Category: Stock Market

Baby Boomers and Gen X Australians both consider superannuation and property as the top investment options for lifetime wealth-building, according to a survey by financial advisory company Findex.

The survey showed that 40% of Baby Boomers and 29% of Gen X rated superannuation as their no. 1 investment option.

Property also scored highly, with 37% of Boomers and 28% of Gen Xers rating it their preferred investment asset class.

Varying approaches to retirement savings

While both age cohorts valued superannuation highly, Findex investment relations head Matthew Swieconek said they typically took different approaches to growing their retirement savings.

Swieconek said Baby Boomers often had a more passive approach.

Having benefited from a strong jobs market and the longest access to compulsory superannuation contributions, they “may prioritise capital preservation and income generation in their investment choices”, Swieconek said.

Generation X might feel less confident about their retirement security whilst juggling higher living costs, stagnant long-term wages growth and large mortgage repayments due to higher interest rates.

“They may be more risk-averse and seek a balance between growth and stability in their super investments,” he said.

Let’s talk superannuation

The Baby Boomers were born between 1946 and 1965, and Gen X was born between 1966 and 1980.

Superannuation was introduced in Australia in 1992. Most superannuation funds are primarily invested in ASX shares and international equities.

Younger Australians may choose to invest in more aggressive ‘growth’ super funds to maximise their earnings. With a longer runway to retirement, they can tolerate higher risk for higher rewards.

In 2023, Chant West figures showed the standard growth superannuation fund (61% to 80% growth assets like ASX shares), returned a median 9.9%. ‘High growth’ funds (81% to 95% growth assets) returned 11.4%.

Baby Boomers may switch from growth to ‘balanced’ or ‘conservative’ funds to preserve more of their capital. According to Chant West, the standard ‘balanced’ superannuation fund (41% to 60% growth assets) returned 8.1% in 2023, and conservative funds returned 6.2%.

Key actions to ensure a secure retirement

Findex recommends the following key investment actions for Baby Boomers and Gen X Australians to take now to ensure an excellent retirement down the track.

Baby Boomers  

Findex recommends the following five actions for Baby Boomers to retire well:

1. Pre-retirement super boost: Maximize your superannuation balance before retirement by utilising catch-up contributions and considering strategies like downsizing contributions.  
2. Legislative changes: Stay informed about changes in superannuation and retirement income policy to adjust your strategy accordingly.  
3. Retirement income planning: Engage with a financial advisor to develop a sustainable retirement income strategy, considering the transition to retirement pensions or annuities.
4. Prepare the next generation: Consider introducing your kids to a trusted financial advisor to help make financial advice more affordable and accessible for them.
5. Legacy planning: Focus on estate planning and how your superannuation benefits will be managed and distributed.  

Gen X 

Findex recommends the following actions for Gen Xers to retire well:

1. Maximising superannuation contributions: Enhancing both concessional and non-concessional super contributions can be a great way to build retirement savings toward the peak earning years.  
2. Review your super investments: Seek advice to refine your superannuation strategy, focusing on investment selection within super, tax planning, and retirement income streams.  
3. Healthcare and insurance: Review your insurance needs within superannuation to ensure adequate coverage, as health concerns may become more prominent.  
4. Consider borrowing to invest: Known as gearing, borrowing money to invest can help boost your portfolio. However, due to its high-risk nature, talk to a financial advisor to ensure this is right for you.
5. Estate planning: Start planning for your wealth transfer to ensure your super and other assets are distributed according to your wishes.  

The post Key actions for Baby Boomers and Gen X to take now for an excellent retirement appeared first on The Motley Fool Australia.

More reading

• 1 compelling ASX dividend share I’d buy for its big yield
• Telstra shares and 4 other defensive income stocks to buy now
• $20,000 invested in these ASX 200 shares 10 years ago is worth…
• Here’s the Westpac dividend forecast through to 2027
• Top ASX shares to buy for your superannuation fund in May 2024

Motley Fool contributor Bronwyn Allen 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.

ASX dividend shares can be really appealing to investors looking for cash flow via passive income. There are plenty of stocks with a high dividend yield, but I’m going to write about one particular name in this article: APA Group (ASX: APA).

The business is not exactly a household name. It has a huge gas pipeline across the country which transports half of the country’s usage. APA owns gas storage, processing and gas-powered energy generation facilities. The business also owns electricity transmission, solar and wind assets.

There are a few compelling reasons why the ASX dividend share could be a compelling high-yield investment.

Appealing dividend yield and track record

The APA share price has declined by 16% in the last year, as we can see on the chart below.

APA already had a solid dividend yield before the drop and it has been boosted by having a cheaper valuation. For example, if a business has a 6% dividend yield and then the share price falls 10%, the yield becomes 6.6%.

The energy infrastructure giant has guided its distribution is expected to be 56 cents per security in FY24, which translates into a dividend yield of 6.4%.

APA has grown its distribution every year for the past 20 years, which is one of the best consecutive payout growth streaks on the ASX.

The estimate on Commsec suggests the business could grow its distribution to 57.5 cents per security in FY25, which would be a distribution yield of 6.6%.

Investing for growth

The ASX dividend share is benefiting from the fact that it has stable and growing revenue. Over 90% of its revenue is linked to inflation, which has obviously been elevated in recent years.

But it’s not just sitting there with its existing assets. The distributions to investors are paid from cash flow, which is steadily growing as more of its projects are finished and become operational. It has a distribution payout target of 60% to 70% of free cash flow.

In the recent Macquarie Australia Conference, the business said it had a “strong pipeline” of growth opportunities between FY24 to FY26, totalling more than $1.8 billion.

Increasing energy demands

I’m not exactly sure how Australia’s energy situation is going to evolve in the coming decades, but Labor recently said that gas will be part of the picture in 2050 and potentially beyond.

As a major pipeline owner, the ASX dividend share has an important role in the future of gas in the country. But it’s investing in other areas too, including a growing portfolio of renewable energy generation and electricity transmission assets. APA is also investigating the potential for pipelines to carry hydrogen, though that’s not a core part of the thesis for me.

Australia’s energy demands are growing, with data centres expected to be a major contributor to that. This could be another help for overall energy demand.

I’m not expecting explosive growth for APA, but the business could continue to play an important part in Australia’s energy mix, enabling ongoing shareholder payouts.

The post 1 compelling ASX dividend share I’d buy for its big yield 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 positions in and has recommended Apa Group. 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 are among five ASX defensive stocks that Shaw and Partners portfolio manager James Gerrish recommends amid today’s share market volatility.

As the chart below shows, the S&P/ASX 200 Index (ASX: XJO) has weakened since hitting its all-time peak of 7,910.5 points on 2 April.

In a recent Market Matters newsletter, Gerrish said he was still bullish on equities but pointed out that ASX defensive shares were a good way to hedge your bets (just in case your plans go pear-shaped!)

Gerrish said:

As equities have struggled over recent weeks, we’ve been asked several times whether this was a good time to allocate additional capital into the market …

… we are still bullish towards equities over the medium term primarily because we see interest rate cuts unfolding over the next 12-18 months, a very bullish backdrop for stocks.

However, Gerrish said successful investing required preparation for good and bad eventualities.

… obviously, not all stocks/sectors move as one, and if we are wrong and stocks are going to enter a tough few years, the defensive end of town should, in theory, outperform.

Fundie backs Telstra shares and 4 other defensive stocks

Gerrish and his Market Matters funds management team have provided an update on how they view the following five well-known ASX defensive shares. They are listed below in order of the team’s preference.

AGL Energy Ltd (ASX: AGL) shares

Market Matters is long and bullish on AGL shares. The team likes AGL for its future yield expansion and potential capital gain. Market Matters holds AGL shares in the Active Income Portfolio.

APA Group (ASX: APA) shares

Market Matters is also long and bullish on APA shares and holds the stock in the same portfolio. The team believes the risk vs. reward is attractive below $8.50 per share for this infrastructure stock.

Gerrish says:

The infrastructure stock has been under pressure for almost two years, falling over 36% from its lofty 2022 high above $12.

The stock has been weighed down by several headwinds, but if we are correct and central banks start cutting rates in 2024/5, it will finally enjoy a macro tailwind that should support it.

We continue to see value in APA as a defensive infrastructure holding, supported by its sustainable and growing yield in the 6-7% region.

Metcash Ltd (ASX: MTS) shares

Gerrish says his team’s positive view on Metcash shares is predicated on the company’s growing proportion of earnings coming from higher growth areas such as hardware.

Market Matters is also long and bullish on Metcash shares. The team reckons it is cheap compared to its peers and offers good value around the $3.80 mark.

Telstra Group Ltd (ASX: TLS) shares

The Market Matters team likes Telstra shares for yield and holds a long position in its Active Income Portfolio.

Gerrish explains their view on the ASX 200 telco:

We bought TLS at good levels in 2021, and it has been delivering a solid yield since.

TLS has been nudging 12-month lows over recent weeks, which is rarely a good sign. As it approaches $3.50, we believe value is returning to the telco, but … TLS needs to address costs to regain investor confidence.

Woolworths Group Ltd (ASX: WOW) shares

Market Matters is “cautiously bullish” on Woolworths shares at about the $31 per share mark.

Gerrish said the market had lost confidence in the company, with CEO Brad Banducci’s recently exiting.

He said:

The supermarkets find themselves in the unenviable political crosshairs ahead of a tight election. They are accused of price gouging when the cost of living pressures are extreme.

New CEO Amanda Bardwell may have inherited WOW at a good time to turn the company’s fortunes around. Their 1H24 result in February was a disappointment, and the stock hasn’t recovered since.

Over the past 5-years, WOW has traded on average PE multiple of 23.85x, but has seen extremes of 31x and 19x.

Currently, WOW trades on 21x earnings making it 11% ‘cheap’ vs. history, and we believe it is likely to be a decent turnaround story in 2025.

Foolish takeaway

Gerrish concludes by saying it’s too early in the cycle to be aggressively overweight in ASX defensive stocks.

However, some value is presenting itself with Telstra shares and the other four ASX shares listed above.

The post Telstra shares and 4 other defensive income stocks to buy now appeared first on The Motley Fool Australia.

More reading

• Which of these ASX 200 shares is the better bargain in May?
• 4 ASX retirement shares to buy in May
• Are Telstra shares a top buy for dividend income?
• Here are the top 10 ASX 200 shares today
• Buy Rio Tinto and these ASX 200 dividend stocks for a passive income boost

Motley Fool contributor Bronwyn Allen 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 Apa Group and Telstra Group. 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.

I’m a big fan of buy and hold investing and believe it is one of the best ways to grow your wealth.

This is because it allows investors to take advantage of the power of compounding. This is what happens when you generate returns on top of returns.

To demonstrate just how successful this investment strategy can be with ASX 200 shares, I like to look at how much a single $20,000 investment in certain shares 10 years ago would be worth today.

Let’s now see how investments in these three shares have fared during this time:

Cochlear Limited (ASX: COH)

It is fair to say that this manufacturer and distributor of cochlear implantable devices for the hearing-impaired has been a great ASX 200 share to own over the last decade.

Due to its industry-leading position, sizeable investment in research and development, its wide distribution network, and ageing populations across the globe, Cochlear has delivered consistently strong sales and earnings growth.

This has led to Cochlear’s shares providing investors with an average total return of 19.4% per annum over the last 10 years. This would have turned a $20,000 investment into almost ~$120,000 today.

NextDC Ltd (ASX: NXT)

Another ASX 200 share that has been lighting up the ASX boards over the past decade has been data centre operator, NextDC.

Thanks to strong demand for capacity in its data centres due to the structural shift to the cloud, and now the artificial intelligence boom, its revenue and operating earnings have been growing at a rapid rate.

This has led to the ASX 200 share outperforming the market since 2014 with an average total return of 26.1% per annum. This means that a $20,000 investment in NextDC shares back then would have grown to be worth just over $200,000 today.

Northern Star Resources Ltd (ASX: NST)

Finally, this gold mining giant has been a star performer on the ASX 200 over the past 10 years.

This has been underpinned by the company’s transformation from a relatively small gold miner to one of the largest in the industry. A booming gold price has also been very helpful in recent times, driving its shares 30% higher over the last six months.

This has led to the company’s shares smashing the market return since 2014. Over the period, Northern Star’s shares have generated an average return of 30.5% per annum. This would have turned a $20,000 investment into almost $290,000 today.

The post $20,000 invested in these ASX 200 shares 10 years ago is worth… appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today

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

Westpac Banking Corp (ASX: WBC) shares were in the spotlight last week when Australia’s oldest bank released its eagerly anticipated half year results.

For the six months ended 31 March, Westpac reported a net profit before one-offs came in at $3,506 million.

This is an 8% decline on the prior corresponding period but a far more modest 1% reduction on the second half of FY 2023.

Despite the softer profits, the Westpac board decided to reward its shareholders with a dividend increase. The bank declared a fully franked interim dividend of 75 cents per share, which is a 7.1% increase on the prior corresponding period.

But the Westpac board didn’t stop there. Thanks to its strong balance sheet, it added a surprise 15 cents per share special dividend into the mix, as well as an additional $1 billion on-market share buyback.

Unfortunately for income investors, Westpac’s shares have now traded ex-dividend for both its interim dividend and special dividend. This means it is too late to receive these payouts unless you were a shareholder before the ex-dividend date.

But don’t worry, there are more dividends on the way. But how big will they be? Let’s take a look at what analysts are forecasting for the Westpac dividend following this result.

Westpac dividend forecast

According to a note out of Goldman Sachs, its analysts have lifted their Westpac dividend estimates in response to its half year results.

The note reveals that Goldman now expects a fully franked $1.65 per share dividend in FY 2024. Based on the current Westpac share price of $26.66, this equates to a 6.2% dividend yield.

Looking ahead, the broker now expects a $1.50 per share fully franked dividend in FY 2025. This is up from its previous estimate of $1.44 per share and represents a 5.6% dividend yield.

It is the same story in FY 2026, with Goldman now expecting another $1.50 per share dividend instead of $1.44 per share previously. This will mean another attractive 5.6% dividend yield for income investors that year.

This trend is expected to continue in FY 2027, with its analysts pencilling in another $1.50 per share fully franked dividend. This of course represents a third consecutive 5.6% dividend yield for investors to look forward to.

Overall, the outlook for the Westpac dividend has improved since the release of the bank’s results and above-average yields are on the cards for the foreseeable future.

The post Here’s the Westpac dividend forecast through to 2027 appeared first on The Motley Fool Australia.

More reading

• Top ASX shares to buy for your superannuation fund in May 2024
• Here are 2 top ASX 200 shares I’d buy now for passive income
• It was huge week for ASX 200 bank shares. Here’s why
• Why Baby Bunting, JB Hi-Fi, Temple & Webster, and Westpac shares are falling today
• Why are Westpac shares slumping 5% on Thursday?

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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.

Deciding which ASX shares to buy for your superannuation fund is not easy. After all, you have toiled all your working life to earn this money, and hopefully, it will afford you a happy, financially secure, and stress-free retirement.

Likewise, your super investment is not something you should constantly meddle with. This means you’ll want the ASX shares within it to be high-quality companies you can hold for the long term — not risky stocks you need to dip in and out of regularly.

Whether you run your own self-managed super fund (SMSF) or simply like to add a few personal touches to your retail super fund, read on!

Because we asked our Foolish contributors which ASX shares they reckon deserve a place in your superannuation fund in May.

Here is what the team came up with:

6 best ASX shares for your super fund right now (smallest to largest)

• VanEck Morningstar Wide Moat ETF (ASX: MOAT), $891.95 million
• Collins Foods Ltd (ASX: CKF) $1.10 billion
• iShares S&P 500 ETF (ASX: IVV), $7.74 billion
• Medibank Private Ltd (ASX: MPL), $10.05 billion
• Coles Group Ltd (ASX: COL), $21.75 billion
• Westpac Banking Corp (ASX: WBC), $92.60 billion

(Market capitalisations as of market close 10 May 2024).

Why our Foolish writers rate these ASX stocks as super!

VanEck Morningstar Wide Moat ETF

What it does: This ASX exchange-traded fund (ETF) gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages.

By James Mickleboro: There are few better investors to follow in the footsteps of than Warren Buffett. Since the 1960s, the Oracle of Omaha has consistently beaten the market and delivered outsized returns for his Berkshire Hathaway business.

The remarkable thing is that Buffett hasn’t achieved his success by using complex investment strategies. His approach is about as simplistic as it gets on the stock market, and time and time again, he has beaten the market.

Buffett does this by buying high-quality companies with sustainable competitive advantage at fair prices. The VanEck Morningstar Wide Moat ETF replicates this strategy, making it super easy for investors to invest in companies that Buffett would buy without having to do any research.

Over the past decade, the index this ETF tracks has generated an average total return of 16% per annum, significantly better than the long-term market average of 10% per annum.

Motley Fool contributor James Mickleboro does not own units of the VanEck Morningstar Wide Moat ETF.

Collins Foods Ltd

What it does: Collins Foods is a major franchisee of KFC outlets in Australia and owns a growing network of KFCs in Germany and the Netherlands. The company is also responsible for the Taco Bell chain in Australia.

By Tristan Harrison:  I’ve long admired the simple growth potential of this ASX 200 company and recently bought shares. I decided to take advantage of the more than 20% decline in the Collins Foods share price since January.

What’s simple about the growth? The company just needs to keep opening/acquiring new locations to grow its scale.

The HY24 result showed everything I think Collins is capable of continuing into the future. Revenue rose 14.3%, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) increased 16.7%, and underlying net profit went up 28.7%. Seeing the profit levels rise (noticeably) faster than revenue is a good sign for future profit scaling of the business.

KFC Australia saw a same-store sales (SSS) growth of 6.6% in HY24, while KFC Europe’s SSS growth was 8.8%. That’s a solid organic growth rate without taking into account any new stores.

Collins Foods opened four new KFC locations in Australia in HY24 and eight in the Netherlands. I think Europe’s large population gives the company a long growth runway.

In terms of the dividend, the annual payout has increased every year over the past decade. The current grossed-up dividend yield is around 4.25%.

Motley Fool contributor Tristan Harrison owns shares of Collins Foods Ltd. 

iShares S&P 500 ETF

What it does: The IVV ETF is a low-cost, index-based ASX ETF that tracks the performance of the 500 largest United States companies comprising the S&P 500 Index (SP: .INX).

By Bronwyn Allen: I like the kind of stocks you can buy and hold forever for my superannuation fund. My super is a long-term savings vehicle for my retirement, so I want it full of boring yet reliable long-term growth stocks.

And it helps that the world’s most successful investor, Warren Buffett, has long recommended that no-fuss investors like me avoid individual stock picking and just consistently throw money into low-cost S&P 500 index funds instead.

He says: “Just keep buying. American business is going to do fine over time, so you know the investment universe is going to do very well.” Buying the IVV ETF means owning a slice of mega global companies like Microsoft, Apple, Nvidia, Amazon, Alphabet, and Meta Platforms.

The IVV ETF is also one of the 10 cheapest ETFs on the ASX with a management expense ratio (MER) of 0.04%, so it fits Buffett’s brief very well.

The iShares S&P 500 ETF share price is currently $52.61, up 29% over the past 12 months and it’s 91% higher over five years.

Motley Fool contributor Bronwyn Allen does not own units on the iShares S&P 500 ETF. 

Medibank Private Ltd

What it does: Medibank Private is Australia’s largest private health insurance provider in the country. More than 4 million people entrust their health coverage to Medibank or its more affordable Ahm label.

By Mitchell Lawler: Health insurance is an industry where size matters. The more members an insurer has, the greater its bargaining power to secure better arrangements with hospitals and other health-based organisations.

It’s a flywheel effect: More members lead to better prices, which in turn generates more members. Once that flywheel is spinning, competitors can struggle to keep pace.

Importantly, Medibank Private is a business that I see being as relevant in 30 years as it is today. That’s critical when it comes to holding compounding investments inside a superannuation fund.

The last thing anyone wants is a chunk of their retirement being vaporised in a business that goes bust. In my opinion, the odds of that happening to Medibank are minuscule.

Motley Fool contributor Mitchell Lawler does not own shares of Medibank Private Ltd.

Coles Group Ltd

What it does: Coles is the second-largest supermarket operator in Australia, with a huge network of stores around the country. Coles also owns the bottle shop chains Liquorland, Vintage Cellars, and First Choice.

By Sebastian Bowen: The qualities investors typically look for in shares to include in a superannuation fund are stability, certainty, and a reliable dividend. Coles arguably offers all three in spades.

Coles is a consumer staples stock, meaning it sells goods we all need, rather than necessarily want.

It’s hard to imagine a future where a decent chunk of the Australian population doesn’t visit Coles to buy food and drinks or stock up on household essentials. As long as there is a local Coles offering these goods at a relatively low cost, Australians will visit it on a regular basis.

This makes Coles’ earnings base highly defensive, which should help anyone with this company in a super fund sleep well at night.

Coles has also built up a very strong dividend track record since it was listed on the ASX back in late 2018. The company has yet to deliver a dividend cut and has increased its annual dividends every year since its ASX debut.

At recent pricing, investors can grab Coles shares with a fully franked dividend yield of more than 4%.

Motley Fool contributor Sebastian Bowen does not own shares of Coles Group Ltd.

Westpac Banking Corp

What it does: Established in 1817 as the Bank of New South Wales, Westpac provides a range of consumer, business, and institutional banking and wealth management services. It has operations throughout Australia, New Zealand, and the near Pacific region.

By Bernd Struben: I think Westpac shares deserve a place in most every superannuation portfolio.

The big four bank recently completed all 354 activities of its risk transformation plan, improving its risk governance. Westpac today is a simpler and stronger business than it was in recent years.

And I was pleasantly surprised by Westpac’s first-half results.

Despite an inflation-exacerbated 8% increase in half-year operating expenses to $5.40 billion, Westpac’s $3.51 billion net profit, excluding notable items, was down only 1% year-on-year. And with Australia’s economic growth forecast to rebound to 2.5% in 2025, the bank looks well placed to increase those profits.

Atop announcing a share-price-boosting additional $1 billion worth of on-market share buybacks, management also declared an interim dividend of 90 cents per share. Westpac shares now trade on a fully franked trailing yield of 5.5%.

The Westpac share price is up 26% in 12 months.

Motley Fool contributor Bernd Struben does not own shares of Westpac Banking Corp.

The post Top ASX shares to buy for your superannuation fund in May 2024 appeared first on The Motley Fool Australia.

More reading

• Here’s the Westpac dividend forecast through to 2027
• Here are 2 top ASX 200 shares I’d buy now for passive income
• It was huge week for ASX 200 bank shares. Here’s why
• If I’d put $5,000 in iShares S&P 500 ETF (IVV) at the start of 2024, here’s what I’d have now
• Which of these ASX 200 shares is the better bargain in May?

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. 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, Nvidia, and iShares S&P 500 ETF. 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 positions in and has recommended Coles Group. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Collins Foods, Meta Platforms, Microsoft, Nvidia, VanEck Morningstar Wide Moat ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to reliable passive income, Aussie investors have a large field of quality dividend stocks to choose from.

In narrowing the field down to just two, I’ve limited myself to S&P/ASX 200 Index (ASX: XJO) dividend stocks.

That’s because the bigger companies tend to have less volatile share price moves. And their dividend payouts tend to be more reliable than some of their smaller peers.

I’ve also drilled down to ASX 200 companies that pay fully franked dividends. This should see me holding onto more of my passive income at tax time. In the long term, those franking credits can make a particularly big difference in retirement.

And while two stocks aren’t enough to offer proper diversification, I do want to ensure that both ASX 200 shares I’d buy now for passive income operate in distinctly different markets.

Finally, I need to keep in mind that future yields may be higher or lower than past yields, depending on a range of company-specific and macroeconomic factors.

With that out of the way…

Two ASX 200 stocks for outsized passive income

The first company I’d buy now for passive income is ASX 200 mining stock Fortescue Metals Group Ltd (ASX: FMG).

Fortescue enjoyed a strong first half of FY 2024.

For the six months ending 31 December, the company reported a 41% year on year increase in net profit after tax (NPAT) to US$3.3 billion.

In light of the profit surge, management boosted the interim dividend by 44% from the prior year to $1.08 per share. Eligible investors will have received that payout on 27 March.

Fortescue also paid a final dividend of $1.00 per share on 28 September.

That brings the full year’s passive income payout from the ASX 200 miner to $2.08 per share.

At Friday’s closing price of $26.21 a share, this dividend gem trades on a fully franked trailing yield of 7.9%.

Which brings us to the second company I’d buy now for outsized passive income, ASX 200 bank share Westpac Banking Corp (ASX: WBC).

Westpac reported its half-year results this past week.

Despite the big four bank’s net profit before one-offs declining 8% year on year to $3.51 billion, management declared an interim dividend of 75 cents per share as well as a 15 cents per share special dividend, both fully franked.

At 90 cents per share, that’s up almost 29% from last year’s interim dividend. This is the kind of growth I like to see. It’s too late to snag that payout, but investors who owned shares at market close on Tuesday 7 May, can expect to be paid on 25 June.

Westpac shares also delivered a final dividend of 72 cents a share, paid on 19 December.

That brings the bank’s full-year passive income payout to $1.62 a share.

At Friday’s closing price of $26.66, Westpac shares trade on a fully franked trailing yield of 5.5%.

The post Here are 2 top ASX 200 shares I’d buy now for passive income appeared first on The Motley Fool Australia.

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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 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 post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

It’s been a pleasant Friday for the S&P/ASX 200 Index (ASX: XJO) and most ASX 200 shares today. At the close of trading, the ASX 200 had gained 0.35% and was back above 7,740 points. But let’s talk about what went on with the ResMed Inc (ASX: RMD) share price.

Resmed shares performed slightly better than the broader market. The ASX 200 healthcare stock closed 0.43% higher at $32.34 after rising even higher this morning to $32.71 a share, a gain worth just over 1.5% at the time.

This green day for Resmed came despite some potentially difficult news for investors to digest.

According to a United States Securities and Investments Commission (SEC) filing, ResMed CEO Michael J. Farrell has just sold a significant chunk of shares.

Remember, Resmed is a dual-listed share and has a home both on the ASX and the New York Stock Exchange under the ticker ResMed Inc (NYSE: RMD). The company’s base is also in America, in the Californian city of San Diego.

This SEC filing shows that Farrell disposed of 14,683 Resmed shares on 7 May (US time) this week.

These sales were executed at an average share price of US$216.50. That means Farrell would have bagged a cool US$3,178,815, which is approximately $4.81 million in our local currency.

There was no explanation given for these Resmed share sales. However, the plot thickens when we examine another two transactions reported on the same day.

Why has the ResMed CEO been selling shares?

The filing also shows that Farrell acquired 14,683 shares on 7 May. So Farrell has apparently bought and then sold $4.81 million worth of Resmed shares on the same day.

Well, not quite. The acquisition price of these shares was listed as US$84.98 – a far cry from the US$216.50 selling price. This implies that these shares were converted from options that the CEO possessed.

It appears that Farrell’s options were exercised and converted into ordinary Resmed shares, which were promptly sold.

Should investors be worried?

Well, that’s up to them. All investors like to see their company’s management teams align themselves financially with investors as much as possible. That means owning as many shares as they can. When CEOs and other senior management figures sell out of said shares, it can cause some understandable consternation.

However, it must also be remembered that most managers tend to try to follow the rules of good wealth management, which most would agree includes at least somewhat diversifying one’s wealth. Unless you’re Warren Buffett, having most of your net worth tied up in one stock investment is rarely a good idea.

This might be a case of Farrell doing just that when it comes to Resmed shares. Perhaps the CEO has a large tax bill coming up or wants to buy a new house.

Before investors follow Farrell and sell out of their shares (which doesn’t appear to be happening anyway, judging by the recent share price performance), keep in mind that Farrell still owns a significant chunk of the company.

The SEC filing shows that the CEO retains 440,752 Resmed shares (presumably the NYSE-listed stock) even after this week’s sale. Those would have a value of US$95.57 million today.

The post Resmed share price higher despite CEO hitting sell on 14,683 shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It has been another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Neuren Pharmaceuticals Ltd (ASX: NEU)

According to a note out of Bell Potter, its analysts have retained their buy rating on this pharmaceutical company’s shares with a slightly trimmed price target of $26.50. This follows the release of an update on Daybue sales in the United States. While those sales were just short of guidance, this was driven by pre-flagged seasonality impacts. The good news is that FY 2024 guidance remains unchanged. In light of this, Bell Potter is expecting another standout year for Neuren. In addition, the broker is eagerly awaiting phase 2 clinical readouts from the company’s second drug candidate, NNZ-2591. It notes that Pitt Hopkins Phase 2 results are due in the current quarter, followed by Angelman results in the third quarter. The Neuren share price is trading at $19.00 on Friday.

REA Group Ltd (ASX: REA)

A note out of Morgan Stanley reveals that its analysts have reaffirmed their overweight rating and $210.00 price target on this property listings company’s shares. This follows the release of a quarterly update which revealed very strong sales and earnings growth from the realestate.com.au operator. The broker notes that REA Group slightly outperformed analyst expectations. It also significantly outperformed its closest rival, which is cementing its market leadership position further. This bodes well for the future and supports the broker’s forecast for further solid growth in the near term. The REA share price is fetching $187.43 this afternoon.

TechnologyOne Ltd (ASX: TNE)

Analysts at Goldman Sachs have retained their buy rating on this enterprise technology company’s shares with an improved price target of $18.10. The broker has been looking ahead to TechnologyOne’s half year results release later this month. It is expecting the company to report annual recurring revenue growth of 35%, which will be a touch ahead of consensus estimates. All in all, the broker believes the company is performing above expectations for ARR and earnings growth and that this is not being fully reflected in its valuation. As a result, Goldman believes that now would be a good time for investors to snap up its shares. The TechnologyOne share price is trading at $16.36 on Friday afternoon.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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