Category: Stock Market

The Telstra Corporation Ltd (ASX: TLS) dividend has traditionally been one of the most popular options for income investors on the S&P/ASX 200 Index (ASX: XJO).

However, over the last few years, shareholders have watched on as the telco giant has been forced to make cut after cut to its dividend.

In fact, the last time the company increased its dividend was in FY 2015. Since then, the Telstra dividend has almost halved from 31 cents per share to 16 cents per share.

When will the Telstra dividend increase again?

The good news for income investors is that the worst appears to be finally over for the Telstra dividend.

So much so, some analysts believe that a dividend increase could be coming in the coming years.

For example, analysts at Goldman Sachs are confident the dividend cuts are old news now. The broker is forecasting a fully franked 16 cents per share dividend each year through to FY 2023. After which, the broker believes Telstra will finally be in a position to make its first dividend increase in almost a decade.

According to a recent note, Goldman expects the telco giant to increase its dividend by 5.4% in FY 2024 to 18 cents per share.

Based on the current Telstra share price of $3.80, this will mean dividend yields of 4.2% through to FY 2023 and then 4.7% in FY 2024. Goldman hasn’t forecast beyond this.

Is the Telstra share price in the buy zone?

Goldman Sachs still sees value in the Telstra share price despite its impressive 26% gain in 2021.

The broker currently has a buy rating and $4.20 price target on its shares. This implies potential upside of 10.5% over the next 12 months.

And if you include the forecast Telstra dividend, this will increase the potential return to just under 15%.

The post When will the Telstra (ASX:TLS) dividend increase again? 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 owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Little Green Pharma Ltd (ASX: LGP) share price has edged lower today after the company released its quarterly results.

Little Green shares finished yesterday’s close at 84 cents, before dropping to an intraday low of 80 cents after the market open. Currently, the Little Green Pharma share price is trading flat at 81 cents.

Here we cover the moving parts in Little Green Pharma’s results in finer detail.

Quick recap on Little Green Pharma

Little Green Pharma is a medicinal cannabis pure-play that cultivates and produces products for the medicinal cannabis industry.

It also has a hand in research and development (R&D) plus the manufacturing and distribution of these products in the Australian market.

The company’s operations are vertically integrated, meaning it has full control over its entire supply chain for efficiency purposes.

Little Green Pharma has a market capitalisation of $188 million at the time of writing.

Little Green’s quarterly results

The company recognised revenue of $600,000 this quarter, with cash receipts totalling $1.82 million, up 20% from the previous quarter.

The discrepancy between revenue and cash receipts boils down to “a change in wholesaling agreements” that the company realised this quarter.

In a nutshell, Little Green had to revise its agreements with all Australian distribution partners after the Therapeutic Goods Association (TGA) updated its clarifications “regarding wholesaling rules for unregistered medicines”.

The change enforces the company to recognise revenue only when its product is sold to the pharmacy, instead of when it is sold to the wholesaler.

Consequently, the company recognised a significant down-step in revenue from the previous quarter, when it recorded revenue of $2.3 million.

Little Green anticipates revenue trends to normalise by the next quarter and estimates revenue of $3 million for Q1 FY22.

Additional takeouts

In other recent updates, Little Green last week completed the acquisition of a medicinal cannabis facility in Denmark for $10.9 million.

As a result, it recorded increased production and staff costs “associated with the Denmark facility”.

Little Green labelled the facility as “one of the largest production assets in Europe”. In addition to improving efficiency, it produced more than 20 tonnes of biomass annually, including over 12 tonnes of “dried cannabis flower”.

Offsetting these expenditures, the company completed a capital raise of $26 million “net of costs”, with “strong support from institutional and sophisticated investors”.

Moreover, Little Green realised a “record growth in underlying patient demand”, adding a 37% increase to new patients and 25% increase in dispensed products.

This brings the total of new patients and products dispensed to 3,300 and 11,200 respectively.

Little Green Pharma share price snapshot

The Little Green Pharma share price has posted a year to date return of 43%, extending the previous 12 month’s return of 122%.

These returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of ~23% over the past year.

Additionally, Little Green finished the quarter with $40 million in cash on its balance sheet.

The post What’s happening with the Little Green Pharma (ASX:LGP) share price today? appeared first on The Motley Fool Australia.

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• Blazing it? How the top ASX cannabis shares performed in FY21

The author Zach Bristow has no positions 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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The WestStar Industrial Ltd (ASX: WSI) share price is one of the best performers on the ASX today. This comes after the industrial services company announced its subsidiary has won a major construction contract.

At the time of writing, WestStar shares are up 20% to 3.6 cents. It’s worth noting today’s gain signifies a 52-week high for the company’s share price, reaching as high as 4.1 cents during intraday trade.

Details of the contract

Investors are driving up WestStar shares following the positive news from the company.

In its statement, WestStar advised its engineering contractor business SIMPEC has been awarded a construction contract for the Iron Bridge Magnetite Project.

Located 145 kilometres south of Port Hedland, Western Australia, the project is a joint venture between Fortescue Metals Group Ltd (ASX: FMG) subsidiary FMG Magnetite Pty Ltd and Formosa Steel IB Pty Ltd.

Under the deal, SIMPEC will supply vertical construction services, hiring more than 500 workers to build a wet processing plant.

The project will consist of module, tank and major mechanical installations, large bore piping and electrical and instrumentation works.

Once completed, the wet processing plant will become a significant part of the new magnetite mine. The facility is expected to produce 22 wet million tonnes per annum of high grade, magnetite concentrate product.

It’s estimated the contract will generate $145 million in revenue for SIMPEC. With works commencing immediately, it is anticipated that the wet processing plant will be delivered by the middle of 2022.

SIMPEC managing director Mark Dimasi said:

This is an important milestone achievement for SIMPEC in the delivery of our Company’s mission to deliver major projects in the industry. The award of the Wet Plant Project represents our largest contract win to date with a first-tier client.

To achieve this in just over 4 years of being part of the Group is a remarkable achievement. It’s proof that our people and culture are building a reputable Company that clients trust.

We look forward to further developing our relationship with the Iron Bridge Joint Venture and thank them for the opportunity to deliver such a high-profile project.

About the WestStar share price

The WestStar share price has gone from strength to strength over the past year, rising more than 150%. The company’s shares have outperformed the broader All Ordinaries Index (ASX: XAO) on year-to-date metrics, up almost 60% versus 11% for the index.

WestStar presides a market capitalisation of roughly $34.1 million and has over 975 million shares on its registry.

The post Why the WestStar (ASX:WSI) share price is up 20% to a 52-week high appeared first on The Motley Fool Australia.

More reading

• What’s gone wrong with China shares like Tencent lately?
• Why the Predictive Discovery (ASX:PDI) share price is up 70% in a month
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• Ellume is making news and these ASX shares are surging, again
• Down 7% this week, why the Zip (ASX:Z1P) share price keeps falling

Motley Fool contributor Aaron Teboneras 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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ASX investors have been happily watching the S&P/ASX 200 Index (ASX: XJO) make a series of new all-time highs over the past few weeks. Ditto with the the US S&P 500 Index (INDEXSP: .INX). Although most investors like to buy shares when they are cheap, I’d wager there are few investors out there that don’t enjoy watching the share market climb to new highs on some level. However, one sector that is certainly not joining the party right now are China shares.

Now, most China shares are not listed on the ASX, instead finding homes on the US, Hong Kong or Shanghai stock exchanges.

But let’s take an ASX China barometer in the BetaShares Asia Technology Tigers ETF (ASX: ASIA). This exchange-traded fund (ETF) is one of the top ETFs on the ASX. It holds within it most of the famous Chinese e-commerce companies in Tencent Holdings Ltd (HKG: 0700) and Alibaba Group Holdings Ltd (NYSE: BABA). As well as JD.com Inc (NASDAQ: JD) and Baidu Inc (NASDAQ: BIDU).

Since topping out at $14.36 a unit back in February, this ETF is now down to $9.76 on current pricing. That’s a pretty steep fall of more than 30%.

Looking at some of the individual shares listed above and things look even worse. The Tencent share price is down more than 42% from its 52-week high. JD and Alibaba aren’t too far behind, while Baudi is out in front, down more than 53% from its February peaks.

So what’s going on here?

China shares face CCP wrath

Well, according to a report in the Australia Financial Review (AFR) today, it’s the Chinese government that is largely to blame. The Chinese Communist Party (CCP) has reportedly been executing a crackdown on several industries in China. Most prominantly education and tech companies.

The CCP is forcing certain educational businesses to reorganise as not-for-profit groups. It has also banned them from raising capital on the private markets. Further, the government is also bringing in more regulation, including new rules for delivery drivers.

This follows an incident last year, which saw Alibaba ditch a float of its financial division Ant Group. This also saw Alibaba founder Jack Ma retreat from public life after making comments that some interpreted as critical of the central government.

The report also states that the CCP wasn’t too happy with the IPO of Chinese ridesharing company DiDi Global Inc (NYSE: DIDI) last month. This reportedly went ahead, even though “Chinese regulators recommended a delay”.

Here’s what the report stated happened next:

This insubordination was quickly punished. Days after it went public, China’s internet regulator ordered Didi to undergo a cybersecurity review, and banned the road-hailing group from accepting new users.

DiDi shares are now trading for less than half of what they were on the company’s first day of trading.

Overall, it seems that the CCP is putting its own control of China’s largest companies ahead of what might be good for the short-term (and perhaps medium or long term) share market performance of its largest companies.

This is probably something that every ASX investor with an interest in China shares should pay attention to.

 

The post What’s gone wrong with China shares like Tencent lately? 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. owns shares of and has recommended Alibaba Group Holding Ltd., Baidu, and JD.com. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended JD.com. 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 Predictive Discovery Ltd (ASX: PDI) share price is zooming higher again on Wednesday.

In afternoon trade, the gold explorer’s shares are up a further 11% to 15.5 cents.

This means the Predictive Discovery share price is now up 70% in the space of a month.

Why is the Predictive Discovery share price rocketing higher this month?

The catalyst for the rise in the Predictive Discovery share price this month has been the release of several very promising drilling updates from its West African-based Bankan Project.

At the beginning of the month, the company revealed its highest impact gold intercept at the project.

Predictive Discovery’s Managing Director, Paul Roberts, commented: “The intersection of 44m at 8.0g/t Au from around 240m vertical depth is an absolute standout, better than any intercept we have obtained so far in the deposit.”

Less than three weeks later, the company revealed further stellar drilling results, driving the Predictive Discovery share price higher again.

Management advised that it followed up its prior drilling with a significantly broader and higher-grade gold intercept 100m to the north of the previous intercept. Something which management described as “simply remarkable.”

Mr Roberts added: “On the new drill section reported here, we can see a clear progression of both increasing grade and grade consistency as we drill deeper. Furthermore, with these new results, we now have a high-grade gold zone which is 100-200m long, extends down-dip for over 250m and, very promisingly, is open at depth.”

What now?

These drilling results have changed the way management is thinking about the project.

Paul Roberts explained: “Until now, NE Bankan has been shaping up as a large gold deposit with excellent geometry for a large-scale open pit mine. These new results have added a whole new dimension to the project as it now appears that the core of the deposit contains consistently higher grades in a zone which is expanding at depth. This offers clear justification for drilling deeper on this deposit.”

The company will now continue to define the new high-grade zone by infill and extension drilling. It has a multipurpose drill rig currently on site that will be focused on further defining and extending this zone over the next few months.

This could make it worth keeping a close eye on the Predictive Discovery share price over the remainder of 2021.

The post Why the Predictive Discovery (ASX:PDI) share price is up 70% in a month appeared first on The Motley Fool Australia.

More reading

• Here’s why the Predictive Discovery (ASX:PDI) share price is rocketing 52% higher
• Why the Predictive Discovery (ASX:PDI) share price is rocketing 20% today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Wide Open Agriculture Ltd (ASX: WOA) share price is strongly in the green today.

Shares in the food and agriculture company are trading higher following the release of its quarterly results earlier today.

Let’s take a look at how Wide Open Agriculture performed for the quarter.   

Wide Open Agriculture reports strong growth

Earlier today, Wide Open Agriculture released its results for the fourth quarter of FY21.

The company’s report was highlighted by its eighth consecutive quarter of revenue growth.

Wide Open Agriculture reported a 28% quarter-on-quarter revenue growth of $1.459 million. The company noted that actual cash payments received for the period totalled $1.585 million.

Revenue for the quarter also represents a 155% increase in sales over the corresponding period the previous year.

Wide Open Agriculture’s management attributed the growth to its commercial strategy to scale and expects its growth trajectory to continue.

The company also noted its strong balance sheet. As at 30 June 2021, Wide Open Agriculture reported a cash position of approximately $13 million.  

Wide Open Agriculture highlights achievements

In addition to its financial performance, Wide Open Agriculture also highlighted its achievements for the quarter.

In particular, the company cited encouraging nutritional analysis of its Lupin Protein Project.

Wide Open Agriculture noted its lupin protein concentrate, with 76% protein content, was being used in several early-stage food and drink prototypes.

The company was also able to expand its distribution and product range during the quarter.

Wide Open Agriculture said it will continue to direct its efforts towards the multi-billion dollar plant-based foods sector.

More on Wide Open Agriculture

Wide Open Agriculture Limited is a vertically integrated food and agriculture company.

The company has three main areas of operation. These include its regenerative food brand ‘Dirty Clean Food’, oat products and plant-based proteins.

Wide Open Agriculture markets and distributes food products with a focus on conscious consumers in Australia and South-East Asia

Despite today’s boost, the Wide Open Agriculture share price has struggled in 2021. Shares in the company are still around 11.5% from where they started the year.

At the time of writing, the Wide Open Agriculture share price is up more than 3.29% for the day, trading at its intra-day high of 78.5 cents.

The post Wide Open Agriculture (ASX:WOA) share price lifts on results appeared first on The Motley Fool Australia.

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• ASX 200 real estate shares are lifting today – here’s why

Motley Fool contributor Nikhil Gangaram 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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Unlisted company Ellume is making headlines again with reports claiming Australian governments are being lobbied to approve the use of at-home rapid COVID-19 tests.

While it would be the dream of many investors to see Ellume debut on the ASX, we have these shares to keep an eye on until then.

Quick refresher on Ellume

Ellume is a Brisbane-based developer of digitally enabled diagnostic products. Nowadays, however, it’s most well known for its at-home rapid COVID-19 tests.

Ellume’s rapid COVID-19 test was the first to receive emergency approval from the United States Food and Drug Administration (FDA).

As The Motley Fool has previously reported, the test developed by Ellume costs around US$30 and takes around 20 minutes to show a result.

It has a 94% success rate when detecting COVID-19. It also has a 96% success rate in detecting the virus is not present.

Why Ellume is boosting ASX shares

Right now, reports are swirling that both state and federal governments are facing pressure to approve the use of at-home COVID-19 tests like Ellume’s.

However, as we reported here, there’s a lot of pushback from government and experts.

But not all hope is lost. News of the unlisted company tends to boost a number of ASX listed shares.

AnteoTech Ltd (ASX: ADO)

Potentially the closest share to Ellume on the ASX is AnteoTech. Right now, shares in AnteoTech are trading for 8.89% more than their previous close. The AnteoTech share price is 25 cents.

One of AnteoTech’s major customers is Ellume. Ellume uses AnteoTech’s AnteoBind technology in their rapid COVID-19 tests.

AnteoTech generally moves when we hear about Ellume.

Atomo Diagnostics Ltd (ASX: AT1)

Another share that’s been boosted by today’s news is Atomo Diagnostics.

Atomo also creates at-home COVID-19 rapid tests. The company partners with Access Bio to bring its integrated device together with Access Bio’s rapid COVID-19 antibody test strips. The resulting at-home rapid test is named CareStart COVID-19 IgM/IgG.

The CareStart COVID-19 lgM/lgG received FDA emergency use approval last month.

The Atomo share price is currently 10% higher, with shares in the company trading for 22 cents apiece.

Memphasys Ltd (ASX: MEM)

Memphasys is another biotech share that the market tends to get excited about when word of Ellume hits the streets. The Memphasys share price is 4.62% higher today, trading at 6.8 cents.

The post When Ellume is making news, these ASX shares are in focus appeared first on The Motley Fool Australia.

More reading

• Here’s why the Atomo (ASX:AT1) share price is soaring 10%
• AnteoTech (ASX:ADO) share price lifts as Ellume US sales ramp-up
• The 5 best ASX shares of FY21 revealed
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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 Bruce Jackson.

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Investors might have been hoping for a bounce in the Zip Co Ltd (ASX: Z1P) share price following the sharp 8.04% selloff last Thursday after the company announced its fourth quarter update.

Unfortunately, the Zip shares have been tipping lower in every single trading session so far this week.

At the time of writing, the Zip share price is down another 1.78% trading at $6.62.

Why is the Zip share price falling today?

The weakness in the Zip share price on Wednesday is broadly in line with the S&P/ASX 200 Index (ASX: XJO) and S&P/ASX Information Technology Index (ASX: XIJ) index, which are down 0.82% and 1.61% respectively.

Another factor possibly weighing on both Zip and ASX tech shares is the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC), which fell 1.21% overnight.

BNPL sector falling flat

It’s a tough time to be bullish on the BNPL sector.

Take Openpay Group Ltd (ASX: OPY) for example. The emerging BNPL announced its June quarter results on Wednesday.

The company revealed classic high double digit and in some cases, triple digit growth across key operating metrics.

In addition, it cited the signing of strategic partnerships to drive merchant growth, an acquisition in the UK to expand into the automotive vertical and perhaps most importantly, plans to launch in the United States in early October 2021.

Despite its achievements and growth initiatives, the Openpay share price is down 2.5% at the time of writing and down almost 50% year-to-date.

While the example doesn’t directly relate to the Zip share price, it might flag the increasingly high expectations that investors might have for BNPL shares.

A similar case for the Zip share price?

The Zip share price met the same fate as Openpay when it released its fourth quarter results last week.

The company revealed triple digit growth for metrics including total transaction volume and revenue. As well as launching its BNPL products in Canada and Mexico.

The market met Zip’s achievements with a harsh 8% selloff. And this selling pressure carried over to this week, where the company’s shares are down another 7.11% to a near 6-month low of $6.59.

The post Down 7% this week, why the Zip (ASX:Z1P) share price keeps falling appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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 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 Bruce Jackson.

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The Lake Resources N.L. (ASX: LKE) share price is pushing higher on Wednesday.

In afternoon trade, the lithium developer’s shares are up 5% to 42 cents.

This means the Lake Resources share price is now up over 420% since the start of the year.

Why is the Lake Resources share price pushing higher today?

Investors have been bidding the Lake Resources share price today following a positive announcement.

In fact, that announcement might make Lake Resources shareholders feel like it’s Christmas in July.

According to the release, in recognition of the support received from its shareholders, Lake Resources revealed that it intends to undertake a bonus issue of options to all shareholders with an address in Australia or New Zealand.

These options will be granted to eligible shareholders that are holding Lake Resources shares at 5pm on the record date of 10 August.

What are the options?

The release explains that all eligible shareholders will be granted one free bonus option for every 10 Lake Resources shares they own on the record date.

These options will be exercisable at 35 cents before their expiration date of 15 October, resulting in 1 new share per option. This represents a 16.5% discount to the current Lake Resources share price.

But it doesn’t stop there! For every option that is exercised, Lake Resources will issue a second option to the shareholder. On this occasion, those options will be exercisable at 75 cents each, with an expiration date of 15 June 2022.

Once again, if exercised, this will result in the shareholder being allotted one new Lake Resources share for every option.

Given that the second option represents a 79% premium to the current Lake Resources share price, management appears confident in the company’s prospects over the next 12 months.

Lake Resources’ Managing Director, Steve Promnitz, commented: “The intent of the offer is to thank supportive shareholders as Lake enters a major development phase through financing, construction and into production. Shareholders appreciated the benefits from a similar bonus option offer in 2019 and the company seeks to repeat that success.”

The post Here’s why the Lake Resources (ASX:LKE) share price is charging 5% higher appeared first on The Motley Fool Australia.

More reading

• Why the Lake Resources (ASX:LKE) share price is 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. 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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The AGL Energy Ltd (ASX: AGL) share price continues to set record lows as we head into the remainder of 2021.

AGL shares are now exchanging hands at $7.52, a 2.4% dip into the red from the market open.

Today’s dip extends the previous 1 month’s loss of ~16% and the previous 12 months’ loss of 55%.

Let’s take a look at some of the headwinds AGL shares have faced lately.

Planned demerger

AGL started the month on the back foot after provided an update on its planned demerger back on 30 June.

AGL explained that it will create two separate listings from the demerger: AGL will become Accel Energy. It will then form a new company, AGL Australia.

The plan will complete the work to spin off its coal-fired power plants to Accel, which will retain these under the new structure.

AGL Australia will then focus its priorities as the largest power retailer in Australia.

Considering AGL is labelled as Australia’s top emitter of “scope 1 greenhouse gases”, it is pursuing a strategy to compete with the emergence of renewables.

AGL chair Peter Botten was quoted saying in the announcement:

The impact of recent challenging market conditions on our financial performance emphasises that AGL Energy is not at an inflection point as the transition of the energy sector accelerates.

Shareholders will go to vote on the proposal later this year, with the company aiming to complete the demerger by Q4 if successful.

Guidance downgrade

AGL also withdrew its FY22 guidance amid the ongoing uncertainties with the planned demerger.

Regarding the coming financial year, it estimates a “material step-down” in earnings on a backdrop of “lower wholesale electricity prices”.

It states these prices have been low for the last 2 years and are only now to be realised by the company.

Suspension of dividend

Regarding its dividend, AGL will be terminating its special dividend program to “preserve ~$400 to $500 million in cash within AGL prior to execution of the demerger”.

Analysts are not viewing AGL’s dividend prospects highly, with an overall negative sentiment.

The company has paid dividends per share of 92 cents over the last 12 months, implying a current yield of 12.2%.

This has crept up from 11.7% on 26 July when AGL shares had set a new record low at $7.87.

However, there is an inverse relationship between share price and dividend yield. If price goes down, yield goes up, and vice-versa.

The Motley Fool encourages investors to consider the concept of a “value trap”. This is where a high and increasing dividend yield is masking a depreciating share price.

Investors who are chasing yield buy on the increasing dividend yield for a particular company, believing they have nabbed a bargain.

However, the prospect of total return is then hindered by poor performance from the underlying share price.

Such is the case with AGL shares given the rapid decline in share price over the previous 12 months, which has propped up the dividend yield.

Since it announced it would slash its dividend, AGL shares have sunk firmly into the red by 17%.

Foolish takeaway

The AGL share price has underperformed the S&P/ASX 200 Index (ASX: XJO) by a considerable amount this month. The broad index has posted a return of 1.16% over the last month versus AGL’s loss of ~17%.

It stands to reason the demerger proposal has been a major catalyst for AGL’s share price depreciation over the past month.

This, coupled with the dividend, has seen AGL shareholders continue to realise record low share prices, which offset the attractiveness of the dividend yield.

The demerger narrative certainly isn’t over for AGL, with shareholders yet to fully vote on a resolution on the matter.

The post It hasn’t been a great month for the AGL (ASX:AGL) share price appeared first on The Motley Fool Australia.

More reading

• Should you buy AGL (ASX:AGL) shares in July 2021 for the dividend yield?
• AGL Energy (ASX:AGL) share price one to watch during transition – expert
• AGL (ASX:AGL) share price checks in at new 52-week low
• The AGL share price is now trading on a 10% dividend yield
• Top brokers name 3 ASX shares to sell today

The author Zach Bristow has no positions 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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