Category: Stock Market

So will the S&P/ASX 200 Index (ASX: XJO) hit 7,500 again this year in 2023? Good question!

Of course, the ASX 200 has been at 7,500 points before. A few times, actually. The first time the ASX 200 ever crossed the 7,500-point threshold was back in August 2021. A few days later, we saw the index touch its current all-time high above 7,600 points. But it wasn’t to last.

The next time the ASX 200 had another incursion above 7,500 points, it was back in April of 2022. The time after that was recent, in February of this year:

On all of these occasions, the ASX 200’s journey above 7,500 points didn’t last too long. But perhaps next time will be different.

So will 2023 give the ASX 200 another shot at this milestone?

Will the ASX 200 see 7,500 points again in 2023?

Well, I’ll keep this quick. I have no idea. And nor does anyone else. Predicting what the share market will do next is a fool’s game (and not the good kind of Fool).

Perhaps additional interest rate rises, more bank failures, some global catastrophe, or sheer investor apathy will drag the ASX 200 under 7,000 points over the rest of the year.

Perhaps investors keep ASX shares where they are for the rest of 2023.

Or perhaps interest rate cuts, good economic news, or unbridled investor optimism will drag the ASX 200 back over 7,500, or even over 8,000 points by the end of the year.

As it stands today, all of these scenarios are possible. And since we don’t know what the rest of 2023 has in store for us, there is no way of knowing what might happen. As such, I believe it is folly to try and make decisions or predictions based on events that are impossible to predict.

But here’s what we do know. ASX shares go up far more often than they go down. And the ASX 200 Index has never once failed to regain and surpass a previous all-time high.

These are things we know to be true and, thus, we should base our investing habits on them. So I’m going to keep investing in ASX shares throughout the remainder of 2023, regardless of what the markets do.

Mathematics is on the side of the investor who knows the history of the share market. If shares go up more than they go down, it makes sense to buy as much of them as possible as soon as you can.

 

The post Will the ASX 200 hit 7,500 again in 2023? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• Is IAG stock a good defensive ASX 200 buy right now?

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.

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If you’re wanting to build lifelong passive income, you don’t have to start with a huge lump sum.

That’s because thanks to the power of compounding, investors with a long investment time horizon can make small investments that have the potential to grow into something material further down the line.

But how small is small? The good news is that investing the equivalent of the price of a skimmed oat latte each day into ASX shares could be enough to grow your wealth.

Passive income tips and tricks

The first tip is coming up with a plan and sticking with it. This is far harder than it sounds, especially early on when it looks like there’s little to no progress being made. But persevering and trusting the process could certainly be worth it.

Since 1965, the S&P 500 index on Wall Street has generated an average annual return of 9.9% per annum. While there is no guarantee that this will be the case over the next 50-something years, it is reasonable to assume (and hope) that future returns will be closely in line with this.

This means that if you were to invest $5 a day into the share market (that could be via micro-investing platforms or saving into larger amounts and investing through brokerages like CommSec), you could build a very large nest egg in time.

For example, $5 invested each day equates to $1,825 a year. If you did this for 10 years and earned a 9.9% per annum return, you would have grown your portfolio to just under $32,000.

But don’t stop there, compounding is only warming up!

Let’s go another 10 years doing the same thing. If we did that, your wealth won’t have doubled to $64,000, compounding will have taken it all the way to almost $114,000.

Keep going

Warren Buffett’s right-hand man at Berkshire Hathaway (NYSE: BRK.B), Charlie Munger, once quipped:

The first rule of compounding: Never interrupt it unnecessarily.

So, let’s not upset Charlie. Let’s keep buying ASX shares for another 10 years, bringing our investment timeframe to 30 years.

If we do this and earn the same return, we will see our portfolio grow from $114,000 to almost $325,000.

And finally, let’s just add a further 5 years to our strategy for good measure. Doing so, would take our portfolio value to just over $530,000.

That’s an extra $200,000 in just 5 years, which demonstrates just how powerful compounding becomes the longer you leave. Charlie might be onto something!

Passive income time

Now we have built up the value of our portfolio, we can start to think of passive income.

There are plenty of ASX shares that offer dividend yields of greater than 5%. This currently includes the likes of Westpac Banking Corp (ASX: WBC) and Rio Tinto Ltd (ASX: RIO).

If we were to build a portfolio of ASX shares that average a 5% dividend yield, our $530,000 investment would provide passive income of $26,500 per year (and growing).

All for the price of a coffee each day.

The post How to start building a lifelong passive income with just $5 a day: Tips and Tricks appeared first on The Motley Fool Australia.

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More reading

• Why did the Rio Tinto share price outperform the ASX 200 in March?
• Are these ASX 200 dividend shares must-buys for passive income investors?
• Why did this ASX All Ords stock just crash 68%?
• Could right now be a great time to buy ASX 200 bank stocks for passive income?
• How I’d invest $20,000 to earn reliable passive income today

Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX share market could be the ticket for creating a lifetime of passive income. But how much is needed to give up work?

Certainly, I don’t think people need to be afraid of buying shares. Yes, share prices move up and down. But, that’s simply a reflection of how much the market is willing to pay for shares on any particular day.

Think of the share market as the business market. Some businesses have been around for decades, and I don’t think they’re suddenly going to disappear.

Companies have the ability to pay out a portion of their profit – say 50% — and invest the other 50% into growth for the business and perhaps improve its balance sheet position. These are the sorts of businesses I like to own.

Some businesses are building a long record of annual dividend growth such as Brickworks Limited (ASX: BKW), Sonic Healthcare Ltd (ASX: SHL), and Coles Group Ltd (ASX: COL).

But, the question is – how much do we need to have invested in ASX dividend shares to live off the passive income?

Dividend requirements

Well, how long is a piece of string?

Everyone has different financial requirements. Someone living in Sydney is likely to have greater financial needs than someone who lives in a regional town.

If a household wants to go on holiday to Europe or America every three months then this will probably cost a lot more than someone just wanting to live a more simple life.

I think it’s a good idea to check out Motley Fool’s guide on how much is needed to retire in Australia.

In that guide, it points out that according to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, a couple who own their own home will need an income of about $67,000. A single person will need an annual income of more than $47,000.

But, someone else may be targeting annual dividends of $100,000, or even more.

How big does the portfolio need to be?

Investors who want to build their large passive income stream need to build up to that amount.

If we were aiming for a round figure of $50,000 per year, and the portfolio had a dividend yield of 5%, then investors would need a $1 million portfolio.

If the dividend requirements were doubled to $100,000, with the same dividend yield, then the portfolio would need to be (at least) $2 million. I say “at least” because we haven’t factored in any tax payments. Tax may be a factor.

If you own a $2 million ASX dividend share portfolio as an individual, it’s likely you’ll need to pay tax.

It also depends on the dividend yield. For example, a $1 million portfolio with a 6% dividend yield makes annual dividends of $60,000.

Different businesses have different yields. Higher yields can come at a higher risk of a cut but yields around those levels are certainly achievable.

For example, according to Commsec, in FY23, Wesfarmers Ltd (ASX: WES) shares could pay a grossed-up dividend yield of 5.2%, Telstra Group Ltd (ASX: TLS) shares might pay a grossed-up dividend yield of 5.7%, and Charter Hall Long WALE REIT (ASX: CLW) has an estimated distribution yield of 6.7%.

Foolish takeaway

I suggest that investors may need to build a portfolio of at least $1 million to achieve dividends for life. But, it’s important to remember that investors don’t need to build their wealth with just ASX dividend shares – we can use ASX growth shares to do a lot of the heavy lifting to build towards a goal.

The post How much do you need to invest to give up work and live only off dividend income? appeared first on The Motley Fool Australia.

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More reading

• Are these ASX 200 dividend shares must-buys for passive income investors?
• Why Brickworks, Energy Resources, Magellan, and Pilbara Minerals shares are dropping today
• How I’d invest $5,000 today for long-term passive income
• 5 things to watch on the ASX 200 on Thursday
• If a stock market crash is coming, I want to own these 2 ASX shares

Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Novonix Ltd (ASX: NVX) share price crashed 19.2% in March.

Shares in the battery technology company closed out February trading at $1.56. By the end of trade on 31 March, those same shares were trading for $1.26.

That’s a big loss compared to the S&P/ASX 200 Index (ASX: XJO), which finished March down 1.1%.

Of course, the ASX 200 is no longer the correct benchmark to measure the Novonix share price against. Not since 20 March.

That’s one of the headwinds the stock faced last month that we’ll look at below.

What were ASX 200 investors considering in March?

The month gone by didn’t start out well for the Novonix share price.

On 2 March, shares closed the day down 6.3%.

As my Foolish colleague Mitch Lawler speculated on the day, that may have been linked to a Tesla Inc (NASDAQ: TSLA) presentation.

You see, Novonix produces cathodes and anodes from synthetic graphite for lithium-ion batteries. And investor fears may have been roused by Elon Musk’s revelation that the global EV giant is constructing its own cathode refining facility.

“We are obviously building a cathode processing facility just adjacent to this building […] that’s for cathode refining,” Musk said.

The Novonix share price also wasn’t helped by S&P Global’s quarterly index rebalance.

With the company’s market cap diving alongside its share price, Novonix was booted from the ASX 200 commencing on 20 March.

That could have a detrimental impact on its shares, as many fund managers are limited to investing in ASX 200 companies. These companies also tend to draw more media attention and therefore more interest from retail investors. Atop that, a number of index tracking funds focused solely on ASX 200 shares will no longer be holding Novonix.

Following on those woes, the Novonix share price had a strong finish to the month, closing up 8.6% on 31 March.

This came after the company announced it had agreed to establish an incorporated joint venture with leading Saudi Arabian energy company TAQAT. The agreement will see the JV partners develop and produce anode materials for EVs and grid storage system batteries in the Middle East and North Africa.

Novonix share price snapshot

As you can see in the chart below, following another big down month in March, the Novonix share price has cratered 83% over the past 12 months.

The post Here’s why the Novonix share price crashed 19% in March appeared first on The Motley Fool Australia.

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More reading

• Why is the Novonix share price diving 7% on Thursday?
• Why Deep Yellow, Frontier Digital, Magellan, and Novonix shares are dropping today
• Chair says Novonix share price ‘will respond appropriately over time’
• Why Block, Novonix, Piedmont Lithium, and Syrah shares are racing higher
• ‘Very excited’: Why the Novonix share price is leaping 14% on Friday

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

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There are a growing number of exchange traded funds (ETFs) for investors to choose from on the Australian share market.

But which ETFs might be top options to buy and hold right now?

Listed below are three quality ETFs that could be worth considering in April

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ETF for investors to look at is the BetaShares Global Cybersecurity ETF.

This ETF gives investors access to the leading companies in the global cybersecurity sector. As we have seen over the last 12 months, cyberattacks are becoming increasingly prevalent. In light of this, you won’t be surprised to learn that demand for cybersecurity services is expected to rise strongly in the future.

This is great news for the companies held by the fund. This includes Accenture, Cisco, Cloudflare, Crowdstrike, Okta, Palo Alto Networks, and Splunk.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF for investors to consider in April is the popular VanEck Vectors Morningstar Wide Moat ETF.

If you want to follow in the footsteps of legendary investor Warren Buffett, then this ETF could be for you. It tracks an index which has been designed to replicate the type of investments that Buffett has made through is long career.

These are typically companies with fair valuations and sustainable competitive advantages or moats (hence its name). And given the Oracle of Omaha’s incredible track record, it’s hard to argue against this strategy.

The ETF generally comprises approximately 50 companies with these qualities. At present, this includes the likes of Adobe, Alphabet, Boeing, Kellogg Co, Meta Platforms, and Walt Disney.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Finally, the Vanguard MSCI Index International Shares ETF could be another great option for investors in April. Particularly if you’re wanting to diversify your portfolio.

That’s because this very popular ETF gives investors access to approximately 1,500 of the world’s largest listed companies. This provides significant diversity for a portfolio, as well as letting investors gain exposure to the long term growth potential of international economies.

There are a host of global giants held by the ETF. This includes Amazon, Apple, Nestle, Procter & Gamble, Tesla, and Visa.

The post Here are 3 fantastic ETFs for ASX investors to buy and hold this month appeared first on The Motley Fool Australia.

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More reading

• Top ASX ETFs to buy in April 2023
• How I’m building more passive income to retire early
• Why did the Vanguard MSCI Index International Shares ETF just hit a new 52-week high?
• It’s another day, another all-time high for this Buffett-esque ASX ETF
• Keen to pocket the next Vanguard MSCI Index International Shares ETF dividend? Read this

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 BetaShares Global Cybersecurity ETF and Vanguard Msci Index International Shares ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The last five years have likely been a disappointing period for those invested in AGL Energy Limited (ASX: AGL) shares.

The stock has tumbled more than 60% in that time amid a failed demerger plan, deepening losses, and a major board room shake up, to name a few dramas facing the company.

Back in April 2018, $3,000 would likely have bought 141 AGL shares. The energy producer and retailer’s stock was trading at around $21.14 at that point.

Today, that holding would sell for just $1,1,73.12. The AGL share price last closed at $8.32.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted around 24% over the same period.

But what about the ASX 200 energy giant’s dividends? Let’s see if the company’s offerings have made up for its share price’s poor performance.

All the dividends paid to those holding AGL shares since 2018

Here are all the dividends paid by AGL shares over the last five years:

AGL dividends’ pay date	Type	Dividend amount
March 2023	Interim	8 cents
September 2022	Final	10 cents
March 2022	Interim	16 cents
September 2021	Final	34 cents
March 2021	Interim	31 cents
March 2021	Special	10 cents
September 2020	Final	51 cents
March 2020	Interim	47 cents
September 2019	Final	64 cents
March 2019	Interim	55 cents
September 2018	Final	63 cents
Total:		$3.89

All up, AGL shares have each provided investors with $3.89 in dividends over the last five years.

That means our figurative parcel has likely yielded around $548.49 – not quite enough to mitigate the capital losses.

Though, it has bumped the total return on investment (ROI) offered by AGL shares in that time to a 42% loss.

It’s also worth remembering that some of the company’s dividends have carried franking credits. All the offerings it paid between 2017 and 2020 were 80% franked – meaning they might have brought additional benefits for some shareholders at tax time.

Right now, AGL shares trade with a 2.16% dividend yield.

The post Bought $3,000 of AGL shares 5 years ago? Guess how much passive income you’ve earned since appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• ‘Risks, returns, and decarbonisation’: AGL shares scrubbed from $68b superfund’s climate watchlist
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

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

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The Insurance Australia Group Ltd (ASX: IAG) share price managed to outpace the S&P/ASX 200 Index (ASX: XJO) in March.

Shares in the ASX 200 insurance stock closed out February trading for $4.65 each. At the closing bell on 31 March, shares were changing hands for $4.69 apiece.

That put the IAG share price up 0.9% in a month that saw the benchmark index fall 1.1%.

Here’s what ASX 200 investors have been considering.

What’s influencing ASX 200 investor decisions?

The only price-sensitive news from the Aussie insurance giant was released on 31 March.

That related to the company redeeming all $220.2 million of IAG Capital Notes, which were issued on 22 December 2016. The IAG share price edged 0.2% lower on the day.

With no other price-sensitive news out since the insurer reported its half-year results on 13 February, IAG’s relative outperformance in March may be linked to the defensive nature of the stock in the face of stubbornly high inflation.

As The Motley Fool reported on 15 March, Wilsons equity strategist Rob Crookston advised seeking out stocks that are able to withstand the margin-eroding powers of inflation.

“The best defence against cost inflation is pricing power,” Crookston said.

“High quality companies with resilient customer demand through the cycle and dominant market positions operating in attractive industry structures are best placed to protect their margins by raising prices.”

Crookston named five stocks that fit the bill, including IAG.

“Number 1 general insurer in Australia, which has been [raising] premium rates strongly to offset rising perils costs (albeit there is a timing lag to margins),” he said. “Even with higher premiums, customer retention rates remain high.”

Indeed, at its half-year results, IAG reported adding more than 100,000 direct customers across Australia and New Zealand over the six-month reporting period. Retention levels for its motor insurance were 91% while home insurance retention rates were 95%.

Net profit after tax (NPAT) for the six months surged 171% year on year to $468 million.

March also saw IAG pay out its six cents per share interim dividend, 30% franked.

IAG share price snapshot

As you can see in the chart below, the IAG share price has been a strong performer over the past 12 months, up 13%.

The post Why the IAG share price outperformed the ASX 200 in March appeared first on The Motley Fool Australia.

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More reading

• Is IAG stock a good defensive ASX 200 buy right now?
• Insurance companies are raking it in, so should you buy ASX 200 shares like IAG right now?
• The IAG dividend is being paid today. Here’s the latest
• 5 ASX 200 shares that inflation can’t touch: expert
• Warren Buffett is invested in IAG shares, should you be?

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

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Passive income can be a great way to earn extra money without having to leave the comfort of your home.

One ASX 300 dividend stock that may provide investors with a decent yield is Accent Group Ltd (ASX: AX1).

Accent shares fell 4.33% in Thursday’s trade and closed at $2.43. For perspective, the S&P/ASX 300 (ASX: XKO) slid 0.26% on the last day of trading before Easter.

So is this ASX 300 dividend stock a good buy for passive income?

Dividend yield

Accent paid an interim dividend of 12 cents per share in the first half of FY23. This represents a dividend yield of 4.9% based on the company’s last closing share price of $2.43.

Looking ahead, Goldman Sachs is tipping Accent to hand out fully franked dividends of 15 cents per share in FY23. This represents a dividend yield of 6.2%.

Meanwhile, Bell Potter is tipping Accent to pay out dividends of 15.5 cents per share in FY23 and 12.2 cents per share in FY24. This represents dividend yields of 6.4% and 5% respectively.

Accent is known for its lifestyle and footwear brands. The company has more than 805 retail stores covering 26 retail names. The company estimates it will have 825 stores by the end of FY23.

The Accent share price has soared 45% in the year to date and 48% in the last year.

And analysts are tipping this top run to continue. In a research note on 29 March, Goldman said “we believe the market is underestimating the full earnings potential” of Accent’s business. Goldman has placed a $3.10 price target on Accent’s share price.

Commenting on Accent, Goldman said:

We see AX1 as well protected from a potential slowdown in discretionary spend given its exposure to a younger consumer and performance footwear.

The business is yet to achieve its full earnings potential, in our view, notwithstanding a strong recovery post lockdowns.

Our FY24/FY25 forecast is +9.8%/+12.8% of consensus.

Bell Potter is also positive on Accent. Analysts were impressed with the company’s first-half performance and are confident this can continue due to its exposure to younger consumers. The younger demographic is not as hard hit by inflation and rising interest rates.

Accent delivered record sales and profit in the first half of FY23. NPAT soared 295.2% on the prior corresponding half, while EBITDA lifted 70.9%.

The post Invest in this 6% yielding ASX 300 dividend stock for passive income appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• This ASX All Ords share has soared 70% in 6 months. Is it too late to buy?
• Don’t underestimate the earnings potential of this ASX 300 share: Goldman Sachs
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Motley Fool contributor Monica O’Shea 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.

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The Woodside Energy Group Ltd (ASX: WDS) share price was a poor performer in March.

During the month, the energy giant’s shares lost 7% of their value to finish at $33.34.

Though, it would have been far worse if oil prices had not rebounded late in the month.

For example, at one stage, the Woodside share price was down almost 14% month to date at $31.00.

What weighed on the Woodside share price last month?

There were a couple of reasons for the weakness in the Woodside share price in March.

The first was falling oil prices. At the height of the recent banking crisis, traders were selling down oil amid concerns that global economic growth (and therefore demand for oil) could be impacted.

How things have changed since then, though! With concerns easing in the banking sector and OPEC cutting its production, oil prices have hurtled higher in April and the Woodside share price is starting to recover.

What else happened?

Also weighing on its shares last month was the Woodside dividend.

In February, Woodside released its full-year results and declared a record fully franked final dividend of US$1.44 per share. This was up 37% on the prior corresponding period and brought its full-year dividend to US$2.53 per share, which was an increase of 87% year over year.

During March, Woodside shares traded ex-dividend for that final dividend of US$1.44 (A$2.154) per share.

When this happens, a company’s shares will usually drop in line with the dividend. After all, why would new buyers pay for something they won’t receive?

And given how this dividend represented a 6% yield based on the Woodside share price at the start of the month, this accounts for the majority of its decline in March.

Here’s hoping April is a strong month!

The post Why did the Woodside share price drop 7% in March? 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.

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Last month in March, the Rio Tinto Ltd (ASX: RIO) share price managed to outperform the S&P/ASX 200 Index (ASX: XJO).

The ASX mining share climbed by around 3%, while the ASX 200 dropped just over 1%.

Outperformance of around 4% in just one month is very helpful for Rio Tinto investors hoping to beat the return of the ASX 200 Index considering the ASX iron ore share typically comes with a good dividend yield as well.

Why did the ASX 200 fall in March?

There are 200 businesses in the ASX 200. But, there are two sectors that have a large weighting in the index, so they can have the largest influence – resources and ASX bank shares.

Let’s look at how the four biggest ASX bank shares performed last month.

The Commonwealth Bank of Australia (ASX: CBA) share price dropped 2.3%, the ANZ Group Holdings Ltd (ASX: ANZ) share price fell 7%, the Westpac Banking Corp (ASX: WBC) share price fell around 4% and the National Australia Bank Ltd (ASX: NAB) share price sank 7.6%.

This was unfortunate as investors may have gone negative on the banking sector because of the troubles faced by Silicon Valley Bank (SVB) and Credit Suisse.

On top of that, the Bank of Queensland Ltd (ASX: BOQ) share price dropped 8%, the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price fell 11% and the Macquarie Group Ltd (ASX: MQG) share price declined 7.3%.

Was anything announced that was positive for Rio Tinto shares?

While it wasn’t a positive announcement, the ASX mining share did reveal that it had agreed to pay a $15 million civil penalty to the US Securities and Exchange Commission (SEC) for “violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act.”

But, on the positive side of things, at the end of the month, Rio Tinto announced it was partnering with First Quantum Minerals to progress the La Granja copper project in Peru, which is reportedly one of the largest undeveloped copper deposits in the world.

La Granja has the potential to be a “large, long-life” operation.

First Quantum is going to buy a 55% stake in the project for $105 million and commit to further invest up to $546 million into the joint venture to solely fund capital and operational costs to take the project through a feasibility study and toward development.

After completing the sole funding commitment, all subsequent expenditures will be applied on the basis of how much of the project each business owns.

This transaction is expected to complete by the end of the third quarter of 2023.

Rio Tinto share price snapshot

While it rose in March, the ASX mining share’s valuation hasn’t moved much since the start of the year.

The post Why did the Rio Tinto share price outperform the ASX 200 in March? appeared first on The Motley Fool Australia.

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More reading

• Why did this ASX All Ords stock just crash 68%?
• How I’d invest $20,000 to earn reliable passive income today
• Buy these ASX 200 dividend shares for passive income: analysts
• Why did the Rio Tinto share price lag the ASX 200 today?
• Top ASX dividend shares to buy in April 2023

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 positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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