Category: Stock Market

ASX bank shares are well-known for their fat dividends, which are usually fully franked. But looking at Bank of Queensland Ltd (ASX: BOQ) shares today, the yield from this bank stock still stands out.

As of yesterday’s closing price of $6.11, BoQ shares seemingly finished up trade on a sizeable dividend yield of 6.22%. Like most ASX banks, BoQ’s dividends usually come with full franking credits attached as well. That means this already-steep dividend yield grosses up to an impressive 8.89% with the value of those franking credits included.

A 6.22% yield is high, even by ASX bank standards. For some comparisons, only ANZ Group Holdings Ltd (ASX: ANZ) comes close to Bank of Queensland’s current yield. ANZ shares are currently trading on a yield of 5.96%, although that only comes partially franked.

Westpac Banking Corp (ASX: WBC) trades on a yield of 5.34% today, while National Australia Bank Ltd (ASX: NAB) is on 4.69%.

Shockingly, BoQ’s 6.22% yield is now almost double that of Commonwealth Bank of Australia (ASX: CBA) shares, which closed yesterday with a yield of 3.54%.

So let’s get down to the crux of today’s discussion: Is this 6.22% yield for real?

Do Bank of Queensland shares really trade on a 6.22% yield today?

Well, on one level, yes.

This yield is indeed ‘legit’, as it stems from BoQ’s last two dividend payments. The first of those was the final dividend from November, which was worth 21 cents per share. The most recent payment was May’s interim dividend of 17 cents per share.

That annual total of 36 cents gives BoQ shares a 6.22% yield at yesterday’s closing stock price of $6.11.

However, as any good dividend investor knows, a dividend yield represents the past, not the future. No ASX share, including BoQ, is under any kind of obligation to maintain its dividends at a previous year’s levels. So, there is no guarantee whatsoever that if you invested $1,000 in Bank of Queensland shares today, you will bank $62 in dividend income every year going forward.

Indeed, history is not on BoQ shares’ side here. That November final dividend of 21 cents per share was actually a reduction from the final dividend of 24 cents per share that investors enjoyed in 2022.

The 17-cent interim dividend from May was also another downgrade from the 20 cents investors banked back in 2023.

Looking forward, we have no idea what the next Bank of Queensland dividends will look like until the bank reveals them.

But some ASX experts aren’t holding their breath.

For example, last week, my Fool colleague Tristan covered the views of ASX broker UBS on BoQ shares. UBS is expecting BoQ’s cash earnings to drop from $450 million in FY23 to $294 million in FY24, eventually recovering to $406 million by FY28.

ASX shares fund their dividend payments by drawing on their earnings and profits, which doesn’t bode well for higher BoQ dividends in the future.

Only time will tell what the next Bank of Queensland dividends will be worth. But BoQ investors, as with all shares, shouldn’t be banking on that 6.22% yield to continue indefinitely.

The post Is the fully franked 6.2% yield on Bank of Queensland shares for real right now? appeared first on The Motley Fool Australia.

More reading

• Can things get better for BOQ shares in FY25?
• ASX 200 bank shares ‘don’t appear overly expensive’ compared to global peers: UBS
• Which ASX shares to buy if interest rates rise (and which to avoid)
• Can the good times keep rolling for ASX 200 bank shares in FY25?
• 2 ASX 200 bank shares smashing new multi-year highs today

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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.

Good news for investors in iShares S&P 500 ETF (ASX: IVV). The exchange-traded fund (ETF) — one of the largest on the ASX — is paying its latest distribution today.

Investing in ETFs allows us to own a whole group of businesses in a single investment, providing a good level of diversification. ETFs pass the dividends and distributions received from their holdings onto the fund’s investors.

So, let’s see what’s in store for eligible IVV ETF investors.

Final distribution for IVV ETF in FY24

Blackrock announced earlier in July that the FY24 final distribution for the iShares S&P 500 ETF would be 14.06 cents per unit.

The ex-distribution date for this payment was 1 July 2024, so investors needed to own units of the fund before this date to be entitled to the payout.

A distribution reinvestment plan (DRP) was open for this distribution, and investors had to sign up for it before today if they wanted to use it. Blackrock informed investors on 2 July 2024 that the unit price for new units issued under the DRP would be 54.45 cents.

Other distributions from FY24

The distribution that was paid three months ago to unitholders was 13.98 cents per unit.

Six months ago, the iShares S&P 500 ETF paid a distribution per unit of 15.98 cents per unit.

Nine months ago, the IVV ETF paid a distribution per unit of 17.3 cents to investors.

Strong capital growth

This ETF is not known for its passive income because its underlying holdings don’t offer high dividend yields.

According to Blackrock, the current 12-month trailing dividend yield of the IVV ETF is just 1.11%.

However, the iShares S&P 500 ETF has delivered strong returns in the last 12 months thanks to capital growth. The underlying performance of stocks like Microsoft, Nvidia, Alphabet, Amazon, Meta Platforms and Apple has been impressive — all increased by double-digit percentage terms over the past year.

The strength of the underlying holdings has helped the IVV ETF rise by 26% over the last 12 months, as shown in the chart above.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has only climbed by 11% in the past year, so the US share market has significantly outperformed. However, past performance is not a guarantee of future performance, of course.

At the end of June 2024, the iShares S&P 500 ETF had a price/earnings (P/E) ratio of 27.3. This implies that the market is expecting strong earnings growth in the next couple of years to justify the current valuation.

The post Own iShares S&P 500 ETF (IVV) units? It’s payday for you! appeared first on The Motley Fool Australia.

More reading

• 5 excellent ASX ETFs to buy this month
• How did the iShares S&P 500 ETF (IVV) race ahead of the ASX 200 in FY 2024?
• Why it’s a big day for ASX ETFs
• Own the iShares S&P 500 ETF (IVV)? Here’s your next ASX dividend
• The iShares S&P 500 ETF (IVV) is slowly becoming a dividend powerhouse. Here’s why

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. 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. 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 Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, 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.

Shares in The Star Entertainment Group Ltd (ASX: SGR) have been drifting higher lately, rising by 23% since May.

Despite this recent uptick, the company’s stock is still down 48% over the past 12 months. It is currently trading at 51 cents per share.

In fact, Star was one of the worst stocks to own in FY24, according to my colleague James.

But its share price has risen from a low of 40 cents on 1 May. So the question is, is there a change in the outlook, or are investors taking a punt on Star Entertainment shares?

Star Entertainment shares up since May

Star Entertainment has faced a tumultuous year marred by regulatory challenges and disappointing financial results.

The NSW Independent Casino Commission’s second inquiry into its suitability as a casino operator heavily impacted investor sentiment. This contributed to a sharp decline in the share price earlier in the year.

However, recent management changes and strategic initiatives have sparked a modest recovery in Star Entertainment shares since May.

Steve McCann, the former CEO of Crown Resorts, has taken the helm at Star Entertainment, bringing with him a wealth of experience in turning around troubled businesses. The new CEO’s resume includes roles at Lendlease and investment bank ABN AMRO.

McCann’s appointment on June 26 looks to have been well-received by the market, with shares up 7.45% since then.

In his first interview as Star’s boss, McCann acknowledged the significant challenges ahead but expressed confidence in his ability to steer the company towards recovery.

Speaking to The Australian Financial Review, McCann said he was “very well aware that there are a lot of different outcomes”.

But I’ve always had that work ethic throughout my whole career, and I haven’t shied away from a challenge before….

…We’ve got to succeed, we’ve got to make the changes we need to make, and we’ve got to get through them in a timely fashion. We’ve got to make sure the stakeholders remain supportive and aligned because not all outcomes are rosy, obviously.

Financial performance and outlook

Despite the new CEO’s tenure starting this week, the outlook for Star Entertainment shares remains challenging.

In its half-year results, the company revised its profit expectations for FY24 lower, forecasting a significant decline in earnings.

Group revenue for Q4 FY24 is expected to be 4.3% below the previous quarter, driven by continued declines in Premium Gaming Rooms (PGRs) revenue.

Brokers are fairly neutral on the stock too.

According to Commsec, Star Entertainment shares are rated a hold, with just 1 broker rating it a buy.

Foolish takeout

Star Entertainment’s journey to recovery is fraught with challenges, from regulatory hurdles to financial instability.

However, the recent leadership changes and strategic initiatives could inject a dose of optimism – at least that’s what the market appears to be saying. As always, thorough due diligence and a keen eye on upcoming financial reports and regulatory updates are essential.

The post Up 23% since May, are investors on the punt with Star Entertainment shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Is it time to buy FY24’s worst-performing ASX shares?
• These were the five worst ASX 200 shares to own in FY24
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Zach Bristow 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.

Do you want big returns and exposure to the booming gold price?

Well, I have good news for you. That’s because one leading broker is tipping one ASX gold stock to double in value from current levels.

Which ASX gold stock?

Analysts at Bell Potter believe that Alkane Resources Limited (ASX: ALK) is a gold stock to buy right now.

The broker highlights that the gold miner has just released the scoping study for the Boda-Kaisar Project in New South Wales.

While a touch softer than its expectations, the broker sees the study results as “a good outcome.” It said:

Principal differences to BPe include: (1) average grade is 0.46g/t AuEq vs BPe 0.57g/t AuEq (driven by processing of low-grade stockpiles, excluding stockpiles average Study grade is 0.53g/t AuEq, much closer to BPe), (2) mining duration in the Study is 13-years, vs BPe 20-years, as the Study largely excludes the Underground Resource (374Mt at 0.59g/t AuEq), (3) Study initial capital costs are A$1,783m (including A$250m of growth and contingency) vs BPe A$1,500m, and (4) due to the previous points, $1,120m Post-tax NPV (adjusted for tax by BP) is less than BPe $1,500m.

Bell Potter agrees with management that Boda-Kaiser can support a large gold mining operation thanks to strong commodity prices. It adds:

We agree with management that the Study shows that at current copper and gold prices, Boda-Kaiser can support a large operation with strong economic returns in highly attractive commodities with strong fundamentals over the long-term.

Big returns

In response to the study, Bell Potter has retained its buy rating and $1.10 price target on the ASX gold stock. Based on its current share price of 51.5 cents, this implies potential upside of 113% for investors over the next 12 months.

Bell Potter then concludes by explaining why it thinks its shares could re-rate to higher multiples in the future. It said:

In ALK’s forward plan we can see steps to increase market value recognition for Boda / Kaiser, including: (1) feasibility studies to include Underground Resources in the Project using mass mining methods (Sub-level Caving), to prolong the duration of higher-grade plant feed over the current 13-year mining period, (2) exploration to discover additional open pit deposits would also enable a longer duration of higher-grade plant feed, (3) securing a high-calibre partner could promote market value recognition of Boda / Kaiser, given the Projects large capital cost relative to ALK’s market capitalisation, and Tomingley’s ability to generate free cash.

The post Meet the ASX gold stock that could double in value appeared first on The Motley Fool Australia.

More reading

• Own iShares S&P 500 ETF (IVV) units? It’s payday for you!
• Up 23% since May, are investors on the punt with Star Entertainment shares?
• Why ASX investors are ‘flocking back’ to BHP shares and these other top stocks
• Down 13% in FY24, is this the year for Lynas shares?
• 5 things to watch on the ASX 200 on Thursday

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.

BHP Group Ltd (ASX: BHP) shares are rising fast on Aussie investors’ radars.

That’s according to the second quarter (Q2 2024) Top Stocks data just out from online investing platform eToro.

The data revealed that Aussies are continuing to invest in Nvidia Corporation (NASDAQ: NVDA) and big tech while also increasing their interest in S&P/ASX 200 Index (ASX: XJO) mining stocks.

Atop fast-rising interest in BHP shares, ASX lithium miners Pilbara Minerals Ltd (ASX: PLS) and Core Lithium Ltd (ASX: CXO) also counted among the top 20 stocks seeing a big rise in investor interest over the past quarter.

BHP shares see big surge in interest

According to the eToro report, BHP shares saw a 24% boost in Aussie retail investor holdings in Q2 compared to the prior quarter.

Retail investor holdings in Core Lithium shares gained 8%, while Pilbara Minerals shares increased 5%.

Commenting on the rise in interest in BHP stock, eToro market analyst Josh Gilbert said, “We’ve also seen investors flock back to local miner BHP as the downturn in China’s real estate sector shows signs of slowing as the government continues to offer support to the sector.”

Gilbert pointed to a recent rise in the iron ore price coupled with the sliding BHP share price as likely driving part of this increased interest.

“There is clearly still a long way to go for China’s economy, but with iron ore prices rising in recent months, investors are seeing the weakness in BHP shares this year as an opportunity,” he said.

As for international stocks like Nvidia…

Move over Apple

It’s not just BHP shares that saw a big increase in interest in Q2.

eToro reported that over the quarter just past, Nvidia overtook Apple Inc (NASDAQ: AAPL) to become the second-most-held stock in Australia. Nvidia continues to dominate AI-related news, likely driving that increased interest.

Elon Musk’s Tesla Inc (NASDAQ: TSLA) maintained its number one spot.

According to Gilbert:

Retail investors continued to flock to AI stocks in the second quarter of 2024, as businesses such as Nvidia and TSMC continue to reap the rewards of the biggest technology revolution we’ve seen for decades.

Taiwan Semiconductor Manufacturing Co (BCBA: TSMC) was the second largest riser for the quarter, enjoying a 25% increase in Aussie retail investor holdings over the three months.

And Gilbert forecasts this trend has some legs.

“We’re unlikely to see this investor migration to AI stocks ease up anytime soon, as these stocks continue to deliver huge profits quarter after quarter, and other AI winners are sure to emerge in the years ahead,” he said.

How have BHP shares been tracking?

Investors may be seeing good value in BHP shares, with the ASX 200 mining stock down 13% in 2024.

The post Why ASX investors are ‘flocking back’ to BHP shares and these other top stocks appeared first on The Motley Fool Australia.

More reading

• Which US shares are ASX investors buying in 2024?
• Prediction: 2 US stocks that will be worth more than Nvidia 5 years from now
• Is Nvidia stock going to $150 in the wake of its high-profile 10-for-1 stock split?
• An ASX dividend titan I’d buy over BHP shares
• Here’s what the iron ore price will be this time next year: Westpac

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

Lynas Rare Earths Ltd (ASX: LYC) shares had a rough ride in FY24, dropping 13%.

Stock in the rare earth explorer started the year trading at $6.85 and finished 12 months later at $5.93 apiece.

Investors are no doubt wondering if FY25 will mark a turnaround for this critical minerals producer. Here’s a recap of last financial year and what’s in store for Lynas shares.

Lynas shares down in FY24

Weaker demand for electric vehicles (EVs) and falling rare earth prices appear to be the primary drivers behind the fall in Lynas shares over FY24.

Lynas, one of just two non-Chinese producers of rare earth elements in the world, is heavily influenced by these market dynamics.

China has global dominance in the rare earths market, with a 70% share in mining and 90% processing capacity. According to my colleague Kate, sluggish EV demand has put pressure on rare earths prices and impacted Lynas’ revenues.

In FY24, the prices for key rare earth elements like neodymium and praseodymium (NdPr) oxide fell by more than 50%.

Neodymium hasn’t recovered, still hovering at CNY457,500 per tonne at the time of writing. Meanwhile, praseodymium is fetching US$95.80 per kilogram, down from highs of $217 per kilogram in January 2022.

Due to the challenging market conditions, Lynas reported a decrease in sales by 36.5% to $234.8 million in its first-half results.

As a result, the company’s net profit after tax (NPAT) of $39.5 million was down 73.6% year over year.

What’s the outlook for Lynas shares?

Lynas doesn’t appear to be resting on its laurels. In its half-year results, the company also announced plans to target the first production of two separated heavy rare earths (HRE) products in 2025.

This includes separated dysprosium (Dy) and terbium (Tb) at its Malaysian facility.

Both are crucial for high-performance magnets used in EVs and other high-tech applications.

Lynas CEO Amanda Lacaze expressed optimism about this development, saying, “This circuit reconfiguration at Lynas Malaysia provides a pathway to accelerate our commitment to processing all of the elements in the Mt Weld ore body.”

Additionally, Lynas is progressing with pre-construction activities for its planned US Rare Earths Processing Facility, designed to accept third-party feedstocks. This facility is part of the company’s strategy to enhance its production capabilities.

What are brokers saying?

Several top brokers see potential in Lynas shares.

Ord Minnett describes Lynas as “the safe way to play the sector”, according to my colleague James. Ord also highlights Lynas’ status as the only significant producer of rare earths outside China.

The broker notes that rare earths prices are currently at depressed levels, potentially making it a ripe time to buy into the sector. It set a buy rating with an $8.00 price target on Lynas shares, implying a potential upside of 28% from current levels.

Similarly, Bell Potter has a buy rating and a $7.80 price target, while Goldman Sachs also maintains a buy rating with a $7.50 price target.

Foolish takeout

While Lynas shares have faced significant headwinds in FY24, the company’s strategic initiatives and the potential recovery of rare earth prices could change the case. Time will tell.

As always, remember to conduct thorough due diligence and stay updated on market developments.

The post Down 13% in FY24, is this the year for Lynas shares? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• 10 ASX shares to buy in FY25
• 3 high-flying ASX 200 stocks leading the charge into FY 2025
• Top brokers agree that Lynas shares are ‘undervalued’
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Zach Bristow 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.

On Wednesday, the S&P/ASX 200 Index (ASX: XJO) had a subdued session and ended the day in the red. The benchmark index fell 0.15% to 7,816.8 points.

Will the market be able to bounce back from this on Thursday? Here are five things to watch:

Strong session expected for the ASX 200

The Australian share market looks set to rebound strongly on Thursday following a very good night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 72 points or 0.9% higher this morning. In the United States, the Dow Jones was up 1.1%, the S&P 500 rose 1% and the Nasdaq stormed 1.2% higher.

Oil prices charge higher

ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good session after oil prices charged higher overnight. According to Bloomberg, the WTI crude oil price is up 1.2% to US$82.39 a barrel and the Brent crude oil price is up 0.8% to US$85.35 a barrel. A decline in US inventories and positive outlook commentary from OPEC boosted prices.

Buy Light & Wonder shares

Goldman Sachs thinks Light & Wonder Inc. (ASX: LNW) shares are great value at current levels. This morning, the broker has initiated coverage on the cross-platform global games company that provides gambling products and services with a buy rating and $190.00 price target. This implies potential upside of 22% for investors over the next 12 months. It said: “LNW is well-placed to continue winning market share in ANZ and North America gaming operations, driving earnings growth of +12% (2-year CAGR) to achieve its FY25 AEBITDA target of US$1.4bn, which we believe has not been factored into market expectations (GSe +3% above VA consensus).”

Gold price rises

It could be a decent session for ASX 200 gold shares Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.45% to US$2,378.9 an ounce. US interest rate cut optimism boosted the precious metal.

Aristocrat rated neutral

Aristocrat Leisure Limited (ASX: ALL) shares have been given a neutral rating by analysts at Goldman Sachs. The broker is very positive on the gaming technology company but believes its shares don’t have enough upside to initiate with a buy rating. Goldman has put a neutral rating and $55.30 price target on them instead. This implies potential upside of 7% for investors. It said: “We are most positive on the near to mid-term prospects within land-based gaming, expecting ongoing share gains from the big three, but prefer LNW to ALL given a greater risk-reward skew.”

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Can ASX 200 investors expect a Fed interest rate cut in September?
• Top brokers name 3 ASX shares to buy today
• Guess which ASX uranium stock is rocketing 80% on ‘world class grades’
• Buy these quality ASX dividend shares for passive income

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Light & Wonder. The Motley Fool Australia has recommended Light & Wonder. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Looking for a source of income from the share market? Then take a look at the ASX 200 stocks listed below.

Brokers have named them as buys and tipped to provide income investors with good dividend yields. Here’s what you need to know about them:

Inghams Group Ltd (ASX: ING)

The first ASX 200 income stock to look at is Inghams. It is Australia’s leading poultry producer and supplier.

The team at Morgans is feeling very positive about the company and has described its shares as “undervalued” at current levels. This is because it believes Inghams deserves to trade on higher multiples due to its market leadership position and favourable consumer eating trends.

In respect to income, Morgans is forecasting fully franked dividends of 22 cents per share in both FY 2024 and FY 2025. Based on the current Inghams share price of $3.60, this equates to dividend yields of 6.1% for both years.

Morgans has an add rating and $4.25 price target on its shares.

Stockland Corporation Ltd (ASX: SGP)

Another ASX 200 income stock that could be a buy according to brokers is Stockland. It is Australia’s largest community creator. It owns, manages, and develops retail town centres, workplace and logistics assets, residential and land lease communities.

Morgan Stanley is a fan of the company and believes it is well-placed to reward investors with big dividend yields in the near term.

It is forecasting Stockland to pay dividends per share of 24.6 cents in FY 2024 and then 25.8 cents in FY 2025. Based on the current Stockland share price of $4.24, this will mean yields of 5.8% and 6.1% yields, respectively.

Super Retail Group Ltd (ASX: SUL)

A final ASX 200 income stock that could be in the buy zone right now is Super Retail. It is the retail conglomerate behind popular store brands BCF, Macpac, Rebel, and Super Cheap Auto.

Goldman Sachs is very positive about the company in the current complex environment. This is largely due to its vast loyalty program. It highlights that Super Retail is “building a competitive advantage through 11.1mn members and 76% sales to members.” Its analysts expect this to “help drive sales in a more complex operating environment.”

Goldman expects Super Retail to pay fully franked dividends per share of 67 cents in FY 2024 and then 73 cents in FY 2025. Based on the latest Super Retail share price of $13.90, this will mean dividend yields of 4.8% and 5.25%, respectively.

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

The post 3 top ASX 200 income stocks to buy now appeared first on The Motley Fool Australia.

More reading

• 5 ASX dividend shares to buy next week
• Buy BHP and these ASX dividend shares
• Lendlease shares crack as watchdog growls at $1.3 billion payday
• Is this the best dividend share in the ASX 200?
• Buy Woolworths and these ASX dividend stocks

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

I’ve owned the ASX dividend share Rural Funds Group (ASX: RFF) for several years now and plan to hold it for a long time.

It’s a real estate investment trust (REIT) that owns farmland in various states, climactic conditions, and farm types. It’s invested in almonds, macadamias, cropping, vineyards, and cattle.

I like owning Rural Funds as a way to gain exposure to Australia’s agricultural sector, which is one industry in which Australia is a global leader.

Here are three key reasons why I think it’s an appealing pick for long-term passive income.

Long rental contracts

Rural Funds has a number of high-quality tenants, which is useful for providing reliable rental income. Those tenants include Olam, The Rohatyn Group, JBS, Select Harvests Ltd (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE), and Australian Agricultural Company Ltd (ASX: AAC).

The ASX dividend share has a very long weighted average lease expiry (WALE), which means the rental income is locked in for a long time.

As of the FY24 first-half result, the WALE was 12.8 years, with the almond and macadamia leases on particularly long contracts.

As Rural Funds put it: “Long-dated WALE provides stability of income and long-term rental growth via a mix of indexation mechanisms.”

Growing income

Growing rental income can increase the value of the properties and also unlock higher distributions.

Most of the ASX dividend share’s rental income grows with either a CPI-inflation-linked increase or a fixed annual increase, with some contracts having market reviews.

While higher interest rates are currently a headwind for rental profits, rental income growth helps to offset this. It also seems as though interest rates may soon stop rising in Australia.

Rural Funds has been investing in some of its farms to increase the productivity, and therefore the rental and underlying value, of those properties.

Farmland has been an important asset for hundreds of years. I think it will be a good asset to own for many more years.

Strong yield

The ASX dividend share is currently paying a solid annualised distribution of 11.73 cents per unit. That translates into a distribution yield of close to 6%.

That’s not the biggest yield around, but it’s more than what someone could get from a savings account, and there’s good potential for distribution growth in the coming years.

I think Rural Funds is the sort of business that could continue to pay good distributions for decades to come. If farm values keep rising, then shareholders could be on track for fertile passive income.

The post 6% dividend yield! I’m buying this ASX share and holding it for decades appeared first on The Motley Fool Australia.

More reading

• Buy these ASX dividend shares for 5% to 7% yields
• 2 bargain Australian shares with dividend yields higher than 6%
• Brokers says these ASX 300 dividend shares are top buys
• Buy Telstra and these ASX dividend stocks in July
• 2 top ASX REITs to buy before yields fall alongside interest rates

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

DroneShield Ltd (ASX: DRO) shares have been shooting the lights out over the past year.

Despite a 0.93% retrace yesterday to $2.13, shares in the All Ordinaries Index (ASX: XAO) drone defence company are up an eye-watering 719% over 12 months.

Yep, that’s no typo.

To put this blistering performance in perspective, this will have turned a $5,000 investment into $40,962.

In one year.

But with DroneShield shares having now leapt from 26 cents to more than $2, would I be crazy to buy?

Let’s dig in.

What’s been sending the ASX drone defence stock to the moon?

ASX investors have been sending DroneShield shares flying higher amid ongoing and rising global tensions.

As we’ve seen over the last year in hotspots including Ukraine and the Middle East, drones are quickly gaining traction in military conflicts, as well as posing increasing threats to civilian infrastructure, prisons and airports.

With the AI revolution in full swing, the threats posed by ever-increasing autonomous drones are only likely to grow. And the demand for AI-enabled drone defence capabilities is likely to grow alongside those threats.

The last 12 months has seen DroneShield tap into that growing defence demand, inking a series of multi-million dollar contracts with government agencies across the globe.

And this has led to some smashing financial results.

On 15 April, the company reported record first-quarter revenues of $16.4 million, up a whopping 900% from the $1.6 million reported in the prior corresponding quarter.

In its quarterly results, the company also reported having a $27 million contracted backlog and a sales pipeline of over $519 million.

DroneShield shares closed up 11.1% on the day at 95 cents a share.

And shares have kept charging higher from there.

Most recently, on 20 June, shares hit another all-time closing high after the company reported on a $4.7 million order from a new non-government Swiss international customer to provide multiple vehicle-based counter-drone (C-UxS) systems.

So, would I be crazy to buy DroneShield shares at more than $2 apiece?

I think not.

Among the tailwinds that could continue to see it grow are the potential threats and accompanying defence capabilities posed by AI technology.

Commenting on that potential following the $4.7 million C-UxS systems sale on 20 June, DroneShield CEO Oleg Vornik said:

This order highlights DroneShield expertise not only as a maker of cutting-edge AI-based C-UAS sensor and effector technologies, but also a system integrator, for demanding applications that involve multiple sensor and effector modalities, operating in tough conditions. 

What are the experts saying about DroneShield shares?

Turning to what the experts are saying about DroneShield shares, in mid-June, Frazis Capital founder Michael Frazis noted:

DroneShield recorded revenues of $55 million in 2023, more than triple the $17 million in 2022. And analysts forecast 2024 revenues of over $90 million, with the bulk coming from high margin defence contracts…

The opportunity is immense. Less than 1% of infantry units, ships, military bases, and civilian targets are protected against low-cost drones.

The fund managers at Tamim Asset Management are also bullish on the outlook for DroneShield shares, recently stating:

In the most recent quarterly report, DroneShield reported incredible financial results for the first quarter of 2024, with revenue growing 10 times year-over-year and a significant increase in order intake.

As the threat of drone-related incidents continues to rise, DroneShield is well-positioned to capitalise on the increasing need for effective counter-drone technologies.

The post Would I be crazy to buy DroneShield shares now at over $2? appeared first on The Motley Fool Australia.

More reading

• 3 ASX small-cap shares that soared 250% to 675% in FY24
• Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today
• What will it take for DroneShield shares to enter the ASX 200?
• Why Boss Energy, DroneShield, Jumbo, and Raiz shares are falling today
• ‘Geopolitical risk is unlikely to subside’: Should you pile into ASX defence shares right now?

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 positions in and has recommended DroneShield. 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.