Category: Stock Market

The All Ordinaries (ASX: XAO), or All Ords, ASX share Universal Store Holdings Ltd (ASX: UNI) could pay a very large dividend yield in FY25.

I think the retailer has already proven that it’s a leading ASX dividend share. Looking at its latest two dividends, the business has a grossed-up dividend yield of 7.1%. This has been boosted thanks to the Universal Store share price falling by 20% since 30 January 2023.

Universal Store describes itself as the owner of a portfolio of “premium youth fashion brands and omni-channel retail and wholesale businesses”. Its core businesses are Universal Store and CTC, which trades as the THRILLS brand. It is currently trialling the Perfect Stranger brand as a standalone retail concept. It operates more than 93 physical stores.

Those businesses sell “on-trend apparel products” to fashion-focused customers aged between 16 to 35.

Strong recent performance

During the FY23 first half, the ASX All Ords share opened four new Perfect Stranger stores, bringing the total number of stores to seven. Despite Perfect Stranger being the largest-selling brand within Universal Store, the performance of those seven stores has had “little to no impact on nearby Universal Store locations”.

Perfect Stranger’s positive early results from its move into New South Wales have bolstered confidence in a potential “nationwide rollout”. I think this is very promising and suggests there could be years of growth ahead for this brand.

The acquired THRILLS business has also been sustaining its sales growth.

Overall, excluding Cheap Thrills, group total sales increased 28.6% in HY23. Including Cheap Thrills, sales grew 34.5% to $145.7 million.

Underlying earnings before interest and tax (EBIT) went up 43.2% to $28.5 million, while statutory net profit after tax (NPAT) increased by 31.7% to $17.8 million. In summary, the business is profitable and rapidly growing.

This profit growth is funding the attractive, growing dividend. The HY23 dividend went up by 27% to 14 cents per share.

In the second half of FY23, it’s expecting to open four to six new Universal Store locations, along with three to four new Perfect Stranger stores and one new THRILLS stores. It’s aiming to have more than 100 stores by 30 June 2023.

The company is also aiming to control costs, as well as improve productivity and efficiencies amid the current environment of rising costs.

Dividend yield expectations for the All Ords ASX share

The ASX All Ords share’s earnings per share (EPS) is expected to grow each year to FY25, according to Commsec, helped by its growth plans and increasing scale. The dividend is expected to rise each year as well, to 35 cents per share in FY25.

This dividend would translate to a grossed-up dividend yield of 10.2% for the 2025 financial year.

I think Universal Store is a very intriguing investment and could deliver compelling market-beating total returns for investors over the next few years, though there could be volatility.

The post This All Ords ASX share could pay a 10% dividend yield in 2025 appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 7 ASX shares flying under the radar to buy now: Goldman Sachs
• Buy these ASX dividend shares with big yields today: experts
• Buy these ASX dividend shares before it’s too late: brokers
• Top ASX small-cap shares to buy in March 2023
• Why Brainchip, Lynas, Megaport, and Universal Store shares are dropping today

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.

from The Motley Fool Australia https://ift.tt/IqsaNQb

If you’re looking for a passive income boost, then you may want to check out the ASX dividend shares listed below.

Analysts have named these ASX shares as buys and tipped them to pay their shareholders attractive dividends this year and next. Here’s what you need to know::

Healthco Healthcare and Wellness REIT (ASX: HCW)

The first ASX dividend share for income investors to consider is the Healthco Healthcare and Wellness REIT.

It is a health and wellness focused real estate investment trust that invests in properties such as hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness properties.

Morgans is positive on the company and continues to forecast attractive dividend yields from its shares.

For example, Morgans is expecting in dividends per share of 7.5 cents in FY 2023 and 7.8 cents FY 2024. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.47, this will mean yields of 5.1% and 5.3% for investors.

Morgans has an add rating and $2.06 price target on its shares.

Rio Tinto Ltd (ASX: RIO)

Another ASX dividend share for income investors to look at is mining giant Rio Tinto.

It could be a top option for investors that are happy to invest in the mining sector. Particularly given the very attractive dividend yields its shares are tipped to provide in the coming years.

Goldman Sachs is very bullish and believes that Rio Tinto is a great option due to its “compelling valuation” and “return to production growth in 2023.”

Combined with strong iron ore prices, its analysts are expecting this to lead to fully franked dividends per share of US$5.33 in FY 2023 and then US$5.98 in FY 2024. Based on current exchange rates and the latest Rio Tinto share price of $114.80, this will mean yields of 6.9% and 7.7%, respectively.

Goldman Sachs has a conviction buy rating and price target of $140.40.

The post Buy these ASX dividend shares with 5%+ yields: analysts appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 top ASX mining shares I’d buy right now
• These ETFs could be top options for buy and hold investors
• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• How to generate $500 of monthly income from Rio Tinto shares
• Is it time to buy ASX 200 iron ore shares 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.

from The Motley Fool Australia https://ift.tt/IvcVan6

The three ASX mining shares I’m going to talk about in this article look like compelling buys for the long term, in my opinion. I particularly like the outlook for the copper miners.

Commodity prices are usually volatile. We don’t know what will happen next year, next month, or even next week. If we did, it’d be much easier to value the miners.

But, I think it’s safe to say that when resource prices go down, it typically leads to lower share prices for mining companies. That’s understandable considering the profit and possible dividends from the miners will also be lower.

However, I think that lower share prices are a buying opportunity when it comes to commodities that are typically cyclical, such as copper.

It’s worth keeping in mind, in the long term, copper demand is expected to rise as the world focuses more on decarbonisation.

Copper is essential for a variety of applications such as the power grid, renewable energy, electric vehicles, and so on. According to S&P Global, copper demand will double by 2035, which has the potential to open up a supply gap.

The copper price was below US$4 per pound last week, according to Commsec. Indeed, this lower price may have contributed to some of the declines in the ASX mining shares below.

Sandfire Resources Ltd (ASX: SFR)

Sandfire Resources has a market capitalisation of $2.5 billion, according to the ASX. The Sandfire share price has fallen 13% from 21 February 2023.

The business is expecting to benefit from the US$1.86 billion acquisition of the MATSA copper operations in Spain in February 2022, as well as the ramping up of the new Motheo mine in Botswana.

Sanfire’s earnings per share (EPS) is projected to soar by FY25, with a current projection of 42 cents, according to Commsec. If that happens, the Sandfire Resources share price could be valued at 13x FY25’s estimated earnings and an FY25 grossed-up dividend yield of 3%.

Aeris Resources Ltd (ASX: AIS)

Aeris Resources has a market capitalisation of $373 million, according to the ASX. The Aeris Resources share price is down around 30% since 22 February 2023.

The company describes itself as a mid-tier metals producer, with a copper-dominant portfolio, comprising four operating assets, a long-life development project, and a “highly prospective exploration portfolio” across the country.

This ASX mining share is generating positive cash flow and is expected to generate earnings before interest, tax, depreciation and amortisation (EBITDA) of $80 million to $110 million in FY23.

In FY25, the business is predicted to make 17.4 cents of EPS. This puts the Aeris Resources share price at just 3x FY25’s estimated earnings.

Rio Tinto Limited (ASX: RIO)

Rio Tinto is a massive ASX mining share. It has a market capitalisation of more than $42 billion. The Rio Tinto share price is down almost 10% since 3 March 2023.

This business produces a number of different commodities. Rio Tinto says that global demand is set to grow by between 1.5% to 2.5% per year.

Its Kennecott mine is located in Utah, in the US. The business is working on studies to expand the open-pit mine, as well as a possible underground mine below the existing open pit.

Rio Tinto also owns two-thirds of the Oyu Tolgoi mine, with the Mongolian government owning the other third. Rio Tinto manages the operations at Oyu Tolgoi which is one of the largest known copper and gold deposits in the world. When the mine is fully operational, it will be the fourth-largest copper mine in the world.

According to Commsec, Rio Tinto shares are trading at 12x FY25’s estimated earnings with a possible FY25 grossed-up dividend yield of 7.7%.

The post 3 top ASX mining shares I’d buy right now appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• These ETFs could be top options for buy and hold investors
• How I’d aim to retire rich enough to live on passive income from my ASX dividend shares
• How to generate $500 of monthly income from Rio Tinto shares
• Is it time to buy ASX 200 iron ore shares right now?
• Why is the Rio Tinto share price diving 5% on Thursday?

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.

from The Motley Fool Australia https://ift.tt/dQGL2Dc

The insurance industry is, fairly or unfairly, perceived as a boring sector to invest in.

But in turbulent economic times like this, investing in ASX insurance shares is not a bad idea.

The thesis is that it’s a service that consumers and businesses will see as essential even through tougher periods. Moreover, insurance companies earn better returns on all the collected premiums when interest rates are higher.

The team at Ophir holds a couple of insurance positions that experienced vastly different reporting seasons. But they have long-term faith in both S&P/ASX 200 Index (ASX: XJO) stocks:

Strong February, strong future

In a letter to clients, Ophir portfolio managers Steven Ng and Andrew Mitchell revealed that insurance broking giant AUB Group Ltd (ASX: AUB) reported one of the portfolio’s best results last month.

“It beat its half-year result and upgraded full-year earnings guidance,” the letter read.

“Even more importantly, the insurer upgraded its medium-term margin expectations for most business lines.”

The market responded in kind, sending the stock price 14.55% higher during February.

Ng and Mitchell like how AUB’s management is running the business.

“The CEO Mike Emmett has been doing a great job turning around underperforming brokers and integrating their large acquisition last year of the UK-based Tysers business.”

It seems the Ophir team is not the only one bullish on AUB. According to CMC Markets, 11 out of 12 analysts that currently cover the stock recommend it as a buy.

Stunningly, 10 of those professionals deem the shares as a strong buy.

The AUB share price has gained 18.5% over the past 12 months while paying out a 2.16% dividend yield.

Short-term bumps on a long-term journey

On the other side of the coin, NIB Holdings Limited (ASX: NHF)’s financial update was not as impressive.

“NIB Holdings, the private health insurer, clocked a small miss on its earnings result,” read the Ophir letter.

“Its core private health insurance business was a little behind as claims continue to normalise post-COVID.”

Ng and Mitchell noticed that a side business was doing pretty well, though.

“Uptake of their travel insurance business is performing well on the back of continued economic reopening.”

Unfortunately, the NIB share price has declined almost 10% year to date.

The Ophir portfolio managers reminded investors that a long-term investment view is critical for a business like NIB.

“Long term, we continue to like management’s ability to deploy capital into new areas, such as its recent acquisition of plan managers who administer the National Disability Insurance Scheme (NDIS).”

Mitchell and Ng’s peers aren’t quite as convinced about NIB. Eight out of 13 analysts surveyed on CMC Markets rate the stock as a hold. 

The post Turbulence insurance: Fund names 2 ASX 200 shares for long-term riches appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Thursday
• 3 ASX 200 shares defying the market following earnings announcements
• Is the NIB share price a bargain buy following Monday’s dive?

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 recommended Aub Group and NIB Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/ZetFjCu

Everyone knows ASX shares are prone to short-term fluctuations.

This has been especially applicable the past year as volatility ruled markets. And experts — both bulls and bears — unanimously agree that this will also be the case in 2023.

In such times it’s critical to keep focused on the long-term prospects of a company.

To demonstrate, Glenmore Asset Management portfolio manager Robert Gregory named one stock that went gangbusters in February and another that had a shocker — but explained why he’s happy to be invested in both.

Demand-supply balance seems ‘very favourable’

Car dealership network Eagers Automotive Ltd (ASX: APE) saw its shares soar 19.9% last month.

“Eagers delivered a solid full-year result, with underlying pre-tax profit of $405 million, up +1% vs prior comparable period, which itself was a very strong result,” Gregory said in a memo to clients.

“FY22 dividend was 71 cents per share, up 14%.”

Despite the boom result and market reaction, Gregory feels like there’s plenty left in the tank for the business.

“Eagers has targeted an uplift in revenue of ~$1 billion in FY23, with ~$400 million from acquisitions made in 2022, ~$450 million from BYD (Chinese electric vehicle manufacturer) deliveries and the balance from organic growth projects.”

The outlook for the retail car market looks positive for Eagers shares.

“The demand/supply balance in the new vehicle market continues to be very favourable, whilst Eagers’ order book continues to grow, driven by orders well in excess of deliveries.”

Many of Gregory’s peers are also bullish on the stock. Ten out 16 analysts currently covering Eagers reckon it’s a buy, according to CMC Markets.

Donut King leading the way

Retail Food Group Ltd (ASX: RFG) is the franchisor for many retail food brands ubiquitous in Australian shopping centres, such as Gloria Jean’s Coffee, Donut King, Michel’s Patisserie, and Crust Pizza.

Unfortunately for the group, the stock price plunged 13.3% in February.

That’s despite Gregory’s assessment that it had “delivered a strong 1H23 result”, with earnings up 47%.

“All brand systems across Retail Food Group’s portfolio reported strong same-store sales growth, with Donut King (+41% growth) a particular standout,” he said.

“Retail Food Group’s international division also performed well, with EBITDA of $2.0 million, up +39%.”

The portfolio manager was glad that RFG confirmed its previous forecast for the full year.

“FY23 profit guidance was reiterated, with EBITDA expected to fall within the upper end of $26 million to $29 million.”

The post ‘Very favourable’: 2 ASX shares Glenmore is riding to the top appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why 29Metals, Eagers Automotive, Northern Star, and Woodside shares are dropping today
• 5 things to watch on the ASX 200 on Wednesday
• 4 ASX 200 shares trading ex-dividend on Wednesday
• Start your engines: Fund backs 2 ASX shares to finish line
• 7 ASX All Ordinaries shares smashing new 52-week highs today

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

from The Motley Fool Australia https://ift.tt/nP7ZXJB

On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.4% to 6,994.8 points.

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

ASX 200 expected to sink

The Australian share market looks set to start the week in the red following a poor finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 98 points or 1.4% lower this morning. On Wall Street, the Dow Jones was down 1.2%, the S&P 500 fell 1.1%, and the NASDAQ dropped 0.75%.

Oil prices fall again

Energy shares such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a difficult start to the week after oil prices fell again on Friday. According to Bloomberg, the WTI crude oil price was down 2.35% to US$66.74 a barrel and the Brent crude oil price fell 2.3% to US$72.97 a barrel. This meant that oil prices shed US$10 a barrel over the space of the week.

Life360 shares are a buy

Life360 Inc (ASX: 360) shares could offer major upside according to analysts at Goldman Sachs. This morning, the broker has reiterated its buy rating on this location technology company’s shares with a buy rating and $7.85 price target. Commenting on Life360, which joins the ASX 200 today, the broker said: “[Life360] stands to generate significant earnings growth in coming years; all of which look underappreciated by the market.”

Gold price nears US$2,000 an ounce

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a great start to the week after the gold price jumped on Friday night. According to CNBC, the spot gold price stormed 3.7% higher to $1,993.70 per ounce. Gold rose almost US$130 an ounce last week amid the global economic uncertainty.

Core Lithium shares still a sell

The recent Core Lithium Ltd (ASX: CXO) share price weakness hasn’t been enough for Goldman Sachs to become more positive. Its analysts have reiterated their sell rating and 90 cents price target on the lithium miner’s shares. Goldman notes that spot lithium prices have continued to weaken. The 6% spodumene spot price is currently fetching US$5,040 a tonne, down from 1.3% from US$5,110 a tonne a week earlier.

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

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• $400 in monthly passive income, buy 8,728 shares of this ASX 200 stock
• Here are the 3 most heavily traded ASX 200 shares on Friday
• 2 ASX 200 directors buying up their company shares this week
• Why Carsales, Evolution, Kelsian, and Synlait shares are dropping
• ASX 200 gold shares reverse the charge higher to tumble today. Here’s why

Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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.

from The Motley Fool Australia https://ift.tt/bE3CDy9

Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating and $41.20 price target on this gaming technology company’s shares. Citi has been looking at Aristocrat’s digital business again/ And while it feels that February was a flat month for the industry, it notes that Aristocrat’s titles continued to outperform. Overall, the broker remains bullish and is forecasting strong earnings growth in the coming years. The Aristocrat share price ended the week at $34.71.

Qantas Airways Limited (ASX: QAN)

A note out of Goldman Sachs reveals that its analysts have retained their conviction buy rating and $8.30 price target on this airline operator’s shares. The broker continues to believe that the market is undervaluing Qantas, noting that its share price does not reflect the company’s improved earnings capacity. Goldman also advised that it expects Qantas’ capital management to continue in FY 2024, with another $800 million share buyback. The Qantas share price was fetching $6.47 at Friday’s close.

Woolworths Group Ltd (ASX: WOW)

Another note out of Citi reveals that its analysts have retained their buy rating and $42.20 price target on this retail giant’s shares. The broker feels relatively positive on consumer spending and has boosted its earnings estimates to reflect this. This means that Citi is now forecasting earnings per share growth of approximately 14% in both FY 2023 and FY 2024. The Woolworths share price ended the week at $37.06.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Buy these ASX growth shares now: analysts
• What’s with the Qantas share price on Thursday?
• 7 ASX shares flying under the radar to buy now: Goldman Sachs
• 5 things to watch on the ASX 200 on Wednesday
• Leading brokers name 3 ASX shares to buy today

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.

from The Motley Fool Australia https://ift.tt/RKadw7Z

Dividends from ASX shares are a beautiful thing – representing real cash flow from your capital in your pocket. And a large dividend from an ASX share, well, that’s even better.

But the higher a share’s dividend, the more investors have to lose. See, the market isn’t silly. If it’s pricing an ASX share with a high dividend yield (yes, the two are directly correlated), there’s probably a reason why.

So you should be very careful when you see an ASX share with a dividend yield of 8, 9 or even 10% or greater. You could be the victim of a dividend trap.

A dividend trap is set off when an investor buys an ASX share with the expectation of a high dividend continuing. When it doesn’t, we often see that share fall in value, reflecting the weakness that is obviously affecting said company. Thus, the investor is ‘trapped’ in a capital loss, with far less income than what was expected to keep them company.

So let’s discuss three ASX dividend shares that are offering high yields today, but that might be dividend traps.

3 ASX shares that could be a dividend trap

Magellan Financial Group Ltd (ASX: MFG)

ASX 200 fund manager Magellan has a truly monstrous dividend yield on display today — 14.31%. That comes from the $1.16 in fully-franked dividends per share this financial services company has paid out over the past 12 months. But here’s the problem.

Magellan shares have been in freefall for almost three years now. This company is bleeding funds under management almost every month. It has gone from managing more than $100 billion a few years ago to less than $50 billion today.

Magellan only makes money off of its funds under management, so if this continues to fall, the company will only be able to afford smaller and smaller dividends. As such, I think Magellan is a classic dividend trap.

Adairs Ltd (ASX: ADH)

Adairs is another ASX 200 dividend share that looks like a trap. It currently offers a dividend yield of 8.11%, hailing from the fully-franked 18 cents per share it has paid out over the past year.

As an ASX 200 consumer discretionary retailer, this is the kind of company that investors hate to own in an environment of rising interest rates, which explains its low share price.

However, I don’t think Adairs is a dividend trap, far from it. It has recently declared an interim dividend of 8 cents per share, matching last year’s payout. And Adairs just reported sales growth of 34.1% and an increase in net profit after tax of 23.9% to $21.8 million. This indicates its business model is growing healthily, which means the dividends should keep flowing.

WAM Capital Ltd (ASX: WAM)

Popular ASX listed investment company (LIC) WAM Capital is our last share worth a look at. This LIC has a trailing dividend yield of 9.39% right now, fully franked. This comes from WAM Capital’s 15.5 cents per share paid out over the past year.

However, this also looks like a dividend trap to me. For one, the WAM Capital share price has lost almost 33% of its value over the past five years. So although it’s paid out high dividends to its investors, they are paying for those out of the company’s poorly performing share price.

But this company’s dividends are looking shaky too. WAM Capital has paid out 15.5 cents per share for years now. Yet its latest report showed that, as of 28 February, it only held 14.7 cents per share in its profit reserves. That’s not even enough to cover the next 12 months of dividends at their current level. As such, this is another ASX dividend share I would be staying away from.

The post Is it a trap? 3 ASX shares with ultra-high dividend yields appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 ASX 300 shares trading ex-dividend on Monday
• Buy 8,333 shares in this ASX growth stock for $1,500 in annual dividends
• Investing as little as $25 a week could help me retire with $104,000 a year in passive income!
• Magellan share price slumps 5% to 10-year low
• The highest-paying term deposit right now offers 4.5% interest. Here are 3 ASX dividend shares paying way more

Motley Fool contributor Sebastian Bowen has positions in Adairs. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/Q1srPeG

One of the most popular exchange traded funds (ETFs) on the Australian share market is the Vanguard Australian Shares Index ETF (ASX: VAS).

This ETF aims to track the return of the S&P/ASX 300 Index before taking into account fees, expenses, and tax.

This means that when you buy this ETF, you will be buying a slice of a diverse group of ASX shares including giants like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woolworths Group Ltd (ASX: WOW), as well as smaller names such as Dicker Data Ltd (ASX: DDR) and Myer Holdings Ltd (ASX: MYR).

Earning income from the Vanguard Australian Shares Index ETF

The Australian share market is one of the more generous markets, with a high proportion of companies sharing their profits with investors.

The good news is that there are plenty of dividend payers in the Vanguard Australian Shares Index ETF, which explains why it is a popular option for income investors.

In fact, according to Vanguard, at present the ETF provides investors with a 4.4% dividend yield.

This means it would be possible for investors to generate a monthly income of $300 per month from its units.

The only issue, though, is that it pays its dividends in quarterly instalments. So, investors would have to be disciplined and distribute their dividends evenly each month.

With that in mind, if you wanted to generate $300 of passive income from the Vanguard Australian Shares Index ETF, you would need to receive total dividends of $3,600 a year.

Based on its current yield, investors would need to own approximately $82,000 worth of units. This equates to 937 units at current prices.

The post How to generate $300 of monthly income from the Vanguard Australian Shares Index ETF appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 reasons the Vanguard Australian Shares Index ETF (VAS) could be worth buying today
• Here’s how I would secure monthly dividends in the 2024 financial year with these ASX stocks
• Does the Vanguard Australian Shares Index ETF (VAS) hold the ticket to building long-term wealth?
• Top ASX ETFs to buy in March 2023
• Dividend dessert: Which ASX ETFs are the sweetest for a passive income?

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.

from The Motley Fool Australia https://ift.tt/dsBga3W

APA Group (ASX: APA) is an S&P/ASX 200 Index (ASX: XJO) stock that can deliver strong monthly passive income to investors.

APA is an energy infrastructure player that owns very large gas pipelines around Australia. It also owns or has stakes in a number of gas assets, including gas storage and gas-powered energy generation.

The company is also expanding its electricity transmission and renewable energy portfolio. It’s involved in solar panel farms and recently acquired the Basslink – an electricity cable that connects Tasmania with the mainland.

How much dividend income will ASX 200 stock pay?

APA has been steadily growing its dividend payments each year for more than a decade and a half. It has funded these increases with growing cash flow from its asset portfolio.

In FY23, the company expects to pay a full-year distribution of 55 cents per security, which would represent an increase of 3.8% compared to FY22.

Receiving $400 per month would equate to $4,800 per year. Keep in mind that APA doesn’t pay every month, it’s just that investors need to translate that annual figure into 12 equal parts.

To gain $4,800 per year, we’d need 8,728 APA shares.

To buy 8,728 APA shares, we’re currently talking about a total cost of around $89,000 after the 6% fall of the APA share price over the last month.

The ASX 200 stock is expected to pay an annual distribution per security of 62 cents in FY25, according to Commsec. With that payment, we’d only need 7,742 APA shares for the passive income target.

What is the yield of APA shares?

Thanks to the ongoing dividend growth and the reduction of the APA share price, the FY23 dividend yield is expected to be 5.4%. That’s solid passive income.

If the distribution does grow to 62 cents per security by FY25, then this would translate into a dividend yield of 6.1%.

This is a stronger yield from the ASX 200 stock than what people can get from savings accounts or term deposits while also offering growth.

APA continues to invest in new pipelines, as well as renewable projects, that could unlock further cash flow for the business. It’s also exploring the possibility of using its pipelines for hydrogen, which could lead to a greener future.

APA share price snapshot

Since the start of 2023, the APA share price has fallen by 3%.

The post $400 in monthly passive income, buy 8,728 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• 2 ASX 200 directors buying up their company shares this week
• 5 things to watch on the ASX 200 on Friday
• What’s with the Qantas share price on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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 Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/blvY9zA