Category: Stock Market

After a decade of dormancy, inflation reared its ugly head as a major economic issue investors had to confront and deal with over 2021 and 2022. Whilst the decades-high levels of price rises that we saw in 2022 are receding, inflation still remains uncomfortably elevated – which is the main reason why interest rates also remain at decade-highs today.

So how should ASX investors approach this conundrum? After all, inflation eats into our wealth and our wages, and certainly throws a spanner or two into the investing mix.

Well, I think a good solution remains to invest in ASX dividend shares. The share market gives us the best shot at overcoming any economic malady to build wealth, whether that be inflation or deflation.

But that’s only if you have the right shares of course. So today, let’s discuss two ASX dividend shares that I think offer some of the best inflation protections on the stock market.

2 ASX dividend shares to hedge against inflation

Coles Group Ltd (ASX: COL)

First up is ASX 200 supermarket stock Coles. High-quality shares in the consumer staples sector are always going to have inherent inflation resistance built into their business models, thanks to the essential nature of the goods and services that they sell. In other words, these companies can increase prices in line with inflation without fear of a significant loss of sales. This label, in my opinion, applies to Coles.

This company’s most recent earnings report was encouraging, showing Coles potentially snatching market share gains from its arch-rival Woolworths Group Ltd (ASX: WOW) over the second half of 2023.

Given Coles’ ability to increase earnings over time, coupled with its fully-franked dividends, which have increased almost every year since 2018, I think this is a great stock to help protect a share portfolio against inflation.

Transurban Group (ASX: TCL)

It’s not too often that a company’s earnings are completely insulated from the corrosive effects of inflation. Yet we can say this about ASX 200 toll road operator and dividend share Transurban. Transurban has a huge portfolio of toll roads across North America, Brisbane, Melbourne and particularly Sydney. Most of these toll roads are arterial routes that are difficult to avoid for motorists.

The beauty of Transurban’s business model is that it has decades-long contracts on these roads, most of which allow Transurban to increase its tolls quarterly by at least the rate of inflation (and often by 4% per annum if inflation is lower).

This provides an incredible amount of certainty for Transurban investors. Barring a major catastrophe resulting in huge traffic volume falls (the pandemic for example), Transurban arguably has one of the most reliable earnings bases on the ASX. And thus, one of the most reliable dividends.

These are all ingredients that combine to make Transurban a highly effective inflation hedge, and a company you’d be happy to have in your portfolio if high inflation persists.

The post 2 ASX dividend shares to beat inflation appeared first on The Motley Fool Australia.

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More reading

• Bell Potter names the best ASX 200 shares to buy in April
• 3 lower-risk, high-yield ASX dividend shares to consider buying now
• Want an income boost? Buy ANZ Bank and these ASX dividend stocks
• If I invest $10,000 in Transurban shares, how much dividend income will I receive?
• 5 excellent ASX dividend stocks to buy in April

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 Transurban Group. The Motley Fool Australia has positions in and has recommended Coles 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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Like many tech-oriented stocks, Telstra Group Ltd (ASX: TLS) shares are likely to enjoy some significant benefits from the rapid advances in artificial intelligence (AI).

So, it won’t come as a surprise that the S&P/ASX 200 Index (ASX: XJO) telco is looking to AI to improve efficiency and customer service, among other benefits.

Which brings us to Telstra Ventures, a venture capital firm that runs independently but collaborates closely with Telstra and its enterprise customers.

Here’s what’s happening.

Making AI more accessible

Telstra shares could get a lift down the road from United States-based data transformation startup Coalesce.

This comes as Coalesce announced that it has successfully raised US$50 million (AU$77 million) in Series B funding to “drive growth and platform innovation”. The funding was backed in part by Telstra Ventures.

Commenting on why Telstra Ventures participated in the fundraising, Saad Siddiqui, general partner at Telstra Ventures said, “The industry is moving from labour-intensive data engineering to automated, enterprise-grade solutions.”

He added, “Coalesce leads this shift, offering comprehensive extensibility for complex ETL/ELT [extract, load, transform] scenarios and an easy-to-use interface for a wider, less technical audience.”

Coalesce CEO Armon Petrossian highlighted the potential of the technology to improve efficiency, which could help boost Telstra shares if the telco rolls out the tech in Australia.

“During a challenging VC market period, we’ve successfully raised capital by demonstrating explosive growth and an innovative product that significantly enhances the efficiency of data teams,” Petrossian said.

Fanni Fan, principal at Industry Ventures which co-led the US$50 million funding round, added, “We’ve had a front-row seat to Coalesce’s success, seeing them consistently outperform targets.”

According to Fan:

Their customers regularly cite them as the most vital part of their data stack, and their mature partner ecosystem is impressive for their stage. Encouraged by this, we confidently led their Series B investment.

Coalesce launched in Australia and New Zealand in April 2023.

According to the company, it has “revolutionised data transformation within the ELT workflow on the Snowflake data cloud”.

Snowflake Ventures also participated in the fundraising.

“Snowflake Ventures invests in our ecosystem partners to accelerate innovation,” Harsha Kapre, director of Snowflake Ventures said.

“Coalesce is designed to complement the performance and scalability of Snowflake and is well positioned to harness the power of the data cloud,” Kapre added, offering some insight into why Telstra wants a solid foot in the door here.

How have Telstra shares been tracking?

Telstra shares came under selling pressure in early February. Despite a modest uptick since late March, shares in the ASX 200 telco are down 4% in 2024.

The post Own Telstra shares? Here’s why the ASX 200 telco just backed this AI startup appeared first on The Motley Fool Australia.

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More reading

• 3 lower-risk, high-yield ASX dividend shares to consider buying now
• 2 ASX shares I’d buy to quickly add diversification
• These ASX 300 dividend shares offer yields of 5% to 8%
• Here are the top five ASX 200 stocks in Macquarie’s model income portfolio
• Should ASX investors buy the dip in Telstra stock?

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 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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The APM Human Services International Ltd (ASX: APM) share price will remain suspended until Monday after the company revealed it is expecting a fresh takeover offer from a new suitor this evening.

This follows last week’s revelations that CVC Asia Pacific was walking away from its revised takeover bid to acquire APM for a price of $2 per share.

The employment and health services provider had granted CVC a four-week exclusivity period until 27 March with the offer conditional on several factors including due diligence and debt financing.

The APM share price has been frozen at $1.63 since last Wednesday when the exclusivity period ended.

APM requested a trading halt and advised investors of “the receipt of a letter from CVC advising that they are unable to proceed to finalise a transaction on terms consistent with their non-binding Offer as disclosed to the ASX on 28 February 2024, and the ending of CVC’s exclusivity period”.

APM asked for the trading halt to remain in place until it released an update or until the commencement of trading on Tuesday this week.

A new suitor comes to the party…

Since then, a new potential buyer has surfaced.

On Tuesday, the company asked the ASX for a voluntary suspension of trading and advised it had “received approaches from parties to assess the potential for a transaction”.

APM said those discussions were continuing and a suspension was therefore appropriate until it could release an update, or until the start of trading today.

Before the market open this morning, APM asked the ASX to extend the suspension until Monday.

It explained that it had received a letter from United States private equity firm Madison Dearborn Capital Partners (MDP).

The letter states MDP’s intention to submit a non-binding indicative offer (NBIO) to acquire 100% of APM shares.

APM is expecting to receive MDP’s NBIO this evening and needs time to “consider the terms of the NBIO and disclose those terms to the ASX …”.

What’s next for the APM share price?

If things go to plan, we’ll find out at the commencement of trading on Monday.

Presumably by then, we will have an update from APM on the NBIO and the potential price on offer to buy up all its shares.

The APM share price has been on a rollercoaster this year.

Overall, it’s up 29.4%. But it’s been a bumpy ride.

On 18 January, APM stock plummeted by just over 40% to a new all-time low at the time of 79 cents after the company released its 1H FY24 trading update.

The price fell further to a new low of 68 cents on 23 January.

The next month, everything changed.

On 19 February, the APM share price leapt 48.2% after press speculation led to the company confirming it was in discussions with CVC. At the time, CVC was offering $1.60 per share.

The APM share price moved 13.5% higher on 28 February when CVC upped its offer to $2 per share.

That same day, APM released its 1H FY24 results.

APM reported a 31% lift in revenue to $1,116.8 million but a 12% decline in underlying EBITDA to $147.8 million. Its statutory net profit after tax and amortisation (NPATA) plummeted 41% to $43.6 million.

The company cited ongoing low unemployment and higher interest rates as drags on its business.

APM shares were listed in November 2021 at a share price of $3.55.

The post APM share price freeze extended amid new takeover bid appeared first on The Motley Fool Australia.

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• APM share price placed on ice as $1.8 billion deal goes dud

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 recommended APM Human Services International. 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is having a tough session and is on course to end it deep in the red. At the time of writing, the benchmark index is up 0.9% to 7,748.5 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Arcadium Lithium (ASX: LTM)

The Arcadium Lithium share price is down 5% to $6.43. This follows a poor night for the lithium miner’s shares on the NYSE on Thursday. Given how lithium stocks are at the very high end of the risk scale, they often fall hardest when markets become volatility. In addition, there are concerns that interest rates will remain higher for longer. This could put pressure on spending and ultimately electric vehicle sales, which would not be good news for lithium demand in an already oversupplied market.

Block Inc (ASX: SQ2)

The Block share price is down almost 4% to $114.11. This has also been driven by a poor night of trade for the payments company’s shares on the NYSE on Thursday. In addition, the company has revealed some heavy insider selling this week. This includes from its CFO Ahuja Amrita. A change of ownership notice reveals that Amrita offloaded a total of 7,961 units at an average price of approximately US$78.63. This equates to a total consideration of approximately US$626,000 (A$950,000). And in other news, Morgan Stanley downgraded its US shares to an underweight rating with a US$62.00 price target.

Capricorn Metals Ltd (ASX: CMM)

The Capricorn Metals share price is down 4% to $5.27. This morning, this gold miner released its quarterly update and revealed a disappointing quarter on quarter production decline. According to the release, Capricorn’s Karlawinda Gold Project in Western Australia achieved 26,017 ounces of gold production for the March quarter. This is down 14.5% from 30,399 ounces in the December quarter. Management blamed this on the negative impacts of heavy rainfall. It highlights that there was in excess of 280mm of rain in the quarter impacting open pit mining activities.

Kogan.com Ltd (ASX: KGN)

The Kogan.com share price is down 2.5% to $7.71. After the market close on Thursday, this ecommerce company revealed that it plans to pay its CEO and CFO a big cash bonus in place of their executive retention options. It explains: “Given the Company’s strong Balance Sheet, ongoing on-market buyback and desire to avoid further dilution for Shareholders, the Board (excluding the Executive Directors) has exercised its discretion under the Company’s Equity Incentive Plan (Plan) to make a payment to the CEO and CFO in lieu of allocation of Shares upon exercise of the Options.”

The post Why Arcadium Lithium, Block, Capricorn, and Kogan shares are dropping today appeared first on The Motley Fool Australia.

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More reading

• Why is the Block share price getting pulped on Friday?
• Why is this ASX 200 mining share sinking 7% today?
• 4 ASX All Ords shares with ex-dividend dates next week
• Here are the top 10 ASX 200 shares today
• Why has the lithium price quietly risen 20% in 2024?

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 Block and Kogan.com. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended Kogan.com. 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 Block Inc (ASX: SQ2) share price is getting pulped today.

Shares in the global S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock – which acquired Afterpay in January 2022 – closed yesterday trading for $118.46. In early afternoon trade on Friday, shares are swapping hands for $114.00 apiece, down 3.8%.

Unless there’s a remarkable late-day turnaround, this will mark the fourth consecutive day of losses for Block shareholders, with the stock currently down 11.5% since the closing bell on 28 March.

For some context, the ASX 200 is down 0.5% at this same time today and down 1.6% this week.

Here’s what’s happening.

Block share price catching headwinds

ASX 200 investors are following the lead of US investors in bidding down the Block share price today.

The BNPL company is dual-listed, both on the ASX and on the New York Stock Exchange (NYSE). The Block share price closed down a painful 6.2% in US markets overnight.

Today’s falls are part of a broader market sell-down fuelled in part by investor concerns over sticky inflation in the United States leading to fewer interest rate cuts from the Federal Reserve. And possibly delaying the first cuts until 2025.

Jittery investors sent the Nasdaq Composite Index (NASDAQ: .IXIC) down 1.4% overnight, while the S&P 500 Index (SP: .INX) closed down 1.2%.

This came following some sobering analysis from US Federal Reserve Bank of Minneapolis president Neel Kashkari, who said that the past few months of inflation data had been “a little bit concerning”.

The Fed’s inflation target is 2%, and officials are awaiting more hard data to ensure it’s on track to return to that target before they begin easing.

And as the past two years have shown, BNPL companies like Block have proven highly susceptible to higher interest rates.

“In March I had jotted down two rate cuts this year if inflation continues to fall back towards our 2% target,” Kashkari said.

“If we continue to see inflation moving sideways, then that would make me question whether we needed to do those rate cuts at all,” he added, likely helping fuel the sell-off.

How has the ASX 200 BNPL stock been tracking?

Despite the rough start to April, the Block share price has been a stellar performer in recent months, with the stock really lifting off at the end of October.

Since market close on 31 October, the ASX 200 BNPL stock is up 88%.

The post Why is the Block share price getting pulped on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why Arcadium Lithium, Block, Capricorn, and Kogan shares are dropping today
• If I’d put $5,000 in Block shares 5 months ago, here’s what I’d have now
• Why are these ASX tech shares getting smashed today?
• 4 ASX growth shares I think will benefit from interest rate cuts in 2024
• Do Block shares come with a dividend in 2024?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. 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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While the market may have recently been trading at a record high, not all shares are faring as well.

For example, the three ASX growth shares listed below are still down significantly from recent highs.

Here’s why analysts think that they could be too cheap to ignore at current levels:

Domino’s Pizza Enterprises Ltd (ASX: DMP)

This pizza chain operator’s shares are down 20% since this time last year. This has been driven by the company’s underperformance due to inflationary pressures and management’s failure to successfully execute its recovery plans.

The good news is that there are now signs that the company is finally moving on from its issues. This could potentially make it a great time to make a patient investment in the ASX growth share.

Morgan Stanley certainly believes this is the case. It recently put an overweight rating and $68.00 price target on its shares.

IDP Education Ltd (ASX: IEL)

Another ASX growth share that could be a bargain buy according to analysts is IDP Education. It is a leading language testing and student placement company with operations across the globe.

The last 12 months have been very turbulent for IDP Education due to the loss of its language testing monopoly in Canada and regulatory changes to student visas in a number of markets. This has led to its shares losing almost 40% of their value since this time last year.

Goldman Sachs believes the selling has been an overreaction and thinks investors should be snapping them up while they are down. Particularly given its belief that IDP Education “is likely to emerge through this period of short-term regulatory tightening with a more diversified business and stronger SP market position to capitalise on the long-term structural growth in international education.”

It is for this reason that the broker has a buy rating and $26.60 price target on its shares at present.

Readytech Holdings Ltd (ASX: RDY)

Another beaten down ASX growth that Goldman Sachs is positive on is ReadyTech. It is a leading cloud-based ATO and ITO-compliant, human resources, payroll, time and attendance, and rostering software provider.

ReadyTech’s shares are down approximately 15% from their recent highs despite its strong performance continuing in FY 2024.

Goldman believes this means that “RDY remains undervalued compared to SaaS peers on an absolute and growth adjusted basis.”

Its analysts currently have a buy rating and $4.25 price target on its shares.

The post 3 beaten down ASX growth shares that could be dirt cheap appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
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• Own Domino’s shares? Today is pay day!
• 3 ASX shares to buy in 2024 and hold for the next 10 years
• Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

Motley Fool contributor James Mickleboro has positions in Domino’s Pizza Enterprises. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Domino’s Pizza Enterprises, Goldman Sachs Group, Idp Education, and ReadyTech. The Motley Fool Australia has recommended Domino’s Pizza Enterprises, Idp Education, and ReadyTech. 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 S&P/ASX 200 Index (ASX: XJO) is having a disappointing finish to the week. In afternoon trade, the benchmark index is down 0.7% to 7,760.9 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are rising today:

Aurelia Metals Ltd (ASX: AMI)

The Aurelia Metals share price is up 16% to 17 cents. This morning, this gold and base metals company released significant results from its recent exploration programs at the Federation deposit. Management notes that two programs in particular have demonstrated the potential for significant further resource growth at Federation. Chief Development and Technical Officer, Andrew Graham, said: “These discoveries have further substantiated our belief in the significant lateral and depth growth potential at the Federation deposit, as we approach development of first stope ore in Q1 FY25.”

Elders Ltd (ASX: ELD)

The Elders share price is up 2% to $9.81. This appears to have been driven by a broker note out of Macquarie this morning. According to the note, the broker has upgraded the agribusiness company’s shares to an outperform rating with an improved price target of $10.45. The broker made the move after boosting its earnings estimates well ahead of consensus expectations due to a better than expected seasonal outlook and higher livestock prices.

GQG Partners Inc (ASX: GQG)

The GQG Partners share price is up 3% to $2.27. This follows the release of the fund manager’s latest funds under management (FUM) update this morning. According to the update, GQG’s total FUM increased 4.3% month on month to US$143.4 billion. Management has warned investors not to get too excited. It said: “While we have demonstrated a solid start to 2024, net flows in the first quarter of any given year are influenced by seasonality and we caution against simple extrapolation.” Nevertheless, it believes it is well positioned in the market.

Telix Pharmaceuticals Ltd (ASX: TLX)

The Telix Pharmaceuticals share price is up 3% to $12.55. This morning, this biopharmaceutical company released its general meeting presentation ahead of the main event. Management commented: “We see rapid growth in our current and near-term commercial products. By the end of 2024, we expect to have multiple commercial products and considerably expanded territory coverage. As part of growing our revenue streams and maintaining our competitive edge, Telix will invest in products, technologies and service enhancements that enable us to expand our indications for use, reach new customers and deliver new clinical differentiation.”

The post Why Aurelia Metals, Elders, GQG, and Telix shares are storming higher today appeared first on The Motley Fool Australia.

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• Why Beach Energy, Elders, Lake Resources, and Premier Investments are rising today
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Motley Fool contributor James Mickleboro has positions in Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Telix Pharmaceuticals. The Motley Fool Australia has recommended Elders and Telix Pharmaceuticals. 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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Cast your minds back to early 2023. Lithium shares across the ASX were riding high – exemplified by the ASX’s largest lithium stock, Pilbara Minerals Ltd (ASX: PLS), announcing its first-ever dividend payment.

In March 2023, investors received an interim dividend of 11 cents per share (fully franked) from Pilbara Minerals shares. This was a big deal. Dividends from lithium stocks were as rare as hen’s teeth at the time. So investors heralded this payment as a turn of a new leaf for the Australian lithium sector.

Pilbara would go on to pay another final dividend in 2023 – the final payout of 14 cents per share that was doled out in September.

But as we traverse April of 2024, the landscape has tangibly shifted. Most ASX lithium shares, including Pilbara, have had a horrid six months. Between August 2023 and January 2024, the Pilbara share price lost a third of its value.

The back end of 2023 saw lithium prices crater, which dampened investor enthusiasm for this once-hot sector. Just as Pilbara’s maiden dividend seemed to herald a new era for lithium shares, its decision to deny shareholders a third consecutive dividend payment this March epitomised the troubled waters that the sector is navigating this year.

Yes, Pilbara’s February earnings report didn’t contain too many numbers that would get investors excited. The company revealed a 65% drop in revenues to $757 million, as well as a 77% slump in earnings to $415 million. Underlying profits after tax also plunged 78% to $273 million.

So in light of those numbers, it’s perhaps not really a surprise investors weren’t treated to a dividend in the following month.

As such, Pilbara shareholders that have held on through these ups and downs might be wondering when their next dividend might be.

When will Pilbara shares start paying out dividends again?

It’s fairly hard to predict what any company’s future dividends might be, let alone a commodity-based stock like Pilbara. This company’s ability to fund shareholder payouts is almost entirely reliant on the global price of lithium. This, like all commodity prices, is difficult to forecast over a six-month or one-year period.

However, we can look at some expert predictions.

As reported in the Australian Financial Review (AFR) this week, ASX broker Morgan Stanley has done some work on forecasting what the dividends from some of the ASX’s major mining shares over the next year or two might look like.

It’s not pleasant reading for owners of mining shares.

Morgan Stanley estimates that the dividends from big iron miners like Fortescue Ltd (ASX: FMG) and particularly BHP Group Ltd (ASX: BHP) are “at risk” going forward.

But the dividend outlook for Pilbara is even worse. The broker reckons that investors will have to wait until at least 2026 for another dividend. It is predicting the dividend rivers to remain dry over 2024 and 2025, despite the company’s dividend policy of paying out 20-30% of its free cash flow.

This prediction is based upon Pilbara’s ongoing and expensive capital expenditure plans, which Morgan Stanley believes Pilbara will prioritise over dividends amid falling lithium revenues.

As we touched on earlier, these are just predictions. no one knows what PIlbara’s future income payments will look like. But this analysis will no doubt be tough to read for Pilbara investors who have just gotten used to receiving dividends from their shares.

The post When will Pilbara Minerals resume paying dividends? 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.

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Woodside Energy Group Ltd (ASX: WDS) shares are getting some support on Friday, following another lift in global oil prices.

Brent crude oil gained 1.5% overnight to trade for US$90.65 per barrel. That sees the oil price up 19.5% so far in 2024.

In late morning trade, shares in the S&P/ASX 200 Index (ASX: XJO) energy stock are up 0.7%, trading for $30.75 apiece. That compares favourably to the 0.5% loss posted by the ASX 200 at this same time.

So, with oil prices shooting higher, why could the dividends from Woodside shares be facing a potential hit?

Are the dividends from Woodside shares at risk?

Woodside is a popular stock among ASX passive income investors for the outsized, fully franked dividends it has paid out in recent years.

The company’s most recent final dividend of 91.7 cents per share was paid out to eligible investors yesterday.

Atop the interim dividend of $1.243, paid on 28 September, Woodside shares trade on a fully franked trailing yield of 7.1%.

However, trouble could be brewing for the future Woodside dividends following a major political shakeup in Senegal.

The African nation’s newly elected president, Bassirou Diomaye Faye, is casting his eye on the “exploitation” of his country’s national resources.

Faye said (quoted by Reuters):

The exploitation of our natural resources, which according to the constitution belong to the people, will receive particular attention from my government…

I will proceed with the disclosure of the effective ownership of extractive companies [and] with an audit of the mining, oil, and gas sector.

Woodside’s Sangomar project, estimated to cost close to $8 billion, is located in offshore Senegal. The project is forecast to produce 100,000 barrels per day, with the first production still scheduled for 2024.

Woodside’s share of the Sangomar project is 82%. Petrosen, Senegal’s national oil company, owns the other 18%.

Woodside shareholders might take some solace from President Faye’s reassurance that “investor rights will always be protected, as well as the interests of the state and the people”. 

However, Citigroup energy analyst James Byrne believes trouble could be brewing.

He notes that the Senegal government’s ‘take’ under production sharing contracts is currently around 30%. But he believes that could well go up.

According to Bryne (quoted by The Australian Financial Review):

Oftentimes frontier markets that undertake this sort of a change after an election see the original rhetoric watered down after industry consultation, but ultimately governments secure a bigger share of the pie.

And Bryne warns that could see the dividends delivered from Woodside shares fall off a “cliff” while the company waits for its mammoth Western Australia Scarborough gas project to come online in 2026.

Bryne said:

Our view is that there is a dividend ‘cliff’ coming as Woodside’s earnings decline into 2026 before Scarborough has started and ramped up.

Supposing the government take was 10 percentage points higher at around 40% then the dividend could be up to 20% lower given Sangomar’s contribution in that particular ‘trough’ year for earnings.

So it may exacerbate the dividend cliff that we are already forecasting.

Commenting on the political development in Senegal, a Woodside spokeswoman said, “Our experience has shown that the most successful jurisdictions have been those that work in partnership with industry, respect contract sanctity, and create investment certainty.”

She added, “Woodside looks forward to continuing to work with the government of Senegal to help meet their energy goals.”

Woodside on track for mid-2024 Sangomar first production

Less than six weeks ago, on 13 February, Woodside announced that its Floating Production Storage and Offloading (FPSO) facility had safely arrived offshore of Senegal.

The company said it was a “significant step toward achieving first production from the Sangomar field,” which would bode well for the outlook for Woodside shares and upcoming dividends.

CEO Meg O’Neill said at the time:

The FPSO arrival brings us closer to first production which is targeted for mid-2024. We are proud to be Senegal’s first offshore oil project and firmly believe that this project will prove to be important to Senegal’s future development and prosperity…

The completion of this phase of the project is only possible through strong partnerships with the Senegalese government, joint venture participant Petrosen, and our contracting partners.

Woodside shares are down 2% in 2024, though that doesn’t include the latest final dividend payout.

The post Uh oh! Are Woodside shares facing a ‘dividend cliff’? 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.

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St Barbara Ltd (ASX: SBM) shares are ending the week with a bang.

At the time of writing, the ASX gold share is up 10% to 21 cents.

This compares favourably to the performance of the ASX 200 index, which is currently down 0.5%.

Why is this ASX gold share soaring?

Investors have been buying St Barbara shares today after the gold miner released its quarterly update.

According to the release, for the three months ended 31 March, Simberi produced 17,257 ounces of gold at an average milled grade of 1.63 g/t Au and gold recovery of 77%. The Simberi operation is the company’s open cut mine in Papua New Guinea.

This quarter’s production is up 33% from 12,969 ounces in the December quarter.

Management notes that mill and rope conveyor availability are yet to reach targeted levels. Nevertheless, as anticipated, its mined grade improved during the quarter as the mine schedule accessed a higher proportion of ore tonnes from the higher-grade zones in the Sorowar pit and reconciled positively.

Total gold sales for the quarter were up 32% quarter on quarter to 18,016 ounces at average realised gold price of A$3,178 per ounce. This equates to total sales of approximately A$57. 25 million for the three months.

This led to the ASX gold share ending the period with total cash of A$218 million. While this is only up a fraction from A$214 million at the end of December, it is worth noting that the gold miner paid down creditors balances in response to improved operating cashflow and the receipt of a tax refund in the Canadian subsidiary.

Commenting on the quarter, St Barbara’s managing director and CEO, Andrew Strelein, said

Simberi again improved during the March quarter with gold production increasing 33% compared to the December quarter. As previously highlighted in the December quarterly report, production guidance for Simberi was weighted to H2 FY24 and we remain on track with this solid quarter.

The ASX gold share is guiding to total gold production of 60,000 ounces to 70,000 ounces for FY 2024. This compares to total production of 40,604 ounces financial year to date.

Going the other way

Heading in the other direction today is Genesis Minerals Ltd (ASX: GMD). It is down 2% at the time of writing.

In May 2023, Genesis Minerals acquired St Barbara’s Leonora assets in Western Australia for A$370 million cash and 152,826,087 Genesis shares.

This deal was designed to create a leading ASX gold house exclusively focused on the prolific Leonora District in Western Australia, with production growth to a sustainable +300,000 ounces per annum.

The post Why is this tiny ASX gold share soaring 10% on Friday? appeared first on The Motley Fool Australia.

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

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