Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) retail shares are in focus as households get to grips with inflation and higher interest rates.

There has been much volatility on the ASX in 2022.

Certainly, a number of ASX retail shares are trading considerably lower year to date:

The Wesfarmers Ltd (ASX: WES) share price is down 23%.

The Harvey Norman Holdings Limited (ASX: HVN) share price is down 17%.

The JB Hi-Fi Limited (ASX: JBH) share price is down 19%.

The Premier Investments Limited (ASX: PMV) share price is down 30%.

The Super Retail Group Ltd (ASX: SUL) share price is down by 24%.

What is happening in the retail sector?

Reporting by The Australian has revealed households are now spending more on services than goods.   

A report by Deloitte Access Economics says that this is a “turning point” and it’s being driven by faster price growth. This means that product prices are driving sales growth, rather than volume growth. Historically, volume growth has been more important.

It’s tricky for ASX 200 retail shares because not only are they charging customers more for products when those customers are facing pressures in their budgets, but the retailers are dealing with higher rent and wage costs.

The Australian quoted Deloitte Access Economics partner and principal report author David Rumbens:

But cracks are starting to show as the economy faces a number of challenges.

Domestically, there has been broad based price growth, especially in retail, fuelled by global supply chain disruptions and supply shortages. There are also higher interest rates to deal with and service capacity constraints in some areas of the economy.

Retail prices increased 4.8% through the year to the June quarter, with the largest price rises seen in food and household goods – the categories where consumers are reining in their spending.

Indeed on a quarterly basis the turning point for overall retail price growth to exceed sales volume growth has already been reached. This occurred in both the March and June quarters of 2022.

What next for ASX 200 retail shares?

Rumbens said that retail price growth is expected to be 5.9% for the year to December 2022, while volume growth is only expected to be 3%.

The strong employment situation in Australia is essentially a double-edged sword, according to Rumbens. Almost everyone who wants a job has a job, which has been good for retail spending. But, at the same time, it means that retailers are finding it hard to get staff.

Since May 2019, retail job vacancies have reportedly doubled. But, with lower margins, retailers reportedly aren’t able to afford large wage rises.

Will the staffing situation be resolved soon? Rumbens doesn’t think so:

Importantly, the industry is missing a key component of its workforce, being migrants and especially international students.

Even with this being a key focus of the federal government’s jobs and skills summit last week, it’s unclear if, and when, international students will return to their pre-pandemic levels.

The higher share of casual and part time workers in the retail workforce is likely also weighing on the industry’s ability to retain workers.

With fewer entitlements binding these workers to retail jobs and high transferability of skills between retail jobs, workers are more likely to shift between employment.

The Reserve Bank of Australia (RBA) is determined to bring down inflation and lower economic activity with higher interest rates, so it’ll be interesting to see what happens next with retail product prices and ASX 200 retail shares.

The post Are ‘cracks starting to show’ for ASX 200 retail shares? appeared first on The Motley Fool Australia.

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More reading

• Why Breville, Incitec Pivot, Magellan, and Super Retail shares are dropping
• Should all ASX investors be buying defensive shares right now?
• Ready for a storm: 3 ASX 200 shares with ironclad balance sheets
• ‘Better chance of making good money when markets are down’: fundie
• Down 20% so far this year, is the Wesfarmers share price a screaming bargain?

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 Harvey Norman Holdings Ltd. and Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Harvey Norman Holdings Ltd., Super Retail Group Limited, and Wesfarmers Limited. The Motley Fool Australia has recommended JB Hi-Fi Limited and Premier Investments Limited. 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Michael Thomson for Nine’s Late News on Tuesday night to discuss the Reserve Bank’s 0.5% rate hike, plus a new business banker on the Commonwealth Bank of Australia (ASX: CBA) board and the outlook for markets.

[youtube https://www.youtube.com/watch?v=joS0hOTMgv0?feature=oembed&w=500&h=281]

The post Rates go up, and CBA beefs up its business cred. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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More reading

• Own CBA shares? Here’s the bank’s warning on rapid RBA rate hikes
• How might falling house prices impact the CBA share price?
• Why ASX bank shares are more likely to slowly grind lower than crash, despite famed Wall Street bear saying it’s time to short them
• Is this why the Macquarie share price was ‘steaming ahead’ on Friday?
• Why did the CBA share price go backwards in August?

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. 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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What investors do with their money in retirement could be just as important as how they build up wealth to get there. Exchange-traded funds (ETFs) on the ASX could be a way for investors to do things simply.

ETFs enable investors to buy into a portfolio of shares or assets with just one trade.

It would certainly be possible for investors to buy into a broad ETF which just follows an index like BetaShares Australia 200 ETF (ASX: A200) and Vanguard Australian Shares Index ETF (ASX: VAS).

But, I think there are some specialised ETFs that can provide more focused investments for retiree investors. A mixture of dividends and growth could be attractive.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)

This fund is about creating a diversified portfolio of dividend-paying quality ASX-listed companies, chosen by Morningstar. It intends to capture the performance of the 25 highest dividend-paying ASX-listed shares, excluding real estate investment trusts (REITs), that meet Morningstar’s required criteria. This combines a share’s ‘economic moat’ and ‘distance to default’ qualities.

An economic moat refers to a company’s ability to maintain its competitive advantages and defend its long-term profitability, such as intangible assets (like brand recognition and patents) or cost advantages.

The distance to default measure is used to predict the likelihood of bankruptcy which, the fund says, has “also proven an effective predictor of dividend cuts”.

I think a portfolio of quality ASX dividend-paying shares can be a solid ETF choice for a retirement portfolio.

Some of the names in the portfolio include Ansell Limited (ASX: ANN), IPH Ltd (ASX: IPH), AUB Group Ltd (ASX: AUB), National Australia Bank Ltd (ASX: NAB), Iress Ltd (ASX: IRE), and Wesfarmers Ltd (ASX: WES).

Over the year to 31 July 2022, the income part of the return was 5.65%.

Vanguard Global Infrastructure Index ETF (ASX: VBLD)

Another area that could fit well into a retirement portfolio is infrastructure.

Infrastructure can be a good investment because of its typically consistent, and perhaps growing, earnings and distributions.

One of the advantages of this portfolio from Vanguard is that it’s globally based. While just over two-thirds of the ETF is invested in the US, there are multiple other countries that have a weighting of more than 0.5% — Canada (14.6%), Japan (3.6%), UK (3.2%), Spain (2.2%), Australia (2.1%), Hong Kong (1.9%), Italy (1.6%), and France (0.7%).

In terms of sector allocation, at 31 July 2022, ‘conventional electricity’ made up 34% of the ETF, ‘railroads’ were 19.6% of the portfolio, ‘pipelines’ were 14% of the portfolio, ‘multi-utilities’ were 10.7% of the portfolio, and infrastructure REITs were 9.7% of the portfolio. Other smaller sectors include transportation services, water, telecommunication services, and telecommunications equipment.

According to Vanguard, the equity yield is 2.9%. That’s not a bad starting yield.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

The first ETF I wrote about was focused on dividends from Australian businesses.

However, the VanEck Morningstar Wide Moat ETF is invested in a portfolio of US shares that are viewed as strong, long-term businesses with wide economic moats.

The Morningstar investment team only choose shares that are seen as good value compared to how much they think the business is actually worth.

For a company to earn the status of having a wide economic moat, according to Morningstar, excess normalised profit must, with near certainty, be positive a decade from now. On top of that, excess normalised profit must, more likely than not, be positive 20 years from now. In other words, chosen investments could be solid picks for at least 20 years. But, the portfolio may move on from those holdings, depending on factors like valuation changes.

While this ETF isn’t likely to pay much of a dividend, the total returns have been good in my opinion. The VanEck Morningstar Wide Moat ETF has made an average return per annum of 15.1% since June 2015. But, of course, past performance is no guarantee of future performance.

The post How I’d invest for retirement using just 3 ASX ETFs appeared first on The Motley Fool Australia.

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More reading

• Could these ASX ETFs soon play a bigger role in Aussie super funds?
• How I’d invest $20,000 in ASX shares today if I had to start from scratch
• 3 high quality ETFs for ASX investors to buy now
• 2 ETFs I think would make good additions to most portfolios
• 3 top ETFs for ASX investors to buy next week

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 recommended IPH Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd., Austbrokers Holdings Limited, IPH Ltd, and VanEck Vectors Morningstar Wide Moat 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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The Paladin Energy Ltd (ASX: PDN) share price has outperformed its benchmarks over the past month.

In opening trade on Wednesday, the Paladin share price is dropping 0.56% to 89.5 cents. Although it secured a substantial 7.78% gain in yesterday’s session.

That helped take the Paladin Energy share price gain to more than 20% in one month.

In broad market moves, the S&P/ASX 200 Energy Index (ASX: XEJ) has spiked 13% in the past month as well.

What’s up with the Paladin share price?

Given the recent calamity in global energy markets, uranium shares have caught a bid as various nations are now looking inward at domestic energy production.

Uranium itself has curled up from recent lows and is now back above its May 2022 levels at US$52/Lbs. This in itself is around some of the highest prices in the past 10 years.

As seen below, this has been a net positive for Paladin, whose share price tracks the price of uranium with striking similarity. Price returns for each are plotted for a year.

Chief to the volatility in uranium has been the looming energy crisis emerging in various nations, Europe in particular. Note that uranium is key in the production of nuclear energy.

“[T]he uncertainty of energy supplies worldwide drove governments to double down in alternative energy sources,” in early September, Trading Economics says.

“[M]ajor [nuclear] producer France stated it will restart all of their nuclear reactors by the winter to offset Europe’s energy crunch, after corrosion issues and drying rivers that were vital for reactor cooling led to the suspension of various power plants,” it added.

With further uncertainty of energy storage supplies heading into winter, it makes sense that alternative sources such as uranium will remain in hot contention for the time being.

What that means for the Paladin share price we can only find out.

Meanwhile, four out of five brokers rate Paladin a buy right now, according to Refinitiv Eikon data. The consensus price target is $1.09.

In the past 12 months, the Paladin share price has clipped a 7% gain.

The post Why has the Paladin Energy share price rocketed 20% in a month? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ASX uranium shares in September?
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Why did ASX uranium shares get hammered on Thursday?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Zach Bristow 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 team at Morgans has been busy again picking out its best ASX share ideas for the month of September.

These are the shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

The first three shares we looked at can be found here. Read on for the next three:

GQG Partners Inc (ASX: GQG)

The first ASX share that Morgans is tipping as a buy is fund manager GQG Partners. Its analysts believe that recent weakness in the GQG share price has left it trading at a very attractive level. The broker commented:

GQG’s strong relative investment outperformance through the current market weakness should solidify the near-term flows outflow. GQG has diversified earnings (by strategy and clients); solid performance track-record; and ongoing growth prospects. In our view, the current ~10x PE (versus a sector medium-term average of ~16x) is attractive.

Morgans has an add rating and $2.02 price target on the company’s shares.

Nextdc Ltd (ASX: NXT)

Another ASX share that the broker rates highly right now is data centre operator NextDC. It is a fan of the company due to its exposure to structural tailwinds that are driving very strong demand for its data centres. It is expecting this to underpin stellar earnings growth in the coming years. The broker said:

Structural demand for cloud and colocation remains incredibly strong. NXT’s new S3 and M3 data centres go live shortly and this should result in significant new customer wins over the next six months (including CSP options being exercised). Sales should drive the share price higher. NXT looks comfortably on-track to generate over $300m of EBITDA in the next three to five years.

Morgans has an add rating and $13.30 price target on NextDC’s shares.

ResMed Inc (ASX: RMD)

A final ASX share that Morgans thinks investors should be buying is sleep treatment company ResMed. The broker is a fan of the company due to its positive long term growth outlook, which is being underpinned by its digital platform. It said:

While we expect the next few quarters to be volatile as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.

Morgans has an add rating and $37.08 price target on ResMed’s shares.

The post Morgans names 3 more of the best ASX shares to buy in September appeared first on The Motley Fool Australia.

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More reading

• Experts say investors should buy these ASX 200 shares
• Leading brokers name 3 ASX shares to buy today
• Broker names 2 excellent ASX growth shares to buy right now
• Experts name 2 top ASX dividend shares to buy next week
• Goldman Sachs tips NextDC share price to rise 40%

Motley Fool contributor James Mickleboro has positions in NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. 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 financial year 2022 (FY22) was a good year for those invested in BHP Group Ltd (ASX: BHP) shares.

The S&P/ASX 200 Index (ASX: XJO) materials monolith delivered record free cash flow and offered investors $4.63 per share of dividends for the 12 months ended 30 June 2022.

But it wasn’t just the company’s shareholders that benefited from the company’s strong performance.

It added tens of billions of dollars to the Australian economy in FY22.

Let’s take a closer look at the economic value the ‘Big Australian’ brought to the nation last fiscal year.

BHP contributes $79.3b to the Aussie economy

The BHP share price outperformed the ASX 200 last financial year, falling just 3.9% over the period compared to the index’s 10% tumble. Factoring in the company’s dividends, investors boasted a $2.94 per share return over the 12 months ended June.

But the resources giant brought a far bigger benefit to the broader economy – one to the tune of $79.3 billion.

That’s right, between taxes, wages, social investments, and other payments, the company contributed $79.3 billion to the Australian economy in FY22. Let’s break that down.

BHP paid $18.5 billion of taxes, royalties, and other payments to governments last fiscal year at an adjusted effective tax rate of 42.7%, including royalties.

According to BHP’s latest Economic Contribution Report, that makes it one of the nation’s largest corporate taxpayers.

The company expects to account for around 10% of all Australian company tax paid last financial year. Meanwhile, BHP-operated projects appear to have contributed 9% and 13% of all revenue, excluding grants, in Queensland and Western Australia, respectively.

It also spent $16.5 billion with suppliers and paid out $4.6 billion in employee wages in financial year 2022. BHP has nearly 50,000 employees and contractors in Australia.

Another $106 million was put into the company’s social investments.

Finally, it counted the $39.6 billion worth of dividends offered to shareholders and investors as another economic benefit.

Its latest annual economic contribution adds to the company’s impressive decade-long tally. BHP has paid around $90.1 billion in taxes, royalties, and other payments to Australian governments over the last 10 years.

BHP share price snapshot

FY22 saw a strong performance from the BHP share price, but its fortunes have since changed.

The iron ore giant’s stock has fallen 12% since the start of 2022. It’s also currently 11% lower than it was this time last year.

For comparison, the ASX 200 has dumped 10% year to date and 9% over the last 12 months.

The post Own BHP shares? Here’s how much the ASX 200 giant added to the Aussie economy in FY22 appeared first on The Motley Fool Australia.

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More reading

• What are brokers saying about the BHP share price?
• What’s the outlook for the BHP share price in September?
• August’s RBA rate hike saw investors favour Macquarie and BHP shares. Here’s what to expect in September: expert
• Why are BHP shares off and racing on Monday?
• How I’d invest $50,000 in ASX dividend shares for retirement, if I had to start from scratch

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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Shares in Medibank Private Ltd (ASX: MPL) are on the back foot today.

This comes despite the private health insurer not releasing any announcements to the ASX.

At the time of writing, Medibank shares are swapping hands at $3.57, down 1.65%.

Let’s take a look at what’s impacting the company’s shares on Wednesday.

Medibank shares final dividend

Investors are offloading Medibank shares after locking in the company’s upcoming final dividend.

Today is the ex-dividend date so those who had Medibank shares in their portfolio before market open will be eligible for the latest dividend.

This means that if you own Medibank shares, you’ll collect a dividend payment of 7.3 cents per share on 29 September.

The dividend is also fully franked.

At this point in time, there is no dividend reinvestment plan (DRP) that is being offered.

Medibank’s capital management objective is to maintain a strong financial risk profile and capacity to meet financial commitments.

The full-year dividend represents an 84.8% payout ratio of underlying net profit after tax (NPAT), normalising for investment market returns. This is at the top end of the group’s dividend target payout ratio range of between 75% and 85% of underlying NPAT.

Medibank share price recap

The Medibank share price has delivered an 8% return to shareholders in 2022.

When compared against the S&P/ASX 200 Financials (ASX: XFJ), the index is down 6% over the same period.

Medibank shares reached an all-time high of $3.79 on 30 August before retracing over the last few days. It appears profit takers took the opportunity to swoop in and lock in their gains.

Based on today’s price, Medibank commands a market capitalisation of approximately $10 billion and has a dividend yield of 3.58%.

The post Why is the Medibank share price slipping on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Ready for a storm: 3 ASX 200 shares with ironclad balance sheets
• Hoping to bag the latest Medibank dividend? Read this
• These 9 ASX 200 shares are going ex-dividend tomorrow
• Can the Medibank share price deliver healthy growth and dividends?

Motley Fool contributor Aaron Teboneras 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 Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has struggled over the past few months.

The ASX banking share closed at $22.59 on Tuesday, having clipped another small loss in yesterday’s session.

This year to date, ANZ is down more than 17%, having slipped from previous highs of $27.69 on 20 April.

Are ANZ shares a buy?

Despite its recent troubles on the chart, the ANZ share price has still caught the attention of various brokers recommending stocks to their clients.

The analyst team at Citi recently updated its view on the bank, rating the share a buy with a $29 price target.

Chief to the broker’s call is ANZ’s move to purchase the banking business of Suncorp Group Ltd (ASX: SUN) – a move that it feels will be accretive to the bank’s earnings.

Aside from that, it forecasts dividend growth of 5–7% over the coming two-year period respectively. That’s something to think about.

Meanwhile, Macquarie also revised its rating on ANZ upward today as well, pushing its stance on the share to outperform.

The two brokers join four others in rating ANZ a buy, while another eight recommend holding and one advises investors to sell the bank’s shares, according to Refinitiv Eikon data.

The consensus price target from this list is $25.43, suggesting a small amount of upside potential should the group be correct.

Meanwhile, ASX financials continue to look volatile, and are down nearly 3.5% on the month as a collective, with the S&P/ASX 200 Financials index (ASX: XFJ) down by that much.

The macroeconomic risks of rising interest rates and a weaker economic outlook pose a direct threat to interest income received from the underwriting of credit.

And with the Reserve Bank (RBA) committed to its tightening policy of raising policy rates to reign in the cost of living, be sure that shares like ANZ will remain in the limelight.

The ANZ share price is down 19% over the past 12 months.

The post Down 19% since April, is the ANZ share price in the buy zone? appeared first on The Motley Fool Australia.

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More reading

• Savings or dividends? What these 3 ASX bank shares are offering for income
• Why ASX bank shares are more likely to slowly grind lower than crash, despite famed Wall Street bear saying it’s time to short them
• Why is this top broker tipping 27% upside for the ANZ share price?
• Is this why the Macquarie share price was ‘steaming ahead’ on Friday?
• Why did the ANZ share price go backwards in August?

Motley Fool contributor Zach Bristow 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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Coal prices are soaring. Coal miners are experiencing boom times. Is there a way to invest in an S&P/ASX 200 Index (ASX: XJO) share and get exposure to this without directly owning a coal miner? There is, which I’ll get to in a minute.

Coal is not exactly a new energy source. Yet, the resource is seeing record prices. That’s because countries are paying big bucks to try to attain sources of energy for what could be a tricky next few months as the northern hemisphere goes into winter.

With Russia shutting down a key pipeline that transports gas to Europe, there could be even stronger demand for coal in the coming months.

ASX 200 shares like Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC) are benefitting from the strong coal prices. This is resulting in big profits and large dividends for shareholders.

But what if investors don’t want to directly buy a coal miner, but are still wanting to benefit from the strong coal price? I think there’s an answer.

It’s through ASX 200 share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

The investment conglomerate has been operating for over a century. Its long-term investment strategies have meant that it has been able to ride a few different trends.

Soul Pattinson’s key coal exposure

At the time of writing, the investment conglomerate owns 39.9% of New Hope.

A key part of New Hope is its Bengalla operations. Despite being impacted by weather and COVID-related shortages, Bengalla performed “strongly” in FY22. Saleable coal production was only down 3% compared to FY21.

In its latest quarterly update, New Hope said that:

Given the unprecedented demand for Bengalla’s high-quality product, the focus for FY23 is to prepare for an increase in current production levels. This supports the view that demand for high-quality, low emission thermal coal will remain strong, and coupled with Bengalla’s position on the cost curve, the benefit to the company is significant.

A warmer than expected northern hemisphere summer increased coal burn, with customers now focused on replenishment of stock before the onset of winter. Australian domestic coal demand particularly in NSW continues to be very strong, and the company has sold further coal into the domestic market in addition to existing contracted domestic supply. With security of supply paramount into our key markets, our forward sales book remains heavily sold in the coming 12 months.

How this can benefit shareholders

Every half-year, Soul Pattinson declares a dividend for shareholders. The cash the ASX 200 share uses to pay the dividend comes from its portfolio of assets. These include shareholdings such as New Hope, TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW) and Macquarie Group Ltd (ASX: MQG).

In the six months to 31 January 2022, which was before the Russian invasion of Ukraine, Soul Pattinson generated $182.6 million of net cash flow from its investments. It generated $153 million of regular profit after tax. New Hope’s dividends were $23.2 million of this, and the upcoming New Hope dividends could be much larger than that.

In other words, a sizeable portion of the Soul Pattinson dividend is currently funded by dividends from New Hope’s coal mining.

However, the ASX 200 investment share isn’t paying out 100% of its cash flow as a dividend, so some of the New Hope dividend could be saved and reinvested into more opportunities.

In the FY22 half-year result, Soul Pattinson had a dividend payout ratio of its regular operating cash flows of 57.32%.

Share price snapshot

Since the beginning of 2022, the Soul Pattinson share price has dropped 15%, while the New Hope share price has risen 146%.

The post Why this ASX 200 share could be a great way to indirectly profit from booming coal prices appeared first on The Motley Fool Australia.

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More reading

• How I’d invest $50,000 in ASX dividend shares for retirement, if I had to start from scratch
• How I’d invest $20,000 in ASX shares today if I had to start from scratch
• Top ASX dividend shares to buy in August 2022
• ‘Capital light and scalable’: Expert picks 2 ASX shares to buy now while CHEAP
• Acquisitions ahoy: Soul Pattinson share price in focus

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended 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 Macquarie Group Limited and TPG Telecom Limited. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Tesla (NASDAQ: TSLA) shares have dropped more than 10% since President Biden signed the inflation Reduction Act (IRA) into law in mid-August. But one analyst thinks investors are missing an opportunity thanks to incentives in the new law. That call helped move Tesla stock as much as 2.1% higher today. As of 1:18 p.m. ET, the stock held on to a gain of 0.8%. 

So what

Wolfe Research analyst Rod Lache upgraded shares of Tesla to a buy rating today, and said he thinks shares are worth $360, according to Barron’s. Lache previously rated shares a hold, and his price target implies upside of 33% over Friday’s closing share price. 

Now what

The analyst thinks the IRA will be a catalyst to more quickly boost EV penetration in the U.S. The law contains incentives for consumers to receive tax credits when buying EVs, with certain restrictions that include retail price and adjusted gross income. But one restriction it removed was the credit that ended for vehicles bought from manufacturers once that company sold more than 200,000 electric vehicles. 

Tesla had long ago crossed that limit, but now some of its vehicles will once again qualify for tax credits for buyers. Lache previously estimated EVs would represent 10% of new car sales in the U.S. by 2025, but now thinks that will be 20%. 

With Tesla shares down double-digits since that legislation was signed into law, the analyst thinks now is a good time to buy the stock. Not all of Tesla’s models will qualify for a $7,500 tax credit, but buyers can include the $55,000 retail car price limit and other restrictions into their decision-making process. The bottom line should be more EVs on the roads over the next several years, and that should be good news for the industry leader. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares moved higher today appeared first on The Motley Fool Australia.

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More reading

• Where does Tesla get its lithium and do any ASX shares benefit?
• Why Tesla shares dropped today
• Why Tesla stock dropped Monday morning
• Why Tesla shares rose today ahead of the stock split
• Tesla stock is rising ahead of its stock split

Howard Smith 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 Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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