Category: Stock Market

If you’re looking for ASX dividend shares to buy, then the two listed below could be worth considering.

Here’s what you need to know about these high yield dividend shares:

HomeCo Daily Needs REIT (ASX: HDN)

The first ASX dividend share that could be a top option for investors is HomeCo Daily Needs.

It is a property investment company with a focus predominantly on metro-located, convenience-based assets across the sub-sectors of neighbourhood retail, large format retail, and health and services.

HomeCo Daily Needs was on form in FY 2022, delivering a 30% increase in funds from operations per unit last week. This went down well with analysts at Goldman Sachs, which declared the result a “strong” one.

In addition, the broker believes that its shares are cheap at current levels. It commented:

We continue to believe HDN is undervalued at its current valuation given its diversified tenant base, and see it as well positioned to benefit from the shift to omni channel retailing, with additional external growth opportunities to drive earnings growth over the medium-term.

Goldman has a buy rating and $1.63 price target on the company’s shares.

But it gets better. The broker is forecasting dividends of 8.3 cents per share in FY 2023 and 8.5 cents per share in FY 2024. Based on the current HomeCo Daily Needs REIT unit price of $1.29, this will mean big yields of 6.4% and 6.6%, respectively.

Whitehaven Coal Ltd (ASX: WHC)

Another ASX dividend share that is highly rated is coal miner Whitehaven Coal.

With the price of the black gold forecast to remain strong for some time to come, the company has been tipped to deliver bumper profits in the near term.

This is expected to lead to “supercharged returns” for shareholders according to analysts at Morgans. At present, the broker has an add rating and $8.60 price target on the company’s shares. Though, it sees scope for them to run even higher. The broker commented:

We see strong potential for a more prolonged dislocation in energy markets where supply security commands a higher premium for longer. WHC offers ~2%/24% upside to our base/bull case pricing scenarios (excluding growth assets) with clear upside risks to valuation and dividends. Note that thermal coal futures pricing currently sits well above our “super-bull” price scenario, which supports an NPV towards $11.00ps.

As for dividends, Morgans is forecasting dividends per share of 100 cents in FY 2023 and 64 cents in FY 2024. Based on the latest Whitehaven Coal share price of $7.97, this will mean yields of 12.5% and 8%, respectively.

The post 2 excellent ASX dividend shares with big yields that analysts rate as buys appeared first on The Motley Fool Australia.

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More reading

• Whitehaven Coal share price slips despite record $1.95 billion profit
• Here are the top 10 ASX 200 shares today
• 3 ASX 200 shares breaking multi-year highs on Tuesday
• Here are the top 10 ASX 200 shares today
• The Whitehaven share price just leapt to another all-time high. Here’s why

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 A2 Milk Company Ltd (ASX: A2M) share price will be on watch on Monday.

That’s because the embattled infant formula company has just released its highly anticipated full year results for FY 2022.

Though, it is worth noting that the market is expected to crash deep into the red today. So, the A2 Milk share price could tumble regardless of this result.

A2 Milk share price on watch after earnings beat and buyback

• Revenue up 19.8% to NZ$1,446.2 million (up 11.2% excluding Mataura Valley Milk (MVM) acquisition)
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 59% to NZ$196.2 million
• Net profit after tax up 42.3% to NZ$114.7 million
• Inventory up to NZ$140 million including MVM
• Cash position of NZ$816.5 million
• NZ$150 million on-market share buyback
• Outlook: High single digit revenue growth in FY 2023

What happened in FY 2022?

For the 12 months ended 30 June, A2 Milk reported a 19.8% increase in revenue to NZ$1.446.2 million and a 42.3% jump in net profit after tax to NZ$114.7 million.

This reflects the acquisition of MVM, China label and English label infant formula sales growth of 12.2% and 11.6%, respectively, and ANZ and USA liquid milk sales growth of 1.8% and 30.2%, respectively.

In respect to its infant formula operations, management highlights that record market shares were achieved in China label infant formula in mother and baby stores and domestic online. In addition, English label infant formula market share in cross border e-commerce (CBEC) increased in the second half and offline-to-online over the full year. This was driven by a significant increase in brand awareness following a 36.3% increase in marketing investment.

Positively, record market shares were also achieved in Australia and USA milk.

In light of this return to form and its improved outlook, the company has elected to return funds to shareholders via a NZ$150 million on-market share buyback

How does this compare to expectations?

The good news for the A2 Milk share price is that this result appears to have come in ahead of expectations.

For example, according to a note out of Bell Potter, its analysts were expecting the company to report a 34.5% increase in profit after tax to NZ$108.6 million. This was a touch lower than the market consensus estimate of NZ$113.9 million.

As you can see above, A2 Milk has outperformed both estimates with its profit of NZ$114.7 million.

The company was also guiding to half on half revenue growth. During the first half, A2 Milk reported revenue of NZ$660.5 million. This means that its second half revenue was NZ$785.7 million, which was up 19% half on half. Another tick.

Management commentary

A2 Milk’s managing director and CEO, David Bortolussi, was pleased with the company’s performance in FY 2022. He said:

It was a successful year for The a2 Milk Company returning to double digit growth in revenue and earnings despite significant headwinds. We are pleased with the progress that has been made in stabilising the business, refreshing our strategy and improving our execution.

Our significant increase in marketing investment has driven further gains in brand health metrics and record market shares delivering strong growth in our China infant milk formula business. We are pleased with the transition of our English label product distribution to more transparent, performance-based and exclusive partners. We remain committed to the Daigou channel and have increased our direct engagement and marketing support with more Daigou supporting the brand.

Our on-market buyback of up to NZ$150 million demonstrates effective capital management and the improved confidence we have in our strategy, execution and outlook.

Outlook

A2 Milk is guiding to high single digit revenue growth in FY 2023 thanks largely to its infant formula business.

However, management is expecting its gross margin to be relatively flat, with cost of goods sold headwinds related to increasing milk, ingredient and packaging costs offset by price increases, mix benefits and cost mitigation initiatives.

The company also intends to continue to increase its brand investment in FY 2023. Marketing spend will be skewed marginally towards the first half with a significant uplift versus the prior corresponding period due to campaign timing.

Nevertheless, the company is expecting EBITDA growth in FY 2023 and a modest improvement in EBITDA margin.

The post A2 Milk share price on watch amid earnings beat and NZ$150m buyback appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Earnings preview: Here are 3 ASX 200 shares reporting next week
• A2 Milk share price lags ASX 200 ahead of Monday’s earnings result
• How did the A2 Milk share price respond last time the company reported?
• The A2 Milk share price has climbed 10% so far this month. What’s going on?

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 recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week in a very positive fashion. The benchmark index rose by 0.7% to 7,104.1 points.

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

ASX 200 expected to crash

It looks set to be a bloodbath on the Australian share market on Monday following a selloff on Wall Street on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 104 points or 1.5% lower this morning. On Wall Street, the Dow Jones was down 3%, the S&P 500 dropped 3.4%, and the NASDAQ crashed 3.95%. This was driven by hawkish comments by the US Federal Reserve.

Oil prices rise

Energy producers Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a better than average start to the week after oil prices pushed higher on Friday. According to Bloomberg, the WTI crude oil price is up 0.6% to US$93.06 a barrel and the Brent crude oil price rose 1.65% to US$100.99 a barrel. Traders were bidding oil higher amid signs that OPEC could cut its output.

A2 Milk results

The A2 Milk Company Ltd (ASX: A2M) share price will be one to watch on Monday when the struggling infant formula company releases its full year results. According to a note out of Bell Potter, its analysts are expecting the company to report a 34.5% increase in profit after tax to NZ$108.6 million. This is a touch lower than the market consensus estimate of NZ$113.9 million.

Gold price tumbles

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a tough start to the week after the gold price tumbled on Friday night. According to CNBC, the spot gold price was down 1.2% to US$1,750.80 an ounce. The prospect of the US Fed raising rates aggressively weighed on the precious metal.

Fortescue FY 2022 results

The Fortescue Metals Group Limited (ASX: FMG) share price could be on the move today when the iron ore giant releases its full year results for FY 2022. Due to the iron ore price tumbling over the last 12 months, the market is expecting the miner to report a sizeable profit decline to US$6,200 million. This is expected to lead to a final dividend of 127 US cents per share being declared.

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

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More reading

• Earnings preview: Here are 3 ASX 200 shares reporting next week
• Guess which ASX All Ords share rocketed 15% on a rare earths deal with Twiggy Forrest
• Here are the top 10 ASX 200 shares today
• Why is the Newcrest share price having such a lowsy end to the week?
• A2 Milk share price lags ASX 200 ahead of Monday’s earnings result

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 recommended A2 Milk. 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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Once a week I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Flight Centre Travel Group Ltd (ASX: FLT) continues to be the most shorted share after its short interest rose to 15.2%. With living costs rising and squeezing budgets, short sellers appear to believe the travel market recovery could falter.
• Betmakers Technology Group Ltd (ASX: BET) has seen its short interest rise to 12.8%. Last week this betting technology company posted a 371% increase in revenue to $91.7 million but a whopping $89.2 million loss.
• De Grey Mining Limited (ASX: DEG) has leapt into the top ten out of nowhere after its short interest surged to 11%. Short sellers seem to believe the market is too optimistic on the development of the Mallina Gold Project.
• Block Inc (ASX: SQ2) has short interest of 10.8%, which is down slightly week on week once again. However, the remaining short sellers will be pleased to learn that the payments company’s shares are expected to crash lower on Monday following a selloff on Wall Street.
• Nanosonics Ltd (ASX: NAN) has short interest of 10.6%, which is down slightly week on week. This infection prevention company’s shares sank deep into the red last week after the release of a disappointing result. Rising costs and new product launch delays weighed on sentiment.
• Lake Resources N.L. (ASX: LKE) has short interest of 10%, which is flat week on week. Short sellers aren’t giving up on this lithium developer despite a significant rally recently. There are doubt over the validity of its DLE technology.
• Zip Co Ltd (ASX: ZIP) has seen its short interest rise to 9.6%. Short sellers will have been pleased to see this buy now pay later provider’s shares tumbled last week after it reported another large loss.
• Inghams Group Ltd (ASX: ING) has short interest of 8.4%, which is up week on week. Short sellers have been loading up on this poultry company’s shares after the release of a disappointing result driven by higher input costs.
• Regis Resources Limited (ASX: RRL) has short interest of 8.3%, which is down week on week again. Production issues have been weighing on this gold miners shares this year.
• Megaport Ltd (ASX: MP1) has seen its short interest fall to 7.7%. Concerns over this network as a service provider’s valuation could be behind this high level of short interest. Based on Macquarie’s estimates, Megaport’s shares trade at ~88x FY 2024 earnings.

The post These are the 10 most shorted ASX shares appeared first on The Motley Fool Australia.

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More reading

• ASX 200 reporting season weekly wrap: Top risers and fallers
• Here are the top 10 ASX 200 shares today
• Here’s why UBS tips the Zip share price to halve
• BetMakers share price pops then drops as full-year revenue leaps 370%
• Zip’s FY22 loss is 165% of its market cap. So why did its shares go up?

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 positions in and has recommended Betmakers Technology Group Ltd, Block, Inc., EML Payments, MEGAPORT FPO, Nanosonics Limited, and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc., EML Payments, and Nanosonics Limited. The Motley Fool Australia has recommended Betmakers Technology Group Ltd, Flight Centre Travel Group Limited, and MEGAPORT FPO. 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 Allkem Ltd (ASX: AKE) share price was a very strong performer last week.

The lithium giant’s shares rallied an impressive 15% higher over the five days.

This means that the Allkem share price is now up almost 60% since this time last year.

Can the Allkem share price continue its ascent?

The good news is that a number of brokers still believe the company’s shares can keep climbing from here.

For example, according to a note out of Morgans, its analysts have retained their add rating with a slightly trimmed price target of $15.40.

Based on the current Allkem share price, this implies potential upside of 11% for investors over the next 12 months.

What did the broker say?

Morgans was pleased with Allkem’s performance in FY 2022. It notes that the company’s “FY22 net profit beat was in-line with our forecast (+1%) despite a miss at the EBITDAIX level.”

And while it acknowledges that the company’s outlook was a bit of a mixed bag, with production downgraded at Mt Cattlin but stronger prices for Olaroz, it saw enough to remain bullish.

Looking ahead, the broker sees plenty of growth avenues and is forecasting strong cash flow generation again in FY 2023. Morgans concludes:

We still see value upside at today’s closing price despite the recent rally. If AKE can provide more detail on its potential future expansion projects like Olaroz S3 and the potential downstream projects for James Bay then we think the market is likely to allow for further growth. We maintain our ADD rating with 12% [now 11%] upside to our target price. Despite the large increases in cash flow we don’t expect AKE to commence paying a dividend in FY23 while its capital expenditure is elevated.

The post Morgans still sees ‘value upside’ upside in Allkem share price despite recent rally appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• ASX 200 reporting season weekly wrap: Top risers and fallers
• Allkem share price higher following massive FY22 profit growth
• Allkem share price on watch amid a record year
• Earnings preview: Here are the ASX shares reporting today

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Of all of the ASX 200 shares to report their full-year earnings so far this earnings season, few have arguably surprised as much as Telstra Corporation Ltd (ASX: TLS) shares.

When the ASX 200 telco reported its full-year earnings on 11 August, Telstra revealed a 4.7% fall in revenues to $22.045 billion, but an 8.4% rise in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $7.256 billion.

But perhaps the biggest surprise of them all was Telstra’s dividend announcement. The telco revealed that it would be increasing its final dividend for FY22 by 6.25% to 8.5 cents per share.

This was the first time Telstra has raised its dividend since early 2015. At that time, the company dialled up its final dividend from 15 cents per share to 15.5. But that was a long time ago, and a very different Telstra.

In more recent years, investors have become used to the telco cutting its dividend. That’s what happened repeatedly between 2017 and 2019. In fact, before this announcement, Telstra had paid an 8 cents per share dividend like clockwork.

So this month’s announcement was certainly a big deal.

Telstra’s first dividend hike in seven years

So now we have Telstra paying out a fully franked final dividend of 8.5 cents per share, to be doled out on 22 September. That means that the company will have paid shareholders a total of 16.5 cents per share for FY2022. On the current Telstra share price, this will give the telco an FY22 dividend yield of 4.1%, or 5.86% grossed-up with the full franking.

So if an investor had a hypothetical $10,000 invested in Telstra shares today, they can expect to receive a total of approximately $410 in dividend income for FY22.

If Telstra follows this dividend up with another 8.5 cents per share payment for its next dividend (which is by no means guaranteed), the company would have a forward yield of 4.23% on current pricing.

But one broker who reckons this could indeed play out is Morgans. As my Fool colleague James covered this week, Morgans was impressed with Telstra’s FY22 earnings report.

The broker slapped an “add” rating on Telstra shares, complete with a 12-month share price target of $4.60. When it comes to dividends, Morgans is pencilling in 17 cents per share over FY23 for Telstra, and again in FY24.

The post How much income will Telstra shares pay for FY22 after this month’s dividend hike? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why is the Telstra share price on the slide today?
• 2 excellent ASX 200 dividend shares that brokers love
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 3 ASX All Ordinaries shares trading ex-dividend tomorrow

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. 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 Telstra Corporation 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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The South32 Ltd (ASX: S32) share price has been rising strongly in recent weeks.

South32 shares have climbed more than 15% over the last month and are up by around 25% since 19 July 2022.

The ASX mining share reported its FY22 results earlier this week, revealing several interesting statistics.

We’ll have a quick look at those numbers but remember – the share market moves on quickly. Investors and the market are generally forward-looking. In other words, what’s expected to happen for South32 in the future could be a more important influence on its valuation.

FY22 earnings recap

South32 reported its result for the 12 months to 30 June 2022.

Revenue rose by 69% to US$9.27 billion, while underlying earnings soared 432% to US$2.6 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 156% to US$4.76 billion.

The statutory net profit after tax (NPAT) recovered from a US$195 million loss in FY21 to $2.67 billion in FY22.

It grew its ordinary dividend by 363% to US 22.7 cents and it also grew its special dividend by 50% to 3 cents per share.

South32 attributed the result to stable operating performance and recent portfolio improvements, which enabled it to capitalise on the strong tailwind of commodity prices.

The ASX mining share pointed to record production at Worsley Alumina, while Hillside Aluminium and Mozal Aluminium continued to “test maximum technical capacity”.

At Cannington, it exceeded production guidance as it transitioned to a new mine configuration, bringing forward higher-grade material. At Cerro Matoso, it achieved a 22% increase in nickel production.

What about the future?

South32 is making “significant progress” towards transforming its portfolio. The goal is to increase its exposure to the metals that are important for a low-carbon future.

It added copper to its portfolio through the acquisition of a 45% interest in Sierra Gorda and doubled its low-carbon aluminium capacity with an additional shareholding in the hydro-powered Mozal Aluminium smelter and the restart of its 100% renewable-powered Brazil aluminium shelter.

At Hermosa, it has completed a pre-feasibility study for the zinc-lead-silver Taylor deposit, which “demonstrated its potential to be a globally significant producer of base metals”, and advanced its study of options for the battery grade manganese Clark deposit.

South32 CEO Graham Kerr said:

Looking forward, we are well-positioned to navigate the current economic uncertainty. We have a strong balance sheet with net cash of US$538 million after funding our new investments during the year, while our ongoing focus on cost management and an expected 14% increase in production will mitigate industry-wide cost inflation.

We have repositioned our portfolio toward metals critical for a low-carbon future, having already established a pipeline of high-quality development options.

In terms of its production for FY23, South32 wanted to highlight that group copper equivalent production is expected to increase by 14% in FY23. The rest of its production is expected to be largely similar to FY22.

Looking at costs, it said that it continues to pursue cost efficiencies, having successfully delivered more than US$50 million of annualised savings across the group.

The savings, combined with an improvement in planned volumes and lower producer currencies, are expected to provide “partial relief” from further upward pressure on its operating unit costs despite continuing industry-wide inflation in raw material input prices, labour and energy.

South32 share price snapshot

While South32 shares are down 12% in the past six months, the miner’s share price is up 4% year-to-date and is tracking a healthy 45.8% higher over the past 12 months.

The post What’s the outlook for the South32 share price following the miner’s latest results? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Here are the 3 most heavily traded ASX 200 shares on Friday
• South32 share price gains ground on record FY22 earnings and special dividend
• Why is the South32 share price tanking on Tuesday?
• I’d still buy 2 ASX shares already up 50% in a year: expert

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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If you’re looking for dividends shares to buy, then you may want to look at the two listed below.

Here’s why analysts rate these ASX 200 dividend shares highly:

BHP Group Ltd (ASX: BHP)

The first ASX 200 dividend share to look at is mining giant BHP.

Earlier this month, the Big Australian released its full year results and revealed record operating profits and free cash flow. This allowed the company to reward its shareholders with a bumper US$3.25 per share fully franked dividend in FY 2022.

And while its dividends may not be as large in the coming years, they are still expected to be very generous.

For example, the team at Morgans are forecasting fully franked dividends per share of A$3.95 in FY 2023 and A$2.98 per share in FY 2024. Based on the current BHP share price of $42.81, this will mean yields of 9.2% and 7%, respectively.

Morgans has an add rating and $48.40 price target on the miner’s shares.

Coles Group Ltd (ASX: COL)

Another ASX 200 dividend share that analysts rate as a buy is supermarket operator Coles.

It released its full year results last week and revealed a 2% increase in sales revenue to $39,369 million and a 4.3% lift in net profit after tax to $1,048 million. This was driven by the successful execution of trade plans, as well as value campaigns focused on lowering the cost of living for customers.

The team at Citi are expecting more of the same in the future. This is expected to underpin solid dividend growth, with the broker forecasting a 75 cents per share dividend in FY 2023 and a 79 cents per share dividend in FY 2024.

Based on the current Coles share price of $17.65, this will mean yields of 4.2% and 4.5%, respectively, for investors.

Citi also sees plenty of upside for its shares with its buy rating and $20.10 price target.

The post 2 ASX 200 dividend shares to buy now according to analysts appeared first on The Motley Fool Australia.

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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 positions in and has recommended COLESGROUP DEF SET. 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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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:

Allkem Ltd (ASX: AKE)

According to a note out of Macquarie, its analysts have retained their outperform rating and $21.00 price target on this lithium miner’s shares. This followed the release of a full year result that was materially ahead of the broker’s expectations. In addition, Macquarie highlights that management is guiding to even stronger than expected lithium prices from Olaroz for the first half of FY 2023. The only disappointment was a reduction to its Mt Cattlin production guidance, which has led to a slight revision to Macquarie’s earnings estimates. The Allkem share price ended the week at $13.91.

Costa Group Holdings Ltd (ASX: CGC)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating and $3.60 price target on this horticulture company’s shares. Goldman was pleased with Costa’s first half performance, noting its solid cost absorption relative to peers in the agriculture sector. In addition, it was pleased with the performance of its Chinese joint venture and better than expected growth in high margin genetics licensing. Overall, with its shares changing hands well below historical multiples, the broker believes Costa is attractive in the context of its earnings growth. The Costa share price was fetching $2.79 at Friday’s close.

South32 Ltd (ASX: S32)

Analysts at Morgans have retained their add rating but trimmed their price target on this mining giant’s shares to $5.50. According to the note, the broker felt South32 delivered a strong full year result, which was in line with consensus estimates. And while Morgans acknowledges that earnings multiples are regularly inconsistent value indicators in resources, it believes that in South32’s case, it shows the market is misjudging how much residual earnings power will remain in the business post cycle peak. The South32 share price was trading at $4.23 on Friday.

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

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More reading

• ASX 200 reporting season weekly wrap: Top risers and fallers
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Costa share price grows on fruitful first-half results
• Allkem share price higher following massive FY22 profit growth
• South32 share price gains ground on record FY22 earnings and special dividend

Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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 COSTA GRP FPO. 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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I believe that the ASX dividend shares worth investing in are companies with good foundations to grow profit over time. It’s hardly worthwhile investing in a business for a yield of a few per cent if it’s a big risk that the share price could fall much more in value.

This is why there aren’t too many ASX companies that I’d buy for dividend income. But, I believe the two ASX dividend shares details below are attractive for their underlying earnings growth, the starting dividend yield and dividend growth potential.

With that in mind, here’s my pick of two leading candidates for defensive dividends.

Rural Funds Group (ASX: RFF)

This real estate investment trust (REIT) invests in farmland around Australia.

It has a portfolio across several different agricultural industries, including almonds, macadamias, cattle, vineyards and cropping (sugar and cotton).

Rural Funds aims to grow its distribution for investors by 4% per annum. Inclusive of franking credits, Rural Funds expects to pay a distribution per unit of 12.2 cents in FY23, which translates into a forward distribution yield of 4.7%.

More than 40% of Rural Funds’ rental revenue is linked to CPI inflation, so the higher rate of inflation can help its rental profit.

The ASX dividend share recently revealed that 52% of its adjusted total assets had been revalued during the second half of FY22. This saw a rise in value of $118 million, or $0.31 per unit.

Sonic Healthcare Ltd (ASX: SHL)

Sonic is one of the ASX market’s largest healthcare shares. It has pathology operations in several countries, including Australia, the United States, Germany, the United Kingdom, Switzerland and Belgium. Radiology and clinical services are two other areas of focus in Australia.

The ASX dividend share has benefited from a lot of COVID-19 testing revenue. This has allowed it to make some acquisitions (for a total of $628 million in FY22) to boost its earnings profile for the long term. But COVID testing does continue. In July 2022, the first month of FY23, it saw $94 million of COVID-related revenue.

Sonic is also seeing a return to stronger growth for its non-COVID revenue. In July 2022, the base business organic revenue rose by 3.9% year over year. The base business saw 2% revenue growth in FY22.

The company has a “progressive dividend strategy” which is expected to continue in FY23 “and beyond”. It has grown its dividend in most years over the past three decades. FY22 saw the total dividend increase by 10% to $1.00 per share. That means the FY22 grossed-up dividend yield is 4%.

In addition, Sonic Healthcare’s partnership with artificial intelligence business Harrison.ai could unlock the next generation of services for patients.

FY23 could be a strong year for the base business due to a backlog of testing that was postponed during the pandemic.

Over the longer term, it can benefit from other growth drivers such as “ageing and growing populations, preventative medicine and new tests.”

I think these factors can help earnings and grow the dividend over time.

The post 2 leading ASX dividend shares I’d buy for long-term income appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Sonic Healthcare share price charges higher on 10% FY22 dividend boost
• Here are top 2 ASX dividend shares with growing yields
• Here are the top 10 ASX 200 shares today
• 2 ASX All Ords shares I’d buy before they report in August

Motley Fool contributor Tristan Harrison has positions in RURALFUNDS STAPLED. 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 RURALFUNDS STAPLED. The Motley Fool Australia has recommended Sonic Healthcare 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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