Category: Stock Market

The S&P/ASX 300 Index (ASX: XKO) stock Rural Funds Group (ASX: RFF) is one of my top picks for dividend income within the index.

I like to own businesses that I believe have enough earnings stability to deliver passive income, even during difficult times for the economy.

The COVID-19 period was a perfect example that not all blue-chip dividends are safe, with cuts from stocks like ASX bank shares and Transurban Group (ASX: TCL).

Rural Funds is a real estate investment trust (REIT) that owns different farm types including almonds, macadamias, cattle, vineyards and cropping.

There are a few key reasons why I’d buy Rural Funds shares (again) for dividend income.

Good rental growth for this ASX 300 stock

The business has long rental contracts, which can provide stability and long-term rental growth through a mix of rental indexation mechanisms.

Over half of the rental income is linked to CPI inflation, so this period of elevated inflation has been supportive for rental income growth. Another 33% of the rental income has fixed rental income (with market reviews). These two areas of rental income growth can help drive the underlying value and rental profits of the ASX 300 stock.

Rural Funds is also working on macadamia orchard developments, with a 40-year lease commenced in January 2024. Development of 3,000 hectares is forecast to be materially complete in 2024. Rent is earned on the value of land, water and capital expenditure as it’s deployed – $173 million was deployed by the end of the first half of FY24, with an increase forecast to $298 million by FY25.

Solid distribution yield

A good, higher-yield ASX dividend share needs to have a solid distribution yield in my books. Ideally, it’s better than what someone could get from a savings account.

The ASX 300 stock is expecting to pay a distribution per unit of 11.73 cents, which currently translates into a distribution yield of 5.8%.

The business still intends to target distribution growth of 4% per annum, as well as generating capital growth.

Discount to NAV

A REIT investor can only know what the true net asset value (NAV) is if they try to sell the assets.

Rural Funds regularly gets independent valuers to work out what the asset values are. The business said its adjusted NAV – which includes water entitlements at market value rather than at cost – was $3.07 at 31 December 2023. The Rural Funds share price is at a 35% discount to this NAV.

The Rural Funds share price has dropped over 30% from its peak in early 2022. I think it’s a good time to buy shares at around $2.

The post Why I think this ASX 300 stock is a fantastic pick for dividend income appeared first on The Motley Fool Australia.

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More reading

• Brokers say these high yield ASX 300 dividend shares are top buys
• Almost ready to retire? I’d buy cheap ASX dividend shares for income
• Where I’d invest $10,000 in ASX shares for passive income
• Here are 3 ASX income shares to buy in May
• 3 high-yield ASX 300 dividend stocks to buy for your income portfolio

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

The Flight Centre Travel Group Ltd (ASX: FLT) share price is flying higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $20.59. In morning trade on Wednesday, shares are swapping hands for $20.89 apiece, up 1.4%.

For some context, the ASX 200 is up 0.24% at this same time.

This comes as investors mull over the trading update and presentation by Flight Centre CFO Adam Campbell at the Macquarie Conference.

Here are the highlights.

Flight Centre share price boosted on reaffirmed profit guidance

The Flight Centre share price is marching higher, with the company eyeing record sales for the full 2024 financial year (FY 2024). Campbell said the business was on track to exceed the previous record total transaction value (TTV) of $23.7 billion it achieved in FY 2019.

And despite impacting its year-on-year growth, Flight Centre lauded falling airfare prices as a “very positive development”.

Campbell said that while international airfare prices were still above pre-COVID levels, they’re now falling in Australia and “expected to stimulate further demand, particularly in leisure” travel.

The Flight Centre share price is also likely gaining support after the company reaffirmed its profit guidance, saying it expected strong year-on-year growth.

With trade said to be “broadly in line with expectations”, management is continuing to target underlying profit before tax (PBT) in the range of $300 million to $340 million for FY 2024.

This compares to PBT of $106 million in FY 2023. Campbell highlighted that if Flight Centre achieved the midpoint of its targeted profit range, this would represent 200% year-on-year growth.

In another strong metric, Flight Centre reported improved margins. In the third quarter (Q3 FY 2024), the company’s underlying PBT margin increased by 0.60% from Q3 FY 2023.

Campbell noted that revenue and cost margins were both tracking well ahead of the prior corresponding period. He added these were set for “further improvement as the market recovery continues and as key strategies gain traction, delivering operating leverage”.

Among the positive emerging market trends, the company said its outbound capacity in April was tracking at 95% of pre-COVID levels in Australia.

A history of growth

Though still in recovery mode from the COVID blow, the Flight Centre share price has a history of growth.

That’s been supported by the company’s remarkable achievement of growing its TTV year-on-year 25 times in 29 years since listing. Campbell noted that two of the years it failed to grow TTV were during the pandemic closures.

Among the company’s strengths, he cited that its leisure business was leveraged to outbound travel, noting this market had grown at a 5.9% compound annual growth rate (CAGR) over the 40 years pre-COVID.

The post Flight Centre share price lifts off amid record full year sales prediction appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• These ASX 200 blue-chip shares could rise 20% to 30%
• These are the 10 most shorted ASX shares
• 10 top ASX shares to buy in May
• Morgans says these are some of the very best ASX 200 shares to buy

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

After wobbling their way through 2023, ASX bank shares have been on a tear this year. Why?

Well, when the investment world is dominated by inflation and interest rates, one offer remains attractive: earning passive income from dividends.

ASX bank shares? They can be fortress-like dividend payers.

One name worth noting is Bank of Queensland (ASX: BOQ). According to its latest filings, the company serves around 1.4 million customers and has a 2.73% share of the Australian residential mortgage market.

The Bank of Queensland share price has lagged the broader ASX 200 Banks Index (ASX: XBK), which has advanced 8.4% since January.

Other ASX bank shares, such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), have also outperformed the Bank of Queensland share price in 2024.

But you shouldn’t look away yet.

Bank of Queensland currently offers us the highest dividend yield out of all the banking majors. As far as investment goes, this is a unique point.

What is the Bank of Queensland dividend yield?

Bank of Queensland shares were swapping hands at $5.86 apiece recently, producing a trailing dividend yield of 6.5%. For context, the dividend yield on iShares Core S&P/ASX 200 ETF (ASX: IOZ) at the time was 3.63%, nearly 1.8 times smaller.

This is the highest yield among the banking majors. By comparison, CBA and NAB currently offer yields of 3.9% and 6.1%, respectively. Here’s a recent snapshot.

ASX Bank shares dividend yield

Company	Recent share price	Trailing dividend	Current dividend yield
Bank of Queensland Ltd	$5.86	$0.38	6.5%
Bendigo and Adelaide Bank Ltd	$9.76	$0.62	6.4%
ANZ Group Holdings Ltd	$28.48	$1.75	6.1%
Westpac Banking Corporation	$26.42	$1.42	5.4%
Commonwealth Bank of Australia	$115.23	$4.55	3.9%
Macquarie Group Ltd	$183.83	$7.05	3.8%
National Australia Bank	$34.40	$1.67	4.9%
Group average	—	$2.49	5.3%

What this means is that a $1,000 investment in Bank of Queensland stock would theoretically produce $65 of annual income to the investor. You simply multiply the investment by the yield to gain your dividend income.

An $8,000 investment would theoretically yield $520 of annual income if one were to invest in Bank of Queensland shares today ($8,000 times 6.% = $520.00).

We can’t forget the effect of franking credits, either. The bank’s most recent dividend was franked at 100%, bringing the full gross yield – that is, adjusted for franking credits – to 9.46% at the time of publication.

Can investors actually gain $530 in passive income from investing $8,000 in Bank of Queensland shares?

All this sounds great on paper. But this is the trailing dividend yield. For it to remain constant, the rate of dividends must continue going forward, and the share price mustn’t creep too high.

For example, if the bank were to reduce its dividend to $0.35 per share today, the dividend yield would fall to 5.6%. The opposite is also true if it were to increase. See the table below.

Change	Dividend per share	Yield at recent share price ($5.86)
Increase	$0.50	8.55%
Same	$0.41	7.01%
Decrease	$0.35	5.98%

Just remember – companies pay dividends from their earnings. If profits are down, the dividend payment may be reduced.

So, if Bank of Queensland maintains its current annual dividend and the share price remains steady, investors could expect to earn $520 of income for every $8,000 invested in Bank of Queensland shares. If it doesn’t? These figures will change.

Based on the company’s track record, profits, and overall strength of the economy, it would be hard to see Bank of Queensland slash its dividend any time soon, in my best estimation.

The post If you invest $8,000 in Bank of Queensland shares, here’s how much passive income you’ll get appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
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• Looking for passive income? These 2 ASX All Ords shares trade ex-dividend next week!
• After passive income? Check out these ASX 200 dividend shares
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Goodman Group (ASX: GMG) share price is scaling new heights on Wednesday.

In early trade, the industrial property company’s shares rose 1.5% to a new record high of $34.90.

Why is the Goodman share price rising?

Investors have been buying the company’s shares this morning following the release of its third quarter update.

According to the release, Goodman delivered a strong operating performance for three months, which management believes positions the business well for the full year and into FY 2025.

In fact, trading was so strong that the company has upgraded its guidance for FY 2024 for a second time.

Initially, Goodman was targeting operating earnings per share growth of 9% this year. It then upgraded this to 11% growth when it released its half year results in February.

Management now expects operating earnings per share growth of 13% in FY 2024. This is being underpinned by a portfolio occupancy rate of 98% and 12-month rolling like-for-like net property income growth of 4.9%.

Management commentary

Goodman’s CEO, Greg Goodman, was pleased with the quarter. He said:

Our active asset management continues to optimise returns for our investors as we deliver essential infrastructure for the expanding digital economy. The location and quality of our properties enables increased productivity, driving demand as our logistics customers are seeking to improve their supply chain efficiency using automation and offering faster transit times. We continue to develop large-scale, high value, data centres, and expand our global power bank to address growing data centre demand as AI usage and cloud computing expands.

During the quarter we internalised the management of the NZX-listed Goodman Property Trust providing a platform for growth for GMT. We continue to review our assets and capital allocation globally, and expect further recycling of capital over time.

Outlook

Speaking about the company’s outlook, Goodman acknowledges that real estate markets will be volatile but believes it is well placed to navigate this. He adds:

The Group continues to execute on its strategy. The challenge of the uncertain interest rate environment, persistent inflation, combined with slowing economic growth, is prolonging volatility in global markets and increased cost of capital.

In the near term we believe aggregate logistics demand is likely to remain at more moderate levels compared to that experienced in the pandemic period. However, supply has been significantly reduced globally, and is generally very constrained in our markets. Our customers remain focused on maximising productivity from their space, preferring infill locations and increasing their investments in technology and automation. Combined with the scarcity of available assets in the markets we operate, should support rental growth and high occupancy.

At the end of the quarter, Goodman had $12.9 billion of development work in progress across 82 projects.

The Goodman share price is up 72% over the last 12 months.

The post Goodman share price hits record high on second FY24 guidance upgrade appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• This ASX 200 real estate stock has been flying ahead of tomorrow’s key update. Should you buy?
• Here are the top 10 ASX 200 shares today
• Why Carnarvon Energy, Goodman, Nickel Industries, and Southern Cross Electrical are rising
• 3 excellent ASX 200 blue-chip shares to buy in May

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

The Japanese stock market could be a smart place to invest for a number of different reasons. I’m going to talk about a particular ASX ETF that could give good exposure to Japanese stocks. Warren Buffett himself recently decided to invest in Japan stocks.

Why is the Japan stock market attractive?

There have been a number of changes made in Japan that could lead to better long-term returns.

For example, the Japanese financial regulator, called the Financial Services Agency, has been campaigning for companies to undo their cross-holdings, which is generally viewed as an inefficient use of capital.

The Tokyo Stock Exchange has been asking companies that are trading at a discount to the balance sheet values to announce plans about how they’ll close that discount.

There are also signs that wage growth could start flowing through the economy,

Another benefit for Aussies is that the Japanese Yen is at close to the weakest exchange rate this century compared to the Australian dollar, so it’s much cheaper for Aussies to buy stakes in Japanese companies at the moment.

Buffett’s Berkshire Hathaway has invested billions in five Japanese companies that are somewhat similar to Berkshire Hathaway because of how diversified their earnings are across numerous sectors. Those businesses include Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui, and Sumitomo Corp.

How to invest in Japanese stocks with an ASX ETF

There are a few different ways to get exposure to Japanese stocks on the ASX, with exchange-traded funds (ETFs) playing a key role.

I think the iShares MSCI Japan ETF (ASX: IJP) could be a good way to do it because it’s entirely invested in Japanese stocks, while ETFs focused on the entire global share market only have a portion of the portfolio invested in Japanese stocks.

The IJP ETF gives exposure to large and mid-sized companies in Japan, providing access to around 85% of the Japanese stock market. At the time of writing, there are a total of more than 220 positions in the portfolio.

Some of the biggest positions within the ASX ETF that I haven’t already mentioned include Toyota, Sony, Hitachi, Honda Motor, Softbank, Nintendo, Daikin, Asahi and Fujitsu.

Looking at the industry allocation, there are four sectors with a weighting of more than 10%: industrials (23.15%), consumer discretionary (18.95%), IT (14.77%) and financials (13.36%).

Past performance is not a guarantee of future performance, but over the past decade, the IJP ETF has returned an average of 9.6% per annum, while the Vanguard Australian Shares Index ETF (ASX: VAS) has returned an average of 8.2% over the last 10 years.

I think it could be a very interesting time to invest in Japan stocks, via this ASX ETF.

The post I’d follow Warren Buffett and buy this ASX ETF right now for exposure to Japan stocks appeared first on The Motley Fool Australia.

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More reading

• Goodman share price hits record high on second FY24 guidance upgrade
• How to invest in uranium on the ASX
• Woodside shares are down 17% in 6 months. Is now the right time to buy?
• Why Telstra shares could be dirt cheap in May
• Analysts give their verdict on ANZ shares: Should you buy?

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 Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nintendo. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Uranium is getting a lot of attention from ASX investors in 2024.

With many countries seeing nuclear power as the answer to clean energy, the demand outlook for the chemical element has become incredibly positive.

However, this is happening at a time when uranium supply is under pressure due to softer than expected production in Kazakhstan, which is the world’s largest producer.

In addition, the United States is in the process of banning Russian uranium, which is just adding to the supply issues.

But this is all good news for ASX uranium stocks, which stand to benefit greatly from sky high prices of the chemical element.

How can you invest in uranium on the ASX?

Fortunately for investors, there are a good number of uranium stocks listed on the ASX.

This includes Alligator Energy Ltd (ASX: AGE), Bannerman Energy Ltd (ASX: BMN), Boss Energy Ltd (ASX: BOE), Deep Yellow Limited (ASX: DYL), Paladin Energy Ltd (ASX: PDN) and Peninsula Energy Ltd (ASX: PEN).

Investors can also choose to invest in an exchange-traded funds (ETF) instead to gain exposure to this side of the market.

The Betashares Global Uranium ETF (ASX: URNM) aims to track the performance of an index that provides investors with access to a portfolio of leading companies in the global uranium industry.

As well as local players like Boss Energy and Paladin Energy, you would be buying a slice of giants Cameco Corp (NYSE: CCJ) and Kazakhstan’s Kazatomprom.

Which uranium stocks do brokers like?

Given how ASX uranium stocks have rocketed over the last 12 months, investors may be wondering which ones are still in the buy zone.

Well, Bell Potter sees value in Boss Energy’s shares. It currently has a buy rating and $6.35 price target on them, which implies potential upside of 13% for investors.

Over at Morgan Stanley, its analysts have an overweight rating and $17.45 price target on Paladin Energy’s shares. Though, this offers only modest upside of approximately 3% from current levels.

Deep Yellow is another ASX uranium stock that Bell Potter likes. It has a buy rating and $1.90 price target on the Tumas project owner’s shares. This suggests potential upside of 13% is possible for investors from current levels.

Finally, Bell Potter sees the most value in Alligator Energy shares with its buy rating and 10 cents price target. This is over 50% higher than where the uranium stock trades today.

The post How to invest in uranium on the ASX appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Paladin Energy share price hits a 12-year high: Too late to buy?
• These 2 ASX uranium shares just smashed multi-year highs!
• 5 ASX ETFs to invest $10,000 into next week
• Here are the top 10 ASX 200 shares today

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

Woodside Energy Group Ltd (ASX: WDS) shares closed up 1.9% on Tuesday but remain down 17.0% over six months.

Six months ago, shares in the S&P/ASX 200 Index (ASX: XJO) energy stock were trading for $33.54. At market close on Tuesday, those same shares were swapping hands for $27.84 apiece.

So, following on this hefty slide, are Woodside shares a buy right now?

I believe so.

Here’s why.

Is now the time to buy Woodside shares?

The pain for Woodside shares really began back in mid-September. Since the closing bell on 15 September, shares are down 27.5%.

There have been a few company-specific issues that have dragged on the share price over this time.

That includes some issues securing government approval for its flagship Scarborough offshore energy project, some shareholder issues with the company’s environmental action plans, and the failed discussions to secure a merger with rival Santos Ltd (ASX: STO).

However, those issues are now largely water under the bridge. Scarborough is now proceeding on track, and the botched Santos merger is fading into the woodwork.

As for the environmental plans, I’m confident that management will concoct a new plan that shareholders will support without throwing up excessive headwinds for the Woodside share price.

How about the oil price?

Oil and gas prices don’t move in lockstep, but they do tend to follow similar trends.

Back in September, when Woodside shares were some 28% higher than today, the Brent crude oil price reached US$97 per barrel. By mid-December, it had dipped to US$73 per barrel and has been on a bit of a rollercoaster this year, trading for US$84 per barrel on Tuesday afternoon.

This is another reason Woodside shares could be an excellent buy right now. After all, the time to buy these sorts of companies is near their cyclical lows.

And there are good reasons to believe that the oil price is more likely to head higher than lower from today’s levels.

According to Rebecca Babin, a senior energy trader at CIBC Private Wealth (courtesy of Bloomberg), “Over US$7 of geopolitical risk premium has been unwound over the past two weeks as the conflict [in the Middle East] avoided additional escalation.”

However, as much as we hope for an extended and permanent peace, sadly, I don’t think that’s very likely in the medium term.

Disruptions to oil shipments in the Red Sea are likely to continue. And Israel has rejected the latest cease-fire proposals in Gaza as entirely unacceptable. Israel now is pursuing its military operations against Hamas in the city of Rafah.

“Geopolitics is back in the driving seat for crude oil traders after last week’s drop. The demand outlook remains supported by expectations of Fed’s rate cuts,” Charu Chanana, an analyst at Saxo Capital Markets, said.

In other potential tailwinds for Woodside shares, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are also intent on supporting the oil price. The cartel is widely expected to extend its current supply cuts through the second half of 2024.

Even Iraq and Kazakhstan, two members who’ve been cheating on their pledged cuts, have indicated they’ll slash output enough to make up for their earlier overproduction.

Woodside shares and LNG

Another reason I’m optimistic that Woodside shares present a longer-term bargain at current levels is the growing realisation that natural gas (LNG) is crucial to Australia’s, and much of the world’s, transition to renewable energy sources.

Last week, Energy Minister Chris Bowen flagged the need for companies to source new gas supplies.

“Slogans like ‘gas-led recovery’ and ‘no new gas’ are equally catchy – and equally unhelpful to explaining the proper role of gas in our net zero energy mix,” Bowen said (quoted by The Australian Financial Review).

Bowen added:

Gas will play an important role in electricity by firming and peaking renewables… While technologies like green hydrogen will be vital – and I am very optimistic about Australia’s role in the global hydrogen supply chain – there are not yet substitutes for gas in many industrial settings.

Don’t forget the dividends

Woodside shares are also attractive for their juicy, fully franked dividends.

Despite coming down over the past 12 months, at the current share price, Woodside trades on a fully franked trailing yield of 7.8%.

But if oil and gas prices tick higher from here, as I expect, the dividends are likely to run higher again, too.

And investors buying at today’s much reduced Woodside share price would then be realising an even higher yield than 7.8%.

The post Woodside shares are down 17% in 6 months. Is now the right time to buy? appeared first on The Motley Fool Australia.

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More reading

• Morgans names the best ASX 200 stocks to buy in May
• 5 things to watch on the ASX 200 on Wednesday
• 3 ASX dividend stocks to buy for an income boost
• 5 things to watch on the ASX 200 on Monday
• Why are ASX 200 energy shares getting smashed in May?

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.

Telstra Group Ltd (ASX: TLS) shares have been well and truly out of form in recent times.

So much so, this week the telco giant’s shares hit a two-year low this month.

This weakness hasn’t gone unnoticed by analysts at Goldman Sachs.

In fact, the broker has been looking at its earnings forecasts to make sure it isn’t missing something. Particularly after New Zealand telco Spark New Zealand Ltd (ASX: SPK) downgraded its earnings guidance.

The good news is that Goldman remains confident that Telstra can deliver on expectations. As a result, it feels that its shares could be dirt cheap at current levels.

What did the broker say?

Commenting on the recent Telstra share price weakness, the broker said:

Following the underperformance of Telstra shares YTD (-8% vs. ASX200 +3%), alongside the recent downgrade in SPK FY24 guidance, we outline why we remain confident in our forecast $8.61bn in EBITDA (+$351mn yoy) for TLS in FY25E.

Goldman believes the key to achieving this will be increasing mobile phone plans in-line with inflation. And while there are doubts around doing this in the current environment, the broker feels it is the most likely outcome. It said:

The key uncertainty to this growth is whether a full CPI mobile price rise will be introduced in Jul-24. We think this is the most likely outcome, given (1) Strong operating trends and NPS through to Feb-24; (2) TLS price-premium vs. history provides some scope to increase; (3) The Government owned, monopoly NBN recently announced CPI price rises of +4.1%; (4) Telstra returns are significantly below supermarket peers WOW/COL (who have faced price gouging accusations).

As mobile makes up 70% of estimated earnings, that is the segment doing the heavy lifting. However, the broker also expects growth from other areas.

It expects the Fixed Enterprise business to add EBITDA of $30 million in FY 2025, which represents 9% of total EBITDA. This is being underpinned by the soon to be announced Fixed Enterprise restructure.

Goldman is also forecasting an $83 million increase from the InfraCo/Amplitel business, representing 24% of EBITDA. It highlights that this “growth is largely locked in, given it relates to CPI (NBN Recurring) and internal data/customer growth.”

Big returns on offer with Telstra shares

In light of the above, the broker has retained its buy rating and $4.55 price target on the company’s shares. This implies potential upside of 25% for investors over the next 12 months.

In addition, the broker is forecasting a 4.9% dividend yield in FY 2024 and then a 5.2% dividend yield in FY 2025. This boosts the total potential 12-month return to approximately 30%.

The post Why Telstra shares could be dirt cheap in May appeared first on The Motley Fool Australia.

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More reading

• 3 safe ASX dividend shares to own for the next 10 years
• 5 things to watch on the ASX 200 on Wednesday
• What does the latest 3G news mean for Telstra shares?
• The ASX 200 telco and energy stocks set to benefit from AI
• Almost ready to retire? I’d buy cheap ASX dividend shares for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ANZ Group Holdings Ltd (ASX: ANZ) shares have been on a good run.

Since this time last week, the banking giant’s shares have risen 3.15%.

But can they keep rising from here? Let’s see what one leading broker is saying about the big four bank following the release of its half-year results.

Half-year results review

As a reminder, ANZ released its results on Tuesday and reported a cash profit of $3,552 million for the six months ended 31 March. This represents a 1% decline compared to the second half of FY 2023.

Despite this decline, the bank increased its partially franked interim dividend to 85 cents per share and announced a $2 billion on-market share buyback.

Are ANZ shares a buy?

This is harder to answer than normal.

That’s because Goldman Sachs has responded to the result by retaining its buy rating on the bank’s shares.

However, the broker’s improved price target of $28.15 (from $27.69) is a touch below the current ANZ share price of $28.79.

So, if you were looking for share price returns, you may not be seeing any over the next 12 months.

However, if you are looking for a source of income, then ANZ’s shares could be worthy of a closer look.

Goldman Sachs is forecasting dividends per share of $1.66 in both FY 2024 and FY 2025. This equates to partially franked dividend yields of 5.75% for investors.

What did the broker say?

Goldman remains positive on ANZ and its shares due to potential productivity benefits, institutional business, and discount to the rest of the sector. It explains:

We reiterate our Buy on ANZ, given i) we are seeing evidence of ANZ’s ability to derive productivity benefits (A$201 mn in 1H24) and management noted there remains a large pipeline available which can be used to offset cost inflation. Furthermore, ii) the improving profitability of ANZ’s Institutional business remains a key driver of our positive investment thesis. We continue to see upside for Group returns due to accretive mix shifts in the Institutional business towards higher ROE Payments and Cash Management business. Finally, the stock still trades at a 30% discount to the sector (ex-dividend adjusted) versus a 15-yr average discount 13%.

Is anyone else bullish?

One leading broker that sees scope for ANZ shares to rise further is Jefferies.

This morning, the broker has responded to the bank’s results by retaining its overweight rating with an improved price target of $31.00 (from $29.00).

The post Analysts give their verdict on ANZ shares: Should you buy? appeared first on The Motley Fool Australia.

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More reading

• Hunting for passive income? Here’s everything you need to know about the boosted ANZ dividend
• ANZ shares tumble despite $3.5b half-year profit
• ANZ share price on watch amid first-half earnings beat and $2b buyback
• 5 things to watch on the ASX 200 on Tuesday
• Brokers say these ASX dividend stocks are buys

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

If you have a low tolerance for risk but want better yields than those offered with term deposits and savings accounts, then it could be worth checking out the ASX dividend shares in this article.

These companies have defensive earnings, strong business models, and positive outlooks. This could make them safe options for income options to buy today. They are as follows:

APA Group (ASX: APA)

When looking for safe options, it is hard to look beyond utilities. In fact, many investors class them as safe haven assets and rotate funds into their shares when market volatility increases.

But APA Group has more to offer than just that. The energy infrastructure company’s growing cashflows as allowed it to increase its dividend each year for almost 20 years.

The good news is that analysts at Macquarie believe this strong run can continue. It is forecasting further dividend increases to 56 cents per share in FY 2024 and 57.5 cents per share in FY 2025. Based on the current APA Group share price of $8.55, this equates to 6.5% and 6.7% dividend yields, respectively.

Macquarie also sees room for its shares to climb higher. It has an outperform rating and $9.40 price target on them.

Coles Group Ltd (ASX: COL)

Another ASX dividend share that boasts defensive qualities is supermarket giant Coles.

As we saw through the pandemic, Coles is capable of growing its earnings through any part of the economic cycle. This bodes well for its dividends in the future.

Morgans is bullish on the company and is forecasting fully franked dividends of 66 cents per share in FY 2024 and then 69 cents per share in FY 2025. Based on the current Coles share price of $16.26, this implies dividend yields of 4% and 4.25%, respectively.

As well as a good yield, the broker highlights that “the stock is looking more attractive following the recent pullback in the share price.” It has an add rating and $18.95 price target on its shares.

Telstra Corporation Ltd (ASX: TLS)

A final safe ASX dividend share for income investors to look at is telco giant Telstra. As with the others, it has defensive earnings and a positive growth outlook.

In fact, it is for exactly these reasons that Goldman Sachs is tipping Telstra as a buy. It believes “the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive.”

As for dividends, the broker is forecasting fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.64, this equates to yields of 4.9% and 5.2%, respectively.

Goldman has a buy rating and $4.55 price target on Telstra’s shares.

The post 3 safe ASX dividend shares to own for the next 10 years appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Brokers say these high yield ASX 300 dividend shares are top buys
• What does the latest 3G news mean for Telstra shares?
• The ASX 200 telco and energy stocks set to benefit from AI
• Almost ready to retire? I’d buy cheap ASX dividend shares for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Apa Group, Coles Group, Macquarie Group, and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.