Category: Stock Market

One key reason why I invest in the share market is to increase my wealth over the long term.

By putting my money into quality ASX shares with a long-term view, I stand to benefit from the power of compounding.

Compounding explains why earning an average 9.6% per annum return would turn a single $20,000 investment into over $300,000 in the space of 30 years.

With that in mind, if I were to invest $20,000 into ASX shares now to try and build wealth, here’s how I would do it.

Find a balance between risk and reward

Investing in the share market is not risk-free like a term deposit or government bond. You can lose money if your investment turns sour. In light of this, I want to buy ASX shares that reward me for taking this risk.

For example, I recently bought Xero Limited (ASX: XRO) shares. It trades on high multiples, making it a higher-risk option. However, given the quality and popularity of its cloud accounting platform and its huge global market opportunity, I believe the long-term rewards from owning its shares are potentially compelling and offset this risk.

Whereas I have stayed well clear of semiconductor company Brainchip Holdings Ltd (ASX: BRN) because the risk/reward is incredibly unfavourable in my eyes. This is because the company has commercially unproven technology in an industry dominated by tech giants with huge budgets. I feel the chances of Brainchip being a success are so slim, it isn’t worth risking capital. Especially when the company already has a mind-boggling $1.2 billion market capitalisation on next to no revenue.

Choose a diverse group of great companies then sit back

I would also look for diversity and quality when investing $20,000 into ASX shares.

While you might be attracted to the tech sector or the lithium industry for the big potential gains, you run the risk of underperforming or losing money if things go awry in either of these areas and you have too much exposure to them.

You only need to look at the tech sector in 2022 to see this. If you had a portfolio filled with tech shares and no exposure to miners such as BHP Group Ltd (ASX: BHP) or the big four banks, you would almost certainly have seen the value of your investment portfolio fall. Whereas a diverse portfolio might have navigated the market volatility better and potentially even generated a positive return.

In light of this, I would build a portfolio filled with quality companies from a few different sectors that I believe have the potential to grow at a solid rate over the long term. By doing this, I can sit back and watch my wealth grow over the long term without having to be too hands-on. Though, that doesn’t necessarily mean set and forget. It would still be prudent to check in from time to time to ensure that the investment thesis was still intact.

All in all, I believe doing the above leaves you well-positioned on your investment journey.

The post How I’d invest $20,000 in ASX shares right now to help build long-term wealth appeared first on The Motley Fool Australia.

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• If I buy $2,000 in Pilbara Minerals shares right now, what could my returns be in 2023?
• 2022 was brutal for Lynas shares. What will this year bring?
• Why have ASX investors been buying Wesfarmers shares to hold?
• 3 ASX 200 dividend shares with HUGE passive-income potential for FY24
• Forget gold! I’d invest in ASX 200 shares to build a retirement portfolio

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 Lynas Rare Earths Ltd (ASX: LYC) share price sank 23% in 2022, a significant underperformance compared to the S&P/ASX 200 Index (ASX: XJO), which dropped by 7%.

Lynas claims to be the world’s second-largest producer of separated rare earth materials, as well as having the world’s largest single rare earths processing plant in Malaysia.

The company’s production includes neodymium and praseodymium (NdPr) used in magnets, and lanthanum, cerium and mixed heavy rare earths.

Lynas reveals that its rare earth materials are used in many high-tech and future-facing applications, including electronics, wind turbines and hybrid and electric vehicles.

What happened in 2022?

A number of different things can affect the Lynas share price.

Resource business success can be heavily impacted in the short term by the selling price of its resources.

In the third quarter of FY22, which covers the three months to 31 March 2022, the average selling price of the company’s rare earths was A$64.7 per kilo. In the fourth quarter of FY23, the three months to 30 June 2022, the average selling price was A$79.2 per kilo.

However, the company reported the average selling price had sunk to A$49.3 per kilo in the first quarter of FY23, which covers the three months to 30 September 2022.

While that’s still a solid price, investors may be worried about a further decline in the rare earths price. In addition, it comes amid the rapidly rising interest rates, which could hurt the global economy and global demand.

Lynas advised that the FY23 first quarter also saw “significant operational challenges, including a complete outage of water supply in Malaysia.” It lost 16 days of production after an equipment failure by the local water supplier.

Will 2023 be better for the Lynas share price?

Lynas is working on a number of growth projects to increase the scale of the business.

It is accelerating production capacity at Mt Weld, completing the rare earths processing facility in Kalgoorlie, enhancing its operations in Malaysia, and planning a US-based rare earth processing facility in Texas.

Progress on each of those projects could boost investor sentiment about the company.

Lynas said the downward pricing trend had been “triggered by concerns that the 25% production quota increase in China would lead to oversupply”. However, prices started to recover and stabilise in mid-September “once these concerns were found to be excessive”.

The company told investors at the end of October that “future pricing trends will depend mainly on the economic recovery in China, which has seen weak demand in the recent past.”

With the Chinese economy now open after COVID lockdowns, could this mean there’s something of a rebound in demand for rare earths from China?

Bear in mind that interest rates remain high, however, and there is uncertainty about how the global economy will go from here.

The Lynas share price has rebounded more than 10% since 3 January 2023.

According to Commsec data, there are currently four analysts that rate Lynas as a buy, four hold ratings and two sell ratings.

The post 2022 was brutal for Lynas shares. What will this year bring? appeared first on The Motley Fool Australia.

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More reading

• Forget gold! I’d invest in ASX 200 shares to build a retirement portfolio
• Expert reveals best time to buy shares in 2023
• 5 things to watch on the ASX 200 on Thursday
• Why did the Xero share price take such a beating on Wednesday?
• When it comes to ASX 200 dividend shares, is boring better?

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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Amid surging inflation and rising interest rates, many investors have likely considered adding gold to their retirement portfolio. The yellow metal is often touted as a good inflation hedge. However, I believe S&P/ASX 200 Index (ASX: XJO) shares could give better protection against the cash-eating measure.

The importance of inflation hedges

Considering the long-term impacts of inflation is an important part of investing for retirement.

Inflation lessens the value of cash. Meaning, what might be a substantial retirement portfolio now, may not stretch as far in the years to come.

That’s why I think it’s worthwhile to consider investing in inflation hedges. Inflation hedges are assets either immune from inflation or capable of growing in value faster than the inflation rate.

One asset often said to house the former quality is gold. The price of gold recently reached an eight-month-high of around US$1,880 an ounce, potentially partially driven by rising demand for its inflation-busting qualities.

However, gold presents what’s known as an opportunity cost. Unlike other investments, it doesn’t pay dividends or interest.

And that’s one reason why I’d turn to ASX 200 shares over gold when building a retirement portfolio.

I’d invest in ASX 200 shares over gold for retirement

While ASX 200 shares generally bring greater risk than gold, they offer a key opportunity – compounding. Many stocks that call the index home pay dividends.

By reinvesting these dividends, a future retiree can compound their investments, thereby potentially growing them at a faster rate than they otherwise might.

Such dividends, alongside potential share price gains, offer the potential for an investor to realise gains at a faster rate than inflation. Thus, ASX 200 shares can act as an inflation hedge.

Additionally, the index houses many of the market’s blue-chip shares.

Blue chip stocks offer exposure to the largest, longest-standing companies. They often boast strong balance sheets, solid earnings records, and loyal customer bases.

Thus, they typically represent a lower-risk investment than, say, growth shares. Such a quality may be important for those building a portfolio designed to last the length of their retirement.

Finally, while gold is trading at around eight-month highs, 2022’s downturn has likely left many ASX 200 shares trading below their fair value.

That means there are likely plenty of bargain buys out there right now, potentially offering a greater opportunity to realise gains.

Though, no investment – whether it be in gold or stocks – can be guaranteed to provide returns or hold its value. Further, past performance doesn’t guarantee future performance.

The post Forget gold! I’d invest in ASX 200 shares to build a retirement portfolio appeared first on The Motley Fool Australia.

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More reading

• Expert reveals best time to buy shares in 2023
• 5 things to watch on the ASX 200 on Thursday
• Why did the Xero share price take such a beating on Wednesday?
• When it comes to ASX 200 dividend shares, is boring better?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

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

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The Vanguard MSCI Index International Shares ETF (ASX: VGS) suffered through 2022, with the exchange-traded fund (ETF) falling by 14%.

It wasn’t the worst-performing ETF by far. For example, the Betashares Nasdaq 100 ETF (ASX: NDQ) dropped by around 30% last year.

Indeed, it was a rough time for a number of markets and sectors. While the ASX didn’t fall much because of its large weighting to ASX bank shares and ASX mining shares (which did well), there were a number of ASX tech shares that did suffer.

Why did the Vanguard MSCI Index International Shares ETF decline?

An ETF’s return is dictated by the return of the underlying holdings. If the combined return of the holdings is positive (taking into account the size of each position), then the ETF’s return can be positive. Each ETF has a management fee, with this one costing 0.18% per annum, which reduces the return.

If we look at the biggest holdings within the ETF, there are a number of the world’s biggest, most recognisable technology businesses including Apple, Microsoft, Alphabet, Amazon.com, Tesla and Nvidia.

In 2022, the Apple share price fell 27%, the Microsoft share price declined by around 30%, the Amazon share price dropped by 50%, the Alphabet share price declined by around 40%, and the Tesla share price plunged 65%.

Interest rates have soared higher as central banks try to put a lid on inflation. But, this is hurting share prices, particularly ones that have a lot of growth factored into their share price.

Billionaire Ray Dalio, founder of Bridgewater Associates, once said:

It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

What next for the global share market?

According to reporting by Reuters, the World Bank has cut its 2023 forecast to a level where many countries are on the brink of recession. Global growth is now expected to be 1.7% in 2023, which would reportedly be the third-worst year in 30 years, behind 2009 and 2020. The World Bank was previously predicting global growth of 3%.

The Eurozone and US are now predicted to grow by just 0.5%. That’s not great for the Vanguard MSCI Index International Shares ETF considering Europe and the US are where a large majority of the ETF is invested.

Reuters reported that the World Bank said in a statement:

Given fragile economic conditions, any new adverse development – such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic or escalating geopolitical tensions – could push the global economy into recession.

Rising interest rates may well have the biggest impact in 2023. The US Federal Reserve has continued to be committed to doing what it takes to bring inflation back to normal.

Federal Reserve Chair Jerome Powell continues to talk about enacting decisions to do what’s needed. CNBC reported on comments from Powell in a speech for Sweden’s Riksbank, he said:

Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.

The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors.

Foolish takeaway

I don’t think the global share market is going to perform strongly for most of the year. I believe that the US Federal Reserve is going to leave interest rates at a high level for longer than plenty of investors would like. However, when interest rates stop rising, it could be a catalyst late in the year, particularly if inflation significantly reduces.

But, in my opinion, the Vanguard MSCI Index International Shares ETF still has a very promising long-term future. The quality of the 1,500 or so businesses is good and I think the global diversification is great.

The post 2022 wasn’t kind to the Vanguard MSCI Index International Shares ETF (VGS). What now? appeared first on The Motley Fool Australia.

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More reading

• How I’d invest $300 a month in ASX dividend shares to target a $30,000 annual second income
• 1 in 7 Australians own an ETF: Are these the ones to buy?
• These could be top ETFs for ASX investors to buy in January
• 3 quality ETFs for ASX investors to buy next year
• I’d aim for a $1 million by buying just a handful of ASX shares

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, Microsoft, Nvidia, Tesla, and Vanguard Msci Index International Shares ETF. 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 positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Despite the perils of predicting the bottom, one expert has stuck his neck out to tell investors when would be the best time to buy stocks in the coming year.

DeVere Group chief executive Nigel Green reckons that the “peak opportunity” for investment will come in just a few weeks — late in the first quarter.

“Until then, unemployment will be rising and there will still be aggressive language from the central banks on the need to stamp out inflation, which by then will be sharply down from current levels,” he said.

“This is, perhaps, when stocks will reach their cyclical bottom, and when investors might be rewarded for taking the plunge.”

The stock market is always forward-looking, so Green warned that inflation will likely still be raging at this point.

“It will still be well above the 2% target set by the central banks.”

Why stock prices could explode in the second quarter

Green predicts that by the second quarter, risk assets like stocks will have already priced in “a cyclical upturn” in the G7 economies.

“The assets that have fallen hardest between now and then may be the strongest performers during this recovery rally, with the best performing days probably at the start,” he said.

“There will be cyclically sensitive sectors, such as industrials, consumer discretionary and autos.”

The catalyst for these returns could be the central banks ending interest rate hikes and an “easing of rhetoric on inflation”.

“As it slowly makes its way down to the 2% target rate in the major western economies, companies [are] cutting back fast, together with signs of economic stabilisation.”

Don’t try to time the market though

Despite his own bold predictions, Green warned investors against trying to pick the bottom.

“Holding cash is tempting, but it suggests an ability to ‘time the market’ — to invest it at an optimum point in the cycle — and this is nearly always impossible,” he said.

“Investors should be starting to position themselves for the cyclical upturn.”

Green also urged portfolios should remain diversified and investors should take “a disciplined approach to putting money into the markets that ignores current trends”.

“There is no ‘right way’ to approach investing, since each individual’s attitude to risk, and time horizon, differs.”

The post Expert reveals best time to buy shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Why did the Xero share price take such a beating on Wednesday?
• When it comes to ASX 200 dividend shares, is boring better?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• ASX 200 lifts despite latest Aussie inflation data

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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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and raced notably higher. The benchmark index rose 0.9% to 7,195.3 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set to rise again on Thursday following a solid night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 32 points or 0.45% higher this morning. In late trade in the United States, the Dow Jones is up 0.5%, the S&P 500 has risen 0.85% and the NASDAQ has climbed 1.25%. Investors are betting that Thursday’s US inflation reading will be soft.

Lithium shares on watch

ASX 200 lithium shares such as Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS) could have a decent session after their US counterparts charged higher overnight. It appears that US investors were scrambling to buy higher risk lithium shares again on the hopes that inflation is easing. Lithium giants Albemarle, Livent, and SQM are all up over 5% in late trade.

Oil prices charge higher

Energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have another strong day after oil prices charged higher again on Wednesday night. According to Bloomberg, the WTI crude oil price is up 2.8% to US$77.24 a barrel and the Brent crude oil price is up 2.85% to US$82.38 a barrel. Oil prices rose on global economic growth optimism.

Copper at six-month high

Mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) could have a decent session after a range of commodity prices pushed higher. One commodity that they produce that is performing particularly positively right now is copper. It rose beyond US$9,000 a tonne overnight on the LME, which is a six-month high. This has been driven by optimism that China’s reopening will underpin increased demand from the world’s top consumer.

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price rose again overnight. According to CNBC, the spot gold price is up 0.25% to US$1,881.1 an ounce. Gold rose ahead of tonight’s key US inflation reading.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• Why did the Xero share price take such a beating on Wednesday?
• Here are the top 10 ASX 200 shares today
• When it comes to ASX 200 dividend shares, is boring better?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• ASX 200 lifts despite latest Aussie inflation data

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

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If the latest monthly CPI data is anything to go by, rising inflation is still proving stubbornly difficult to quash. As a result, many Aussies are really starting to feel the pinch of surging prices across life’s everyday essentials. 

Yes, wages have also been climbing. But for most of those fortunate enough to have received a boost to their take-home pay, this has generally been eradicated (and then some!) by the need to shell out more at the checkout.

So, what’s the solution? Start a side hustle? Take a second job? Hit up the boss for a pay rise?

If you’re looking for a slightly less labour-intensive way to boost your income, ASX dividend shares could be the answer. Unlike investment properties, which can take considerable time and effort to maintain, dividend stocks have the potential to provide a truly passive income stream.

So sit back and relax! Because we asked our Foolish contributors which ASX dividend shares they reckon are worth buying with your hard-earned cash right now. Here’s what the team came up with:

5 best ASX dividend shares for December 2022 (smallest to largest)

Universal Store Holdings Ltd (ASX: UNI), $394.34 million

Vanguard Australian Shares High Yield ETF (ASX: VHY), $2.68 billion

Sonic Healthcare Limited (ASX: SHL), $14.65 billion

ANZ Group Holdings Ltd (ASX: ANZ), $71.24 billion

Westpac Banking Corp (ASX: WBC), $82.15 billion

(Market capitalisations as at market close on 11 January 2023)

Why our Foolish writers love these ASX dividend shares

Universal Store Holdings Ltd

What it does: Universal is a retailer of clothing and accessories aimed at dressing Australia’s youth. The company operates 80 stores across Australia, as well as two separately-branded online stores, and its newly acquired Thrills brand.

By Brooke Cooper: The Universal Store share price was hit hard, alongside those of many retailers, in 2022. The stock fell 25% over the 12 months ended 31 December.

However, as Goldman Sachs notes, the economic headwinds that spurred much of the downturn among ASX consumer dictionary shares are unlikely to majorly impact Universal’s target market. Thus, I believe the stock’s struggles may have brought about a buying opportunity.

Universal Store shares have paid 21.5 cents of dividends over the last 12 months and are currently trading at $5.14. That leaves the stock boasting a 4.17% dividend yield.

Motley Fool contributor Brooke Cooper does not own shares of Universal Store Holdings Ltd.

Vanguard Australian Shares High Yield ETF

What it does: The Vanguard Australian Shares High Yield ETF is an exchange-traded fund (ETF) that invests in a basket of ASX-listed dividend-paying shares.

By Sebastian Bowen: This ETF from reputable provider Vanguard aims to provide investors with high levels of dividend income and franking credits. It holds a relatively concentrated basket of only ASX dividend shares.

These mostly consist of the blue-chip shares income investors know and love, spread across different industries. They include banking and finance, mining, energy, infrastructure, and consumer staples.

As such, this investment could well be worth considering for income investors in 2023 who are seeking a diversified, income-producing investment in one single and simple fund.

This ETF also pays out dividend distributions quarterly, which some investors might appreciate. On recent pricing, the Vanguard Australian Shares High Yield ETF offered a trailing distribution yield of more than 6%.

Motley Fool contributor Sebastian Bowen does not own units of the Vanguard Australian Shares High Yield ETF.

Sonic Healthcare Limited

What it does: Sonic is a global pathology healthcare business that operates in a number of countries including Australia, the USA, Germany, the UK, and Switzerland.

By Tristan Harrison: Sonic Healthcare has a stated progressive dividend policy. It has increased its dividend every year for a decade.

According to Commsec, the company is expected to pay an annual dividend per share of $1.04 in FY24. This translates to a forward, grossed-up dividend yield of almost 5%.

Sonic management points to “strong underlying industry drivers and market share” with a backlog of testing postponed during the pandemic. This implies solid, non-COVID testing revenue growth over the short-to-medium term.

I like the company’s recent acquisitions, including the 19.9% stake it bought in Microba Pty Ltd (ASX: MAP). I believe this is a good use of the company’s COVID-testing cash flow and can help grow its profit and dividend in future years.

Motley Fool contributor Tristan Harrison does not own shares of Sonic Healthcare Limited.

ANZ Group Holdings Ltd

What it does: ANZ is the smallest of the big four Australian banks, servicing both Australia and New Zealand across its retail, commercial, and institutional divisions. As of September 2022, the bank held $283.1 billion worth of Australian home loans on its balance sheet.

By Mitchell Lawler: The market appears to be discounting ANZ shares compared to its peers. Right now, big blue is trading at roughly 10 times earnings.

In comparison, the rest of the banking giants fetch 14 to 19 multiples. Perhaps investors aren’t keen on the bank’s expenses chewing up 45% of its revenue – the highest of the big four.

However, I’m of the opinion the proposed merger between ANZ and Suncorp Group Ltd (ASX: SUN) will go through… eventually. The mergers of the past – Commonwealth Bank of Australia (ASX: CBA) and Bankwest, Westpac and St. George – have set precedents that will be hard for the ACCC to argue against.

A merger of ANZ and Suncorp would help create business simplification and improved pricing power. I believe this would provide justification for ANZ shares to trade more in line with the industry average.

In my opinion, ANZ shares offer an attractive blend of income (6.14% yield currently) and potential share price growth.

Motley Fool contributor Mitchell Lawler does not own shares of ANZ Group Holdings Ltd but does own shares of Commonwealth Bank of Australia.

Westpac Banking Corp

What it does: Westpac is one of Australia’s big four banks. As well as the eponymous Westpac brand, it operates the Bank SA, Bank of Melbourne, Rams, and St George brands.

By James Mickleboro: I think Westpac could be a top dividend option in January. Thanks to the positive impact of rising interest rates on margins and the bank’s bold cost-reduction target, I feel that Australia’s oldest bank is well-placed to deliver solid earnings and dividend growth in the coming years.

I’m not alone in this view. Goldman Sachs is forecasting fully-franked dividends per share of $1.48 in FY 2023, $1.59 in FY 2024, and $1.69 in FY 2025. This represents yields of 6.3%, 6.8%, and 7.2%, respectively, based on the current share price. Goldman also sees plenty of upside with its conviction buy rating and $27.60 price target.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp.

The post Top ASX dividend shares to buy in January 2023 appeared first on The Motley Fool Australia.

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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 Sonic Healthcare, Vanguard Australian Shares High Yield ETF, and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Xero Limited (ASX: XRO) share price languished today despite a broadly positive session for Australian shares.

Investors in the cloud-based accounting software provider might find some solace in the fact that they’re not alone — misery loves company, right? Other notable ASX tech shares that experienced weakness today include Link Administration Holdings Ltd (ASX: LNK) and TechnologyOne Ltd (ASX: TNE).

Though, Xero is mostly to blame for dragging the technology sector into the red. At the closing bell, Xero shares shrunk 3.3% in value to $69.29 apiece. In contrast, the S&P/ASX 200 Index (ASX: XJO) finished 0.9% higher.

Losing one of its growth engines

Xero’s bottom line is treading on the cusp of profitability. This puts a greater focus on the software company’s top-line growth trajectory. If revenue begins to slow, it could significantly impact the future potential earnings power of the company, and its valuation.

Yesterday afternoon, the Australian Financial Review reported on the delay to the latest phase in the United Kingdom’s Making Tax Digital (MTD) initiative. Under the revised plan, the use of digital accounting for income tax self-assessment (ITSA) has been pushed back from April 2024 to April 2026.

Those earning more than £50,000 (A$87,975) will now have an additional two years to adopt an MTD-supported software solution. The change is a blow to Xero’s share price and its short-term growth ambitions in its largest market outside of Australia.

The accounting software company provided the news itself via a blog three weeks ago. Within the blog, Xero shared the new-look roadmap for its major UK catalyst, the MTD rollout:

• April 2026 — MTD for ITSA instituted for businesses, self-employed individuals, and landlords with income over £50,000
• April 2027 — MTD for ITSA instituted for businesses, self-employed individuals, and landlords with income over £30,000

Importantly, the changes are merely a delay and not a removal of previous plans. However, the high rate of inflation puts a greater value on cash flows in the near term.

Does the Xero share price have potential?

Shareholders might be wary of slowing growth in the future. Though, Xero has been growing its cash from operations at an impressive margin for years. The question is whether there will be considerable profits to be made when the company decides to take its foot off the gas.

Two brokers that are opportunistic on the Xero share price at the moment are Citi and Bell Potter. Both currently hold a price target of $97.90 on Xero shares. That would mean investors at today’s price could be looking at roughly a 42% upside.

The Xero share price is down an astonishing 45.8% over the past year.

The post Why did the Xero share price take such a beating on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• When it comes to ASX 200 dividend shares, is boring better?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• ASX 200 lifts despite latest Aussie inflation data
• Why European Lithium, PEXA, PolyNovo, and Xero shares are dropping today
• What’s the outlook for ASX 200 gold shares in 2023?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Link Administration and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Technology One. 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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Whilst I’m a valuer of consistency when it comes to investing, I still regard a new year as a great opportunity to take a look at my ASX share portfolio and think about what my next moves might be.

So here are three dependable ASX shares that I’m seriously considering adding to my share portfolio in 2023.

3 ASX shares that I’m hoping to buy this year

Brickworks Limited (ASX: BKW)

Brickworks is sometimes derided as a ‘borin’ kind of ASX 200 share. But that’s precisely why I would love to own this company. Brickworks’ main business is the manufacturing and sale of construction materials, as its name implies.

But this company also has a lucrative property portfolio, which it cannily builds up using surplus land from its manufacturing facilities. This enables the company to mitigate the cyclical nature of the construction materials industry.

Further, the company also has a share investment portfolio, headlined by a massive stake in Washington H. Soul Pattinson and Co Ltd (ASX: SOL), which is another ASX 200 share I deeply admire.

Perhaps what attracts me most to Brickworks shares is the company’s stellar dividend track record. Brickworks hasn’t cut its dividend in more than four decades, and more often than not, gives its investors an annual dividend pay rise.

All of these factors are driving me to add Brickworks to my portfolio in 2023 if I can get an attractive price.

Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)

This exchange-traded fund (ETF) from Vanguard is an investment I already own. However, I am hoping to add even more to my holdings in 2023. Unlike the more popular Vanguard Australian Shares Index ETF (ASX: VAS), this fund focuses exclusively on the smaller side of the ASX.

Instead of BHP Group Ltd (ASX: CBA) and Commonwealth Bank of Australia (ASX: CBA), you’ll find companies like Lynas Rare Earth Ltd (ASX: LYC), Cleanaway Waste Management Ltd (ASX: CWY) and Carsales.com Ltd (ASX: CAR) amongst this ETF’s major holdings.

I think smaller ASX shares have far more capacity for growth than our largest businesses. So I like the diversification that this ETF brings to my portfolio. This fund also tends to pay out very healthy dividend distributions as well.

TechnologyOne Ltd (ASX: TNE)

My final 2023 hopeful is an ASX 200 tech share in TechnologyOne. Tech shares had an exceptionally rough year last year. But TechnologyOne was spared the pain. I think this was due to the high quality of this business. This company is a top provider of enterprise software to a range of clients, including companies, universities and governments.

TechnologyOne has delivered some impressive growth numbers over many years too. In FY2022, the company managed to boost its revenues by 19% and its after-tax profits by an even better 22%. I don’t see the success slowing down any time soon either.

So this is the third ASX share I would love to see in my portfolio by the end of 2023, and I’m hoping that this year will give me a compelling price at some point to realise this dream.

The post New year, new look: 3 dependable ASX shares I’ll be adding to my portfolio in 2023 appeared first on The Motley Fool Australia.

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More reading

• ‘Attractively priced’: Why fund is excited by these 2 ASX 200 shares
• How ASX dividend shares can solve retirement income needs
• Brokers name 3 ASX shares to buy now
• 5 things to watch on the ASX 200 on Friday
• Here’s how I’ll be investing my money in ASX shares in 2023

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF, Vanguard Msci Australian Small Companies Index ETF, 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 Carsales.com and Technology One. 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 was a good day to be invested in many S&P/ASX 200 Index (ASX: XJO) shares, with the index gaining 0.9% on Wednesday to close at 7,195.3 points.

In a welcome change from yesterday’s session, nearly all sectors ended the day higher than they started.

That was despite the Australian Bureau of Statistics releasing seemingly disappointing inflation data. The Aussie inflation rate rose 7.3% over the 12 months to November, with the cost of housing leading the increase.

Leading the surge among ASX 200 shares today were miners, with the S&P/ASX 200 Materials Index (ASX: XMJ) lifting 1.7%. Joining it in the green was the S&P/ASX 200 Real Estate Index (ASX: XRE), gaining 1.9%.

However, it wasn’t such a good day for energy providers. The S&P/ASX 200 Utilities Index (ASX: XUJ) fell 0.5% today.

Let’s take a look at the shares that led the market higher on Wednesday.

Top 10 ASX 200 shares countdown

Today’s top-performing ASX 200 stock was none other than former favourite Novonix Ltd (ASX: NVX).

The tech share lifted 9.3% today to close at $1.755. Though, that’s still 82% lower than it was this time last year.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
Novonix Ltd (ASX: NVX)	$1.755	9.35%
IGO Ltd (ASX: IGO)	$14.63	5.18%
Allkem Ltd (ASX: AKE)	$12.47	5.14%
Liontown Resources Ltd (ASX: LTR)	$1.50	4.9%
Lovisa Holdings Ltd (ASX: LOV)	$25.33	4.63%
Sayona Mining Ltd (ASX: SYA)	$0.235	4.44%
Mineral Resources Ltd (ASX: MIN)	$87.93	3.75%
AMP Ltd (ASX: AMP)	$1.315	3.54%
Megaport Ltd (ASX: MP1)	$6.50	3.5%
Pinnacle Investment Management Group Ltd (ASX: PNI)	$10.13	3.47%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 3 ASX 200 lithium shares brokers just upgraded to ‘buy’
• Why Allkem, Pilbara Minerals, Talga, and Westgold shares are storming higher today
• Will 2023 be a golden year for ASX 200 mining shares?
• 5 things to watch on the ASX 200 on Wednesday

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 Lovisa, Megaport, and Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Lovisa and Megaport. 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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