seen and the biggest cap-ex boom in history.”

For ASX investors with little exposure to AI-themed companies in the local market, the offering adds a new level of opportunity and excitement.

When will the company begin trading?

According to The Australian Financial Review, Firmus is set to begin trading on the ASX on 23 October. 

Based on the originally reported offer price of $11, the company is looking to raise around $7 billion. Combined with existing ownership, this would give it an implied equity valuation of nearly $44 billion. For context, this would put it in the league of well-known Aussie blue chips Transurban Ltd (ASX: TCL), Woolworths Ltd (ASX: WOW), and Woodside Energy Group Ltd (ASX: WDS). Each of these companies currently has a market capitalisation of between $40 to $50 billion.

If priced at $11, the proposed deal would be Australia’s second-largest IPO by funds raised. Telstra Group Ltd (ASX: TLS)’s 1997 listing, which raised $14 billion, still holds the top spot. Medibank Private Ltd (ASX: MPL), which raised nearly $6 billion in 2014, would move to third place.

However, overnight, it was reported that the initial bid price may be reduced as low as $8.25, amid a lack of interest from prospective investors at the higher price. This would materially reduce its market capitalisation upon listing. 

It’s also worth noting that the prospectus is yet to be released. That’s due on 12 October.

Who are the existing investors?

Should you choose to buy shares in the company, you may be wondering who you’d be investing alongside. After all, high insider ownership is a common criterion many investors look for when making a new investment, as it often signals alignment of managerial and shareholder interests. 

In the case of Firmus, there is decent alignment with company founders and their close family owning around 24% of the company. Co-Founder and Co-CEO Oliver Curtis holds the largest stake at 13.3%, followed by his father, Nick Curtis, at 5.5%. 

It’s also worth noting that the three founders have the majority of their holdings subject to escrow restrictions. This means they can’t sell their shares when the stock begins trading, even if the stock skyrockets in value. 

Other notable investors include Nvidia (7.2%) and Blackstone (6.7%). 

Several institutional investors hold 53%, including Wilson Asset Management and Regal Partners, who were early backers. 

How can ASX retail investors participate?

Not all ASX retail investors can participate in IPOs. When a company is getting ready to list, shares are allocated to specific brokers and investment banks. In the case of Firmus, that being JPMorgan, Morgan Stanley, Bank of America, and Morgans. 

If you’re interested, you’ll need to check with your broker to see if you can access an allocation. 

Retail applications and offers are expected to run from 12-19 October. 

It’s also worth noting that Firmus’ broker syndicate has revealed that around half of the IPO book is likely to go to existing investors. 

Of course, should you miss out, there will be an opportunity to buy the stock after it lists.

The common IPO trajectory

Rather than focusing on whether you can participate, you should also question whether you should do so.

IPOs are exciting, and FOMO can be a powerful motivator. 

However, history has shown that shares often retract after initially listing. 

SpaceX was arguably the most highly anticipated IPO in history. After listing at a share price of $135 on 12 June, the company soared, powered by market enthusiasm. However, within just a few months, it retreated. In August, investors could have picked up shares for $104. While it is currently trading (marginally) back above its IPO price, patience paid off for those who waited for a more attractive entry point. 

Using a more local example, fast food retailer Guzman Y Gomez Ltd (ASX: GYG) listed on the ASX in June 2024. This was regarded as one of Australia’s most successful and high-profile public floats in recent years. GYG shares followed a similar ‘pop and drop’ trajectory to SpaceX, soaring 36% on its day of listing before retracting. Only recently has the company climbed back above its IPO price.

More broadly, the Australian Financial Review reported earlier this year that of the 17 companies that had listed this year, just six were trading above their IPO price.

Firmus specific risks

Of course, it’s not just ‘IPO risk’ that prospective investors need to consider. While Firmus appears to be a promising company backed by strong demand, there are risks to consider. 

Firstly, the company has very little operating history, making it difficult to determine what it’s actually worth. Critics have noted that the company has yet to make a profit and has billions in debt. The reported listing price ($11 per share) implies a valuation multiple of up to 1,000 times its current revenue.

Another risk worth noting is environmental concerns that have been flagged with regard to data centres. These have been widely reported in the media and could cause major setbacks. 

Goodman Group (ASX: GMG) recently abandoned plans to build a $1.2 billion data centre in Sydney over similar concerns. 

It was also recently reported that hedge fund Plato Asset Management is planning to short the stock as soon as it lists. 

Another skeptic, Ten Cap’s portfolio manager Jun Bei Liu, described the Firmus IPO as a “high risk proposition”. 

As reported by the Australian Financial Review, Bei Liu described Firmus as “probably the most polarising IPO [she has] ever seen”, claiming that “the lack of detail they disclose is unprecedented.”

So, not everyone is convinced.

How to decide

If you’re still on the fence about whether to invest in Firmus, remember that investing does not need to be an all-or-nothing decision. It’s up to you to decide how much you want to invest and when. You can always start out small and build your position as you learn more about the company, or decide to wait for a more attractive valuation before going all in. 

There are also other ways to invest other than buying the stock directly. Given the likely size of the company, it could be included in the S&P/ASX 200 Index (ASX: XJO) at the December rebalance. Hence, the stock will likely make its way into many exchange-traded funds (ETFs) in the near future, providing investors with diversified exposure.

The post Should you participate in Australia’s second-largest IPO in history? appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Motley Fool contributor Laura Stewart 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 Blackstone, Goodman Group, JPMorgan Chase, Meta Platforms, Nvidia, and Transurban Group. The Motley Fool Australia has positions in and has recommended Goodman Group, Telstra Group, and Transurban Group. The Motley Fool Australia has recommended Meta Platforms and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.