Category: Stock Market

GQG Partners Inc (ASX: GQG) is an ASX passive income all-star in my opinion. It just grew its annual dividend per share by 17%, and I think it’s still one to watch.

The GQG share price has taken its shareholders on an impressive run, rising by around 30% since the start of 2024. It has lifted by 48% since I called it “my pick for superior income in 2024“.

Dividend growth

GQG reported its 2023 annual result on Friday, which showed average funds under management (FUM) increased 14.7% to US$101.9 billion, net revenue increased 18.5% to US$517.6 million, net profit after tax (NPAT) grew 18.7% to US$282.5 million and distributable earnings rose 17.4% to US$297.9 million.

All of those growth numbers helped GQG’s dividend per share increase 17.3% to US 9.1 cents. At the current GQG share price and foreign exchange rate, that translates into an FY23 dividend yield of 6.4%.

There aren’t too many fund managers delivering double-digit profit growth and dividend growth at the moment.

Could the ASX passive income payments keep growing?

The ASX passive income all-star generates nearly all of its revenue from asset-based management fees as opposed to performance fees. If funds under management (FUM) grow, then revenue, net profit and dividends should be able to keep growing.

The fund manager experienced an average FUM of $101.9 million in FY23, and it finished the year with a closing FUM of $120.6 million. If the US$120.6 billion closing FUM ends up being the average FUM for FY24, that would suggest a rise of another 18%. Ongoing net inflows can help here.

Fund managers are very scalable businesses – it doesn’t necessarily take another 10% more people to manage 10% more FUM, so more FUM can translate into even faster earnings growth.

But, let’s play with the idea that the GQG dividend could grow by 18% in FY24. At the current GQG share price, that would translate into a forward dividend yield of 7.5%.

It’s quite possible the dividend could grow even more than that because at 31 January 2024, the FUM reached US$127 billion. So, we’ll have to see what the net inflows and investment performance are for the rest of 2024.

But, I’m quite optimistic about the business, considering its investment funds have managed to deliver good returns over the long term.

The post This ASX passive income all-star just increased its dividend by 17% appeared first on The Motley Fool Australia.

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More reading

• Why Fletcher Building, GQG, Pilbara Minerals, and Tyro shares are climbing today
• Up 55% in a year, GQG share price charging higher again on surging revenue results
• 2 cheap and ‘attractive’ ASX shares to buy now that you’ve not thought of
• What can owners of GQG shares expect in the upcoming FY23 result?
• Why the GQG share price is up 7% to a 52-week high and could keep rising

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

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ASX small-cap shares can deliver wonderful returns for investors who are brave enough to look at them. In fact, in 2024, I’d rather buy smaller businesses than ASX blue-chip shares.

Don’t get me wrong, I think the ASX has many quality, large businesses such as Wesfarmers Ltd (ASX: WES), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Sonic Healthcare Ltd (ASX: SHL), Brickworks Limited (ASX: BKW) and Xero Limited (ASX: XRO).

And I’m not suggesting that every small-cap will do well — I don’t usually look at a business with a market capitalisation of less than $100 million.

But if I want to achieve stronger returns (and I do), I think some of those smaller names could be good ideas for a few different reasons.

1. Growth potential

Smaller businesses are typically much earlier in their growth journey than blue chips.

To give ourselves a good chance of beating the market return, I think we need to see potential revenue/profit growth that’s faster than the market’s growth over a longer time period (such as three or five years).

It’s much easier for a company to double its revenue from $10 million to $20 million than it is to go from $1 billion to $2 billion.

Every business has a growth ceiling – once it reaches a certain level, volume growth can slow (and be limited to population growth and inflation). The earlier we can identify these businesses with strong growth potential, the better the shareholder returns may be.

Bear in mind that every big business was small once, including stocks like Amazon.com and Microsoft. But we can’t know for sure if an ASX small-cap share will do well, and it can take years for the growth to play out, so patience is critical.

2. ASX small-cap shares are under-researched

Many analysts and investors typically follow the performance of ASX blue-chip shares. This means the market rarely undervalues these companies by any significant amount. There aren’t many major surprises.

But, a significantly smaller number of people are analysing those ASX small-cap shares, so they have less public attention and coverage. This can sometimes mean they trade on an attractive price/earnings (P/E) ratio even though they have a much larger growth runway ahead of them.

I like finding ASX shares where the market underappreciates a company, and the smaller end is the right place to look, in my opinion.

When a stock has a relatively low P/E ratio, it can also lead to a solid dividend yield. I was able to buy Altium Limited (ASX: ALU) shares roughly a decade ago with a dividend yield of more than 3%, simply because it wasn’t priced for how much growth it was about to achieve.

3. Takeover potential

As a bonus, a takeover offer can suddenly appear, rapidly increasing the return.

There have been a number of ASX shares that I liked which received (and accepted) takeover offers, including Volpara Health Technologies Ltd (ASX: VHT), Pushpay and Healthia. If the overall market doesn’t recognise the potential, a bidder may swoop in and deliver the returns we’re looking for.

Plenty of ASX small-caps have seen their share prices lift in the last few months, so there may not be as many cheap opportunities today. But I think there are still more than enough if you do your research.

The post 3 reasons why I’d buy small-cap shares over ASX blue chips in 2024 appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up this week
• Buying Altium shares amid blockbuster takeover deal? What you need to know
• I’d invest $580 a month in ASX 200 shares to aim for a million!
• Here are the top 10 ASX 200 shares today
• Why Altium, Goodman, Magellan, and Wesfarmers shares are storming higher today

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Altium, 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 Altium, Amazon, Brickworks, Microsoft, Volpara Health Technologies, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and Xero. 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 positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and Xero. The Motley Fool Australia has recommended Amazon and Sonic Healthcare. 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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If you want a comfortable retirement, then you will likely need a sizeable superannuation fund.

While everybody’s needs are different, a $1 million superannuation fund is thought to be a good fit for most.

That’s because having $1 million available in retirement means you could invest it in a group of ASX dividend shares that average 4% yields and earn $40,000 of passive income from dividends each year to fund your lifestyle.

But how could you build such a nest egg? Let’s have a look at your options.

Building a $1 million superannuation fund

How you get to $1 million will largely depend on when you start the process.

As with all investing, the sooner you start, the better. That’s because of the way that compounding supercharges your returns. The longer you leave it to do its thing, the more you benefit.

For example, an investor with a $10,000 superannuation fund at the age of 30 could conceivably grow it to our target amount by the time they are 60 if they add $5,000 a year to their fund each year (based on a 10% per annum return).

And if you’re living well within your means and have spare capital each month, you could consider making additional contributions to your super. Not only could this be a tax-efficient thing to do with your money, but it could accelerate your wealth building.

If we circle back to our previous example and adjust our annual contribution to $10,000 per year, you would have a $1 million superannuation fund by the time you’re 53, all else being equal.

What about if you’re older?

If you’re in your 50s or 60s then you may need to make bigger contributions to your superannuation as you may not be able to leverage compounding as much as someone in their 20s to 40s.

Let’s imagine you have just turned 55 and have $250,000 in your superannuation. To get that to $1 million, you will need to add $20,000 to your fund for 10 years and generate an average 10% per annum return.

What else could you do?

It’s important to keep an eye on the performance of your superannuation fund.

While it may be unnecessary to switch funds if you have a year of underperformance, if you notice a trend of this happening, you might want to move your money to a new fund.

After all, it could make a very big difference over the long term.

For example, $100,000 compounding at 7% per annum would become $387,000 in 20 years.

Whereas $100,000 compounding at 10% over the same period would become $673,000 million. That’s almost $300,000 more because of that 3% outperformance.

Final thoughts

Overall, it is entirely possible to build a $1 million superannuation fund. You just need to map out your path to that figure based on your age and capital.

The post How to build a $1 million superannuation fund appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up this week
• Here are the top 10 ASX 200 shares today
• 7 ASX 200 shares with ex-dividend dates next week
• 5 things to watch on the ASX 200 on Friday
• This ASX 200 energy stock is predicted to pay a dividend yield of almost 8%!

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.

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BHP Group Ltd (ASX: BHP) shares are traditionally a popular option for passive income investors.

And it isn’t hard to see why.

The mining giant regularly shares a large portion of its profits with its shareholders through the distribution of both an interim and final dividend.

This has seen the Big Australian cumulatively return tens of billions of dollars to investors over the past few years.

The good news for investors looking for a passive income boost is that the next BHP dividend is only days away from being announced. On Tuesday 20 February, the miner will be releasing its half year results and declaring its interim dividend for FY 2024.

$10,000 a year of passive income from BHP shares

If you want to generate $10,000 of income from BHP shares, then you would need to make a reasonably large investment. Though, analysts believe it could be well worth doing.

According to a note out of Goldman Sachs, its analysts are expecting the miner to pay a fully franked US$1.49 per share (A$2.28 per share) dividend in FY 2024. Based on the current BHP share price of $45.61, this equates to an attractive 5% yield for investors.

This means that you would need to own 4,386 BHP shares to pull in passive income of $10,000. That’s an investment of approximately $200,000.

But as I said above, it could be worth the investment.

As well as getting $10,000 of income from its BHP dividends, Goldman expects your shares to increase in value meaningfully.

It has a buy rating and $49.40 price target on them. If they were to rise to this level, they would have a market value of almost $217,000.

Throw in the passive income and you’re looking at a ~$27,000 return on your investment. Not bad if you ask me!

The post I’d need this many BHP shares for passive income of $10,000 a year appeared first on The Motley Fool Australia.

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• Why these 3 top ASX 200 stocks grabbed the Motley Fool’s headlines this week
• 5 steps to becoming a milionaire with ASX shares
• Why ASX nickel shares are ending the week with a spring in their step
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• Which ASX 200 large-cap shares offer the best dividend yields in 2024?

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.

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The share market has historically been a great place to grow your wealth.

Over many decades, it has delivered investors an average annual return of approximately 10%.

This has allowed investors to turn their excess capital into something significant.

But how long would it take to turn $20,000 into $100,00 with ASX dividend stocks? Let’s find out.

Turning $20k into $100k with ASX dividend stocks

Firstly, if you’re not in immediate need for the income generated from ASX dividend stocks, then it would pay to reinvest your dividends.

By doing so, you can take advantage of compounding fully to supercharge your returns.

Secondly, a return of 10% is what share markets have generated historically. I would expect the same again over the long term, but it is not a guarantee.

With that in mind, a single investment of $20,000 earning a 10% per annum would take 17 years to turn into $100,000.

But you don’t necessarily have to settle for that. If you want to get to your goal sooner, you could make additional contributions.

For example, a $20,000 investment earning 10% per annum with $500 monthly contributions takes 7 years to turn into $100,000.

Beating the market

The 10% return is based on historic averages. Some investors will outperform the index if they can unearth market-beating ASX dividend stocks.

For example, the shares of footwear retailer Accent Group Ltd (ASX: AX1) have achieved an average total return of 14.8% per annum since 2014.

This would have turned $20,000 into approximately $80,000 over the last decade.

A company that has delivered even stronger returns for investors is computer hardware and software distributor Dicker Data Ltd (ASX: DDR). This ASX dividend stock has recorded an average total return of 27% per annum over the last 10 years.

That would have turned a $20,000 investment into approximately $220,000.

The key is to identify high quality ASX dividend stocks that have strong long-term growth potential, competitive advantages, and robust business models. If you can find these shares, you may get to $100,000 quicker than you think.

The post How long would it take to turn $20,000 into $100,000 with ASX dividend stocks appeared first on The Motley Fool Australia.

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More reading

• Last time this ASX 300 stock reported results, it surged 19%. Will it deliver again next week?
• $20k of savings? Here’s how I’d aim to turn that into a second income of $6,705 a month!
• 3 ASX dividend shares with 5%+ yields to buy now
• Forget term deposits and buy these ASX dividend shares
• Dicker Data shares charge higher on dividend boost

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 Dicker Data. The Motley Fool Australia has positions in and has recommended Dicker Data. The Motley Fool Australia has recommended Accent 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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Well, it’s that time of year again. Every three months, US companies are required to file a 10F report, which details their financial moves over the preceding quarter.

The 10F filing from Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) is probably one of, if not the, most anticipated on the entire American stock market.

The last time Berkshire Hathaway filed a 10F report, we covered some of Buffett’s significant stock sales, as well as the far fewer buys.

So what does the latest report tell us?

What has Berkshire Hathaway been buying (and selling)?

Compared to the November 10F, this February’s report was far tamer. However, Buffett was still a net seller of stocks over the three months to 31 December.

Here are some of Berkshire’s major sales, according to WhaleWisdom:

• HP Inc (NYSE: HPQ), with Berkshire selling US$2.4 billion worth of stock
• Apple Inc (NASDAQ: AAPL), US$1.93 billion sold
• D.R. Horton Inc (NYSE: DHI), with US$710 million sold
• Paramount Global Inc (NASDAQ: PARA) with US$450 million sold
• Markel Group Inc (NYSE: MKL) with US$259 million sold

In contrast, Buffett’s buys were a lot less enthusiastic:

• Chevron Corp (NYSE: CVX), with Berkshire buying US$2.36 billion worth of stock
• Occidental Petroleum Corp (NYSE: OXY), US$1.17 billion purchase
• Sirius XM Holdings Inc (NASDAQ: SIRI), US$167 million purchase

Buffett doubles down on big oil

This is an interesting report to go through. Buffett is famous for his buy-and-hold investing, once commenting that his favourite holding time for an investment is “forever”. So it’s interesting to see Berkshire trim its largest position (accounting for more than 50% of Berkshire’s portfolio) in Apple. Of Course, US$1.9 billion is something of a drop in the bucket – Berkshire still owns almost US$166.5 billion worth of Apple stock.

But the sale is still significant, given what Buffett has previously said.

Also significant is Buffett’s buyup of oil giant Chevron, as well as Occidental. Last quarter’s 10F filing revealed that Berkshire had offloaded shares in Chevron. As such, it’s notable to see Buffett buying them back up, as well as shares in fellow oil stock Occidental. The recent volatility in oil prices (and thus the share prices of oil stocks) could have something to do with this.

Buffett’s other major sale was in tech company HP. HP shares haven’t gone anywhere for a while but did rally around 20% between October and December last year. So perhaps this gave Buffett an excuse to sell a big chunk of shares.

Foolish takeaway

Buffett’s portfolio moves often seem to contradict the advice that he so generously showers on ordinary investors. Because we rarely get explanations or insights into Buffett’s thinking (and if so, they usually come months later), I tend to think it’s best to take what Buffett says as gospel advice, rather than what he does.

The post What can ASX investors learn from Warren Buffett’s latest buys and sells? appeared first on The Motley Fool Australia.

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More reading

• Buy and hold these ASX ETFs for 10 years or more
• What this Warren Buffett-linked CEO’s prediction could mean for Woodside shares
• No passive income at 50? I’d use Warren Buffett’s methods to get rich
• Big ticket clipping. Why I’m doubling down on Apple shares with $2,300
• How Charlie Munger used $1,500 to make a $107k-a-year passive income

Motley Fool contributor Sebastian Bowen has positions in Apple and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, Chevron, HP, and Markel Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, and Markel 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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It’s funny to call an ASX stock that’s rocketed 217% in the past year a “bargain”.

But that’s precisely the situation we have with Neuren Pharmaceuticals Ltd (ASX: NEU), according to the experts at Blackwattle.

Let’s check out their rationale:

‘A pause for breath’

The Neuren share price has plunged 8.2% since late December.

But the simple fact is that the Blackwattle team is not worried.

“Neuren fell 5% in January, which we saw as a pause for breath, after rising 115% over the previous 3 months,” read its memo to clients.

The steep climb in the preceding quarter was due to multiple factors.

“The rise over the previous three months was driven by the release of strong revenue growth from Daybue, their sole approved drug treating Rett Syndrome in the US and positive phase 2 trial results for their new drug NNZ-2591.”

The new drug development is critical in the Blackwattle team’s continued bullishness.

“The phase 2 results for NNZ-2591 were particularly exciting and provide strong confidence for NNZ-2591 to progress towards a phase 3 trial.”

A huge 2024 expected for this ASX stock

Blackwattle experts are far from the only ones not at all put off by either the massive rise in the past year or the diving stock price over the past six weeks.

Broking platform CMC Invest shows all five analysts covering Neuren still rating the stock as a buy.

“We continue to retain a large position in the company given the multiple value accretive upcoming catalysts in 2024,” read the memo.

“The key drivers for the portfolio tend to be fundamental company updates which give high quality companies the opportunity to demonstrate their ongoing strength and the market can reassess the outlook and what to pay for it.”

Neuren Pharmaceuticals is scheduled to release its preliminary financial results on 23 February.

The post A hot ASX stock with ‘multiple catalysts’ looming is 8% down. Time to buy appeared first on The Motley Fool Australia.

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More reading

• Why Inghams, IAG, Neuren Pharmaceuticals, and Pro Medicus shares are sinking today
• This ASX 200 healthcare share is diving 13% as short sellers take aim
• If you’d put $20,000 in this ASX healthcare stock in December 2021, you’d have $257,000 now
• Top ASX shares to buy in February 2024
• Is now the right time to buy this ASX 200 stock? Here’s my take

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

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I believe that buy and hold investing is the best way to grow your wealth.

By investing over the long term, investors are able to benefit fully from the power of compounding. This is what happens when you generate returns on top of returns.

It explains why a return of 10% per year turns $10,000 into $11,000 in one year but almost $70,000 in 20 years.

The only problem is that some readers may not be fans of stock picking or can’t decide which ones to buy and hold.

But don’t let that hold you back. Not when there are exchange traded funds (ETFs) out there that make life easy for investors.

For example, the two ASX ETFs listed below provide investors to large and diverse groups of shares in one fell swoop. This means you’re not exposed to individual stock risk.

Here’s what you need to know about them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

The BetaShares NASDAQ 100 ETF provides investors with access to the 100 largest non-financial companies on the famous Nasdaq index. These are global behemoths such as Alphabet, Apple, Meta, Microsoft, Nvidia, and Tesla.

Given the positive long-term outlooks of many of its holdings, it would not be surprising to see this ETF outperform the market again over the next decade or two.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Warren Buffett is a big fan of buy and hold investing and it certainly has served him well over multiple decades.

If you want to follow in its footsteps, then you could look at the VanEck Vectors Morningstar Wide Moat ETF. This ETF invests in the types of companies that the Oracle of Omaha would normally buy. These are companies with attractive valuations, strong business models, and competitive advantages.

The post Buy and hold these ASX ETFs for 10 years or more appeared first on The Motley Fool Australia.

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Wesfarmers Ltd (ASX: WES) shares are definitely worth a spot in my ASX dividend income portfolio in 2024. The recent FY24 first half-year result was a real reminder of the quality of the business.

There are some wonderful businesses in the Wesfarmers portfolio such as Kmart, Bunnings, Officeworks, Priceline, InstantScripts and so on.

When it comes to ASX dividend shares, I like the idea of getting a good dividend yield. But there’s more to it than just that – I want to see dividend growth over time, profit growth and the potential for more growth in the future.  

Wesfarmers shares tick all of the boxes, in my opinion.

Dividend growth

In the FY24 half-year result, Wesfarmers’ board decided to increase the dividend per share by 3.4% to 91 cents. While that dividend growth isn’t as strong as recent inflation has been, it’s solid enough considering the business can deliver capital growth of the Wesfarmers share price.

This payment represented a dividend payout ratio of 72.3% of its net profit after tax (NPAT). I think this is a fairly generous amount, but it also leaves more than a quarter of the profit inside the business to invest for more growth.

Dividend growth is something that Wesfarmers is aiming to provide shareholders – it has grown its dividend each year since FY21.

Net profit growth

Wesfarmers pointed to Kmart as the key business that helped deliver good financial performance in the HY24 result.

Despite all of the difficulties faced in the current economic environment, Wesfarmers managed to deliver revenue growth of 0.5% to $22.7 billion, earnings before interest and tax (EBIT) growth of 1.6% to $2.2 billion and NPAT growth of 3% to $1.425 billion.

Bunnings saw total sales growth of 1.7% to $9.95 billion and generated earnings before tax (EBT) of $1.28 billion, which was a a growth of 0.3%.

Kmart saw sales growth of 7.8% to $4.88 billion and EBT grew by 26.5% to $601 million.

Wesfarmers says its strong focus on providing good value for households is resonating and enabling it to win market share.

Why I’m confident on Wesfarmers shares

The long-term for the company looks very promising. Kmart’s Anko products are doing so well that it’s expanding the distribution of the business into new markets globally, such as Canada.  

Bunnings is also a very strong business that is steadily growing organically and from its acquisitions, with Beaumont Tiles being one of the more recent buys.

I am a big believer in businesses having the investment flexibility to buy other companies, particularly when it diversifies their earnings. Wesfarmers has a long track record of moving into (and out of) industries if it thinks the long-term outlook is worth making a move.

For example, I really like the company’s efforts to invest in healthcare because of the long-term tailwind of ageing demographics.

According to Commsec, the business could pay a grossed-up dividend yield of 4.4% and it could reach 5.3% by FY26.

I think this business is definitely worth a spot in my ultimate ASX dividend income portfolio in 2024.

The post Why I’d put Wesfarmers shares in my ultimate ASX dividend income portfolio in 2024 appeared first on The Motley Fool Australia.

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More reading

• If I could buy only one ASX stock this February earnings season, it would be…
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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 positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. 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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ASX earnings season is now in full swing on the Australian share market. We’ve already heard from some big names so far, including Commonwealth Bank of Australia (ASX: CBA), CSL Ltd (ASX: CSL), Telstra Group Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES). Next week, Medibank Private Ltd (ASX: MPL) will join them

Yes, Medibank is scheduled to drop its latest earnings, covering the six months to 31 December 2023, next Thursday, 22 February.  It’s a report I’ll be watching like a hawk.

I am interested in all of the financials the company is set to give investors a look at. Last year, my Fool colleague Tristan covered how the insurer expected to “achieve total resident policyholder growth in FY24 of between 1.5% to 2%”. It will be interesting to get a report card on how that’s going.

I’m also keen to see how Medibank’s investment portfolio is faring. After all, higher interest rates have boosted the company’s investment returns in the past.

But I’ll be paying special attention to what Medibank has to say about its next dividend.

Why I’ll be watching the next Medibank dividend

I’ve long regarded Medibank as a leading candidate in the ASX healthcare space for dividend investors. It has something that most ASX shares don’t. That’s explicit support from the Australian government.

There are many government policies that herd customers towards Medibank and its private health insurance offerings. The Medicare surcharge, lifetime health cover loadings, private health insurance rebates… not too many other ASX shares benefit from this kind of customer encouragement.

This has helped shape Medibank into a reliable dividend payer. As such, it’s the dividend announcement from Medibank that I’ll be paying the closest attention to next week.

In 2023, Medibank showered investors with its largest dividends since the company was privatised in 2014. Shareholders enjoyed a March interim dividend worth 6.3 cents per share, and a final dividend in October of 8.3 cents per share. Both payments came fully franked. And both payments were increases over 2022’s interim and final dividends of 6.2 cents and 7.3 cents per share, respectively.

These dividend payments have resulted in Medibank shares offering a generous fully-franked dividend yield of 3.86% at current pricing. If Medibank announces an even higher dividend next week, my belief that this company is a fantastic income stock for dividend investors will only solidify.

The post Here’s why I’ll be watching the Medibank results like a hawk appeared first on The Motley Fool Australia.

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More reading

• Beyond ASX 200 bank shares: 3 insurance plays with nice dividends
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• Want a large and growing dividend? Medibank shares might be the answer
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Motley Fool contributor Sebastian Bowen has positions in CSL, Telstra Group and Wesfarmers. 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 Telstra Group and Wesfarmers. The Motley Fool Australia has recommended CSL. 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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