Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is breaking hearts on Valentine’s Day and is a sea of red in early trade.

At the time of writing, the benchmark index is down 1.5% to 7,491 points.

Almost all sectors are deep in the red, with investors selling shares indiscriminately.

Here’s a quick summary of how a number of popular ASX 200 shares are performing:

• BHP Group Ltd (ASX: BHP) shares have dropped 1.5%
• JB Hi-Fi Limited (ASX: JBH) shares are down 3%
• Pilbara Minerals Ltd (ASX: PLS) shares have fallen 3%
• Westpac Banking Corp (ASX: WBC) shares are down 1.5%
• Xero Ltd (ASX: XRO) shares are 2% lower

Why is the ASX 200 sinking?

Investors have been hitting the sell button in a panic today following a selloff on Wall Street which saw the Dow Jones drop 1.35%, the S&P 500 index fall 1.4%, and the Nasdaq index crash 1.8%.

This was driven by the release of inflation data that was much hotter than expected, sparking fears that interest rate cuts are still some way off.

According to CNBC, the US consumer price index rose 0.3% in January from December and 3.1% on an annual basis. Whereas economists were expecting CPI to have increased by 0.2% month over month in January and 2.9% from a year earlier.

Furthermore, excluding volatile food and energy prices, core CPI accelerated 0.4% in January and was up 3.9% from a year ago.

Quincy Krosby, chief global strategist at LPL Financial, commented:

The much-anticipated CPI report is a disappointment for those who expected inflation to edge lower allowing the Fed to begin easing rates sooner rather than later. Across the board numbers were hotter than expected making certain that the Fed will need more data before initiating a rate cutting cycle.

The post Why is the ASX 200 index crashing 1.5% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the top 10 ASX 200 shares today
• Big news: 15 ASX 200 shares smashing 52-week highs this Tuesday
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Soaring interest rates have made the return from term deposits much more attractive. However, ASX shares should also be considered for the long term.

The Reserve Bank of Australia (RBA) cash rate has gone from almost 0% to 4.35%. Aussies can now get good term deposit rates compared to two years ago.

According to Canstar, there are some term deposits that offer an interest rate of at least 5% for 12 months.

I’d always recommend that some people should always keep some cash aside as an emergency fund. I think cash, deposited in a government-guaranteed savings account with a safe bank, is the safest and most flexible in the short term.

But, over the long term, it could make a lot of sense to invest in ASX shares. Let’s compare term deposits to ASX shares.

Term deposit return

If we put $10,000 into a term deposit for a 12-month period which pays annually, we typically have to wait until the end of the term to get the interest and for the bank to return the money.

A $10,000 investment would generate $500 of annual interest and the capital amount would still be worth $10,000 at the end of the period. If they spent that $500 and did another 12-month term with the remaining $10,000, it’d make another $500 (if the interest rate was still 5%).

The term deposit holder could decide to re-invest the $500 instead and it’d be $10,500 making interest, but they wouldn’t be able to spend any of that money. If $10,500 earned 5%, they’d get $525 of interest at the end of the period.

What about ASX shares?

ASX shares have the ability to pay dividends and deliver growth.

Investing in the stock market does come with volatility – share prices can go down, but they can also go up over time.

Let’s think about an ASX blue-chip share like Telstra Group Ltd (ASX: TLS), which has an enviable market position in the mobile market. Steady growth of subscribers and other revenue is helping drive the company’s profit higher.

I don’t have a crystal ball, but Telstra has been steadily growing its dividend in the last few results and it could keep growing. Analyst estimates on Commsec suggest Telstra could pay a fully franked dividend yield of 4.5%, or a grossed-up dividend yield of 6.5%, in FY24.

If someone invested $10,000 into Telstra shares, they’re projected to get $650 of grossed-up income for FY24. That person could spend all of that money and could still get a bigger dividend in FY25. The Commsec projection suggests a fully franked dividend yield of 4.8% or a grossed-up dividend yield of 6.8% for FY25 at the current Telstra share price. That would be grossed-up income of $680.

Good ASX shares can pay appealing dividends and also deliver dividend growth.

That’s not even mentioning the potential to supercharge compounding by re-investing the dividends into more shares. An investor can decide to receive the dividends and invest in different ASX shares, or activate the dividend reinvestment plan (DRP) of a company (if it has one) and receive more shares (brokerage free) instead of cash.

In my mind, if people are looking for their money to make a return, I’d choose ASX shares because of that long-term growth element. One of my favourite blue chips for potential long-term dividends and growth is Wesfarmers Ltd (ASX: WES) – the owner of Bunnings and Kmart – which I recently wrote about here.

The post How does investing in a term deposit compare with buying ASX shares? appeared first on The Motley Fool Australia.

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More reading

• Forget Westpac and buy these top ASX dividend stocks
• Will these ASX 200 shares help you retire rich?
• Transform $50 into monthly income: The best ASX dividend stocks under $50
• 3 ASX 200 dividend shares to buy with great yields
• 3 things ASX investors should watch this week

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 Telstra Group and 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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The IDP Education Ltd (ASX: IEL) share price is avoiding the market selloff on Wednesday.

In morning trade, the language testing and student placement company’s shares are up 15% to $23.33.

This follows the release of a stronger than expected half-year result.

IDP Education share price jumps on strong result

• Revenue up 15% to a record of $579.1 million
• Adjusted earnings before interest and tax (EBIT) up 25% to $159 million
• Adjusted net profit after tax up 23% to $107 million
• Interim dividend of 25 cents share

What happened during the half?

For the six months ended 31 December, IDP Education reported a 15% increase in revenue to $579.1 million. This was driven almost entirely by its Student Placement business, which offset softer revenue from English Language Testing.

IDP Education’s Student Placement business reported a 44% increase in revenue to $287.5 million thanks to strong growth across both its Australia and Other Destinations segments. This reflects a 33% increase in student placement volumes to a record of 57,300 and price increases.

The English Language Testing business reported a 5% decline in revenue after testing (IELTS) volumes fell 12% to 902,000. This was due largely to weakness in the key India market.

How does this compare to expectations?

The company’s half-year results has come in ahead of expectations. This may explain why the IDP Education share price is charging higher today. Goldman Sachs commented:

IEL has reported a strong 1H24 result, with revenue/EBIT/NPAT in line with our above-consensus estimates, and +3%/+11%/+13% vs Visible Alpha Consensus Data expectations.

Management commentary

IDP Education’s CEO and managing director, Tennealle O’Shannessy, was pleased with the half. She said:

IDP’s performance was highlighted by our student placement business which grew total revenue by 44 per cent. This exceptional growth was partially offset by a weaker period for English Language Testing where revenues fell five per cent.

Outlook

While no guidance was given, O’Shannessy spoke about recent policy changes that have been weighing on the IDP Education share price. The good news is that she believes the company is well-placed to navigate these changes. Ms O’Shannessy said:

IDP is the leading player, operating in a large market, with global scale diversified across business lines and geographies. We have a relentless focus on quality and have been building our strategic position as the trusted provider for more than 50 years. While policy settings in our main destination markets for international students and migrants are entering a more restrictive period, IDP remains very well placed to strengthen its industry leadership and help students and institutions navigate these changing market conditions.

The IDP Education share price remains down 25% over the last 12 months.

The post IDP Education share price jumps 15% after crushing first-half expectations appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• These top ASX growth shares can rise 30% to 40%
• 6 oversold ASX shares to buy in February 2024
• 50% down: 2 ‘world leader’ ASX 200 shares ready to bounce back

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 Idp Education. The Motley Fool Australia has recommended Idp Education. 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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While Westpac Banking Corp (ASX: WBC) is a popular option for income investors, its shares are currently trading at a 52-week high.

In addition, they are trading beyond the valuations of almost all brokers. This makes them a riskier than usual proposition for investors.

In the absence of a decent pullback that creates a better entry point, income investors might find more value from the ASX dividend stocks listed below.

Here’s what analysts are saying about them:

Telstra Corporation Ltd (ASX: TLS)

Goldman Sachs thinks that telco giant Telstra could be a great option for income investors.

The broker rates the company highly due to its low risk earnings and dividends growth over FY 2023 to FY 2025.

It is expecting this to lead to Telstra paying fully franked dividends of 18 cents per share in FY 2024, 19 cents per share in FY 2025, and then 20 cents per share in FY 2026. Based on the current Telstra share price of $3.97, this equates to yields of 4.5%, 4.8%, and 5%, respectively.

Goldman has a buy rating and $4.65 price target on Telstra’s shares.

Transurban Group (ASX: TCL)

Another ASX dividend stock that analysts think could be in the buy zone at current levels is toll road operator Transurban.

Citi remains positive on the company following its first half results release last week. So much so, it continues to expect Transurban to pay dividends ahead of guidance in FY 2024.

The broker is forecasting dividends per share of 63 cents in FY 2024, 65 cents in FY 2025, and 68 cents in FY 2026. Based on the current Transurban share price of $12.90, this will mean yields of 4.9%, 5%, and 5.3%, respectively.

Citi has a buy rating and $15.60 price target on the company’s shares.

Finally, in case you were wondering, Goldman and Citi have neutral ratings and $22.85 and $22.25 price targets on Westpac’s shares.

The post Forget Westpac and buy these top ASX dividend stocks appeared first on The Motley Fool Australia.

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More reading

• Big news: 15 ASX 200 shares smashing 52-week highs this Tuesday
• Westpac shares at a 52-week high ahead of results: What’s the market expecting?
• Will these ASX 200 shares help you retire rich?
• Transform $50 into monthly income: The best ASX dividend stocks under $50
• 3 top ASX bank shares hit 52-week highs today: Is there still value to be found?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Transurban Group. 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.

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On the face of it, buying investment property in Australia’s regions may seem like the inferior choice.

Historically, regional properties have been a cheaper option for investors, delivering superior rental returns but less capital growth than the cities. And it was harder to find a good long-term tenant.

What’s the equivalent in shares?

Are ASX small-cap shares seen as the inferior choice to ASX 200 blue-chip shares?

Depends on your point of view. Small-caps are riskier investments but the good ones can deliver more share price growth than the large-caps over the long term. But they typically don’t pay dividends, so there’s no yield for their investors, and they can struggle to perform in poor economic conditions.

But are times changing? Are regional properties and ASX small-caps looking more attractive these days?

Over the past three years, regional properties have actually grown at a faster rate than city properties.

They’ve still delivered superior rental returns, and it’s become much easier to find a tenant with the average regional vacancy rate currently as low as the cities at 0.8%, according to Domain data.

And what about ASX small-cap shares?

Some experts are saying they’re looking more attractive, given they were sold off as interest rates rose, and now that rates are expected to fall, their prospects for share price gains look better.

Let’s investigate further.

Buying investment property in regional areas

A key reason why capital cities have historically delivered better capital gains is population density and growth.

Migration is the primary driver of our population growth, and we don’t build enough new homes. That means housing demand goes up at a rapid rate every year, with all those new arrivals needing homes immediately. Natural increase (births minus deaths) raises housing demand much more slowly.

On top of that, Australia only has eight capital cities, and almost 70% of us choose to live in one of them.

But Australia has just undergone a dramatic population shift.

During the pandemic, working from home enabled thousands of city dwellers to relocate to the regions for more affordable housing and arguably a better lifestyle.

In 2020, interstate migration reached its highest level since the Australian Bureau of Statistics began keeping records in 2001.

This trend continued for a while, leading to massive property price growth. So much so that the 10-year rate of capital growth is now higher in the regions, as this chart shows.

This has changed the game when it comes to buying investment property.

While that COVID surge in interstate migration has tapered back, remote work is a permanent change.

This means future generations will have far more choices as to where to live. This may create permanent changes in our population movement, especially given the housing affordability challenges in our cities.

The Regional Australia Institute (RAI) estimates that 3.5 million Australians are interested in relocating to regional areas today.

Difficulty finding employment was previously a deterrent to regional living. Now, people can take their jobs with them, or find one pretty easily locally.

The Federal Government’s newly released State of Australia’s Regions 2024 report says three years of record agricultural production and expanded tourism have contributed to strong regional economic growth and a more than doubling of regional job ads over the four years to October 2023.

Put all that together, and regional property markets seem to have stronger economic fundamentals to support better capital gains in the future.

Plus, most of them are still cheaper than city markets and still deliver better rental yields.

Will this see more people buying investment property in regional areas?

It seems so, with research by MCG Quantity Surveyors revealing the average distance between landlords’ primary residences and their property investments soared to 1,502km in the year to November 2023.

It was just 293km before COVID.

For the record, regional South Australia delivered the best capital gains of the regions in 2023 at 9.4%.

Buying ASX small-caps for investment

ASX small-cap shares are those with a market capitalisation of between a few hundred thousand and $2 billion.

They are typically young and growing companies that have yet to establish strong, consistent earnings. They often don’t do well when interest rates are rising because they’re carrying debt to enable expansion.

Their share prices are volatile, and their trading liquidity is often constrained.

However, for investors with medium to high risk tolerance, ASX small caps can be more attractive. This is mainly because their prospects for long-term capital growth can be better.

Andy Gracey, portfolio manager of the Emerging Companies and the Australian Shares Fund at Australian Ethical Investment, says ASX small-cap shares may do better this year.

In an interview with my colleague Bernd last month, Gracey said:

Small companies and particularly microcap companies have underperformed their Australia blue-chip peers over the last few years, so there certainly is rationale to anticipate some form of catchup for these emerging companies.

Gracey has some tips for investors interested in buying ASX small-cap stocks this year.

Morgans analysts also think ASX small-cap shares may be in for a good year, commenting:

Small-caps have historically bounced hardest upon confirmation of a flattening-out in the rates cycle. Several ingredients remain in place supporting a rebound in this space (rates, trading/fundamentals, sentiment/positioning). We think the tide is turning for small-caps, and now is an opportune time to build exposure to forgotten small-caps.

Morgans says their favourite seven forgotten small-caps include ASX biotech Clinuvel Pharmaceuticals Limited (ASX: CUV) and debt collector Credit Corp Group Limited (ASX: CCP).

Broker Bell Potter says luxury retailer Cettire Ltd (ASX: CTT) and electrical infrastructure products group IPD Group Ltd (ASX: IPG) are small-caps worth buying.

LSN Emerging Companies Fund likes financial services provider EQT Holdings Ltd (ASX: EQT) and MMA Offshore Ltd (ASX: MRM).

Joe Wright of Airlie Funds Management says ASX small-cap stock selection is crucial. He recommends avoiding ‘concept’ companies and those with excessive gearing.

The post Is buying investment property in regional areas like buying ASX small-cap shares? appeared first on The Motley Fool Australia.

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More reading

• 2 top ASX bargain stocks that could be ready for a bull run
• Here are the top 10 ASX 200 shares today
• Why Bell Potter says these ASX small cap shares are buys
• Here are the top 10 ASX 200 shares today
• Bell Potter says this rocketing small cap ASX share can keep climbing

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 Ipd Group. The Motley Fool Australia has recommended Cettire, Ipd Group, and Mma Offshore. 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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You don’t need to be a millionaire to start earning a meaningful annual passive income stream.

In fact, by investing just $833 a month in ASX shares, you could create a passive income of $845 a year, or more, in only 12 months’ time.

Now, there are a wide number of quality S&P/ASX 200 Index (ASX: XJO) dividend stocks that could help you achieve this goal. But, keeping in mind the importance of diversification, you wouldn’t want to invest all of your money into a single, high-yielding company.

Even quality companies with a good track record of annual dividend payouts can run into short-term troubles that could slash the passive income you were expecting to bank.

However, as you may have noticed in the title, I did mention one particular ASX share.

Here’s why.

This ASX ETF is a passive income leader

The ASX share in question is the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

The appealing thing for passive income hunters is that this exchange-traded fund (ETF) gives investors instant diversity through its portfolio of 40 to 60 high-yielding, blue-chip ASX shares.

As of the end of December, the ETF’s top three holdings are Commonwealth Bank of Australia (ASX: CBA) BHP Group Ltd (ASX: BHP) and CSL Limited (ASX: CSL).

And HVST pays out dividends on a monthly basis, meaning your next passive income payout is never too far away.

Because the ETF’s holdings are actively managed and rebalanced every three months to target higher-yielding ASX dividend stocks, the annual management fee is 0.72%.

If you’re looking to capture the magic of compounding so you can watch your annual income soar over the years, HVST offers a partial or full dividend reinvestment plan.

As at 31 January, the ETF had a 12-month trailing yield of 5.94%, 79.5% franked. Those franking credits bring the grossed-up yield to 8.45%.

Based on this grossed-up dividend yield alone, investing $833 a month (or $10,000 over a year) should deliver $845 in annual passive income.

Of course, we’re also hoping to see the ETF deliver some share price gains in 2024.

The HVST share price is down 2% since this time last year. But the ETF has gained 10% since 31 October.

If that upward trend continues, it could see this ASX ETF deliver significantly more than $845 in passive income from those 12 monthly $833 investments.

The post Invest $833 in this ASX share each month to create passive income of $840 in 2024! appeared first on The Motley Fool Australia.

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More reading

• This 6.7% ASX dividend stock pays cash every month
• How I’d aim to build a bullet-proof ASX passive income portfolio with just $7,000 in 2024

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 CSL. 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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Fletcher Building Ltd (ASX: FBU) shares be suspended until later today to give the building products company time to explain its bombshell announcement to analysts and investors. The ASX 200 stock’s suspension request states:

[Fletcher Building] considers it appropriate for additional time to be provided following the conclusion of the investor call, to enable investors and the market to consider and assess the information released by FBU and the commentary provided at the investor call.

What’s going on with this ASX 200 stock?

This morning Fletcher Building released its half-year results which were significantly weaker than the market was expecting. It also announced the impending exit of its CEO, Ross Taylor.

In respect to its results, the ASX 200 stock reported:

• Revenue down 1% to NZ$4,248 million,
• EBIT before significant items down 27% to NZ$264 million,
• Net loss after tax of NZ$120 million
• Dividend suspended

What happened?

Fletcher Building’s outgoing chief executive, Ross Taylor, revealed that its performance was impacted largely by challenging trading conditions in New Zealand. He said:

Against the backdrop of materially weaker trading conditions, particularly in the NZ residential sector where volumes declined 20%, Group revenue of NZ$4,248 million was in line with the prior period’s NZ$4,284 million. EBIT before significant items was NZ$264 million, compared to NZ$360 million in the prior period.

Taylor also advised that significant items weighed on its profits. He adds:

The Group reported a net loss after tax of NZ$120 million, compared to a profit of NZ$92 million in the prior period. Disappointingly, the result was heavily impacted by the NZ$165 million significant items provision on the New Zealand International Convention Centre announced on 5 February and a $122 million non-cash impairment and writedown on the Tradelink Australia business.

Management is now looking to divest the Australian Tradelink business after deciding that “further ownership of the business is not in line with the strategic objectives of Fletcher Building.”

CEO and chair to exit

In a separate announcement, the ASX 200 stock advised that Ross Taylor will be leaving the company along with its chair, Bruce Hassall.

Hassall commented:

The Board, Ross and I believe it is in the best interests of the business and the team that he handover to a new leader and that I hand over to a new Chair at the time of the ASM in October.

Mr Taylor has a six-month notice period, which he will serve in full if required to facilitate an orderly handover to his successor.

Fletcher Building shares are down 19% over the last 12 months.

The post Guess which ASX 200 stock is suspended after reporting $120m loss and exit of CEO and chair appeared first on The Motley Fool Australia.

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More reading

• Why CSL, Fletcher Building, Skycity, and Wildcat shares are falling today
• 5 things to watch on the ASX 200 on Tuesday
• Why Core Lithium, Fletcher Building, Silver Lake, and Silver Mines shares are sinking
• Top ASX dividend shares to buy in February 2024
• $10,000 in savings? Here’s how I’d try to turn that into $500 a month of passive income

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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Thinking of buying the Vanguard Australian Shares Index ETF (ASX: VAS)? You’re probably not alone. VAS is the most popular exchange-traded fund (ETF), and index fund, on our ASX stock market. And by quite a mile too.

But although this ETF looks relatively simple, with just one ticker code, the reality is that it is a rather complex investment.

So if you’re thinking of buying VAS units today or in the future, it’s probably a good idea to know exactly where your money is going.

The ASX’s most popular index fund

As we touched on earlier, the Vanguard Australian Shares ETF is an index fund. This means that it represents an investment in an entire index, rather than a single ASX company.

In this particular case, the Vanguard Australian Shares ETF mirrors the S&P/ASX 300 Index (ASX: XKO). The ASX 300 is an index that tracks the fortunes of the 300 largest companies listed on the Australian stock market.

However, it doesn’t give equal representation to those 300 shares. Like most indexes, the ASX 300 is weighted by market capitalisation (size). This means that the largest shares have more influence in the index (and therefore the index fund) than the smaller ones.

What does VAS’ ASX portfolio look like?

To illustrate, let’s look at the five largest ASX 300 shares in VAS’s portfolio right now, along with their portfolio weightings (as of 31 December):

1. BHP Group Ltd (ASX: BHP) with a VAS portfolio weighting of 11.01%
2. Commonwealth Bank of Australia (ASX: CBA) with a weighting of 8.07%
3. CSL Ltd (ASX: CSL) with a weighting of 5.96%
4. National Australia Bank Ltd (ASX: NAB) with a weighting of 4.14%
5. Westpac Banking Corp (ASX: WBC) with a weighting of 3.46%
6. ANZ Group Holdings Ltd (ASX: ANZ) with a weighting of 3.36%
7. Macquarie Group Ltd (ASX: MQG) with a weighting of 2.84%
8. Wesfarmers Ltd (ASX: WES) with a weighting of 2.79%
9. Woodside Energy Group Ltd (ASX: WDS) with a weighting of 2.54%
10. Rio Tinto Limited (ASX: RIO) with a weighting of 2.17%

In very simple terms, this means that for every $100 you invest into VAS’s ASX units, $11.01 will be allocated to BHP shares. A further $8.07 will go towards an investment in CBA, and so on.

But a company like Kogan.com Ltd (ASX: KGN), which is up the back end of the ASX 300, and thus, VAS’ ASX portfolio, only commands a weighting of 0.019%. That means that of your $100, only 1.9 cents will find its way into Kogan shares.

As you can see, putting money into the Vanguard Australian Shares ETF will see your money spread out over a huge number of different investments. So hopefully you now have a better understanding of how an index fund like VAS works on the ASX if you’re thinking about buying into this popular ASX ETF.

The post Thinking about buying the Vanguard Australian Shares ETF (VAS)? Here’s what you’re really buying appeared first on The Motley Fool Australia.

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More reading

• Transform $50 into monthly income: The best ASX dividend stocks under $50
• Shares vs. property: Beginner investors choosing Aussie shares, ASX ETFs and rentvesting
• 5 ASX shares to buy and hold forever in your investment portfolio
• 5 reasons to buy an ASX index fund today
• Should I buy the Vanguard Australian Shares Index ETF (VAS) now or wait for an ASX dip?

Motley Fool contributor Sebastian Bowen has positions in CSL, Kogan.com, National Australia Bank, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Kogan.com, Macquarie Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. The Motley Fool Australia has recommended CSL and Kogan.com. 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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There are plenty of ASX dividend shares to choose from, but which ones could be buys?

Three shares that were recently identified as buys are listed below. Here’s what analysts are saying about them:

Dexus Convenience Retail REIT (ASX: DXC)

The first ASX dividend share that could be a buy is Dexus Convenience Retail REIT. It is a convenience retail and service station property company.

Morgans is positive on the company and believes its shares are good value at current levels. Last week the broker put an add rating and $3.23 price target on its shares.

Its analysts are expecting some big dividend yields in the coming years. They are forecasting dividends per share of 21 cents in both FY 2024 and FY 2025. Based on its current share price of $2.84, this implies yields of 7.4%.

Elders Ltd (ASX: ELD)

Another ASX dividend share for income investors to look at is agribusiness company Elders. It provides livestock, real estate, feed and processing, wool agency services, and grain marketing services to rural and regional customers.

Bell Potter is a fan of the company, particularly given how operating conditions have been more favourable for Elders since the release of its FY 2023 results. It has a buy rating and $9.50 price target on its shares.

As for income, the broker is forecasting dividends per share of 34 cents in FY 2024 and 41 cents in FY 2025. Based on the current Elders share price of $8.99, this will mean yields of 3.8% and 4.55%, respectively.

Orora Ltd (ASX: ORA)

Finally, Goldman Sachs believes that Orora would be a good option for income investors. It designs and manufactures packaging products such as fibre-based packaging, glass bottles, beverages cans, and corrugated boxes.

Goldman likes the company due to its defensive qualities and positive growth outlook. The broker has a buy rating and $3.50 price target on its shares.

In respect to dividends, it expects dividends per share of 14 cents in FY 2024 and 15 cents in FY 2025. Based on the current Orora share price of $2.83, this will mean yields of 4.9% and 5.3%, respectively.

The post Are these ASX dividend shares strong buys for passive income? appeared first on The Motley Fool Australia.

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More reading

• Forget term deposits and buy these ASX dividend shares
• Here are the top 10 ASX 200 shares today
• Brokers say these ASX dividend stocks are buys
• How ASX shares vs. property performed in January
• These were the best performers on the ASX 200 in January

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 recommended Elders and Orora. 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 Commonwealth Bank of Australia (ASX: CBA) share price will be on watch today.

That’s because the banking giant has just released its half-year results and delivered a cash profit slightly ahead of expectations.

CBA share price on watch following half-year results

For the six months ended 31 December, Australia’s largest bank reported the following compared to the prior corresponding period:

• Operating income up 0.2% to $13,649 million
• Operating expenses up 4% to $6,011 million
• Cash net profit after tax down 3% to $5,019 million
• Fully franked interim dividend up 2.4% to $2.15 per share

What happened during the half?

CBA’s operating income was up slightly to $13,649 million during the first half. This was supported by volume growth and higher volume-based fee income, offset by margin compression.

Speaking of which, the bank’s net interest margin has fallen 6 basis points since the end of FY 2023 to 1.99%. This reflects increased deposit price competition and deposit switching.

Also heading in the wrong direction were the bank’s expenses. CBA’s operating expenses increased 4% to $6,011 million due to inflationary pressures and additional spending on technology to support the delivery of strategic priorities.

This ultimately led to CBA’s cash net profit after tax falling 3% to $5,019 million. Statutory net profit after tax was down by 8% to $4,837 million.

Nevertheless, this didn’t stop the CBA board from lifting its fully franked interim dividend by 2.4% to $2.15 per share. This represents a payout ratio of 72%, which is up from 68% a year earlier.

CBA ended the period with a CET1 ratio of 12.3%.

How does this compare to expectations?

The good news for the CBA share price is that this result appears to have come in slightly ahead of expectations.

The market consensus estimate was for a first half cash profit of $4,972 million.

Outlook

CBA’s CEO, Matt Comyn, commented that 2023 was a challenging year and warned that there could be some tough times ahead. He said:

2023 was increasingly challenging for many of our customers who are finding it harder to absorb cost of living pressures. The economy has been fairly resilient, supported by a strong labour market, savings and repayment buffers, population growth and relatively high commodity prices. However, downside risks are building as slowing demand and persistent inflation impact Australian businesses. Ongoing geopolitical tensions also create uncertainty.

As cash rate increases have a lagged impact on households and business customers, we expect financial strain to continue in 2024, with an uptick in our arrears and impairments. We remain well provisioned and capitalised, with capacity to navigate an uncertain economic environment.

The CBA share price is up 6% over the last 12 months.

The post CBA share price on watch following $5b cash profit and dividend boost appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why the CBA dividend fountain will be in focus this week
• 3 top ASX bank shares hit 52-week highs today: Is there still value to be found?
• CBA could be eyeing record profits if first-half results echo the past
• Which Big Four ASX bank share will pay the biggest dividend this year?

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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