Category: Stock Market

Deciding which ASX income stock to buy can be a gruelling process.

Luckily for income investors, analysts have done a lot of the hard work for you and picked out four they think are buys.

Here’s what they are saying about these dividend stock:

APA Group (ASX: APA)

The first ASX income stock to look at is APA Group. It is an energy infrastructure business that owns, manages, and operates a diverse portfolio of gas, electricity, solar and wind assets.

Macquarie is a fan of the company and currently has an outperform rating and $9.40 price target on its shares.

As for income, the broker believes that APA Group’s long run of dividend increases will continue. The broker is forecasting dividends per share of 56 cents in FY 2024 and 57.5 cents in FY 2025. Based on the current APA Group share price of $8.39, this equates to 6.7% and 6.85% dividend yields, respectively.

Coles Group Ltd (ASX: COL)

Over at Morgans, its analysts think that income investors should be buying this supermarket giant’s shares.

The broker currently has an add rating and $18.95 price target on its shares.

In respect to dividends, it is expecting Coles to pay fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $17.10, this implies yields of approximately 3.85% and 4%, respectively.

Dalrymple Bay Infrastructure Ltd (ASX: DBI)

Morgans also thinks that Dalrymple Bay Infrastructure could be an ASX income stock to buy.

It is the long-term operator of the Dalrymple Bay Coal Terminal. This has been Queensland’s premier coal export facility since all the way back in 1983.

The broker currently has an add rating and $3.05 price target on its shares. As for income, the broker is forecasting dividends per share of 22 cents in FY 2024 and then 23 cents in FY 2025. Based on the latest Dalrymple Bay Infrastructure share price of $2.93, this will mean yields of 7.5% and 7.85%, respectively.

GDI Property Group Ltd (ASX: GDI)

Finally, the team at Bell Potter thinks that this property company could be an ASX income stock to buy.

Its analysts currently have a buy rating and 75 cents price target on its shares.

As well as plenty of upside, the broker believes GDI Property could provide investors with some big dividend yields in the coming years. It is forecasting dividends per share of 5 cents across FY 2024, FY 2025, and FY 2026. Based on the current GDI Property share price of 60 cents, this implies dividend yields of 8.3% for the next three years.

The post 4 ASX income stocks for Aussie investors to buy now appeared first on The Motley Fool Australia.

More reading

• Can Coles shares outperform the ASX 200 Index from here?
• Buy Coles and these ASX 200 dividend stocks
• ASX passive income: Earn $1000/month
• Here’s how the ASX 200 market sectors stacked up last week
• Mining, supermarkets, and property: 3 ASX 200 dividend stocks to buy

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

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The artificial intelligence (AI) trade took a turn for the worse on Monday as Nvidia (NASDAQ: NVDA) shares dropped as much as 6.5%, dragging the entire AI market with it.

Super Micro Computer (NASDAQ: SMCI) fell as much as 8.5%, and Taiwan Semiconductor Manufacturing (NYSE: TSM) was down 3.8% at its low today. The three AI stocks were down 4.9%, 7%, and 3.2%, respectively, at 11:30 a.m. ET. There isn’t any specific news about AI, but investors have a lot on their minds about the future demand for the chips driving AI today.

Nvidia insiders are selling in droves

On Friday, Nvidia insiders, including CEO Jensen Huang, announced massive stock sales beyond just tax sales related to stock options and warrants. Huang reported he sold 240,000 shares on the open market on Thursday and Friday, totaling $31.6 million for just those two days.

In June alone, Huang has already sold nearly $95 million of stock as he’s been touting the growth potential for AI long term. Numerous other executives have also reported large stock sales on the open market.

Insider sales can be an indication they are less bullish on a stock, which is why this is notable.

Is the bubble popping?

As impressive as AI demand has been, the valuations of Nvidia and Super Micro Computer in particular have hit crazy levels. You can see below that Nvidia’s price-to-earnings (P/E) multiple is still over 70 and its price-to-sales (P/S) multiple is 37.6. Super Micro Computer isn’t quite as expensive, but it’s still priced for perfection.

NVDA PE ratio data by YCharts.

Investors must consider how much growth is priced into AI stocks right now and what the likelihood is that they will live up to that potential. Very few AI companies make money, so the money flowing to chips could slow down if those that are developing AI models and tools don’t create business plans that make them sustainable in the long term.

Earnings come into focus

Investors are suddenly thinking about demand because we’re only a few weeks away from the start of earnings season for the second quarter of 2024. That’s when we’ll hear about end demand and margins for tech companies building AI products, including those buying the most Nvidia chips.

If demand is strong, stocks could go up, but investors are taking money off the table for fear there could be some disappointing signs. And with stocks priced to perfection, even the smallest crack in the AI growth story could send them tumbling.

It’s all up to Nvidia

Nvidia is the biggest name in AI, and its fortunes will drive Super Micro Computer and TSMC, which are suppliers to the company and beneficiaries from the overall growth in AI demand. If the market for Nvidia chips continues to grow, the other companies will have plenty of demand.

What I think the focus over the next month will be is the demand for AI products that companies have introduced and whether or not that will lead to more capital spending. If not, there could be a pullback in orders in the future, and that could put both revenue and margin projections into question.

These high valuations and lack of AI business models are why I’m avoiding AI stocks today. The risk is simply too high for the observable reward right now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nvidia stock drops 6.5%, dragging artificial intelligence stocks lower appeared first on The Motley Fool Australia.

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• Thinking about buying Nvidia stock? Here’s why you might already own it
• Nvidia investors just got some bullish news

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia and Taiwan Semiconductor Manufacturing. Travis Hoium has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On the ASX, investors can normally expect dividend payments every six months from their dividend shares. This biannual income schedule is decidedly the norm on the Australian markets. ASX dividend stocks that pay out quarterly payments are rare, and stocks that dole out a paycheque every month are rarer still.

But that doesn’t mean they don’t exist.

One such example is Plato Income Maximiser (ASX: PL8). This listed investment company (LIC) specialises in paying out fat, fully franked dividends. And it does so every single month, with its shareholders getting a paycheque in the proverbial mailbox 12 times a year.

Plato Income Maximiser, like all LICs, manages a portfolio of underlying assets on behalf of its shareholders. In this case, those assets are a collection of diversified ASX dividend stocks, selected on their current and future income potential.

Some of the largest ASX dividend stock positions in Plato’s portfolio include ANZ Group Holdings Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP), Goodman Group (ASX: GMG) and Commonwealth Bank of Australia (ASX: CBA).

Some of Plato’s highest-yielding ASX dividend stocks include Woodside Energy Group Ltd (ASX: WDS), Ampol Ltd (ASX: ALD), Metcash Ltd (ASX: MTS) and Whitehaven Coal Ltd (ASX: WHC).

Over the past 12 months, Plato shareholders have enjoyed a monthly dividend worth 5.5 cents per share. Each of those 12 dividends came with full franking credits attached.

At the current Plato share price of $1.21, these payments give this ASX dividend stock a yield of 5.91%.

$100 a month in cash from this ASX dividend stock?

That means that if an income investor puts approximately $20,350 into Plato shares today, and the company at least maintains its dividend schedule, that investor can expect to enjoy around $100 in passive dividend income every month.

Of course, we should never assume that an ASX dividend stock will continue paying out the dividends it has in the past into the future. But Plato does have a fairly strong record when it comes to maintaining its dividend. Since it was first listed back in 2017, the only significant income cuts came in the COVID-ravaged years of 2020 and 2021.

Over 2022, 2023 and 2024 to date, Plato’s dividends have been remarkably consistent.

That’s in addition to some healthy overall returns from Plato shares. The ASX dividend stock tells us that, as of 31 May, its shareholders have enjoyed a total return (including share price gains, dividends, fees and franking credits) of 9.6% per annum since its 2017 inception. That compares to an average of 9.5% per annum from its ASX 200 benchmark over the same period.

The post This 6% ASX dividend stock can pay $100 cash every month appeared first on The Motley Fool Australia.

More reading

• Nvidia stock drops 6.5%, dragging artificial intelligence stocks lower
• Buy Telstra shares due to its ‘excessive’ discount
• 3 ASX dividend shares to buy with 6%+ yields
• Is the FY25 outlook compelling for Wesfarmers shares?
• 5 things to watch on the ASX 200 on Tuesday

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

Telstra Group Ltd (ASX: TLS) shares could be trading at an unwarranted discount right now.

That’s the view of analysts at Bell Potter, which are urging investors to snap up the telco giant’s shares.

What is the broker saying about Telstra’s shares?

According to a note from this morning, the broker has been busy updating its financial model to reflect recent developments. It explains:

We update our Telstra forecasts for the flagged restructuring costs of $200-250m across FY24 and FY25 due to the reduction of up to 2,800 staff. We assume the midpoint of the range and apply $100m in FY24 and $125m in FY25. Note there is no change in our underlying forecasts and our underlying EBITDA of $8.2bn and $8.6bn in FY24 and FY25 remain consistent with the guidance ranges of $8.2-8.3bn and $8.4- 8.7bn in each period.

Its analysts concede that these job cuts could be a sign that Telstra is finding it harder to reduce costs than it was expecting. They add:

Our overall view of the update last month was slightly net negative given the size of the job cuts suggests the $500m cost reduction target by FY25 is proving difficult and the turnaround in Enterprise is likely to be slow.

However, one thing that Bell Potter was happy with was the removal of Telstra’s inflation-linked price increases. It explains:

But the removal of annual CPI price rises for postpaid mobile price plans we did not view negatively – as it provides flexibility – and in our view does not indicate increased competition in mobile (as supported by the price rises by Optus in late May).

‘Excessive’ discount

In light of the above, the broker has reaffirmed its buy rating and trimmed its price target by 1% to $4.20.

Based on where Telstra shares currently trade, this implies potential upside of 16% for investors. In addition, 5%+ dividend yields are forecast each year through to FY 2026.

Bell Potter believes that the company’s shares are trading at an excessive discount to its large cap peers and expects this to change in time. Particularly given its attractive dividend yield. It concludes:

Telstra is trading on an FY25 PE ratio of 18.6x based on our underlying forecasts which is a 24% discount to the average 24.4x of the peers (ALL, COL, CSL, GMG, WES and WOW). We view some discount as appropriate but in our view this looks excessive, particularly given the forecast mid to high single digit EPS growth over the next few years, strong market position and the potential for some or all of InfraCo to be sold in the medium term. We also believe the forecast yield of c.5% is supportive of the share price which is higher than all of the peers.

The post Buy Telstra shares due to its ‘excessive’ discount appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Would Warren Buffett buy Telstra shares?
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• Telstra shares: Buy or sell?
• How to invest for retirement in an inflationary environment

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 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.

If you are hunting for some generous dividend yields, then you may want to check out the three ASX dividend shares listed below.

That’s because analysts have named them as buys and are tipping them to provide income investors with above-average yields in the near term. Here’s what you can expect from them:

Accent Group Ltd (ASX: AX1)

Accent Group could be an ASX dividend share to buy. It is a market-leading leisure footwear retailer with a huge network of stores across countless brands. This includes HypeDC, Stylerunner, Platypus, and The Athlete’s Foot.

Bell Potter thinks income investors should be buying its shares. The broker has a buy rating and $2.50 price target on them. It believes Accent Group is well-positioned thanks to its “growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy.”

Its analysts expect 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 $1.98, this represents dividend yields of 6.55% and 7.4%, respectively.

Inghams Group Ltd (ASX: ING)

Over at Morgans, its analysts think that Inghams could be an ASX dividend share to buy right now. It is Australia’s leading poultry producer and supplier.

The broker likes Ingham due to its market leadership position, favourable consumer eating trends, and valuation. In respect to the latter, its analysts have described Ingham’s shares as “undervalued” at current levels. The broker has an add rating and $4.40 price target on them.

As for income, Morgans is forecasting fully franked dividends of 22 cents per share in FY 2024 and then 23 cents per share in FY 2025. Based on the current Inghams share price of $3.49, this equates to dividend yields of 6.3% and 6.6%, respectively.

Stockland Corporation Ltd (ASX: SGP)

A third ASX dividend share that could be a buy for income investors is Stockland. It is a leading residential developer.

Citi is a fan of the company and believes a recently announced land lease partnership with Invesco could support better returns on capital. In light of this, it has put a buy rating and $5.20 price target on its shares.

In respect to dividends, Citi is expecting Stockland to be in a position to pay dividends per share of 26.2 cents in FY 2024 and then 26.6 cents in FY 2025. Based on the current Stockland share price of $4.40, this will mean yields of ~6%, respectively.

The post 3 ASX dividend shares to buy with 6%+ yields appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Wesfarmers Ltd (ASX: WES) shares have convincingly beaten the market in 2024 to date, with an increase of 14%, while the S&P/ASX 200 Index (ASX: XJO) has only gone up by 1%. Based on some forecasts, the company may also be able to look forward to a good FY25.

The owner of Bunnings, Kmart and Officeworks has managed to succeed in this inflationary environment this year so far. But, what’s next?

Let’s look at both what the company has said in recent times about its outlook and what analysts estimate could happen in the 2025 financial year.

Outlook for the divisional operations

The last update from Wesfarmers was the 2024 strategy briefing day. The ASX share said it’s “well positioned to deliver strong growth and returns over the long-term.”

The company said it has businesses with attractive growth opportunities, growing addressable markets, new product and service offerings, and network and population growth. Its retailers are well-positioned for demand growth from demographic changes, and they have opportunities for productivity and efficiency benefits.

Looking at Bunnings, the core profit generator and key division for Wesfarmers shares, the ASX share said the hardware business is focused on “driving sustainable earnings growth over the long term in both consumer and commercial segments and across in-store and online channels”. The ASX retail share revealed Bunnings’ value credentials are resonating with “increasingly value-conscious customers”.

Wesfarmers noted that population growth and housing demand remain “positive macroeconomic drivers” for Bunnings. It also said that it continues to “invest in new and expanded ranges, optimising space, supply chain and accelerating data and technology to improve the customer offer and maintain a low-cost model”.

With Kmart, Wesfarmers said progress on a consistent strategic agenda has allowed the discount retailer to continue growing its market share of customers’ wallets. The company said the strength of its “world-class Anko product development capability is a key competitive advantage.”

The company is working on growing Kmart’s addressable market in Australia by expanding into new categories and extending existing categories. Kmart is also looking to explore “new and profitable channels by expanding Anko into new markets globally through tailored business models.”

Officeworks is delivering profitable growth by “meeting the changing needs of customers as they work, learn, create and connect”. It is also working on offering a wider range, accelerating its growth with businesses, leveraging its data and loyalty programs, and expanding the store network. Officeworks is also working on productivity and efficiency improvements.

Finally, with the Wesfarmers chemical, energy and fertiliser (WesCEF) business, it’s investing to improve efficiency and progressing production capacity expansions to facilitate long-term growth. The company is working to secure competitively priced natural gas amid a forecast supply deficit.

WesCEF is advancing the Covalent lithium project. The refinery construction recently hit the 75% completion milestone, and the focus is shifting to commissioning activities. Lithium hydroxide production is expected in the first half of the 2025 calendar year.

Analyst forecasts for Wesfarmers shares

The broker UBS has forecast that Wesfarmers can generate $46.2 billion of revenue in FY25, up from the forecast of $44 billion in FY24.

UBS also predicts Wesfarmers can generate $2.77 billion of net profit after tax (NPAT) in FY25, up from $2.56 billion in FY24. This translates into potential earnings per share (EPS) of $2.70, putting the current Wesfarmers share price at 24x FY25’s estimated earnings.

The broker has suggested Wesfarmers could pay an annual dividend per share of $2.16 in FY24.

UBS has a price target of $66 on Wesfarmers shares, which implies a possible rise of 1% over the next 12 months.

The post Is the FY25 outlook compelling for Wesfarmers shares? appeared first on The Motley Fool Australia.

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• Are BHP or Wesfarmers shares a better buy?
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• Did you catch the latest rumour about Wesfarmers shares?
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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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week in a disappointing fashion. The benchmark index fell 0.8% to 7,733.7 points.

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

ASX 200 expected to rebound

The Australian share market is expected to rebound on Tuesday despite a mixed start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 42 points or 0.55% higher. On Wall Street, the Dow Jones was up 0.7%, but the S&P 500 fell 0.3% and the Nasdaq dropped 1.1%.

Paladin Energy acquisition

The Paladin Energy Ltd (ASX: PDN) share price will be on watch today after the uranium miner announced a major acquisition. Paladin Energy has signed an agreement to acquire Fission Uranium Corp. (TSX: FCU) through an all-scrip deal at 0.1076 shares per Fission share. This values the Canadian uranium miner at C$1.140 billion (A$1.25 billion). The transaction is targeted to close in the September 2024 quarter.

Oil prices storm higher

It could be a good session for ASX 200 energy shares Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) after oil prices stormed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.2% to US$81.68 a barrel and the Brent crude oil price is up 1% to US$86.06 a barrel. Oil prices have been rising thanks to optimism that summer fuel demand will draw down inventories and tighten the market.

Telstra named as a buy

Telstra Group Ltd (ASX: TLS) shares remain good value according to analysts at Bell Potter. This morning, the broker has reaffirmed its buy rating with a trimmed price target of $4.20. The broker believes the telco giant’s shares are undervalued based on the discount they are trading at to other large cap peers. It said: “We view some discount as appropriate but in our view this looks excessive, particularly given the forecast mid to high single digit EPS growth over the next few years, strong market position and the potential for some or all of InfraCo to be sold in the medium term.”

Gold price rises

ASX 200 gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good session on Tuesday after the gold price pushed higher overnight. According to CNBC, the spot gold price is up 0.6% to US$2,345.9 an ounce. A softer US dollar boosted the precious metal.

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

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• Here are the top 10 ASX 200 shares today
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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 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.

I’m a big fan of ASX dividend shares that can provide a pleasing level of resilient dividend income.

Dividends are not guaranteed, but some businesses have built up a record of passive income and operate in industries that could enable those pleasing payments to continue.

I’m not going to promote stocks like Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP) because I don’t believe they are as defensive as some investors may think. Commodity prices can be volatile, while banks heavily depend on the economy’s strength and borrowers’ financial health to keep making good profits. The COVID period saw a CBA dividend cut.

Instead, I’ll tell you about two ASX shares with a commitment to shareholder payouts.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts is one of the oldest businesses on the ASX. It was listed in 1903 and has paid a dividend every year since then.

I think everyone in their 60s or older should be concerned about dividend stability to ensure passive income keeps flowing even during economic downturns. Soul Patts has grown its annual ordinary dividend every year since 2000, the best record on the ASX.

It’s an investment house that owns stakes in various companies and sectors, including telecommunications, building products, resources, property, swimming schools, agriculture, and more.

I like the diversification that Soul Patts has within its portfolio; it seems like one of the less risky S&P/ASX 200 Index (ASX: XJO) shares to me because it actually owns a large number of different ASX shares.

It currently has a grossed-up dividend yield of 3.9%, which I think is a solid starting point for dividend income.

Charter Hall Long WALE REIT (ASX: CLW)

This is a diversified real estate investment trust (REIT) that typically pays out 100% of its net rental profit each year to investors, creating a strong dividend yield.

The business has blue-chip tenants (such as government and listed businesses) who are signed on long-term rental leases. This gives the business a lot of income visibility and security. In the FY24 first half-year result, the business had a weighted average lease expiry (WALE) of 10.8 years.

Some of its main types of property investments include offices (leased to a government entity), pubs and bottle shops, telecommunication exchanges, service stations, grocery and distribution, food manufacturing, and waste and recycling management.

While interest rates are a headwind for rental profits and some property valuations, Charter Hall Long WALE REIT is benefiting from steady rental increases. Some of the rent is linked to inflation, while other rental contracts have fixed rent increases.

The ASX dividend share is expecting to generate operating earnings per security (EPS) of 26 cents and pay all of that out as a distribution, which translates into a distribution yield of 7.5%.

The post If I were 60 I’d buy these ASX shares for dividends appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. 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 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.

The BetaShares Diversified All Growth ETF (ASX: DHHF) could be an effective investment for people who don’t want to worry about having a portfolio full of individual share investments. An all-in-one approach may suit some investors.

The DHHF ETF provides exposure to a diversified portfolio of large, medium, and small businesses from Australia, globally developed and emerging markets.

The ETF has a relatively low annual management cost of just 0.19%, which is quite cheap, considering several other BetaShares’ ETFs have a higher yearly fee than that.

There are two key factors I like about the DHHF ETF. Let’s take a look.

Strong diversification

According to BetaShares, the DHHF ETF provides exposure to around 8,000 shares from around the world.

In terms of investment strategy, these are the four main allocations as of 31 May 2024:

• Australian shares – 36.1%
• US shares – 38.9%
• Developed markets excluding the US – 18.6%
• Emerging market shares – 6.4%

In terms of country allocation, the United States and Australia are obviously the two countries with the largest weighting. After that, Japan has a 4.2% allocation, China and Canada have a respective 1.9% and 1.8% allocation, and the United Kingdom has an allocated 1.7%. Meanwhile, India comes in with a 1.5% allocation, and France and Taiwan have 1.4% and 1.3% allocations, respectively.

The DHHF ETF is fairly evenly weighted between industries thanks to the mixture of US shares and ASX shares. At May 2024, there were six sectors with a weighting of at least 9%: financials (21.1%), IT (14.2%), materials (10.8%), healthcare (10.5%), industrials (10.3%) and consumer discretionary (9.5%).

The allocation to Australian shares has the pleasing effect of boosting the ASX ETF’s underlying dividend yield. At 31 May 2024, the ETF’s underlying yield was 2.6%. Grossed up with franking credits, it was 3%.

Growth potential

Some other all-in-one ASX ETFs, such as the Vanguard Diversified High Growth Index ETF (ASX: VDHG), have a certain weighting to bonds. I think bonds can be a decent investment, but their growth potential is limited.

Investors who want stronger long-term returns may be better served by owning DHHF ETF units.

According to BetaShares, since the ASX ETF’s inception in December 2020, it has delivered an average annual return of 10.5%. Compare that to the VDHG ETF’s net returns — in the last three years, it has returned 6.6% per annum and 9.1% per annum in the last five years.

While we can’t rely on past returns to predict future returns, I believe the DHHF ETF is a useful pick for diversification and, hopefully, a good level of future returns.

The post Want to diversify your portfolio? Try this growth ASX ETF appeared first on The Motley Fool Australia.

More reading

• If I were 60 I’d buy these ASX shares for dividends
• How to invest in US weight loss drug stocks on the ASX
• Over $100 million of GYG shares sold by insiders on day one. Should investors be worried?
• Here are the top 10 ASX 200 shares today
• Bell Potter says these ASX dividend shares are top buys this month

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.

Over the past couple of years, you’ve likely heard of the popular weight loss drugs such as Ozempic that are coming out of the United States.

Drugs like Ozempic have taken the world by storm and resulted in massive profits for drug stock makers like Novo Nordisk. As such, it’s only natural for ASX investors to want a slice of the action.

And some significant action there is. According to exchange-traded fund (ETF) provider BetaShares, investment bank Morgan Stanley estimates that the global market for obesity drugs like Ozempic could reach US$77 billion by 2030.

However, the ASX is not exactly known for its pharmaceutical stocks. Sure, we have a few respectable names on our ASX boards. But the real global titans in this space – think the likes of Novo Nordisk, Eli Lilley, Pfizer and Johnson & Johnson – are all international stocks with either primary or secondary listings on the US markets.

Australian investors can always buy these shares directly from the US markets if they want exposure to these companies. But many ASX investors aren’t comfortable with this option.

Luckily, there’s an easy, ASX-based alternative – investing in ASX ETFs.

The ASX is home to hundreds of different exchange-traded funds. A few of these specialise in global healthcare and pharmaceutical companies and would make for an easy way for ASX investors to get a slice of the action.

How to use ASX ETFs to buy US weight loss drug stocks

One such fund is from BetaShares itself – the BetaShares Global Healthcare ETF (ASX: DRUG). This ETF invests in a portfolio of the world’s leading healthcare companies, hedged into Australian dollars to take out the impacts of foreign exchange movements.

DRUG holds around 60 different pharmaceutical and healthcare stocks, mostly listed on the US markets. If you buy DRUG units, you’re top two holdings in the underlying portfolio will be none other than Eli Lilley and Novo Nordisk. Eli Lilley currently makes up 8.5% of DRUG’s weighted portfolio, with Novo Nordisk coming in at 7.1%.

As such, this is a very simple choice for any ASX investors seeking access to these stocks.

But DRUG isn’t the only choice for ASX investors looking for weight loss drug exposure. There’s also the iShares Global Healthcare ETF (ASX: IXJ).

This ETF operates similarly to DRUG in offering a portfolio of the largest global healthcare and pharmaceutical stocks to ASX investors.

IXJ also currently has Eli Lilley and Novo Nordisk as its largest holdings, with portfolio weightings of 9.31% and 5.95%, respectively.

VanEck Global Healthcare Leaders ETF (ASX: HLTH) is another option to consider. It has a slightly different composition, with stocks like Tenet Healthcare and United Therapeutics Corp occupying the top spots. However, Eli Lilley and Novo Nordisk are still there, with portfolio weighting of 2.51% and 2.46%, respectively.

Being sector-specific ETFs, these funds aren’t the cheapest on the ASX. DRUG charges an annual management fee of 0.57%, for example. IXJ asks 0.41% per annum, while HLTH will set you back 0.45% per annum.

But that’s the price you’ll have to pay if you want easy ASX access to US weight loss drugs and their manufacturers on the Australian stock market.

The post How to invest in US weight loss drug stocks on the ASX appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Johnson & Johnson. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pfizer. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and Novo Nordisk. 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.