Category: Stock Market

With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Austal Ltd (ASX: ASB)

According to a note out of Citi, its analysts have upgraded this shipbuilder’s shares to a buy rating with a $2.31 price target. The broker was very pleased with news that Austal has won a major shipbuilding contract with the US government. It highlights that this win suggests the recent indictment of three former Austal USA employees by the US Department of Justice is not impeding Austal’s ability to win work with the US Navy. The Austal share price is trading at $2.01 this afternoon.

NIB Holdings Limited (ASX: NHF)

A note out of Goldman Sachs reveals that its analysts have initiated coverage on this private health insurer’s shares with a buy rating and $8.80 price target. The broker likes NIB due to its belief that it has stronger Australian resident health insurance underlying top line growth potential relative to its key rival. It also highlights that the company is taking more shareholder-friendly action to not profit from Covid-19, resulting in better reported margins. The NIB share price is fetching $8.30 today.

ResMed Inc. (ASX: RMD)

Analysts at Macquarie have retained their outperform rating and $38.00 price target on this sleep treatment focused medical device company’s shares. Macquarie believes ResMed is well-placed to benefit from improved industry growth after a lull during the pandemic. In addition, due to competitor issues, the broker sees scope for the company to increase its market share in the coming years. The ResMed share price is trading at $33.79 on Monday.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares to buy according to brokers
• Why AUB, Austal, Core Lithium, and Xero shares are pushing higher
• Why the Austal share price is sailing 25% higher today
• ‘Welcome improvement’: 3 ASX small-cap shares to grab right now
• 2 of the best ASX 200 blue chip shares to buy: Morgans

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 Austal and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended NIB Holdings. 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 market appears slightly downcast on Monday. The All Ordinaries Index (ASX: XAO) is slipping 0.3% at the time of writing, no thanks to three shares posting falls of 10% and more.

So, what’s weighing so heavily on the trio of stocks? Let’s take a look.

3 ASX All Ordinaries stocks plunging on Monday

The first All Ordinaries stock suffering at the hands of the market on Monday is Galan Lithium Ltd (ASX: GLN). It’s tumbling 10% right now to trade at $1.08.

It follows the completion of the company’s institutional capital raise, which saw $31.5 million committed to the cause.

New shares were offered to intuitional investors for $1.05 apiece under the raise, with the cash going towards the company’s Hombre Mueto West project. It will also help provide contingency funding for work at its Greenbushes South project.

Also in the red on Monday is the share price of City Chic Collective Ltd (ASX: CCX). The All Ordinaries clothing retail stock is tumbling 11.7% to trade at 34 cents right now.

It comes as the company updates the market on its debt facility, the progression of its strategic review, and its trading over the 45 weeks to 14 May.

Amendments to its debt facility are expected to provide the working capital necessary to return the business to profitable growth through the next financial year. Meanwhile, the company has decided to accelerate its inventory unwind.

Finally, City Chic revealed its sales slumped 15.2% year-on-year over the 45 weeks to 14 May to $262.2 million. Though that’s up 16.4% on the same period of financial year 2021.

Finally, Tyro Payments Ltd (ASX: TYR) shares are the worst performing on the All Ordinaries right now. They’re plummeting 18.2% to trade at $1.25.

The fall comes as the company announced Potentia Capital Management has scrapped takeover talks with the payments provider.

Potentia previously put forward a $1.60 per share bid, which was rejected by Tyro’s board.

However, the private equity firm was granted due diligence in January in hopes pouring over the ASX All Ordinaries company’s books would see it up its offer.

The post Monday blues: 3 ASX All Ordinaries shares crashing 10% or more today appeared first on The Motley Fool Australia.

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More reading

• Why Galan Lithium, Metcash, Tyro, and Zip shares are falling today
• Why is this ASX lithium share crashing over 10% today?
• Tyro share price plummets 18% as suitor abandons takeover talks
• Tyro share price leaps amid Apple Pay news
• Tyro share price slumps despite cost reductions delivering earnings guidance upgrade

Motley Fool contributor Brooke Cooper 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 Tyro Payments. The Motley Fool Australia has recommended Tyro Payments. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small decline. At the time of writing, the benchmark index is down 0.3% to 7,257.3 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are tumbling:

Galan Lithium Ltd (ASX: GLN)

The Galan Lithium share price is down 10% to $1.08. Investors have been selling this lithium developer’s shares after it completed the institutional component of its capital raising. Galan Lithium has received firm commitments to raise $31.5 million through an institutional placement priced at $1.05 per share. The proceeds will be used to purchase long lead items for the lithium carbonate pilot plant and the Stage 2 definitive feasibility study at Hombre Muerto West.

Metcash Limited (ASX: MTS)

The Metcash share price is down 3.5% to $3.65. This is likely to have been driven by a downbeat broker note out of Macquarie. According to the note, the broker has downgraded this wholesale distributor’s shares to a neutral rating with a reduced price target of $3.90. Macquarie is concerned that Aldi could be taking market share away from Metcash.

Tyro Payments Ltd (ASX: TYR)

The Tyro share price has crashed 17% to $1.27. Investors have been hitting the sell button today after Potentia withdrew from takeover talks for the payments company. Potentia had nearly four months of due diligence before pulling the plug. It appears to have seen something it didn’t like in Tyro’s books.

Zip Co Ltd (ASX: ZIP)

The Zip share price is down 5% to 54.5 cents. This follows news that the Treasury plans to strengthen the BNPL regulatory framework. However, it is worth noting that Zip was in full support of the changes that are being proposed and would already be compliant with any new requirements.

The post Why Galan Lithium, Metcash, Tyro, and Zip shares are falling today appeared first on The Motley Fool Australia.

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More reading

• Could Zip shares be a winner of more regulation in the BNPL sector?
• Credit call: ASX BNPL shares slump as regulation arrives
• Why is this ASX lithium share crashing over 10% today?
• Tyro share price plummets 18% as suitor abandons takeover talks
• Here are the 10 most shorted ASX shares

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The Woodside Energy Group Ltd (ASX: WDS) share price is marching higher today.

The S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed Friday trading for $34.24. Shares are currently changing hands for $34.61 apiece.

That puts the Woodside share price up 1.1% at the time of writing, while the ASX 200 is down 0.3%.

With oil and gas prices edging lower over the weekend, I suspect Germany and its fellow G7 nations may be offering some tailwinds to Woodside today.

Tailwinds that may continue to blow for some time.

What happened at the G7 meeting with energy demand?

The G7 nations met in Hiroshima on Saturday to discuss a range of pressing global matters.

Amongst those was energy security.

With Europe continuing to ween itself off of Russian energy exports, the continent is finding that renewable sources remain insufficient to keep the lights on at night and the aircon running in summer.

And in what may provide some longer-term support for the Woodside share price, the seven rich nations agreed that increased supplies of liquefied natural gas (LNG) are important.

As Reuters reports, the G7 stated that increasing LNG deliveries are “necessary to accelerate the phase-out of our dependency on Russian energy”.

According to a statement from the group:

We stress the important role that increased deliveries of LNG can play, and acknowledge that investment in the sector can be appropriate in response to the current crisis and to address potential gas market shortfalls provoked by the crisis.

While maintaining the goal of reducing global emissions, including highlighting the potential of green hydrogen, the G7 stated:

In the exceptional circumstance of accelerating the phase out of our dependency on Russian energy, publicly supported investment in the gas sector can be appropriate as a temporary response.

Though they conveniently failed to mention how long this “temporary” public investment in gas projects might be.

As you’d expect, climate activists were less than pleased with the development.

But Germany doubled down on the need for more gas. And in potentially other good news for the outlook of the Woodside share price, added that the nation will be building new gas power plants.

“We also need some new gas power station, but they should be built in a way that they can run on green hydrogen later on as well. So it is an investment in the clean future as well,” a German government official said (quoted by Reuters).

Woodside share price snapshot

The Woodside share price has been a strong outperformer over the past 12 months, gaining 20%.

The post Woodside share price lifts as Germany flags need for ‘new gas power stations’ appeared first on The Motley Fool Australia.

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More reading

• Are Woodside shares the greatest dividend buy of the ASX 200?
• How I’d invest $20,000 today for a $3,370 passive income
• 5 things to watch on the ASX 200 on Friday
• How might this news out of China impact the oil price?
• 5 things to watch on the ASX 200 on Wednesday

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 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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The S&P/ASX 200 Index (ASX: XJO) is having a subdued start to the week. In afternoon trade, the benchmark index is down 0.25% to 7,261.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are rising:

Bigtincan Holdings Ltd (ASX: BTH)

The Bigtincan share price is up 14% to 57 cents. This morning, the sales enablement platform provider confirmed media speculation that it has received a confidential, non-binding, incomplete and indicative offer from Siris Capital Group. An indicative offer price of $0.80 per share has been tabled.

EBR Systems Inc (ASX: EBR)

The EBR Systems share price is up 9% to 99 cents. Investors have been buying this medical device company’s shares after it revealed that its pivotal SOLVE-CRT trial met the primary efficacy and safety endpoints demonstrating statistically significant improvement against benchmarks. The study results showed that patients implanted with its WiSE device saw a 16.4% reduction in heart volume, indicating improved heart function.

Gentrack Group Ltd (ASX: GTK)

The Gentrack share price is rocketing 26% higher to $4.03. This morning, this utilities and airport software solutions provider released its half year results. Gentrack reported a 47.7% increase in revenue to $84.3 million and a profit of $7.9 million. The latter is a big improvement from a $5.8 million loss a year earlier.

New Hope Corporation Limited (ASX: NHC)

The New Hope share price is up 1.5% to $5.20. This has been driven by the release of the coal miner’s third-quarter update this morning. For the three months, New Hope reported underlying EBITDA of $448.1 million. This represents an increase of 14.8% compared to the previous quarter and a 20.6% increase compared to the same period last year.

The post Why Bigtincan, EBR, Gentrack, and New Hope shares are storming higher appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX All Ords share is soaring 16% amid a fresh takeover bid
• New Hope share price charges 4% higher on strong Q3 earnings growth
• Here are the top 10 ASX 200 shares today
• Looking for passive income? Here’s the yield you’re earning if you bought New Hope shares in June
• Why Alumina, New Hope, Virgin Money, and Vulcan Energy shares are falling

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 Bigtincan. The Motley Fool Australia has positions in and has recommended Bigtincan. 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 recent pullback in Harvey Norman Holdings Ltd (ASX: HVN) shares could provide an opportune entry point for passive income investors.

Shares in the S&P/ASX 200 Index (ASX: XJO) retail stock have come under some pressure amid investor angst over a possible recession.

A recession could see sales slow down further if consumers delay the purchase of some big-ticket discretionary items, like TVs, computers, or that new sofa.

Since reporting a decrease in sales on 27 February, Harvey Norman shares are down more than 13%, currently trading for $3.61 apiece.

But as I said, longer term, this pullback could mean ASX 200 investors buying shares today will be earning a lot more passive income tomorrow.

So, just how much would you have to invest in Harvey Norman shares for $1,000 in passive income?

How many Harvey Norman shares would yield $1,000 in passive income?

The ASX 200 retailer has a lengthy track record of delivering two fully franked dividends each year.

Now, before we dive into how many Harvey Norman shares will deliver that handy $1,000 of passive income, do take note that the yields we’re discussing are trailing yields. These are based on the dividend payments of the past 12 months. Future yields may be higher or lower, depending on a range of company-specific and wider macroeconomic factors.

With that said, Harvey Norman paid out a final dividend of 17.5 cents per share on 14 November. The interim dividend of 13 cents per share hit investors’ bank accounts on 1 May.

That works out to a full-year dividend payout of 30.5 cents per share. At the current Harvey Norman share price, that equates to a trailing yield of 8.4%, fully franked.

To garner my $1,000 in passive income I’d need to buy 3,279 Harvey Norman shares. Or $11,903 worth.

Now I likely won’t make that full investment all in one go.

But that’s okay.

Investing is a long game.

If I invest $500 a month, or whatever I’m able to set aside, I’ll get to my passive income goal eventually.

The post How much do I need to invest in Harvey Norman shares for $1,000 a year in passive income? appeared first on The Motley Fool Australia.

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More reading

• Turning ASX shares into a $40,000 annual passive income generator
• How much would I need to invest in ASX shares for a retirement income of $65,000 per year?
• No savings at 40? Here’s how I’d aim to build a passive income of $3,000 a month
• Buy Telstra and this ASX 200 dividend share for passive income: brokers

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 Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. 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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Zip Co Ltd (ASX: ZIP) shares are plummeting amid news the buy now, pay later (BNPL) industry will soon face greater regulation in Australia.

But there’s little need to worry about the impact on the company, co-founder and chief operating officer (COO) Peter Gray says.

Zip was “well-placed to continue with business as usual” in the face of increased regulation, Gray told ABC Radio. In fact, the BNPL share isn’t expecting to lose a single customer as a result of the shift.

The Zip share price tumbled to a low of 53 cents this morning – a 7.8% drop.

It’s since recovered slightly to trade just 5.2% lower at 54.5 cents at the time of writing.

For comparison, the All Ordinaries Index (ASX: XAO) is down 0.31% right now.

Let’s take a closer look at what might be weighing on the ASX BNPL share today.

Could ASX BNPL share Zip be a regulatory winner?

In news reportedly announced by Minister for Financial Services Stephen Jones today, the BNPL industry will soon fall under the Credit Act.

That means providers will need to hold a credit licence and undergo checks to ensure consumers can afford to pay off BNPL debt before providing the products.

And while the changes sound like they could be dire for ASX BNPL shares, Zip might be in a position to benefit.

Gray applauded the Government’s move, saying the company had been advocating for such changes for years. He told ABC Radio:

It’s likely to be a competitive advantage for our business in Australia, given how well placed we are in our business practices that we’ve adopted since inception.

As I touched on, it’s business as usual for us, whereas many of the competitive peer set really will have to make some significant changes to the way they operate their business.

The company already holds a credit license and completes affordability checks on all its customers. It also has “robust” hardship, dispute, and complaint resolution processes in action, Gray noted.

That’s good news for shareholders, the insider said.

Investors “should be encouraged” that the changes could be a “positive differentiator” for the company, even carrying the potential to increase its market share.

Of course, it would likely take more than a competitive shift to see Zip shares regain all they’ve lost in recent years. The stock is currently 96% lower than it was at its 2021 peak.

The post Could Zip shares be a winner of more regulation in the BNPL sector? appeared first on The Motley Fool Australia.

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More reading

• Credit call: ASX BNPL shares slump as regulation arrives
• Here are the 10 most shorted ASX shares
• The Zip share price has zoomed 12% higher in a week. Is this the beginning of a turnaround?
• Here are the 10 most shorted ASX shares
• What’s the outlook for the Zip share price in May?

Motley Fool contributor Brooke Cooper 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 Zip Co. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is bucking the wider selling trend today.

Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner closed Friday trading for $44.16. At the time of writing, BHP shares are swapping hands for $44.20.

That puts the BHP share price a whisker into the green at 0.09% higher, while the ASX 200 is down 0.4%.

A range of factors impacts the big miner’s share price performance. But with iron ore still counting as BHP’s number one revenue earner, that’s a big one for investors to keep an eye on.

What’s the outlook for the iron ore price?

Iron ore is currently trading for US$105 a tonne.

That’s up from a recent low of just under US$100 a tonne on 5 May and a recent high of just over US$134 a tonne on 15 March,

Those are some unusually large price swings for the industrial metal, which in turn has seen some volatility in the BHP share price.

Most of that has to do with China. Namely, the uncertainty surrounding the outlook for steel demand from China’s mills to supply to the nation’s oft-booming but currently wobbling real estate sector.

With that in mind, ANZ Group Holdings Ltd (ASX: ANZ) senior commodity strategist Daniel Hynes has downgraded the bank’s short-term outlook for the iron ore price.

“We see the risk of another leg down for prices as relatively high,” Hynes said (quoted by The Australian Financial Review).

ANZ now has a short-term price target of US$95 a tonne on iron ore, 9.5% below the current price. Should the iron ore price take that next leg down, it would throw up some additional headwinds for the BHP share price in the three months ahead.

While Chinese home sales ticked up over the first quarter, spurred by government stimulus measures, new housing starts fell by 28%. Which bodes poorly for short-term steel demand.

Compounding the short-term outlook is an increase in the supply of iron ore.

According to Hynes:

Without any improvement on the horizon, steel mills are likely to start reducing output in coming months. This is likely to lead to further weakness in the iron ore market.

We expect the market to move into surplus in the second quarter, compounded by a rise in supply. This should see the stubbornly persistent market deficit haunting end users over the past two years return to surplus in 2023.

But the iron ore price – and by connection the BHP share price – is expected to increase in the second half of the year.

According to ANZ, that’s based “on expectations of a stabilisation in demand as China’s housing market improves”.

BHP share price snapshot

The BHP share price is down 7% over the past 12 months.

Longer-term, shares in the ASX 200 miner are up 34% over five years.

The post Here’s what ANZ’s iron ore forecast could mean for the BHP share price in 2023 appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares to buy according to brokers
• The copper price could explode. This is the ASX share to take advantage
• Neutralised? What it means for ANZ shares and their reinvested dividends
• Why BHP shares made our headlines this week
• Buy these ASX shares with big dividend yields: Goldman Sachs

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 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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Qantas Airways Limited (ASX: QAN) shares have been strong performers over the last 12 months.

As you can see on the chart below, since this time last year, the airline operator’s shares have soared over 18%.

Have you missed the flight on Qantas shares?

With Qantas shares flying high and smashing the market, investors may be wondering if they are too late to the gate on this one.

The good news, though, is that one top broker doesn’t believe it is too late. In fact, its analysts believe even greater returns await investors that commence boarding today.

According to its latest best ideas list, Morgans has an add rating on Qantas shares with a price target of $8.35. This implies potential upside of 29% for investors over the next 12 months.

Why is Morgans bullish?

Morgans is bullish on Qantas due to its positive outlook, lower costs, and attractive valuation. In respect to the latter, the broker highlights that the company’s shares are trading at a significant discount to pre-COVID levels despite being a much stronger company now. It explains:

QAN is now our preferred pick of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply. QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

The strong pent-up demand to travel post-COVID should result in a healthy demand environment for some time, underpinning further EBITDA growth over FY24/25. QAN’s balance sheet strength positions it extremely well for its upcoming EBITaccretive fleet reinvestment and further capital management initiatives (recently announced a A$500m on-market share buyback at its 1H23 result). There is also likely upside to our forecasts and consensus if QAN achieves its FY24 strategic targets.

The post Have I missed the flight on Qantas shares? appeared first on The Motley Fool Australia.

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• Back to 100%: The deal driving Qantas shares into the green on Friday
• Why Goldman Sachs rates these ASX 200 shares as top buys
• Why Qantas shares are Morgans’ top pick in the travel sector
• Buyback bender: These ASX All Ords shares can’t get enough of their own stock
• Qantas shares: High-flying potential or grounded expectations?

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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ASX shares can be a great tool to use to unlock a second income of $1,000 per month. I wouldn’t be concerned even if I had no savings because of the potential of compounding.

Bank savings accounts are finally offering a decent interest rate. Having money parked in a high-interest savings account can earn a decent rate. But, I think there’s less compounding potential than ASX shares – businesses can grow their profit while paying a (growing) dividend. Investors can decide to spend those dividends and still get growing passive income or decide to re-invest the dividends for even stronger wealth-building.

The first step, and perhaps the hardest, is to save money to invest. That requires spending less than you earn, one way or another.

I’d try to save at least $750 a month by making some changes with my spending choices, though each household’s finances are different – some people may be able to save $500 per month while others may be able to invest $2,000 per month or even more.

When we’ve got some cash, we need to decide where to invest it. Receiving $1,000 per month is equivalent to $12,000 per year. Getting that much of a second income could require a portfolio worth $300,000 (at a 4% dividend yield or 4% withdrawal rate).

Where to invest it?

There are three different ways that I’d consider investing my savings to build my portfolio.

I’ll just mention that all of the financial numbers mentioned below are just for demonstration and generally don’t account for tax, as I’d need a crystal ball to know what future returns are going to be and what’s the best option for each individual circumstance.

Index-based ETFs

Index-based exchange-traded funds (ETFs) are funds that allow people to invest in a portfolio of businesses. They’re usually low-cost, offer good diversification and track the returns of the share market.

An example is the Vanguard MSCI Index International Shares ETF (ASX: VGS) is an ETF that invests in the global share market, owns more than 1,400 businesses and has produced average returns per year of more than 10% over the long-term, though past performance is not a guarantee of future performance.

I would keep investing $750 per month in this ETF and re-invest the distributions until I’d reached a minimum of $300,000. If the VGS ETF returned an average of 10% per annum, then this would take 15 years.

To unlock a second income, I’d then sell 4% of the ETF’s value each year to get $12,000 per annum out of the portfolio.

ASX growth shares

Another option could be to choose ASX growth shares that may be able to grow in scale significantly and create wealth. If an investor chooses right, they may be able to grow their wealth the most with this path, but it can also come with more risk.

It’s very hard to say what the future returns of each individual growth share are going to be.

I believe there are some growing businesses that could pay much larger dividends in the future, funded by the growing profit. Those ASX growth shares could pay the required dividends for a second income in 10 or 15 years. I’d look at names like Lovisa Holdings Ltd (ASX: LOV), Johns Lyng Group Ltd (ASX: JLG), Healthia Ltd (ASX: HLA) and Bailador Technology Investments Ltd (ASX: BTI).

Some ASX growth shares don’t pay dividends but are very promising to me, such as Xero Limited (ASX: XRO), Temple & Webster Group Ltd (ASX: TPW) and Volpara Health Technologies Ltd (ASX: VHT). They may pay dividends in the distant future, but buying these sorts of names could require selling 4% of the $300,000 portfolio value to unlock $12,000 of a second income.

I would also consider investing in a growth-focused ETF like the Vaneck Morningstar Wide Moat ETF (ASX: MOAT) if I were thinking with a growth mindset and then sell 4% of the value each year.

ASX dividend shares

A final option to consider could be to choose ASX dividend shares that could deliver solid capital growth and are already paying a good dividend yield.

If these ASX dividend shares keep growing their profit and dividend, we could just live off the dividends and not need to think about selling any of the portfolio. Plus, there would probably be some helpful franking credits coming from these names to boost the yield.

Three of my favourite ideas for an ASX dividend share portfolio that could also deliver growth would be Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and Wesfarmers Ltd (ASX: WES). I’d also consider names like Premier Investments Limited (ASX: PMV) and Sonic Healthcare Limited (ASX: SHL).

Foolish takeaway

I think each of the avenues I’ve talked about can help unlock a second income. The ETF route (including the MOAT ETF) would probably be the simplest path, as I wouldn’t need to worry about which ASX shares to own.

However, the ASX dividend shares route is the one I’m pursuing with my real portfolio because I like the cash flow and franking credits that are created by that route.

For my own portfolio, I like the long-term record that Soul Pattinson and Brickworks have already demonstrated for dividends and wealth creation, and I think that can continue.

The post No savings? Here’s how I’d target a second income of $1,000 per month from scratch appeared first on The Motley Fool Australia.

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More reading

• $10k invested in Vanguard MSCI Index International Shares ETF (VGS) 5 years ago is worth how much?
• No savings at 40? Here’s my 3-step plan for $1,500 of passive income a month
• Could buying the Vanguard Australian Shares Index ETF (VAS) at under $90 help me retire early?
• 3 reasons to buy Wesfarmers shares today
• 2 of the best ASX 200 blue chip shares to buy: Morgans

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments, Brickworks, Healthia, Johns Lyng Group, Lovisa, Temple & Webster Group, Vanguard Msci Index International Shares ETF, Volpara Health Technologies, Washington H. Soul Pattinson and Company Limited, and Xero. The Motley Fool Australia has positions in and has recommended Brickworks, Volpara Health Technologies, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and Xero. The Motley Fool Australia has recommended Bailador Technology Investments, Healthia, Johns Lyng Group, Lovisa, Premier Investments, Sonic Healthcare, Temple & Webster Group, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. 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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