Category: Stock Market

Investing in companies is more than just buying stocks.

It’s also about partnering with businesses that value their shareholders. If you think about it this way, how much better is it to partner with companies that treat their shareholders like royalty?

A solid dividend policy and track record are excellent indicators of a company’s commitment to sharing profits directly with its investors.

Moreover, these dividend-paying companies not only offer consistent income to their shareholders but also showcase strong financial health and stability.

This article delves into two ASX-listed shares that exemplify strong commitments to their shareholders by assessing financial metrics such as payout ratios, franking credits, and dividend growth history.

Washington H Soul Pattinson & Company Ltd (ASX: SOL)

The first company that comes to mind is Washington H Soul Pattinson, also known as Soul Patts. The company stands as a testament to longevity and reliability in the Australian market.

Since its listing in 1903, this diversified investment house has consistently rewarded its shareholders with dividends, highlighting its commitment to investor returns.

Soul Patts has paid dividends every year since its inception over a century ago. And it has increased its total annual dividends for 24 consecutive years since 2000 at a compound annual growth rate (CAGR) of 9.6%. Notably, between FY21 and FY23, it boasted an impressive 18.5% CAGR in its dividend payment growth.

Over the last five years, its payout ratios have mostly moved between 50% and 60%. With a payout ratio hovering around 50%, Soul Patts strikes a balance between rewarding shareholders and retaining earnings for future growth.

Investors benefit from 100% franking on dividends, a policy that has been consistently maintained for the past two decades. These franking credits provide nice tax benefits to investors.

The good news is Soul Patts shares are attractively valued after their recent fall, as my colleague Tristan highlighted.

The Soul Patts share price was $32.39 at the close of trade on Friday, near its price a year ago after a recent decline. It offers a fully franked dividend yield of 2.8%.

Steadfast Group Ltd (ASX: SDF)

Steadfast is a premier insurance brokerage network in Australasia, offering a comprehensive range of insurance and risk management services.

Since its initial public offering (IPO) in 2013, Steadfast has demonstrated strong dividend growth, increasing its annual dividend payments from 4.5 cents per share (cps) to 15.75 cps in the last 12 months to March 2024. This growth reflects the company’s solid earnings performance as well as its dedication to returning profits to its shareholders.

With a payout ratio of 76%, Steadfast ensures a substantial portion of its earnings is distributed to shareholders while keeping some for its future growth needs.

Like Soul Patts, Steadfast provides 100% franking credits on its dividends, making them particularly attractive to investors seeking tax-effective income streams.

Steadfast’s impressive track record of dividend growth, combined with its high payout ratio and fully franked dividends, underscores its robust financial health and shareholder-friendly policies.

This makes Steadfast Group a compelling choice for investors seeking both income and growth potential in the insurance sector.

Using S&P Cap IQ data, Steadfast shares are trading at approximately 20x FY24’s estimated earnings, which is inexpensive compared to its history and industry peers.

The Steadfast share price was $5.39 at Friday’s close, down 7% year-to-date after surging almost 60% over the last five years. It offers a dividend yield of 2.9%.

The post 2 ASX shares with shareholder-friendly policies appeared first on The Motley Fool Australia.

More reading

• Brickworks share price jumps on big Soul Patts news
• Can Soul Patts shares beat the market over the next 12 months?
• Down 9% in a year, is it time to buy this ASX 200 dividend stock?
• 3 of the best ASX blue chip shares to buy in June
• Top ASX shares to buy in June and hold for retirement

Motley Fool contributor Kate Lee 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 Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Steadfast Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When you think of investing in artificial intelligence (AI) stocks, it’s probably global tech giants like Nvidia that first spring to mind. However there are a whole raft of companies outside the tech space that are also pivoting their businesses to capitalise on the benefits of AI.

For example, many retailers are using AI to transform the way they interact with customers. Med-tech companies are pioneering advancements in diagnostics and treatments using the new technology. Real estate companies are cashing in on the surging demand for warehouse space. Even energy providers are looking to benefit from the increased demand for power to fuel AI technologies.

Whether you’re looking to jump on the AI investment bandwagon by buying a traditional ASX tech stock or sneak aboard via a less obvious path, you’re in luck!

Because we asked our Foolish writers which ASX AI stocks they think offer the best buying right now.

Here is what they said:

8 ASX that could be set to benefit from the AI megatrend (smallest to largest)

• IPD Group Ltd (ASX: IPG), $440.40 million
• Dicker Data Ltd (ASX: DDR) $1.75 billion
• Life360 Inc (ASX: 360), $3.15 billion
• Betashares Nasdaq 100 ETF (ASX: NDQ), $4.89 billion
• AGL Energy Limited (ASX: AGL), $6.87 billion
• Sonic Healthcare Ltd (ASX: SHL), $12.17 billion
• Pro Medicus Limited (ASX: PME), $13.70 billion
• Goodman Group (ASX: GMG), $67.93 billion

(Market capitalisations as of market close 14 June 2024).

Why our Foolish writers say these ASX AI stocks are smart long-term buys

IPD Group Ltd

What it does: IPD Group distributes electrical and automation solutions in Australia. With more than 70 years of experience, it offers services including power distribution, industrial control, renewables, and testing. The company supports various sectors, such as power generation, infrastructure, and commercial facilities, leveraging renowned global brands like ABB and GE.

By Kate Lee: In March this year, Tesla boss Elon Musk predicted the rapid expansion of AI and electric vehicles (EVs) would lead to supply crunches in electricity and transformers as early as 2025. AI computer systems consume significant amounts of electricity, and the AI boom will inevitably drive higher demand for data centres, which also rely heavily on electrical power.

The anticipated supply crunch fueled by AI-related demand could exacerbate the country’s already-strained power supply. As reported by The Australian last month, the Australian Energy Market Operator (AEMO) warned of potential power shortages in New South Wales and Victoria due to delays in new transmission lines and renewables projects.

I think potential AI-fuelled energy shortages may present IPD Group with a growth opportunity as the industry faces the need to upgrade the current electricity supply grid and move to greener energy sources.

IPD Group is not only a distributor of various electric systems but also aims to become a one-stop shop for solar energy systems through its recent acquisition of Addelec and Gemtek.

Two weeks ago, IPD Group provided a bright outlook for FY24. The company expects to report earnings before interest, tax, depreciation and amortisation (EBITDA) between $39 million and $39.5 million, implying 42% growth from a year ago at the midpoint. These projections exclude costs from the acquisitions of EX engineering and CMI Operations. 

With the company’s exposure to data centres, solar energy systems, and electricity testing, I believe IPD Group is well-positioned to benefit from the anticipated power shortages led by the AI revolution.

The IPD Group share price is down 20% from its all-time high of $5.42 in February this year. Based on trailing earnings, the company is trading at a price-to-earnings ratio of 21x.  

Motley Fool contributor Kate Lee does not own shares of IPD Group. 

Dicker Data Ltd

What it does: Dicker Data is in the business of wholesale distribution of computer hardware and software. It has specialised exposure to the AI segment, boasting major relationships with such AI giants as Nvidia and Microsoft.

By Zach Bristow: As an investor focusing on AI stocks, Dicker Data has caught my attention in 2024. Following a sharp pullback in its share price over the last six months, it stands out as my top AI stock pick for June. 

Why? Well, I think Dicker Data has several things going for it right now.

For one, the company recently reported it’s in a “leadership position in the artificial intelligence arena”, flaunting its competitive advantage as “the only end-to-end Nvidia distributor” in the region and “the number one distributor” of Microsoft’s Copilot program.

Dicker Data stock was also recently upgraded by Goldman Sachs to a ‘neutral’ rating with a $9.85 price target — slightly above the current share price. The reasons for the upgrade were cited as being Dicker Data’s defensive revenues and strong balance sheet – arguably standout attributes in the ASX tech sector.

The company has also grown its operating margins in the last 12 months to 4.8% from 4.4%. So even if broad economic growth was softer going forward, the company was positioned for earnings growth, Goldman said. 

Tailwinds for this earnings growth are expected to emerge from a recovering PC market in the second half of CY 2024. 

With exposures to such colossal tech giants as Nvidia and Microsoft, the extent of Dicker’s recent selloff is too deep, in my opinion. I think this makes Dicker Data shares – trading at a price-to-earnings (P/E) ratio of 20 times – appear fairly valued relative to peers.

Motley Fool contributor Zach Bristow does not own shares of Dicker Data Ltd.

Life360 Inc

What it does: Based in the United States, Life360 develops software that’s largely used for location sharing. The company’s smartphone app is favoured by families looking to track their children’s locations or to help keep elderly people and folks with special needs safe.

By Bernd Struben: The Life360 share price has surged 99% year to date, and I expect there are more outsized gains to be reaped in the years ahead.

The company has been rapidly growing its customer base. As at 31 Match, Life360 reported servicing some 66 million monthly active users in more than 150 countries.

Earlier this month, the ASX AI stock pulled off a successful Nasdaq initial public offering (IPO). The broader exposure and increased capital available to the now dual-listed company should support ongoing growth.

And the AI revolution could well help supercharge that growth.

At the end of May, Morgan Stanley noted, “We see Life360 as having access to huge volumes of user data, from personal details to daily habits, driving patterns and behaviours.”

With all that AI-friendly data at hand, the broker said it saw significant long-term potential for Life360 “in terms of both monetisation and user experience of consumers being served compelling offers”.

Motley Fool contributor Bernd Struben does not own shares of Life360 Inc.

Betashares Nasdaq 100 ETF

What it does: The BetaShares Nasdaq 100 ETF is an exchange-traded fund (ETF) that tracks the largest 100 non-financial companies on America’s Nasdaq stock exchange.

By Sebastian Bowen:  It might seem strange to think of this index fund as an artificial intelligence stock, but hear me out. The Nasdaq stock exchange is one of the two major exchanges over in the United States. It is well-known as the home of choice for almost all of the US’ big tech giants. 

An investment in this ETF is an investment in the likes of Apple, Microsoft, Alphabet, Nvidia, Meta Platforms, Amazon, Netflix, and Tesla. 

These stocks happen to be the largest movers and shakers in the AI space today. And you can get a slice of all of them using this simple index fund. In fact, for every $1 invested in the NDQ ETF today, around 8 cents each will go towards Apple, Microsoft, and Nvidia shares, respectively.

As such, if one was seeking easy exposure to a range of world-class AI stocks this June, I would look no further than the BetaShares Nasdaq 100 ETF.

Motley Fool contributor Sebastian Bowen owns shares of Apple, Microsoft, Alphabet, Meta Platforms, Amazon, Netflix, and Tesla.

AGL Energy Limited

What it does: AGL is one of Australia’s largest energy generators, with some coal generation including Loy Yang A and Bayswater. It’s also one of the country’s largest energy retailers, with around 2.4 million customers, as at 31 December 2023. 

By Tristan Harrison: Earlier this year, Yukio Kani, the CEO of Japan’s largest power provider, said that data centres were “very hungry caterpillars”, according to reporting by the Wall Street Journal.

The Australian Financial Review also recently reported that data centres were already using 5% of Australia’s electricity. Large-scale construction around the country could see data centre capacity more than double by the end of the decade, with an increase from 1,050MW to 2,500MW. That would equate to growth of 13% per year.

Thus, the surge in AI, along with Australia’s rising population and the long-term adoption of electric vehicles, could lead to significant energy demand increases in the coming years.

As one of the largest players in the Australian energy market, AGL could benefit greatly from this growing demand.

Furthermore, while national energy demand is predicted to rise, coal energy generation is scheduled to be taken offline over the next decade or so. Less electricity supply could lead to rising electricity prices and, ultimately, stronger profits.

According to UBS estimates, the AGL share price is currently valued at approximately 8x FY27’s estimated earnings.

While I don’t currently own AGL shares, I’m seriously considering buying some in the coming weeks for the reasons outlined above. 

Motley Fool contributor Tristan Harrison does not own shares of AGL Energy Limited.  

Sonic Healthcare Ltd

What it does: Sonic Healthcare is ubiquitous in the pathology, laboratory, and radiology domain. The company is a truly global business, with operations in countries such as the United States, Australia, Germany, and the United Kingdom. While artificial intelligence may not be what Sonic is known for, innovation has long been a part of its DNA.

By Mitchell Lawler: Worldwide, healthcare costs are ballooning following the latest bout of inflation. 

In Australia, hospital operator Ramsay Health Care (ASX: RHC) runs on a paper-thin margin of 1.4% as reimbursements fail to keep pace with rising costs. Sonic Healthcare has also felt the squeeze, with revenue from its services on the Medicare Benefits Schedule (MBS) declining in real terms. 

It’s clear companies need a way of enhancing productivity to grow profitability in this situation. 

Sonic Healthcare is making strides in AI-led improvements. For example, Franklin.ai is a joint venture aiming to introduce AI to pathology for improved scaling. Likewise, PathologyWatch is a recent acquisition that is developing AI-powered melanoma detection. 

The current strain on healthcare companies may benefit Sonic Healthcare as it utilises AI to potentially outperform its competitors. 

Motley Fool contributor Mitchell Lawler owns shares of Sonic Healthcare Ltd.

Pro Medicus Limited

What it does: Pro Medicus is one of the world’s leading health imaging technology companies. Its crown jewel is the Visage platform, which is a complete solution for all an organisation’s imaging needs.

By James Mickleboro: I think Pro Medicus could be a great option for investors looking for exposure to the AI megatrend.

This is because the company is leveraging artificial intelligence to make its industry-leading platform even more powerful. 

In addition, there are revenues that the company can generate from AI that it would not ordinarily be able to capture. In fact, Goldman Sachs estimates that “AI opens an incremental US$620mn TAM [total addressable market] today.”

And, with the broker predicting this TAM to grow at a +34.7% compound annual growth rate (CAGR), it believes Pro Medicus is well positioned to “take share as the incumbent viewing platform across many large, and likely early adopters of new technology.”

This is partly why the broker currently has a buy rating and a $136.00 price target on the company’s shares.

Motley Fool contributor James Mickleboro owns shares of Pro Medicus Limited.

Goodman Group

What it does: Goodman is Australia’s largest real estate investment trust (REIT), with a huge global property portfolio worth $80.5 billion.

By Bronwyn Allen: Goodman Group is an industrial property specialist and is seeking to capitalise on the AI megatrend by building large, high-quality data centres and expanding its global power bank.

Data centres currently make up 40% of the group’s $12.9 billion development pipeline, and it’s reviewing additional sites for potential data centre use now. Goodman’s global power bank totals 4.3GW, with 2.2GW not yet secured but in the advanced stages of procurement.

The company said its strong balance sheet was enabling it to continue buying and developing high-tier data centres in sought-after locations. Last month, Goodman issued its third-quarter update and upgraded its FY24 guidance for a second time. The company now expects operating earnings per share (EPS) growth of 13% in FY24. 

Motley Fool contributor Bronwyn Allen owns shares of Goodman Group.

The post Top ASX AI stocks to buy in June 2024 appeared first on The Motley Fool Australia.

More reading

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• Records tumble! Hot ASX ETFs smash all-time highs again on Friday
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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. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Goldman Sachs Group, Goodman Group, Ipd Group, Life360, Meta Platforms, Microsoft, Netflix, Nvidia, Pro Medicus, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF, Dicker Data, and Ipd Group. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Goodman Group, Meta Platforms, Microsoft, Netflix, Nvidia, Pro Medicus, and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 and Life360. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended Flight Centre Travel Group and HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was another disappointing session for the Core Lithium Ltd (ASX: CXO) share price.

During Friday’s trade, the lithium miner’s shares tumbled to a new multi-year low of 9 cents.

And while it ended the day a fraction higher at 9.2 cents, this doesn’t change much for shareholders.

Over the last 12 months, the Core Lithium share price is down over 90%.

To put that into context, if you had invested $20,000 into its shares a year ago, you would have just $2,000 left.

That’s $18,000 gone seemingly in a blink of an eye.

Why is the Core Lithium share price at a multi-year low?

The decline in the company’s share price over the last 12 months shouldn’t come as a big surprise. I have warned for some time now that its shares could crash deep into the red.

And while I hadn’t expected such a large decline, in hindsight it isn’t surprising given what has transpired over the period.

With lithium prices at low levels and some analysts forecasting them to remain that way for some time due to a potential surplus of the white metal, it has become unprofitable for Core Lithium to continue mining operations.

As a result, it has suspended its mining activities and there’s no word on when things will change.

If prices remain at current levels for the next three years, it could conceivably mean that no shovels are in the ground at the Finniss Operation during that time.

Though, it is worth highlighting that management has revealed that it is looking beyond lithium. So, there’s potential for the company to expand into other metals or minerals that are experiencing stronger pricing.

What are analysts saying?

As things stand, it seems that even the most bearish analysts are starting to see value emerge from the Core Lithium share price.

For example, Goldman Sachs has a sell rating on its shares but a price target of 11 cents. This implies potential upside of 20% for investors from current levels.

But whether Goldman believes that is enough of a reward to justify the risk of investing in the company at this stage, remains to be seen. So, don’t count on the broker adjusting its recommendation in a hurry.

Elsewhere, Macquarie currently has a neutral rating and 15 cents price target on the lithium stock and Citi rates it as a sell with a 9 cents price target.

The post Core Lithium share price hits a multi-year low: Will the tide change soon? 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 Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s another day and another loss for the S&P/ASX 200 Index (ASX: XJO) so far this Friday. At the time of writing, the ASX 200 has shed another 0.4%, leaving the index at around 7,720 points.

But this loss for the broader market hasn’t stopped a series of ASX exchange-traded funds (ETFs) from smashing out new record highs today.

Let’s start with the BetaShares Nasdaq 100 ETF (ASX: NDQ). NDQ units closed at $44.77 each yesterday afternoon. But those same units opened at $44.86 this morning before rising as high as $44.93 after lunchtime today. That’s a new all-time high for this ETF.

But it’s not just NDQ that’s on fire today. We’re seeing something similar happening with the Vanguard MSCI Index International Shares ETF (ASX: VGS). VGS units finished up at $125.43 yesterday, and opened at $125.38 this morning. But since then, this index fund has climbed to a new record high of $125.58.

Keeping the train rolling, let’s now look at what’s happening with the iShares S&P 500 ETF (ASX: IVV). IVV units finished their Thursday at $54.55 each. But this morning, those units opened at $54.68 before hiking up to a new record of $54.75.

A final ASX ETF hitting new records today is the VanEck MSCI Index International Quality ETF (ASX: QUAL). This ETF isn’t an index fund like these other three record smashers. But it has still clocked a new all-time high of $57.26 a unit today after closing at $57.02 yesterday and opening at $57.19 this morning.

What’s up with these record-smashing ASX ETFs today?

It might seem strange that no fewer than four ASX ETFs are breaking new record highs this Friday on a day that has seen the Australian stock market decisively lose value.

But this isn’t new. It was only Tuesday that we were discussing a previous batch of new record heights for three of these four funds. As we covered then, none of the ASX ETFs listed above actually track or cover ASX shares. Rather, they are all funds that are almost entirely exposed to the United States markets.

NDQ and IVV are index funds that mirror the NASDAQ-100 Index (NASDAQ: NDX) and S&P 500 Index (SP: .INX), respectively.

VGS is also an index fund, but it tracks the MSCI World ex-Australia Index. This index covers dozens of advanced economies around the world but is predominantly invested in American shares, as is the QUAL ETF.

As it happens, the US markets have been on a tear themselves this week. We’ve seen fresh new all-time highs for the S&P 500 Index and the NASDAQ 100. This has, in turn, been driven by new highs for many of the US’s largest companies, including Apple, Microsoft, and NVIDIA.

Given this favourable backdrop, it’s not surprising that these US-based ASX ETFs vaulted higher this Friday despite the bad mood the broader ASX is in.

The post Records tumble! Hot ASX ETFs smash all-time highs again on Friday appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Apple and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, BetaShares Nasdaq 100 ETF, 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 positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Apple, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, 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.

The AGL Energy Ltd (ASX: AGL) share price is down 0.6% right now while the S&P/ASX 200 Index (ASX: XJO) is down 0.3%. Competitor Origin Energy Ltd (ASX: ORG)’s share price is also down by 0.3%, so AGL is underperforming. Investors are digesting AGL’s comments about its energy investment plans.

As one of the largest energy generators and retailers, AGL is important in Australia’s efforts to achieve net zero emissions by 2050.

While AGL and Origin have long-term plans to exit coal, questions remain about where to invest to enable the energy transition.

AGL’s energy investment plans

According to reporting by the Australian Financial Review, AGL’s chief operating officer Markus Brokhof has revealed AGL is going to focus on hydro, gas and batteries, as well as renewable energy purchase contracts and rooftop solar.

Brokhof believes the investment case for new wind and solar generation is “tricky”, so the business will focus on a strategy that minimises solar and wind asset ownership. The solar peak generation time during the day coincides with the lowest demand, while wind generation’s revenue is “relatively low”.

Brokhof said to the AFR:

Everything from a battery, from a pumped hydro facility, or even a gas-fired power station, we will put on our balance sheet. We want to invest in this.

[In] renewables, we will partly invest but also underwrite power purchase agreements. We don’t need to be the owner of a wind farm.

Hydro is underappreciated

Hydropower is undervalued in AGL’s eyes because it opens up deep storage and firming capabilities for the energy market, which can help during times when renewable energy isn’t able to perform.

However, Brokhof also warned that the cost of building hydro facilities was “huge” and suggested support from the government is possible. He commented on the prospect of government funding:

I think that’s partly foreseen, but the terms and conditions are not clear.

AGL hopes the federal government’s Capacity Investment Scheme includes pumped hydro projects, which may prioritise batteries according to the AFR‘s reporting.

As reported by the AFR, hydropower can work by pumping water uphill using low-cost (renewable) energy and then releasing it when demand increases after the sun has set (and wholesale electricity prices are higher). The water is then released and goes downhill, which powers a turbine to produce electricity.

AGL is looking at upgrading three of its hydro power plants to operate as pumped hydro facilities.

Brokhof said:

Firming capacity is key for us. It will allow us to use our trading capability. Being the largest private owner of hydro assets in Australia is a differentiator for us.

AGL share price snapshot

As shown on the chart below, the AGL share price has gone up 5% since the start of 2024, compared to a 1% rise for the ASX 200.

The post What’s put the wind up AGL shares on Friday? appeared first on The Motley Fool Australia.

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

Ever since Medibank Private Ltd (ASX: MPL) shares were first wrested from government hands and privatised back in 2014, investors have been anticipating hefty dividend income from this health insurance giant.

Those investors haven’t been disappointed. Medibank has paid out remarkably consistent dividend payments since its ASX debut. That’s despite the Medibank share price itself delivering fairly lacklustre growth in recent years.

Sure, today the company is around 70% above the ~$2.20 share price it hit the ASX boards at back in late 2014. But Medibank shares have only appreciated by around 9.3% over the past five years.

Have a look at the Medibank share price’s recent (and not so recent, if you wish) performance for yourself below:

But let’s get down to Medibank’s dividends. 

What’s the current dividend yield on Medibank shares?

The ASX 200 health insurance provider has paid out two dividends every year since 2015. Over the past 12 months, Medibank has doled out a final dividend worth 8.3 cents per share (back in October 2023) and an interim dividend (March) of 7.2 cents per share. Both dividend payments came with full franking credits attached, as is the norm for Medibank stock.

That’s an annual total of 15.5 cents per share. Plugging that into the current Medibank stock price of $3.71 (at the time of writing), we get a trailing dividend yield of 4.18%. If we include the value of Medibank’s full franking credits, this yield grosses up to 5.97%.

As we touched on before, Medibank’s dividends have been on a generally upward trajectory ever since the company’s ASX listing. Back in 2016, Medibank funded an annual total of 11 cents per share in dividend payments. But over 2023, the company forked out a total of 14.3 cents per share in payouts.

Medibank has also increased its annual dividend every year since 2020. That year saw shareholders receive 12 cents per share in dividends. But 2021 had Medibank fork out 12.7 cents per share, rising to 13.4 cents in 2022 and to 14.3 cents by 2023.

What about the future?

The interim dividend of 7.2 cents per share from March this year was a hefty rise over 2023’s equivalent payout of 6.3 cents. So it looks as though this streak of delivering consistently rising dividends is set to continue this year.

That’s a belief held by one ASX expert, anyway. As my Fool colleague James covered earlier this month, ASX broker Goldman Sachs is predicting Medibank will pay out a total of 16 cents per share in dividend income over FY2024, rising to 17 cents per share in FY2025.

If Goldman is on the money here, investors can expect a forward yield from Medibank stock of 4.19% and 4.6%, respectively.

Let’s see if Goldman is on the money and Medibank shareholders continue to enjoy a rising dividend yield.

The post Medibank shares: Here’s the dividend yield you’ll get today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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.

Over the past three years, the Lynas Rare Earths Ltd (ASX: LYC) share price has been disappointing. Lynas shares have dropped more than 40% from their all-time high in January 2022 to just over $6 today.

Despite this underperformance, the Lynas share price is still 130% higher over the last five years, handily outpacing the S&P/ASX 200 Index (ASX: XJO), which gained approximately 18% over the same period.

Weak consumer demand for electric vehicles (EVs) and falling global rare earth prices are largely behind such dramatic share price fall.

However, after a 40% drop in its stock value, is this battery metal miner ready to rebound when the global commodity market recovers?

Why did the Lynas share price drop so much?

China dominates the rare earths market with a 70% share in mining and a 90% processing capacity. Lynas is one of only two non-Chinese companies selling rare earths, the critical element in producing EVs and military devices. The other producer is MP Materials Corp (NYSE: MP) located in the United States.

Behind the sluggish share price movement is underwhelming consumer demand for EVs, which heavily use rare earth materials for batteries and other critical components.

The weak demand has pushed down the global rare earths prices, impacting revenue and profitability for producers like Lynas.

According to Lynas’ quarterly updates, China’s domestic prices for neodymium and praseodymium (NdPr) oxide, one of the important types of rare earth elements, have halved to US$43 per kilogram in a year. This is less than a third of the metal’s peak price of $144 per kilogram in March 2022.

What experts say about global rare earths price outlook

Former BHP copper boss Darryle Cuzzubbo is optimistic about the long-term outlook for the rare earths market. In a May 2024 interview with the Australian Financial Review, he referenced projections from Arafura Rare Earths Ltd (ASX: ARU), predicting a supply shortfall by 2032 with global production expected to reach only 65,000 tonnes, far below the anticipated demand of around 126,000 tonnes.

That said, price predictions for any commodities are difficult as the supply and demand dynamics keep on changing. Just yesterday, Europe’s largest deposit of rare earth elements was discovered at Fen, Norway. This news, as my colleague James summarised, pushed down the share prices of rare earths producers.

The good news is that Lynas is one of the few producers generating positive operating cash flows at the current low prices. Many other producers remain in the red. This means there could be industry consolidation ahead of us, and if it happens, Lynas has a better chance of becoming the survivor.

What do brokers say, and who else is positive about Lynas?

Mining magnate Gina Rinehart seems to think it’s a good time to invest in this critical metal producer. In April 2024, she became a major shareholder in Lynas, holding 5.8% through her company, Hancock Prospecting.

The same company bought 5.3% of the other non-China rare earth producer MP Materials in the US earlier this year. This series of share purchases sparked speculation that she may play a pivotal role in a potential merger between Lynas and MP Materials, as the Australian Financial Review reported.

Brokers see an upside from the current Lynas share price. UBS is cautiously optimistic saying rare earths prices have likely bottomed while not ruling out the possibility of further downside.

Goldman Sachs is another broker remaining optimistic. In a report in April 2024, summarised by my colleague Bronwyn, Goldman highlighted better-than-expected production volume from Lynas Advanced Materials Plant (LAMP) in Malaysia and the Lynas shares’ cheap valuation metrics.

Foolish takeaway

In the mining sector, navigating the ups and downs of global commodity cycles is inevitable. Lynas stands out as a key rare earths producer outside of China, offering a unique market position amid intensifying geopolitical tensions.

In my view, the recent dip in Lynas’s share price could present a compelling buying opportunity for long-term investors.

The post Down 40% in under 3 years, is the Lynas share price due a bounce? appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee 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.

The S&P/ASX 200 Index (ASX: XJO) is up 0.3% so far in June, with three ASX 200 shares doing a lot of the heavy lifting.

Which three stocks have really been going gangbusters this month?

I’m glad you asked!

ASX 200 shares flying higher in June

The first high-flying ASX 200 share in June is electronics retailer JB Hi-Fi Ltd (ASX: JBH).

JB Hi-Fi shares closed out May, trading for $58.23. In afternoon trade today, shares are changing hands for $63.39. That puts the JB Hi-Fi share price up 8.6% so far in June. Shares are now up 50% since this time last year.

JB Hi-Fi shares also trade on a fully franked dividend yield of 4.3%.

The last price-sensitive announcement from the company was a reasonably strong quarterly sales update on 9 May.

Investors appear to have been bidding up the ASX 200 share in June ahead of the pending stage 3 tax cuts and a raft of cost-of-living relief measures contained in the Federal budget. With most Aussies looking at pocketing significantly more money in the year ahead, JB Hi-Fi could enjoy a material uptick in sales.

Pro Medicus Ltd (ASX: PME) is the second ASX 200 share to charge higher in these first two weeks of June.

Shares in the health imaging company closed out May trading for $120.12. At the time of writing, shares are changing hands for $132.54 apiece, up 9.3% in June. That sees the Pro Medicus share price up an eye-watering 104.5% since this time last year. Pro Medicus shares trade on a fully franked 0.3% dividend yield.

The most recent share price momentum was driven by the company’s 28 May announcement that its wholly owned US subsidiary, Visage Imaging, had signed five new customer contracts. Pro Medicus said the new contracts have a total value of at least $45 million.

In a nod to its growing AI ambitions, the new contracts will be fully cloud-deployed and are expected to be completed within the next six months.

“Despite record new contract signings this year, our pipeline remains strong with a broad range of opportunities both in terms of size and market segments likely helping,” Pro Medicus CEO Sam Hupert said on the day.

Also soaring in June

Rounding off the list of ASX 200 shares going gangbusters in the first half of June is Bapcor Ltd (ASX: BAP).

Shares in the auto parts company closed out May trading for $4.25. In afternoon trade today shares are changing hands for $5.00 apiece, up 17.7%. The Bapcor share price remains down 14.8% since this time last year. Bapcor shares also trade on a 4.2% fully franked trailing dividend yield.

The big June boost for the Bapcor share price came on Tuesday this week.

Investors sent the ASX 200 share up 14.0% on the day after management confirmed media speculations that the company had received a non-binding takeover proposal from United States-based private investment firm Bain Capital.

The $5.40 per share cash offer values Bapcor at more than $1.8 billion.

There is not yet any guarantee that the takeover offer will proceed.

The post 3 ASX 200 shares going gangbusters in June appeared first on The Motley Fool Australia.

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

The Reserve Bank will make its next decision on interest rates next Tuesday.

All of the Big Four banks are expecting rates to remain on hold. For several months, they’ve all been tipping the first cut to occur in November, with four more cuts to follow over the course of 2025.

This week, ANZ Group Holdings Ltd (ASX: ANZ) became the first of the four to alter its view.

ANZ now expects the first cut to occur in February, with only two more to follow by the end of the year.

What are the experts saying on interest rates?

Gareth Aird, Head of Australian Economics at Commonwealth Bank of Australia (ASX: CBA), is sticking with his November forecast for the first interest rate cut.

However, he says the chances of it being delayed are increasing due to signs of stickier inflation.

Aird commented:

Our expectation for a more material loosening in the labour market relative to the RBA’s forecasts is a key reason why our base case sees the RBA commence an easing cycle in late 2024.

But given the challenging underlying inflation backdrop and a shortening runway between now and November, the risk to our call is increasingly moving towards a later start date for an easing cycle.

Luci Ellis, Chief Economist at Westpac Banking Corp (ASX: WBC), is also tipping November or thereabouts for the first rate cut.

Ellis said:

The likely trajectory of disinflation from here precludes a rate cut much before November.

The trimmed mean measure of inflation was still a full percentage point above the top of the target range over the year to the March quarter. The Bank will be watching this measure more closely as temporary factors buffet the headline measure in coming quarters.

However, even with a further moderation in trimmed mean inflation, it will take time for enough evidence to accumulate to convince the Board that the disinflation is firmly on track to reach 2-3% on a sustained basis.

The main thing that would cause the RBA to push back the timing of its first rate cut is inflation remaining sticky above the target range.

AMP Ltd (ASX: AMP) Chief Economist Share Oliver said 25% of the world’s central banks had begun cutting rates.

The central banks in Canada and Europe cut rates by 25 basis points earlier this month.

However, Australia began its interest rate hiking cycle later than other major economies. Therefore, we are not as far along in taming inflation as other economies, so we are likely to cut rates later.

Dr Oliver said:

The RBA will still want to see lower inflation readings, how the economy responds to the tax cuts next month and more confidence that inflation will decline sustainably into the 2-3% target …

But we continue to see the first rate cut coming by year end as continuing weaker than expected economic conditions provide the confidence it needs regarding the inflation outlook.

Interestingly, after the GDP data the money market removed the probability of another rate hike and is now allowing for around a 46% chance of a cut by year end.

The post Is there any chance of an interest rate cut in Australia next week? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Anz Group and Commonwealth Bank Of Australia. 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.