Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) bank share Macquarie Group Ltd (ASX: MQG) is seen as a compelling opportunity, according to Morgan Stanley.

The Macquarie share price has seen plenty of pain over the past year. In the last 12 months, it’s down by 15%.

But, while shareholders may be nursing a financial bruise, the broker Morgan Stanley has suggested that the ASX 200 bank share could rise by more than 20% over the next year.

Reasons for the bullish call on the Macquarie share price

According to reporting by The Australian, Morgan Stanley currently has a price target of $215 on the company. That implies a possible rise of 21% at the time of writing.

One of the main reasons for the optimistic outlook for the ASX 200 bank share is US gas price volatility. When gas price volatility increases, the company’s commodities and global markets (CGM) division can generate higher earnings.

According to reporting by the newspaper, the gas price dispersion index rose by 80% year over year to a decade high in the three months to 31 December 2022.

Morgan Stanley analyst Andrei Stadnik said that the quarter for the three months to March was currently tracking at 50%. The analyst said:

We think the market gives MQG little credit for growth in commodities, but it still supports EPS [earnings per share] and dividends and generates capital for growth.

This could be important because the commodity revenue reportedly comprises around 35% of group revenue. Stadnik also reportedly noted that the European gas price volatility had remained “historically high”.

The Europe, Middle East and Africa (EMEA) regions account for around 25% to 30% of CGM’s revenue. If commodity revenues rise by 7.5%, then the analyst’s EPS estimate will increase by 6.5%.

What is the valuation?

Using the estimated numbers on Commsec, the Macquarie share price is valued at under 16x FY23’s estimated earnings, with a possible dividend yield of 3.6%, ignoring the effect of franking credits.

Of the analyst opinions that Commsec has collated, eight rate the ASX 200 bank share as a buy, five rate it as a hold, and one has a sell rating.

The post Buy this ASX 200 bank share with 21% upside: Morgan Stanley appeared first on The Motley Fool Australia.

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More reading

• Why Integrated Research, Macquarie, Pilbara Minerals, and South32 shares are pushing higher
• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
• ASX financial shares lifted the ASX 200 today
• Boost your passive income with these ASX dividend shares next year
• 3 top dividend payers of the ASX 200

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 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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Investors around the world keep a close eye on the goings-on of Warren Buffett and the multi-billionaire’s company Berkshire Hathaway Inc (NYSE:BRK.A)(NYSE:BRK.B). However, a deal between the investing great and home-grown insurance share Insurance Australia Group Ltd (ASX: IAG) has been under Aussies’ noses for years.

The market has been reminded about a whole of account quota share (WAQS) agreement between S&P/ASX 200 Index (ASX: XJO) insurer IAG and Berkshire Hathaway subsidiary National Indemnity Company (NICO) today with news of its renewal. Though, other key deals between the pair have been scrapped.

The IAG share price is up 0.84% on the back of the announcement, trading at $4.80.

Let’s take a closer look at what agreements the pair have and haven’t renewed.

IAG share price lifts on news of Buffett agreement

The IAG share price has climbed on Thursday after the company announced it renewed one of its previous agreements with Buffett’s Berkshire Hathaway.

The renewed WAQS agreement represents 20% of IAG’s WAQS program. It came into effect on 1 January 2023 and applies until 31 December 2029.

Quota share deals see an insurer – in this case IAG – offering a reinsurer – such as NICO – a portion of insurance premiums in exchange for paying out the same portion of claims – in this case, 20%.

IAG has now renewed 30% of the 32.5% WAQS with various reinsurers. Negotiations on the remaining portion are expected to be completed in the coming months.

Meanwhile, a strategic relationship agreement and equity ownership subscription agreement previously made with Berkshire Hathaway won’t continue.

IAG formed a strategic relationship with Buffett’s company in 2015. The billionaire said at the time:

I am 84 years old and this is my first investment in an Australian company. I’ve been very derelict, but it has been worth waiting for.

Back then, Berkshire Hathaway forked out $500 million for a 3.7% stake in IAG, paying $5.57 per share.

It also agreed its stake in the ASX 200 insurer would remain between 3.7% and 14.9%. Meaning the billionaire might now be free to sell his holding in the company.

IAG chief financial officer Michelle McPherson commented in today’s release, saying:

The terms of the renewed agreement with Berkshire Hathaway’s NICO reflect the maturing of our partnership, and the removal of supporting subscription and strategic relationship agreements provides consistency with our other quota share partner arrangements.

The post What do IAG shares have in common with Warren Buffett? appeared first on The Motley Fool Australia.

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• Starting 2023 with no savings? I’d follow Warren Buffett and start building wealth
• Why AMP, Computershare, IAG, and Telix shares are dropping today
• I would follow Warren Buffett’s advice when buying ASX shares in 2023
• I’m listening to Warren Buffett and buying cheap ASX shares

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 positions in and has recommended 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, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Insurance Australia Group. The Motley Fool Australia has recommended Berkshire Hathaway. 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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It’s turning out to be yet another corker of a day for the ASX share market and the S&P/ASX 200 Index (ASX: XJO) so far this Thursday.   

At the time of writing, the ASX 200 has lifted by an impressive 1.25% to back above 7,280 points.

But let’s take a deeper dig into these pleasing market machinations by taking stock of the shares currently topping the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Thursday

Core Lithium Ltd (ASX: CXO)

First up today is the ASX 200 lithium producer Core Lithium. So far today, a sizeable 9.84 million of this company’s shares have been traded on the markets. There have been no big announcements out of Core Lithium today.

So we can probably put this volume down to what is happening with the company’s shares themselves. Core Lithium shares have been bouncing around a little bit today. But the company is still up by a decent 1.02% at $1.19 a share. It got as high as $1.22 earlier in the session.

Whitehaven Coal Ltd (ASX: WHC)

Next up is the ASX 200 energy share Whitehaven coal. This Thursday has had a notable 11.24 million Whteihaven shares find a new home thus far. We haven’t heard anything out of Whitehaven recently either.

However, that hasn’t stopped this coal miner from enduring a nasty slump today. Bucking the broader market, Whitehaven shares are currently down by a nasty 2.1% at $8.66, after dipping as low as $8.33 this morning. This loss is probably to blame for the high volumes we are seeing.

Pilbara Minerals Ltd (ASX: PLS)

Finally today, we have another ASX 200 lithium share, the popular Pilbara Minerals. A hefty 20.64 million Pilbara shares have been bought and sold over this Thursday’s session as it currently stands. This looks like a consequence of the big push higher that the Pilbara share price is presently experiencing.

The leading lithium share is currently up by a whopping 3.64% to $4.12 each. As my Fool colleague touched on earlier today, this looks like a response to a big night over on the US markets for lithium stocks last night, as well as some love from ASX broker Citi.

The post Here are the 3 most heavily traded ASX 200 shares on Thursday appeared first on The Motley Fool Australia.

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More reading

• Power up: 3 best ASX 200 energy shares of 2022
• Can Woodside shares keep delivering stellar gains in 2023?
• 5 ASX 200 shares smashing new, 52-week highs on Thursday
• Why Integrated Research, Macquarie, Pilbara Minerals, and South32 shares are pushing higher
• Oil best China reopening play: Goldman Sachs

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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National Australia Bank Ltd (ASX: NAB) shares are having a strong day on Thursday.

In afternoon trade, the banking giant’s shares are up 2% to $30.70.

As you can see below, this means its share price is now up over 20% from its June low.

Is it too late to buy NAB shares?

The good news for investors is that Goldman Sachs doesn’t believe it is too late to buy NAB shares.

In fact, its analysts are expecting the bank’s shares to rise another 15% from current levels. The broker has a buy rating and $35.41 price target on them.

In addition, Goldman is expecting NAB to pay a $1.73 per share dividend in FY 2023. This equates to a 5.6% dividend yield, which increases the total potential return beyond 20%.

Three reasons to invest

Goldman Sachs has outlined three key reasons why it thinks investors should buy NAB shares.

The first two relate to the bank’s overweight exposure to commercial banking. It explained:

Our Buy rating on NAB is predicated on: i) NAB providing the best leverage to the thematic that domestic volume momentum will favour commercial over housing volumes over both the short- and medium-term, ii) our expectation that commercial lending will be better insulated from competitive pressures particularly prevalent in mortgage lending.

The third reason is the hard work it has already undertaken on cost management initiatives. Goldman said:

NAB’s cost management initiatives, which seem further progressed vs. peers, has allowed it to deliver the highest levels of productivity over the last three years, and we think this leaves it well positioned for an environment of elevated inflationary pressure (c. A$400 mn productivity savings expected in FY23).

All in all, this could make NAB a top option if you’re looking for banking sector exposure in 2023.

The post 3 reasons to buy NAB shares right now: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Here’s why 2023 will be a huge year for passive income
• Buy these strong blue chip ASX 200 shares now: analysts
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• Can ASX bank shares deliver in 2023 after higher interest rates?
• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?

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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A broad range of ASX dividend stocks pay attractive dividend yields to investors. I’m using the difficult period for investment markets we’re currently in to supercharge my long-term passive dividend income.

I think ASX dividend shares are a great way to grow wealth over the long term. Companies can pay and boost dividends and achieve strong price growth if the profit grows over time.

The current economic period appears particularly compelling to invest in due to the lower share prices in general across the ASX share market.

Better yields

A dividend yield can be heavily affected by movements in the short term.

If an ASX dividend stock has a dividend yield of 5%, but then the share price drops 20%, the dividend yield turns into 6%.

Think about how much of a difference that could make if someone was going to invest $1 million of cash. At a 5% yield, it would generate an income of $50,000. With a 6% yield, it makes $60,000 in income. That’s an extra $10,000 of income from the same investment just because the valuation has dropped.

The Wesfarmers Ltd (ASX: WES) share price is a good example of this. It has dropped by more than 25% since its peak in August 2021. According to Commsec, the company could pay a grossed-up dividend yield of 5.5% in FY23.

With investors pushing down share prices amid strong inflation and higher interest rates, we currently have the opportunity to invest in companies that are now paying much better yields, assuming the dividend isn’t cut. It’s a good chance to boost my passive dividend income.

Why I’m investing in ASX dividend stocks now

It’s not often that quality names like Wesfarmers fall by 20% or more.

But I don’t think that investor pessimism is going to stick around forever. At some point, the US central bank will stop raising interest rates. In 2024, there might even be interest rate cuts.

I generally believe that the share prices of good businesses will start going up again. This will have the effect of pushing down dividend yields a bit.

For example, if a business with a dividend yield of 6% sees a 10% rise in the share price, then the dividend yield is reduced to 5.4% — at least until the company increases the dividend payment for shareholders.

In the long term, I think investing at these lower prices can also give us a greater chance of achieving capital growth, on top of boosting passive income.

Recent examples of names that I’ve invested in at a lower share price for a bigger dividend yield include Brickworks Limited (ASX: BKW) and Bailador Technology Investments Ltd (ASX: BTI).

I think the lower share prices of APA Group (ASX: APA), Wesfarmers, Sonic Healthcare Ltd (ASX: SHL) and Brickworks are all attractive contenders for good dividend growth in the coming years while offering solid yield today.

The post Dividend stocks: Why I’m buying now for supercharged and long-lasting passive income appeared first on The Motley Fool Australia.

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More reading

• Why have ASX investors been buying Wesfarmers shares to hold?
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• Want 17% upside plus dividend income? Broker says buy Wesfarmers shares
• My top predictions for ASX 200 shares in 2023
• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments and Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments and Brickworks. The Motley Fool Australia has positions in and has recommended Apa Group, Brickworks, and Wesfarmers. The Motley Fool Australia has recommended Bailador Technology Investments and 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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ASX 200 energy shares had a stellar year in 2022 and energy was the best-performing sector by a mile.

The S&P/ASX 200 Energy (ASX: XEJ) rose by 40% compared to a 5.5% dip for the S&P/ASX 200 Index (ASX: XJO).

The surge was largely due to the war in Ukraine, which has significantly disrupted the world’s energy supply arrangements and prompted massive increases in commodity prices for coal, oil, and gas.

So no surprise that the top three performing ASX 200 energy shares in 2022 were from these sectors.

The following data is from S&P Global Market Intelligence canvassing ASX 200 energy share price gains from the close on 31 December 2021 to the close on 31 December 2022.

Whitehaven Coal Ltd (ASX: WHC)

The top-performing ASX 200 energy share was Whitehaven, with an astonishing 261% share price gain.

This was largely due to coal prices hitting all-time highs in 2022.

As my Fool colleague Brooke reports, Whitehaven posted a record $1.95 billion profit for FY22. It had a 1,396% year-over-year increase in earnings before interest, tax, depreciation, and amortisation (EBITDA).

Shareholders enjoyed a higher dividend in 2022 as a result.

Looking ahead, my Fool colleague James reports consensus estimates of an FY24 dividend of 91 cents per share. This represents a 10.5% dividend yield.

Bell Potter is far more bullish, predicting a $1.66 per share dividend, which equates to a 19.3% yield.

The Whitehaven share price is trading at $8.61 on Thursday afternoon.

New Hope Corporation Limited (ASX: NHC)

The share price of fellow ASX coal miner New Hope skyrocketed 185% in 2022.

Its FY22 profit rose by nearly 1,140% to $983 million year-over-year and its underlying EBITDA came in about 330% higher at $1.58 billion.

Looking ahead, New Hope has the biggest potential dividend yield of FY24, as my Fool colleague James reports.

Consensus estimates tip the ASX 200 coal share will pay $1.30 per share. This equates to a 22% dividend yield at today’s share price.

Citi is expecting an even greater dividend at $1.93 per share — a whopping 32% yield.

The New Hope share price is trading at $5.90 on Thursday afternoon.

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price rose by 62% last year due to higher oil prices and the company’s merger with the petroleum business of BHP Group Ltd (ASX: BHP).

About 70% of Woodside’s assets are involved in gas production, and the merger turned it into one of the top 10 LNG players in the world.

In August, Woodside announced a 400% profit surge and declared the largest interim dividend since 2014. The dividend was triple the size of the interim dividend paid for the 1H FY21.

As my Fool colleague Tristan reports, Woodside has revealed that its dividend policy will be based on its net profit after tax (NPAT), with a minimum dividend payout ratio of 50%.

The company has also noted “additional opportunities to provide returns through special dividends and share buybacks.”

The Woodside share price is trading at $36.16 on Thursday afternoon.

The post Power up: 3 best ASX 200 energy shares of 2022 appeared first on The Motley Fool Australia.

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More reading

• Can Woodside shares keep delivering stellar gains in 2023?
• Oil best China reopening play: Goldman Sachs
• Here’s why 2023 will be a huge year for passive income
• 3 ASX 200 dividend shares with HUGE passive-income potential for FY24
• With a projected 20% dividend yield, is this ASX 200 energy share for real?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in BHP Group and Woodside Energy Group. 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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CSL Limited (ASX: CSL) shares have been having a rough time in recent weeks.

Despite pushing higher today, the biotherapeutics giant’s shares are still down 5% since this time last month.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) has risen approximately 1.5% over the same period.

Should you buy CSL shares?

The team at Citi appear to believe that CSL shares are trading at an attractive level.

According to a recent note, the broker has a buy rating and $340.00 price target on the company’s shares.

Based on where its shares are trading at today, this implies potential upside of over 22% for investors over the next 12 months.

Citi is also expecting a modest 1.4% dividend yield in FY 2023, stretching the total potential return to almost 24%.

Why buy shares?

Citi is positive on CSL due to the improved trading conditions in the plasma industry. The broker explained this in a note last year following the release of updates from its rivals. It said:

Results from Grifols (June HY) and Takeda (June Q) show continued improvement overall in the operating environment for the plasma industry – this is as we anticipated and supportive of our CSL forecasts. The key points from the results were: 1) Demand is very strong, and prices are up mid-single digit, showcasing the pricing power of plasma companies; 2) Plasma collections are now well above pre-covid levels; 3) Plasma donor fees are coming down, helping margins.

The broker has since commented on the acquisition of Vifor Pharma, which completed last year. It commented:

The inaugural Vifor investor day was largely as anticipated. CSL gave investors a better appreciation for the rationale behind the deal: Vifor has the most extensive suite of products available in a large underpenetrated market, with a limited number of competitors, and unique industry partnerships.

All in all, its analysts are expecting the company to grow its earnings per share by 20% in FY 2023, then 23% in FY 2024, and 15.9% in FY 2025. This means CSL shares are changing hands at just 24x FY 2025 earnings, which Citi appears to believe makes them great value today.

The post Want 20% upside in 2023? Citi says buy CSL shares appeared first on The Motley Fool Australia.

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More reading

• Bought $1,000 of CSL shares 10 years ago? Here’s how much dividend income you’ve received
• How different is the Vanguard Australian Shares Index ETF (VAS) now compared to a year ago?
• Are healthy returns on the horizon for ASX 200 healthcare shares in 2023?
• I’d listen to Warren Buffett and invest in ASX shares with wide economic moats
• Build a strong portfolio in 2023 with these ASX 200 blue chip shares: experts

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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 Woodside Energy Group Ltd (ASX: WDS) share price was one of the best-performing ASX 200 blue chip shares in 2022. Over the year just passed, Woodside shares went from $21.93 to $35.44. That’s a rise worth an extraordinary 61.61%.

Throw in Woodside’s record dividend payments worth $4.66 per share, and we have one heck of a lucrative investment.

That’s even more impressive considering the S&P/ASX 200 Index (ASX: XJO) went backwards by 5.5% last year.

But those returns are now in the past and are of little use to investors today. So what might 2023 bring for Woodside shares?

Well, 2022’s stellar returns had a lot to do with fortunate timing. Last year, Woodside finalised a mega-merger with the energy division of BHP Group Ltd (ASX: BHP). This saw BHP investors issued additional Woodside shares when the company took over BHP’s old energy assets.

The timing turned out to be excellent for investors, with this merger coinciding with rocketing energy prices. These were primarily caused by the war in Ukraine and high global inflation last year. Just take a look at the Woodside share price below for a visual representation of this:

So the most important factor for Woodside shares in 2023 will continue to be the price of crude oil.

But time now to see what some ASX experts reckon about all of this.

ASX experts rate Woodside shares

As my Fool colleague shared earlier this month, one expert who remains bullish on oil is hedge fund trader Pierre Andurand of Bloomberg.

Andurand predicts that global oil demand could rise by 4 million barrels in 2023 if the world fully emerges from COVID restrictions, possibly leading to an oil price as high as US$140 per barrel. That would be almost double the current price of US$75 per barrel for WTI crude.

But Bloomberg isn’t the only expert bullish on oil. As we covered earlier this month, ASX broker AllianceBernstein lifted its 12-month share price target for Woodside shares to $46. If that occurs, it will result in a potential upside of more than 27% from where the shares are today.

This is due to a belief that Woodside can benefit from “a potential spike in gas prices on lower Russian gas exports to Europe and a recovery of oil prices on a China reopening“.

So more than one ASX expert reckons there are more good things to come for Woodside shares and their investors. But let’s wait and see what 2023 has in store for this ASX 200 energy giant.

The post Can Woodside shares keep delivering stellar gains in 2023? appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares smashing new, 52-week highs on Thursday
• Oil best China reopening play: Goldman Sachs
• Here’s why 2023 will be a huge year for passive income
• 2022 was brutal for Lynas shares. What will this year bring?
• Forget gold! I’d invest in ASX 200 shares to build a retirement portfolio

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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Michael O’Neill of Investors Mutual reckons it’s “time to double down” on ASX dividend shares because lower capital growth is likely not just this year but over the next decade.

Amid global recession forecasts for 2023, it’s best for investors to look for income opportunities with good quality stocks that are worth holding over the long term, he says.

This is a better strategy than trying to buy shares at their bottom in the hope of capital gains.

In an article published on the Investors Mutual website, O’Neill says:

…it’s incredibly difficult to time the market – so you’re usually better off not trying.

Dividends are always important, right now they’re critical. … in times like these … it’s best to minimise your risks and invest your money where you have the best chance of healthy returns.

For us that means buying and holding shares in quality industrial companies, at attractive valuations, that pay strong dividend yields.

Why will ASX 300 share price gains be lower?

O’Neill explains:

Capital growth in the next decade is likely to be lower than the last decade.

Ultra-low interest rates and readily available, cheap, money drove a very long bull market. With high inflation and rising rates, that time has passed.

While markets may, or may not, perform well in 2023, what is very unlikely is that we’ll enter another long bull market with a similar amount of capital growth.

Dividends ‘remarkably reliable’

O’Neill says dividends are particularly important now because they provide more reliable returns than capital gains [and] can act as a safety net during a volatile market.

O’Neill says data from 1998 to 2021 inclusive shows ASX dividend shares provided 51% of overall returns from the S&P/ASX 300 Index (ASX: XKO).

While outperforming capital growth only slightly, annual dividend returns were vastly more stable.

He said:

… the return on capital fluctuates significantly, but dividend returns are remarkably reliable…

[Dividends are] generally a reflection of the company’s overall profitability – its financial performance.

So, in periods where the overall sharemarket goes down, an investor’s dividends should stay much the same if they have a diversified portfolio made up of quality companies.

Which ASX dividend shares are the best buys?

The upside of a volatile market is “a great chance to pick up high-quality companies at bargain prices”.

In a high-inflation environment, O’Neill says stocks with pricing power and rational, low-risk strategic management are good options.

His ASX 300 dividend shares picks include Suncorp Group Ltd (ASX: SUN). The insurance giant is trading on a forward price-to-earnings (P/E) ratio of 12.1 times FY24 earnings (as at 14 December 2022). Its forecast dividend yield for FY24 is 6.8%.

He also likes explosives company Orica Ltd (ASX: ORI) on an FY24 P/E of 16.1 times and a dividend yield of 3.4%.

Businesses that sell essential products and services are also good inflation hedges. O’Neill tips IGA shopping chain owner, Metcash Limited (ASX: MTS) at an FY24 P/E of 11.9 times and a dividend yield of 5.9%.

Companies that can put well-structured contracts in place, ideally with adjustments for inflation, are also good options. Examples include railway owner, Aurizon Holdings Ltd (ASX: AZJ). It has an FY24 P/E of 12.3 times and a dividend yield of 7.3%.

He recommends avoiding overweight positions in commercial property, resources, and other cyclicals.

The post Why ASX dividend shares are so ‘critical’ right now: fundie appeared first on The Motley Fool Australia.

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More reading

• When it comes to ASX 200 dividend shares, is boring better?
• How to minimise risk using ASX 300 dividend shares: fundie
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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon and Metcash. 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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S&P/ASX 200 Index (ASX: XJO) oil shares could be worth watching amid China’s reopening, according to Goldman Sachs global head of commodities research Jeff Currie.

The expert tipped the black liquid to climb to trade at US$110 a barrel by the third quarter of 2023 if international travel takes off in the nation, as per Bloomberg TV.

Of course, that would likely be good news for ASX 200 oil shares such as Woodside Energy Ltd (ASX: WDS), Beach Energy Ltd (ASX: BPT), and Santos Ltd (ASX: STO).

Their bottom lines typically hinge on the energy commodity’s value, with surges in the oil price pushing earnings sky-high in 2022.

Let’s take a closer look at why Currie dubbed oil “the true reopening play”.

Tailwinds for oil price as China reopens

The oil price could rebound to near-2022 highs this year as China relaxes COVID-19 restrictions and reopens its borders, as announced late last year.

In fact, Currie expects oil’s value to leap more than 30% from around US$82.67 as of Wednesday’s close.

Jeff Currie, global head of commodities at Goldman Sachs, discusses the impact of the the return of demand from China on oil and copper prices. He speaks on “Bloomberg Markets” https://t.co/91sJ6MxsE4 pic.twitter.com/npMuowcYMN

— Bloomberg TV (@BloombergTV) January 11, 2023

https://platform.twitter.com/widgets.js

The expert believes oil could reach U$90 a barrel this quarter. It could then increase to US$95 in the June quarter as “the reopening gains momentum”.

Throw a premium due to the reopening’s speed and international air travel returning to China on top, and “you’re up to U$110 by [the] third quarter”, Currie said.

And he’s not alone in his bullishness. Indeed, it’s surpassed by that of hedge fund trader Pierre Andurand, my Fool colleague James reported earlier this week.

Andurand is said to believe the price of oil could surpass US$140 a barrel this year. Similarly to Currie, Andurand’s forecast relies on Asia’s reopening and is conditional on no new lockdowns.

That could lead demand to increase by 4 million barrels this year, according to the trader.

No doubt, all eyes will be on ASX 200 oil shares if such forecasts come to fruition.

The post Oil best China reopening play: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• 5 ASX 200 shares smashing new, 52-week highs on Thursday
• Here’s why 2023 will be a huge year for passive income
• 2022 was brutal for Lynas shares. What will this year bring?
• Forget gold! I’d invest in ASX 200 shares to build a retirement portfolio
• Expert reveals best time to buy shares 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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