Category: Stock Market

Well, I’m back from Tamworth.

(What? You didn’t know I was there? You really should read more of my articles!)

For those not in the know, I headed up for 4 days with my young bloke for the Tamworth Country Music Festival.

And if you get the chance, please go and see Troy Cassar-Daley, The Bushwackers, John Williamson, and Colin Buchanan in concert. They were all fantastic, and highly recommended.

You know, there’s something about these sorts of events. The vibe was warm and friendly. Everyone is there to have a good time. There were plenty of coppers about, but I didn’t see a single issue.

It was just a great time.

Now, I could bang on (justifiably) about the beauty of our country, and (again) recommend you check it out as soon as you can, if and when you can.

And I do want to say thanks to those people who came up to say g’day, including Greg from Toyota, and Graham (aka Mr. Elvis).

But this isn’t about me.

It’s about some investing thoughts I had while I was away. They’re loosely related, but each stands alone.

First, I was reminded of the power of community and of ‘fans’. Not just for music, and not just country music. But for artists and businesses in general. If a business can create not just ‘users’ or ‘consumers’, but ‘fans’, they’re off to a very good start. And not just a good start, but a very good chance of continued business.

Greg said he loved working at Toyota, because the product was just so good, and that people in the country loved their Toyotas. (I agreed – we have a Prado and a Hilux!)

Most of the fans at the concerts I went to weren’t at their first Troy/John/Bushwackers/Colin concert. They knew the music, they’d seen the artists before, and they were back again.

See, fans aren’t just fans. They’re usually repeat customers.

Tesla knows all about fandom. So does Apple. And RM Williams. And Toyota.

That’s the beauty of fans. Customers buy once. Maybe twice. But with fans, you’ve usually got repeat customers. Potentially for years.

Next, the value of what some people call ‘discretionary effort’.

While I was at the Wallabadah coffee shop (‘Best Coffee outside of Italy’ apparently!), a group was discussing some plans they had for their community. I didn’t want to eavesdrop, so I didn’t hang around, but I could hear them discussing a plan for some sort of event or promotion.

Sure, this group might have been businesspeople who’d benefit from more exposure, or more people in town, but they were also trying to help the rest of the town. That’s ‘discretionary effort’.

In a business, it’s the extra effort that employees put in over and above the bare minimum required.

No, I’m not talking about exploitation – I’m talking about the extra effort that people make, usually when they believe in the mission or purpose of a company.

When they want their business to be successful, because they see the benefit for all parties.

I’ve worked in businesses with and without it, and while it’s not a guarantee, it’s a good indicator of potential business success.

The last thing that struck me while I was away was when my young bloke and I were discussing hotel room prices.

We had to shift hotels because he wanted to stay an extra day, and the one we were in was booked out.

Now, he’s 10, so I saved some of the detailed pricing lessons for another time, but he was interested in how and why different hotels charged different prices.

He gets the general relationship between price and quality, so he gathered that the ‘nicer’ hotels – in his world, they’re the ones with swimming pools! – charged more than the others.

And I explained that sometimes, like during the Country Music Festival, all of the hotels were full, but they weren’t full all year round.

And that was enough, for him, for now at least.

But it reminded me of the importance of really understanding a business’ economic model, especially when investing.

What costs are truly fixed? Which are fixed in the short-term, but can be flexed? And which costs are variable?

Having an understanding of those relationships can be really helpful, particularly when you’re thinking about cyclical businesses or those with fickle customer bases.

Which businesses will suffer during recessions? Which will be resilient?

When does a sales downturn become uncomfortable, and when does it threaten a company’s very viability?

And, for investors, how do you think about the right price to pay for those companies?

Now, there’s much more to investing than these three observations.

But, if you can put them together, and answer those questions with a degree of evidence-based confidence, I reckon you’re probably a decent way down the road.

A company with fans. Whose employees believe in the mission. And for which you understand the economic drivers and the impact on the bottom line.

If I was looking for a way to create a shortlist of potential investments, I reckon that’s a pretty good filter.

And seriously, get out into the regions. You’ll be glad you did.
Fool on!

The post What country music taught me about investing appeared first on The Motley Fool Australia.

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More reading

• Flight Centre share price frozen amid $211m ‘luxury’ acquisition
• Forget lithium! I’m using the Warren Buffett method to help find winning ASX shares in 2023
• How I’d invest $20,000 in ASX shares in 2023
• Up 18% in a year, is it time to cash in the chips on BHP shares?
• Broker warns that the Fortescue share price could crash 39% from current levels

Motley Fool contributor Scott Phillips has positions in Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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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I’ve got nothing against lithium. It looks likely that this future-facing metal is going to play a big part in the world’s transition to providing cleaner energy. But I’m willing to bet the legendary investor Warren Buffett isn’t interested in investing in lithium.

Buffett is famously generous with giving out investing wisdom. As such, we know what he typically looks for in an investment. Buffett’s methodologies have helped him return upwards of 20% per annum in the investment portfolio of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) over his 60-year investing career.

Buffett’s typical investing checklist includes finding companies with intrinsic competitive advantages (or ‘moats’), a management team with integrity, an easy-to-understand business model, and (of course), buying it at the right price:

The reason why Buffett hasn’t ever bought a lithium stock? Most fail that first hurdle before they even get off the ground.

Buffett wouldn’t buy lithium

A lithium miner is still a miner, even if the company possesses a key ingredient for a cleaner future. This means that a lithium producer has to sell its products at a common market price. Most of Buffett’s long-term holdings aren’t restricted by this kind of barrier.

Take Berkshire’s largest position: Apple Inc (NASDAQ: AAPL). Apple has some of the best margins in the world because of its globally dominant brand. The company can basically charge whatever it likes for its products, safe in the knowledge that its customers will be happy to pay top dollar for the privilege of owning something with the famous Apple logo on it.

A lithium producer has no such luxury. It has almost no influence over what it can charge the buyers of its products. This doesn’t matter so much when lithium prices are rising. But when the inevitable commodity cycle plays out and lithium prices go through a tough time, all producers will suffer, regardless of ‘brand power’.

So I’m following the Buffett playbook in 2023 and limiting my search to companies that I can understand, have intrinsic competitive advantages, top management teams and compelling prices.

I’ll be taking closer looks at the likes of TechologyOne Ltd (ASX: TNS), Transurban Group (ASX: TCL), Breville Group Ltd (ASX: BRG) and Premier Investments Limited (ASX: PMV).

But I’ll be taking a pass on Core Lithium Ltd (ASX: CXO), Pilbara Minerals Ltd (ASX: PLS) and Liontown Resources Ltd (ASX: LTR). It’s not that these companies are poor businesses. They just don’t fit into the Buffett investing framework I like to try and stick to.

The post Forget lithium! I’m using the Warren Buffett method to help find winning ASX shares in 2023 appeared first on The Motley Fool Australia.

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• 3 ASX lithium shares to buy right now: experts
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Motley Fool contributor Sebastian Bowen has positions in Apple and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, and Premier Investments. 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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After all the excitement for the ASX share market in 2022, I think there are some very compelling ASX growth shares that are at prices that could mean excellent returns in 2023.

It’s understandable why asset prices have suffered since interest rates started rising. Warren Buffett, one of the world’s greatest investors, once said:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature … its intrinsic valuation is 100% sensitive to interest rates.

With that in mind, I’m seeing very good opportunities for potential long-term returns. If I had $20,000 ready to go to invest, these are some of the ASX growth shares I’d want to choose:

Xero Limited (ASX: XRO)

Xero is one of the world leaders when it comes to accounting software, which is cloud-based. The business has millions of subscribers around the world, in places such as New Zealand, Australia, the UK, the USA, Canada, South Africa, and Singapore.

The business continues to grow subscriber numbers, which is a useful boost for revenue. It’s also seeing an increase in average revenue per user (ARPU), partly thanks to price increases.

The Xero share price is down around 30% over the past year, making it look much better value.

With the business now talking about increasing its profit margins, I think it could capture investor attention again when the profit starts flowing through the business and if ARPU keeps rising at a good pace.

I think the company’s global growth runway is still long, which is why I’d invest $8,000 into this ASX share.

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is one of the most interesting and compelling S&P/ASX 200 Index (ASX: XJO) shares. Amid the market volatility since November 2021, the Pinnacle share price is down more than 40% from its former height.

It’s logical there would be difficulties during a time of market decline because of the fact that it’s a funds under management (FUM) business. While it doesn’t run funds itself, it helps launch funds management businesses and then receives a cut of their earnings because it owns a stake. Pinnacle can offer services like legal, finance, fund administration, seed FUM and so on to allow the fund manager to focus on investing.

A number of the fund managers that Pinnacle is invested in regularly deliver outperformance, so fund inflows could resume once the interest rates stop going up and the share market seems less intimidating.

Pinnacle has been hit hard, but I think it’s a contender for one of the strongest rebounds over the next 12 months.

It’s exciting that the portfolio of managers continues to grow too. Pinnacle has recently expanded into Canada with a small-cap-focused manager.

I’d put $7,000 into this ASX share.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster is a fast-growing furniture and homewares online retail share. It has grown significantly since the start of COVID-19 and, despite lockdowns being over, is expecting to return to reporting good year-over-year sales growth by the end of FY23.

Over the past year, the Temple & Webster share price has fallen by 33%.

Households weren’t likely to keep spending on the home as strongly forever. But, I think the heavy fall now represents good value with the business heavily focused on the long term. It has a goal of being the largest homewares retailer, online or offline.

It’s investing heavily in growth areas such as marketing and technology. The business is able to offer customers an augmented reality (AR) service so that they can see the product in their space.

As the company grows in size, it can benefit from scale advantages, which could make it a much more profitable business in future years.

I would invest the final $5,000 into this exciting business.

The post How I’d invest $20,000 in ASX shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• Why Block, Core Lithium, Lynas, and Xero shares are charging higher today
• Why Xero shares are Goldman’s top ASX 200 tech pick
• These ASX 200 tech shares are leading the market today
• Bargains or traps? Fundie reveals if these 3 ASX shares are worth buying cheap
• Top ASX growth shares to buy in 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 positions in and has recommended Pinnacle Investment Management Group, Temple & Webster Group, and Xero. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group and Xero. The Motley Fool Australia has recommended Temple & Webster 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 BHP Group Ltd (ASX: BHP) share price has lifted higher in the past year, but is it the time to sell?

BHP shares have risen 18% in the last year and are now fetching $49.23 as of Monday’s close. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) has returned 14% in the last year.

Let’s take a look at the outlook for the BHP share price.

What’s ahead?

BHP is a major iron ore producer on the ASX 200 that also explores copper, nickel, potash, and metallurgical coal.

Shaw and Partners senior investment advisor Jed Richards is recommending investors sell BHP shares.

Commenting on BHP in The Bull, Richards highlighted the impact of commodity prices on investor sentiment in the next year. He said:

The company’s most recent result delivered a strong cash dividend above expectations. Investors will be closely monitoring iron ore, copper and coal prices during the next 12 months.

The macro backdrop is still fragile given global growth is slowing. Iron ore prices are now softer than in previous years. Costs continue to increase and port facilities are operating at maximum capacity.

On the flip side, Macqaurie analysts placed an “outperform” rating on BHP shares with a $50 price target on the company’s shares in January. The broker is predicting the company to deliver a fully franked dividend of $2.88 per share.

BHP delivered a 3.3% lift in iron ore production to 66.9 Mt in the December quarter. The company produced 424.3 kt of copper, also a 3% boost on the previous quarter.

Meanwhile, BHP is planning to acquire copper miner Oz Minerals Limited (ASX: OZL) in 2023. Oz Minerals shareholders will vote on this proposal in late March or early April. This could also weigh on the company’s share price in the future.

BHP share price snapshot

BHP shares have climbed about 8% in the year to date. However, in the past week, BHP shares have slid more than 1%.

BHP has a market capitalisation of about $249 billion based on the current share price.

The post Up 18% in a year, is it time to cash in the chips on BHP shares? appeared first on The Motley Fool Australia.

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More reading

• Core Lithium shares led the charge on this trading platform in 2022. Can you guess the other top stocks?
• Sick of the grind? Here’s how I’d aim to replace my wage with dividend income in 2023
• Why is the BHP share price slipping on Monday?
• Invested $5,000 in BHP shares 5 years ago? Here’s how much passive income you’ve earned
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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 Macquarie 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 Fortescue Metals Group Limited (ASX: FMG) share price has been in sensational form over the last six months.

As you can see on the chart below, the iron ore miner’s shares have risen a sizeable 22% since the start of August.

Can the run continue or is the Fortescue share price heading lower?

While the Fortescue share price has been defying gravity for some time, a growing number of analysts are warning that it could fall heavily in the near future.

One of those is Goldman Sachs, which this morning has reiterated its sell rating with a $13.60 price target. Based on where its shares are trading now, this implies potential downside of 39% over the next 12 months.

Goldman’s bearish view is driven by its valuation, decarbonisation, and dividend concerns. In respect to the former, the broker highlights that Fortescue’s shares trade at a significant premium to rivals BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO). It said:

Relative valuation: the stock is trading at a premium to RIO & BHP on our estimates; 1.7x NAV vs. BHP at c. 1.15x NAV and RIO at 0.95x NAV, c. 7.5x NTM EV/EBITDA (vs. BHP/RIO on c. 6x/5x), and c. 3% FCF vs. BHP/RIO on c. 5%/7%.

Goldman has also warned investors that there’s no guarantee that Fortescue will be able to continue paying big dividends in the near future because of its decarbonisation spend. It explained:

Our recent FMG site trip to the Pilbara highlighted ongoing elevated spend to maintain hematite group shipments at ~190Mtpa going forward. Combined with the ~US$7bn decarb program, we forecast FMG’s capex to increase from ~US$3.2bn in FY23 to ~US$4.6bn by FY26. We continue to think FMG is at an inflection point on capital allocation, and to fund the ambitious strategy, we assume the company raises ~US$5bn of new debt, reduces the dividend payout ratio from the current ~75% in FY22 to ~50% from FY24 onwards, and increases gross gearing to 30-35% by FY26 (in-line with the company’s target of 30-40%).

This sentiment is echoed by analysts at Morgans. Its analysts have retained their reduce rating with a $15.60 price target. It warned:

Significant capex is still to come from FMG’s decarbonisation spend and various projects targeting FID in CY23. FMG expects to fund this spending through its iron ore cash flow, which sees its FCF yield reducing significantly over the next few years, and increasing its sensitivity to any unexpected market volatility.

Morgans thinks it will get so bad that Fortescue’s shares will provide a yield of just 1.4% in FY 2025.

All in all, the broker community appears to believe the good times are coming to an end for this mining giant.

The post Broker warns that the Fortescue share price could crash 39% from current levels appeared first on The Motley Fool Australia.

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More reading

• Has the Fortescue share price topped out?
• Fortescue share price hits 52-week high on record half
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• How much profit could Fortescue shares make in 2023?
• ASX passive income: My game plan to reach $30,000 per year

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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Most retirees have spent a lifetime working and building up a nest egg. But life happens, and some people will find that they haven’t built up enough income for a comfortable retirement.

I think that ASX dividend shares could be the answer.

The dream of living out the golden years with ample money is one that plenty of people aspire to.

A recent article on CNBC suggested that to “maintain your standard of living in retirement, the rule of thumb is you need to be able to replace at least 70% of the income you had while you were working.”

However, of a survey of 1,566 participants in the United States by Goldman Sachs Asset Management, just 25% of retirees generated that 70% level of former income. The research showed that 51% of retirees made less than 50% of their pre-retirement income.

What can Aussies do about this?

While Australia isn’t the same as the US, there are a few things to consider for how much is needed to retire in Australia.

For example, the age that people can access a pension and their superannuation can play a part. For those born on or after 1 January 1957, the retirement age (being the age pension entitlement age) will move to 67 years as of 1 July 2023.

The Motley Fool’s article on retirement planning outlines an example of how long a nest egg may need to last:

So, theoretically, an Australian woman who retires at 67 and lives until the average age of 85 will need her retirement savings, investments, and superannuation to fund her living expenses for 18 years.

Households will need to determine how much they want/need to spend in retirement as well.

For a comfortable retirement, the Association of Superannuation Funds of Australia’s Retirement Standard suggests a couple that owns their home will need an income of $67,000, while a single person will need an annual income of more than $47,000, according to Motley Fool research.

I think that ASX dividend shares can play a very helpful role in boosting retirement income and supplementing other forms of income, such as a pension or a part-time job.

Strong yields from ASX dividend shares

The US market isn’t particularly known for paying good dividends. As an example, the Vanguard US Total Market Shares Index ETF (ASX: VTS) has a dividend yield of 1.7%, according to Vanguard.

Meanwhile, franking credits give Aussie investors the ability to significantly boost their after-tax dividend income.

Some businesses are building a record of consecutive years of dividend growth, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Sonic Healthcare Ltd (ASX: SHL), APA Group (ASX: APA) and Brickworks Limited (ASX: BKW).

Some of these businesses are seeing rising share prices.

There are also some names that have higher dividend yields and, in most years, tend to increase their payouts. These include Wesfarmers Ltd (ASX: WES), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF)

While ASX dividend shares aren’t a magic cure, they can allow retirees to generate more investment income from their nest egg than many other types of assets.

The post Why ASX dividend share income could be so important for 75% of retirees appeared first on The Motley Fool Australia.

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More reading

• Broker warns that the Fortescue share price could crash 39% from current levels
• Buy these ASX dividend shares for income: broker
• Core Lithium shares led the charge on this trading platform in 2022. Can you guess the other top stocks?
• 3 ASX lithium shares to buy right now: experts
• Forget bonds, I’d much rather buy this ASX 200 stock for its 4% dividend yield

Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, 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, Goldman Sachs Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group, Brickworks, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, 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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If you’re looking to boost your income with some dividend shares, then you may want to consider the two listed below.

Both dividend shares are rated as buys by Morgans and expected to provide investors with attractive yields in the near term. Here’s what you need to know about them:

Coles Group Ltd (ASX: COL)

The first ASX dividend share that has been tipped as a buy is Coles.

It is one of Australia’s most recognisable brands and the operator over 800 supermarkets and over 900 liquor retail stores.

Morgans is positive on the company’s outlook and has an add rating and $19.50 price target on its shares. It said:

We continue to see COL as offering good value with the company’s solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.

As for dividends, the broker is expecting fully franked dividends per share of 64 cents in FY 2023 and 66 cents in FY 2024. Based on the current Coles share price of $17.35, this implies yields of 3.6% and 3.8%, respectively.

Dexus Industria REIT (ASX: DXI)

Another ASX dividend share to consider buying is Dexus Industria.

It is a listed Australian real estate investment trust which owns, manages and develops high-quality industrial properties and business parks. This includes the Jandakot Airport industrial precinct.

Morgans is a fan of Dexus Industria and has an add rating and $3.25 price target on the industrial property company’s shares. It likes the company due to its exposure to key industrial markets. It explained:

DXI’s key industrial markets remain robust with the outlook for solid rental growth backed by strong tenant demand. The development pipeline also provides near and medium term upside potential. A key focus will be the leasing up of the business park assets and a potential divestment could be a positive catalyst. While the portfolio remains well positioned, we acknowledge there will be near-term uncertainty around interest rates.

In respect to dividends, Morgans is forecasting dividends per share of 16.4 cents in FY 2023 and 16.9 cents in FY 2024. Based on the current Dexus Industria share price of $3.08, this will mean yields of 5.3% and 5.5%, respectively.

The post Buy these ASX dividend shares for income: broker appeared first on The Motley Fool Australia.

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More reading

• ASX 200 consumer staples shares raced higher to finish the day on top
• Why I think Woolworths shares aren’t worth the worry
• I think Coles shares are a top ASX 200 buy for 2023
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles 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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Core Lithium Ltd (ASX: CXO) shares were the most traded of any in 2022 on the investment platform Stake.

65% of those transactions saw investors buying Core Lithium shares, while 35% sold.

As we know now, investors who bought the S&P/ASX 200 Index (ASX: XJO) lithium stock at the beginning of the year won’t be complaining. Although they have endured plenty of volatility along the way, the Core Lithium share price closed the year up 73%.

The top-traded findings come from Stake’s Stockest 100, showing last year’s most traded ASX shares and exchange traded funds (ETFs). The data is based on more than one million ASX trades completed on the platform in 2022.

So, we know Core Lithium shares led the charge. Can you guess the other top-traded stocks?

Following close on the heels of Core Lithium shares…

We won’t leave you hanging.

The second most traded stock last year, following Core Lithium shares, was the Vanguard Australian Shares Index ETF (ASX: VAS).

The popular ETF tracks the performance of the largest 300 ASX companies by market cap. So it’s not surprising that VAS closed the calendar year down 8.5% as companies struggled with rising costs and investors mulled over the impact of higher interest rates.

Still, 91% of investors on Stake bought VAS in 2022, while only 9% sold the ETF.

Coming in at number three was lithium producer Pilbara Minerals Ltd (ASX: PLS), which owns the Pilgangoora Lithium Project in Western Australia.

53% of those trades saw investors buying Pilbara shares, while 47% sold. That came as the Pilbara share price struggled amid falling lithium prices in the latter half of the year. Despite the retrace, Pilbara shares gained 17% in 2022.

Which brings us to Lake Resources NL (ASX: LKE), the fourth most popular traded share.

The ASX lithium exploration and development company faced some headwinds in 2022, with the abrupt mid-year departure of its CEO. Questions were also raised about the viability of its direct lithium extraction (DLE) technology.

All up, Lake Resources closed 2022 down 21%. 61% of investors on Stake sold shares over the year while 39% bought them.

Rounding off the list at number five is mining giant BHP Group Ltd (ASX: BHP), with 75% buying BHP shares and 25% selling them in 2022.

On the back of strong iron ore and copper prices for much of the year, BHP delivered some outsized dividend payments while the share price gained 10% over the 12 months.

ASX investors held their nerve and predominantly kept buying

Commenting on the results, Stake markets analyst Megan Stals noted that despite the tough trading conditions of 2022 amid rocketing interest rates, “investors didn’t panic and continued to add to their positions, with 68% of trading activity consisting of buy orders”.

On Core Lithium shares leading the pack, Stals said:

Lithium was by far the most popular segment overall in 2022, as the metal saw record high prices. Core Lithium was the most popular company on Stake, seeing 78% returns for the year. That said, it wasn’t an easy ride for shareholders, with the stock experiencing large peaks and troughs throughout the year. 

As for the number two traded stock, the Vanguard Australian Shares ETF, Stals noted, “It was the most popular by far, showing how Australians are optimistic about the long-term prospects of the local economy.”

With 10 investors buying VAS for every one selling despite the index-tracking ETF slipping during the year, Stals said this demonstrated “investors are committed to long-term returns”.

The post Core Lithium shares led the charge on this trading platform in 2022. Can you guess the other top stocks? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX lithium shares to buy right now: experts
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Sick of the grind? Here’s how I’d aim to replace my wage with dividend income in 2023
• Here are the 3 most heavily traded ASX 200 shares on Monday

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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There is much speculation about whether lithium stocks have had their run, considering the steep price rises seen the past year or two for the mineral.

But many experts still reckon the insatiable demand for the battery ingredient will outstrip supply for the foreseeable future.

Two such professionals this week named three ASX lithium shares to buy at the moment:

‘Strong growth potential’ with a possible surprise coming

Seneca investment advisor Arthur Garipoli is pleased with where Pilbara Minerals Ltd (ASX: PLS) is heading.

“In the December quarter, Pilbara delivered a 10% increase in spodumene concentrate production compared to the September quarter,” Garipoli told The Bull.

“Unit operating costs were down 5% and shipments were up 8%. The company’s cash balance rose by 62% to $2.226 billion.”

The Pilbara share price is up 55.8% over the past year.

Those who buy the stock now may also benefit from a pleasant surprise down the track.

“In our view, the company offers strong growth potential. It may announce a maiden interim dividend.”

Garipoli is not the only one excited about Pilbara.

According to CMC Markets, eight out of 16 analysts that currently cover the stock rate it as a strong buy. Five are recommending a hold, while three reckon Pilbara’s a sell.

‘Business growth profile is appealing’

Mineral Resources Ltd (ASX: MIN) doesn’t just produce lithium but is also involved in providing services for iron ore hubs.

“Mineral Resources is underpinned by its resilient mining services business, holding long-term contracts with some of Australia’s biggest tier-1 miners,” said Shaw and Partners senior investment advisor Jed Richards.

And, he adds, the stock is an absolute bargain at the moment.

“The company’s target to double volumes over the next three-to-five years isn’t fully captured in analyst forecasts, nor is the company’s current market valuation.

“In our view, the business growth profile is appealing.”

Richards’ buy conviction is almost universally agreed by upon his peers. CMC Markets currently shows 12 out of 16 analysts rating Mineral Resources as a strong buy.

The Mineral Resources share price has gained a tidy 65.8% over the last 12 months.

18 months until this stock potentially rockets

Leo Lithium Ltd (ASX: LLL) differs from the other two buy recommendations in that it has yet to produce lithium.

But Garipoli is confident that’s not far away.

“The company is developing the Goulamina lithium mine in Mali and recently announced a resource upgrade,” he said.

“In our view, this confirms the outstanding scale of a high-grade project. The project is less than 18 months from production.”

Leo Lithium, which is backed by a deep-pocketed Chinese benefactor, could see its share price going through the roof once it actually starts producing minerals.

“Partner Ganfeng Lithium is providing funding to the project. More drilling results are imminent, but sovereign risk remains.”

Garipoli’s peers agree on Leo’s potential. All five analysts currently covering the stock say it’s a strong buy, according to CMC Markets.

The Leo share price is now more than 29% higher than where it was a year ago.

The post 3 ASX lithium shares to buy right now: experts appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why lithium prices could be ‘higher for longer’: Macquarie
• Pilbara Minerals share price ‘offers strong growth potential’: expert
• Top brokers name 3 ASX shares to buy next week
• What’s with ASX 200 lithium shares today?

Motley Fool contributor Tony Yoo 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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Bonds now offer investors much more potential investment income. But I’d still rather buy a few S&P/ASX 200 Index (ASX: XJO) dividend stocks over bonds.

Investing in bonds essentially means buying debt. Generally, bonds are seen as less risky than shares because they are prioritised in the capital structure. If a company goes out of business, the bondholders are paid before shareholders (if equity holders get anything at all).

With interest rates now a lot higher, most bonds are offering investors a higher yield.

For example, Vanguard Australian Government Bond Index ETF (ASX: VGB) had a running yield of 2.8% on 31 December 2022, with a yield to maturity of almost 4%.

However, here’s why bonds don’t appeal to me that much. While they may have a fixed level of interest, that’s essentially all bond investors will gain. One-off interest rate changes can impact bond valuations, as can concerns about bond investors being paid.

Skilled active investors may be able to buy bonds at a discounted price and sell them at a higher price. But, the income will largely form the basis of the return.

However, my preferred form of income investing is one that takes advantage of the power of compounding.

This ASX 200 stock can benefit from compounding

If someone invested $1,000 in a bond with a 4% yield, they’d get $40 of income over a year. After the end of 12 months, they could invest the $40 into bonds, but they wouldn’t be able to spend the income. If they spent the $40 income, they’d be left with the $1,000 again – no growth, assuming the 4% yield stayed the same.

However, let’s use an ASX 200 dividend stock as an example.

Imagine I invested $1,000 into Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares with a 4% grossed-up dividend yield. The total income would still be $40. But, an investor could spend that $40 and the business could still grow its dividend (and the investor’s income) over the next 12 months as it re-invests its retained profit within the business for more growth.

According to Commsec, Soul Pattinson is expected to grow its annual dividend by 4.3% in FY24 compared to the projected FY23 payout.

Over time, ASX 200 dividend stocks can steadily grow and compound their earnings and dividends, even if investors spend that money on their living expenses.

Other reasons to like Soul Pattinson shares

It’s an investment house, meaning it invests in other businesses, thus making it a diversified company thanks to its holdings. The company has investments in ASX shares like TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Brickworks Limited (ASX: BKW), Macquarie Group Ltd (ASX: MQG) and BHP Group Ltd (ASX: BHP).

It’s also invested in private businesses such as electrical parts, agriculture, swimming schools and luxury retirement living.

The company has grown its annual ordinary dividend every year since 2000 and intends to keep increasing it. I think its income payments could be as resilient as corporate bonds, though nothing is guaranteed.

This ASX 200 dividend stock is already one of the largest positions in my portfolio, and I plan to regularly invest in it as time goes on. I like that the business can change its portfolio to be future-focused.

The post Forget bonds, I’d much rather buy this ASX 200 stock for its 4% dividend yield appeared first on The Motley Fool Australia.

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More reading

• ASX passive income: My game plan to reach $30,000 per year
• How to invest $10,000 this year to create ‘safe’ passive income
• Why I’ll be buying more ASX dividend shares for my portfolio in 2023
• With almost no investments at 30, can ASX shares still make me rich?
• ‘Attractively priced’: Why fund is excited by these 2 ASX 200 shares

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 Australia has recommended Macquarie Group and Tpg Telecom. 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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