Category: Stock Market

If you have a high tolerance for risk, then it could be worth thinking about adding the speculative ASX stock in this article to a balanced portfolio.

The stock in question is IperionX Ltd (ASX: IPX).

What is IperionX?

IperionX is aiming to become a leading American titanium metal and critical materials company.

It is using patented metal technologies to produce high performance titanium alloys from titanium minerals or scrap titanium. This is achieved with lower energy, low costs and low carbon emissions.

The company notes that its Titan critical minerals project is the largest JORC-compliant mineral resource of titanium, rare earth, and zircon minerals sands in the United States.

This leaves it well positioned to benefit from demand for titanium metal and critical minerals for advanced U.S. industries. This includes space, aerospace, defence, consumer electronics, hydrogen, electric vehicles, and additive manufacturing.

Why is this a speculative ASX stock to buy?

According to a note out of Bell Potter, its analysts think this ASX stock could be seriously undervalued at current levels.

The note reveals that the broker has reaffirmed its speculative buy rating with an improved price target of $3.85. Based on its current share price of $2.19, this implies potential upside of 76% for investors over the next 12 months.

To put that into context, a $10,000 investment would be worth approximately $17,600 by this time next year if Bell Potter is on the money with its recommendation.

Though, it is worth acknowledging that its speculative rating means that there’s potential for sizeable losses as well. That’s why this ASX stock is likely to be only suitable for investors that have a much higher than average risk tolerance.

What is the broker saying?

Bell Potter believes that the company has the potential to disrupt the titanium supply chain with its technology. It explains:

IPX has the potential to disrupt the incumbent titanium supply chain through materially lowering production costs and manufacturing waste. Large-scale production will commence this year, further de-risking the company’s technologies and enabling IPX to progress commercial relationships with several high-profile aerospace, automotive, luxury goods and government end users.

Our valuation is mostly supported by Phase 2 earnings using relatively conservative assumptions with respect to process margins. There is potential for IPX to rapidly scale Phase 2 and cement itself as a key supplier in the US and global titanium value chains. Our IPX valuation is now $3.85/sh (previously $3.70/sh), having removed the assumption of a near-term equity raise and its corresponding dilution.

All in all, the broker believes IperionX could have a very bright future ahead of it. This could make it one to watch very closely.

The post This disruptive speculative ASX stock could rise 75% in 12 months 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 Scott Phillips.

I’ve already bought the two cheap ASX dividend shares in this article. They’re wonderful picks for passive income in retirement.

The higher interest rate environment is harming some sectors more than others. Within the pain, I think there are a few opportunities on the ASX.

And I’d much rather buy undervalued businesses than, say, the Commonwealth Bank of Australia (ASX: CBA), which, based on its earnings multiple and price-to-book ratio, is one of the most expensive banks in the world.

So, if I were investing in companies because of the dividend yield and value on offer, the below two would be among the names at the top of my buy list.

Metcash Ltd (ASX: MTS)

Metcash is a diversified business with three core segments.

It supplies independent supermarkets around Australia, namely IGAs. The company also supplies independent liquor retailers, including IGA Liquor, Bottle-O, Cellarbrations, and Porters Liquor. The food and liquor divisions can, in my opinion, provide stable earnings because of the largely consistent demand by households.

I’m excited about the company’s hardware division, which includes Total Tools, Mitre 10, and Home Timber & Hardware.

Hardware earnings are currently facing headwinds amid the high cost-of-living environment households and builders are in. I think Metcash can return to good earnings growth when economic conditions improve.

I like the company’s recent move to buy one of the country’s largest frame and truss businesses and a food service business that supplies other businesses, such as restaurants, cafes, hotels, hospitals, and others.

The ASX dividend share has committed to a dividend payout ratio of 70% of underlying net profit after tax (NPAT), which means it can pay a relatively high dividend yield. According to the estimates on Commsec, Metcash could pay a grossed-up dividend yield of 7.7% in FY24.

It looks cheap to me because it’s trading at just 13x FY24’s estimated earnings, whereas blue-chip peers like Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL) are trading at higher earnings multiples.

Rural Funds Group (ASX: RFF)

Rural Funds is a cheap ASX dividend share, in my opinion, because the farmland real estate investment trust (REIT) is trading at a significant discount to its underlying net asset value (NAV).

According to Rural Funds (and independent property valuers), the business had an adjusted NAV of $3.07 at 31 December 2023. That means the current Rural Funds share price is at a discount of around 34% to the latest disclosed NAV.

The business is seeing its rental income steadily grow thanks to rental indexation built into most of its contracts. Some of those rental increases are linked to inflation, while other contracts have a fixed annual increase.

Rural Funds has grown or maintained its distribution every year for the past decade. In the longer term, it wants to grow its annual distribution by 4% per annum.

The business has good farmland diversification across cattle, almonds, macadamias, vineyards and cropping. Diversification is useful as a form of protection against risk, so not all the eggs are in one basket. Being open to investing in multiple farming sectors gives the business more opportunities.

Its trailing distribution yield is 5.8%, which I believe is a solid starting yield for this cheap ASX dividend share.

The post 2 cheap ASX dividend shares I’d buy in retirement appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Metcash and Rural Funds Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group, Rural Funds Group, and Wesfarmers. The Motley Fool Australia has recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The uranium sector has been a great place to invest over the last 12 months.

During this time, a number of ASX 200 uranium stocks have delivered stunning returns for their lucky shareholders.

However, one uranium stock that may have peaked now is Paladin Energy Ltd (ASX: PDN).

That’s the view of analysts at Bell Potter, which have just downgraded the uranium miner’s shares.

Why has this ASX 200 uranium stock been downgraded?

According to a note, the broker has downgraded its shares to a hold rating (from buy) with a trimmed price target of $15.70 (from $16.50). This is largely in line with the current Paladin Energy share price of $15.74.

Bell Potter recently visited the company’s Langer Heinrich Mine (LHM) in Namibia and was impressed with what it saw. In fact, it sees scope for Paladin Energy to surprise to the upside with its earnings. It said:

In summation, we were surprised at the quality of the site/ regional infrastructure and competency of the local workforce. The restart & ramp up appears to be running smoothly, which could provide upside risks to our earnings.

However, there are risks for investors to consider. One of these comes from its operating costs. It adds:

On the flip-side, we are cautious on operating costs which seem to be the biggest downside risk at this point. Based on the assumptions in the restart plan (2021) PDN anticipated a US$15.74/t milled ore mining cost. In our mind, there is no doubt that this figure has increased, however the Namibian Rand has depreciated 10% against the US$ since that period. Overall, we have factored in a 5% increase to US$ mining costs going forward.

In addition, Bell Potter highlights that there is an election coming up in Namibia, which could throw a spanner into the works. It explains:

In the upcoming election (Nov), key risks remain with the potential for an introduction of a Government free-carry interest and/or an increase in mining taxes being discussed. At this stage, the likelihood is unknown however the impact should these measures be introduced could be substantial.

Shares downgraded

In light of the above and with the ASX 200 uranium stock rallying hard over the last 12 months, the broker has decided to downgrade its shares to a hold rating. It summarised its decision:

Our target price for PDN decreases slightly to $15.70/sh (previously $16.50/sh) and we downgrade to a Hold. We walked away from the site tour with a positive outlook on LHM, however note that the stock has appreciated 140% over the past twelve months and at current levels looks fully valued, on our estimates. Further appreciation from here will be driven by 1) improving uranium pricing (PDN has ~80% market exposure through to 2030, our near-term price assumes a near-term price of US$115/lb vs spot of $92/lb), 2) expansion and exploration to the west of the current mining lease at LHM, and 3) potential M&A activity as LHM reaches a steady state of production.

The post Guess which ASX 200 uranium stock was just downgraded appeared first on The Motley Fool Australia.

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• ASX 200 shares vs. property: Which has performed better since the COVID crash?
• Is the Paladin Energy share price overcooked at $17.40?
• Here are the top 10 ASX 200 shares today
• Will ASX uranium shares run higher on this ‘historic’ supply ban?
• Why Judo Capital, NAB, Paladin Energy, and Perpetual shares are falling 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 Scott Phillips.

On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week in a very positive fashion. The benchmark index rose 0.8% to 7,788.3 points.

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

ASX 200 expected to rise

The Australian share market is expected to rise again on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 18 points or 0.25% higher. Wall Street was closed for the Memorial Day holiday and the UK market was closed for a bank holiday. However, the DAX and CAC were open for business and had positive sessions. Each rose 0.45% overnight.

Elders goes ex-dividend

The Elders Ltd (ASX: ELD) share price will be trading ex-dividend on Tuesday and could trade lower. Last week, the agribusiness company released its half year results and reported a sharp profit decline. This forced the Elders board to cut its interim dividend by 22% to 18 cents per share. The company’s shares will trade ex-dividend for this partially franked dividend this morning. After which, eligible shareholders can look forward to receiving it in their bank accounts next month on 26 June.

Oil prices rise

It could be a good session for ASX 200 energy shares including Santos Ltd (ASX: STO) and Karoon Energy Ltd (ASX: KAR) after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.1% to US$78.55 a barrel and the Brent crude oil price is up 1.1% to US$83.04 a barrel. Optimism over an upcoming OPEC+ meeting appears to have given prices a boost.

Neuren rated as a buy

The Neuren Pharmaceuticals Ltd (ASX: NEU) share price can keep rising according to analysts at Bell Potter. Despite rising almost 16% on Monday, the broker believes there are still strong gains ahead for the ASX 200 pharma stock. Bell Potter responded to the company’s trial results by reiterating its buy rating and lifting its price target to $28.00. This implies potential upside of almost 17% for investors over the next 12 months.

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a good session on Tuesday after the gold price rose overnight. According to CNBC, the spot gold price is up 0.8% to US$2,352.5 an ounce. Traders were buying the precious metal ahead of the release of US inflation data this week.

The post 5 things to watch on the ASX 200 on Tuesday 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 Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

You might have heard someone talk about the recent Powerball jackpot at your most recent barbeque or water cooler gathering. Nothing gets as a-gossiping more it seems than a monstrous, life-changing jackpot up for grabs. Certainly not ASX shares.

Last week’s $150 million Powerball jackpot remains unclaimed at the time of writing, although we do know that the winning ticket was purchased in South Australia.

Whilst this gargantuan amount of cash has understandably got everyone talking (and dreaming), it’s probably worth discussing the pitiful odds of this windfall coming to you.

According to reporting from the ABC, mathematician Adam Spencer has estimated that the odds of winning last week’s $150 million jackpot was a staggering 134 million to one. Here’s how that looks written out:

134,000,000,000 : 1

Spencer expanded by walking us through the maths:

First of all, you have to get seven correct out of 35… That is a one in 6.8 million chance. If you get through that hoop, you then have a one in 20 chance of getting the final ball. The total odds are one in 134 million.

Not much of a gambler myself, I like the idea of getting a decent return on one’s cash using ASX shares instead.

Buying an ASX share almost certainly isn’t going to make you a millionaire 134 times over in one day. However, the probability of you building life-changing wealth using the share market is a lot more appealing than buying a lottery ticket.

So if you missed out on last week’s jackpot, here are two ASX shares I think you’d be better off buying than another long-shot lotto ticket.

Two ASX shares I’d buy over a lottery ticket

First up is the Vanguard Australian Shares Index ETF (ASX: VAS). This index fund isn’t really an individual ASX share, but represents an investment in a whole bunch.

How many? Well, VAS tracks the S&P/ASX 300 Index (ASX: XKO), which means it holds the largest 300 shares on the Australian share market within it.

That’s everything from Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX: WOW) to Telstra Group Ltd (ASX: TLS) and Harvey Norman Holdings Limited (ASX: HVN).

Think of this index fund as buying a small share of all the lottery tickets on the ASX. You won’t get rich overnight. But over time, you’ll enjoy the average return of the entire stock market.

This average return has historically been rewarding. Since this index fund’s inception in 2009, it has averaged a return of 8.97% per annum (as of 30 April).

Whilst past performance is never a guarantee of future returns, I think an index fund like VAS is about as good as it gets if you’re looking for a sturdy long-term investment.

If you can’t win the Powerball, buy it

Next, we have Lottery Corp Ltd (ASX: TLC). Yep, none other than the very ASX share that runs the Powerball.

Lottery Corp has exclusive licenses to run lotteries and Keno in most Australian states and territories. Whilst only one person tends to benefit from a Powerball win, every single Lottery Corp shareholder benefits when a Powerball ticket is sold.

As such, I think you’d be better off betting on the ASX share that runs the Powerball than trying to beat those one in 134 million odds.

Lottery comparisons aside, I like Lottery Corp as an ASX share investment. We all tend to want to try our luck with a lotto ticket or at Keno in all kinds of economic weather. That makes Lottery Corp a reliable and defensive investment in my view.

Additionally, this company pays a decent, fully franked dividend, which means that there’s a good chance (a lot better than the lotto) you’ll get paid every six months just for owning this company’s shares.

The post Forget lottery tickets, I’d buy these ASX shares instead appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lottery. The Motley Fool Australia has positions in and has recommended Harvey Norman and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are a lot of options for income investors to choose from on the Australian share market.

One of the most popular options out there is Telstra Group Ltd (ASX: TLS).

The telco giant features in countless portfolios and super funds across the country. This is thanks largely to its defensive earnings and the Telstra board’s decision to regularly share a good portion of these profits with its shareholders each year in the form of dividends.

For example, in FY 2023 Telstra’s solid financial performance enabled the board to resolve to pay dividends of 17 cents per share, returning $2 billion to shareholders.

But what is next for the Telstra dividend?

Telstra recently released an update on its guidance for FY 2024 and FY 2025.

In respect to the former, Telstra has reaffirmed its earnings guidance for FY 2024. It continues to expect underlying EBITDA in the range of $8.2 billion to $8.3 billion.

However, it introduced guidance for FY 2025 which was short of expectations. Telstra is guiding to underlying EBITDA of $8.4 billion to $8.7 billion. A key driver of this growth will be a $350 million cost reduction plan.

Commenting on next year’s guidance, Goldman Sachs said:

Overall mid-point of guidance of $8.55bn is disappointing given we previously noted our views that $8.6bn was very achievable. Although the differences vs. GSe are not clear, it potentially relates to: (1) Timing of Enterprise restructure; or (2) Lower than CPI postpaid mobile pricing.

In light of this, it may not come as a surprise to learn that this guidance has implications for the Telstra dividend.

Dividend forecast through to 2027

According to a note out of Goldman Sachs, its analysts have downgraded their estimates for the Telstra dividend.

For FY 2024, the broker continues to expect a fully franked 18 cents per share dividend. This represents a 5.1% dividend yield based on the current Telstra share price of $3.53.

However, in FY 2025, Goldman now only expects a half cent increase to 18.5 cents per share. This is down from its previous estimate of 19 cents per share. Though, Goldman’s new dividend estimate still equates to an above-average dividend yield of 5.25%.

Looking ahead, it is a similar story in FY 2026, with Goldman now pencilling in a 19.5 cents per share fully franked dividend for that financial year. This is down from its previous estimate of 20 cents per share.

But once again, an attractive dividend yield would be on offer with Telstra’s shares if this dividend estimate is accurate. Based on its current share price, 19.5 cents per share equates to a 5.5% yield.

Should you invest?

Goldman may have been disappointed with Telstra’s update, but it still sees a lot of value in its shares.

It currently has a buy rating and $4.25 price target on them, which implies potential upside of 20% for investors over the next 12 months.

The post Here’s the new Telstra dividend forecast through to 2026 appeared first on The Motley Fool Australia.

More reading

• Joining the revolution: How I’d invest in ASX AI shares right now
• Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings
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• Buy these ASX 200 dividend shares for passive income in June
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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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Artificial intelligence (AI) could be one of the next great megatrends to affect society, potentially as impactful as the Industrial Revolution.

While there is some trepidation about this rapidly developing new technology, there is also an incredible amount of excitement and optimism. AI could upend whole industries and fundamentally change the way we all work. But it also has the capability to massively enrich and improve our lives.

In this article, we take a look at what makes AI such an exciting field to invest in. Then, we’ll list some of the ASX stocks best positioned to benefit from the emergence of AI.

What even is AI, anyway?

Our ideas about AI have changed a lot over the past few decades. We used to think of AI as the friendly robots that ‘beep-booped’ their way around the Star Wars universe.

But nowadays, in the era of ChatGPT and DALL-E 3, we’re probably more likely to think of AI as a piece of complex computer software that we interact with on a computer screen than a clunky humanoid robot that follows us around on intergalactic adventures.

As our understanding of AI has changed and evolved, it has become a much more nebulous concept to define. Essentially, it is now an umbrella term that includes just about any computer process designed to simulate the patterns of human thought.

For example, ChatGPT is a large language model that is designed to produce fluent, human-sounding responses to just about any prompt. And, as I’m sure you’re already aware, it’s pretty convincing.

AI systems like ChatGPT use machine learning, an algorithmically driven process. In this process, the AI program is fed huge amounts of data, which it then analyses for patterns, connections, and correlations.

In the case of ChatGPT, if you give the program enough language data, it will begin to learn how language is constructed. Eventually, the program will be able to simulate that language and even generate its own unique responses to questions.

Why should you invest in it?

Putting all those uncomfortable Blade Runner­-type questions about what it even means to be human anymore to one side, today’s AI technology is undoubtedly extremely cool. And it’s developing at a rapid pace.

The commercial applications of AI are potentially limitless. Tasks that would normally take a human hours to complete, AI could bash out in mere seconds. It could replace a corporation’s whole logistics, accounting and cybersecurity departments.

It could develop marketing campaigns based on a deep analysis of consumer trends, improve medical care, help advance scientific discoveries, and drive our cars for us.

Given its potential, AI could be a great section of the market to focus on for growth-minded investors. It does, of course, come with risks – the fast pace of development means that today’s industry leaders might become tomorrow’s laggards.

So, be sure to diversify across a few different AI stocks and balance them out in your portfolio with some less risky shares, like defensive stocks and blue chips.

ASX AI shares

Luckily for ASX investors, there are plenty of stocks available on the ASX that tap into the AI trend. Some develop AI technology, while others provide the infrastructure that supports it.

I’ve selected a bit of a mix below to give you an indication of the different ways you can gain exposure to AI.

NextDC Ltd (ASX: NXT)

AI programs like ChatGPT and other machine learning systems require huge amounts of data to function effectively. And all that data needs to be stored somewhere.

That’s where NextDC comes in. It is a leading Australia-based company operating data centres in Australia, New Zealand, Japan and Malaysia. As AI technology continues to develop, demand for data storage will only increase, creating growth opportunities for companies like NextDC.

And the company knows it – it launched a $1.3 billion capital raise back in April to help finance its growth plans.

Telstra Group Ltd (ASX: TLS)

In addition to data storage, AI needs fast and reliable internet connectivity. As the nation’s leading telco, Telstra could have the potential to be Australian AI’s infrastructure backbone.

According to its website, Telstra’s mobile network covers 2.7 million square kilometres of Australia’s landmass – about 60% more than its next biggest rival.

Telstra is a good choice for income-seeking investors as it pays a consistent, fully franked dividend. Based on current prices, its dividend yield is a healthy 5%.

BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)

Exchange-traded funds (ETFs) are a great option for investors seeking diversified exposure to global AI stocks. When you buy a unit of an ETF like RBTZ, you’re really buying a small ownership stake in a portfolio of stocks overseen by a fund manager.

This means that in a single trade, you can gain exposure to an entire industry.

The RBTZ ETF invests in companies worldwide that specialise in robotics, AI, automation, and driverless cars and have a market capitalisation of at least US$100 million.

Currently, the fund’s largest holding is American tech company and AI champion NVIDIA Corp (NASDAQ: NVDA), which makes up about 10% of its portfolio,

The post Joining the revolution: How I’d invest in ASX AI shares right now appeared first on The Motley Fool Australia.

More reading

• Here’s the new Telstra dividend forecast through to 2026
• Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings
• Nvidia shares are now worth more than 17 times the market cap of BHP. What’s next?
• With a dividend yield over 7%, are Telstra shares a buy for income?
• Buy these ASX 200 dividend shares for passive income in June

Motley Fool contributor Rhys Brock has positions in Nextdc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nvidia. The Motley Fool Australia has positions in and has recommended Telstra Group. 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.

With a new month just days away, let’s take a look at four ASX dividend stocks that analysts think could be worth adding to your portfolio in June.

Here’s what you need to know about them:

Accent Group Ltd (ASX: AX1)

Accent could be an ASX dividend stock to buy in June. It is the footwear-focused retailer behind brands such as HYPEDC, Platypus, Stylerunner, Subtype, and The Athlete’s Foot.

Bell Potter is a big fan of the company and sees significant value in its shares at current levels. The broker currently has a buy rating and $2.50 price target on them.

As for dividends, Bell Potter expects 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 $1.89, this represents dividend yields of 6.9% and 7.7%, respectively.

Centuria Industrial REIT (ASX: CIP)

Another ASX dividend stock for investors to consider buying in June is Centuria Industrial. It is the country’s largest domestic pure play industrial property investment company.

Analysts at UBS are feeling very positive about the company’s outlook and have a buy rating and $3.71 price target on its shares.

The broker is also expecting some decent yields from its shares in the near term. It is forecasting dividends per share of 16 cents in both FY 2024 and in FY 2025. Based on the current Centuria Industrial share price of $3.20, this represents dividend yields of 5% in both years.

Deterra Royalties Ltd (ASX: DRR)

Deterra Royalties could be another excellent ASX dividend stock to buy next month. It is a mining royalties company with a collection of cash-generating assets across Australia.

Morgan Stanley is positive on the company and has an overweight rating and $5.60 price target on its shares.

It also expects Deterra Royalties to be in a position to pay some big dividends in the near term. It is forecasting fully franked dividends per share of 32.7 cents in FY 2024 and 39 cents in FY 2025. Based on the current Deterra Royalties share price of $4.77, this will mean yields of 6.8% and 8.2%, respectively.

Eagers Automotive Ltd (ASX: APE)

A final ASX dividend stock that could be a buy in June is Eagers Automotive. It is operates one of Australia’s largest auto dealership networks.

Bell Potter sees a lot of value in its shares following a recent selloff. The broker reiterated its buy rating with a price target of $13.35.

As for income, it expects Eagers Automotive to pay fully franked dividends of 64.5 cents per share in FY 2024 and then 73 cents per share in FY 2025. Based on its current share price of $10.52, this represents dividend yields of 6.1% and 6.9%, respectively.

The post 4 excellent ASX dividend stocks to buy in June appeared first on The Motley Fool Australia.

More reading

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• 2 of the best passive-income-focused ASX shares to consider buying in June
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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 and Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a stalwart in my portfolio, and I expect to own it for the rest of my life.

Soul Patts is an investment house that has been listed since 1903, making it one of the oldest companies on the ASX.

It started as a chemist with 21 pharmacy stores, but it’s now a very different business. Incredibly, Soul Patts has been managed by the same family from the start – Robert Millner is the fourth generation of the family to chair the company.

Being old doesn’t automatically make it a compelling investment, though longevity is a useful characteristic for a long-term investment. It means I can confidently hold the ASX 200 share for a long time.

Three factors really matter to me about this business.

Diversification and investment flexibility

Diversification is appealing because it lowers the risk to the Soul Patts portfolio if a particular investment goes wrong.

The portfolio is invested in multiple industries and asset classes, including ASX blue-chip shares, ASX small-cap shares, private businesses, property, and credit/bonds.

In terms of individual ASX companies, some of its main investments include Brickworks Limited (ASX: BKW), New Hope Corporation Ltd (ASX: NHC), TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG), CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG) and Wesfarmers Ltd (ASX: WES).

Other areas it’s invested in include agriculture, resources, financial services, retirement living, swimming schools, electrification and more.

I like that the business has the flexibility to invest almost anywhere, opening up lots of opportunities for the company to find the best investment.

Re-investment

One of the most substantial financial moves that can help an ASX 200 share deliver long-term returns is the re-investment of profit back into itself for more growth.

With Soul Patts, there’s a double layer of re-investment occuring. The investment house’s portfolio of companies are re-investing inside their own businesses. Soul Patts doesn’t need to do anything for Wesfarmers, Goodman and Brickworks to invest in and grow their operations.

On top of that, Soul Patts receives dividends and distributions from its portfolio of assets. After paying for its costs and sending a majority of the net cash flow to shareholders as a dividend, Soul Patts re-invests some of that cash flow into more opportunities, adding more financial power to the snowballing effect of growth.

Growing dividends

The ASX 200 share has grown its annual ordinary dividend every year since 2000, the longest streak of consecutive dividend increases on the ASX.

Dividend hikes aren’t guaranteed, but it’s nice to know that there’s a good chance next year’s dividend payment will be larger than this year’s.

In the FY24 first-half result, Soul Patts increased its interim payout by 11.1% after its net cash flow from investments increased by 6.9%.

It currently has a grossed-up dividend yield of around 4%.

I like that I can own Soul Patts shares and receive dividends, meaning I don’t need to sell shares to capitalise on the growth it’s generating.

The post If I had to own only one ASX 200 share forever, this would be it appeared first on The Motley Fool Australia.

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• An ASX dividend giant I’d buy over Westpac shares right now
• How I plan to invest my tax cuts
• With $1,000 to invest, should I buy ASX growth stocks or income shares?
• If I were Warren Buffett, I’d buy these 3 ASX shares

Motley Fool contributor Tristan Harrison has positions in Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, CSL, Goodman Group, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. 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.

Warren Buffett is one of the world’s greatest investors. Berkshire Hathaway, the business Buffett has led for decades, achieved an average annual return of 19.8% between 1965 and 2023.

Buffett is also one of the world’s most generous people with his money and advice. He plans to donate most of his huge wealth to charity. He also spends hours every year at the Berkshire Hathaway annual general meeting answering questions from shareholders and has given numerous pieces of advice over the years.

I will talk about three Buffett pearls of wisdom that I think are very relevant to today’s investment conditions.

Interest rates

Inflation remains higher than central banks would like, so interest rates may stay at this level for longer. The US Federal Reserve boss Jerome Powell said earlier in May:

We did not expect this to be a smooth road. But these [inflation readings] were higher than I think anybody expected.

What that has told us is that we’ll need to be patient and let restrictive policy do its work.

Of course, that doesn’t mean we shouldn’t invest at all. But, I believe investors should continue to assess company valuations on their merits and only buy if they think long-term returns can be solid.

Warren Buffett once explained why interest rates are so important to valuations:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

Don’t have to swing at every pitch

At a time when the share prices of many businesses are close to 52-week highs or all-time highs, I think it would be reasonable for investors to be discerning about which investments they’re buying.

Investing is not like baseball, where batters must swing at pitches sooner or later. We can take our time with investments and only buy shares at a price we like.

Warren Buffett explained how to handle investing in this situation:

The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.

When the market does become fearful, that could be the time to be greedy. There doesn’t need to be a bear market to find opportunities, though; I’ve written plenty of articles recently where I see opportunities right now.

Great companies at fair prices

There is a wide range of potential ASX share investments for us to buy. Warren Buffett and Charlie Munger have been advocates of investors focusing on wonderful companies rather than average businesses. Warren Buffett said:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

By choosing great businesses, I think those investments are much more likely to deliver strong metrics such as a higher return on equity (ROE) and better compounding of net profit after tax (NPAT) over the long term. Owning wonderful companies can deliver good share price (and dividend) returns over time.

The post 3 pearls of Warren Buffett wisdom I think all ASX investors need right now appeared first on The Motley Fool Australia.

More reading

• 2 of the best ASX 200 blue chip shares that money can buy
• Guess which ASX gold stock crashed over 20% today
• Guess which little-known ASX tech stock has soared 18% as a private investor strikes
• Here are the top 10 ASX 200 shares today
• Why inflation could cost young investors 50% of their retirement savings

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 positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.