Category: Stock Market

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.

Mega-cap public companies have gotten unbelievably large in the past few years. Some of the technology giants like Apple and Microsoft have gotten so large that their market capitalizations — the total value of their publicly traded shares — are now north of $1 trillion. Only six publicly traded companies in the United States have ever joined the exclusive $1 trillion market cap club. But what company will be the next to join? I think a good candidate is Nvidia (NASDAQ: NVDA), the maker of computer chips for gamers, cryptocurrencies, data centers, and many other technologies. 

Nvidia’s market cap is currently around $400 billion. Can it join the ranks of companies valued at $1 trillion, or more than double its current price, by 2025? Let’s investigate. 

Recent growth has been fantastic

To take a look at Nvidia’s prospects to reach the $1 trillion club, we first need to look at its financials and growth. In its latest quarter, revenue hit $8.29 billion, up 46% year-over-year, and free cash flow hit $1.37 billion. Nvidia is currently seeing super-strong growth for its data center business, which grew revenue by 83% year-over-year to $3.75 billion. Gaming revenue, Nvidia’s other large operating segment, is seeing solid growth as well, with revenue hitting $3.62 billion in the quarter, up 31% year-over-year.

And there’s reason to be optimistic about both segments continuing to grow over the long term. Video games and associated technologies are growing steadily each and every year, and data center build-outs continue to happen in order for companies to build out cloud computing infrastructure. There should also be continued growth in machine learning and artificial intelligence (AI) research. Nvidia’s various computing products are the market leaders for these industries. 

Watch out for short-term headwinds

There’s one thing Nvidia investors should be concerned with, at least in the short run, and that is cryptocurrencies. Long story short, cryptocurrency companies and miners use Nvidia’s computing products to run their businesses. With the crypto markets crashing, these companies are starting to sell their Nvidia products, sometimes for prices well below retail. This increase in the supply of used products has the chance to decrease demand for new Nvidia products coming down the manufacturing line, which would hurt Nvidia’s top-line revenue growth.

Regardless of whether or not Nvidia gets hit by cryptocurrency demands, the long-term growth drivers for the business remain intact. People are playing more video games, businesses are building out more data centers, and researchers are building out more and more AI technologies. All bode well for the demand for Nvidia’s products in the future. 

So will it join the $1 trillion club?

In order to reach a market cap of $1 trillion, Nvidia will need to significantly increase its annual free cash flow generation. Based on a price-to-free cash flow multiple (P/FCF) of 25, which is above the market average right now, a stock worth $1 trillion needs to generate $40 billion in annual free cash flow ($1 trillion divided by 25). For reference, of the four U.S. companies valued at over $1 trillion (Apple, Alphabet, Microsoft, and Amazon), all except Amazon have generated over $60 billion in free cash flow in the last 12 months. Amazon’s free cash flow is negative due to a lot of heavy investments it has made since the start of the pandemic, but should recover to above $40 billion in the next couple of years.

NVDA Free Cash Flow data by YCharts

As you can see in the above chart, Nvidia generated just under $8 billion in free cash flow over the last 12 months. In order to hit $40 billion by the end of 2025, the company needs to grow its free cash flow by 50% a year for four straight years. While certainly possible, it doesn’t seem probable for a company of this magnitude to grow that fast. Of course, the stock could hit $1 trillion with pure multiple expansion, but investors shouldn’t be banking on that happening, especially as we enter a bear market.

Given the tailwinds around computing, AI, and data centers, Nvidia is on a path to eventually join the $1 trillion market cap club. But to do so by the end of 2025 seems unlikely. 

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

The post Will Nvidia be a trillion-dollar stock by 2025? appeared first on The Motley Fool Australia.

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Brett Schafer has no position in any of the stocks mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Nvidia. 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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The BHP Group Ltd (ASX: BHP) share price is enjoying a healthy lift today, up 2.5% to $42.22 per share.

That will come as welcome news to shareholders of the S&P/ASX 200 Index (ASX: XJO) iron ore giant, who’ve watched the BHP share price decline 21% since mid-April.

And there could be more good news to come in the short-term, according to Jessica Amir, Australian market strategist at Saxo Markets.

Why does the BHP share price appear set for a lift?

Amir notes that the BHP share price has come under pressure since April “as China’s lockdown has ground down industrial metals demand and prices in iron and copper”.

However, she said that this week BHP shares could march higher for three reasons.

First, it’s the end of the financial year in Australia, with the BHP share price well down year-on-year. For that reason, Amir said, “We may likely see fund managers top up BHP positions as it’s the largest commodity stock in the world and the biggest stock on the ASX.”

Next, Amir said, “The technical indicators suggest BHP shares could rally as it’s in oversold territory.”

What other tailwinds could lift the ASX 200 miner?

The third reason she said the BHP share price could continue to gain over the short-term is due to apparent success with China’s battle to contain its COVID outbreaks:

Sentiment picked up in China after it declared victory over Shanghai’s Covid outbreak. This resulted in the iron ore price jumping 3.7% yesterday, and the technical indicators suggest buying may continue in the short-term. Meanwhile, the copper price jumped for the first time in five days.

Over the medium term, Amir is more cautious on the outlook for the BHP share price, noting that, “The industrial metal commodity rally could be short lived, until we have consistent news from China that restrictions are easing.”

BHP’s financial year ends this week.

Looking ahead Amir said, “We await their operational review due 19 July, which will probably give a dimmer outlook on commodity demand. BHP’s financial results are due 16 August.”

The post Why the BHP share price looks poised for a short-term boost: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Woodside Energy Group Ltd (ASX: WDS) share price is taking off on Tuesday alongside the price of oil.

The energy commodity’s value lifted close to 1.8% overnight on notable supply concerns.

At the time of writing, the Woodside Energy share price is $32.41, 3.48% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.3% today while the S&P/ASX 200 Energy Index (ASX: XEJ) is up 2.99%.

Let’s take a closer look at what’s going on with Woodside Energy and its ASX 200 peers today.

Why’s the Woodside Energy share price outperforming?

The Woodside Energy share price is in the green amid higher oil prices on Tuesday.

The Brent crude oil price lifted 1.7% in Monday’s session overseas to reach US$115.09 a barrel, according to CommSec. Meanwhile, West Texas Intermediate crude oil gained 1.8% to trade at US$109.57 a barrel.

The commodity’s gain came as the Group of Seven nations proposed to place a price cap on Russian oil in response to its ongoing invasion of Ukraine. The move is designed to put financial pressure on Russia through new sanctions, reports Reuters.

Additionally, the publication reports unrest in Libya and Ecuador may see oil production in those nations halted in coming days.

Finally, the United Arab Emirates has reportedly flagged it’s nearing its maximum production capacity as OPEC+ nations prepare to meet on Thursday.

Woodside Energy is joined in the green by many of its energy-producing peers today.

The Beach Energy Ltd (ASX: BPT) share price is among the top-performing energy stocks right now, gaining 5.45%. Meanwhile, shares in Santos Ltd (ASX: STO) and Worley Ltd (ASX: WOR) are up 2.78% and 3.28% respectively.

Today’s gain sees the Woodside Energy share price 47% higher than it was at the start of 2022. It has also jumped 44% since this time last year.

The post Here’s why the Woodside Energy share price is green all over today appeared first on The Motley Fool Australia.

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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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The Wesfarmers Ltd (ASX: WES) share price is out of form on Tuesday.

In afternoon trade, the conglomerate’s shares are down 3% to $42.80.

Why is the Wesfarmers share price falling today?

The weakness in the Wesfarmers share price today appears to have been caused by a broker note out of Ord Minnett this morning.

According to the note, the broker has downgraded Wesfarmers and a host of other retail shares amid concerns over the current consumer environment.

In respect to Wesfarmers, Ord Minnett has downgraded its shares to a lighten rating from hold and cut its price target on them by over 20% to $41.20. Based on the current Wesfarmers share price, this implies further potential downside of approximately 4% for investors.

Ord Minnett has reduced its earnings estimates for Australian retailers through to FY 2024 to reflect tougher operating conditions than previously expected.

Other retailers that are being hit by downgrades include the following:

• Coles Group Ltd (ASX: COL) shares to lighten with a $17.00 price target
• JB Hi-Fi Limited (ASX: JBH) shares to hold rating with a $42.00 price target
• Woolworths Group Ltd (ASX: WOW) shares to hold with a $35.40 price target

What are other brokers saying about Wesfarmers?

Analysts at Morgans are a lot more positive on the Wesfarmers share price. Earlier this month, the broker put an add rating and $58.40 price target on the company’s shares.

Its analysts note that management appears confident that it can navigate the tough consumer environment.

Morgans commented:

With cost-of-living pressures increasing, management was confident in WES’s ability to navigate through a more cautious consumer environment given the retail businesses offer a strong value proposition underpinned by scale benefits, product innovation and supply chain efficiencies.

With value expected to become increasingly important, we think Kmart is well-placed to benefit with the average price of an item at around $6-7. Even if price rises are needed to mitigate cost inflation, this will be small on an absolute basis (eg, a 5% increase in average selling price = ~35c) and Kmart can use its scale and supply chain flexibility to limit increases vs its competitors.

Time will tell which broker makes the right call.

The post Wesfarmers share price tumbles on broker downgrade 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 and Wesfarmers 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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It’s been a big week so far for the Carsales.com Ltd (ASX: CAR) share price. Not that you would know it from looking at Carsales shares this week. The ASX 200’s online classifieds company’s shares haven’t moved an inch since last Friday when Carsales closed at $20.76 a share.

This is because the company requested a trading halt yesterday before market open. As we covered at the time, this was initially gazetted as a capital raising endeavour. We found out more soon after market open.

Carsales announced that it was intending to raise $1.207 billion from the placement of new Carsales shares. Eligible existing retail and institutional shareholders will be able to subscribe to one new Carsales share for every 4.16 shares owned for the price of $17.75.

The proceeds raised from this offer will fund the acquisition of the remaining 51% of Trader Interactive that Carsales does not yet own.

Trader Interactive is a US-based platform that is a market leader in recreational vehicles, powersports, commercial trucks, and equipment.

How does the Carsales share price react to acquisitions?

We have yet to see how the Carsales share price will react to this latest news. The shares have not yet resumed trading, which won’t happen until tomorrow.

Carsales bought its initial 49% stake in Trader Interactive back in May 2021. Back then, the company raised $600 million from a prior capital raising program. So let’s look at what has happened to the Carsales share price when the company has made acquisitions in the past.

Carsales’ last acquisition was that initial stake in Trader Interactive, announced on 12 May 2021. Investors initially reacted sceptically at the time, with the Carsales share price dipping from more than $19 on 11 May to $17.63 by 21 May.

On the day that Carsales returned from that trading halt (17 May 2021), its shares fell 7%. But a month later, the shares were back to around $19.50. By September 2021, they had risen to Carsales’ 52-week high of $26.67 – a high watermark that still stands today.

So the last time Carsales halted its shares for an acquisition, it seemed to be ‘dip, then pop’. There’s no guarantee this will happen this time too, but it’s an interesting case study.

Before this, Carsales’ last major acquisition was the 2017 decision to buy the remaining 51% stake of South Korea’s Encar.com for $244 million. Back then, the Carsales share price also reacted positively and gained around 11% in the month following the acquisition.

We shall have to wait and see what happens to the Carsales share price this time around when the company resumes trading tomorrow.

The post How has the Carsales share price performed after past acquisitions? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com 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.

High inflation makes it very difficult to invest, particularly for those of us whose salaries aren’t keeping up with the escalating costs we’re facing. Almost paradoxically though, that same inflation makes it critically important to invest. After all, over the long run, owning shares in companies that are able to adapt, profit, and grow despite that inflation just might be your best chance of protecting your own purchasing power.

The need to keep investing despite those challenges does raise a key question: How exactly do you go about investing during periods of high inflation? When all is said and done, it takes a bit more planning and perseverance than investing in ordinary times, but the tactics involved are very similar.

Keep your costs down

First and foremost, figure out how to get your costs down. Energy costs have been a key driver of the recent inflation we’ve felt. On that front, consider what you can do to reduce your direct energy usage. Can you raise your thermostat a few degrees this summer to cut down on air conditioning bills? What about consolidating your trips, taking the bus, or carpooling more to cut down on gas costs? Do you still have incandescent lights that can be converted to LEDs to reduce their operating costs?

Beyond energy, food has been another pain point from an inflation perspective. Switching to generics and buying in bulk — especially foods that don’t spoil quickly — are time-tested approaches to saving money on food. In addition, taking advantage of free food available to you (such as office coffee) is another way to save money on food. On a related note, cooking more of your own meals rather than relying on take out or restaurants is another approach to save on the costs of eating.

There are often even ways to combine savings in food and energy together. For instance, if you cook in big batches, you can often save energy (and time) versus cooking each meal individually.

Unfortunately, inflation is taking a toll on costs well beyond just food and energy. That’s especially true when it comes to things that have to be transported, thanks in large part to fuel prices that recently hit an all-time high. As a result, it’s often important to find ways to cut back on other costs, as well as food and energy.

If you have a car, for instance, keeping a used one running for longer is often cheaper than trying to buy a new one. That’s especially true these days, when there’s a shortage of car parts, making new vehicles scarcer and more expensive than they used to be. Likewise, repairs may be a cheaper option than replacements for many major appliances like ovens or refrigerators.

Get your debts under control

Once you’ve reduced your ongoing costs, the next big hurdle is paying down your debts. The most efficient way to do that is something known as the debt avalanche method. To use that approach, you line up all your debts in order from highest interest rate to lowest. On all your debts except the highest interest one, you pay the minimum. On that highest-interest-rate debt, you pay as much as you can above that minimum until it’s completely paid off.

Then, once that’s paid off, you take the money that had been going toward that payment and add it to your new highest-interest-rate debt. Keep it up until (nearly) all your debts are paid off.

Some debts, such as your mortgage, might be worth keeping out of your accelerated payoff. It only makes sense to do that, though, if your debt is at a very low interest rate, has a small enough payment that it doesn’t disrupt your life, and the debt plays a clear purpose for your future. Unless all three of those are true, then you’re very likely better off including that debt into your avalanche payoff process before investing.

Make sure you have an emergency fund. Then invest!

By cutting your everyday costs, you free up money to pay down your debts. By completely eliminating many of your debts, you free up even more money. Once those things are true, then you’ve got a decent chunk of money freed up each month that you can sock away for your future.

Before you start aggressively investing in stocks, however, first make sure you’ve got a decently stocked emergency fund. Having around three to six months of expenses in one to handle the unexpected expenses that come up can go a long way toward keeping you from having to sell your shares while they’re down. The good news on that front, though, is that by getting your costs down and your debts paid off, your emergency fund doesn’t have to be as big as it otherwise would have been.

Once that emergency fund is in place, you’re ready and able to put the cash flow you’ve freed up toward investing. Today’s inflation may make it tougher to get there than it used to be, but it also makes it more important than ever. So get started on your plan today, and improve your chances of being able to keep on investing, even in today’s inflationary environment.

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

The post How to keep investing during high inflation appeared first on The Motley Fool Australia.

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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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

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The 4DMedical Ltd (ASX: 4DX) share price is surging today, up 39.6% after posting gains of as much as 95% in early morning trade.

4DMedical shares closed yesterday at 36 cents and are currently trading for 51 cents.

So what’s driving ASX investor interest in the respiratory imaging technology company?

Nationwide contract inked

The 4DMedical share price is rocketing after the company reported it has signed a nationwide contract with I-MED Radiology Network. I-MED has more than 250 clinics across Australia.

The new three-year agreement formalises an existing commercial arrangement between the two companies. 4DMedical is now cleared to send its lung imaging technology to other selected clinics across I-MED’s network.

Atop the agreement, the company said its agreed to establish a Lung Centre of Excellence together with I-MED. Employing its ling imaging technology, 4DMedical said the centre will “enable world-class research and development activities to advance diagnostic imaging throughout Australia”.

The 4DMedical share price could also be getting a lift from the company’s report that the collaboration with I-MED could streamline the adoption processes of its diagnostic imaging technology without requiring extensive pilot programs.

Commenting on the development

4DMedical CEO, Andreas Fouras said:

Expansion of our proven capability nationwide means many more people will be able to access the latest technology in respiratory imaging. Beyond putting our innovative technology in the reach of more people, this deal represents a significant opportunity to drive revenue for the company. Additionally, this agreement creates a framework for the rapid commercialisation of future 4DMedical products.

I-MED CEO Shrey Viranna added, “Activating this arrangement augments I-MED’s world-class diagnostic imaging offering through access to 4DMedical’s unique functional lung imaging technology.”

4DMedical share price snapshot

Despite today’s big lift, the 4DMedical share price remains down 59% in 2022. By comparison, the All Ordinaries Index (ASX: XAO) is down 13% year-to-date.

The post Why is the 4DMedical share price exploding 40% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 BlueBet Holdings Ltd (ASX: BBT) share price is on the move during lunchtime trading on Tuesday.

This comes after the mobile-first online wagering provider announced it has expanded its presence in another US state.

At one point, BlueBet shares soared 42.5% to an intraday high of 67 cents. However, some profit taking by investors has led the company’s shares to retrace to 54.5 cents, up 15.96% at the time of writing.

BlueBet secures market access to Indiana

The latest release by the company has excited shareholders with the BlueBet share price accelerating today.

In its announcement, BlueBet advised it has signed a lucrative online market access agreement with Horseshoe Hammond, LLC.

Based in Indiana, the co-party is a 400,000-square-foot casino that is owned by global casino giant Caesars Entertainment.

In essence, this will allow BlueBet to operate a new online sportsbook in Indiana under its ClutchBet B2C brand. Although, regulatory approval and licencing will need to be acquired first.

The market access agreement has an initial 10-year term.

BlueBet noted Indiana is home to roughly 6.8 million people. The US state first legalised online sports betting in October 2019 and has generated $4.5 billion in wagering handle in the last 12 months.

A number of noted professional sports teams are based in the state such as the Indiana Pacers and Indianapolis Colts.

With market access now expanded to four US states, BlueBet will employ the first stage of its “Capital Lite” US entry strategy. This consists of launching ClutchBet to demonstrate the capability of its technology and team to run profitable sportsbooks in the United States.

The company expects to take first bets in its first US state, Iowa, within the coming weeks. It is set to be followed by Colorado and Louisiana in Q2 FY23 and Indiana in H2 FY23.

Management commentary

BlueBet CEO Bill Richmond touched on the milestone achievement, saying:

BlueBet now has market access in four US states, which provides a strong platform to roll out our B2C brand, ClutchBet, and demonstrate the capability of our technology and team to run profitable sportsbooks in the US.

There is no shortage of opportunities for further B2C expansion in the US, but our focus and capital are pointed firmly towards executing in our initial four states as we seek partners for our Sportsbook-as-a-Solution B2B offer.

BlueBet share price snapshot

Despite rocketing today, the BlueBet share price has tumbled more than 53% over the last 12 months.

These losses have come in 2022 following a major selloff of sports betting shares globally. Year to date, BlueBet shares are down 64%.

Based on today’s price, BlueBet commands a market capitalisation of roughly $106 million.

The post Why is the BlueBet share price rocketing 16% today? appeared first on The Motley Fool Australia.

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• Why is the PointsBet share price sinking on Tuesday?
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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 recommended BlueBet 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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The PointsBet Holdings Ltd (ASX: PBH) share price is having a tough day on Tuesday.

In early afternoon trade, the sports betting company’s shares are down 7% to $2.60.

Why is the PointsBet share price sinking?

There are a couple of potential catalysts for the weakness in the PointsBet share price today.

The first is broad weakness in the tech sector following a poor night on Wall Street’s tech-focused Nasdaq index. This saw Nasdaq-listed rival, DraftKings, lose approximately 4% of its value during overnight trade.

This weakness has seen most ASX tech shares tumble today, leading to the S&P ASX All Technology index trading 2% lower at the time of writing.

What else?

Also potentially weighing on the PointsBet share price is news that smaller rival Bluebet Holdings Ltd (ASX: BBT) will be joining the company in the Indiana market.

This morning, BlueBet revealed that it has signed a 10-year market access agreement with Caesars Entertainment to operate a new online sportsbook in Indiana under the ClutchBet B2C brand.

Though, it will have some catching up to do. PointsBet has been operating in the Indiana market since March 2020, so has a big head start.

Though, there certainly is a big enough market for both companies and their US rivals to work with. Indiana is a state of ~6.8 million people and first legalised online sports betting in October 2019.

Business has been booming since then. For example, during the last 12 months, the state generated $4.5 billion in wagering handle.

The post Why is the PointsBet share price sinking on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Tech shares tumble, Collins Foods jumps
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• Own PointsBet shares? Here’s what the SIG investment means for shareholders
• 5 things to watch on the ASX 200 on Wednesday
• Why GrainCorp, PointsBet, Weebit Nano, and Westpac shares are racing 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 positions in and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended BlueBet Holdings Ltd and Pointsbet 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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It’s another rough day for the Adairs Ltd (ASX: ADH) share price, adding to the stock’s recent turmoil.

At the time of writing, the Adairs share price is $1.995. That’s 2.68% lower than its previous close and 50% lower than at the start of 2022.

For context, the S&P/ASX 200 Index (ASX: XJO) is gaining 0.2% today and has slipped 11% year to date. The All Ordinaries Index (ASX: XAO) is also up 0.2% and nearly 13% lower than it was at the start of this year.

But there’s a notable silver lining for the home furnishing retailer’s shares. The stock’s downturn has left it trading with a dividend yield of 9%.

Adairs shares offer a 9% dividend yield

Considering the current Adairs share price and the company’s two latest dividends totalling 18 cents per share, the stock is boasting a 9.02% dividend yield.

Adairs announced it would pay investors a 10-cent final dividend for financial year 2021 in August 2021. Then, in February, it declared an 8-cent interim dividend.

Both dividends were fully franked. That means they provide shareholders with even more value at tax time.

Additionally, Adairs offered a dividend reinvestment plan (DRP) for its most recent payout. That allowed some investors to receive their dividends in the form of new shares rather than cash – thereby cost-effectively increasing their holding in the company.

The last time the market heard price-sensitive news from the retailer was the release of its half-year results in February.

Then, the company noted COVID-19 outbreaks had dinted its earnings. Plenty of eyes will likely be on Adairs in coming months to see if the inflationary environment and interest rate hikes have also taken a toll on its bottom line.

The post Do Adairs shares really boast a 9% dividend yield? appeared first on The Motley Fool Australia.

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More reading

• Why I think these 2 ASX shares are trading at bargain basement prices
• The Adairs share price is down 54% in 2022. What’s happened?
• Why did the Adairs share price surge 5% today?
• Is Adairs really going to pay a dividend yield of 21%?
• Down 20% in a month: Top broker tips 75% upside for the Adairs share price

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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS 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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