Category: Stock Market

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

Shares of Apple (NASDAQ: AAPL) turned sharply higher on Wednesday, continuing Tuesday’s impressive climb. The stock added as much as 5.3% in early trading. As of 1:44 p.m. ET today, the stock was still up 4.9%.

Wall Street continues to weigh in on the iPhone maker’s big artificial intelligence (AI) reveal as a part of Apple’s Worldwide Developers Conference (WWDC). 

Wall Street is decidedly bullish

Apple’s announcement about its plans for generative AI has been well received by investors, driving the stock higher on Tuesday. As Wall Street continued to digest the news, analysts have been weighing in on what it means for the company and its shareholders. After several upgrades and a number of price-target increases yesterday, the bullish commentary continued today.

Bank of America analyst Wamsi Mohan joined the chorus, suggesting that Apple’s installed base of more than 2.2 billion devices provides insight into future demand. The analyst suggests that the debut of Apple Intelligence — the company’s suite of AI-powered features and applications — will be the catalyst that sparks the next big upgrade cycle.

Mohan sees the replacement cycle for Apple products shrinking as its AI-related improvements give consumers a reason to replace their existing devices. And he believes Wall Street’s current outlook is far too low.

I think he is on the right track. Estimates suggest that there are roughly 1.5 billion iPhones currently in use, and about 270 million of them haven’t been upgraded in four years, according to Wedbush analyst Dan Ives.

The advent of Apple Intelligence and the buildout of generative AI-powered apps will likely inspire users to upgrade to the iPhone 16, which is expected to debut in the fall. This could lead to a so-called supercycle, with many iPhone owners trading up to the newest device.

Some investors saw the economic challenges as a reason to abandon Apple stock, but the company has a long track record of defying detractors. The stock currently trades at 33 times earnings, which is a slight premium compared to a multiple of 28 for the S&P 500. But over the past decade, Apple stock has gained 823%, more than four times the 180% gains of the S&P — which illustrates why it deserves a premium. 

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

The post Why Apple stock popped (again) Wednesday morning appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple and Bank of America. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

With shares up by an eyewatering 25,000% over the last 10 years, it’s no surprise that Nvidia (NASDAQ: NVDA) relies on stock splits to keep its equity price manageable for smaller investors who may not have access to fractional shares. The most recent of these went into effect on June 7 and gave investors 10 shares of Nvidia for each one they previously owned — bringing its stock price to around $126 at the time of writing.

The stock split did nothing to change Nvidia’s $3 trillion market cap, which represents the value of all its shares combined. However, some market participants are hopeful that the lower share price could make Nvidia’s equity more liquid and help it maintain its explosive bull run. Let’s dig deeper to decide if this technology giant is still a buy.

What is Nvidia’s bull thesis?

If the generative artificial intelligence (AI) industry can be likened to the California gold rush, Nvidia would be selling the picks and shovels every miner needs to dig for gold. The company’s industry-leading graphics processing units (GPUs) are crucial for running and training complex AI algorithms. And this has led to explosive growth and margins.

Nvidia’s first-quarter revenue increased 262% year over year to $26 billion, driven by sales of data center chips, such as the H100. And net income jumped 628% to $14.88 billion.

Considering this elevated growth rate, Nvidia’s stock is still reasonably valued at a forward price-to-earnings (P/E) ratio of around 47. For comparison, rival chipmaker Advanced Micro Devices has the same forward P/E despite only growing sales by 2% in its first quarter. That said, Nvidia’s stock might not be as cheap as it looks on the surface.

Nvidia is not as cheap as it looks

Over the next few years, Nvidia will face incredibly challenging comps. After enjoying booming sales over the previous 12 months, it will be difficult for the company to continue growing its revenue relative to extremely high prior-year numbers. And this might be a big reason why the stock’s forward valuation is so low relative to growth.

Demand could become another problem. While Nvidia’s picks-and-shovels take on the AI industry protects it from competition on the consumer side of the industry, it wouldn’t be shielded from an industrywide slowdown, which could occur if its clients aren’t able to generate enough cash flow to justify their spending on Nvidia chips.

The long-term prospects of AI look undeniably bright. But there could be many ups and downs before it reaches its full potential — just like other major technologies like the internet, electric vehicles, or even blockchain.

Buy with caution

For many retail investors, Nvidia’s stock split will be a powerful psychological encouragement to buy the stock. At just $120 per share, the mammoth company now looks relatively small. And those who were previously intimidated by its four-digit stock price may now be encouraged to finally pull the trigger and hit the buy button.

But while Nvidia certainly has a bright future as the AI industry develops, investors who buy the stock now are late to the party. And this brings the risk of being left holding the bag if things go wrong.

Over the next few years, Nvidia will face more difficult comps, which could cause top- and bottom-line growth to slow down, even if the AI industry remains strong. While shares still look capable of outperforming over the long term, investors should remain aware of the significant risks they are taking by buying a company that has already risen so far so fast.

Historically, no stock has grown exponentially forever. And Nvidia will likely face a correction at some point. Be careful out there. 

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

The post Is Nvidia stock a buy after the 10-for-1 stock split? appeared first on The Motley Fool Australia.

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• Will Apple stock be worth more than Nvidia by 2025?
• Is Nvidia going to $5 trillion after its 10-for-1 stock split?
• 4 top ASX 200 stocks to buy now for the AI revolution
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Will Ebiefung 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 Nvidia. The Motley Fool Australia has recommended Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Up 63% so far in 2024, the Telix Pharmaceuticals Ltd (ASX: TLX) share price isn’t going anywhere today.

Shares in the S&P/ASX 200 Index (ASX: XJO) biopharmaceutical company closed yesterday trading for $16.46 apiece. Which is where they’re likely to stay until Monday.

This morning, Telix Pharmaceuticals shares were placed on trading halt at the company’s request “pending it releasing an announcement”.

Shares are expected to remain frozen until Monday.

While the release didn’t specify, the announcement most likely will provide further details on the ASX biotech stock’s proposed initial public offering (IPO) on Wall Street.

Last Thursday, 6 June, Telix confirmed its intent to list American Depositary Shares (ADSs) on the tech-heavy Nasdaq. Each ADS will represent one ordinary share in Telix. The company is targeting US$200 million in gross proceeds from the offering.

Commenting on the Nasdaq IPO process back in late May, Telix Pharmaceuticals chair Kevin McCann said, “It enables Telix to better access the deep pool of specialist investors focused on biotechnology and radiopharmaceuticals in the US.”

As for the longer-term impact on the Telix Pharmaceuticals share price, McCann said that the increased visibility the Nasdaq listing would provide “will drive long-term value creation for shareholders”.

The post Why is the Telix Pharmaceuticals share price frozen today? appeared first on The Motley Fool Australia.

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• 4 top ASX 200 stocks to buy now for the AI revolution
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• 2 ASX biotech shares that could be the next Telix Pharmaceuticals
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you have a high tolerance for risk, then it could be worth adding some exposure to small caps to your investment portfolio.

Especially when analysts are tipping the three in this article to deliver outsized returns for investors over the next 12 months.

Here’s what you need to know about these buy-rated small cap ASX shares:

AVITA Medical Inc (ASX: AVH)

AVITA Medical could be a small cap to buy according to analysts at Morgans. It is a regenerative medicine company with a focus on wound care management and skin restoration with its RECELL technology.

The broker notes that the US FDA has just approved its RECELL Go product. It is an autologous cell harvesting device, harnessing the regenerative properties of a patient’s own skin to treat burn wounds and full-thickness skin defects. The broker sees this a very big milestone for the company. Morgans said:

AVH has received FDA approval for its automated product, RECELL Go, for use in burns and full thickness skin defects. This approval marks a significant milestone for the company, with management expecting this device to increase adoption of the technology amongst clinicians. We have made no changes to our forecasts and recommendation.

Its analysts have an add rating and $5.60 price target on the company’s shares. This implies that its shares could more than double in value.

Camplify Holdings Ltd (ASX: CHL)

Another small cap ASX share that Morgans rates highly is Camplify. It is a peer-to-peer recreational vehicle (RV) rental operator.

Morgans likes the company due to its market leadership position and its significant local and global market opportunities. It explains:

We expect CHL to continue to grow into its large addressable market locally, with over 790k registered RVs in Australia and ~130k in NZ. CHL only has ~2% of these on its platform. It has broadly doubled its domestic fleet since listing and with its acquisition of Germany- based PaulCamper (PC) now has a total fleet of over 29,000, making it a true global player.

Morgans has an add rating and $2.55 price target on its shares. This also suggests that its shares could more than double from current levels.

Universal Store Holdings Ltd (ASX: UNI)

A third small cap ASX share that is rated highly is Universal Store. It is the youth fashion retailer behind the Universal Store brand, as well as the Perfect Stranger and Thrills brands.

Bell Potter is a fan of the company and believes it is well-positioned for strong growth and improved margins. It said:

Management execution remains a key strength for UNI and we see good growth trajectory for the name given the building of core brands while growing its store rollout. In our view, the higher margin sales from the majority private label sales should become a major driver of margin improvement and earnings growth, in an expanded store footprint.

Bell Potter has a buy rating and $6.15 price target on its shares. This implies potential upside of 19% for investors.

The post Analysts name 3 small cap ASX shares to buy for big returns appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Universal Store. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Camplify. The Motley Fool Australia has recommended Avita Medical and Camplify. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woolworths Group Ltd (ASX: WOW) share price is down around 20% from June 2023, as we can see on the chart below. When an ASX blue-chip share falls as much as that, it’s worthwhile to examine if it’s a potential opportunity.  

It’s an interesting time for the ASX supermarket share because it’s meant to be defensive, yet the market has really turned off the business at a time when some discretionary areas of the Australian economy are suffering.

Should the market be negative about the business? I’ll examine some negatives and positives.

Inflation and sales are weakening

In 2023, the company was benefiting from strong tailwinds with a high level of food inflation and a rapidly growing Australian population.

Woolworths reported in FY23 that its Australian food sales increased 5% to $48 billion, with FY23 second-half sales rising 7.6% to $23.5 billion. Woolworths reported inflation of average prices was 7.7% in the FY23 second quarter, 5.8% in the third quarter and 5.2% in the fourth quarter.

The recent FY24 third quarter showed much slower progress for Woolworths, where the Australian food division only achieved 1.5% total sales growth after a 0.7% decline in average prices (excluding tobacco). It also didn’t help investor confidence that BIG W sales declined by 4.1% to $1 billion.

Woolworths said it’s expecting trading conditions to be “challenging” for the next 12 months due to competition for customer shopping baskets, and inflation returning to a “very low single digit range”. 

What’s attractive about the Woolworths share price?

For starters, the lower valuation is now much more appealing with a lower price/earnings (P/E) ratio.

The broker UBS projects Woolworths could generate $1.32 of earnings per share (EPS) in FY24, which puts it below 25x FY24’s forecast profit.

Pleasingly, Woolworths is expected to deliver significant earnings growth in the coming years. By FY27, EPS is projected to increase to $1.57 and then increase to $1.74 in FY28.

I’m a big believer that earnings growth can drive share prices, so the potential 32% rise in EPS could be supportive for the Woolworths share price in the next few years.

The Woolworths dividend per share is also expected to grow from 96 cents in FY24 to $1.30 per share in FY28. Those potential payouts translate into a grossed-up dividend yield of 4.2% in FY24 and 5.7% in FY28.

Ultimately, shareholder returns depend on share price movements and dividend payouts, and growth looks positive in the coming years, even if the shorter term looks weak. I think this could be the right time to consider Woolworths shares.

The post Are Woolworths shares a bargain after falling 20%? appeared first on The Motley Fool Australia.

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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 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.

Are you looking for a big income boost for your investment portfolio?

If you are, then read on because listed below are three ASX dividend stocks that analysts rate as buys and are expecting huge dividend yields from in the near term.

Let’s see what they are forecasting for these income options:

Accent Group Ltd (ASX: AX1)

Accent Group could be an ASX dividend stock to buy according to analysts at Bell Potter.

It is a leading footwear focused retailer that operates a large number of retail banners. This includes HypeDC, Platypus, Sneaker Lab, Stylerunner, and The Athlete’s Foot.

At the last count, the company had a network of over 800 stores and almost 10 million contactable customers.

Bell Potter believes these stores and its online businesses will support the payment of fully franked dividends per share of 13 cents in FY 2024 and then 14.6 cents in FY 2025. Based on the latest Accent share price of $2.00, this represents dividend yields of 6.5% and 7.3%, respectively.

The broker has a buy rating and $2.50 price target on its shares.

Deterra Royalties Ltd (ASX: DRR)

Another ASX dividend stock to look at is Deterra Royalties.

While it can be classed as a mining stock, it actually doesn’t do any digging or processing itself. Instead, it gets paid royalties on a collection of mining operations across the country.

The jewel in the crown is the iron ore producing Mining Area C project, which is operated by BHP Group Ltd (ASX: BHP).

Morgan Stanley expects these assets to generate enough free cash flow to underpin the payment of 32.7 cents per share dividends in FY 2024 and then 39 cents per share dividends in FY 2025. Based on the current Deterra Royalties share price of $4.44, this will mean yields of 7.4% and 8.8%, respectively.

Morgan Stanley has an overweight rating and $5.60 price target on its shares

Dexus Convenience Retail REIT (ASX: DXC)

A final ASX dividend stock that could provide investors with a big dividend yield is Dexus Convenience Retail REIT. It owns a portfolio of service stations and convenience retail assets across Australia.

Morgans is a fan of the company and sees plenty of value in its shares at current levels. It is also forecasting dividends per share of 21 cents in both FY 2024 and FY 2025. Based on its current share price of $2.71, this implies yields of 7.9%.

The broker has an add rating and $3.23 price target on its shares.

The post Buy these ASX dividends stocks with 6% to 9% yields 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 recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Getting started on an investing journey into the Australian share market can be a daunting prospect. We all know that the ASX can be a risky place to invest your hard-earned dollars. And buying the first ASX shares on your investing journey is often where a prospective investor makes their first mistake.

That’s fair enough of course. There are hundreds of different ASX shares to choose from on the ASX. With the varying opinions and recommendations one is often inundated with when first starting out in the share market, this can make it easy to follow the wrong advice and go for a company that may not be a wise choice for a long-term investment.

As such, today, I’ll be discussing three ASX shares that I think would make great, lower-risk picks for a beginner investor. No ASX share is a risk-free investment, of course. But I think these three picks are about as safe as an ASX share can be.

3 lower-risk ASX shares for a beginner investor

Coles Group Ltd (ASX: COL)

It’s my view that the lowest-risk shares on the ASX are companies that provide goods or services that we need rather than want. Of life’s basic needs, none come above food. That’s why I think Coles is a great choice for investors looking for a safer entry point into the Australian stock market.

Coles has a nationwide network of supermarket grocers that many Australians go to to buy food, drinks, and household essentials. We can be reasonably sure that this isn’t going to change anytime soon, as Coles is always under pressure to sell us these basics at the cheapest pricing it can.

This isn’t an investment that will make anyone rich overnight, but I think Coles has the potential for some modest capital gains going forward. The company also offers a hefty (and fully-franked) dividend, which is currently yielding just under 4%.

Telstra Group Ltd (ASX: TLS)

In a similar vein, I also view Telstra as a good choice for beginner investors who are looking for a low-risk share to dip their toes into the stock market world. While food, drinks, and household essentials are at the top of our basic needs, reliable internet access is also a top priority in today’s modern world.

Telstra is the gold standard stock to invest in if you want a slice of that action. It is the largest provider of both mobile and fixed-line internet services in Australia, and its mobile network is almost universally regarded as superior to those of its competitors.

Like Coles, Telstra’s earnings are unlikely to be severely affected by any problems in our economy. Whether we are dealing with high inflation or an economic recession, Telstra’s customers are probably not going to stop paying for phone usage or internet access. This inherent defensiveness makes this company another great choice for any beginner investor today.

Telstra shares also offer investors a decent, fully franked dividend yield. At inflation prices, this was just under 5%.

Argo Investments Ltd (ASX: ARG)

A final ASX share that I think any beginner can consider as a low-risk starter investment is Argo Investments. Argo is a listed investment company (LIC), which means it actually functions as something akin to a managed fund.

Rather than producing or selling goods or services itself, it runs a portfolio of other investments on behalf of its investors. Argo has been around for a very long time. It first opened its doors back in 1946. Since then, it has built up a reputation as a conservative and reliable steward of its investors’ capital.

Argo’s strength comes from its diversified portfolio of ASX shares. It consists of dozens of underlying ASX shares, which (as of 31 May) included everything from Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to Suncorp Group Ltd (ASX: SUN) and TechnologyOne Ltd (ASX: TNE).

Thanks to this huge, diversified portfolio of different ASX companies, I think Argo represents a very low-risk ASX share that any beginner investor can feel comfortable holding. Argo also pays out a regular, fully franked dividend, which was recently trading at a yield of around 4%.

The post 3 lower-risk ASX shares for beginner investors appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One of the best ways to grow your wealth is arguably to invest in high quality companies with a long-term view.

The latter gives your investment time to compound and supercharge your returns and wealth creation.

As for the former, they say the cream always rises to the top. And this is usually the case in the share market with the very best companies delivering the best returns over the long term.

But which ASX 200 shares could be classed as high quality? Let’s look at three that could be buys according to analysts. They are as follows:

CSL Limited (ASX: CSL)

CSL could be one of the highest quality companies on the ASX boards. It is one of the world’s leading biotechnology companies with a collection of businesses that are leaders in the respective fields. This includes CSL Behring, CSL Vifor, and Seqirus businesses, which focus on blood plasma products, kidney therapies, and vaccines, respectively.

But CSL is never one to rest on its laurels. Each year it reinvests in the region of 12% back into its research and development activities. This ensures that it has a pipeline of potentially lucrative treatments.

Macquarie is a big fan of the company sees scope for its shares to rise to $500 in the coming years. But in the immediate term, the broker has an outperform rating and $330.00 price target on them.

Goodman Group (ASX: GMG)

A second high quality ASX 200 share for investors to look at is Goodman Group. It is a leading integrated commercial and industrial property company with a world class portfolio of assets in key locations across the globe.

Strong demand for these assets has underpinned stellar earnings growth over the last decade. The good news is that Morgan Stanley thinks this positive form can continue. Especially given its belief that Goodman’s exposure to artificial intelligence through its data centre pipeline will be another driver of future growth.

Morgan Stanley currently has an overweight rating and $36.65 price target on its shares.

ResMed Inc. (ASX: RMD)

Bell Potter thinks that this sleep disorder treatment company could be a high quality ASX 200 share to buy.

The broker likes ResMed due to its significant opportunity as a leader in obstructive sleep apnoea (OSA) and other sleep disorders. It notes that “the market for OSA and chronic obstructive pulmonary disease (COPD) remains under penetrated, and we expect industry volume growth to continue in the 6-8% range for the foreseeable future.”

This bodes well for its sales and earnings growth over the next decade. Particularly given that one of its key rivals has been battling a major product recall.

Bell Potter has a buy rating and $36.00 price target on its shares.

The post 3 high-quality ASX 200 shares to buy forever appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, Macquarie Group, and ResMed. The Motley Fool Australia has positions in and has recommended Macquarie Group and ResMed. The Motley Fool Australia has recommended CSL and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If I had invested $5,000 into DroneShield Ltd (ASX: DRO) shares a year ago, I would be laughing all the way to the bank now.

That’s because during the last 12 months, the counter drone technology company’s shares have been among the very best performers on the Australian share market.

To demonstrate just how successful an investment in DroneShield has been, let’s take a look and see what a $5,000 investment a year ago would be worth now.

$5,000 invested in DroneShield shares

Investors that were savvy enough to invest into the company’s shares in June 2023, would have been able to snap them up for 24 cents a piece.

This means that with $5,000 to invest, I would have been able to acquire approximately 20,833 shares in the high-flying share.

As of yesterday’s close, DroneShield shares were changing hands for $1.37 each. This means that those 20,833 units now have a market value of $28,541.21.

That’s a whopping return on investment of $23,541.21, which is almost five times your original outlay.

Why has it been such a good investment?

DroneShield’s rise is not entirely surprising. In fact, I named it as one of my top ten ASX shares to buy in 2024 due to how well-positioned it is to benefit from the increasing demand for counterdrone systems.

In the company’s annual report, its chairman summarised why demand is surging for its technology. Peter James said:

Drones and counterdrone systems are now used in every conflict globally, including the Ukraine war, Hamas attacks on Israel, Houthi attacks in the Red Sea, and most recently, the attacks on the U.S. bases in Jordan which killed 3 and injured over 30. Significant non-military use cases for drones continue for the intelligence community, airports, prisons, border security, stadiums, and other facilities. Nefarious use of drones is a global and rapidly rising threat, with DroneShield providing a proven market leading suite of solutions, directly and via its network of 70+ in-country partners globally.

DroneShield has also let its results do the talking for it. During the first quarter of FY 2024, the company’s revenue increased 10x over the prior corresponding period to $16.4 million.

Since then, it has been able to raise $100 million from investors through a capital raising.

The proceeds from this will be used to capitalise on strong momentum experienced in the first quarter and favourable geopolitical environment. Management also noted that it has a sales pipeline of over $500 million, with over 90 qualified projects at different stages with high quality government customers.

All in all, it’s no wonder that DroneShield shares are the talk of the town right now. Here’s hoping its run can continue.

The post If I’d put $5,000 into DroneShield shares just 1 year ago, here’s what I’d have 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. has positions in and has recommended DroneShield. 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.

ANZ Group Holdings Ltd (ASX: ANZ) shares are traditionally a popular option for passive income investors.

This isn’t surprising.

After all, the banking giant regularly shares a good portion of its sizeable profits with its shareholders every six months.

For example, in FY 2023, ANZ’s solid financial performance allowed the bank to pay an interim dividend of 81 cents per share and then a final dividend of 94 cents per share. The latter comprised an 81 cents per share dividend partially franked at 65% and an additional one-off unfranked dividend of 13 cents per share.

This brought the total dividends for FY 2023 to 175 cents per share, which represents a dividend payout ratio of 71% of cash profit from continuing operations.

But those dividends have been and gone. What sort of passive income could be coming next for investors that buy ANZ shares today? Let’s find out.

Passive income from ANZ shares

Let’s imagine that you buy 1,000 ANZ shares, let’s see what income you could receive from this sort of investment.

With the ANZ share price currently trading at $28.78, it would set you back $28,780 to buy 1,000 units. That’s not a small investment but would it be worth it?

Well, according to a note out of Goldman Sachs, its analysts expect the bank to pay shareholders dividends of $1.66 per share in FY 2024, FY 2025, and FY 2026.

If Goldman is on the money with its estimates, this will mean passive income of $1,660 for investors over the next 12 months from their 1,000 ANZ shares.

And given how Goldman expects ANZ to continue paying the same amount for the foreseeable future, you can likely expect to receive the same amount of income from your shares in the following 12 months.

Should you invest?

While Goldman Sachs has a buy rating on ANZ’s shares, its price target of $28.15 is actually lower than where they trade today.

As a result, this could make it worth keeping your powder dry for the time being and waiting for a better entry point.

Though, it is worth noting that Ord Minnett sees reasonable upside for the bank’s shares. Despite only having a hold rating, its price target of $31.00 implies potential upside of almost 8%.

In addition, Ord Minnett agrees that a $1.66 per share dividend is coming this year, but expects an increase to $1,70 per share in FY 2025.

The post If I buy 1,000 ANZ shares, how much passive income will I receive? 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 positions in and has recommended Goldman Sachs Group. 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.