Category: Stock Market

Woodside Energy Group Ltd (ASX: WDS) shares have been on a downward trend over the last year, falling more than 20%, as we can see in the chart below.

After its sizeable decline in the past 12 months, investors may wonder if this is a buying opportunity.

There are some compelling reasons to buy Woodside shares, but also other reasons for avoiding it. Let’s look at both sides of the investment equation.

The positives

A lower Woodside share price means a more appealing valuation, as shown by its lower price/earnings (P/E) ratio. It’s possible Woodside shares could still go cheaper, but the 27% drop from September 2023 is substantial.

Broker UBS has forecast Woodside could make earnings per share (EPS) of $1.23, resulting in a forward P/E ratio of 15. This is materially lower than the valuation when the Woodside share price was still above $38, compared to approximately $28 today.

A cheaper Woodside share price also leads to a larger dividend yield for new investors. UBS suggests the ASX energy share could pay an annual dividend per share of US 98 cents. That translates into a possible grossed-up dividend yield of 7.6%. The dividend return could generate an essential part of the overall shareholder returns in the medium term.

The third positive I’ll point to is the possibility of growing energy demand. Data centres could drive significant demand growth for greener energy, such as hydrogen, which could help the company find customers for its hydrogen projects.

Finally, the Australian Federal Government recently announced that gas would remain part of Australia’s energy plans at least until 2050. The government had this to say:

Reliable gas supply will gradually and inevitably support a shift towards higher-value and non-substitutable gas uses. Households will continue to have a choice over how their energy needs are met.

Australia is, and will remain, a reliable trading partner for energy, including Liquefied Natural Gas (LNG) and low emission gases.

Negatives about Woodside shares

An integral negative for me is the company’s profit is closely linked to energy prices, but it has little control over oil or gas prices. It’s a price-taker rather than a price-maker. Price-takers find it challenging to deliver consistently growing profit, so we can often see the Woodside share price bounce around rather than steadily rising over time.

Consequently, UBS thinks EPS could be higher in FY24 than in FY26 and FY28. Forecasts are just educated guesses, of course — energy prices could be weaker or stronger. However, if EPS doesn’t grow much compared to the estimate for FY24, I can’t see the Woodside share price delivering too much in terms of capital growth.

UBS also points out that one of Woodside’s projects, Sangomar, has “complicated” geology. The broker is cautious because the ASX energy share has not provided disclosure on its well performance.

The broker also notes there’s an “increased risk” that the fiscal regime under the Sangomar Production Sharing Contract may be renegotiated to increase the government’s take following Senegal’s change in government.

Foolish takeaway

Now may be an opportune time to examine the business after its recent decline.

However, because of the uncertainty relating to commodity pricing, I don’t think there’s a significant upside for the Woodside share price. I’d rather focus on other ASX shares with a more foreseeable and consistent growth outlook.

The post The pros and cons of buying Woodside shares right now appeared first on The Motley Fool Australia.

More reading

• Buy these ASX 200 dividend shares for passive income in June
• 5 things to watch on the ASX 200 on Monday
• Here are the top 10 ASX 200 shares today
• How data centres could lift Woodside shares
• 5 things to watch on the ASX 200 on Thursday

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.

The Australian mining stock Sandfire Resources Ltd (ASX: SFR) has excellent investment potential because of its copper exposure, I believe.

Sandfire is one of the largest copper miners on the ASX. Its DeGrussa operations are located 900km northeast of Perth in Western Australia, which is generating “strong cash flows,” according to the company. The ASX copper share also owns the MATSA operations in Spain and the Motheo copper mine in Botswana.

Here are two major reasons why I think Sandfire Resources has a compelling future.

Strong growth potential for the Australian mining stock

The mining company says its MATSA portfolio in Spain offers “exceptional exploration upside”.

While MATSA is already operational, the surrounding exploration tenure — approximately 3,000sq km in size — offers “substantial long-term exploration upside and organic growth potential”, according to Sandfire.

If it can find more copper in Spain, the company can lengthen the life of its mining operations and utilise existing infrastructure. The company can also potentially find copper in other locations.

The outlook for copper itself is another reason to be interested in this Australian mining stock.

Copper is an essential decarbonisation commodity because of its role in global electrification, including expanding the electrical grid, manufacturing renewable energy generation (like wind power), and the significant use of copper in electric vehicles.

According to McKinsey, electrification is projected to increase annual copper demand to 36.6 million metric tons by 2031. The research outfit has forecast a possible pathway to 30.1 million metric tons of annual copper supply, but that suggests a deficit of 6.5 million metric tons (or 20%).

Sandfire Resources is an important global copper player, so the Australian mining stock could benefit from higher copper prices if demand materially outstrips supply in the coming years.

Sandfire Resources share price valuation

The broker UBS, has forecast the ASX copper share can generate earnings per share (EPS) of 47 cents in FY26. This puts the ASX mining share at 20x FY26’s estimated earnings.

With the potential for the copper price to rise in the long term, plus the company’s efforts to grow copper production over time, I think this is a compelling Australian mining stock to consider.

The post 1 Australian mining stock worth a long-term investment appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Brokers name 3 ASX shares to buy now
• What this unprecedented short squeeze signals for ASX copper stocks
• Is it too late to buy surging ASX copper shares like Sandfire?
• Here are the top 10 ASX 200 shares today

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.

Telstra Group Ltd (ASX: TLS) shares have significantly declined over the past year, dropping by 20%.

This means the Telstra share price currently offers a higher level of dividend income because the dividend yield increases when a share price falls.

After the valuation decline for the ASX telco share, let’s examine what income Telstra investors are getting now.

How big is the dividend yield today?

Telstra told investors that solid cash flow conversion and generation supported “flexibility to grow dividends and invest” and that it wanted to maintain “balance sheet strength and flexibility while seeking to grow dividends”.

The last two dividends declared by Telstra amounted to 17.5 cents, delivering a fully franked dividend yield of 5.1% and a grossed-up dividend yield of 7.2%.

But those dividends are history. What could the future payouts be for owners of Telstra shares?

The broker UBS has predicted Telstra could pay a dividend per share of 18 cents per share in FY24 and 19 cents per share in FY25. That translates into forward grossed-up dividend yields of 7.5% and 7.9%, respectively. That’s much more than what you can get from a savings account.

But there’s more to a sound investment than just the dividend yield. Ideally, I’d like to see profit growth over the longer term. Profit generation funds the dividend payments, so bigger profits can enable large payouts. Higher profits can also support a higher Telstra share price.

Are Telstra shares a buy?

Pleasingly, every six months, Telstra typically reports that it has added significant additional subscribers. In the first half of FY24, Telstra revealed that its mobile services in operation (SIO) grew by 4.6%, or 625,000 subscribers. I believe mobile subscriber growth will be the critical driver of underlying profit.

Telstra has already spent the capital on its networks and built the infrastructure. The additional subscribers can help boost revenue and margins.

The company recently acknowledged its enterprise business wasn’t performing and announced job cuts in the division, with up to 2,800 roles to be removed. Most of the cuts are expected to occur by the end of the 2024 calendar year.

With those cuts and other actions, Telstra expects to achieve $350 million of its T25 cost reduction goal by the end of FY25. One-off restructuring costs are expected to be between $200 million and $250 million across FY24 and FY25.

The company has guided that its underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) for FY25 is expected to be between $8.4 billion and $8.7 billion. That would be growth compared to the guidance range for FY24 (which hasn’t finished yet) of between $8.2 billion and $8.3 billion.

At this lower Telstra share price, I think it’s a buy. The underlying profit and dividend are growing, and the lower valuation looks more appealing. According to UBS, the Telstra share price is valued at 19x FY24’s estimated earnings.

The post With a dividend yield over 7%, are Telstra shares a buy for income? appeared first on The Motley Fool Australia.

More reading

• Buy these ASX 200 dividend shares for passive income in June
• Top brokers name 3 ASX shares to buy next week
• Is the Telstra share price too cheap?
• 2 of the best passive-income-focused ASX shares to consider buying in June
• Why these 4 ASX 200 shares just got downgraded by top brokers

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 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.

There are plenty of quality ASX 200 dividend shares to choose from on the Australian share market.

But which ones could be buys next month?

Three that have been tipped as buy in June are listed below. Here’s why they could be worth a look:

Aurizon Holdings Ltd (ASX: AZJ)

Aurizon could be an ASX 200 dividend share to buy according to analysts. It is Australia’s largest rail freight operator and each year transports more than 250 million tonnes of Australian commodities, connecting miners, primary producers and industry with international and domestic markets.

The team at Ord Minnett thinks income investors should be buying its shares. The broker has an accumulate rating and $4.70 price target on its shares.

As for dividends, Ord Minnett is forecasting partially franked dividends of 17.8 cents per share in FY 2024 and then 24.3 cents per share in FY 2025. Based on the latest Aurizon share price of $3.70, this will mean dividend yields of 4.8% and 6.55%, respectively.

Telstra Corporation Ltd (ASX: TLS)

Another ASX 200 dividend share for income investors to consider buying is Telstra.

Goldman Sachs remains positive on the telco giant despite being disappointed with its recent guidance update.

It notes that the “low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive.” It also believes that the company “has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets”.

Goldman expects fully franked dividends of 18 cents per share in FY 2024 and then 18.5 cents per share in FY 2025. Based on the current Telstra share price of $3.45, this equates to yields of 5.2% and 5.35%, respectively.

The broker has a buy rating and $4.25 price target on Telstra’s shares.

Woodside Energy Group Ltd (ASX: WDS)

A final ASX 200 dividend share that could be in the buy zone this month is Woodside Energy. It is one of the globe’s largest energy producers.

The team at Morgans thinks that investors should be taking advantage of recent share price weakness. Especially given the quality of its earnings and strong balance sheet.

In addition, recent share price weakness has boosted the yield on offer with its shares. Morgans is forecasting fully franked dividends of $1.25 per share in FY 2024 and then $1.57 per share in FY 2025. Based on the current Woodside share price of $27.93, this represents dividend yields of 4.5% and 5.6%, respectively.

Morgans has an add rating and $36.00 price target on its shares.

The post Buy these ASX 200 dividend shares for passive income in June appeared first on The Motley Fool Australia.

More reading

• With a dividend yield over 7%, are Telstra shares a buy for income?
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• Here are the top 10 ASX 200 shares today
• Is the Telstra share price too cheap?

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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 Australia has recommended Aurizon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’m a big fan of the Vanguard US Total Market Shares Index ETF (ASX: VTS) as a solid investment for building towards retirement — and for retirees too.

The VTS ETF is one of the largest exchange-traded funds (ETFs) on the ASX and provides investors with exposure to most of the US share market.

Pleasingly, its most significant portfolio holdings are among the world’s biggest and strongest companies, including Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta Platforms and Berkshire Hathaway.

Another attractive feature of this ETF is that its management fee is just 0.03% per annum. This leaves almost all returns generated in the hands of investors, making it one of the cheapest annual fees in Australia.

Here are some more reasons why I think it’s such an effective investment for people in both the accumulation and retirement phases.

Excellent wealth-growing pick

The VTS ETF owns a high-quality group of US tech businesses with globally leading service or product offerings. For example, companies like Microsoft, Nvidia, and Alphabet are leading the charge for the development of artificial intelligence (AI). These US giants have incredible balance sheets, impressive operating profit margins, and long growth runways.

Due to sizeable allocations to those high-performing stocks, the Vanguard US Total Market Shares Index ETF has delivered a hefty average annual return of 14.2% in the five years to April 2024.

Now, we can’t fully rely upon this rate of return in the future, but even if it remains reasonably stable in the years ahead, investors can grow wealth at an impressive rate.

For example, if someone invested $1,000 a month for 20 years and the fund grew at 14.2% per annum, it would be worth $1.1 million after two decades.

This fund has more to it than the top holdings — it actually has 3,719 holdings. That’s an enormous amount of diversification in a single investment.

I also like the sector allocation. Technology makes up around a third of the weighting, which is the industry where many compelling businesses are located. Other sectors in the ASX ETF with double-digit weightings include consumer discretionary (14.1%), industrials (13%), healthcare (11.8%), and financials (10.9%).

Can unlock cash flow for retirees

Investors in retirement are likely seeking income to fund their cash flow requirements.

The VTS ETF isn’t known for dividends – it currently has a dividend yield of around 1.4% because of the generally low dividend yield of the underlying holdings.

However, the ETF can still be a great source of income by crystallising some capital gains. I’ll show you how it can work.

Imagine owning $100,000 of the VTS ETF, and over 12 months, it rises 10% to become worth $110,000. If you sell $5,000, that’s a 5% dividend yield on the original $100,000, and the net value after the sale would be $105,000.

Of course, the stock market can be volatile and shares in the VTS ETF might be lower in some years, so I wouldn’t choose to sell all my gains every year. It’s good to keep some in reserve in case you need an emergency fund. A 4% or 5% yield would be the right balance, in my opinion.

If the VTS ETF keeps delivering good returns, it could provide cash flow for retirees and capital growth.

The post Why Vanguard US Total Market Shares Index ETF (VTS) is a top buy for retirement appeared first on The Motley Fool Australia.

More reading

• Own the ASX’s Vanguard US Total Markets ETF (VTS)? Here’s what you’re invested in
• Here’s what makes the Vanguard US Total Market ETF (VTS) stand out from other index funds
• How much money should I put in one ASX ETF?
• 5 ASX ETFs to invest $10,000 into next week

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. 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 stand among some of the largest companies within the S&P/ASX 200 Index (ASX: XJO). But simply being a big business isn’t enough to appeal to me.

While ANZ shares hold a sizeable weighting in exchange-traded funds (ETFs) such as the Vanguard Australian Shares Index ETF (ASX: VAS) and other popular investment funds, I’m not attracted to the ASX 200 bank share for a few crucial reasons. Let’s take a look.

Strong competition

Ideally, I want to invest in businesses with strong competitive advantages or economic moats.

Competition is stiff in the banking sector, with numerous lenders operating in Australia. On the ASX alone, we have the big players like ANZ, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Bank of Queensland Ltd (ASX: BOQ) and Macquarie Group Ltd (ASX: MQG).

Not to mention a host of smaller lenders, including Bendigo and Adelaide Bank Ltd (ASX: BEN), Pepper Money Ltd (ASX: PPM), AMP Ltd (ASX: AMP) and MyState Ltd (ASX: MYS).

Thanks to the rise of digital banking, lenders don’t need a national network to be competitive anymore. Macquarie and ING have become sizeable players without branch networks.

Loans appear to have become commoditised, so lenders have seen their margins decline. That trend doesn’t seem to be reversing. Plus, mortgage brokers are now influential players in the market. In my mind, these are long-term headwinds.

In the FY24 first-half result, ANZ revealed that its net interest margin (NIM) had declined. The NIM tells us how much profit a bank makes on its lending (including the cost of funding, such as term deposits).

The ANZ NIM has declined every quarter since the start of FY23, from 2.47% in the first quarter of FY23 to as low as 2.32% in the second quarter of FY24.

High dividend yields aren’t ideal for me

ANZ pays a high dividend yield, which may be ideal for some owners of ANZ shares.

However, as a full-time worker, I’m in the ATO tax bracket, where essentially a third of my additional income is lost to tax. Considering ANZ pays big dividends every year, I’d lose a fair amount of my return.

If my shares generate capital growth, they aren’t taxed until the asset is sold, so that is much more appealing to me. Another benefit of capital growth returns rather than dividend returns is getting a capital gains discount if I hold for more than 12 months.

Weak earnings growth expected

I don’t mind the idea of a high dividend yield if the ASX 200 share’s earnings are expected to rise significantly in the next few years.

However, due to the competitive landscape and low demand for credit amid the high cost of living, I don’t believe ANZ’s earnings will grow much in the next few years.

The broker UBS expects the bank’s FY24 and FY25 net profit after tax (NPAT) of $7 billion and $7.2 billion, respectively, to be lower than FY23’s net profit ($7.4 billion) amid the challenging conditions. It might take until FY26 for ANZ’s net profit to surpass FY23.

If profit isn’t growing, then I don’t think the ANZ share price can sustainably rise much in the next 12 months, which is one of the main reasons why I’m steering clear of buying ANZ shares.

The post 1 popular ASX 200 share I wouldn’t touch with 2 bargepoles! appeared first on The Motley Fool Australia.

More reading

• ASX 200 bank shares: How dividends offset poor capital growth over 10 years
• Is now a good time to buy this high-yield ASX dividend stock?
• Here is the earnings forecast through to 2026 for ANZ shares
• Here’s what Wilsons is saying about ANZ, CBA, NAB, and Westpac shares
• How ASX growth shares can become top dividend stocks

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 Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Do you have room in your portfolio for some new ASX shares? If you do, then it could be worth checking out the three listed below.

They have all been named as buys and tipped to generate strong returns over the next 12 months. Here’s what you need to know:

Lovisa Holdings Limited (ASX: LOV)

The first ASX share that could be a buy is fashion jewellery retailer Lovisa.

Morgans is feeling very positive about the company’s outlook and sees it as a great long-term pick due to its global expansion plans.

In fact, the broker has previously suggested that “LOV may just prove to be one of the biggest success stories in Australian retail. LOV is showing every sign of becoming a global brand.”

Morgans has an add rating and $35.00 price target on its shares. This implies potential upside of 9% for investors from current levels. It also expects a ~2.6% dividend yield to sweeten the deal further.

NextDC Ltd (ASX: NXT)

Another ASX share that could deliver big returns for investors is NextDC. It provides colocation services to local and international organisations from its growing collection of world-class Tier III and Tier IV data centre facilities across Australia and the Asia-Pacific.

It has been growing at a rapid rate for many years thanks to the insatiable demand for data centre capacity due to the shift to the cloud. The good news is that the artificial intelligence boom is expected drive a third wave of demand. This bodes well for NextDC’s growth over the next decade.

Morgan Stanley is a big fan of the company. It believes the data centre market will more than double in size by the end of the decade.

As a result, earlier this month it put an overweight rating and $20.00 price target on its shares. This suggests potential upside of almost 14% for investors.

WiseTech Global Ltd (ASX: WTC)

Finally, the team at UBS believes that WiseTech Global could be an ASX share to buy.

It is the logistics solutions company behind the CargoWise One platform. This platform is integral to the global logistics industry and used by all the big players.

In fact, strong demand for the platform from industry giants means WiseTech has been growing at a very strong rate in recent years. The good news is that UBS believes this strong form can continue.

Earlier this month, the broker put a buy rating and $112.00 price target on WiseTech Global’s shares. This implies potential upside of 14% for investors over the next 12 months.

The post 3 high-quality ASX shares tipped to generate strong returns appeared first on The Motley Fool Australia.

More reading

• Here’s how the ASX 200 market sectors stacked up last week
• Forget Nvidia: This ASX growth stock is poised for its own bull run
• These 2 ASX shares could win big time in the long term
• These are the 2 ‘best’ ASX 200 stocks to buy now for the AI megatrend: expert
• 2 highly rated ASX growth shares to buy before it’s too late

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

If you are on the lookout for the dream combination of huge gains and a juicy dividend yield, then it could be worth taking a closer look at the ASX All Ords stock in this article.

That’s because the team at Bell Potter believes that this stock could rise more than 30% over the next 12 months.

In addition, the broker is forecasting very attractive 6%+ dividend yields through to 2026.

Which ASX All Ords stock?

The ASX All Ords stock in question is Regal Partners Ltd (ASX: RPL).

It is a specialist alternative investment manager with approximately $12.1 billion in funds under management.

Regal Partners was formed in 2022 following the merger of Regal Funds Management and VGI Partners. It manages a broad range of investment strategies covering long/short equities, private markets, real and natural assets, and credit and royalties on behalf of institutions, family offices, charitable groups, and private investors.

According to the note, Bell Potter has been pleased with the company’s recent performance and feels it could be outperforming expectations in respect to performance fees. It said:

The first four months have shown strong returns for the majority of the funds in the Regal stable. We consider which funds may be generating a performance fee, both by performance and size. A recent presentation from Regal (23 May) notes that 72% of FUM is at, or within 5% of HWM, compared to 54% at December. The implication is that H1 will show strong performance fees.

We consider six of Regal’s funds and show year to date performance, fund or strategy size and attempt to estimate the size of performance fee that RPL could be generating. We estimate that from these six funds alone RPL could generate performance fees of around $55m (compared to our forecasts of $38m) with particularly strong contributions coming from the PM Capital Global companies, the Regal Australian Small Companies, Regal Tactical Opportunities and RF1 (- which including reinvestment of income is now back above its HWM). Across the entire stable of funds, we could expect the figure to be higher.

Big returns

The note reveals that Bell Potter has reaffirmed its buy rating on the ASX All Ords stock with an improved price target of $4.02.

Based on its current share price of $3.07, this implies potential upside of 31% for investors over the next 12 months.

In addition, the broker is forecasting fully franked dividends per share of 19.7 cents in FY 2024, 18.9 cents in FY 2025, and 21.7 cents in FY 2026. This equates to above-average dividend yields of 6.4%, 6.15%, and 7.1%, respectively.

Overall, the broker feels the market is undervaluing this ASX All Ords stock. It concludes:

As a result of these updates, our NPAT and adjusted EPS forecasts increase by 21.9% for FY24, 3.2% for FY25 and 2.5% for FY26. We adjust our price target to $4.02 (from $3.86 previously). We continue to favour RPL, given its strong organic & inorganic growth potential, and entrepreneurial culture. Following the acquisition of PM Capital and Taurus (50%) last year, the firm has shown an acceleration of inflows, strong investment performance and success in marketing new funds. We feel this strong performance is not reflected in the share price and see considerable upside.

The post Buy this ASX All Ords stock for a 30% gain and 6% dividend yield appeared first on The Motley Fool Australia.

More reading

• 1 popular ASX 200 share I wouldn’t touch with 2 bargepoles!
• 3 high-quality ASX shares tipped to generate strong returns
• Should you buy, hold, or sell this ASX 200 bank stock?
• 2 ASX dividend stocks to buy in June
• Here is the latest lithium price forecast through to 2027

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.

Bendigo and Adelaide Bank Ltd (ASX: BEN) shares have been on form in 2024.

Since the start of the year, the ASX 200 bank stock has risen almost 13%.

To put this into context, a $10,000 investment at the end of last year would now be worth approximately $11,300.

As a comparison, the benchmark ASX 200 index has climbed 1.8% over the same period.

But can this strong run continue or have its shares peaked? Let’s see if Bendigo and Adelaide Bank’s shares are now a buy, hold, or sell.

Where next for this ASX 200 bank stock?

According to a note out of Goldman Sachs this morning, its analysts are calling time on this bank stock’s rise.

The note reveals that the broker has reiterated its neutral rating and $10.51 price target on its shares.

Based on the current Bendigo and Adelaide Bank share price of $10.89, this implies potential downside of 3.5% over the next 12 months.

What did the broker say?

Goldman notes that the ASX 200 bank stock recently held its investor day event.

At the event, the bank reiterated its target of improving its return on equity (ROE) to above its cost of capital. The broker said:

While quantitative detail was lacking in relation to how BEN would seek to improve its ROE to being above its cost of capital, management believes i) improvements would be driven both by higher revenues and lower expenses, and ii) operating expenses will be managed at or below inflation levels.

Our Macro team currently forecasts average annual inflation of 2.8% over the four years to Jun-27. Assuming cost growth in line with inflation, FY27E GS revenues would need to be 13% higher than current GSe to reach a 50% CTI, and would translate to a 31% rise in PPOP. For Visible Alpha (VAe) consensus, FY27E revenues would need to be 17% higher, and would translate to a 41% rise in PPOP.

Neutral rating

Overall, the broker hasn’t seen anything in the investor day update to justify a more positive recommendation on the ASX 200 bank stock. It summarises:

Until we see more evidence that the company can deliver a sustained improvement in its ROE, we are reticent to capitalise the material upside to PPOP that a 50% CTI would deliver to shareholders. Therefore, with the stock implying -3% downside to our A$10.51 target price, in the middle of our A&NZ coverage, we reiterate our Neutral recommendation.

The post Should you buy, hold, or sell this ASX 200 bank stock? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• Hoping to retire? I’d buy these ASX 200 dividend shares for passive income
• ASX 200 bank shares: How dividends offset poor capital growth over 10 years
• Guess which ASX 200 mining giant could crash 30%
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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 Bendigo And Adelaide Bank. 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 on the horizon, what better time to consider making some new additions to your income portfolio.

But which ASX dividend stocks could be buys in June? Let’s take a look at two that analysts are bullish on right now. Here’s what they are saying about these income options:

Cedar Woods Properties Limited (ASX: CWP)

The team at Morgans thinks income investors should be buying this ASX dividend stock in June. It currently has the property company on its best ideas list with an add rating and $5.60 price target on its shares.

In respect to dividends, the broker has pencilled in dividends per share of 18 cents in FY 2024 and then 20 cents in FY 2025. Based on the current Cedar Woods Properties share price of $4.46, this will mean dividend yields of 4% and 4.5%, respectively.

Morgans thinks that the company’s shares are cheap and deserve to trade on higher multiples. Particularly given its improving outlook. It said:

CWP is a volume business and the demand for lots looks to be improving, with margins to invariably follow. CWP’s exposure to lower priced stock in higher growth markets sees further potential to drive earnings. On this basis, we see every reason for CWP to trade at NTA and potentially at a premium, were the housing cycle to gain steam through FY25/26.

Challenger Ltd (ASX: CGF)

Over at Goldman Sachs, its analysts think that this annuities company could be an ASX dividend stock to buy. The broker currently has a buy rating and $7.50 price target on its shares.

As for income, the broker is forecasting fully franked dividends of 26 cents per share in FY 2024, 27 cents per share in FY 2025, and then 28 cents per share in FY 2026. Based on the current Challenger share price of $6.62, this will mean dividend yields of 3.9%, 4.1%, and 4.2%, respectively.

Commenting on its bullish view, the broker said:

CGF is Australia’s largest retail and institutional annuity provider across Term and Lifetime annuities with a funds management business. We are Buy rated on the stock. We like CGF because: 1) it has exposure to the growing superannuation market across Life and Funds Management; 2) higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins; 3) its annuity book growth looks well supported through a diversified distribution strategy.

The post 2 ASX dividend stocks to buy in June 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 recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.