Category: Stock Market

The CSL Limited (ASX: CSL) share price is set to go above $300 according to David Clark, an expert from Cameron Harrison.

According to reporting by the Australian Financial Review, the ASX healthcare share could get back to that milestone “before too long”.

Clark thinks the outlook for the business is compelling and believes CSL can reverse the decline seen this year.

Since the beginning of the 2022 calendar year, the CSL share price has dropped by 9%. It has fallen along with many other ASX shares amid the intense market focus on inflation and interest rate rises.

In early trading on Friday, it is up 0.54% to $270.52.

So why the optimism about CSL? Let’s have a look at what Clark said to the AFR about the healthcare business with a $130 billion market capitalisation (according to the ASX).

Plasma division margins predicted to recover

Clark noted that there are two key divisions within the business. The blood plasma division called Behring generates around 70% of revenue, and the influenza vaccine division called Seqirus generates around 26% of the revenue.

The investment professional said demand for CSL’s blood plasma products remains “very strong” amid diminishing stockpiles during the pandemic. COVID-19 lockdowns and restrictions reduced accessibility of the donation hubs and “drastically” reduced donor rates for plasma.

Clark pointed out that the plasma division has higher fixed costs, so the COVID impacts hurt CSL’s profit margins. He said this explained the “flat” CSL performance in the second half of the pandemic. The CSL share price is still 20% lower than its pre-COVID peak.

Cameron Harrison thinks CSL’s plasma volumes will grow above pre-COVID levels in the second half of 2022 because of a few different tailwinds.

In the United States, higher payments to donors have helped stop a downward trend – Clark pointed out that CSL’s plasma collections volume was up 18% in the FY22 first half. CSL said it plans to open 35 new centres in FY22.

Another tailwind, according to Clark, is that CSL’s challenge on a ban on plasma donations by Mexican nationals on the B1/B2 visa was upheld last month, creating a potential tailwind into FY24.

The final potential tailwind for the plasma division that Clark referred to is that donations tend to rise when households have less disposable income.

If the US Federal Reserve’s interest rate rises lead to higher unemployment, it could “help donor rates”. As donation volumes rise, Cameron Harrison thinks there will be a “pronounced improvement” in the CSL profit margin, which could help the CSL share price.

Strong performance by Seqirus

The vaccine business has done better than expected, according to Clark. There was a bad flu season in the northern hemisphere and that’s followed through to the southern hemisphere. This is helping drive revenue and earnings before interest and tax (EBIT).

Explaining the positive outlook for this side of the business, Clark said to the AFR:

The success of the mass-scale COVID-19 vaccination program appears to have flowed into increased consumer comfort towards flu vaccines, which we expect to underpin higher vaccination rates.

CSL share price snapshot

While the CSL share price has suffered in 2022, it’s only down by 2% over the past month. It has also fallen around 5% over the past 12 months.

The post Why a CSL share price above $300 is on the cards: expert appeared first on The Motley Fool Australia.

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More reading

• ASX 200 healthcare shares provided some pain relief today. Here’s why
• What’s the outlook for the CSL share price in July?
• Has CSL been growing its dividend?
• ‘Don’t get too bearish’: 3 ASX shares Wilsons just added
• How much have CSL shares paid in dividends over the last 5 years?

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 CSL Ltd. 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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ASX buy now, pay later (BNPL) shares suffered through June, falling as much as 58% in just 30 days.

Interestingly, most ASX-listed companies in the field were silent during this time. Here’s how the ASX’s most renowned BNPL shares performed last month:

• Zip Co Ltd (ASX: ZIP) – fell 52%
• Humm Group Ltd (ASX: HUM) – fell 47%
• Sezzle Inc (ASX: SZL) – fell 53.5%
• Block Inc (ASX: SQ2) – fell 28%
• Splitit Ltd (ASX: SPT) – fell 58%

For context, the S&P/ASX 200 Index (ASX: XJO) slipped nearly 9% last month while the All Ordinaries Index (ASX: XAO) slumped 9.5%.

So, what inspired such a dismal period for ASX BNPL shares? Let’s take a look.

What dragged ASX BNPL shares down in June?

Inflation, rates, and potential regulation, oh my. ASX BNPL shares suffered through yet another month of uncertainty in June.

The Reserve Bank of Australia hiked interest rates by 0.5% early last month in an attempt to control surging inflation. And that was likely bad news for ASX BNPL shares.

Increasing rates makes debt more expensive and, as a result, generally slows the economy, my Fool colleague Brendon Lau reports.

Pricier debt is often a hit to companies’ bottom lines. But BNPL companies face even greater challenges in such an environment.

A slower economy increases the likelihood that BNPL users default on payments, creating more bad debts.

Additionally, consumer sentiment tends to waver when rates rise. That could see fewer customers forking out on purchases they would otherwise use BNPL services to cover.

And finally, the regulation of BNPL companies has been flagged once more. Federal Financial Services Minister Stephen Jones is reportedly expected to introduce legislation to do just that in the near future.

There was also some notable drama among ASX BNPL shares last month.

Drama in Humm’s camp

While most ASX BNPL shares stayed silent through June, the Humm board was reshaped into a battleground.

Five of the company’s six board members announced their resignation last week after its remaining director campaigned against the now-scrapped sale of its BNPL leg.

Humm founding director and major shareholder Andrew Abercrombie fought against the company’s plan to sell its consumer finance business to Latitude Group Holdings Ltd (ASX: LFS) in a previously proposed mostly-scrip deal.

The company previously noted the business had failed to turn a profit in 2022.

The post June was a terrible month for ASX BNPL shares. Here’s why appeared first on The Motley Fool Australia.

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More reading

• These were the worst performing ASX 200 shares in June
• Could ASX BNPL shares be set for imminent regulation as spending swells to $12 billion?
• Bargains or value traps? Expert rates 3 ASX shares that halved this year
• Here’s why ASX 200 tech shares are taking a beating on Wednesday
• Zip shares sink 6% despite BNPL spend doubling this financial year

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool Australia has recommended Humm Group 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 Ioneer Ltd (ASX: INR) share price is on course to end the week on a positive note.

In morning trade, the lithium developer’s shares are up 3.5% to 42.5 cents.

Why is the Ioneer share price rising?

Today’s gain appears to have been driven by news that the Ioneer share price had a solid debut on the Nasdaq index overnight.

The US-based emerging lithium–boron supplier commenced trading on the Nasdaq under an American Depositary Receipt (ADR) listing and ended the day 5% higher.

Ioneer’s Managing Director, Bernard Rowe, believes the secondary listing will be a boost to the company. He explained:

We believe this secondary listing will be greatly beneficial to the Company and its shareholders. There is a growing desire among North American investors to take part in the clean energy supply chain. We are pleased ioneer will gain greater visibility through a leading North American capital market trading platform that is suited for future-forward companies like ours.

What is Ioneer?

Ioneer is the company behind the Rhyolite Ridge lithium-boron operation in Nevada, USA. This is the only known lithium-boron deposit in North America and one of only two known deposits worldwide.

Management expects the operation to come on stream in 2025, making it a major domestic supplier of refined lithium and boron products. In fact, it estimates that it will produce enough supply of lithium materials for approximately 400,000 electric vehicles each year.

Ioneer Executive Chairman, James Calaway, said:

Rhyolite Ridge is a world-class lithium project and ioneer is ideally positioned to play a major role in the energy transition. We believe making it easier for North American capital market participants to invest in ioneer is consistent with our ambition to produce materials necessary to develop electric vehicle and renewable energy supply chain infrastructure in North America.

The post Here’s how this ASX lithium stock performed on its US debut appeared first on The Motley Fool Australia.

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More reading

• 3 ASX All Ordinaries shares that leapt more than 10% on Thursday
• What’s boosting the Ioneer share price 14% higher?

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 Telstra Corporation Ltd (ASX: TLS) share price may be an opportunity in July 2022, according to experts.

As Australia’s largest telecommunications business, Telstra hasn’t escaped some of the volatility seen across the ASX share market.

Since the start of 2022, Telstra shares have fallen by around 9%. The broker Ord Minnett thinks Telstra can regain this lost ground, and more, over the next 12 months.

Latest views on the Telstra share price

The broker Ord Minnett recently slightly reduced its price target for Telstra to $4.65. A price target is where it thinks the share price could be in 12 months.

If the Telstra share price was to reach $4.65, that would equate to a rise of around 21% from the current price of $3.85.

The broker Morgan Stanley has a price target of $4.60 on Telstra shares. That implies a possible rise of around 19%.

This broker suggests the strength shown by T-Mobile (a 5G leader in the US) is good news for Telstra as fixed wireless broadband captures household attention quicker than anticipated. Telstra is seen as the 5G leader in Australia.

Profit growth initiatives

Telstra is doing several different things to try to grow profit for shareholders.

The telco has just launched its T25 strategy, aiming to deliver growth, “exceptional customer experiences”, and continued network and tech leadership.

It wants to be the 5G market leader, so it’s extending its 5G network coverage to 95% of the population. Telstra has identified $500 million of net fixed costs to cut between FY23 to FY25.

It hopes to grow underlying earnings before interest, tax, depreciation and amortisation (EBITDA) at a compound annual growth rate (CAGR) in the mid-single digits while growing underlying earnings per share (EPS) at a CAGR in the high-teens to FY25.

Telstra also plans to maximise its fully franked dividend for shareholders and grow it over time. Dividend growth could be helpful for the Telstra share price.

Another move by Telstra to try to grow and diversify its earnings was the acquisition of Digicel Pacific, which is a market leader in several Pacific island nations.

The upfront cost to buy this business was US$1.6 billion, although Telstra is only contributing US$270 million of equity. The Australian government will provide the rest of the funding through non-recourse debt facilities and equity-like securities.

Telstra said the overall Digicel Pacific business made US$233 million of EBITDA in the financial year to 31 March 2021.

One of the final things Telstra is doing that could help earnings in the shorter and longer term is increasing prices. The company said it would increase prices in line with CPI inflation in July and could raise prices annually from now on.

As the price increase implementation happens, investors may factor that into their thoughts.

Telstra share price snapshot

Despite the recent decline, the Telstra share price has risen 2% over the past year. It was relatively flat in June, down by 0.8%.

The post Could July be a good month for the Telstra share price? appeared first on The Motley Fool Australia.

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More reading

• Telstra share price slides as Optus exec ramps up calls for TPG deal to be canned
• 4 ASX dividend shares to buy that aren’t banks or miners: expert
• Here are 2 top ASX 200 dividend shares to buy right now according to experts
• What are brokers saying about the Telstra share price?
• Optus plea to ACCC doing little to these ASX 200 telco shares today

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 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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As was largely expected, the AVZ Minerals Ltd (ASX: AVZ) share price won’t be returning to trade on Friday.

The lithium developer’s shares have been suspended from trade since 9 May and will remain that way for a little longer.

What’s the latest on the AVZ Minerals share price?

This time last month, the company requested that the suspension of its shares be extended until 1 July while it sorted out an ownership dispute relating to the Manono Lithium Project.

However, with this dispute still unresolved, the company was not ready to let the AVZ share price return to action.

Though, the end is potentially in sight now. Rather than requesting another full month of suspension, the company has optimistically named 15 July as its return date this time around.

It commented:

AVZ Minerals Limited refers to the Company’s request for an extension to its voluntary suspension dated 1 June 2022, in relation to the finalisation and release of an announcement with respect to its mining and exploration rights for the Manono Lithium and Tin Project (Manono Project).

The Company advises that it is encouraged with the progress being made with its discussions with the DRC Government, although the subject of the initial trading halt request remains incomplete.

Accordingly, the Company requests a further extension to the voluntary suspension until the commencement of trade on 15 July 2022 or an earlier announcement to the market regarding its mining and exploration rights for the Manono Project.

Why are its shares suspended?

The AVZ share price is out of action while it battles proceeding relating to the “meritless claim that La Congolaise D’Exploitation Miniere SA (Cominière) has transferred a 15% interest in Dathcom Mining SA (Dathcom) to Jin Cheng.” Dathcom is the owner of the mining licence for the Manono Lithium Project.

Last month, AVZ commented on the matter. It said:

AVZ confirms that Cominière breached the preemptive rights of AVZI under the Shareholders Agreement by purporting to transfer a 15% interest to Jin Cheng, making it invalid and of no force or effect.

The Company has considered Jin Cheng’s claims in detail and considers them to be spurious in nature, without merit, containing fundamental and material errors, and having no substance or foundation in fact or law. The Company is continuing to take all necessary actions to resist these vexatious and meritless claims and to protect its and Dathcom’s interests.

Time will tell how the court views these claims and ultimately how much of the project AVZ ends up owning. There are fears it could be as little as 36%.

The post AVZ share price remains suspended, but a return is in sight appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Will AVZ Minerals shares finally return to trade this week?
• 3 ASX All Ordinaries shares that have surged 300% in the past year
• AVZ share price suspension: What is the Manono Lithium Project they are fighting over?

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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A new financial year is here so what better time to look at your portfolio and make some changes.

But which shares should you buy? Analysts at Bell Potter are lending a helping hand by picking out the best shares to buy in FY 2023.

Listed below are three ASX 200 shares the broker rates as buys for the new financial year. They are as follows:

Costa Group Holdings Ltd (ASX: CGC)

The first ASX 200 share that Bell Potter believes could be a top option in FY 2023 is Costa. It is Australia’s largest horticulture company with ~7,300 hectares of farming assets across five key categories and three regional hubs.

Bell Potter has a buy rating and $3.75 price target on the company’s shares. This compares to the current Costa share price of $2.86. It commented:

CGC has deployed ~$540m of capital since CY19 through the acquisition of citrus properties, development of berry acreage in Morocco and China and investment in mushroom and tomato capacity. A return on this investment is expected to be the main driver of earnings through to CY23e. In addition we are seeing favourable YTD pricing trends across the majority of CGC’s product portfolio which provides insulation against inflationary cost pressures.

Liontown Resources Limited (ASX: LTR)

Bell Potter remains positive on the battery minerals space due to its belief that the supply side is facing significant hurdles in respect to meeting increasing demand. So, with Liontown already signing offtake agreements with the likes of Tesla, it expects the company to profit greatly when production commences in 2024.

Bell Potter currently has a speculative buy rating and $3.06 price target on the ASX 200 lithium share. This compares favourably to the current Liontown share price of $1.06. It said:

Kathleen Valley is expected to commence production in 2024 and ultimately ramp-up production to 550ktpa SC6 by 2026. Key catalysts are now final project scope and costings, FID [now approved] and commencing project development.

TechnologyOne Ltd (ASX: TNE)

Another ASX 200 share that Bell Potter rates as a buy in FY 2023 is TechnologyOne. While the broker expects the tech sector to remain under pressure as rates rise, it believes stocks “with reasonable cash flows/earnings […] will continue to perform well – even in a rising interest rate environment.”

Bell Potter has a buy rating and $12.50 price target on the company’s shares. This compares to the latest TechnologyOne share price of $10.71. The broker commented:

The migration [to a fully integrated SaaS solution] is now around three quarters complete and Technology One is starting to reap the benefits of greater recurring revenue and a higher margin. This combination will in our view drive double digit earnings growth for years to come and, as the migration of customers approaches 100%, we expect the multiple to rerate to that of a pure SaaS company.

The post Top broker names 3 of the best ASX 200 shares to buy in FY23 appeared first on The Motley Fool Australia.

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More reading

• Experts say these ASX 200 growth shares are buys with 20%+ upside
• Why have ASX lithium shares had such a lousy month in June?
• Top broker says the Liontown share price can rise 150%
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX shares 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 recommended COSTA GRP FPO and TechnologyOne 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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Australia and New Zealand Banking Group Ltd (ASX: ANZ) shareholders should check their bank accounts today. The banking giant has paid out its biggest interim dividend since COVID-19.

In case you weren’t aware, ANZ is rewarding investors with a fully franked dividend of 72 cents per share.

At Thursday’s market close, the ANZ share price finished 2.65% lower at $22.03.

For context, the S&P/ASX 200 Index (ASX: XJO) also tumbled yesterday, down 1.97% to 6,568.1 points.

Let’s take a look at all the details regarding the ANZ dividend.

ANZ’s latest dividend leaves the vault

In May, the big four bank reported growth across key metrics in its half-year results for the 2022 financial year.

In summary, cash earnings from continuing operations rose 4% to $3,113 million over the prior corresponding period. This was driven by the strong performance of its Australia retail and commercial segment and its New Zealand segment.

Evidently, this offset the bank’s weakened margins from its institutional segment, which recorded a 23% decline in cash earnings to $730 million.

Management noted that the economic environment is likely to be very different as it continues to adjust its risk appetite.

Nonetheless, the board elected to increase its interim dividend by 2.9% from the 70 cents per share in H1 FY21.

Based on today’s price, the current ANZ dividend yield is 6.42%.

ANZ share price snapshot

Over the past 12 months, the ANZ share price has fallen by roughly 21%. It is also down 20% over the past 12 months.

Notably, its shares hit a 52-week low of $20.95 on 17 June before quickly rebounding in the days after.

ANZ has a price-to-earnings (P/E) ratio of 9.98 and a market capitalisation of roughly $63.23 billion.

The post ANZ rewards shareholders with its latest dividend. Here are the details appeared first on The Motley Fool Australia.

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More reading

• What’s in store for the ANZ share price in July?
• Volt gets packing as ASX 200 bank shares prove to be a formidable force
• Why is the ANZ share price outperforming the ASX 200 today?
• ASX 200 bank ANZ turns to crypto for carbon credit settlement
• CBA share price leads the big four as banks outperform ASX 200 on Monday

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 Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price fell by 8.4% in June 2022. That compares to a decline of 8.9% for the S&P/ASX 200 Index (ASX: XJO).

So what contributed to such a tough run?

Last month, one of the biggest headline-grabbers was the Reserve Bank of Australia (RBA) increasing the interest rate by 50 basis points, or 0.5%.

The RBA wants to get on top of inflation and slow it down. However, the size of the increase was more than some in the market expected.

The RBA is currently expecting inflation to peak at around 7% in the quarter for the three months to 31 December 2022. Interest rates are also tipped to go higher in the coming months.

Interest rates can have a significant impact on valuation. In theory, higher interest rates are meant to pull down the valuation of assets.

Specific headwinds for the Soul Pattinson share price

For readers who haven’t heard of Soul Pattinson, it’s an investment conglomerate. It owns a portfolio of investments in ASX shares, private businesses, and other assets.

Therefore, if the underlying value of Soul Pattinson’s portfolio goes down, it may seem logical for the Soul Pattinson share price to decline as well.

Let’s look at how some of the company’s biggest investments performed in June.

At 31 January 2022 (the FY22 first-half ending date), the total (pre-tax) net asset value at Soul Pattinson was around $9 billion. This has reduced since then, but we can use it as an indication as to which shares may be having the largest effect on the underlying value.

At 31 January 2022, Brickworks Limited (ASX: BKW) was the biggest position in the portfolio, worth $1.48 billion. In June, Brickworks shares fell around 11%.

The TPG Telecom Ltd (ASX: TPG) shareholding was worth $1.4 billion at the end of the Soul Pattinson FY22 first half. TPG shares climbed almost 4% in June.

Its holding of New Hope Corporation Limited (ASX: NHC) shares was worth $753 million at the HY22 ending date. New Hope shares fell 6.75% in June.

Soul Pattinson’s stake in Macquarie Group Ltd (ASX: MQG) shares was worth $338.5 million at 31 January 2022. Macquarie shares sunk 11.5% in June.

Commonwealth Bank of Australia (ASX: CBA) shares in the investment conglomerate’s portfolio were worth $335 million at the end of HY22. CBA dropped 13.4% in June.

Resource giant BHP Group Ltd (ASX: BHP) shares were worth $244 million in FY22. BHP suffered a 7.5% decline in June.

The last one I’ll highlight was Tuas Ltd (ASX: TUA), which had a $225.7 million weighting at 31 January 2022 in the portfolio. The Tuas share price fell 16% in June.

As readers can see, most of its biggest holdings fell substantially over June, reducing the underlying value of the Soul Pattinson portfolio.

Soul Pattinson share price snapshot

Since the beginning of 2022, the investment conglomerate has dropped around 20%. It is also down almost 30% over the past 12 months.

The post Why did the Soul Pattinson share price go backwards in June? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• These were the best performing ASX 200 shares in June
• These were the worst performing ASX 200 shares in June
• ASX 200 healthcare shares provided some pain relief today. Here’s why
• Own Soul Patts shares? Here’s how much of its portfolio is exposed to coal

Motley Fool contributor Tristan Harrison has positions in 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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Looking for dividend shares to buy this month? If you are, then you might want to look at the shares listed below.

Here’s why these ASX dividend shares are rated as buys:

National Australia Bank Ltd (ASX: NAB)

The first ASX dividend share that could be in the buy zone in July is banking giant NAB. Particularly given recent market volatility, which has dragged its shares notably lower.

One broker that sees a lot of value in the NAB share price following the recent weakness is Goldman Sachs. Its analysts recently reiterated their conviction buy rating with an improved price target of $34.26.

Goldman believes NAB’s balance sheet mix provides the best exposure to the domestic system growth over the next 12 to 18 months.

As for dividends, the broker is forecasting a $1.51 per share dividend in FY 2022 and then a $1.68 per share dividend in FY 2023. Based on the current NAB share price of $27.39, this will mean fully franked yields of 5.5% and 6.1%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share that could be a top option for income investors in July is Transurban.

The leading toll road operator appears well-placed for growth thanks to its portfolio of important roads and its pipeline of development projects.

In addition, analysts at Morgans are very positive on Transurban due to its exposure to regional population and employment growth and urbanisation. In light of this, Morgans has put at add rating and $14.42 price target on its shares.

The broker is also forecasting a rebound in dividends in the coming years. It expects dividends per share of 37 cents in FY 2022 and then 60 cents in FY 2023. Based on the current Transurban share price, this implies yields of 2.6% and 4.2%, respectively.

The post 2 excellent ASX dividend shares that analysts rate as buys in July appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares with enough pricing power to battle inflation: Expert
• Can investors bank on the NAB share price in July?
• Volt gets packing as ASX 200 bank shares prove to be a formidable force
• In the green: Why the NAB share price is rising on Wednesday
• Why is the Transurban share price languishing 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.

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I think the current Lovisa Holdings Ltd (ASX: LOV) share price could make it an attractive ASX dividend share for the longer term.

For readers that haven’t heard of Lovisa before, it’s an ASX retail share that sells affordable jewellery, which is generally targeted at younger shoppers. While it does have an Australian retail network, the company has turned into a global force and it has plans for a lot of growth in the long term.

But, with the company’s growth plans, I think it has plenty of potential to deliver good dividends over time if it continues to pay out a reasonably high level of profit as a dividend.

Dividend projections

Let’s look at how big the Lovisa dividend yield could be over the next couple of financial years.

According to CMC, Lovisa could pay a grossed-up dividend yield of 4.9% in FY22 and 4.85% in FY23. By FY24, CMC’s numbers indicate it could be 5.75%.

Some brokers are expecting even bigger dividends in FY23. UBS has pencilled in a 5% grossed-up dividend yield for FY23, while Morgan Stanley thinks it could be as high as 5.85%.

But what all the projections show are expectations of profit growth over the next few years.

Earnings growth to fund shareholder payouts

A key reason why I think Lovisa could be a leading ASX dividend share is because of the expectation of earnings growth. Profit growth can help drive the Lovisa share price higher, but it can also fund growing dividends.

For example, estimates on CMC suggest that Lovisa could generate 47.6 cents of earnings per share (EPS). That puts the Lovisa share price at 29x FY22’s estimated earnings.

However, in FY24, profit projections on CMC suggest 73.5 cents of EPS – that would represent growth of 54% over two years. If Lovisa did achieve that FY24 figure, it’s valued at just 19x FY24’s estimated earnings.

What could drive Lovisa earnings higher?

I think Lovisa can grow its profit, and therefore its dividend, through a number of initiatives. It is investing “strongly” in its digital platform and strategy to drive continued global growth.

It’s also focused on identifying new markets in which to pilot its Lovisa brand.

The company boasts that it has a strong balance sheet and no debt and it’s continuing to control its costs.

In its last presentation in May, the company said its international rollout was continuing, with 59 new stores opening in the year to date.

The company’s same-store sales can continue to drive earnings higher. It said that in the first eight weeks of the second half of FY22, comparable store sales were up 12.1% and that sales momentum continued to the end of April 2022.

I think if the business expands its global store network, grows digital sales, increases same-store sales and achieves scale benefits, the profit and dividends can grow. This could also assist the Lovisa share price, which closed 1.15% lower at $13.81 on Thursday.

The post Here’s why I think Lovisa could be a top ASX dividend share appeared first on The Motley Fool Australia.

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More reading

• Analysts name 2 excellent ASX shares to buy and hold
• Brokers name 3 ASX shares to buy today
• Could be ‘one of the biggest success stories’: Top broker tips 87% upside for Lovisa shares
• Experts name 2 ASX growth shares to buy with major upside potential
• Analysts are tipping these ASX growth shares as buys

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 recommended Lovisa Holdings Ltd. 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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