Category: Stock Market

ASX 200 healthcare stock Neuren Pharmaceuticals Ltd (ASX: NEU) has posted impressive gains over the past year but one director appears to still see value in today’s share price.

Neuren shares closed the session on Thursday at $19.31, up 2.6% for the day. The ASX 200 healthcare stock outperformed the benchmark S&P/ASX 200 Index (ASX: XJO), which rose by 0.44%.

Over the past year, the Neuren Pharmaceuticals share price has risen 48.3% while the ASX 200 has lifted just 8.6%.

So, it’s interesting to see one of the company directors ploughing more of his own funds into the ASX 200 healthcare stock despite this impressive price lift.

Director invests almost $100,000 in Neuren shares

Neuren Pharmaceuticals issued a notice to the ASX yesterday advising that director Joseph Basile has increased his stake in the company by 50%.

Basile bought 5,000 Neuren shares on-market on Tuesday through his self-managed super fund (SMSF) for $19.49 apiece, for a total consideration of $97,450.

He already owned 10,000 Neuren shares, so the purchase lifted his stake in the ASX 200 healthcare stock by 50%.

What’s the latest news from this ASX 200 healthcare stock?

The last piece of price-sensitive news from Neuren came on 27 May when the company announced top-line results from the Phase 2 clinical trial of its second drug candidate, NNZ-2591.

The drug treats Pitt Hopkins syndrome (PTHS), which is a neurodevelopmental condition that causes developmental delays. It causes moderate to severe intellectual disability, hyperventilation and/or breath-holding while awake, seizures, gastrointestinal issues, speech difficulties, and sleep disturbances.

The top-line results showed a “statistically significant improvement” across all four efficacy measures.

Neuren Pharmaceuticals CEO Jon Pilcher said:

We are very excited about the results of this first clinical trial in Pitt Hopkins patients. This underserved community has such urgent unmet need and we can now continue towards our goal of developing a first approved treatment.

The ASX 200 healthcare stock rocketed 15.7% on the day of the news.

PTHS is caused by the loss of one copy, or a mutation, of the TCF4 gene on the 18th human chromosome. The incidence of PTHS is estimated at between 1 in 11,000 people and 1 in 41,000 people.

Neuren develops drugs for serious childhood neurological disorders that have no or limited approved treatments.

In the United States, all of its drugs have the designation of ‘orphan drug’. Biotechs working on orphan drugs are given special incentives, such as longer exclusive marketing rights, to ensure they make a profit.

Neuren also has an orphan drug designation for NNZ-2591 in Europe.

Neuren Pharmaceuticals share price snapshot

This ASX 200 healthcare stock has flown 1,565% higher over the past five years.

This compares to an 18.3% gain for the ASX 200.

The post This ASX 200 healthcare stock is up 48% in a year, but one director is still buying! appeared first on The Motley Fool Australia.

More reading

• These ASX shares could rise 25% to 35%
• Why Cettire, Neuren, Peter Warren, and Qantas shares are falling today
• Which ASX biotech shares are pioneering the future of medicine?
• This ASX 200 stock can rocket to a record high: Broker
• 5 things to watch on the ASX 200 on Tuesday

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

The Australian share market has historically provided investors with a return of approximately 10% per annum.

But that doesn’t mean that all ASX stocks rise by that level. Some will underperform and some will outperform the market.

And sometimes you will see shares that deliver mouth-watering returns that make the market return look minuscule.

The good news for investors with a high tolerance for risk is that analysts at Bell Potter see potential for one speculative ASX stock to do exactly this. In fact, they see scope for its shares to triple in value over the next 12 months.

Which ASX stock could rocket?

According to a note this morning, the broker believes that Meteoric Resources NL (ASX: MEI) shares could be extremely undervalued by the market.

In response to a revised resource estimate for the Capão do Mel (CDM) rare earths deposit at the Caldeira Project in Brazil, the broker has reaffirmed its speculative buy rating and 50 cents price target on its shares.

Based on its current share price of 16.5 cents, this implies that the ASX stock could rise 200% between now and this time next year.

What is the broker saying?

Bell Potter was pleased with the ASX mining stock’s resource estimate. It commented:

The M+I [measured and indicated] Resource at CDM defined 85Mt at 3,034ppm TREO, which included a high-grade core of 36Mt at 4,345ppm TREO using a 3,000ppm cut-off. Importantly, the high-grade zone we believe supports production over the first ~8 years (BPe). The scoping study, which was delayed until the release of the updated CDM Resource, is due for imminent release, and will be a major catalyst for the stock and broader ion adsorption/ ionic clay (IAC) projects. The updated resource for the entire Caldeira project increases to 619Mt at 2,538ppm TREO.

Its analysts then explain why they think investors should consider buying Meteoric Resources shares. The broker said:

We view the Caldeira project and MEI as being attractively positioned vs peers and maintain our valuation of $0.50/sh and Speculative Buy recommendation. We anticipate MEI will look to de-risk the project over the next 12 months, with the key catalyst being the release of the scoping study on its Southern projects. We currently estimate the market is factoring in less than the current depressed spot price for NdPr of ~US$50/kg, which differs significantly from our outlook of US$95/kg over the long term.

All in all, this could make it worth a closer look if you are wanting exposure to rare earths and have a high tolerance for risk.

The post Meet the speculative ASX stock that could rise 200% appeared first on The Motley Fool Australia.

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• Small-cap expert reveals ASX mining stock with 150%+ upside

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.

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

Tesla (NASDAQ: TSLA) stock gained in Thursday’s daily trading session, with the electric vehicle (EV) innovator’s share price up almost 3% as of the close.

Tesla stock gained ground following indications that CEO Elon Musk’s latest compensation package is likely to be approved. After the market closed yesterday, Musk indicated that shareholders were poised to give the green light for a hotly contested pay package valued at roughly $56 billion. He also indicated that shareholders were voting in favor of moving the company’s place of incorporation from Delaware to Texas. Wall Street is apparently feeling bullish about both news items.

Musk’s big payday moves closer to reality, but there’s a catch

In 2018, Tesla board members approved a performance-based compensation package that would potentially award Musk with as much as $56 billion worth of company stock. But a Delaware judge struck down the pay package this January on the grounds that the company’s board had not shown that the compensation was fair or provided evidence that they had engaged in meaningful negotiations about the CEO’s pay. Shareholders have been voting on whether to reauthorize the deal.

While most of the votes on Musk’s pay package were submitted yesterday, a small remainder will be submitted later today. The pay package appears likely to pass, but some legal experts think that the Tesla CEO’s compensation will once again wind up being challenged in court.

What comes next for Musk and Tesla stock?

There’s no doubt that Musk’s leadership has been instrumental in Tesla’s incredible rise and stock performance. On the other hand, the EV company has been facing some significant challenges lately. Further complicating the question of Musk’s compensation, Tesla stock has seen big sell-offs this year despite an overall bullish backdrop that has powered explosive gains for many tech stocks.

TSLA data by YCharts

Valued at roughly 72 times this year’s expected earnings, Tesla continues to trade at highly growth-dependent multiples despite somewhat sluggish performance for the business. With the company facing pressure from the rise of Chinese EV makers and other players in the space, it may be hard to justify the company’s valuation when viewing it through the lens of a traditional automobile maker. But Musk has continued to invest heavily in innovation initiatives, and some investors are willing to assign a premium to the stock based on his vision and the company’s track record of disruption.

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

The post Why Tesla stock jumped today appeared first on The Motley Fool Australia.

More reading

• Why Telstra and these excellent ASX dividend stocks could be buys
• This ASX 200 healthcare stock is up 48% in a year, but one director is still buying!
• Meet the speculative ASX stock that could rise 200%
• Sell these ASX 200 stocks now: Goldman Sachs
• Is the 11% dividend yield from Yancoal shares too good to be true?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. Keith Noonan 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.

Now could be the time to sell the two ASX 200 stocks in this article.

That’s the view of analysts at Goldman Sachs, which have slapped sell ratings on them this morning.

Which ASX 200 stocks are sells?

The first stock that could be a sell is stock exchange operator ASX Ltd (ASX: ASX).

In response to its investor day update this week, the broker has reiterated its sell rating and $55.45 price target on its shares.

Based on its current share price of $58.14, this implies potential downside of 4.5% for investors over the next 12 months.

Commenting on the ASX 200 stock’s investor day event, the broker said:

Elevated Capex to persist at ~$160-180m p.a. across FY25 to FY27 implying ~$510m cumulative spend (at midpoint) across that 3 year period on CHESS, derivatives & trading + maintenance capex. We note that while ASX’s technology roadmap extends beyond FY27, ASX does guide to capex reducing into FY28. 2) D&A will continue to be a drag on earnings growth: ASX guidance implies ~$50m D&A charge in FY25. We think D&A will gradually increase in a staged manner based on ASX’s guided capex spend and as system releases go live through FY25-FY28+ using a useful life of about 7-10 years. We now forecast a more material increase in D&A by FY30 (assuming all major projects go live before then).

Reece Ltd (ASX: REH)

Another ASX 200 stock that has copped a sell rating is Reece.

This morning, Goldman has initiated coverage on the plumbing parts company’s shares with a sell rating and $23.35 price target. This implies potential downside of 12.1% for investors over the next 12 months.

The broker appears to believe the market is too optimistic on the company’s US expansion and feels it will take time to have a meaningful impact. It explains:

US provides growth optionality…over time. Limited geographic spread and low network density in a fragmented market supports store roll out growth opportunity with margin expansion to complement market growth over time. However, assessing the network density of competitors like Ferguson and Watsco suggests this is a long-dated opportunity. We forecast a 7% 3yr EBITDA CAGR (USD) for this segment.

In light of this and with the ASX 200 stock trading on higher than normal multiples, the broker feels it is fully valued today. It adds:

REH is trading in excess of its historical average premium to the S&P ASX200 (0.6x standard deviations above its 5yr average). Compared to its peer set, REH is also trading above its historic premiums despite lagging the peer set on metrics such as EBIT margins and EBIT growth (note we forecast a 5% EBIT CAGR for REH, in line with Visible Alpha consensus). We initiate at Sell.

The post Sell these ASX 200 stocks now: Goldman Sachs appeared first on The Motley Fool Australia.

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• Why ASX, Brazilian Rare Earths, Liontown, and Sigma shares are sinking today
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• Why Goldman Sachs just slapped a sell rating on this ASX 200 stock

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.

Looking at the Yancoal Australia Ltd (ASX: YAL) shares right now, one metric will probably jump out at you straight away. That would be this All Ordinaries Index (ASX: XAO) stock’s monstrous dividend yield.

Yancoal shares closed on Thursday at $6.20 apiece. At that pricing, this All Ords coal stock appears to be trading on a trailing dividend yield of a whopping 11.21%.

Yancoal’s last few dividend payments have also come with full franking credits attached. This means that 11.21% yield would gross up to an even more eye-watering 15.83% with the value of those franking credits included.

ASX All Ords shares are well-known for relatively high dividend yields compared to what is on offer on other stock exchanges around the world. But even so, an 11% yield (let alone a 15.8% one) is well above what your typical ASX share would offer investors. To illustrate, it’s rare to see an ASX bank stock, usually amongst the highest-yielding ASX blue chips on the market, on a yield above 7%.

So 11% is a big deal.

However, as every dividend investor knows, a company’s dividend yield is only a reflection of the past. It in no way guarantees that an investor who buys a share today will receive its current dividend yield on their investment going forward.

So today, let’s talk about whether Yancoal shares’ ridiculous 11.21% dividend yield is the real deal.

Is Yancoal shares’ 11% dividend yield too good to be true?

Well, first things first, Yancoal’s 11% yield is legitimate. It comes from the last two dividend payments the company has forked out.

The first was last September’s interim dividend of 37 cents per share, and the second was the 32.5 cents per share payment we saw doled out back in April. As we touched on above, both of these payments came with full franking credits attached.

If we plug in these 69.5 cents per share in dividend payments into the current Yancoal share price, we get a trailing yield of 11.21%.

But what about the future?

Unfortunately, Yancoal’s dividends are even harder to forecast than most ASX All Ords shares due to its nature as a commodity stock. This company’s profitability (and thus divided dividend ability) is almost entirely dependent on the price of coal over any given period.

If coal prices are high, Yancoal’s coffers will be flush with cash, and the company will have to capacity to continue to fund large dividend payments. However, if coal prices sink, you’ll almost certainly see a corresponding drop in the levels of dividend income that shareholders will enjoy.

Income feast and famine

To illustrate just how wildly this company’s payments can fluctuate, Yancoal paid out $1.23 per share in dividends over 2022, a year that saw a huge runup in the price of coal. But just three years prior in 2019, investors received a total of just 38.9 cents per share.

As my Fool colleague Zach recently covered, Yancoal’s most recent quarterly update indicated that the company was continuing to enjoy relatively high coal prices, which bodes well for the company’s short-term dividend firepower.

But Yancoal is never going to be a company with a reliable and predictable dividend yield. So don’t expect to buy this All Ords stock today and forever get an 11% yield on your cash.

The post Is the 11% dividend yield from Yancoal shares too good to be true? appeared first on The Motley Fool Australia.

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• How to earn $1,900 in passive income with just $10,000 in savings
• Guess which ASX All Ords stock has rocketed 37% in a year AND pays an 11% dividend yield!
• 2 high-yield ASX shares I’d buy now for dividends
• How the Yancoal share price soared 36% in a year and what to expect next
• If I invest $5,000 in Yancoal shares today, how much income will I receive in 2025?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.

There are a lot of exchange-traded funds (ETFs) to choose from on the Australian share market.

To narrow things down, let’s take a look at four excellent ASX ETFs that could be good additions to a balanced investment portfolio. They are as follows:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ASX ETF to look at is the BetaShares Asia Technology Tigers ETF. It provides investors with easy access to 50 of the best technology stocks that the Asian region has to offer. These technology tigers include online retail giant Alibaba, WeChat owner Tencent Holdings, Temu owner Pinduoduo, and search engine leader Baidu. The fund manager, Betashares, notes that the ETF “provides diversified exposure to a high-growth sector that is under-represented in the Australian sharemarket, and a complement to investors with U.S. technology exposure.”

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another excellent ASX ETF to look at is the BetaShares Global Cybersecurity ETF. As you might have guessed from its name, this ETF gives investors exposure to the growing cybersecurity sector. This certainly could be a great area of the market to be invested. Betashares notes that “with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.” Among the fund’s holdings are cybersecurity giants Accenture, Cisco, Crowdstrike, and Palo Alto Networks.

iShares Global Consumer Staples ETF (ASX: IXI)

A third ASX ETF that could be a great option is the iShares Global Consumer Staples ETF. This ETF provides investors with access to many of the world’s largest consumer staples companies. These are generally regarded as low risk options and companies that perform well whatever is happening in the global economy. This could make it a good option for investors that have a low tolerance for risk. Among its holdings are global behemoths such as Coca-Cola, Nestle, and Unilever.

Vanguard Australian Shares Index ETF (ASX: VAS)

A final ASX ETF for investors to look at is the Vanguard Australian Shares Index ETF. It is an index-based exchange-traded fund that aims to track the ASX 300 index. The ASX 300 index is home to Australia’s leading 300 listed companies. This includes a diverse group of shares such as BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), Northern Star Resources Ltd (ASX: NST), and Wesfarmers Ltd (ASX: WES). It also provides investors with a source of income. For example, at present, the ETF is trading with a dividend yield of 3.7%.

The post 4 excellent ASX ETFs to buy this month appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Accenture Plc, Baidu, BetaShares Global Cybersecurity ETF, Cisco Systems, CrowdStrike, Macquarie Group, Palo Alto Networks, Tencent, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group and Unilever Plc and has recommended the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF, Macquarie Group, Wesfarmers, and iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Betashares Capital – Asia Technology Tigers Etf and CrowdStrike. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have room in your portfolio for some new additions, then it could be worth considering Washington H Soul Pattinson & Company Ltd (ASX: SOL) shares.

That’s the view of analysts at Morgans, which rate the investment house very highly.

What is Washington H Soul Pattinson & Company?

Washington H Soul Pattinson & Company, also known as Soul Patts, started life as an owner and operator of Australian pharmacies.

Since then, Soul Patts has evolved into a diversified investment house investing across a range of industries and asset classes. This includes listed equities, private equity, credit, and property.

It has a proud history and highlights that it has never missed a dividend payment to its shareholders since listing all the way back in 1903. In addition, it has delivered increasing dividends every year of this century.

And while its returns over the last three years have been disappointing, this hasn’t stopped Soul Patts’ shares from delivering an average 10% per annum return over the last decade.

The good news is that Morgans believes that the latter can continue for the foreseeable future. As a result, the broker currently has the company on its best ideas list. Its analysts commented:

SOL’s investment portfolio includes a diversified pool of assets ranging from listed equities (both large cap and emerging companies), private equity, property and structured yield. On a 20-year horizon, SOL’s annualised TSR is 12.5% vs the All Ords accumulation index of 9%. SOL has a 20-year history of increased dividend distributions, with a 20-year CAGR of c.8%. In our view, SOL’s management team continues to deliver both organic and inorganic growth over the long term. We continue to like the SOL story, particularly its track record of growing distributions.

Buy Soul Patts shares

Morgans believes that investors buying the company’s shares at current levels could get an above-average total return over the next 12 months.

Its analysts have put an add rating and $35.60 price target on the investment house’s shares. Based on its current share price of $32.36, this implies potential upside of 10% for investors between now and this time next year.

In addition, the broker is forecasting fully franked dividends of 94 cents per share in FY 2024 and then $1.05 per share in FY 2025. If this proves accurate, it will mean dividend yields of 2.9% and 3.2%, respectively.

This boosts the total potential 12-month return from Soul Patts shares to approximately 13%.

The post Can Soul Patts shares beat the market over the next 12 months? appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX blue chip shares to buy in June
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• Why I’d back up the truck on Soul Patts shares right now
• Why this broker just upgraded Brickworks shares to a buy rating
• 5 things to watch on the ASX 200 on Monday

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 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.

There are few S&P/ASX 200 Index (ASX: XJO) shares that can say their dividend payout has grown or been maintained every year for two decades. Owners of Brickworks Limited (ASX: BKW) shares have seen reliable dividend payments for almost five decades.

Dividends aren’t guaranteed, but companies that have built a history of sending solid dividends to shareholders could continue to deliver pleasing payouts.

There are a couple of reasons why I believe Brickworks’ strong dividend record can continue.

Incredible dividend streak

Brickworks says that it’s proud of its long history of dividend growth and the stability this provides to shareholders.

It has been 48 years since the last full-year ordinary dividend was decreased in 1976. Following the dividend hike in the FY24 first-half result, the company has grown its dividend every year for the past ten years.  

Total shareholder returns have been satisfactory as well – in the HY24 result, the ASX 200 share revealed that over the prior 25 years, it had achieved an average shareholder return per annum of 12.9%, compared to an 8.6% return per annum for the All Ordinaries Accumulation Index (ASX: XAOA).

What is funding the dividends?

Brickworks may be best known for its Australian and US building product divisions – it’s the country’s largest brickmaker, one of the largest roofing businesses and more.

However, two other segments are providing resilient cash flow to enable Brickworks to keep paying and growing its dividend.

First, the ASX 200 share owns approximately a quarter of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), an investment conglomerate that is invested across numerous industries including resources, telecommunications, swimming schools, agriculture, financial services and property. Soul Patts itself has grown its dividend ever year since 2000, providing growing cash flow to shareholders such as Brickworks.

Brickworks also owns a variety of property assets, with the crown jewel being its 50% share of an industrial property trust. The business is benefiting from organic rental increases with those properties, as well as the ongoing completion of new large industrial warehouses adding to the rental snowball. The FY24 first-half result saw net rental income rise 4% (including the headwind of higher-costing debt), while gross rental income increased 17%.

That combination of growing rental profits and a rising Soul Patts dividend is helping send the Brickworks dividend higher.

Brickworks currently has a grossed-up dividend yield of 3.5%, which I believe is a decent starting point.

The post This ASX 200 share has grown (or maintained) its dividend every year for almost 50 years! appeared first on The Motley Fool Australia.

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

Few funds can compete with Vanguard US Total Market Shares Index ETF (ASX: VTS) for the title of best ASX exchange-traded fund (ETF), in my opinion.

When choosing an ETF to invest in, I’m looking for low fees, diversification and good returns. This fund, which provides exposure to a large array of US shares, looks very appealing to me.

There are several diversified ETFs that I’d be extremely happy to own including VanEck Morningstar Wide Moat ETF (ASX: MOAT), Betashares Global Quality Leaders ETF (ASX: QLTY), VanEck MSCI International Quality ETF (ASX: QUAL) and BetaShares Global Sustainability Leaders ETF (ASX: ETHI). But the VTS ETF arguably ticks the most boxes.

Let’s examine how Vanguard US Total Market Shares Index ETF rates on each of the factors I’m looking for.

Low fees

In terms of annual costs, this is the cheapest shares ETF that Aussies can buy on the ASX.

According to Vanguard, the yearly fee is a very minimal 0.03%.

In contrast, an active fund manager typically charges an annual fee of, say, 1% and then performance fees if they outperform their benchmark. The VTS ETF fund does not charge performance fees — it simply tracks the return of the US share market.  

Diversification

The Vanguard US Total Market Shares Index ETF has a total of more than 3,700 holdings. There are few ASX ETFs that provide as much exposure to that many businesses in a single fund.

Having this many holdings reduces the risk of being invested too much in one particular business.

I also like the level of sector allocation diversification. The technology sector has typically been the best-performing industry over the past decade because of its high margins and fast revenue growth.

Around a third of the VTS ETF is invested in technology shares, with consumer discretionary (14%), industrials (13.1%), healthcare (11.8%) and financials (10.9%) being the other sectors with a weighting of over 10%.

Good returns

While past performance is not a guarantee of future performance, the VTS ETF has done very well thanks to its biggest holdings driving the US share market higher.

I’m talking about some of the largest stocks in the world: Microsoft, Apple, Nvidia, Alphabet, Amazon.com, Meta Platforms and Berkshire Hathaway. These are high-quality businesses with extremely powerful market positions and the ability to re-invest for a high return within the business. This quality helps the VTS ETF deliver returns for investors.

In the 10 years to 31 May 2024, the Vanguard US Total Market Shares Index ETF has delivered an average annual return of 15.9%.

I can’t predict its level of return over the next 10 years, but its heavy weighting to strong technology stocks makes me believe the VTS ETF can continue outperforming the S&P/ASX 200 Index (ASX: XJO) over the long term.

The post Why the Vanguard US Total Market Shares Index ETF (VTS) is a top long-term buy appeared first on The Motley Fool Australia.

More reading

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• Why Vanguard US Total Market Shares Index ETF (VTS) is a top buy for retirement
• Own the ASX’s Vanguard US Total Markets ETF (VTS)? Here’s what you’re invested in

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) may have failed with its takeover of UK-listed Anglo American (LSE: AAL) last month, but another ASX 200 mining stock has had more luck over there.

After the market close on Thursday, this miner revealed that it has had its takeover offer accepted, making a deal now quite likely.

Which ASX 200 mining stock is making an acquisition?

The company in question is Deterra Royalties Ltd (ASX: DRR). It is a mining royalties company that prints money without having to lift a shovel. The jewel in its crown at present is BHP’s Mining Area C operation.

But it could shortly be adding to this after Trident Royalties (LSE: TRR) recommended Deterra Royalties’ 49 pence or 144 million pounds (A$276 million) cash offer.

Trident Royalties is a diversified mining royalty company based in the UK and listed on the London Stock Exchange. It has a portfolio of 21 royalties and royalty-like offtake contracts providing exposure to base, precious, bulk and battery metals. This includes lithium, gold, silver, copper, zinc, mineral sands, and iron ore.

Its directors intend to unanimously recommend that Trident shareholders vote in favour of the takeover offer and have agreed to vote their shares in favour of it. Deterra has also received irrevocable undertakings and a letter of intent to vote in favour of the offer from key shareholders. Combined, they represent approximately 28.7%. of Trident’s issued share capital.

The release notes that the transaction will be implemented by way of a UK scheme of arrangement and is subject to Trident shareholder and court approvals, as well as other conditions precedent that are customary for a UK scheme.

The ASX 200 mining stock’s managing director, Julian Andrews, commented:

This Transaction is aligned with our growth strategy of building a diversified portfolio of royalties, with, amongst other benefits, leverage to our scalable operating cost structure. It is an opportunity to accelerate the growth of our portfolio through the addition of a high-quality portfolio of 21 royalties and royalty-like instruments, the majority of which are over North American domiciled assets, at an attractive time in the commodities cycle. This portfolio is consistent with our stated investment criteria, providing exposure to commodities within our target of bulk, base and battery metals from mining operations and projects located in primarily stable and established mining jurisdictions.

Dividend policy update

Potentially offsetting some of the good news above is that Deterra Royalties plans to make a major change to its dividend policy.

This change could potentially see the ASX 200 mining stock’s dividends become less generous in the coming years.

It currently operates with a dividend payout ratio of 100% of net profit after tax and will maintain this in FY 2024. However, moving forward, it will change to a minimum payout ratio of 50% of net profit after tax.

Andrews commented:

 We have a strong history of disciplined capital management, having delivered more than A$480 million of fully franked dividends to shareholders since our listing in late 2020. While consistent with our well established and overarching capital management strategy, today’s adjustment to our dividend policy is designed to better align it with Deterra’s targeted longer-term balance between capital growth and income returns. Importantly, our discipline to return capital when not required for investment or balance sheet management remains unchanged.

The post Guess which ASX 200 mining stock is making a $276m UK acquisition appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.