Category: Stock Market

If you’re looking to add some blue chip ASX 200 shares to your portfolio, you may want to look at the three listed below.

Here’s why these blue chips are highly rated right now:

Goodman Group (ASX: GMG)

The first blue chip ASX 200 share to look at is Goodman Group. It is a leading integrated commercial and industrial property company with a portfolio of in-demand properties. These properties have exposure to key growth markets such as ecommerce and logistics.

Thanks to strong demand and a material development pipeline, Goodman has been tipped to continue its solid growth in the coming years by the team at Citi. So much so, the broker currently has a buy rating and $26.00 price target on the company’s shares.

SEEK Limited (ASX: SEK)

Another blue chip ASX 200 share to look at is this leading job listings company. Thanks to its leadership position in the ANZ market and a rebound in listing volumes, SEEK delivered a strong result in FY 2021. The company reported a 1% increase in revenue to $1,591 million and a 58% jump in net profit after tax excluding significant items to $141 million.

Analysts at Macquarie expect job ad volumes to continue to increase as Australia’s unemployment levels fall and for SEEK to benefit. As a result, the broker has an outperform rating and $37.00 price target on SEEK’s shares.

Sonic Healthcare Limited (ASX: SHL)

A final blue chip ASX 200 share to consider is Sonic. It is one of the world’s leading healthcare providers, with operations in Australasia, Europe and North America. While all of Sonic’s businesses are strong, the standout at the moment is its COVID testing business. This has been generating significant revenue and profits and looks set to continue doing so in the near term even with vaccines rolling out.

It is largely for this reason that the team at Morgans are so positive on Sonic. The broker currently has an add rating and $45.98 price target on the company’s shares.

The post 3 blue chip ASX 200 shares to buy appeared first on The Motley Fool Australia.

More reading

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• 2 ASX 200 (ASX:XJO) shares that brokers rate as buys

Motley Fool contributor James Mickleboro owns shares of SEEK 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 SEEK Limited and Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PointsBet Holdings Ltd (ASX: PBH) share price has been a positive performer in recent trading sessions.

So much so, since this time last week, the sports betting company’s shares have risen 10%.

Why is the PointsBet share price rising?

There appears to have been a couple of catalysts for the recent rise in the PointsBet share price.

One was M&A activity in the industry and the other was a bullish broker note out of Goldman Sachs.

In respect to the former, last week DraftKings made a US$20 billion offer to acquire UK based online betting company Entain. It is the company behind a range of brands including BetMGM, bwin, and Ladbrokes.

The multiples involved in the transaction appear to help justify the premium the PointsBet share price trades at.

What about the broker note?

Also giving the PointsBet share price a lift was a broker note out of Goldman Sachs.

That note reveals that the broker has a buy rating and $14.75 price target on the company’s shares.

Based on the current PointsBet share price of $10.18, this implies potential upside of 45% over the next 12 months.

Why is Goldman bullish?

Goldman believes PointsBet’s shares aren’t fully reflecting a potentially transformational 12 to 18 months ahead.

The broker explained: “We continue to see it as well-placed domestically noting it saw a record monthly performance in July 2021, the spring racing carnival and AFL/NRL grand finals should drive 1Q, and recent app DL data suggesting its share domestically continues to outpace its market share. Beyond this, the US remains the key attraction in our investment case, and we are of the view that there are asymmetric risks ahead, with the current share price not fully reflecting what we expect to be a transformational 12-18months ahead for the company as they aim to triple their operational footprint by CY22.”

Overall, this could make it worth considering the growing sports betting company even after its strong recent gains.

The post Why the PointsBet (ASX:PBH) share price has jumped 10% in a week 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. owns shares of 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 Bruce Jackson.

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Infrastructure ASX shares could be a compelling place to find businesses with potentially reliable cashflows and consistent distributions.

Some investments have exposure to long-term tailwinds like energy transition or population growth.

The below two ideas could be ones to consider as leading ASX infrastructure shares:

Magellan Infrastructure Fund (Currency Hedged) (ASX: MICH)

This is a fund that aims to deliver the stable returns offered by the infrastructure asset class, while protecting returns from currency movements.

It has a global portfolio of 20 to 40 infrastructure stocks. Some of the names in the portfolio include Transurban Group (ASX: TCL), Atmos Energy, Excel Energy, Crown Castle, Eversource Energy, Aena, American Tower, Enbridge, Vinci and Sempra Energy.

Looking at the portfolio by the sector exposure, there isn’t a large allocation to any particular segment. At the end of July 2021, these were the following weightings: airports (8%), communications (10%), roll roads (14%), rail (8%), energy infrastructure (7%), gas utilities (7%), transmission and distribution (17%), integrated power (18%) and water utilities (7%). The rest of the portfolio is a 4% cash holding.

The infrastructure ASX share defines infrastructure as monopoly-like assets that face reliable demand and enjoy predictable cashflows.

This investment pays out a distribution semi-annually. Over the last three years, Magellan Infrastructure Fund’s total returns have outperformed the global infrastructure benchmark by an average of 2.4% per annum, after fees.

It comes with an annual management fee of 1.05% per year.

APA Group (ASX: APA)

APA is a large energy infrastructure ASX share. Its key asset is a large, national gas pipeline that spans more than 15,000km. It supplies half of Australia’s natural gas usage.

But it has other assets as well, including gas storage facilities, gas processing plants, gas energy generation and renewable energy (wind, solar and batteries).

The business is always on the lookout for opportunities to invest into more assets which aim to increase its overall cashflow generation. It’s the annual cashflow generation that funds the payment of the distribution to shareholders.

It has a ‘growth pipeline’ of $1.3 billion over the next three years. The business is expecting to pay a distribution of 53 cents per security in FY22, which currently translates to a distribution yield of 7.3% at the current share price.

It’s currently in a takeover battle to try to buy Ausnet Services Ltd (ASX: AST). AusNet is one of the largest electricity network operators in Australia, with $11.2 billion of a regulated and contracted asset base, as well as $1.9 billion of annual revenue. It services over 1.5 million customers and has 60,850km of transmission and distribution lines across Victoria, as well as 12,400km of gas networks.

APA is attracted to a few different things about Ausnet. APA likes the predictable earnings and cashflows that it offers, with 94% of FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) coming from regulated businesses. The infrastructure ASX share also points to an attractive organic growth pipeline, with $2.2 billion of total Victorian regulated capital investment to 2027.

If APA is successful with the bid, it would change APA’s EBITDA generation. APA generated 89% of EBITDA from gas in FY21. The new split would be 58% from gas, 20% from electricity distribution, 13% from electricity transmission and 9% from power generation, contracted electricity and others.

In summary, APA likes the potential AusNet investment for its potential to unlock long-term growth opportunities in the Australian energy transition.

The post 2 leading infrastructure ASX shares to consider appeared first on The Motley Fool Australia.

More reading

• Is the Transurban (ASX:TCL) share price a buy after the WestConnex acquisition?
• Top brokers name 3 ASX shares to buy next week
• Why Lake Resources, Ramelius, Telix, & Transurban shares are falling
• APA Group (ASX:APA) share price jumps on strong support for its takeover bid
• ASX 200 (ASX:XJO) midday update: Transurban falls, Premier Investments jumps

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 owns shares of and has recommended APA Group. The Motley Fool Australia has recommended Magellan Infrastructure Fund. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With low interest rates still at ultra low levels, it remains a difficult period for income investors.

The good news is there are plenty of ASX dividend shares that can help you overcome low rates. Two to look at are listed below:

Mineral Resources Limited (ASX: MIN)

If you don’t mind investing in the resources sector, then Mineral Resources could be a dividend share to look at.

Mineral Resources gives investors exposure to iron ore and lithium through its operations in the Pilbara and Goldfields regions of Western Australia.

The team at Citi are very positive on the company and appear to believe the recent pullback in its share price is a buying opportunity. Earlier this month the broker upgraded its shares to a buy rating with a $65.00 price target.

In addition, the broker is forecasting a $3.37 per share fully franked dividend in FY 2022. Based on the latest Mineral Resources share price of $47.64, this will mean a very attractive 7% yield.

Super Retail Group Ltd (ASX: SUL)

A second ASX dividend share to consider is Super Retail. It is the retail conglomerate behind four leading store brands – BCF, Macpac, Rebel, and Super Cheap Auto.

These businesses were all on form in FY 2021, underpinning strong sales growth and even stronger profit growth. For the 12 months ended 30 June, Super Retail reported a 22% increase in sales to $3.45 billion and a 107% jump in normalised net profit after tax to $306.8 million.

And while the company is unlikely to top this in FY 2022 as tailwinds ease, that doesn’t mean Super Retail won’t be in a position to reward its shareholders with generous dividends.

According to analysts at Credit Suisse, they expect a fully franked dividend of 53 cents per share in FY 2022. Based on the current Super Retail share price of $12.20, this will mean a 4.3% dividend yield.

Credit Suisse has an outperform rating and $14.41 price target on the company’s shares.

The post 2 buy-rated ASX dividend shares for income investors today 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. owns shares of and has recommended Super Retail Group Limited. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Origin Energy Ltd (ASX: ORG) share price will be one to watch on Tuesday.

This follows the release of a positive announcement on its UK investment.

Why is the Origin share price on watch?

The Origin share price will be on watch after it revealed that the value of its investment in fast-growing UK energy retailer and emerging technology business Octopus Energy has increased materially.

According to the release, Octopus Energy has received a 211 million pounds investment from leading sustainable investor Generation Investment Management (GIM) for a 7% stake.

This investment values Octopus at approximately 3 billion pounds or $5.5 billion. As a comparison, last year Origin agreed to invest a total of $507 million for a 20% stake in the company. This valued Octopus at approximately $2.55 billion.

The release explains that in order to maintain its 20% stake, the company has agreed to invest a further 38 million pounds or $70 million.

Furthermore, GIM will have an option to double its stake in Octopus under the same terms prior to 30 June 2022. Origin will have an option to invest to maintain its 20% if GIM exercises its option.

What is Octopus?

Octopus is an energy retailer with approximately 5.3 million customer accounts and a technology and software provider licensing its proprietary platform, Kraken, to a growing list of leading energy retailers around the world.

It is also a renewable asset manager with more than 3.4 billion pounds of assets under management.

The release notes that Octopus is also increasingly focused on developing future energy products and services. This includes the decarbonisation of heat, smart meters, and electric vehicle leasing and charging.

Management commentary

Origin’s CEO, Frank Calabria, said: “Since our investment in May 2020, Octopus has emerged as a global leader in energy retailing and technology, achieving significant growth in its home market and expanding into several international markets. It has also continued licencing its Kraken technology platform to leading energy retailers around the world with a target of 100 million customer accounts on Kraken by 2027.”

“In the competitive and fast-changing energy sector, a technology-enabled retail business that delivers superior customer experience at low cost will be core to Origin’s continued success. The strategic partnership with Octopus will help Origin achieve these objectives and strengthen our retail leadership, as we migrate our retail customers to Kraken by the end of 2022 and replicate its low cost, high service operating model, delivering an expected $100-150 million of cash benefits from FY2024,” he added.

The Origin share price is down 7% in 2021.

The post Origin (ASX:ORG) share price on watch after Octopus investment update 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 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 Bruce Jackson.

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Rural Funds Group (ASX: RFF) could be a quality ASX dividend share to consider for a few different reasons.

If readers haven’t heard of Rural Funds before, it’s a real estate investment trust (REIT) that owns farmland properties that it leases out.

There are a number of reasons why it could be a good idea to consider this agricultural landlord for income:

Diversification

Unlike a residential investment property where all of the value is tied up in one piece of real estate, Rural Funds owns a portfolio of assets. It’s diversified in several different ways.

It has farming properties across several different sectors including cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

The farms are also diversified geographically – they are spread across different states and in different climactic conditions. Rural Funds also owns a large portfolio of water entitlements to ensure that its tenants have enough water for their needs.

Some of Rural Funds’ tenants include: Olam, JBS, Select Harvests Limited (ASX: SHV) and Treasury Wine Estates Ltd (ASX: TWE).

Income growth

One of the main goals of Rural Funds is to increase its distribution to investors by 4% per annum. It has been successful with this target ever since it listed several years ago.

One of the main ways that Rural Funds achieves this growth is thanks to the rental growth that is built into the contracts it has with its tenants. Most of the contracts either have a fixed annual rental increase or it’s linked to CPI indexation, with some contracts having market reviews.

In FY21, Rural Funds grew its distribution by 4% to 11.28 cents per unit. In FY22 it has guided that it will increase the distribution by 4% to 11.73 cents per unit. That translates to a forward distribution yield of 4.3%.

Investing for growth

Rural Funds is not just passively growing its profit from rental increases. It is taking measures to grow its rental profit by investing for growth.

For example, at its cattle properties it has invested in a number of things like water points, pasture improvement, cultivation areas, irrigated areas and grazing areas.

Another key element of the investing is changing the land to higher and better use to increase total returns. For example, it’s currently turning some of its cropping farms into macadamia orchards. Planting of 1,000 hectares is expected to be completed by June 2022. Planted orchards are more attractive to tenants and may be leased at higher rates.

What is the Rural Funds share price’s underlying value?

Over the last six months the Rural Funds share price has risen around 16%. FY21 saw the pro forma adjusted net asset value (NAV) per unit increase 13% to $2.20. That means the REIT is valued at a premium of around 23.6% to its adjusted NAV.

The post 3 reasons why Rural Funds (ASX:RFF) is a quality ASX dividend share appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Redpoint Investment Management senior portfolio manager Max Cappetta explains why his fund is betting on 2 of the 4 major banks and a construction materials provider.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Max Cappetta: In the Redpoint Australian Equity Income Fund, we’re seeking to capture a share of the profits earned by Australia’s leading companies, which are paid as dividends. 

Companies usually pay their dividends twice a year, just after they announce their half-year and their full-year results. And if we look at history, it shows us that owning a share of company profits can provide a really attractive level of income from those dividends over the longer term.

The Australian equity market has delivered, on average, an annual cash yield of approximately 4%, quite consistently. This means that the income paid year on year — so every 6 months as dividends — has kept up with the overall growth in share prices over time.

The good news here is that this income we can capture has kept pace with inflation over the longer term because it represents a share of the profits which have been earned by companies. And those profits are tied to the underlying growth of the overall economy. 

Our fund is specifically designed for low and zero tax rate payers, such as retirees and charities. I think what’s of particular benefit to these investors — and we’re looking to capture in our strategy and fund — is that when companies pay dividends here in Australia, they also pass through the tax credits for the income tax that they’ve already paid.

So for a zero tax rate investor, they can claim this amount back in their tax return. What it means is that for every dollar of a fully franked dividend that investors like this earn, they actually get $1.42 worth of value.

When you consider that the cash rate is pretty much stuck at 0.1 of 1%, and you’ve got a one-year term deposit rate at a quarter of 1%, then an average 4% cash yield on equities is actually very attractive. 

Now, within the fund, what we are looking to do is deliver an even higher cash yield than the ASX 200 if you were to hold that passively. While we’re also looking to deliver our investors with a total return that will be in line with the S&P/ASX 200 Index (ASX: XJO) over the longer term.

We’re trying to take the total return of the equity market and deliver back to investors a higher proportion in fully franked income. Then a smaller proportion, but still important, growth over the long term. Because they do need their capital, and they do need that income to keep tabs with inflation over the long term.

MF: Considering your income focus, 2021 must be, so far, a pretty good year for your team.

MC: Yes. Certainly, in this reporting period, it’s been very strong through August and September. We’ve definitely seen a bounce back in the bank dividends, and we’ve also seen some record profits from iron ore miners, such as Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). 

I think overall there’s been a relaxation in the conservativeness that many of Australia’s listed companies had in 2020, where there was great uncertainty over COVID-19 and what that meant. And I think now, people are looking forward to 2022, and we’re seeing more of that profit being returned to shareholders as dividends.

Biggest convictions

MF: What are your two biggest holdings?

MC: First, I might just say that we actually run a very diversified portfolio of around 60 to 70 names. We do think that that is one of the features of our approach because we do look at companies from a range of different metrics and try to stay well-diversified. 

However, when you look at that income capture element, coming up in the dividend calendar is now the full-year results to 30 September for 3 out of Australia’s 4 major banks. 

As you know, the Commonwealth Bank of Australia (ASX: CBA) reported on 30 June. They delivered essentially a doubling in their dividend plus a tax-effective off-market share buyback for investors, which delivers an even larger fully franked dividend to investors that tender their shares into that buyback.

Now at the moment for the other three, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), and Australia and New Zealand Banking Group Ltd (ASX: ANZ), we favour Westpac and the NAB. 

Our expectations are showing that their profitability looks to be rebounding more strongly. Plus, we also see the potential for capital management by either a buyback or even an increased dividend from Westpac. 

We also like building materials giant James Hardie Industries plc (ASX: JHX). I think they are benefiting from both a DIY renovation market growth and also gaining market share in the United States.

One of the key things that we look for as we analyse financial statements is that they are improving operationally. So that leads us to believe that they could deliver an even larger earning surprise than they have in the past.

And also, the company has guided that they are going to reinstate their dividends at their first half-year result, which will be at 30 September. We expect that dividend to come through sometime in November.

The post Why we favour 2 of 4 big bank ASX shares: fund manager appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares that everyone’s underestimating right now
• The NAB (ASX:NAB) share price rises amid hiring frenzy in private banking
• These experts believe the future is bright for the Bank of Queensland (ASX:BOQ) share price
• The Westpac (ASX:WBC) share price is down 3% so far in September. What’s next?
• How does the Commonwealth Bank (ASX:CBA) dividend compare to ASX bank shares?

Motley Fool contributor Tony Yoo 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 Bruce Jackson.

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If you are looking to strengthen your portfolio with some ASX 200 shares, you may want to look at the two listed below.

Both of these ASX 200 shares are highly rated and have recently been named as buys. Here’s what you need to know about them:

Bapcor Ltd (ASX: BAP)

The first ASX 200 share to look at is Bapcor. It is the Asia Pacific region’s leading provider of vehicle parts, accessories, equipment, service and solutions. It was on form again in FY 2021, delivering a 20.4% increase in revenue to $1,761.7 million and a 46.5% jump in pro forma net profit after tax to $130.1 million. This was driven by growth across the business. Pleasingly, more of the same is expected over the 2020s thanks to its strong market position and bold expansions plans.

The team at Credit Suisse remain positive on its long term growth potential. Its analysts currently have an outperform rating and $9.20 price target on its shares. This compares to the current Bapcor share price of $7.59.

Xero Limited (ASX: XRO)

Another ASX 200 share to look at is Xero. It is a fast-growing cloud-based accounting solution provider to small and medium sized businesses. Xero’s rapid growth in recent years has been driven by the shift to the cloud, its global expansion, and a series of bolt-on acquisitions. The good news is that the company still has a very long runway for growth. At the end of FY 2021, Xero had 2.74 million subscribers. This compares to its total addressable market of 45 million subscribers.

Goldman Sachs believes the company has multi-decade strong revenue growth potential. As a result, the broker has a buy rating and $165.00 price target on Xero’s shares. This compares to the current Xero share price of $149.95.

The post 2 highly rated ASX 200 (ASX:XJO) shares to buy right now 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. owns shares of and has recommended Xero. The Motley Fool Australia owns shares of and has recommended Bapcor and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are few S&P/ASX 200 Index (ASX: XJO) dividend shares that could be good ideas to consider.

Income is hard to come by at the moment with the official Reserve Bank of Australia (RBA) interest rate being close to 0%. Businesses with attractive dividend yields could be the way to go to boost investment income.

Here are two ASX 200 dividend shares to consider:

Centuria Industrial REIT (ASX: CIP)

This business is a real estate investment trust (REIT) that owns a quality portfolio of industrial properties across Australia, predominately in metropolitan areas.

After its latest acquisitions, it will have a total of 75 assets with a total value of around $3.5 billion. The occupancy rate is 97.3% and it has a weighted average lease expiry of nine years.

Its portfolio is invested across different sectors including distribution centres (36%), manufacturing (25%), data centres (15%), transport logistics (14%), cold storage (8%) and development (3%).

Looking at its tenants, some of the largest (in terms of rental income) includes Telstra Corporation Ltd (ASX: TLS), Arnott’s, Woolworths Group Ltd (ASX: WOW), Visy and Australian Pharmaceutical Industries Ltd (ASX: API).

In FY22, the ASX 200 dividend share is expecting to generate funds from operations (FFO) – net rental profit – of no less than 18.1 cents per unit and pay a distribution of 17.3 cents per unit. That means the Centuria Industrial REIT share price is valued at 21x FY22’s estimated FFO. It’s expecting to pay a distribution yield of 4.5% in FY22.

The broker Macquarie Group Ltd (ASX: MQG) rates Centuria Industrial REIT as a buy. It’s expecting the distribution yield in FY23 to be 4.8%.

Metcash Limited (ASX: MTS)

Metcash is a diversified business.

It’s the largest supplier for independent supermarkets in Australia, supplying more than 1,600 stores including IGA and Foodland.

Metcash also says it’s the second largest player in the liquor market, supplying more than 90% of independent liquor stores in Australia, including national brands like IGA Liquor, Bottle-O and Cellarbrations.

The company is also the second largest player in the Australian hardware market. It owns the Mitre 10 and Home Timber & Hardware brands. A recent addition has been Total Tools. A few months ago it actually increased its ownership of Total Tools from 70% to 85% for a cost of $59.4 million.

Metcash believes that Total Tools has significant growth opportunities, including expansion of the store network and the acquisition of an ownership interest in a select number of stores. Metcash has a pathway to full ownership towards the end of FY24 with put and call arrangements in place.

FY21 saw underlying earnings per share (EPS) increase by 13.3% to 24.7 cents. This allowed Metcash to increase the total dividend by 40% to 17.5 cents. The ASX 200 dividend share has increased its payout ratio to 70% of underlying net profit.

In FY22, Metcash is seeing a single digit decline of food sales with the loss of contracts like 7-Eleven. However, liquor sales were up 9.5% and hardware sales were up 16.3% in the first 16 weeks of FY22.

UBS currently rates Metcash shares as a buy, with a price target of $4.60. A change of consumer habits appears to have helped the business, including higher levels of local shopping. Some of these changes could be permanent.

The broker believes Metcash could pay a grossed-up dividend yield of 6.5% in FY22.

The post 2 ASX 200 shares that could be buys for dividends appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts today
• Woolworths (ASX:WOW) and Coles (ASX:COL) could face a margin shock
• ASX 200 (ASX:XJO) midday update: Fortescue jumps, Wesfarmers dealt takeover blow

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 owns shares of and has recommended Macquarie Group Limited and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday the S&P/ASX 200 Index (ASX: XJO) started the week on a positive note. The benchmark index rose 0.6% to 7,384.2 points.

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

ASX 200 expected to fall

The Australian share market is expected to fall on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 43 points or 0.6% lower. This follows a mixed start to the week on Wall Street. The Dow Jones rose 0.2% and the S&P 500 fell 0.3%, and the Nasdaq dropped 0.5%.

Iron ore price continues rebound

Mining giants BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) could have a decent day after iron ore prices continued to rebound. According to Metal Bulletin, the spot iron ore price has risen 7.2% to US$119.31 a tonne.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could push higher today after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 2% to US$75.44 a barrel and the Brent crude oil price has risen 1.7% to US$79.41 a barrel. Supply constraints are supporting oil prices. In other news, Beach announced a deal with BP after the market close on Monday.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price softened. According to CNBC, the spot gold price is down 0.1% to US$1,750.4 an ounce. The precious metal fell due to a stronger dollar and higher bond yields.

Dividends being paid

It is pay day for the shareholders of a number of ASX 200 shares. Paying their dividends today are the likes of Altium Limited (ASX: ALU), Amcor CDI (ASX: AMC), Coles Group Ltd (ASX: COL), and Evolution Mining.

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

More reading

• Why the Beach Energy (ASX:BPT) share price will be in focus on Tuesday
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts today
• September hasn’t been a great month so far for the Coles (ASX:COL) share price
• Why AVZ, Flight Centre, Fortescue, & Sigma shares are storming 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. owns shares of and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium, Amcor Limited, and COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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