Category: Stock Market

The last decade has likely disappointed those invested in Santos Ltd (ASX: STO) shares.

If one were to have poured $1,000 into the S&P/ASX 200 Index (ASX: XJO) energy stock in January 2013, they likely would have walked away with 94 shares and $8 change, having paid $10.55 apiece.

Today, that parcel would be worth just $691.84. The Santos share price closed Monday’s session at $7.36 – 30.2% lower than it was 10 years ago.

For comparison, the ASX 200 has gained around 54% in that time.

But have the oil and gas giant’s dividends made up for its stock’s poor performance? Let’s take a look.

How much have Santos shares paid in dividends since 2013?

Here are all the dividends those invested in Santos shares have received over the last decade:

Santos dividends’ pay date	Type	Dividend amount
September 2022	Interim	10.9 cents
March 2022	Final	11.8 cents
September 2021	Interim	7.7 cents
March 2021	Final	6.3 cents
September 2020	Interim	2.9 cents
March 2020	Final	7.6 cents
September 2019	Interim	8.9 cents
March 2019	Final	8.6 cents
September 2018	Interim	4.8 cents
March 2016	Final	5 cents
September 2015	Interim	15 cents
March 2015	Final	15 cents
September 2014	Interim	20 cents
March 2014	Final	15 cents
September 2013	Interim	15 cents
March 2013	Final	15 cents
Total:		$1.695

As the chart above shows, the last decade has been a wild ride for Santos dividends.

The company paid out as much as 20 cents per share between 2013 and 2015, after which a change in its dividend framework saw it paying out at least 40% of its underlying net profits, subject to business conditions. The energy giant then forewent offering dividends for much of 2016, 2017, and 2018 as it worked to reduce debt.

Ultimately, those invested in Santos shares have received a total of approximately $1.695 per security over the last decade. That leaves our figurative investor having realised $159.33 of passive income over the life of their holding.

Meaning, even considering dividends, those who invested in Santos shares in January 2013 are still 14.2% in the red.

Though, it’s worth mentioning most of Santos’ dividends in that time have been fully franked, potentially allowing investors to realise additional benefits at tax time.

Right now, Santos shares are trading with a 3.09% dividend yield.

The post Stocked up on $1,000 of Santos shares 10 years ago? If so, here’s how much dividend income you’ve earned appeared first on The Motley Fool Australia.

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• Looking to energise returns with this pocket of undervalued ASX shares in 2023
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• 3 things Scott Phillips is most excited about investing in 2023

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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There is no doubt 2022 was a turbulent year with war, inflation, and interest rate rises.

Unfortunately, many experts are expecting more volatility to follow this year, with the Russia-Ukraine conflict dragging on and inflation still raging.

In such uncertain times, it might be worth retreating from the smaller, riskier plays and relying on the old favourites that Australian consumers might stick with through a downturn.

Catapult Wealth portfolio manager Tim Haselum this week named two ASX shares to buy that precisely fit that bill.

‘We like its outlook’

As the leading telecommunications company in Telstra Group Ltd (ASX: TLS), its shares should be more pleasurable to own.

But it has been a bane in many investors’ portfolios for decades now.

Sure, it pays out a reasonable 3.3% dividend yield, but its capital growth has been anaemic, even for the most patient long-term investor.

Over the past five years, the Telstra share price has only grown 11.7%.

Haselum, though, feels like the telco giant has turned a corner and is worth picking up right now.

“Asset sales have reduced debt,” Haselum told The Bull.

“It increased its dividend and forecast earnings growth should be met.”

The portfolio manager labelled Telstra “a fierce competitor”.

“The company has forecasted total income of between $23 billion and $25 billion in fiscal year 2023,” he said.

“We like its outlook.”

Many of Haselum’s peers agree with him. According to CMC Markets, eight out of the 11 analysts that cover the stock currently rate it as a buy.

Pounce on this one when it dips

Regardless of whether the unemployment rate is rising or if the economy is slipping into recession, people have to eat.

That’s why during turbulent times, many may find supermarket giant Woolworths Group Ltd (ASX: WOW) a comforting investment.

In addition to a handy 2.64% dividend yield, the Woolworths share price has gained almost 50% over the past five years — through COVID-19 and the inflation surge. 

Haselum reckons it is at a particularly interesting time to buy in right now.

“Several disruptions and abnormal costs during the past two years appear to be ending,” he said.

“We expect COVID-19 costs to continue falling.”

The supermarket chain has “a strong balance sheet“, he added. 

“The shares also appeal for their defensive qualities. Any price weakness represents a buying opportunity, in our view.”

Other professionals are somewhat divided on Woolworths shares. Nine out of 16 analysts surveyed on CMC Markets rate the stock as a buy, while five think it a hold, and two are even suggesting a strong sell.

The post ‘Fierce competitor’: Expert names 2 big brand ASX shares ready to take off in 2023 appeared first on The Motley Fool Australia.

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• Telstra share price is ‘undervalued’ right now: broker
• Telstra shares: Here are the dividend forecasts for 2023 and 2024
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 2 high-dividend shares to buy today for early retirement

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 positions in and has recommended Telstra 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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If you’re looking for dividend shares to buy for your income portfolio, then it could be worth checking out the two named below.

These two ASX 200 dividend shares have been rated as buys by analysts at Morgans. Here’s what they are saying about them right now:

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that has been tipped as a buy by Morgans is insurance giant QBE.

The broker is very positive on the company’s outlook. It expects “QBE’s earnings profile to improve strongly over the next few years” thanks to strong rate increases and further cost-out benefits.

Morgans also highlights the company’s robust balance sheet and believes its shares are “relatively inexpensive.”

As for dividends, the broker expects QBE to pay a 76 cents per share dividend in FY 2023 and then an 85 cents per share dividend in FY 2024. Based on the latest QBE share price of $13.49, this equates to yields of 5.6% and 6.3%, respectively.

Morgans currently has an add rating and $15.05 price target on its shares.

Santos Ltd (ASX: STO)

Another ASX 200 dividend share that could be a buy is Santos.

It is a leading energy producer with a collection of high quality operations across several regions.

Morgans believes the company could be a top option in the current environment. This is thanks to its “growth profile and diversified earnings base,” which the broker believes leaves Santos “well placed to outperform against a backdrop of a broader sector recovery.”

In addition, Morgans highlights the company’s strong cash flow generation and believes Santos “is positioned to flex its cash dividends and buybacks.”

It expects this to lead to fully franked dividends of 28 US cents (40 Australian cents) per share in FY 2023 and 30 US cents (42.7 Australian cents) per share in FY 2024. Based on the current Santos share price of $7.36, this will mean yields of 5.4% and 5.8%, respectively.

Morgans has an add rating and $8.75 price target on its shares.

The post Broker names 2 high yield ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Looking to energise returns with this pocket of undervalued ASX shares in 2023
• 5 things to watch on the ASX 200 on Tuesday
• Own Santos shares? Here’s why the ASX 200 company’s net-zero plan is taking heat
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week

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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The technology space has been hit heavily amid higher interest rates. But I think there are some leading ASX exchange-traded funds (ETFs) that could be exciting opportunities for a tech rebound.

When something falls by 50% from $100 to $50, it only needs to get back to $75 to generate a 50% return from that low starting valuation of $50.

I don’t think interest rates are going to go back below 2% for the foreseeable future, perhaps for the rest of the decade. But, technology valuations now seem much more reasonable, so I think some of the beaten-up tech ETFs could perform well over the next year or two.

Betashares Cloud Computing ETF (ASX: CLDD)

The Betashares Cloud Computing ETF unit price has fallen around 45% since November 2021. The idea of this ETF is to give investors exposure to the cloud computing trend. Betashares explains:

Cloud computing has been one of the strongest-growing segments of the technology sector, and given much of the world’s digital data and software applications are still maintained outside the cloud, continued strong growth has been forecast.

A growing number of different services can now be provided online, giving the ASX ETF growing diversification. Looking at the biggest holdings, these are some of the largest positions: Coupa Software, Sinch, Five9, Workiva, Workday, Shopify and SPS Commerce.

With the collective valuations of the companies involved now much lower, I think this group of businesses could rebound nicely if investor pessimism starts fading when interest rates stop rising.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The Betashares Nasdaq 100 ETF is another one that has fallen heavily – it’s down around 30% since November 2021.

I think this ETF is invested in some of the highest-quality businesses in the world, they are global leaders in what they do. I’m talking about names like Apple, Microsoft, Alphabet, Amazon.com, Nvidia, PepsiCo, Costco, Cisco Systems, Intuitive Surgical and Moderna.

Interest rates have soared in the US to try to bring inflation under control in the country. An economic downturn may be on the cards. But, I don’t think the outlook will always look this pessimistic, particularly when thinking about the long-term. I think this ASX ETF has an attractive future ahead.

When share prices drop heavily, there may be an important negative influencing event going on in the world. But that’s when I think investors should become more optimistic about investing and making long-term returns. Be greedy when others are fearful, as the saying goes.

There won’t be many times when the Betashares Nasdaq 100 ETF drops by 30%, so I think this could be a good time to invest and then be patient after that.

The post 2 ASX ETFs I’d buy for a tech rebound in 2023 appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Cisco Systems, Costco Wholesale, Five9, Intuitive Surgical, Microsoft, Nvidia, Shopify, Workday, and Workiva. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Moderna and has recommended the following options: long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Nvidia, and Workday. 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 AGL Energy Limited (ASX: AGL) share price has gone through a lot of pain since April 2017, dropping by over 70%. It has fallen over 60% since the start of the COVID-19 pandemic.

That’s a shocking fall considering the utilities sector is usually thought of as a defensive sector with consistent cash flow and typically solid dividends.

Shareholders have seen their shares sink in value over time.

But, with a plan now in place to decarbonise and re-energise the business, could the company be a good turnaround opportunity for contrarian investors?

Bumpy road ahead

AGL’s new CEO Damien Nicks was recently talking to The Australian about the job that the energy business faces in the years ahead. He became the chief financial officer of AGL in August 2018.

The company will reportedly need to find $20 billion of funding to achieve its decarbonisation plans, install 12GW of renewable energy generation and end coal usage.

Speaking to The Australian, Nicks said:

There are going to be bumps on the road. This is not going to necessarily be a purely smooth ride for the whole market. But for us it’s about having clarity about how we deliver. We’ve got deep plans over the next seven years to 2030. And we’ll continue to refine those plans, and then continue refining those plans out to 2035 as well.

There are going to be challenges, but we need that co-ordinated approach across the market, not just AGL. It needs to be co-ordinated and that’s what we’re driving particularly hard. And that’s where we can play that leadership role.

Earnings recovery expected for AGL shares

AGL said in its recent annual general meeting (AGM) that it’s “well positioned from FY24 to benefit from sustained higher wholesale electricity pricing as historical hedge positions progressively roll-off”.

In FY23 it’s looking to reduce its sustaining capital expenditure by more than $100 million compared to FY23. It’s also hoping for guiding underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be between $1.25 billion to $1.45 billion, while underlying net profit after tax (NPAT) guidance to be between $200 million to $320 million.

Using Commsec numbers, it’s projected to generate 39 cents of earnings per share (EPS). This puts the AGL share price at around 20 times FY23’s estimated earnings.

Then, EPS could jump to 91 cents in FY24 and $1.27 in FY25. This would translate into forward price/earnings (P/E) ratios of 8 and 6 respectively.

Is the AGL share price a buy?

Talking about the task ahead for the energy company and the new CEO, major investor VanEck’s Jamie Hannah said:

He has a massive job ahead. From staffing to financing to the roll out of the new initiatives and to the changes to the company and winding down of existing assets. If you wrote down all the things that they need to achieve over the next five years, it’s a somewhat overwhelming task. So he’s not going to be able to do it himself. Obviously, he just needs to set the agenda. And make sure he gets the right staff.

I don’t know how he’s going to go on something this big. But I don’t think he’s the wrong person for the role. He certainly knows the company and knows what it can achieve. So I’m more than happy to give him a fair chance at this and see how he performs.

According to analyst opinions collated by Commsec, there are six buy ratings and four hold ratings, with no sell ratings. It may well be a decent contrarian ASX share idea for brave investors.

The post ‘Massive job ahead’: Should you buy AGL shares now or wait? appeared first on The Motley Fool Australia.

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• What’s with the AGL share price on Thursday?
• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24
• Can AGL shares really deliver a 7% dividend yield in FY24?
• 2 ASX 200 dividend stocks I’m running a mile from
• Fortescue’s Twiggy Forrest is in the wars this week. Here’s why

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 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 S&P/ASX 200 Index (ASX: XJO) and ASX shares have already made a flying start to 2023. As of yesterday’s share market close, the ASX 200 has gained an impressive 7.4% over the year to date.

After 2022’s full-year loss of 5.5%, it’s certainly a pleasing change of pace to see the ASX 200 start the year with such optimism.

But 2023’s strong showing thus far doesn’t mean there aren’t still cheap shares out there to find.

One area that might be worth taking a dive into is ASX energy shares. That’s according to one ASX expert, anyway.

Looking for undervalued ASX shares in 2023? Try cooking with gas

ASX mining resources and energy shares were some of the only places to hide from the market’s poor showing last year. In fact, many had stellar years.

Just take the BHP Group Ltd (ASX: BHP) share price. BHP shares rose almost 10% last year, defying the gloom that infected the broader market. Rio Tinto Limited (ASX: RIO) shares fared even better, giving investors a share price return of more than 16%.

But that’s nothing compared to ASX coal share Whitehaven Coal Ltd (ASX: WHC). Whitehaven shares gave investors a spectacular return of 165% last year, not including dividends.

Expert investor Aaron Binsted saw the writing on the wall for these sectors. Binsted is an Australian equities portfolio manager at Lazard Asset Management. Lazard’s Select Australian Equity fund was one of the best-performing managed funds in 2022, returning 26.34% for investors last year.

According to reporting in the Australian Financial Review (AFR) this week, Lazard went in hard on resources and energy sources in 2020 and 2021, which helped to drive the fund’s stellar returns last year.

Binsted reckons, “This energy crisis has been brewing for a long time”. In 2020, he recalls saying, “If you’re not overweight energy now, you never will be. It was absolutely against the consensus of the time.”

Back in 2020, he favoured oil shares like Woodside Energy Group Ltd (ASX: WDS), but in 2023, he’s looking to gas, largely due to the “superior cashflow generation” on offer:

Most people’s long-run numbers [for LNG prices] are probably in the $US7 to $US8 mark. No one’s got that in their valuations for the equities…

We are in a world that’s short energy, while a bit over 80 per cent is coming from fossil fuels, and governments are saying, ‘give us more energy, but don’t invest in fossil fuels’. It’s very hard to make up that gap from fossil fuels at the moment…

We can only assume Binsted is still looking at Woodside shares (Woodside is also a gas producer), as well as other gas stocks such as Santos Ltd (ASX: STO), Karoon Energy Ltd (ASX: KAR) and Beach Energy Ltd (ASX: BPT).

The post Looking to energise returns with this pocket of undervalued ASX shares in 2023 appeared first on The Motley Fool Australia.

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• Why Whitehaven Coal shares could ‘continue rewarding’ ASX 200 investors in 2023: expert
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• Own Santos shares? Here’s why the ASX 200 company’s net-zero plan is taking heat

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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ASX dividend shares can provide investors with an attractive level of passive income.

Businesses that have good dividend yields and a compelling future could be options to unlock investment cash flow.

While some companies have high yields and could achieve a lot of income very quickly, there are others that could deliver solid growth in the coming years.

So, I’ll offer up a few names as ideas for each strategy.

Instant big passive income

If I’d just won the lottery and I were looking to instantly generate a lot of passive dividend income, then carefully choosing high-yielding ASX dividend shares could be one way to go.

The higher the dividend yield, the less reliable that dividend income can be. However, if the business is trading on a very low multiple of its earnings, meaning it has a low price/earnings (P/E) ratio, then it could pay a very good dividend yield. I would only choose ideas that look like they could grow earnings in the coming years.

There are a few names, at the current prices, that I’d look to achieve a dividend yield of close to 10% or higher.

I think that Shaver Shop Group Ltd (ASX: SSG) could be an effective pick. It’s exposed to a growing beauty and personal care market, which is helped by a growing Australian population. It’s expanding its product range and increasing the number of stores across Australia and New Zealand.

The business is expected to grow its earnings each year from FY23 to FY25 according to Commsec numbers. At the current Shaver Shop share price it’s valued at under 10 times FY23’s estimated earnings with a possible FY23 grossed-up dividend yield of 12.5%.

Adairs Ltd (ASX: ADH) is another ASX retail share that’s predicted to grow its earnings and dividend each year between FY23 to FY25. The furniture and homewares business has plans to grow its store network, upsize some existing Adairs stores, expand its product ranges and increase the number of members.

Using Commsec numbers, it’s valued at under 10 times FY23’s estimated earnings with a potential grossed-up dividend yield of 9.3%.

GQG Partners Inc (ASX: GQG) is another interesting ASX dividend share for potential passive income. The business has guided that it’s going to pay 90% of its distributable earnings to investors each year.

It’s a US fund manager that is regularly attracting more fund inflows and achieving good returns on its existing funds. GQG is also looking to expand geographically, in places like Australia and Canada.

By FY25 it could be paying a dividend yield of around 10% according to estimates on Commsec.

A portfolio worth $500,000 could generate $50,000 of income if it had a 10% dividend yield.

Long-term dividend growth

I also believe that there are some very compelling ASX shares that could deliver long-term value creation while also growing the income payments to shareholders. This could help achieve strong annual passive income after a number of years of investing.

While ASX dividend shares may not achieve the strongest capital growth, the good ones could achieve good compounding growth over the long term.

Brickworks Limited (ASX: BKW) already has a record of not cutting its dividend for around 45 years. I like the impressive industrial properties that are being built on excess Brickworks land. The large exposure to Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares can also help grow Brickworks’ cash flow and the underlying value in the coming years.

Lovisa Holdings Ltd (ASX: LOV) is a retailer that sells affordable jewellery to younger shoppers. It already has a global store base, but this number could expand significantly, particularly if it’s able to grow in places like Europe, the US, China (including Hong Kong) and India. I think earnings could grow very strongly over the rest of the 2020s.

Universal Store Holdings Ltd (ASX: UNI) is an apparel retailer that’s focused on the younger demographic. I think this segment of the market may be less affected by a possible recession compared to the general retail segment. The business has plans to grow its store network and I like that it’s also looking to expand with other brands.

I believe these three businesses are just a few of the names that could help deliver passive income and good capital growth over the coming years for investors.

The post Which ASX dividend shares I’d buy now to target $50,000 of annual passive income appeared first on The Motley Fool Australia.

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• ASX income stocks: A once-in-a-decade chance to get rich?
• My top predictions for ASX All Ords shares in 2023
• 3 undervalued ASX shares that should be on your radar
• One oversold ASX 300 dividend share (with a 6% yield) to buy now
• Here are 2 excellent high yield ASX dividend shares that experts rate as buys

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 Adairs, Brickworks, Lovisa, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Adairs, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa. 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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Westpac Banking Corp (ASX: WBC) shares are expected to generate much more profit in the coming years.

The ASX bank share is benefiting from the rising interest rates. The Reserve Bank of Australia (RBA) has hiked the official interest rate by 300 basis points, or 3%, from 0.1% to 3.1% since May.

Banks, including Westpac, have passed on more hikes for loans than for savings accounts, boosting their net interest margins (NIMs). In other words, it’s good news for banking profitability in FY23.

This could be why the Westpac share price has done well over the past year.

The question is, how much of an impact will this have on Westpac’s profit?

Profit projections

I think that earnings per share (EPS) is a very important profit measure. It shows how well things are going for each shareholder and each share, not just the overall number. I don’t think there’s much point in growing total profit if it involves issuing a growing number of shares, which reduces the EPS.

EPS gives context to the share price and can help us work out the price/earnings (P/E) ratio.

Using the estimates on Commsec, the ASX bank share could generate $2.09 of EPS in FY23. This puts the Westpac share price at less than 12 times FY23’s estimated earnings.

Looking at the potential dividend payment for the 2023 financial year, the ASX bank share could pay an annual dividend per share of $1.38, which translates into a grossed-up dividend yield of around 8%.

Are Westpac shares worth buying?

I think the banking sector will get an earnings boost this year thanks to the higher interest rates.

Share prices often follow earnings. In other words, if the profit goes up then the shareholder returns are likely to be decent as well.

The dividend income alone could be a solid return for 2023.

Westpac is also aiming to cut hundreds of millions of dollars in costs, which could improve profitability further over the next couple of years.

Out of the big four banks, I think I prefer Westpac shares to Commonwealth Bank of Australia (ASX: CBA) because they seem better value. As well, I like Westpac over ANZ Group Holdings Ltd (ASX: ANZ) because it isn’t going through a major takeover process.

The one thing I’m wary of, however, is that the higher interest rates could lead to bad debt pains in the future, but the low P/E ratio may already reflect that possibility.

The post How much profit could Westpac shares make in 2023? appeared first on The Motley Fool Australia.

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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 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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Whitehaven Coal Ltd (ASX: WHC) shares led the charge on the S&P/ASX 200 Index (ASX: XJO) in 2022.

By the time we flipped our calendar over to 2023, the ASX 200 coal share had gained a stellar 261% over the 12 months. And this in a year when the ASX 200 fell by 5.5%.

The miner was a clear beneficiary of soaring energy costs, with thermal coal prices driven to new records following Russia’s invasion of Ukraine.

This helped Whitehaven deliver a record half year, as reported in its quarterly update for the three months ending 31 December.

Among the highlights, the miner forecasts it will post all-time high half-year earnings before interest, taxes, depreciation and amortisation (EBITDA) of $2.6 billion. For some context, that compares to EBITDA of $600 million in the prior corresponding period.

You can see the remarkable performance of the Whitehaven Coal share price in the chart below.

So far, 2023 has presented a fair number of ups and downs for the big coal miner. But with more ups than downs, shares have gained 6% since the opening bell on 3 January.

With that kind of performance already in the bag, what can investors expect next?

More rewards on offer from Whitehaven Coal shares?

While thermal coal prices have retraced some 20% from their 2022 record highs, demand for high-quality Aussie coal is forecast to remain strong over the year ahead.

And eToro markets analyst Josh Gilbert believes Whitehaven Coal shares could offer investors more rewards over the next 12 months.

According to Gilbert:

For investors, Whitehaven’s growth in 2022 was sensational, with earnings soaring… Although growth will moderate over 2023, investors are likely to see another record year with market expectations for 60% earnings growth, before tailing off in 2024.

Regarding the longer term, Gilbert advised some caution, but he sounded a bullish note for Whitehaven shares in 2023.

“Whitehaven might not be a stock to marry, but it may be set to continue rewarding investors in 2023,” he said.

And don’t forget the dividends.

As my Fool colleague James Mickleboro notes, “Consensus estimates have the coal miner rewarding its shareholders with a 91 cents per share dividend in FY 2024.”

At the current share price, that represents a yield of 9.7%.

The post Why Whitehaven Coal shares could ‘continue rewarding’ ASX 200 investors in 2023: expert appeared first on The Motley Fool Australia.

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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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Commonwealth Bank of Australia (ASX: CBA) shares represent one of the biggest businesses in Australia, with a market capitalisation of over $180 billion according to the ASX. So, is it a good idea to buy this S&P/ASX 200 Index (ASX: XJO) stock for passive income?

On the ASX, only BHP Group Ltd (ASX: BHP) is a bigger business.

Sometimes investors may see the size of CBA and think the blue chip is safer than other options. However, size doesn’t necessarily protect shareholders from dividend cuts. An excessive valuation can also be risky, even if the business keeps performing.

Firstly, we’ll take a look at the potential dividends from the ASX 200 bank share.

Dividend projections

CBA’s earnings are expected to rise in the short term as it gets a boost from higher interest rates as the Reserve Bank of Australia (RBA) aims to take the heat out of the economy and lower inflation.

Banks are passing on the rate hikes to borrowers faster than savers, so this is pushing up the lending profitability of CBA.

According to Commsec, which uses independent third-party data, the business could generate earnings per share (EPS) of $6.07 in FY23 and $6.27 in FY24.

Those earnings could allow the ASX 200 income stock to pay an annual dividend per share of $4.47 in FY23 and $4.55 in FY24, which translates into grossed-up dividend yields of around 6% from the bank. That’s solid passive income potential.

Are CBA shares a buy for passive income?

The CBA share price has seen plenty of volatility over the past year, but it’s currently at a high point.

At the current level, the CBA share price is valued at around 18 times FY23’s estimated earnings. This seems like an inflated price/earnings (P/E) ratio compared to the other big banks like Westpac Banking Corp (ASX: WBC).

Westpac shares are valued at under 12 times FY23’s estimated earnings, according to Commsec.

However, CBA seems to always trade on a higher valuation than the other banks, so I’m not sure what would close that gap.

But, the higher P/E ratio does push down CBA’s yield on offer, making it a less appealing option.

However, with a dividend yield of around 6% and potentially rising profit, it could still be a decent investment from here. But, investors may be able to buy shares at a better CBA share price if they are patient.

After a strong run, I believe that there are plenty of other ASX dividend shares that could make more effective choices for passive income.

The post CBA shares: A decent ASX 200 passive income stock to buy? appeared first on The Motley Fool Australia.

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More reading

• This could crash the earnings season party for ASX 200 bank shares: Macquarie
• What could we expect for ASX 200 bank shares this earnings season?
• Can income investors bank on CBA growing its dividend yield by 18%?
• Up 20% in 6 months, is the Westpac share price now fully valued?
• Broker forecasts CBA share price to slide 15%

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 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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