Category: Stock Market

The Adairs Ltd (ASX: ADH) share price has fallen on hard times this year.

Despite finishing 3.64% higher to $1.85 yesterday, the homewares and furniture retailer’ shares are down 54.32% in 2022.

Down, but not quite as low, the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector is also in the red this year by 25.54%.

Let’s take a look at what’s impacted Adairs shares lately.

What’s driving Adairs shares lower these past few months?

The Adairs share price has continued to head south following weakened investor confidence on the ASX.

With inflation levels spiking to 5.1% in the quarter ending 31 March, the Reserve Bank of Australia (RBA) tightened its monetary policy.

This saw the central bank use its toolkit to cool down the hot inflation by raising interest rates.

The monthly household spending report for April indicated an uptick in buying furnishings and household equipment, up 14.9%. However, with May’s report set to be released on 12 July, this could show a drop-off in consumer spending.

This follows the RBA’s decision to aggressively ramp up the official cash rate by 0.5% this month to 0.85%.

Furthermore, the RBA governor, Philip Lowe, warned that more rate hikes in 2022 will impact the cost of living.

A number of economists expect the cash rate to lift to 2.35% by the end of the calendar year.

In Adairs’ first-half result, there was a drop-off across key metrics compared to the prior corresponding period.

Earnings before interest and tax (EBIT) and net profit after tax (NPAT) took a significant hit brought on by COVID-related operational disruptions.

However, with the COVID-19 era almost behind us, the headwinds outlined above could weigh down the company’s current financial performance.

Adairs share price snapshot

A disappointing 12 months has led the Adairs share price to register a loss of almost 60%.

It’s worth noting that its shares reached a 52-week low of $1.65 last week, before recovering some lost ground.

Based on valuation metrics, Adairs commands a market capitalisation of approximately $305.8 million.

The post The Adairs share price is down 54% in 2022. What’s happened? appeared first on The Motley Fool Australia.

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More reading

• 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
• What’s on the horizon for the Adairs share price in June?
• 2 ASX dividend shares that experts are tipping as buys right now

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 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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If you’re an income investor in search of dividend shares to buy to combat rising inflation, then you may want to look at the ones listed below.

Analysts are very positive on these dividend shares and are forecasting attractive yields from them in the coming years. Here’s what you need to know:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share to consider is leading baby products retailer, Baby Bunting.

Thanks to its leadership position in a less discretionary category which benefits from around 300,000 births a year, Baby Bunting has been tipped to continue growing at a solid rate over the coming years.

Citi is particularly bullish on Baby Bunting and currently has a buy rating and $6.22 price target on its shares.

The broker commented: “[W]e forecast a FY21 to FY24 EPS CAGR of 17%, and see growth being driven by i) rollout, ii) ramp up of new stores, iii) margin expansion and iv) penetrating existing categories with low presence. Further, the stocks growth prospects are in some respects less risky than other high multiple retailers who are relying more on new markets and acquisitions.”

As for dividends, Citi has pencilled in fully franked dividends per share of 16 cents in FY 2022 and 19 cents in FY 2023. Based on the current Baby Bunting share price of $4.17, this will mean yields of 3.8% and 4.5%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another top ASX dividend share to consider is Telstra. It is of course Australia’s largest telecommunications company.

Telstra could be a great option in the current environment given its defensive qualities and attractive yield. In addition, Telstra’s outlook is now arguably the most positive it has been in over a decade. This is thanks to the success of its T22 strategy which ends this year and the potential of its upcoming T25 strategy.

Management is very confident in its plans and expects the T25 strategy to deliver solid and sustainable growth in the coming years. This could bode well for Telstra’s dividends.

For now, though, the team at Ord Minnett is expecting fully franked 16 cents per share dividends again in FY 2022 and FY 2023. Based on the current Telstra share price of $3.82, this will mean yields of 4.2%.

In addition, Ord Minnett sees a lot of value in its shares at the current level. Earlier this week it reiterated its buy rating with a $4.65 price target.

The post 2 ASX dividend shares that brokers are tipping as buys right now appeared first on The Motley Fool Australia.

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More reading

• Why these top brokers are forecasting high-speed gains for the Telstra share price
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Here are 2 ASX dividend shares with 4%+ yields
• Despite recent volatility, brokers are predicting big things for the Telstra share price. 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 positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://www.fool.com.au/2022/06/22/2-asx-dividend-shares-that-brokers-are-tipping-as-buys-right-now-2/

The founder of Fortescue Metals Group Limited (ASX: FMG), Andrew ‘Twiggy’ Forrest, has suggested the best industry to be growing in is hydrogen.

But why is Twiggy talking about hydrogen? Fortescue may be best known as an iron ore miner, but it’s in the process of becoming a major player in green hydrogen. The company is planning to take a global leadership position in green energy and technology.

What’s green hydrogen?

Hydrogen is seen as a future-focused resource in a decarbonising world.

Fortescue is looking to produce hydrogen with as little impact on the environment as possible.

Green hydrogen is produced by using renewable energy such as solar.

Fortescue is investing to create a global portfolio of green energy projects to supply 15 million tonnes per year of renewable green hydrogen by 2030.

Why is green hydrogen so attractive?

Fortescue wants to make green hydrogen the most globally-traded seaborne commodity as the world looks to different resources for energy, away from fossil fuels.

However, Forrest also thinks that green hydrogen can help with current soaring energy prices triggered by various events, including the Russian invasion of Ukraine.

Forrest said (as quoted by the Australian Financial Review):

I don’t know of a better industry to be pivoting towards when fuel prices are going through the roof than an industry where you can make all your own fuel. We smoke $3.5 billion worth of fossil fuel into the atmosphere every year. That is one hell of a pool of capital annually to invest into your own fuel production and green iron systems.

Is there any demand for green hydrogen?

Fortescue Future Industries (FFI) – the green division of Fortescue – and German-based international energy company E.ON have signed a deal to supply up to five million tonnes of green hydrogen per year by 2030. That will equate to a third of Fortescue’s production.

E.ON and FFI’s broader ambition is to “lead the decarbonisation of Europe and to strengthen security of green energy supply at a time when Europe needs to reduce its energy dependence on fossil fuels from Russia as quickly as possible”.

At the time of that announcement, Forrest said:

The announcement of this historic partnership today aims to diversify the future energy security in Europe. Green energy will reduce fossil fuel consumption dramatically in Germany and quickly help substitute Russian energy supply, while creating a massive new employment intensive industry in Australia. This is a cohesive and urgently needed part of the green industrial revolution underway here in Europe.

FFI also signed a “multi-billion-pound-deal” with construction giant J C Bamford Excavators (JCB) and Ryze Hydrogen for 10% of FFI’s global green hydrogen projection.

FFI is expecting green hydrogen production to grow to 50 million tonnes per year in the 2030s.

Fortescue share price snapshot

Over the last month, the Fortescue share price has fallen by 13%.

The post ‘I don’t know of a better industry to be pivoting towards’: Twiggy talks up hydrogen play amid soaring fuel costs appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price rebounds 3% today
• Fortescue’s Twiggy adamant there’s ‘not a snowflake’s chance in hell’ of recession
• Why Bega, Fortescue, Santos, and Silver Lake shares are tumbling lower
• Why are ASX 200 iron ore shares getting hammered on Monday?
• Fortescue share price plunges 7%, but here’s why Twiggy’s not worried about a Chinese iron ore cartel

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://www.fool.com.au/2022/06/22/i-dont-know-of-a-better-industry-to-be-pivoting-towards-twiggy-talks-up-hydrogen-play-amid-soaring-fuel-costs/

The top economists at the S&P/ASX 200 Index (ASX: XJO) banks have delivered their outlooks on a recession in the United States.

While the US may be far from our shores, if the world’s top economy dips into a recession, the ripple effects will almost certainly be felt here.

So, what are the ASX 200 banks forecasting?

US inflation and rates soaring

The May inflation rates out of the US, released last week, surprised most economists to the upside. While inflation had dipped slightly in April from the March figures, it headed higher again in May, reaching 8.6%. That’s the fastest pace of consumer price increases in 40 years.

The higher-than-expected inflation figures prompted the US Federal Reserve to hike the official interest rate by 0.75%, the biggest single rate hike since 1994.

With rates on the rise and inflation running hot, is the US heading for a recession?

According to the top economists at the ASX 200 banks, quite likely. But investors need not necessarily be overly alarmed.

A technical recession occurs when a country’s GDP declines for two consecutive quarters.

While chief economist at Commonwealth Bank of Australia (ASX: CBA) Stephen Halmarick believes a recession in the US is likely, he doesn’t expect the world’s biggest economy to implode.

According to Halmarick (courtesy of The Australian Financial Review):

It’s more than likely to meet the technical definition of a recession, but that’s not the same as a collapse in the economy. People are expecting to go from boom-like conditions to a collapse, and there’s a pathway in between…

It’s not negative growth for the year, but there may be two quarters of negative growth… We’re expecting a slowdown because the Fed will take monetary policy into restrictive territory.

ASX 200 banks address US recession impacts on Australia

As far as the impact of a US recession spreading to Australia, Westpac Banking Corp (ASX: WBC) chief economist Bill Evans said financial markets, the Aussie dollar, and confidence could all play a role.

Should the US enter a recession, it would likely result in a stronger Aussie dollar.

Although falling confidence “would certainly lower expectations for economic activity,” he said, impacting Australia’s own growth outlook.

Evans added:

If business confidence gets hit hard, then people would lower their expectations for business investment, and if consumer confidence gets hit hard, then it’s all about consumer spending and house prices.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) chief economist Richard Yetsenga highlighted that it’s really the severity of any potential US recession investors should keep an eye on.

According to Yetsenga (quoted by the AFR):

The US economy is operating well beyond capacity and two quarters of modestly negative GDP need not be all that disruptive. A deep recession that is associated with large-scale unemployment, business bankruptcies and credit rationing would be more concerning and would directly impact Australia.

However, the ASX 200 bank economist doesn’t believe that’s likely. “US consumers look to be in very good shape suggesting the downturn in consumption will only be moderate,” he said.

Should a US recession be on the cards, National Australia Bank Ltd (ASX: NAB) chief economist Alan Oster believes that’s most likely to happen “in mid-to-late 2023”.

“We would, however, downplay the idea that a recession is only when there are two successive quarters of negative GDP growth,” he added.

Oster said the US could face “recession-like” conditions.

The ASX 200 bank is forecasting slower GDP growth to 1.1% over the next two years while it expects US unemployment to rise from the current 3.6% to 4.8%.

The post Worried about a US recession? Here’s what the ASX 200 banks are forecasting appeared first on The Motley Fool Australia.

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More reading

• Why did Morgan Stanley just slash its target for the CBA share price?
• How does the Macquarie dividend stack up against the ASX big four banks?
• Why GrainCorp, PointsBet, Weebit Nano, and Westpac shares are racing higher
• The ANZ share price has tumbled 24% from its 2022 high. Is it time to pounce?
• ASX 200 midday update: BHP and Rio Tinto rebound, Westpac rated as a buy

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

from The Motley Fool Australia https://www.fool.com.au/2022/06/22/worried-about-a-us-recession-heres-what-the-asx-200-banks-are-forecasting/

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was back on form and stormed higher. The benchmark index rose 1.4% to 6,523.8 points.

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

ASX 200 expected to rise again

The Australian share market looks set to rise again on Wednesday following a strong night of trade in the US. According to the latest SPI futures, the ASX 200 is expected to open the day 42 points or 0.65% higher this morning. On Wall Street, the Dow Jones rose 2.15% and the S&P 500 climbed 2.45%, and the Nasdaq stormed 2.5% higher.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a decent day after oil prices pushed higher. According to Bloomberg, the WTI crude oil price is up 0.9% to US$110.58 a barrel and the Brent crude oil price has risen 0.6% to US$114.83 a barrel. Strong demand and tight supply boosted prices.

PointsBet rated as a buy

The PointsBet Holdings Ltd (ASX: PBH) share price could have plenty of upside according to analysts at Bell Potter. This morning the broker retained its speculative buy rating with a trimmed price target of $5.25. It notes that SIG Sports Investments Corp has made a strategic investment into the company. Its analysts appear pleased and “view the strengthening of the cash position as key given it helps alleviate the major concern with the company.”

Gold price drops

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued day after the gold price edged lower overnight. According to CNBC, the spot gold price is down 0.3% to US$1,834.5 an ounce. Rising bond yields reduced the appeal of the safe haven asset.

Goodman selling overdone

Analysts at Goldman Sachs believe the selldown of the Goodman Group (ASX: GMG) share price has been overdone. This morning the broker reiterated its buy rating and $25.40 price target on the company’s shares. It commented: “GMG and VCX are well-positioned to absorb higher funding costs and should perform well in this environment.”

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

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More reading

• Broker names 2 of the best ASX 200 shares to buy now
• How does the Macquarie dividend stack up against the ASX big four banks?
• Why GrainCorp, PointsBet, Weebit Nano, and Westpac shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 3 ASX All Ordinaries shares going great guns on Tuesday

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 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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What a rollercoaster ride it has been for the Zip Co Ltd (ASX: ZIP) share price.

From reaching an all-time high of $14.53 in February 2021, the buy-now pay-later (BNPL) shares are now trading at 53 cents. That represents a massive 96% decline in just 16 short months.

And even when you look at year-to-date, its shares are down 90%. This means the share price would need to increase by 900% to break even.

While you may think Zip shares are too cheap at current valuations, here’s why I won’t be buying at all.

Investors fall out of love with the BNPL industry

The once gleaming BNPL industry was popular among investors as consumer trends shifted during the pandemic.

Government stimulus packages among record low interest rates drew an insatiable appetite for shoppers.

However, as quickly the BNPL market soared, it has now almost turned to dust.

To put that into perspective, Zip was once valued more than $6 billion at its height. More than retail giant, JB Hi-Fi Limited (ASX: JBH).

Today, the BNPL company has a market capitalisation of around $371.49 million. A staggering fall of 94%.

Why I won’t be a buyer of the Zip share price

With so many market entrants to the BNPL sector, it has become increasingly crowded.

Recently, tech behemoth Apple Inc. (NASDAQ: AAPL) also signalled its move into the BNPL space.

Titled “Apple Pay Later”, the service offering doesn’t charge any interest or late payment fees to customers.

In addition, a number of major Australian banks such as Commonwealth Bank of Australia (ASX: CBA) have promoted their own offering.

Furthermore, Zip is experiencing credit losses outside its target range. With the latest figures at around 2.6% of total transaction volume, this may increase due to the current macroenvironment.

Interest rate hikes due to soaring inflation levels are leading some economists to predict a recession in 2023.

Essentially, what this means is that consumers are less likely to spend on discretionary items when interest rates are high. The cost of debt such as credit cards, personal loans and mortgages will require extra payments, affecting consumer spending habits.

The post The Zip share price is down 90% in 2022. Why I won’t be buying appeared first on The Motley Fool Australia.

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More reading

• Zip share price falling again as market experts argue for UK and US exit
• Why A2 Milk, Bubs, Evolution, and Zip shares are rising despite the selloff
• The Zip share price is actually climbing today. What’s going on?
• Is the ‘path to profit impossible’ for Zip shares?
• ASX 200 midday update: Block and Zip crash amid market selloff

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 positions in and has recommended ZIPCOLTD FPO. 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 aiming to boost your income with some dividend shares, then the two listed below could be worth considering.

Both have been named as buys and tipped to pay attractive dividends in the near term. Here’s what you need to know about these ASX 200 dividend shares:

Centuria Industrial Reit (ASX: CIP)

The first ASX 200 dividend share to look at is Centuria Industrial. It is the owner of a portfolio of high-quality industrial assets situated in key metropolitan locations throughout Australia.

Demand for the company’s properties has been very strong and has so far underpinned a portfolio occupancy rate of 99.2% and 10% rental growth in FY 2022.

The good news is that analysts are expecting this positive trend to continue thanks to elevated demand from the e-commerce sector, which is creating competition for high-quality industrial assets.

Analysts at Macquarie are positive on Centuria Industrial and have an outperform rating and $3.94 price target on its shares. Macquarie highlights that recent weakness has left the company’s shares trading at a large discount to net tangible assets.

As for dividends, the broker is forecasting a 17.3 cents per share distribution in FY 2022 and a 16.8 cents per share distribution in FY 2023. Based on the current Centuria Industrial share price of $2.89, this will mean yields of 6% and 5.8%, respectively

Macquarie Group Ltd (ASX: MQG)

Another ASX 200 dividend share that has been rated as a buy is investment bank Macquarie.

Macquarie recently released its full-year results for FY 2022 and revealed a 56% increase in net profit after tax of $4.7 billion. This was driven by growth across the business after a stellar 12 months.

Analysts at Morgans concede that it will be hard for Macquarie to top this in FY 2023. However, it feels investors should look beyond this and focus on the long term. As a result, it has put an add rating and $215.00 price target on the bank’s shares.

Morgans explained: “We anticipate some near-term earnings volatility over FY23 but we like MQG’s favourable longer-term growth profile and consistent history of delivering strong returns (~15% average ROE over time).”

In respect to dividends, its analysts are forecasting a $7.07 per share dividend in FY 2023 and then $7.47 per share dividend in FY 2024. Based on the current Macquarie share price of $164.00, this will mean yields of 4.3% and 4.5%, respectively.

The post Analysts name 2 top ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

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More reading

• How does the Macquarie dividend stack up against the ASX big four banks?
• 2 powerhouse ASX shares going for dirt cheap right now: expert
• Top broker tips 30% upside for the Macquarie share price
• Why Macquarie shares could be set for a $570m tailwind
• ASX 200 bank shares tumble: Citi says time to buy

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 Tabcorp Holdings Limited (ASX: TAH) share price was on form on Tuesday.

The gambling company’s shares ended the day up 1% at $1.06.

What drove the Tabcorp share price higher?

There were a couple of catalysts for the rise in the Tabcorp share price on Tuesday.

One was a rebounding ASX 200 index, which lifted most shares. The other was news that the announcement of wagering tax changes in New South Wales. Tabcorp believes the latter is “a further positive step toward industry reform.”

What’s happening?

From 1 July 2022, New South Wales will increase the Point of Consumption Tax (POCT) rate payable by wagering operators from 10% to 15%.

Tabcorp will receive transition payments over an 18-month period from the commencement of these changes to ensure it is no-worse off relative to its current tax obligations as a result of the changes.

Had these transition payments not been applied, based on Tabcorp’s calendar year 2021 NSW revenues, its EBITDA would have been approximately $16 million lower.

Tabcorp’s Managing Director and Chief Executive Officer, Adam Rytenskild, was pleased with the news but will push for further reforms.

Today is a positive step forward in levelling the playing field in NSW. Online bookies will pay a greater share of wagering tax which can be invested back into the local racing industry and ensures a fairer system.

We welcome the NSW Government’s announcement. Online betting has changed substantially since the TAB’s licences were issued and this is an opportunity to better align with the modern economy. The Queensland Government has recently announced reforms to create a level playing field and NSW is now a step closer to a level playing field.

How have Tabcorp’s shares been performing since the demerger?

Following today’s gain by the Tabcorp share price, it is now trading marginally higher than where it ended the day following the Lottery Corporation Ltd (ASX: TLC) demerger.

On 24 May, the company’s shares closed the session at $1.055 cents, just a touch lower than current levels.

Though, it is worth noting that Tabcorp’s shares continued to slide in the days that followed and closed at 90.5 cents on 1 June. So, anyone buying at that point would have done very well.

The post How has the Tabcorp share price been performing since the demerger? appeared first on The Motley Fool Australia.

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More reading

• These were the best performing ASX 200 shares last week
• Here are the 3 most traded ASX 200 shares on Tuesday
• Why GrainCorp, New Hope, Tabcorp, and Woodside shares are pushing higher
• Why is the Tabcorp share price racing higher today?
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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 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 broker Morgan Stanley is now expecting a further drop of the Commonwealth Bank of Australia (ASX: CBA) share price.

With CBA shares already down 15% over the last month, Morgan Stanley’s new, lower price target now implies another step down.

For readers that aren’t sure what a price target is, it’s a guess of where brokers think a share price will – or perhaps should – be trading at in 12 months time.

Morgan Stanley’s new price target on the big four ASX bank is now $79. This is a reduction from the previous target of $91.

The reason for the banking pessimism

The lower price target implies a possible decline of more than 10% over the next year.

However, CBA wasn’t the only one to receive a cut. Morgan Stanley also cut the price targets of the other big four banks National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC) by more than 10%. The broker is more pessimistic on all of the big ASX bank shares.

Morgan Stanley analyst Richard Wiles commented (as reported by The Australian):

We believe that a quick and aggressive tightening cycle provides more support for margins, but will lead to a weaker housing and mortgage market and a higher probability of recession.

Our price targets have been lowered to reflect various factors, including attaching a higher probability to our bear case and reducing our bear case scenario values more sharply.

CBA share price valuation

The Commonwealth Bank is expected to grow profit in the shorter term.

CBA shares are valued at 17 times FY22’s estimated earnings. With a prediction of a small increase in profit, the CBA share price is then valued at 17 times FY23’s estimated earnings.

But there’s more to the major bank than just how much profit it makes. Investors may also like to know about the expected dividends from the bank over the next two financial years.

Dividend yield

Based on Morgan Stanley’s dividend estimates, at the current CBA share price, it could pay a grossed-up dividend yield of 6% in FY22.

The broker’s numbers then imply a double-digit rise in the annual dividend to shareholders in FY23.

Morgan Stanley has pencilled in a grossed-up dividend yield of 6.75% in FY23.

CBA share price snapshot

CBA shares have fallen by around 9% over the last 12 months.

The post Why did Morgan Stanley just slash its target for the CBA share price? appeared first on The Motley Fool Australia.

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More reading

• How does the Macquarie dividend stack up against the ASX big four banks?
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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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Macquarie Group Ltd (ASX: MQG) is a unique ASX share. It is often grouped together with the ASX 200 big four banks, and indeed is often called the ‘fifth big four bank’.

But with its funds management business, focus on investment banking, and relatively small market share in traditional banking products such as mortgages, Macquarie is arguably not really in the same boat as the big four.

But when it comes to ASX bank shares, investors often apply much of their focus to dividends. So let’s see how Macquarie stacks up against the other major ASX banks when it comes to shareholder income.

So, to reiterate, the big four banks like Commonwealth Bank of Australia (ASX: CBA) are well-known ASX dividend shares.

As it currently stands, the dividends on offer from the big four range from CBA’s current dividend yield of 4.21% to that of Australia and New Zealand Banking Group Ltd (ASX: ANZ) at 6.56%.

National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) currently have yields of 5.21% and 6.16% respectively. All of these big four bank dividends come fully franked at present.

So, how does Macquarie measure up?

How does the Macquarie dividend compare?

Well, Macquarie’s latest two dividends consist of an interim dividend of $2.72 per share that was paid out last December, and a final dividend of $3.50 per share that investors will receive on 4 July.

The interim dividend came 40% franked. Next month’s final dividend will also be franked at 40%.

That’s an annual total of $6.22 in dividends per share. This gives Macquarie a dividend yield of 3.79% on the current share price.

So that’s definitely on the low end of what the big four currently have on the table.

But remember this before you sell your Macquarie shares to buy ANZ.

The Macquarie share price is up by 83% over the past five years. CBA shares are up 10% over the same period. NAB is down 8% and ANZ is also down 20.45%. Westpac has lost almost 35%.

That’s perhaps an argument why Macquarie shouldn’t be considered the ‘fifth big four bank’ right there.

The post How does the Macquarie dividend stack up against the ASX big four banks? appeared first on The Motley Fool Australia.

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More reading

• Why did Morgan Stanley just slash its target for the CBA share price?
• Why GrainCorp, PointsBet, Weebit Nano, and Westpac shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• How to start investing in stocks: This ASX 200 share is where I’d begin
• The ANZ share price has tumbled 24% from its 2022 high. Is it time to pounce?

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank 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 Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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