Category: Stock Market

Earning monthly income from ASX dividend shares can be a good way of generating extra cash on the side.

Mining giant Fortescue Metals Group Ltd (ASX: FMG) has a strong history of paying dividends to investors.

Fortescue shares have climbed 5% in the year to date and were priced at $21.57 at last close.

How many Fortescue shares would get you to $150 a month in dividends?

Starting with the basics, a monthly income of $150 equates to an annual income of $1800.

Fortescue has paid $1.96 worth of dividends in the past year. This consists of an interim fully franked dividend of 75 cents per share in the first half of FY23, and a final fully franked dividend of $1.21 per share in the second half of FY22.

So in order to have received $1800 ($150 a month) from Fortescue shares over the past year, investors would need to own 918 shares in the company.

At the last closing price of $21.57 per share, this would cost an investor $19,801.26.

Dividend estimate

Looking to the future, the team at Bell Potter is tipping Fortescue to pay a larger dividend in the second half of FY23.

Analysts are forecasting Fortescue to pay a fully franked final dividend of 148.8 cents per share this financial year.

If this eventuates, Fortescue would pay a total of 223.8 cents per share in dividends in the 2023 financial year.

To receive $1800 in annual income — or $150 in monthly income — from a 223.8 cents per share dividend, investors would need to own 804 Fortescue shares ($1,800 divided by $2.238).

Therefore, based on the company’s last closing share price of $21.57, investors would need to invest $17,342.28 in Fortescue to generate a monthly income of $150.

Fortescue reported an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$4.352 billion in the first half of FY23, down 8.6% on the prior corresponding half.

Share price snapshot

The Fortescue share price has slipped 0.42% in the last year. However, in the past week, the company’s share price has climbed 1.94%.

Fortescue has a market capitalisation of about $66.4 billion based on its last closing price.

The post Here’s how much I would need to invest in Fortescue shares to generate a $150 monthly income appeared first on The Motley Fool Australia.

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More reading

• Which is the best ASX 200 iron ore stock now: BHP, Fortescue, or Mineral Resources?
• Why did the Fortescue share price smash the ASX 200 in March?
• 2 ASX 200 mining directors buying up their company shares in the past week
• Here are the top 10 ASX 200 shares today
• Bought $9,000 of Fortescue shares in 2018? Here’s how much passive income you’ve pocketed

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

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The S&P/ASX 200 Index (ASX: XJO) share Medibank Private Limited (ASX: MPL) is expected to pay an increasingly attractive dividend in the next few years.

The ASX healthcare share has been through plenty of difficulties with a cyberattack. However, the Medibank share price has been steadily climbing since hitting a low after the sell-off.

Despite the rise in the share price, the private healthcare business is still projected to pay a sizeable dividend yield this year and beyond.

Ongoing growth

In the recent half-year result, the business saw a number of growth numbers, despite concerns about what could happen after the cyber attack.

It revealed that group net profit after tax (NPAT) rose 5.9% to $233.3 million despite cybercrime costs of $26.2 million, net resident policyholders grew 1,700 (or 0.7%) and net non-resident policy units grew by 33,400 (or 17%). The health insurance operating profit increased 8.7% to $305.2 million. Medibank also increased its interim dividend by 3.3% to 6.3 cents per share.

It said that more normal business operations resumed in January, with “early signs of improvement in policyholder trajectory”. In the month up to 18 February, it saw net growth of 200.

The ASX 200 share also reported that the resident health insurance market remained “buoyant” with growing numbers of younger adults and those taking out cover for the first time despite the challenging economic conditions.

Dividend expectations

According to projections on Commsec, the business is expected to pay an annual dividend per share of 14 cents in FY23. This would be a grossed-up dividend yield of 5.8%.

The dividend could then grow by 11.4% to an annual payment of 15.6 cents per share. This would be a grossed-up dividend yield of 6.5%.

Commsec projections suggest that the ASX 200 share’s dividend could grow by another 2.6% to 16 cents per share in FY25. This would be a grossed-up dividend yield of 6.7%, almost reaching that 7% level.

Foolish takeaway

Dividends are not guaranteed. But, if Medibank can keep increasing its profit then the dividend can keep increasing as well.

The post This ASX 200 share could pay a dividend yield of almost 7% by 2025 appeared first on The Motley Fool Australia.

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• Medibank share price lifts despite shareholder class action
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• ‘Increased confidence’: Alphinity reveals 2 ASX 200 shares it just bought
• Latitude shares are back on the ASX, but why are they falling 8% today?
• 2 beaten-up ASX dividend shares I’d buy for long-term income

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 Arafura Rare Earths Ltd (ASX: ARU) share price has returned from its trading halt with a bang.

In morning trade, the rare earths developer’s shares are up 11% to 53.5 cents.

Why is the Arafura share price racing higher?

Investors have been bidding the Arafura share price higher today after the company announced a major offtake agreement for its Nolans project.

According to the release, the company has signed a binding offtake agreement with Siemens Gamesa Renewable Energy for up to 400 tonnes per annum (tpa) of neodymium and praseodymium (NdPr) metal.

Siemens Gamesa is a pioneer and leader of the wind industry with 27,000 employees.

The deal

The deal is for five years (with an option to extend for two more) and will see offtake volumes start at 200tpa in 2026 before increasing to 360tpa in 2027 and then 400tpa for the following three years. This is in line with the ramp up of the Nolans project.

Management notes that this is the second offtake agreement to be signed, with approximately 53% of its targeted 85% annual production now secured under long-term sale arrangements.

In addition, the company highlights that this offtake agreement will support its ongoing discussions with Germany’s ECA Euler Hermes for an untied loan guarantee of up to US$600 million to support the project.

Arafura’s Managing Director, Gavin Lockyer, commented:

We are delighted to have concluded negotiations for our second offtake agreement. Siemens Gamesa is the world’s leading manufacturer of offshore wind turbines, and this agreement compliments our strategy to create supply diversification into the renewable & E-mobility sectors.

The Arafura share price is now up 52% since this time last year.

The post Here’s why the Arafura share price is racing 11% higher appeared first on The Motley Fool Australia.

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More reading

• Why has the Arafura share price just been halted?
• Arafura stock sell-off continues, broker tips 35% upside
• Why Atlantic Lithium, Arafura, Brainchip, and Core Lithium shares are falling

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 Newcrest Mining Ltd (ASX: NCM) share price is on the move on Tuesday morning.

At the time of writing, the gold miner’s shares are up 6.5% to $30.12.

Why is the Newcrest share price rising?

The Newcrest share price is defying a pullback in the gold price overnight after the company received an improved takeover proposal from US giant Newmont.

Back in February, Newcrest received and rejected an all-scrip offer that was the equivalent of $27.40 per share. This followed the rejection of a previously undisclosed $26.15 per share offer.

The Newcrest board felt that the offer undervalued the company. It explained:

The Board has considered the Indicative Proposal and has unanimously determined to reject the offer as it does not represent sufficient value for Newcrest shareholders.

New offer

This morning, Newcrest revealed that it has received an improved offer of 0.4 Newmont shares per Newcrest share.

In addition, the conditional and non-binding proposal permits Newcrest to pay a franked special dividend of up to US$1.10 per share.

This represents an aggregate implied value of A$32.87 per share, which is a 16% premium to the current Newcrest share price. It also values the company’s equity at $29.4 billion and implies an enterprise value of $32 billion.

The good news for Newmont is that this offer has been enough to get it access to Newcrest’s books. The miner has agreed to grant Newmont the opportunity to conduct confirmatory due diligence to put forward a binding proposal.

However, management has warned that there is no certainty that the revised proposal will result in a binding offer for consideration by shareholders. As a result, shareholders do not need to take any action at this stage.

Newcrest will continue to keep the market informed of any material developments in accordance with its continuous disclosure obligations.

The post Newcrest share price jumps on new takeover offer appeared first on The Motley Fool Australia.

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More reading

• ASX 200 gold shares are rallying. Is the yellow metal set for new all-time highs?
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Friday
• ASX shares are paying out $19 billion in dividends this week. Are you getting a piece?
• Why are ASX 200 gold shares like Newcrest being thumped on Thursday?

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 Commonwealth Bank of Australia (ASX: CBA) share price appears to have been caught up in what many have called a global banking crisis.

That saw it tumbling below $100 for the first time since October last year, hitting a 2023 low of $93.05 last month.

So, is the S&P/ASX 200 Index (ASX: XJO)’s biggest bank destined to sit below three figures for now, or is it gearing up to post a ripper recovery? Let’s take a look.

Was the ASX 200 banking giant caught up in international drama?

The CBA share price hasn’t traded over $100 since early March. In the meantime, the global banking sector has faced major disruptions.

United States-based Silvergate Bank kicked off a string of collapses last month, embroiling Silicon Valley Bank and Signature Bank as well. Not to mention, Credit Suisse appeared to be saved from the same fate by an acquisition agreement with Swiss peer UBS.

No doubt, all that shook some investors’ confidence in the sector, thereby weighing on shares in the likes of CBA.

But experts remain divided on whether things could be about to turn around for the biggest of the big four banks.

Will the CBA share price surpass $100?

CBA shares currently trade with a 4.2% dividend yield, a 17.15 price-to-earnings (P/E) ratio, and a 2.31 price-to-book (P/B) ratio, according to CommSec.

That makes the stock the most expensive of its big four banking peers on a P/E and P/B basis. It also offers the lowest dividend yield of the lot.

But Fairmont Equities’ Michael Gable believes the stock is worth the premium. The expert tips the bank to outperform over the long term due to its quality, as per The Bull.

Meanwhile, broker UBS has a $100 price target on CBA shares while Morgans expects the stock to slump to $96.11.

Personally, I think the CBA share price is likely to bounce into triple-digits in the near future. Indeed, it’s less than 1% off the milestone figure right now.

However, only time will tell if the stock can both surpass $100 and remain there, over the long term.

The post Is the CBA share price heading back over $100? appeared first on The Motley Fool Australia.

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More reading

• Could right now be a great time to buy ASX 200 bank stocks for passive income?
• Investing in ASX 200 dividend shares? Here’s how I’d aim for $200 per month in passive income
• Is right now a once-in-a-decade opportunity to buy CBA shares?
• ASX 200 rebounds after RBA hits pause on its rate hikes
• Passive income: How much to invest to get $800 per month

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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It’s not too often you find an ASX 200 dividend share sporting a high yield like 8.3%. Dividend yields are a direct result of a company’s share price. So it’s unusual to see investors allow a good-quality company’s share price to get so low that it jacks up its dividend yield to 8.3%. 

Yet that’s exactly the situation facing investors of famous ASX 200 retail share Harvey Norman Holdings Limited (ASX: HVN).

Harvey Norman hasn’t yet paid out its 2023 interim dividend. That payday for investors will come on 1 May next month. Investors are in line to net themselves 13 cents per share, fully franked. Together with the final dividend worth 17.5 cents per share that investors received back in November, Harvey Norman’s annual dividend now stands at a fully-franked 30.5 cents per share.

At market close on Friday, Harvey Norman shares finished trading at $3.67, down 1.08%:

At this share price, Havey Norman’s 30.5 cents per share in dividends gives this company a dividend yield of 10.22% right now. 

So is this ASX 200 share a high-yield bargain that shouldn’t be ignored?

Is this ASX 200 retail share a bargain buy right now?

Well, Harvey Norman shares certainly look cheap, just going off the company’s metrics. At $3.67, Harvey Norman sports a price-to-earnings (P/E) ratio of just 6.14.

By way of comparison, Commonwealth Bank of Australia (ASX: CBA) shares currently have a P/E ratio of 17.15, while the Coles Group Ltd (ASX: COL) share price is at 21.95.

But who better to judge if Harvey Norman shares are a bargain buy than the man who co-founded the company, Gerry Harvey?

Well, Harvey clearly thinks his own company is being undervalued by the markets. Late last month, we reported on how Harvey has been on an absolute buying spree of late. He had picked up more than $76 million worth of Harvey Norman shares over 2023 alone by the end of March.

And he hasn’t seemed to slow down either. An ASX filing from 3 April shows that Harvey made yet another purchase of 642,000 shares, close to $1 million worth, on 29 March.

So Harvey clearly thinks his own company is well in the bargain buy zone right now. But he’s not the only one. As we covered last week, ASX broker Goldman Sachs is another Harvey Norman bull. Goldman commented the following on its buy rating on Harvey Norman shares:

Harvey Norman holds a unique position within the electronics and appliances retail industry as a result of its franchise model of operations in Australia, property portfolio and regional exposure. While we do not view HVN as the most advanced retailer on digitalization, we view HVN as a more defensive option that is under-valued in the home category.

The broker has a 12-month share price target of $4.70 for the company.

So there’s more than one expert who is clearly seeing some value in this ASX 200 retail share right now.

The post At 10.2%, is this ASX 200 share a high-yield bargain? appeared first on The Motley Fool Australia.

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More reading

• This iconic ASX 200 retail share is down 28% over the past year. Is it time to buy?
• Top ASX dividend shares to buy in April 2023
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today
• Why is the Harvey Norman share price diving on Friday?
• 5 things to watch on the ASX 200 on Friday

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 positions in and has recommended Goldman Sachs Group and Harvey Norman. The Motley Fool Australia has positions in and has recommended Coles Group and Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Wesfarmers Ltd (ASX: WES) shares have been rising over the last six months. Is this a solid, defensive S&P/ASX 200 Index (ASX: XJO) stock to own in the current environment?

There are a number of different businesses within the Wesfarmers stable including Bunnings, Officeworks, Kmart, Target and Priceline.

It may be said that each of these businesses could have varying levels of resilience during an economic downturn.

I think the recent past could be a useful guide. I’m not talking about the COVID-19 period, Wesfarmers performed excellently during the pandemic.

The last difficult period

The coronavirus period was certainly tricky for many businesses, but the huge demand for DIY and construction materials, as well as technology and other products that Wesfarmers sold.

But, FY19 may be a good example of somewhat similar conditions where house prices had fallen and economic demand was lower.

In that result, Wesfarmers’ continuing operations earnings before interest and tax (EBIT) increased 12.2% and net profit after tax (NPAT) grew 13.5%. Bunnings managed to grow earnings.

But, as the saying goes, past performance is not a guarantee of future performance for the ASX 200 stock.

Are Wesfarmers shares defensive?

I think it’s important to say that no share price is impervious to volatility. Even if a company’s profit isn’t affected by a downturn, the market can still decide to push down a share price due to investor pessimism.

However, I believe that Wesfarmers is well-positioned to outperform in the current environment, making it a defensive ASX 200 stock.

In a time when household budgets may be stretched and particularly value-conscious, the price-focused businesses of Bunnings and Kmart could attract more customers than competitors.

Considering Priceline is a business that operates in the healthcare sector, it could also display good earnings.

The Wesfarmers chemicals, energy and fertiliser (WesCEF) segment seems to continue to perform thanks to the demand for commodities.

In my opinion, a good majority of Wesfarmers’ earnings could grow in FY23. Commsec estimates suggest that the company could generate earnings per share (EPS) of $2.14 in FY23 and $2.25 in FY24. This would put Wesfarmers shares at 24 times FY23’s estimated earnings and 23 times FY24’s estimated earnings.

Is the Wesfarmers share price a good buy?

I think Wesfarmers is usually a good business to consider because of its diversified operations and ability to invest in new businesses.

It’s not as cheap as it was last year. But, I think it has the potential to deliver capital growth, as well as good dividends.

There may be a bit of pain if interest rate effects hit harder than expected. But, over the long term, I think Wesfarmers is one of the most interesting and compelling ASX 200 stocks out there. I’d call it a buy.

The post Is Wesfarmers a good defensive ASX 200 stock to buy in the current climate? appeared first on The Motley Fool Australia.

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More reading

• How much do you need to invest to give up work and live only off dividend income?
• How I’d invest $5,000 today for long-term passive income
• How I’m building more passive income to retire early
• Big Wednesday: 12 ASX 200 stocks cracking new 52-week highs
• Why did the Wesfarmers share price just smash a new 52-week high?

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 positions in and has recommended Wesfarmers. 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 Webjet Limited (ASX: WEB) share price has done remarkably well over the last six months. It has risen by around 50%. There are not many ASX shares that have done as well as that.

The S&P/ASX 200 Index (ASX: XJO) has only gone up by 8% over the past half-year period.

Despite all of the higher interest rates, Webjet has managed to deliver excellent performance in terms of shareholder returns.

But, I believe the business has a very promising future and I still think it’s a buy for the long-term.

Reasonable valuation

Profitability is quickly returning to the ASX travel share’s financials. By the 2025 financial year, it could be making a high level of profit for shareholders again.

In the 2023 financial year, it’s expected to generate 15.4 cents of earnings per share (EPS), according to Commsec. Profit could approximately double in FY24 with an EPS of 31.4 cents.

The ASX travel share’s profit could rise by another 28% in FY25 to 40.1 cents.

Now, these are just projections – EPS could be weaker or stronger than those numbers.

But, taking Webjet’s FY25 forecast, it puts the Webjet share price at 18 times FY25’s estimated earnings.

I think FY25 could be the first full 12 months that the global travel industry is able to operate as normal with normalised airline capacity.

One of the main reasons why I think that Webjet’s valuation looks reasonable is because I think it can keep growing.

Growth expected

In the recent FY23 half-year result, Webjet said it has returned to pre-pandemic bookings.

WebBeds is Webjet’s business-to-business (B2B) segment. In HY23, the EBITDA margin was over 55% – ahead of pre-pandemic levels. In the seasonal peak of July and August, it achieved its EBITDA margin target of 62.5%. The ASX travel share said that WebBeds is on track to exceed pre-pandemic profitability in FY23.

The company is expecting its underlying earnings to exceed pre-COVID underlying earnings in FY24.

Webjet’s online travel agency business (OTA) has been gaining market share and it’s also hoping that new technology called Trip Ninja could increase its share of the international flights market.

With WebBeds, the business sees a “massive global opportunity” – it’s targeting $10 billion of total transaction value (TTV). To put that in perspective, the entire business saw TTV of $2.14 billion in the FY23 first half.

Webjet noted that WebBeds is now 35% more efficient on the metric of booking per full-time equivalent employee.

Foolish takeaway

I think the Webjet share price can climb from here over the long term, particularly if it keeps seeing good TTV growth and profit margin improvement. I believe it could continue to perform, even if the wider ASX share market stagnates.

The post The Webjet share price has soared 50% in 6 months: Why I think it’s still a buy appeared first on The Motley Fool Australia.

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More reading

• Big Wednesday: 12 ASX 200 stocks cracking new 52-week highs
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• Jewellery and travel: Analysts say these ASX growth shares are buys
• Here are the top 10 ASX 200 shares today
• Up 8% in 2023, is right now the time to buy back into Webjet shares?

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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Thankfully for income investors, there are plenty of dividend shares on the ASX offering attractive yields.

Two that brokers are particularly bullish on right now are named below. Here’s why they rate them as buys and what yields they expect in the near term:

Bank of Queensland Limited (ASX: BOQ)

The first ASX 200 dividend share for income investors to consider is Bank of Queensland.

It is the regional bank behind the eponymous Bank of Queensland brand. In addition, it owns the ME Bank and Virgin Money Australia brands.

Ord Minnett is feeling positive about Bank of Queensland thanks partly to its digitisation program. The broker expects the program to support loan and deposit growth, as well as achieve productivity benefits.

Ord Minnett has an accumulate rating and $8.40 price target on the bank’s shares.

As for dividends, the broker is forecasting fully franked dividends per share of 52 cents in FY 2023 and then 54 cents per share in FY 2023. Based on the current Bank of Queensland share price of $6.42, this will mean big yields of 8.1% and 8.4%, respectively.

Santos Ltd (ASX: STO)

Another ASX 200 dividend share that has been rated as a buy is Santos.

It is one of the region’s largest energy producers thanks to its recent merger with Oil Search. This merger means the company is now targeting production in and around the 100 million barrels of oil equivalent (mmboe) per annum. 

The team at Macquarie sees a lot of value in its shares at the current level. In fact, the broker recently highlighted that its shares have dropped to a level which is in line with a takeover offer several years ago. And that’s despite the recent addition of Oil Search’s assets. 

Macquarie currently has an outperform rating and $9.90 price target on Santos’ shares.

As for dividends, the broker is expecting dividends per share of 42 cents in FY 2023 and 31 cents in FY 2024. Based on the current Santos share price of $7.14, this will mean yields of 5.9% and 4.3%, respectively.

The post Banking and energy: The ASX 200 dividend shares to buy now according to analysts appeared first on The Motley Fool Australia.

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More reading

• What’s the forecast for the Bank of Queensland share price?
• 5 things to watch on the ASX 200 on Thursday
• Morgans names the best ASX 200 dividend shares to buy in April
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• ‘Strong demand’: The 2 ASX 200 shares to pounce on right now

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 ASX financial share Macquarie Group Ltd (ASX: MQG) has declined 8% since 7 March 2023. It’s currently under $180 per share.

It’s unsurprising that the investment bank has suffered a fall during this short amount of time considering all of the pain relating to the global banking sector over the past month.

First, there was the collapse of venture-tech-focused bank Silicon Valley Bank (SVB) which suffered from massive withdrawals of customer deposits, leading to the bank selling bonds at a loss. Then Credit Suisse had to be taken over by UBS.

But, a key question is whether the business will be able to generate pleasing returns from here. No one can say what the future shareholder returns are going to be, but I’m going to outline why the ASX financial share can perform for investors from here.

Dividends

I think that capital growth will generate the majority of the returns for shareholders because I expect that Macquarie will be able to generate long-term earnings growth. This will help push the Macquarie share price higher.

But, the dividends from Macquarie can help some of the returns and provide cash benefits during this period of volatility.

Excluding the effects of franking credits, over the last 12 months, Macquarie has paid dividends totalling $6.50 which is a dividend yield of 3.7%.

That dividend is expected to grow in the coming years.

In FY24 the dividend is expected to rise to $6.80 per share and then in FY25, the annual dividend per share could rise to $7.20 per share, according to Commsec.

In other words, by FY25, Macquarie could be paying an annual dividend share of 4.1%. I think that the dividend can continue to rise from here.

Long-term earnings growth

One of the biggest advantages of Macquarie Group Ltd (ASX: MQG) compared to a bank like Commonwealth Bank of Australia (ASX: CBA) is its global earnings base.

The domestically focused ASX banks generate (almost) all of their earnings from Australia and New Zealand, largely from lending.

Macquarie has a very diversified group of businesses. It does have a rapidly growing Australian banking division.

But, it also has a large asset management business, Macquarie has investment banking operations and also a commodities and global markets (CGM) business.

I think Macquarie has proven to be very effective at investing in the right places to help it grow. With its global operations, Macquarie is able to invest wherever makes the most sense for its capital.

The ASX financial share is putting money into green energy, green financing and other energy transition areas, which is a very large growth area.

Macquarie says it’s well-capitalised and conservatively positioned to handle whatever comes next. I think this can enable the business to outperform its ASX bank share peers.

Foolish takeaway

While the next 12 months could be uncertain for Macquarie’s earnings, Commsec numbers suggest that earnings per share (EPS) could rise to $13.20 in FY25. This would put the current Macquarie share price at 13 times FY25’s estimated earnings.

I think Macquarie shares can outperform the S&P/ASX 200 Index (ASX: XJO) over the longer term. However, with how large the business is, I wouldn’t expect it to achieve massive returns – so I think I’d go for other candidates to try to build a lot of wealth.

The post Could buying Macquarie shares at under $180 make me rich? appeared first on The Motley Fool Australia.

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More reading

• Why ASX shares in 2023 are eerily similar to 2019 (and what you should do)
• Morgans says these are some of the best blue chip ASX 200 shares to buy now
• Is right now a once-in-a-decade opportunity to buy ASX 200 bank shares?
• Should I use the banking crisis as an opportunity to pounce on Macquarie shares?
• Why these 3 ASX 200 shares could be leading picks for dividends and growth

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 positions in and 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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