Category: Stock Market

S&P/ASX 200 Index (ASX: XJO) stock Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has just received major backing from one of its leadership figures with share purchases.

Robert Millner has been a non-executive director of the business since 1984, and the chair since 1998. Lewy Pattinson listed Soul Patts (as a pharmacy business) in 1903. Rob Millner is Lewy’s great-grandson and is the fourth generation of the family to chair the company.

Millner recently increased his already-sizeable stake in the company.

Insider buying

It was announced yesterday that entities related to Rob Millner had bought a total of 520,000 Soul Patts shares between 2 April 2024 to 4 April 2024.

The first investment to buy 181,635 shares on 2 April 2024 cost $6.15 million, the second investment to buy 218,365 shares cost $7.33 million, and the third investment to acquire 120,000 shares amounted to $4.1 million.

Those three on-market trades cost around $17.6 million in total. Typically, insiders buying shares on the market may suggest they think the share price is good value.

By most people’s standards, that’s a huge investment and provides backing to the ASX 200 stock.

Significant ownership

Millner’s latest investments are large transactions, but they represent a small amount of his overall ownership of Soul Patts shares.

According to the ASX announcement, Millner now has a direct interest in 371,076 Soul Patts shares and indirect interests in 22,459,692 shares.

At the current Soul Patts share price, all of those shares are worth $783 million.

Ex-dividend date approaching

Interestingly, this investment was made just before the ex-dividend date for the interim dividend, which is the cut-off date for eligibility to receive the upcoming dividend.

The payout from the ASX 200 stock is going to be 40 cents per share – the ex-dividend date is 17 April 2024, so investors have until 15 April 2024 to acquire shares if they want a piece of that payout.

The business recently reported its FY24 first-half result, which came with two important positives. Soul Patts’ net cash flow from its investments grew by 6.9% to $263.4 million for the six-month period – it uses this cash flow to fund larger dividends. The net cash flow grew thanks to continued growth of the credit portfolio and income from its strategic portfolio (where it owns large stakes in some businesses).

The HY24 pre-tax net asset value (NAV), meaning the underlying value, grew by 10% to 10.5 billion.

The ASX 200 stock’s active management style aims to deliver returns that are better than the market.

The post Guess which ASX 200 insider has bought $17 million of company shares before the ex-dividend date appeared first on The Motley Fool Australia.

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More reading

• The best ASX buys I’d grab to beat the market without a tonne of risk
• 2 ASX shares I plan to hold til I’m 100
• 2 safe ASX dividend shares that have paid income for decades
• This ASX 200 stock is down 11% in under a month. Should you buy before it trades ex-dividend?
• Where I’d instantly invest $10,000 in ASX shares for passive income

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Bank of Queensland Ltd (ASX: BOQ) shares are under pressure on Tuesday afternoon.

At the time of writing, the ASX 200 bank share is down over 1% to $6.12.

Why is this ASX 200 bank share falling?

The weakness in the Bank of Queensland share price today could have been driven by a bearish broker note out of Goldman Sachs this morning.

According to the note, the broker believes investors should be selling the ASX 200 bank share ahead of the release of its half-year results release later this month.

Goldman is expecting the bank’s earnings to come in well short of expectations during the first half.

For example, its analysts have pencilled in cash earnings of $154 million for the half. This is 6.1% lower than the consensus estimate of $164 million.

In light of this, it also expects the ASX 200 bank share’s dividend to disappoint. Goldman is forecasting an interim dividend of 16 cents per share, which is 7.5% lower than the consensus estimate of 17.3 cents per share.

This is expected to be driven by a combination of lower than consensus average interest earning assets and a softer than expected net interest margin (NIM).

Major downside

Goldman has reiterated its sell rating with a price target of $5.04. Based on where the ASX bank share currently trades, this implies 18% downside for investors.

Its analysts explained their bearish stance of Bank of Queensland. They said:

BOQ is an Australian bank offering retail and commercial banking, financial services and insurance. We are Sell-rated on BOQ given: i) while the company’s transformation program is the right long-term strategy to deliver a strong and simpler bank, we believe it does leave the bank more exposed to inflation in third party distribution costs, and ii) we are concerned by the operational risks and costs pressures involved in undertaking such an initiative, furthermore iii) BOQ’s volume momentum remains weak, and while this is partly due to management’s efforts to protect profitability, BOQ’s FY23/2H23 NIM fell materially (notably below market expectations) and we do not expect margin pressures to ease given the current challenging environment (intense competition in both lending and deposits). Our 12-month target price offers downside to the current share price, towards the bottom end of our A&NZ Financials coverage.

All in all, the broker feels that this is one ASX 200 bank share that investors should stay away from right now.

The post This ASX 200 bank share could drop 20%! appeared first on The Motley Fool Australia.

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More reading

• Should you wait for a dip to buy ASX 200 bank shares?

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

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A return to US$100 oil prices would certainly be welcomed by investors in S&P/ASX 200 Index (ASX: XJO) energy stocks.

Except, perhaps, when they stop at the servo to fill up their cars.

Atop oil and gas prices, a number of other factors will impact how the big ASX energy shares perform over the months ahead.

Woodside Energy Group Ltd (ASX: WDS) shares, for example, could face some headwinds following the recent political shakeup in Senegal.

The ASX 200 energy share’s Senaglaese-based Sangomar project could be forced to give more to the government. This news came after newly elected president Bassirou Diomaye Faye said, “The exploitation of our natural resources, which according to the constitution belong to the people, will receive particular attention from my government.”

Santos Ltd (ASX: STO), which earlier this year was in failed merger discussions with larger rival Woodside, is now looking to recoup costs incurred from the lengthy legal delays to its offshore Barossa LNG project.

And Beach Energy Ltd (ASX: BPT) shares got pummelled last week after the company reported on major cost blowouts at its Waitsia joint venture project in the Perth Basin.

With that said, all three ASX 200 energy stocks would benefit from a soaring oil price.

ASX 200 energy stocks and US$100 per barrel oil

International benchmark Brent crude oil has been marching higher throughout 2024.

The Brent crude oil price kicked off the year at US$76 per barrel and has since soared 20% to trade for just under US$91 per barrel today.

On the demand side of the equation, global oil demand is expected to increase modestly in 2024 from last year.

But the price pressure lifting the oil price, and potentially ASX 200 energy stocks like Woodside, Beach Energy and Santos, is coming more from the supply side.

Part of that comes from the ongoing output cuts from the Organization of Petroleum Exporting Countries and their allies (OPEC+).

Costs and investor jitters are also rising amid the escalation of Houthi attacks on ships in the crucial Red Sea corridor.

Then there are the existing sanctions on Russian oil exports and potential new ones the United States is considering implanting on oil-rich Venezuela.

Mexico is also cutting its oil exports, with Bloomberg reporting a 35% decrease in Mexican oil shipments in March.

If that’s not enough, the Middle East conflict could expand to a broader war between Iran and Israel. Israeli Prime Minister Benjamin Netanyahu said his nation would respond to any attack from Iran.

“The way in which I think it really impacts the broader oil balances is whether Israel responds by looking to attack Iranian energy infrastructure,” Greg Sharenow, head of commodity portfolio management at Pacific Investment Management said (quoted by Bloomberg).

Indeed, such a response could send global oil prices soaring and see investors bidding up ASX 200 energy stocks amid hopes of higher profits and dividends.

Ed Morse, a senior adviser at Hartree Partners, added, “What is underpinning the move is financial markets. With the rise in tensions in the Middle East, there certainly is an increase in call buying for Brent.”

With this picture in mind, the US Energy Information Administration now expects global crude inventories to fall by 900,000 barrels a day.

As for ASX 200 energy stocks enjoying a return to US$100 per barrel oil, Bob McNally, founder of Rapidan Energy Group said:

It is a market on firm fundamental footing, no question. I think $100 oil is entirely real; it just requires a little more risk pricing on the true geopolitical risk.

The post How ASX 200 energy stocks could soon enjoy US$100 oil prices appeared first on The Motley Fool Australia.

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More reading

• Better ASX stock: Woodside vs Telstra
• In this bull market, where are the bargain buys to be found?
• 5 things to watch on the ASX 200 on Tuesday
• Why APM, Azure Minerals, Beach Energy, and Elders shares are crashing today
• Guess which ASX 200 energy share is imploding 18% today on cost blowouts

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.

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The market may be on form again on Tuesday and charging 0.5% higher, but that’s nothing compared to some of the gains being made in the mining sector today.

For example, the two ASX mining stocks listed below are smashing the market with very strong gains. Here’s why they are on fire today:

Aeris Resources Ltd (ASX: AIS)

This copper miner’s shares are up 12% to 19.7 cents on Tuesday. This appears to have been driven by the release of an announcement from joint venture partner Helix Resources Ltd (ASX: HLX).

Helix revealed continued success of its induced polarisation geophysical survey techniques to rapidly delineate key zones that correlate with known copper anomalism at the Canbelego and Caballero joint venture projects in New South Wales.

Helix holds 70% and manages the joint venture, with Aeris Resources owning the balance.

The release notes that a gradient array induced polarisation survey has identified a highly prospective 1,200m conductive zone at the Canbelego Main Lode extending north of Canbelego and coincident with surface copper geochemical anomalism.

Helix’s executive technical director, Kylie Prendergast, commented:

The new geophysical survey results show there are significant new copper targets in close proximity to known, high-grade copper mineralisation at the Canbelego deposit. This is generating a lot of excitement in the Helix team on our ability to expand our Canbelego Copper Mineral Resources with drilling scheduled to start in May.

Predictive Discovery Ltd (ASX: PDI)

This gold explorer’s shares are up over 6% to 24.5 cents. This follows the release of further regional drilling results from the 5.38Moz Bankan Gold Project in Guinea.

This regional exploration campaign is aiming to discover additional commercial gold deposits and is currently focused on the Argo area, which lies 15-20km north of the NEB and BC deposits.

As you might have guessed from the share price reaction, the drilling results announced today were very promising.

The ASX mining stock’s managing director, Andrew Pardey, commented:

We are delighted with the latest exploration results from Argo, which pleasingly includes both follow-up drill holes at promising targets and first-pass results from new areas. The Fouwagbe-Sinkoumba targets continue to show significant potential, with the first DD holes at Fouwagbe returning multiple high-grade intercepts, confirming mineralisation in previous RC holes extend at depth. The next phase of drilling here will focus on testing continuity along strike between the drilling lines completed to date.

The excellent initial results along strike to the north-east at Sanifolon South, which include some of the best intercepts so far from Argo, such as 12m @ 6.29g/t, further add to the potential of this Argo Central Trend.

The post 2 ASX mining stocks smashing the market on Tuesday appeared first on The Motley Fool Australia.

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• Why this ASX small cap stock could rocket 60%

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.

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It’s a very difficult task indeed to recommend ASX share buys to anyone if they want to beat the market with minimal risk. That’s because investing in any stock on the Australian share market is inherently risky.

However, the task becomes a little easier if we focus on ASX buys that offer inbuilt protections, such as diversified earnings bases and strong track records of beating the market. No penny stocks or speculative miners here.

So if I had to choose two ASX buys for someone looking to beat the market with minimal risk, here’s what I’d choose.

2 best ASX buys to beat the market (without a tonne of risk)

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

First up is ASX 200 investing house Soul Patts. This company is one of my favourite investments on the ASX and a share I would happily buy today. Soul Patts is a share that offers both inherent diversification and a long track record of ASX outperformance.

It runs a series of investment portfolios on behalf of its shareholders. These include blue-chip shares, large stakes in a small range of quality companies, private credit investments, venture capital and property.

I’d be happy to tout Soul Patts as an ASX buy for this reason, as well as its enviable performance history. Last month, this company confirmed that its investment portfolio had delivered an average annual return (including dividends) of 12.4% per annum over the 20 years to 31 January 2024.

Speaking of dividends, Soul Patts also has the distinction of being the only stock on our share market that has delivered an annual dividend pay rise for 24 years in a row.

That’s enough to make this stock the first ASX buy I’d recommend to anyone looking to beat the market without a boatload of risk.

Wesfarmers Ltd (ASX:WES)

Next up we have ASX 200 industrial and retail conglomerate Wesfarmers. Here we have, what is in my view, another ASX buy for anyone looking for a high-performance, lower-risk stock.

Wesfarmers offers much of the same diversification benefits as Soul Patts. This company also has a huge array of different earnings streams that all feed into its bottom line. Its crown jewel is Bunnings Warehouse, the highly successful hardware chain we’d all be familiar with.

But Wesfarmers also owns and operates OfficeWorks, Kmart, Target and catch.com.au. It also owns or part-owns businesses like Kleenheat Gas, Covalent Lithium, Workwear Group, and Wesfarmers Chemicals, Energy And Fertilisers (WesCEF). Amongst many others.

This company also has an enviable performance track record it can boast of, which is another reason I think it is an ASX buy today.

Wesfarmers may not have a decades-long streak of raising its dividends like clockwork. But it has still done so at an impressive rate. Particularly if you take into account the spinoff of Coles Group Ltd (ASX: COL) in 2018. Coupled with the 92.5% that Wesfarmers shares have appreciated over the past five years, and you have a very happy group of shareholders.

I fully expect these happy returns to continue for decades to come.

The post The best ASX buys I’d grab to beat the market without a tonne of risk appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares I plan to hold til I’m 100
• 2 safe ASX dividend shares that have paid income for decades
• This ASX 200 stock is down 11% in under a month. Should you buy before it trades ex-dividend?
• Where I’d instantly invest $10,000 in ASX shares for passive income
• Are Wesfarmers shares an ASX bargain buy or overvalued right now?

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Three leading brokers have sounded off on whether Rio Tinto Ltd (ASX: RIO) stock or BHP Group Ltd (ASX: BHP) shares are the better buy in 2024.

Namely Citi, UBS and Morgan Stanley, who ran their slide rules over two S&P/ASX 200 Index (ASX: XJO) mining giants.

And, as The Australian Financial Review reports, all three brokers believe Rio Tinto stock is the one to own this year.

Here’s why.

Why the brokers say Rio Tinto stock trumps BHP shares

The common thread amongst the three brokers is that Rio Tinto stock looks better positioned to capitalise on strong copper prices as the iron ore markets continue to struggle.

Although the iron ore price jumped 6% overnight to just over US$104 per tonne, most analysts believe it will trend lower from here amid lower steel demand out of China, whose property markets continue to struggle.

Despite the overnight lift, iron ore remains down more than 25% this year, having traded for US$143 per tonne in early January.

In a positive sign for the global growth outlook, copper prices have gone the other direction. Currently trading for US$9,412 per tonne, the red metal is up 10% from the US$8,554 per tonne where it started the year.

So, why does that have Citi forecasting that Rio Tinto stock will gain 20% over the next 12 months while BHP shares will gain a more modest 6%?

Part of the broker’s bullishness stems from Rio’s Oyu Tolgoi mine, located in Mongolia, where the miner aims to as much as double its copper production.

As Rio Tinto stated in its full-year results:

Our Copper C1 unit costs are expected to decrease in 2024, primarily driven by higher volumes at Oyu Tolgoi as the underground continues to ramp up and at Kennecott, where refined copper volumes are expected to increase following the planned smelter rebuild in 2023.

Noting that 21% of the revenue earned by Rio Tinto stock this year will come from aluminium and 13% from copper, Morgan Stanley also favours the miner over BHP.

And with copper prices expected to remain resilient amid the metal’s crucial role in the global push to electrification, UBS also is bullish on Rio Tinto stock for its copper production alongside its healthy balance sheet.

According to UBS (quoted by the AFR):

BHP has more equity copper tonnes near term than Rio. But Rio is growing its copper production more quickly, and it has a large aluminium business, while BHP has a large met coal business.

UBS noted that Rio Tinto stock and BHP both “have other businesses in their portfolio in addition to iron ore”.

However, the broker added, “We have positive views on both copper and aluminium, so Rio has more of a positive offset in terms of earnings momentum coming from its non-iron ore business.”

The post Why top brokers say Rio Tinto stock is a better buy than BHP appeared first on The Motley Fool Australia.

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More reading

• In this bull market, where are the bargain buys to be found?
• The BHP share price is down 12% in 2024. What’s next for the iron ore price?
• Why I’d confidently buy these 3 ASX blue-chips while others grow fearful
• The pros and cons of buying BHP shares right now
• These high-yield ASX dividend stocks can rise 15% to 20%

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.

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It is widely accepted that an individual’s risk appetite falls with age.

This makes a lot of sense. After all, someone in their 20s has a lot more time to recoup their losses compared to someone in their 60s who is nearing retirement and reliant on their nest egg to fund their future lifestyle.

Because capital preservation becomes increasingly important as we grow older, investors need to ensure they select ASX 200 shares that are consistent with their risk appetite and investing timeframe.

With that in mind, here are two buy-rated ASX 200 shares that could be great additions to a well-balanced retirement portfolio:

CSL Limited (ASX: CSL)

When building a retirement portfolio, you will want to own the highest quality companies that money can buy.

CSL is arguably the crème de la crème on the Australian share market. It is one of the world’s leading biotechnology companies. Its three businesses, CSL Behring, CSL Seqirus and CSL Vifor, provide lifesaving products to patients in more than 100 countries and employ 32,000 people.

It also always has the future in mind. Each year, CSL reinvests ~11%-12% of its sales back into research and development (R&D) activities. This ensures that it has an R&D pipeline containing some potentially lucrative and lifesaving therapies and vaccines.

On Monday, Macquarie retained its outperform rating and lifted its price target on the company’s shares to $330.00. This implies potential upside of almost 18% for investors. Macquarie also suggested that there’s scope for them to rise beyond $500 within three years.

Telstra Group Ltd (ASX: TLS)

Another ASX 200 retirement share that could be a top option for investors is Australia’s largest telco, Telstra.

It is also a high quality business and ticks a lot of boxes for a retirement portfolio. These include having defensive qualities and a positive growth outlook. In addition, the company’s shares offer investors a great dividend yield.

For example, the team at Goldman Sachs is currently forecasting fully franked dividends per share of 18 cents in FY 2024, 19 cents in FY 2025, and 20 cents in FY 2026. Based on the current Telstra share price of $3.81, this will mean very attractive yields of 4.7%, 5%, and 5.25%, respectively.

Another positive is that Goldman believes this ASX 200 retirement share could rise strongly from current levels. Its analysts currently have a buy rating and $4.55 price target on them.

This implies potential upside of almost 20% for investors over the next 12 months. And if you include dividends, you’re looking at a total potential return of approximately 25%.

The post 2 excellent ASX 200 retirement shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Better ASX stock: Woodside vs Telstra
• In this bull market, where are the bargain buys to be found?
• Why I’d confidently buy these 3 ASX blue-chips while others grow fearful
• Leading brokers name 3 ASX shares to buy today
• Buy Telstra and these ASX dividend shares next week

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

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Looking for high-quality, cheap ASX shares?

Aren’t we all?

Well, today we can report the latest buying recommendations from Michael Gable of Fairmont Equities.

He’s identified two ASX shares that he reckons are going for cheap.  

Fortescue Ltd (ASX: FMG) shares

The Fortescue share price is $25.47, up 2.45% at the time of writing.

Gable thinks the ASX 200 iron ore pure-play is currently looking like great value.

Fortescue is a popular holding in many Australians’ portfolios given it is the second biggest ASX mining share by market capitalisation on the ASX, valued at $76.54 billion.

Perhaps Gable’s confidence may inspire some investors to average-in at today’s lower price to enhance their exposure to this reliable ASX dividend payer.

On The Bull, Gable said:

The share price has fallen from its early February highs in response to weaker iron ore prices. But we expect iron ore prices to recover as the global growth outlook appears to be strong.

The company generated increasing revenue and earnings in the first half of fiscal year 2024 when compared to the prior corresponding period.

The fully franked interim dividend of $1.08 a share was also higher. We view the softer share price as a buying opportunity.

Whitehaven Coal Ltd (ASX: WHC) shares

The Whitehaven share price is $7.22, up 2.78% at the time of writing.

Gable says:

The share price has fallen … as a result of softer coal prices at the end of 2023.

We expect global growth to assist a recovery in coal prices.

The share price looks cheap when taking into account the recently acquired metallurgical coal assets from BHP. The share price chart was recently showing impressive buying support.

Last week, Whitehaven completed its 100% purchase of BHP’s Daunia and Blackwater metallurgical coal mines and all of the shares in South Blackwater Coal Pty Ltd from BHP and Mitsubishi Development.

Paul Flynn, CEO and managing director said:

This is a significant milestone for Whitehaven that transforms us into a leading metallurgical coal producer and will deliver benefits for all of our stakeholders. We are well placed to execute a smooth transition and to integrate the Daunia and Blackwater mines into the Whitehaven portfolio.

What’s next for commodity prices?

We recently revealed the official new 5-year price forecasts for 10 different commodities.

Commodity values directly impact the earnings, dividends and share prices of ASX resources stocks like Fortescue and Whitehaven, so knowing which direction they are expected to go in can be useful information.

The post ‘Share price looks cheap’: Fortescue & 1 other beaten-up ASX 200 share to buy now appeared first on The Motley Fool Australia.

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More reading

• In this bull market, where are the bargain buys to be found?
• Fortescue shares climb amid Australian first for clean energy
• Own ASX 200 mining shares? Here’s the 5-year forecast for commodity prices
• Invest $6,000 in Fortescue shares and get $502 in passive income
• How this unexpected development in China could boost ASX 200 mining stocks

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.

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Telstra Group Ltd (ASX: TLS) stock and Woodside Energy Group Ltd (ASX: WDS) stock both have their positives. But which is a better choice for passive income?

Telstra is the biggest ASX telco share, while Woodside is a major ASX energy share – it’s one of the biggest operators in the region.

I’m going to compare them on three key points that would help me choose between them.

Dividend yield

As industry giants already, their growth prospects are less than when they were first starting out as much smaller businesses. That’s why I think the dividend returns are an important part of the picture.

Both of these ASX blue-chip shares are known for their dividends, so let’s look at which one might pay better dividends in FY24 and beyond.

Telstra has recently returned to dividend growth with its profit returning to sustainable increases. According to the estimates on Commsec, Telstra could pay an annual dividend per share of 18 cents in FY24 and 20 cents per share in FY26, translating into a grossed-up dividend yield of 6.75% and 7.5%, respectively at the current Telstra stock price.

With significant exposure to energy volatility, the Woodside dividend can be quite volatile and follow the direction of oil and LNG prices.

Based on the projections on Commsec, owners of Woodside stock could get a grossed-up dividend yield of 7.9% in FY24 and 6.4% in FY26.

While Woodside may offer slightly larger income in FY24, Telstra’s dividend could keep climbing while Woodside’s may fall.

Growth

Revenue and profit growth are driven by different factors for each business.

Telstra is seeing steady subscriber growth as more Aussies sign up with the country’s biggest telco. More users means the infrastructure is being better utilised, which can lead to rising profit margins. The Telstra FY24 first-half result saw total income growth of 1.2% to $11.7 billion while net profit after tax (NPAT) rose 11.5% to $1 billion.

The telco is investing in things like cybersecurity and digital health, which is helping it diversify earnings and open up more growth avenues. Expanding its 5G network is a key focus.

Woodside has a different reporting calendar and recently reported its 2023 full-year result. It reported a 17% drop in operating revenue to US$14 billion, a 37% decline in underlying NPAT to US$3.3 billion and a 74% plunge in reported NPAT to US$1.66 billion.

No one can truly know what’s going to happen with energy prices, but Woodside continues to work on new projects that can grow its production. Trion, a “large, high-quality resource” is one example, it will be Mexico’s first deepwater oil development.

Defensive earnings?

The decisive factor for me is how predictable and defensive Telstra’s earnings are – I’d guess nearly all households and businesses would choose to keep paying for their internet connection if they can afford it. The profit is predictable and growing, making Telstra stock very appealing.

However, Woodside is heavily reliant on energy prices for its annual profit and we really don’t know what’s going to happen next. Its profit could rise 20% next year or halve, it’s unpredictable. If I’m looking for income, I’d rather know what I’m roughly going to receive next year.

The only time I’d personally consider Woodside shares for my own portfolio as a possible market-beating investment is when energy prices are really weak, which could open up a cyclical rebound opportunity.

However, remember the world is looking to decarbonise and reach net zero by 2050, so I’m not sure when the right time to invest in an oil and LNG producer is in the coming years if demand is going to slow. It would be beneficial for Woodside if its hydrogen efforts are successful in the future.

The post Better ASX stock: Woodside vs Telstra appeared first on The Motley Fool Australia.

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More reading

• In this bull market, where are the bargain buys to be found?
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• Buy Telstra and these ASX dividend shares next week
• 3 ‘forever’ ASX dividend shares to build your wealth

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.

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Two S&P/ASX 200 Index (ASX: XJO) shares just received some sizeable upgrades from leading brokers.

Health and safety products company Ansell Ltd (ASX: ANN) closed on Monday trading for $23.89 a share.

A number of brokers are forecasting a significant potential uplift from here, according to The Australian.

Jeffries is among the most bullish on the ASX 200 share. The broker’s analysts raised the Ansell stock to a buy rating with a price target of $30.85 a share. That’s more than 29% above Monday’s closing price of $23.89.

Ansell shares are up 11.1% today, currently trading for $26.53 a share.

The second ASX 200 share receiving an upgraded outlook is agribusiness Elders Ltd (ASX: ELD).

Elders stock was raised to an add rating by Morgans Financial with a price target of $9 a share. That represents a potential 21% upside from Monday’s close of $7.43.

Elders shares are up 5.7% today, currently trading for $7.85 per share.

Here’s what’s been happening with the two upgraded ASX 200 shares.

ASX 200 shares tipped for outsized gains

Turning to Elders first, the ASX 200 share had an absolute horror day yesterday, with the share price crashing 24.4% by Monday’s closing bell.

This followed on a disappointing trading update that came in significantly below consensus expectations.

The company’s trading performance has been hampered by uncooperative weather conditions and lower-than-expected sheep and cattle prices. This saw management dial down full-year earnings estimates, now expected to be around 18% to 30% lower than the prior year.

Turning back the clock to Friday prior to the update’s release, the Elders share price closed at $9.83. Meaning the upgrade from Morgans Financial really values the stock at some 8% less than at Friday’s close.

Still, if the broker has this right, it could prove to be a profitable ‘buy the dip’ scenario.

As for Ansell, the ASX 200 share was in a trading halt yesterday ahead of reporting on a new acquisition and capital raise.

The company revealed it has entered into a binding agreement to acquire 100% of the assets of United States-based Kimberly-Clark’s Personal Protective Equipment (KCPPE) business.

You may not have heard of Kimberly-Clark. But you’ve likely heard of some of their global brands, like Huggies and diapers and Kleenex tissues.

That announcement was released this morning and looks to be fuelling today’s rocketing Ansell share price.

The ASX 200 share reported it has successfully completed a $400 million (US$263 million) fully underwritten institutional share placement at a price of $22.45 per share.

Management said the proceeds will be used to partially fund the acquisition of 100% of the assets that constitute KCPPE from Kimberly-Clark Corporation for US$640 million.

The post These 2 ASX 200 shares just got big upgrades from top brokers appeared first on The Motley Fool Australia.

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More reading

• Are Elders shares a bargain following Monday’s crash?
• Ansell shares jump 14% amid blockbuster acquisition
• Why APM, Azure Minerals, Beach Energy, and Elders shares are crashing today
• Ansell share price hits pause as company gloves up for $975 million acquisition
• Why is this ASX 200 share plunging 29% after a trading update?

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 recommended Ansell and Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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