Category: Stock Market

Harvey Norman Holdings Limited (ASX: HVN) shareholders have been left to lick their wounds after a scathing past 12 months for the ASX retail share. Succumbing to the waning demand, the Harvey Norman share price is now 27.8% lower than a year ago — fetching $3.70 apiece.

Shares in the 40-year-old multinational retailer are struggling to find support amid dwindling profits and slowing sales. Yet, the company’s co-founder and chair, Gerry Harvey, has been scooping up Harvey Norman shares to the tune of more than $80 million worth throughout March.

It all begs the question: should we add this ASX 200 retail share to our shopping cart?

All eyes on interest rates

An uncertain half ahead was a common theme among retailers during the February earnings season.

The strength of businesses, such as Harvey Norman, fundamentally comes down to the confidence and health of the average household budget. Hence, you can begin to imagine the ramifications of the current rate-rising environment.

After 10 consecutive interest rate hikes by the Reserve Bank of Australia, the tightening appears to be having its intended effect.

Data released by Commbank last month showed a 9.8% decline in retail spending intentions for February compared to the prior month. Similarly, the Australian Bureau of Statistics recently presented the slowest year-on-year growth in retail trade since December 2021.

These subdued spending habits were evident in Harvey Norman’s weak total system sales for the first half of FY2023. The top line figure was an underwhelming 1.4% above the prior corresponding period. Meanwhile, reported net profit after tax (NPAT) and non-controlling interests declined 15.1% to $365.9 million.

There’s a good chance investors are remaining cautious around ASX retail shares as the ‘mortgage cliff’ is expected to be coming up around June. If a substantial spending crunch is to occur, this will probably be its onset.

Retailers are likely first in line to get chopped from the budget as financial distress materialises, according to global consulting firm McKinsey & Company. In turn, many former Harvey Norman shareholders have decided not to stick around to find out how bad it could get.

Would I buy this ASX retail share?

The economic outlook is certainly hazy — and there’s no telling if we’ve seen the last of the rate hikes — but I’m inclined to be somewhat quietly optimistic on the Harvey Norman share price.

Personally, I tend to believe we’re close to peak tightening. Sure, rates could remain higher for longer than we’d prefer, but will that cause the devastation that is currently being priced in? I’m not so convinced.

Currently, analyst estimates suggest a bottoming in Harvey Norman’s earnings in FY2024 at around $425 million, as shown above.

At today’s market capitalisation, that would calculate out to be a price-to-earnings (P/E) ratio of nearly 11 times. Hardly expensive in my view when the global retail industry average earnings multiple is around 17 times.

Furthermore, the ASX 200 retail share hasn’t traded on an earnings multiple this low since the Global Financial Crisis, depicted in the chart above.

Back then, the company had a debt-to-equity ratio of approximately 29%. Today, the balance sheet is stronger with that same ratio now around 20%.

As such, I personally believe there could be a strong upside to the Harvey Norman share price from here.

The post This iconic ASX 200 retail share is down 28% over the past year. Is it time to buy? appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in April 2023
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today
• Why is the Harvey Norman share price diving on Friday?
• 5 things to watch on the ASX 200 on Friday
• 4 ASX 300 directors buying up their company shares in the past week

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

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The Woodside Energy Group Ltd (ASX: WDS) share price is slightly in the red today. Woodside shares are sliding 0.5% at last look and are currently fetching $34.05.

For perspective, the S&P/ASX 200 (ASX: XJO) is down 0.27% today. The S&P/ASX 200 Energy Index (ASX: XEJ) is also sliding 0.41%.

But could Woodside be in for some tough times ahead? Let’s take a look at the outlook for the Woodside share price.

What’s ahead?

Woodside is a major oil and gas producer on the ASX 200. The brent crude oil price is currently down 0.67% to US$84.42 a barrel, while the natural gas price is falling 1.39% to US$2.13 per MMBtu, according to Bloomberg.

Citi has downgraded the Woodside share price to a sell, The Australian reported this week. Santos Ltd (ASX: STO), also an oil and gas producer, has been cut to neutral.

Analysts are concerned a riskier environment for capital allocation could impact production and growth projects.

Citi head of energy James Byrne, quoted by the publication, said:

More onerous petroleum resource rent tax; a more aggressive safeguard mechanism, Australian Domestic Gas Security Mechanism; price caps and regulated pricing; collapsing contractors; labour shortages; and a meticulous offshore regulator; in isolation, these changes could be absorbed by industry, but in aggregate are likely to result in various consequences.

The ongoing allocation of capital in Australian energy markets is crucial for the sanctity of energy markets on both East and West coasts.

He said companies such as Woodside could choose to “take capital abroad” to locations like the Gulf of Mexico.

Citi has placed a $30 price target on the Woodside share price. This implies a nearly 12% downside based on the current share price.

Woodside reported a 223% boost in underlying net profit after tax in calendar year 2022 to US$5.23 billion.

Eligible Woodside shareholders received a record final dividend of US$1.44 per share yesterday.

Woodside share price snapshot

The Woodside share price has climbed 1% in the last year. In the past month, Woodside shares have declined nearly 10%.

Woodside has a market capitalisation of about $64.7 billion based on the current share price.

The post Here’s Citi’s forecast for the Woodside share price appeared first on The Motley Fool Australia.

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More reading

• The whopper Woodside dividend is being paid today. Here’s the lowdown
• How I would build a Warren Buffett-style portfolio with ASX 200 shares
• 5 things to watch on the ASX 200 on Wednesday
• How much would I need to invest in Woodside shares for a $500 monthly income?
• Why EOS, Lake Resources, Tyro, and Woodside shares are racing higher today

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

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ASX 200 bank stocks have always been known for their passive income potential. Chances are most retirees’ dividend income portfolios you will see out there will have at least one of the ASX big four bank shares in it, and often more.

This reputation that bank shares have comes from decades of these companies paying healthy, fully-franked dividends to investors. But just because a share has done something in the past doesn’t mean we can assume it will automatically keep doing it into the future.

So today, let’s take a look at the ASX banks and see how their dividend chops stack up.

What kind of passive income can investors expect from ASX 200 bank stocks today?

First up we have the ‘big daddy’ of the ASX 200 bank shares, Commonwealth Bank of Australia (ASX: CBA). Like all ASX bank stocks, CBA pays out two dividends a year. Its last two payments were the final dividend of $2.10 per share, fully franked, that investors saw last September. Then there was the interim dividend, also worth a fully franked $2.10 a share, that was paid out just last month.

Both of these dividends represented big increases over the corresponding payments investors bagged across 2021 and 2022. As well as those received over 2020 and 2021. They give CBA shares a dividend yield of 4.24% at current pricing.

Next, let’s look at National Australia Bank Ltd (ASX: NAB). NAB hasn’t paid out a 2023 dividend yet. But its interim dividend of 73 cents per share for 2022, as well as the final dividend of 78 cents, were also both big increases over 2021’s corresponding dividends. Both payments were fully franked too.

This gives the NAB share price a dividend yield of 5.41% right now.

What about Westpac and ANZ?

Westpac Banking Corp (ASX: WBC) is next up. This ASX 200 bank stock also dialled up its dividends across 2022, but not by quite as much compared to the other two banks we’ve looked at. 2021 saw Westpac dole out an interim dividend of 58 cents per share, fully franked, and a final dividend of 60 cents.

2022 saw these rise slightly, with the bank funding a 61 cents per share interim dividend, and 64 cents for the final dividend (both fully franked). This leaves Westpac with a dividend yield of 5.74% right now.

And finally, let’s turn to ANZ Group Holdings Ltd (ASX: ANZ). ANZ’s dividend trajectory resembles that of Westpac. This ASX bank forked out a fully-franked interim dividend of 70 cents per share in 2021, followed by a final dividend of 72 cents. 2022 saw these payments bumped up by 2 cents each, leaving them at a fully-franked 72 cents and 74 cents per share respectively.

This leaves ANZ shares with a dividend yield of 6.26% today.

So now the big question: is it a good time to buy ASX 200 bank stocks for passive income right now?

Time to buy the banks?

Well, it depends on an investor’s goals, in my opinion. For investors who want to maximise returns without so much focus on dividend income, the outlook is cloudy.

But if your sole purpose for investing in ASX shares is to maximise passive income, dividends and franking credits, then I think any of the big four banks fits that bill nicely.

As we’ve demonstrated, you can get a fully-franked dividend yield of between 4% and 7% from the big four right now. And that will certainly come in handy for any income investor today.

Barring any catastrophic developments in the global financial system, I would expect these dividends to keep rising over the coming years as well. That’s a view shared by many ASX brokers too.

So ASX 200 bank shares remain dividend powerhouses of the ASX. Thus, I see little reason why these veterans of our share market won’t continue to grace the portfolios of retirees, pension funds and other income investors’ portfolios going forward.

The post Could right now be a great time to buy ASX 200 bank stocks for passive income? appeared first on The Motley Fool Australia.

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More reading

• How I’d invest $20,000 to earn reliable passive income today
• Investing in ASX 200 dividend shares? Here’s how I’d aim for $200 per month in passive income
• Is right now a once-in-a-decade opportunity to buy CBA shares?
• Morgans names the best ASX 200 dividend shares to buy in April
• How I would build a Warren Buffett-style portfolio with ASX 200 shares

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end its winning streak. At the time of writing, the benchmark index is down 0.2% to 7,222.4 points.

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

Brickworks Limited (ASX: BKW)

The Brickworks share price is down almost 2% to $22.60. This has been driven by the building products company’s shares trading ex-dividend this morning for its latest dividend. Eligible shareholders can now look forward to receiving this 23 cents per share interim dividend in their bank accounts on 2 May.

Energy Resources Of Australia Ltd (ASX: ERA)

The Energy Resources share price is down a massive 69% to 5.8 cents. This uranium developer’s shares have come under significant pressure this week after it announced a $369 million 5 for 1 entitlement offer. Energy Resources is raising the funds at a whopping 90.2% discount of 2 cents per share. The proceeds will be used partly to support its Ranger Project Area rehabilitation expenditure over the next 12 months.

Magellan Financial Group Ltd (ASX: MFG)

The Magellan share price is down a further 3.5% to $7.98. Investors have been hitting the sell button this week after the fund manager released another bleak funds under management (FUM) update. The company’s FUM has now dropped by 38% over the last 12 months.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down 4% to $3.57. Investors have been selling ASX lithium shares on Thursday after their US peers tumbled overnight. A bearish broker note out of Bank of America appears to have sparked the selling in Wall Street. It warned that lithium prices could fall materially in the coming months based on futures contracts. It suspects this could lead to negative earnings revisions for Albemarle. Investors appear to believe this may also be the case for Pilbara Minerals and co.

The post Why Brickworks, Energy Resources, Magellan, and Pilbara Minerals shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium stocks sink again following Albemarle downgrade
• Buy Pilbara Minerals and this ASX dividend share: analysts
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why Deep Yellow, Frontier Digital, Magellan, and Novonix shares are dropping 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 positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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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March was a month to forget for the Lake Resources (ASX: LKE) share price.

Shares in the S&P/ASX 200 Index (ASX: XJO) lithium company were trading for 63 cents apiece at the closing bell on 28 February. By the time the bell sounded on 31 March, shares were trading for 45 cents each.

That represents a painful 28.6% slide for the Lake Resources share price in March.

Here’s what happened.

Short sellers and a sliding lithium price

It wasn’t just the Lake Resources share price that sold off sharply in March.

A quick look at my screens confirms the vast majority of ASX lithium shares finished well in the red. Though most didn’t fall quite as steeply as Lake Resources.

The one notable exception here is Liontown Resources Ltd (ASX: LTR), which finished March up a stellar 89.7%. That came in the wake of a takeover proposal from United States-based lithium giant Albemarle Corporation (NYSE: ALB).

Without a takeover offer of its own, the Lake Resources share price succumbed to pressure on several fronts.

First, lithium prices continued to slide in March, ending the month down more than 50% from the all-time highs recorded in November.

The lithium price has retraced as near-term supplies have caught up with near-term demand. An end to China’s subsidies for battery manufacturers and new EV purchases has also dented investor appetite for lithium stocks.

Lake Resources faced some additional headwinds in March over reports from short-sellers. Those cast doubts on the company’s funding and its Direct Lithium Extraction (DLE) technology, meant to produce high-purity lithium with far less waste.

The company had 6.9% of its shares held short in the first full week of trading in March.

The month didn’t end well for the miner either.

The Lake Resources share price tumbled 13.5% on 27 March. This followed reports that non-executive chairman, Stu Crow, had sold just over 7.9 million shares in the company, for a total consideration of just under $3.9 million.

Despite management’s assurance that Crow remains one of Lake Resources’ largest private shareholders with no intention to sell any more stock, investors were quick to hit the sell button on the news.

Lake Resources share price snapshot

As you can see in the chart below, it’s been a rough year for Lake Resources, with shares down 78.6% over 12 months.

The post The Lake Resources share price plunged 29% in March. Here’s what happened with the ASX 200 lithium share appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium stocks sink again following Albemarle downgrade
• Why EOS, Lake Resources, Tyro, and Woodside shares are racing higher today
• Why is the Lake Resources share price rocketing 19% on Monday?
• Down 27% in a month, is the Lake Resources share price finally cheap enough to buy?
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today

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

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The lithium industry is having another difficult day on Thursday.

In late morning trade, the majority of ASX 200 lithium stocks are dropping notably lower.

Here’s a summary of how some of the bigger names are performing:

• The Allkem Ltd (ASX: AKE) share price is down 3.5%
• The Lake Resources N.L. (ASX: LKE) share price has dropped over 5%
• The Liontown Resources Ltd (ASX: LTR) share price has fallen 3%
• The Mineral Resources Ltd (ASX: MIN) share price is down 2.5%
• The Pilbara Minerals Ltd (ASX: PLS) share price has tumbled 4%

Why are ASX 200 lithium shares dropping again?

Investors have been selling ASX 200 lithium stocks on Thursday after their US peers tumbled overnight.

The worst performer of the major lithium players was Liontown’s suitor, Albemarle Corp (NYSE: ALB), which sank over 6% on Wall Street.

This was driven by a bearish broker note out of Bank of America Securities, which appears to have spooked investors.

According to the note, Bank of America Securities’ analysts have downgraded the lithium stock to an underperform rating and slashed their price target on its shares by approximately 25% to US$195. This is largely in line with where the Albemarle share price trades now.

The broker made the move in response to falling lithium prices. Its analysts highlight that Chinese lithium carbonate prices ended last week at US$33,400 a tonne. But that’s unlikely to be where prices stop, with Bank of America noting that futures contracts are pointing to prices falling to US$23,000 a tonne by August.

In light of this, the broker believes “that negative earnings revisions are forthcoming.” And judging by the performance of ASX 200 lithium stocks today, the market appears to believe the same could apply to them.

The post ASX 200 lithium stocks sink again following Albemarle downgrade appeared first on The Motley Fool Australia.

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More reading

• Buy Pilbara Minerals and this ASX dividend share: analysts
• Which is the best ASX 200 iron ore stock now: BHP, Fortescue, or Mineral Resources?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Top ASX growth shares to buy in April 2023
• Why are ASX 200 lithium shares having such a miserable week?

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Elanor Investors Group (ASX: ENN) share price is charging ahead today amid a multi-billion dollar deal.

Elanor Investors shares are up 16.89% and are currently trading at $1.73 apiece. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.26% today.

Let’s take a look at the details of this deal.

What are the details?

Elanor is a funds management business with billions of dollars of real estate assets in Australia and New Zealand.

Today, Elanor advised it plans to acquire 100% of Challenger Ltd‘s (ASX: CGF) $3.4 billion Australian real estate funds management business for an upfront consideration of $41.8 million.

After the transaction, Challenger would become Elanor’s largest shareholder with an 18.2% stake. Elanor is planning to deliver 27.4 million shares to Challenger.

The takeover, if approved, will more than double Elanor’s assets under management from $3 billion to $6.4 billion.

The deal is expected to deliver material earnings growth for Elanor in FY24. Elanor and Challenger have also entered into a strategic partnership.

Commenting on the news, Elanor chief executive Glenn Willis said:

We are pleased to have executed on a key strategic objective of the group to grow AUM through the acquisition of a significant real estate funds management platform. This is a transformational transaction for Elanor.

Combining Elanor’s real estate funds management capability with Challenger’s market leading capital raising platform delivers significant size and scale benefits, and positions us for further strong growth.

The acquisition is due to be complete by 30 June and is subject to both shareholder and regulatory approvals.

Elanor is planning to hold a shareholder meeting in mid-June.

Share price snapshot

The Elanor Investors share price has fallen nearly 20% in the last year.

Elanor has a market capitalisation of nearly $211 million based on the current share price.

The post Elanor Investors share price surges 17% on $3.4 billion Challenger funds deal appeared first on The Motley Fool Australia.

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More reading

• Should I buy ASX 200 property shares following the RBA rate pause?
• How I’d invest $20,000 to earn reliable passive income today
• What’s going on with BHP shares and lithium?
• How I’d invest $5,000 today for long-term passive income
• Here’s why the Western Mines share price is surging another 65% on Thursday

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 Challenger. 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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Property stocks might be back on the table following the Reserve Bank of Australia’s (RBA’s) latest interest rate decision, with a top broker tipping three real estate S&P/ASX 200 Index (ASX: XJO) shares as buys.

Citi analyst Suraj Nebhani points to the RBA’s decision to pause rates at 3.6% in April, as well as data suggesting house prices are rising, saying courtesy of The Australian:

[It] raises questions whether we are nearing a bottom of the residential property market.

That’s surely good news for those invested in the sector. The S&P/ASX 200 Real Estate Index (ASX: XRE) plunged nearly 24% last year amid what became 10 consecutive rate hikes – an effort to tame rampant inflation.

The sector has traded relatively flat so far in 2023, posting a slight 2% uptick over the last fortnight. Is this just the start of a notable recovery? Nebhani thinks so, continuing:

The impending mortgage cliff and lower borrowing capacity create some near-term uncertainty, but rising immigration along with low supply create a positive medium-term backdrop.

Let’s take a look at the three recently-embattled ASX 200 property shares Citi rates as buys right now.

3 buy rated ASX 200 property shares

Mirvac Group (ASX: MGR)

Citi has upgraded its outlook for Mirvac shares to a buy with a $2.40 price target – a potential 11% upside.

The property group saw its statutory profit fall 62% to $215 million in the first half of financial year 2023, mainly due to lower investment property revaluations.

The company’s CEO and managing director Susan Lloyd-Hurwitz said high inflation and interest rates created uncertainty for consumers and put pressure on economic growth during the period.

Stockland Corporation Ltd (ASX: SGP)

Also now buy rated is property development giant Stockland – Citi tips its shares to rise 11.5% to trade at $4.60.

The company’s commercial property leg delivered just $30 million of revaluation gains in the first half – down from $543 million in the previous period. That saw its half-year statutory profit tumble nearly 65% to $301 million.

Ingenia Communities Group (ASX: INA)

Finally, Citi recently initiated coverage of lifestyle communities developer and operator Ingenia Communities – slapping its shares with a buy rating and a $4.40 price target. That represents a potential 12.6% upside.

The softening residential real estate market, along with construction delays, dinted the company’s earnings last half. Its statutory profit fell 16% to $33.7 million in the period.

The post Should I buy ASX 200 property shares following the RBA rate pause? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Top brokers name 3 ASX shares to buy today
• Why now is a golden opportunity to earn passive income from Aussie real estate

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Australian share market is a great place to generate a passive income.

Every six months (sometimes even more frequently), a large number of ASX shares will share their profits with their shareholders in the form of dividends.

In light of this, if I had $20,000 sitting in a bank account, I would consider putting it into high-quality ASX shares that offer a reliable source of passive income.

Where I would invest $20,000 in ASX shares for passive income

I’m going to split this $20,000 up into four $5,000 investments to add some level of diversity to my income portfolio.

The first ASX share I would buy for passive income is Westpac Banking Corp (ASX: WBC). The recent banking crisis has dragged bank shares notably lower, which I believe has created a compelling buying opportunity.

For example, not only does Goldman Sachs have a conviction buy rating and lofty $27.74 price target, it expects a generous fully franked 6.75% dividend yield this year and a 7.15% dividend yield in FY 2024.

What else?

Next up, I think Universal Store Holdings Ltd (ASX: UNI) would be another top option for income investors in the current environment. That’s because this youth fashion retailer’s target demographic is expected to continue spending largely as normal despite the cost of living crisis. This is underpinned by their limited exposure to rising interest rates and an increase in the minimum wage.

Morgans is a fan of Universal Store and has an add rating and a $6.85 price target on its shares. It is also forecasting fully franked dividend yields of 6% in FY 2023 and 7% in FY 2024.

Another ASX share that I would invest $5,000 into for passive income is Rio Tinto Ltd (ASX: RIO). I’m expecting some big dividends from this mining giant in the near term thanks to a combination of strong commodity prices and production growth.

Goldman Sachs also expects this to be the case. It is forecasting fully franked dividend yields of 6.7% in FY 2023 and 7.5% in FY 2024. The broker also sees plenty of upside for the miner’s shares with its buy rating and $140.40 price target.

Finally, I think the Vanguard Australian Shares High Yield ETF (ASX: VHY) would be a great way to round out your passive income portfolio. It invests in a diverse collection of ASX shares that pay larger-than-average dividends.

At present, the ETF offers an estimated forward dividend yield of 5.4% and I would expect something similar the following year.

What passive income would these shares generate?

Based on the above, the four investments would have an average dividend yield of 6.2% in FY 2023 and 6.75% in FY 2024.

This means that a $20,000 investment would yield passive income of approximately $1,250 in the first year and then $1,350 in the second year.

And, don’t forget, there’s potential for capital returns on top of these dividends!

All in all, I feel this would be a great starter portfolio for investors seeking passive income.

The post How I’d invest $20,000 to earn reliable passive income today appeared first on The Motley Fool Australia.

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More reading

• Morgans names the best ASX 200 dividend shares to buy in April
• Buy these ASX 200 dividend shares for passive income: analysts
• Why did the Rio Tinto share price lag the ASX 200 today?
• Investing $10k in Westpac shares could generate substantial passive income
• Could buying Westpac shares at under $22 make me rich?

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 Vanguard Australian Shares High Yield ETF 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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BHP Group Ltd (ASX: BHP) shares are up a fraction of a per cent in morning trade.

The S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $45.24 per share. Those shares are currently trading for $45.28 apiece.

That’s Thursday’s rather muted early price action for you, the last day of trading before we head into the four-day Easter holiday weekend.

Now, what’s going on with BHP shares and lithium?

Is the mining giant rethinking its lithium ambitions?

If you’re investing in BHP shares, you’re likely aware that the ASX 200 miner produces uranium as a by-product at Olympic Dam in South Australia.

You’re also likely aware that the miner hasn’t been exactly keen to join the global lithium race.

Speaking at the 2022 BMO, Global Metals and Mining Conference, BHP CEO Mike Henry was clear about the company’s lithium aspirations.

It is one of these things where we always try to maintain an open mind and keep things under review. But, as we have been quite clear over a number of years now, we do not see the opportunity in lithium to create a business akin to the other businesses that we have, which are large, where we generate very significant margins.

Henry added:

No doubt lithium demand is increasing at quite a pace, but we think that the long-term cost curve for lithium is probably not aligned with the sort of shape of the cost curve and margin opportunity that we would see in things like copper, nickel, potash and even iron ore and high-quality hard coking coal.

To date, BHP shares haven’t been materially impacted by either the fast-rising or, subsequently, fast-falling price of lithium.

But that may not be the case in the future.

As Reuters reports, BHP’s nascent Xplor accelerator program is expanding its ambitions beyond prospective copper and nickel projects to also include uranium and lithium projects, commencing in September.

Addressing a commodities conference in Singapore this week, vice president of BHP Xplor Sonia Scarselli said, “We will be looking not just at copper and nickel, but at uranium and lithium and so on.”

BHP has already chosen seven companies to support for the first half of 2023, all focussed on copper or nickel. Both metals are core to the global energy transition, and BHP expects demand for both to grow strongly over the coming years.

The seven companies, including private Aussie mineral explorer Red Ox Copper and junior listed explorer Impact Minerals Ltd (ASX: IPT), receive up to half a million dollars in funding along with business and technical support.

Scarselli said the mining industry has been hamstrung by 10 years of underinvestment in exploration. BHP’s Xplor accelerator program is one way the mining giant is working to counter that trend and uncover metals crucial to the global electrification push.

And now, it appears, that lithium may be back on BHP’s radar.

How have BHP shares been tracking?

As you can see in the chart below, BHP shares are trading right around where they kicked off 2023.

Longer-term, shares in the ASX 200 miner have gained 58% over five years.

The post <strong>What’s going on with BHP shares and lithium?</strong> appeared first on The Motley Fool Australia.

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More reading

• Which is the best ASX 200 iron ore stock now: BHP, Fortescue, or Mineral Resources?
• Investing in ASX 200 dividend shares? Here’s how I’d aim for $200 per month in passive income
• ASX 200 rebounds after RBA hits pause on its rate hikes
• Passive income: How much to invest to get $800 per month
• A director has been buying up BHP shares. Should you?

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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