Category: Stock Market

There could be some big returns on offer in the tech sector still according to analysts at Goldman Sachs.

One such example is ASX tech stock CAR Group Limited (ASX: CAR).

What is the broker saying about this ASX tech stock?

According to a note out of the investment bank this morning, its analysts believe the auto listings company is well-placed for strong growth over the coming years despite some foreign exchange and Trader Interactive (TI) headwinds. It commented:

We revisit the near-term earnings outlook for CAR ahead of FY24 results, noting recent investor queries around: (1) US and AU dealer health; (2) FX; and (3) potential M&A. Overall, we remain confident that despite spot FX and TI dealer headwinds, CAR is well-placed to continue delivering ‘good’ earnings growth (i.e. > 10% EBITDA) & remains our preferred classified into earnings.

Goldman also highlights that the ASX tech stock’s Australian business is performing strongly despite a challenging ad-market. It said:

AU trends remain robust, particularly in used, with volumes (> 95% of total) remaining solid (Ex 4-7); pricing power continues (i.e. 5-6% price increase in private, we expect 4-5% dealer increase in Sept, as used dealer margins remain strong & CAR didn’t increase materially through covid), while media revenues are supported by healthy new car volumes despite the challenging ad-market. With elevated CAR domestic opex growth in 1H24 (13.4%), there is also scope to slow investment and maintain double digit EBITDA growth.

Big returns

In light of the above, the broker has reaffirmed its buy rating on the ASX tech stock with an improved price target of $41.40. Based on its current share price of $34.76, this implies potential upside of 19.1% for investors over the next 12 months.

In addition, Goldman Sachs is forecasting partially franked dividend yields of 2.1% in FY 2024 and 2.3% in FY 2025. This brings the total potential 12-month return beyond 21%, which is more than double the historical return of the share market.

Goldman then concludes by summarising its buy thesis. It said:

Carsales is the largest Auto classified domestically, in addition to having strong international operations in Korea, US (Non-auto) and LATAM. We are Buy rated on CAR as we are increasingly confident in the company’s earnings momentum (both locally & globally) – forecasting +11% EPS CAGR across FY24-27E. Downside risks include: (1) Global macro trends; (2) dealer relationships; (3) FX exposure.

The post Buy this ASX tech stock for a 20%+ return: Goldman Sachs appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• The best ASX 200 share of each market sector in FY24
• Can ASX 200 tech shares produce another strong performance in FY25?
• 10 ASX shares that have raised dividends for a decade

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

ASX retail shares had a pretty decent year in FY24, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) rising 19.29% over the 12 months.

Does that strike you as strange? In the middle of a cost-of-living crisis?

Consumers have been cutting back big-time on their discretionary spending for many months now, yet ASX retail shares went up in FY24 at more than twice the pace of the benchmark index.

The S&P/ASX 200 Index (ASX: XJO) rose by 7.83% in FY24, or 12.1% if you include dividends.

So, why did this happen?

Why did ASX retail shares rise during a cost-of-living crisis?

David Rumbens, a partner at Deloitte Access Economics, has an answer for us.

In a blog, Rumbens explained why discretionary stocks defied sticky inflation and high interest rates in FY24 to rise by more than 19%.

Rumbens said:  

Consumer discretionary stocks defied expectations by posting a 19% increase despite the economy experiencing per-capita recession.

This unexpected strength largely came from the first nine months of the financial year where consumer savings were being run down.

Ah-ha! Housing savings.

Household savings reached a historical peak during the COVID years. The household saving ratio, which means the percentage of income saved, hit an all-time high of 24% in the June 2020 quarter, according to data from the Australian Bureau of Statistics (ABS).

This happened for three reasons.

Firstly, we weren’t spending much during lockdowns.

Secondly, many Australians received generous government stimulus payments, such as a beefed-up JobSeeker payment and the JobKeeper payment.

Thirdly, emergency low interest rates during the pandemic meant many households with mortgages saved money and left it in their offset accounts.

A saving grace for the economy

This major increase in household savings has turned out to be a massive saving grace for our economy.

This is because what followed COVID was initially unexpected.

As the world reopened and inflation started rising, many economists and central banks predicted the inflation spike would be “transitory” and not too big a deal.

But it turned out to be a big deal.

Inflation hit a peak of 7.8% in Australia in the December 2022 quarter as the cost of living skyrocketed.

Between May 2022 and November 2023, the Reserve Bank of Australia (RBA) raised interest rates 13 times.

So, those pandemic savings are certainly coming in handy for struggling households today. Not only are they enabling people to continue spending at the shops, they’re also protecting home values, too.

You see, despite home loan repayments increasing by 30% to 60% since May 2022, home loan arrears are still very low, according to the RBA. That means not too many people are being forced to sell, and that protects the market by keeping supply in check.

In its latest Financial Stability Review, the RBA noted that pandemic savings were a key factor enabling borrowers to keep up with their repayments.

The RBA said:

Households are coping well due to a strong labour market, which is allowing them to increase their hours or get a second job if necessary.

They are also drawing on large savings buffers, partly created by pandemic stimulus and lower spending during lockdowns, and have reduced their discretionary spending as necessary.

The bank noted that about half of all borrowers had enough savings to pay their loans and cover the cost of essential living expenses for at least six months.

Another factor supporting ASX retail shares in FY24 was the ongoing spending among baby boomers.

CommBank research shows the baby boomers are still spending pretty freely at the shops, despite the cost of goods and services, like travel, going up.

The boomers are one of the biggest population cohorts in Australia’s history, so the fact this group is still spending is helpful for retailers in a cost-of-living crisis.

Best 3 ASX retail shares of FY24

Here are the best ASX 200 retail shares of FY24 based on share price growth, according to data from S & P Global Market Intelligence.

Lovisa Holdings Ltd (ASX: LOV)

Budget jewellery retailer Lovisa led the consumer discretionary stocks in FY24 with a 70.3% share price gain. The Lovisa share price closed the session on Thursday at $32.34, down just 0.03%.

Premier Investments Limited (ASX: PMV)

The second top-performing ASX 200 retail share in terms of share price growth was Premier Investments, up 53.8% over the 12 months. The Premier Investments share price closed at $29.89 yesterday, up 0.88%.

JB Hi-Fi Ltd (ASX: JBH)

The JB Hi-Fi share price gained 39.9% over FY24. The ASX retail share closed at $65.25 yesterday, up 1.34%.

The post Why did ASX retail shares rise 19% in FY24 amid a cost of living crisis? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• JB Hi-Fi shares leap to record high despite legal scuffle
• CBA and 7 other ASX 200 shares smashing new highs on Thursday
• 5 things to watch on the ASX 200 on Thursday

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 Lovisa. The Motley Fool Australia has recommended Jb Hi-Fi, Lovisa, and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX lithium shares have suffered greatly over the past year or two, but now some experts think there could be opportunities within the ASX mining share sector.

The S&P/ASX 200 Index (ASX: XJO) offers many different potential investment options, including the major iron ore miners, BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), and Fortescue Ltd (ASX: FMG).

According to reporting by the Australian Financial Review, mining-focused fund managers are looking beyond the ASX iron ore shares to find the next stage of returns, so those experts are digging into other sub-sectors of the ASX materials sector.

Experts say ASX mining shares are great value

Ben Cleary, the portfolio manager of Tribeca’s Global Natural Resources fund, told the AFR:

Resources equities are just screaming value. While I think rate cuts are on the horizon, they aren’t necessarily needed for the commodities equities to perform strongly in the second half, but it’ll certainly help.

In terms of lithium, Janus Henderson’s Global Natural Resources Fund portfolio manager, Darko Kuzmanovic, is bullish on the battery metal and has been buying shares of Mineral Resources Ltd (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS).

Janus Henderson is excited by signs that electric vehicle sales in China are increasing, according to the AFR. Kuzmanovic said:

Lithium could be a surprise into the end of 2024, as lithium equities are trading at levels that imply the whole EV transition is over.

The groundwork is set for a strong rebound in resources equities and commodity prices over the next few months into year’s end.

Another expert who’s bullish on lithium is Ethical Partners investment director Nathan Parkin, who had this to say:

We like the lithium sector. The underlying fundamentals are still quite strong, but there has just been lots of noise that people put a lot of weight on, but our view is that you can look through that noise.

Ethical Partners owns IGO Ltd (ASX: IGO) shares as one of its main positions. With the ASX lithium share’s cash costs below spot prices. Parkin suggested IGO can keep making money even if prices drop further.

Are there any other commodities opportunities?

The copper price has reduced from its all-time high of US$11,000 per tonne earlier this year. Cleary is optimistic about copper and thinks prices will need to increase again to incentivise enough supply to meet the strong demand amid global decarbonisation.

The Tribeca resources fund has invested in Sandfire Resources Ltd (ASX: SFR) as one of the opportunities in that space.

The post Is it time to dive back into ASX lithium shares? appeared first on The Motley Fool Australia.

More reading

• Buy this ASX lithium stock and sell this one
• 5 things to watch on the ASX 200 on Friday
• Fortescue shares in focus as more ‘spying’ details emerge
• The 5 most popular ASX shares bought by investors
• Why ASX investors are ‘flocking back’ to BHP shares and these other top stocks

Motley Fool contributor Tristan Harrison has positions in Fortescue. 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.

The lithium industry has been having a terrible time of late due to falling battery material prices.

Given how heavily ASX lithium stocks have fallen, investors may be wondering if it has created some buying opportunities.

Well, analysts at Goldman Sachs have picked out one ASX lithium stock that they believe is a buy and named another they think investors should sell. They are as follows:

IGO Ltd (ASX: IGO)

Goldman thinks that IGO could be an ASX lithium stock to buy. This is thanks to its low costs, which leave it well-positioned in the current environment. It said:

We see a widening discount supporting our relative preference for IGO (Buy) with Greenbushes expansion (and opportunity for value optimisation) and JV balance sheet risks overdone, with the AISC of Greenbushes well below peers.

The broker currently has a buy rating and $7.15 price target on the company’s shares. Based on its current share price of $5.92, this implies potential upside of approximately 21% for investors over the next 12 months.

Pilbara Minerals Ltd (ASX: PLS)

Its analysts think that Pilbara Minerals is an ASX lithium stock to sell right now. It highlights that the lithium giant trades at a premium to peers and doesn’t believe this is deserved. It said:

PLS (Sell) continues to trade at fundamental premium vs. peers, including on both EV/EBITDA and EV/LCE production even when including an underwhelming ‘P2000’ expansion scenario.

Goldman currently has a sell rating and $2.60 price target on the company’s shares. Based on its current share price of $3.02, this suggests that its shares could fall approximately 14% over the next 12 months.

What about the lithium market outlook?

Goldman Sachs has been (correctly) bearish on the lithium market for some time. Unfortunately, nothing has changed with this view and the broker continues to believe that prices will remain depressed due to supply outstripping demand.

In addition, it highlights that more supply is coming to the market, which it suspects could keep prices lower for longer. The broker explains:

New lithium volumes still being added in market surplus: With lithium spot prices still sitting near the top end of the integrated cash cost curve, we have yet to see meaningful volumes come out of the market or new projects get deferred. In fact, new projects continue to be proposed (i.e. PLS’ ‘P2000’), or progressed. DLE is also set to become a commercial reality outside China later this year with Eramet recently inaugurating its new plant. With this backdrop (where we note lithium auctions have each achieved a lower price than the last since mid-April), we continue to factor in near term pricing weakness over 2H CY24 and CY25.

This could be bad news for ASX lithium stocks and restrict any meaningful rebound in the near future.

The post Buy this ASX lithium stock and sell this one appeared first on The Motley Fool Australia.

More reading

• Is it time to dive back into ASX lithium shares?
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• This top broker thinks Pilbara Minerals shares are done falling
• Guess which ASX lithium stock was just named as a sell
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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.

If you’re wanting to supercharge your passive income stream, then read on.

That’s because listed below are three high-yield ASX dividend shares that could give your income portfolio a major boost.

Here’s what you need to know about these shares:

Accent Group Ltd (ASX: AX1)

Bell Potter think that Accent Group could provide investors with a big dividend yields in the coming years. It is a retail conglomerate with a focus on the leisure footwear market. This includes with store brands such as HypeDC, Platypus, and The Athlete’s Foot.

The broker believes the company is well-placed to navigate “a challenging retail spend environment” thanks to its “scale & exposure in terms of channels, brands & size.”

It expects this to underpin fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. Based on the latest Accent share price of $1.95, this represents dividend yields of 6.7% and 7.5%, respectively.

Bell Potter has a buy rating and $2.50 price target on its shares.

APA Group (ASX: APA)

Over at Macquarie, its analysts think investors should be looking at APA Group. It is an energy infrastructure company that owns, manages, and operates a $27 billion portfolio of gas, electricity, solar and wind assets.

Macquarie believes the company is positioned to continue its long run of dividend increases. It is forecasting dividends per share of 56 cents in FY 2024 and then 57.5 cents in FY 2025. Based on the current APA Group share price of $7.88, this equates to 7.1% and 7.3% dividend yields, respectively.

Its analysts have an outperform rating and $9.40 price target on its shares.

Healthco Healthcare and Wellness REIT (ASX: HCW)

Finally, a third high-yield ASX dividend share that could supercharge your passive income stream according to analysts is Healthco Healthcare and Wellness REIT. It is a property company with a focus on health and wellness assets. This includes hospitals, aged care facilities, and primary care properties.

Bell Potter is positive on the company and highlights the sizeable discount to net tangible assets that its shares trade at. It sees this as a buying opportunity, especially given its expectation that Healthco Healthcare and Wellness REIT’s dividend will continue to grow.

The broker is forecasting dividends per share of 8 cents in FY 2024 and then 8.3 cents in FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.12, this will mean yields of 7.1% and 7.4%, respectively.

Bell Potter has a buy rating and $1.50 price target on its shares.

The post 3 high-yield ASX dividend shares to supercharge your passive income stream appeared first on The Motley Fool Australia.

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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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group and Macquarie Group. 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.

ASX bank shares are often viewed through a dividend lens – how much dividend income can they generate? Sometimes, ANZ Group Holdings Ltd (ASX: ANZ) shares can provide the biggest dividend yield because of their generous dividend payout ratio and low valuation.

Banks can typically trade on a relatively low price/earnings (P/E) ratio, partly because they have such large balance sheets. A relatively small percentage of their loans going bad can significantly impact that year’s profit. Pleasingly, a low P/E ratio can translate into a large yield.

We shouldn’t choose an investment just because of the dividend yield. The reliability of the yield should be considered, or else the yield will just be a mirage. When evaluating the outlook, we need to consider whether earnings are increasing and whether today’s valuation is attractive.

Having said that, investors interested in ANZ shares may like to know where it sits in terms of the potential dividend income compared to other banks. I will exclude franking credits from the yield because it’s unknown what ANZ’s upcoming franking level will be.

Dividend forecast for ANZ shares

The estimate on Commsec suggests the major ASX bank could pay an annual dividend per share of $1.66 in FY25 and $1.66 in FY26.

If those predictions come true, the bank would pay a dividend yield of 5.6% in both FY25 and FY26.

Passive income projections for other ASX bank shares

According to the (independent) estimates on Commsec, Commonwealth Bank of Australia (ASX: CBA) could pay an annual dividend per share of $4.55 in FY25 and $4.59 in FY26. This would translate into forward dividend yields of 3.5% and 3.6%, respectively.

National Australia Bank Ltd (ASX: NAB) is projected to pay annual dividends per share of $1.69 in FY25 and $1.71 in FY26. These forecasts suggest dividend yields of 4.7% and 4.8%.

Westpac Banking Corp (ASX: WBC) is predicted to pay total dividends per share of $1.50 in FY25 and $1.50 in FY26, according to Commsec. This works out to be forward dividend yields of 5.4% in both financial years.

According to the projections on Commsec, owners of ANZ shares could get the biggest yield for the next couple of financial years compared to the other major ASX bank shares.

But, there are other banks to consider, so let’s look at those as well.

Macquarie Group Ltd (ASX: MQG) is predicted to pay an annual dividend per share of $7 in FY25 and $7.55 in FY26. This would translate into forward dividend yields of 3.4% and 3.7%, respectively.

Bank of Queensland Ltd (ASX: BOQ) is predicted to pay an annual dividend per share of 34 cents in FY25 and 36 cents per share in FY26. This would be dividend yields of 5.6% and 5.9% in the next two financial years.

Bendigo and Adelaide Bank Ltd (ASX: BEN) is forecast to pay an annual dividend per share of 63 cents in FY25 and FY26. This translates into a forward dividend yield of 5.4%.

Foolish takeaway

BOQ is predicted to pay potentially the highest yield in the next two financial years, though its profit has been going the wrong way in recent years. Aside from BOQ, ANZ shares could have the highest dividend yield in the ASX banking sector, which may be an appealing factor for some investors. But, as I said earlier, the yield isn’t necessarily everything.

The post Do ANZ shares offer the biggest dividend yield in the ASX bank sector? appeared first on The Motley Fool Australia.

More reading

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• $3,000 in savings? Here’s how I’d use that to start investing today
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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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Earlier this week, we discussed the US shares that ASX investors have been buying the most heavily over the past few months.

Some familiar names were on that list, including Apple, NVIDIA, Tesla and Amazon. But there were also a couple of surprises, such as Chinese e-commerce giant Alibaba and ‘meme-stock’ posterchild GameStop.

But what we didn’t delve too deep into at the time was just how lucrative investing in US shares has been for ASX investors.

Almost every big name on the US market has had a stunning 2024 to date.

Take Apple. Apple stock has risen by a lucrative 25.5% year to date so far.

Tesla’s 2024 gains have been slightly more muted at around 6%. But saying that, the electric vehicle and battery manufacturer is still up more than 80% since late April.

Amazon stock, on the other hand, has rocketed more than 33% since the start of the year. And Nvidia, the undisputed golden child of the American markets right now, has exploded 180% higher since the beginning of January.

So it’s no wonder ASX investors have been trying to get a slice of this lucrative action.

But with portfolio-altering gains like the ones we’ve just discussed now under the belt, is it still a good idea to buy US shares today? After all, these gains are highly unusual over such a short time span, even by the high standards of the US tech giants.

Is it too late to start buying US shares like Nvidia?

Well, one ASX expert reckons ASX investors should stick the course. That expert is Tom Stevenson, investment director at fund manager Fidelity, and he is arguing that “It has rarely been sensible to bet against Uncle Sam”.

Sure, the United States is looking at a fairly tumultuous back half of 2024. There’s the November Presidential Elections, of course. But the US economy is also dealing with similar concerns over inflation and interest rates as we are. The level of economic uncertainty is high ‘Stateside’, and that often causes uncertainty on the share market.

Indeed, Stevenson acknowledges that the stunning stock market performance we have seen this year so far is rare, as we haven’t seen a major American market pullback since “last autumn”. He noted that, “There has only been a handful of periods in the past 30 years when we have gone this long without such a pullback in markets”.

Even so, Stevenson tells investors that “this is not by itself a reason to worry”, and goes so far as to state that “to a large extent this has been justified by economic and corporate fundamentals”.

For starters, he points out that:

strong first half years often set investors up for a rewarding second half too. Since the beginning of the 20th century shares have only fallen seven times in the second six months after a strong opening to the year. The last time this happened was nearly 40 years ago. The second half return after a strong first half is higher than the average for all years too.

American exceptionalism

But Stevenson also points out that the strong share market performance of the American markets has been “justified by stronger corporate earning growth”:

Since the financial crisis American shares have consistently outperformed those in the rest of the world but so too has the profitability of American companies. American market exceptionalism has been a reflection of exceptional American growth.

Indeed, America’s exposure to the ‘growth’ investment style has been a massive boon to US investors. The period from 2009 to the start of the monetary policy tightening cycle in 2022 represented the longest unbroken outperformance of growth over value in the past 50 years. Wall Street has more exposure to the world’s fastest-growing sectors and companies and less exposure to its laggards.

Stevenson isn’t arguing that there aren’t risks with investing in US shares today. He points to the current high valuations of US stocks and the concentration of the American indexes, thanks to the massive sizes of tech giants like Nvidia and Apple, as potential trip hazards for investors.

But even so, Stevenson concludes the same way he started, by arguing that “It has rarely been sensible to bet against Uncle Sam”. No doubt that will be of some comfort for ASX investors looking to top up on their winning US shares today.

The post Is it too late for ASX investors to start buying US shares? appeared first on The Motley Fool Australia.

More reading

• Which ASX shares could soar if AI falls into a $500 billion hole?
• Why ASX investors are ‘flocking back’ to BHP shares and these other top stocks
• 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?

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 Sebastian Bowen has positions in Amazon, Apple, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group. The Motley Fool Australia has recommended Amazon, Apple, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Thursday, the S&P/ASX 200 Index (ASX: XJO) had a very strong session and raced higher. The benchmark index rose 0.95% to 7,889.6 points.

Will the market be able to build on this on Friday and end the week on a high? Here are five things to watch:

ASX 200 to edge lower

The Australian share market looks set to end the week on a positive note despite a tough session on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open 38 points or 0.5% higher this morning. In the United States, the Dow Jones was up 0.1% but the S&P 500 was down 0.9% and the Nasdaq sank 1.95%. The latter was driven by investors rotating out of 2024 tech winners.

Oil prices rise

It looks like ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a good finish to the week after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.1% to US$82.99 a barrel and the Brent crude oil price is up 0.75% to US$85.71 a barrel. Rate cut hopes gave the oil demand outlook a boost.

BHP suspends nickel production

BHP Group Ltd (ASX: BHP) shares will be on watch today after the mining giant announced the suspension of activities at the Nickel West operations and West Musgrave project. BHP intends to temporarily suspend operations in October. After which, a review of the decision is expected to be made by February 2027. It commented: “The decision to temporarily suspend Western Australia Nickel follows oversupply in the global nickel market. Forward consensus nickel prices over the next half of the decade have fallen sharply reflecting strong growth of alternative low-cost nickel supply.”

Gold price surges

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a great finish to the week after the gold price surged overnight. According to CNBC, the spot gold price is up 1.8% to US$2,423 an ounce. Increasing rate cut bets helped drive the precious metal higher.

Buy Car Group shares

The CAR Group Limited (ASX: CAR) share price could be great value according to analysts at Goldman Sachs. This morning, the broker has retained its buy rating on the auto listings company’s shares with a $41.40 price target. This implies potential upside of approximately 19% for investors over the next 12 months. It said: “CAR is well-placed to continue delivering ‘good’ earnings growth (i.e. > 10% EBITDA) & remains our preferred classified into earnings.”

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

More reading

• Here are the top 10 ASX 200 shares today
• This ASX 200 gold stock was just tipped for 22% gains
• Why ASX investors are ‘flocking back’ to BHP shares and these other top stocks
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today

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

There’s an ASX dividend stock on the market right now that, until very recently, was yielding close to 5%. This particular ASX 200 blue chip has rallied significantly over the past few weeks, which has now pushed down its dividend yield closer to 4.5%. But at the price I paid for this stock, I am indeed enjoying a dividend yield of well over 5%.

That ASX dividend stock is none other than Telstra Group Ltd (ASX: TLS). Although Telstra shares are not a huge part of my overall ASX share portfolio, they do occupy a small corner of it. And I am happy to keep it there.

Telstra went through a major correction in 2023. The ASX dividend stock was asking north of $4.30 this time last year. But in August, Telstra revealed that it would be keeping some of its valuable infrastructure assets in-house, bucking the expectations of a sell-off by the markets.

Investors were not impressed at the time and punished Telstra by slowly dropping its share price. By May of this year, the telco had hit a new 52-week low of just $3.39 a share, a fall of more than 20% from last year’s highs.

Buying an ASX dividend stock when it’s down

But far from despairing, I picked up some extra shares. I thought the market’s reaction to Telstra’s infrastructure announcement was vastly overcooked. After all, is it really a bad thing if a company decides to retain some of its most valuable assets?

At the current Telstra share price, this ASX dividend share is sporting a yield of 4.58%. That comes from the company’s last two dividend payments.

Telstra stock paid a final ASX dividend of 8.5 cents per share last September, followed by an interim dividend of 9 cents per share in March. As is typical with Telstra’s payouts, both dividends came with full franking credits attached.

Telstra might be offering a yield of 4.58% today. But back in May, investors could have got in when this ASX dividend share was sporting a yield of 5.16%. If one includes the value of those full franking credits, that yield grosses up to an even more impressive 7.37%.

This shows that ASX investors have much to gain by buying a quality dividend share when the market is shunning it.

I think the recent Telstra share price rally has vindicated this contrarian outlook. This telco’s shares have been rallying for around a month now, but buying accelerated ever since Telstra revealed it would be increasing its mobile pricing across the board earlier this week.

Telstra announced that its mobile plans would be rising by around 4% from August, with most plans increasing by between $2 and $4 per month. These rises will also take effect for Telstra’s value-conscious Belong brand.

Here’s how Telstra justified its decision to customers:

It takes a lot of work and cost to run a mobile network as large as ours, and even more to support the increased usage we have seen on our network.

The investments we make in our mobile network don’t just help to keep your phone connected to your favourite content and apps. We know those are important, but our network does so much more every single day…

These price changes help us to keep investing in mobile coverage, performance and local support, as well as ongoing investments to improve the security of our services.  We monitor our network 24/7 to help protect against scams by blocking malicious calls and texts from reaching you.

Moats and dividends

I think this decision demonstrates the presence of a wide economic moat for Telstra. A ‘moat’ is a term first employed by legendary investor Warren Buffett. It refers to an intrinsic competitive advantage a company can possess that helps protect its profits from competitors – in much the same way as a moat protected a castle back in days of yore.

A moat can be anything from a pricing advantage to a powerful brand. However, in Telstra’s case, I believe its superior network forms the backbone of its moat. Many customers, particularly Australians who live in rural or regional areas, simply have to use Telstra’s network because no other provider services them.

So, while Telstra’s pricing increases won’t be welcomed by customers, they will probably be accepted. That is a moat in action. It seems the market agrees with this sentiment too, given that this ASX dividend stock has rallied more than 3% this week in light of this announcement.

When it comes down to it, I am happy to own Telstra stock in my ASX portfolio. This company may not deliver life-changing wealth, but it does deliver hefty, reliable dividend income and franking credits like clockwork, and that’s worth a lot to me.

The post Why I keep buying shares of this 5%-yielding ASX dividend stock appeared first on The Motley Fool Australia.

More reading

• Telstra stock pays a massive 7% dividend, and now could be a great time to buy
• Here are the top 10 ASX 200 shares today
• Why Catalyst Metals, Imugene, Red 5, and Telstra shares are pushing higher today
• Top brokers name 3 ASX shares to buy today
• Is the Telstra share price good value in July?

Motley Fool contributor Sebastian Bowen has positions in Telstra 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 Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

How nice it would have been to invest $10,000 in any one of the best ASX 200 stocks of each market sector in FY24!

In this article, we look at what would have happened if you had invested $10,000 in the No. 1 ASX 200 property stock for share price growth in FY24.

What this ASX 200 property stock did in FY24

The No. 1 property stock for share price growth in FY24 was Goodman Group (ASX: GMG).

Goodman is Australia’s largest real estate investment trust (REIT). It booked a 73.1% share price gain in FY24. By comparison, the S&P/ASX 200 A-REIT Index (ASX: XPJ) rose 19.9% over the 12 months.

Goodman Group owns a huge global portfolio of property assets worth $80.5 billion.

The company specialises in industrial property, and it’s sure catching the enormous artificial intelligence (AI) tailwind these days.

It’s doing so by building the data centres needed to make AI work. Data centres account for approximately 40% of Goodman’s $12.9 billion construction pipeline at the moment.

In a recent update, Goodman said its strong balance sheet would enable it to continue buying and developing high-tier data centres in desirable locations around the world.

Now, let’s do some maths.

If you invested $10,000 at the start of FY24…

Goodman shares closed on 30 June 2023 at $20.07 per share.

If you’d invested $10,000 at that price, you would have ended up with 498 Goodman shares.

Total spend = $9,994.86.

Then this happened.

At the closing bell on 30 June this year, your Goodman shares were worth $34.75 apiece.

So, you would have made $14.68 per share, which, multiplied by 498, gives us a $7,310.64 capital gain.

That’s a fantastic investment outcome.

But wait, there’s more.

What about dividends?

This ASX 200 property stock also pays dividends.

In FY24, you would have received an unfranked final dividend of 15 cents per share in August 2023 and an unfranked interim dividend of 15 cents per share in February 2024.

This would have added another $149.40 to your total returns for FY24.

Granted, that’s not a big dividend yield, but investors don’t buy this ASX 200 property stock for income.

Goodman Group is a growth stock, which means the company tends to reinvest much of its earnings in order to get bigger over time.

It does this by acquiring new assets and redeveloping existing assets as trends change (e.g., Goodman is currently repurposing some of its industrial properties into data centres now).

CEO Greg Goodman explains:

Data centres will be a key area of growth and the acceleration of data centre activity is a
catalyst for the Group to consider multiple opportunities to enhance its returns.

We continue to assess the Group’s capital allocation to both existing and potential opportunities to provide the best risk-adjusted returns.

Key to this will be the active rotation of our capital to fund sustained earnings growth over the
long term.

Thus, Goodman is more focused on delivering growth in earnings per share (EPS) than dividends.

According to CommSec, the consensus forecast among analysts is for this ASX 200 property stock’s EPS to grow from $1.074 per share in 2024 to $1.211 per share in 2025 and $1.377 per share in 2026.

The post How a $10,000 investment in this ASX 200 stock ballooned to $17,460 in FY24! appeared first on The Motley Fool Australia.

More reading

• Why Macquarie says go overweight on ASX REITs now!
• Shares vs. property: Which stocks and suburbs delivered the best growth in FY24?
• The best ASX 200 share of each market sector in FY24
• Here are the best ASX REITS of FY24 (a $66 billion company grew the most)
• Shares vs. property: Which delivered the best growth in FY24?

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