Category: Stock Market

The Telstra Group Ltd (ASX: TLS) share price is weakening on news the telecom giant plans to oust up to 2,800 employees.

Despite the move being marketed as necessary, shares in Australia’s thirteenth-largest listed company are down 2.1% to $3.60 in light of the update. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) — Australian investors’ yardstick — is only 0.1% lower.

Resetting costs during ‘ongoing inflationary pressures’

Today, Telstra announced it will begin a ‘reset’ of its enterprise business. Up to 2,800 employees are expected to be removed as part of this restructuring.

The decision follows a review of the declining product segment, which experienced a 66.7% fall in earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the first half of FY2024. Telstra noted a decline in connectivity and calling at that time, dragging the division’s EBITDA down from $213 million to $71 million.

Telstra CEO Vicki Brady described the impetus behind the decision, saying it’s needed to accommodate continued investments to deal with ‘ever-increasing growth in data volumes’ and provide better connectivity for its customers.

Yet, the Telstra share price is still moving lower today.

Additionally, Brady highlighted the tough backdrop Telstra is facing, stating:

This is occurring within a dynamic environment, with an evolving competitive landscape, rapid advances in technology, changing customer needs, and the ongoing inflationary pressures facing all businesses.

To reduce costs, Telstra highlights the following key items:

• Reducing the number of network applications and services (NAS) products by almost two-thirds
• Simplifying its sales and service model, and
• Reducing the cost base of its tech services, with a particular focus on NAS products

Telstra management expects the majority of the cuts will be complete by the end of the year.

Finally, the telco is also scrapping annual inflation-linked postpaid mobile plan price reviews.

What about earnings guidance?

Making swift and broad cuts comes at a cost. Telstra is pencilling in $200 million to $250 million in one-off restructuring costs between FY24 and FY25. Although, these costs will not be included in the company’s guidance.

Speaking of which… Telstra reaffirmed its FY24 guidance and pulled back the curtain on FY25. The company forecasts $8.4 billion to $8.7 billion in underlying EBITDA in the next financial year, reassuring investors that it is committed to achieving its ‘T25’ goals.

Has the Telstra share price lagged the market?

The Telstra share price is down 16% compared to last year. This is a distinct departure from the return of the Australian benchmark, which was roughly 8% over the same timeframe.

Even after dividends, Telstra’s returns over the past 12 months are negative. Profits have increased slightly during this time. However, revenue and net profits after tax remain noticeably lower than at the end of 2018.

The post Telstra share price slips amid 2,800 cuts for growth appeared first on The Motley Fool Australia.

More reading

• Should you buy Telstra stock on a pullback?
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• With $1,000 to invest, should I buy ASX growth stocks or income shares?
• How much could $10,000 invested in Telstra shares be worth next year?

Motley Fool contributor Mitchell Lawler 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.

I’m always on the lookout for ASX shares that seem too cheap to ignore. Buying great value stocks can lead to outperforming the S&P/ASX 200 Index (ASX: XJO) over the longer term.

Cheap can mean several different things, such as trading at a large discount to the business’ net asset value (NAV). In this article, I’ll focus on companies that trade on a low price/earnings (P/E) ratio.

I believe the market is materially undervaluing the long-term growth prospects of the below ASX shares.

GQG Partners Inc (ASX: GQG)

GQG is a funds management business based in the US. One of the stock’s appealing factors is that it’s growing geographically in places like Canada and Australia, expanding its potential customer base.

The company has deliberately set up its funds to have minimal (or no) performance fees, meaning management fees generate the significant majority of its revenue and profit. Therefore, higher funds under management (FUM) is a key driver of earnings.

At 31 December 2023, GQG had FUM of US$120.6 billion. The FUM rose 17.7% to US$142 billion at 30 April 2024, driven by strong investment performance and net inflows of US$6.3 billion for 2024 to date. I’m expecting more inflows over the rest of 2024 with clients attracted to GQG’s funds’ ability (thus far) to deliver long-term outperformance of their respective benchmarks.

The ASX share has committed to a generous dividend payout ratio of 90% of distributable earnings. Based on the forecast on Commsec, the GQG share price is valued at under 11x FY25’s distributable earnings, which looks cheap to me.

Close The Loop Ltd (ASX: CLG)

This company is heavily involved in the circular economy.

It collects, sorts, reclaims and reuses resources and materials that would otherwise go to landfill, such as electronic products, print consumables and cosmetics. Close The Loop also enables the reusing of toner, and utilises post-consumer plastics for an asphalt additive. Finally, the company creates packaging that includes recyclable and made-from-recycled content.

In a world where countries, companies and households are looking to reduce their impact on the planet, this company operates in an attractive area of the economy with growth tailwinds.

The financials are going in the right direction. In the FY24 first-half result, revenue rose 76% to $103.1 million, the operating profit rose 97% to $12.4 million and the operating cash flow increased 105% to $12.3 million. The growth was particularly strong in that period thanks to the acquisition of ISP Tek Services.

The ASX share is beating growth expectations, leading management to upgrade the earnings before interest, tax, depreciation, and amortisation (EBITDA) guidance to between $44 million and $46 million for FY24.

How cheap is it? According to the forecast on Commsec, it’s trading at an incredibly low 6x FY25’s estimated earnings. I’m looking to buy more Close The Loop shares when I have the capital to do so.

The post 2 great value ASX shares I want to buy appeared first on The Motley Fool Australia.

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

The Rio Tinto Ltd (ASX: RIO) share price is in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock closed yesterday trading for $135.87. In morning trade on Tuesday, shares are changing hands for $134.96 apiece, down 0.7%.

For some context, the ASX 200 is down 0.2% at this same time.

The Rio Tinto share price is under selling pressure amid news that the company is pausing alumina shipments to third parties from its Queensland refineries.

Rio Tinto share price slips on alumina disruptions

Citing sources wishing to remain anonymous, The Australian Financial News reports that the ASX 200 miner has declared force majeure on its Queensland alumina shipments.

A force majeure, if you’re not familiar, relates to any force of nature (or man) that’s well beyond a company’s control. Like wild weather, war, or in Rio Tinto’s case, a shortage of gas to power its alumina refineries.

For its full-year results, reported in February, Rio Tinto noted:

Alumina production of 7.5 million tonnes was unchanged from 2022, with the Yarwun and Queensland Alumina Limited (QAL) refineries showing improved operational stability.

Alumina is the raw material that is processed into the aluminium we’re all more familiar with.

The anonymous sources said Rio Tinto’s refineries haven’t been able to produce at normal capacity due to regional gas shortages impacting the East Coast. Back in March, the miner reported fires in the state could have impacted the gas pipelines that supply Yarwun.

The miner’s own aluminium operations are not expected to be impacted.

The Rio Tinto share price remains up 25% over 12 months.

The post Rio Tinto share price sinks amid gas woes 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.

S&P/ASX 200 Index (ASX: XJO) tech stock Technology One Ltd (ASX: TNE) is marching higher today.

The TechnologyOne share price closed yesterday at $16.02. In morning trade on Tuesday, shares are swapping hands for $16.14 apiece, up 0.75%.

For some context, the ASX 200 is down 0.1% at this same time.

This comes following the release of the software company’s half-year results for the six months ending 31 March.

Read on for the highlights.

ASX 200 tech stock marching higher on revenue and profit boost

• Total revenue of $244.8 million, up 16% year on year
• Total annual recurring revenue (ARR) of $423.6 million, up 21%
• Profit after tax of $48.0 million, up 16% from the prior corresponding period
• Total expenses of $183.2 million, up 16% year on year
• Record interim dividend of 5.08 cents per share franked at 65%, up 10% from the prior interim dividend

What else happened for Technology One during the half year?

Other key metrics that look to be helping boost the ASX 200 tech stock include the 117% net revenue retention for the half year, exceeding management’s target by 2%.

TechnologyOne also reported a 21% increase in revenue from its SaaS and recurring business, which came in at $223.1 million.

Management noted that, as expected, cash flow generation was negative $3.8 million for the six months. However, they noted that cash flow generation will be strong over the full year.

On the research front, R&D investment (before capitalisation) also increased by 15% year on year to $56.9 million. This represents 24% of the company’s revenue.

And the United Kingdom business was a strong performer with ARR in the UK up 36% to $28.8 million.

As at 31 March, TechnologyOne held cash and investments of $172.0 million, up 24% from last year.

Impressively, this marks the 15th year of record first-half profit, revenues, and SaaS fees.

What did management say?

Commenting on the results boosting the ASX 200 tech stock today, CEO, Ed Chung said, “These are strong half year results for TechnologyOne and validate the strength of our SaaS strategy, which continues our strong growth trajectory in both Australia and the UK.”

Chung continued:

Net revenue retention (NRR), which is the net amount of new ARR from existing customers, was 117% for the 12 months to 31 March. This was an outstanding result given that best-in-class in the ERP market is considered between 115% and 120%.

We expect to meet our 115% target for the full year. By growing NRR at 115%, we can double the size of our business every five years, which shows the strength and resilience of our strategy and deep customer relationships

What’s ahead for the ASX 200 tech stock?

Looking at what could impact the ASX 200 tech stock in the months ahead, the company’s FY 2024 guidance foresees a 12% to 16% increase in profit.

This is expected to be driven by ARR growth of 15% to 20% and net profit before tax margin growth of around 1% for the full year.

Guidance for FY24 – profit up 12% to 16%, underpinned by strong ARR growth up 15%-20% and net profit before tax margin growth of approximately 1% for the full year.

“We expect strong growth for the full year FY 2024 and the company sees significant growth opportunities in the coming years,” Chung said.

Looking at what’s further ahead for the ASX 200 tech stock, Chung added:

We are on track to surpass total ARR of $500 million-plus by FY 2025, from our current base of $424 million. We will continue to invest for the long-term in R&D to build platforms for growth to continue to double in size every five years.

TechnologyOne share price snapshot

With today’s intraday moves factored in, the ASX 200 tech stock is up 6% so far in 2024.

The post ASX 200 tech stock lifts off on another record-setting half-year profit 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 positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Nvidia (NASDAQ: NVDA) has risen to become a nearly $1,000 stock again, which is usually a threshold where investors start to expect a stock split. While there’s no hard and fast rule about when to expect a split (some companies never do), history tells us that Nvidia could be considering one now.

Additionally, May 22 may be the day that one is announced, which is right around the corner. The last time Nvidia announced a stock split, the stock went wild and rose significantly. So, should you buy ahead of this potential announcement?

The last stock split was announced at a similar time in 2021

The last time Nvidia enacted a stock split was on July 20, 2021. That four-for-one split broke each Nvidia share into four separate pieces, thus increasing the share count fourfold and cutting the stock price to 25% of its original value. Without this split, Nvidia’s stock would be around $3,600 today.

However, the timing of this last split announcement sets the stage for a potential announcement on May 22 during its first-quarter fiscal year 2025 earnings release. In its Q1 fiscal year 2022 earnings release (which occurred on May 26, 2021), Nvidia announced to shareholders that the board of directors agreed to split the stock. This is perfect timing, as the annual meeting of stockholders was set to occur only a few weeks later so that shareholders could approve the vote. At that time, Nvidia was trading at around $600, so the stock is far more expensive today than when it decided to split its stock.

With the stage set for nearly the same scenario three years later, I would not be surprised if Nvidia announced a stock split on May 22. The question is, will it ignite a run-up like it did last time? After Nvidia’s Q1 results were announced, up until the stock split date, the stock went on an impressive tear.

NVDA data by YCharts

With the stock rising 30% in the days after the stock-split announcement, who wouldn’t want to get ahead of that movement? However, investors should not expect that kind of reaction again.

Should Nvidia’s stock increase by 30% from current levels, its market cap would increase from $2.3 trillion to roughly $3 trillion. That would allow Nvidia to surpass Apple as the second-largest company in the world and put it within striking distance of Microsoft as the largest company in the world.

I doubt that a stock-split announcement will create nearly $700 billion in value. Fortunately, there are other reasons to buy the stock.

Nvidia’s growing business is driving the stock price higher

While the threshold where companies split their stocks differs for each business, the reason remains the same: Their stock price has gotten too expensive. This occurs because the business is succeeding — a great problem to have.

Nvidia’s business has been on fire lately, with its graphics processing units (GPUs) selling at an unbelievable pace to satisfy the demand for data centers built to power the artificial intelligence (AI) arms race.

Any stock movement from a potential stock-split announcement should be attributed to its GPU business, as it’s the driving force behind the stock. With management guiding investors for Q1 revenue of about $24 billion (indicating 234% growth), we’re slated to see a monster quarter reported again.

While a stock-split announcement may be coming, investors should look beyond that to determine if Nvidia is a potential buy (or not). 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post History says an Nvidia stock-split announcement might be coming on May 22 appeared first on The Motley Fool Australia.

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Keithen Drury 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 Apple, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Vanguard Australian Shares Index ETF (ASX: VAS) is a leading exchange-traded fund (ETF) that enables Aussies to invest in the S&P/ASX 300 Index (ASX: XKO). The dividend-paying nature of many of the large blue chips in the portfolio can appeal to retirees.

ASX ETFs can provide a very simple way for investors to track the performance of a particular share market or industry. Low fees are one of most appealing qualities of index funds like the VAS ETF.

We’re going to look at how effectively the VAS ETF can help grow our wealth.

Strong dividend income

An ETF passes any dividends it receives onto investors, so if the underlying holdings have a good dividend yield, the VAS ETF can provide a solid overall dividend yield as well.

According to Vanguard, the Vanguard Australian Shares Index ETF has a dividend yield of 3.7% (which doesn’t include the franking credits).

That high yield is thanks to sizeable allocations to stocks like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).

If someone’s portfolio has a higher dividend yield, it means they don’t need as large a wealth balance to generate a targeted amount of dividend income. For example, a $1 million portfolio with a 3.7% dividend yield generates $37,000 in annual dividends. If a fund had a 2% dividend yield, someone would need to have a $1.85 million balance to receive the same $37,000 of cash flow.

On this side of things, the VAS ETF can help people retire earlier. Reaching a lower balance is more attainable for investors.

Slower capital growth

ASX blue-chip shares like BHP, CBA and the other ASX bank shares are not known for delivering strong capital growth compared to global stocks like Alphabet, Microsoft, Nvidia and Amazon which have grown enormously over the long term.

The heavy influence of the banks and miners on the ASX 300 has resulted in quite slow capital growth for the VAS ETF. In the past ten years, the ASX ETF has achieved average capital growth per annum of 3.2%, and in the last three years, it has seen average capital growth of just 1.9% per annum.

Even with the dividends, the total return (dividends plus capital growth) of the VAS ETF over the past three years and ten years has been an average of 7.1% and 7.7%, respectively.

Compare those returns to the Vanguard MSCI Index International Shares ETF (ASX: VGS) – an ETF focused on the global share market – which has returned an average of 12.7% per annum since inception in November 2014.

If someone invested $1,000 a month for 20 years and the investment produced an average return of 12.7%, it would become worth $938,000.

Investing $1,000 per month for 20 years in an investment that produced an average of 7.7% per annum would grow to $531,000.

That’s a big difference and shows how important capital growth is. However, the global share market isn’t guaranteed to continue its long-term outperformance.

For someone wanting to reach a certain investment balance, the VAS ETF has not demonstrated as strong a performance as globally-focused funds like the VGS ETF.

Foolish takeaway

The Vanguard Australian Shares Index ETF is a decent option at under $100 per unit for investors looking to receive dividend income.

The VAS ETF can help investors reach retirement, but other options could deliver stronger total returns, which may be more helpful for bringing forward an early retirement.

The post Could buying the Vanguard Australian Shares Index ETF (VAS) at under $100 help me retire early? appeared first on The Motley Fool Australia.

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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. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Commonwealth Bank of Australia (ASX: CBA) share price has soundly outperformed the S&P/ASX 200 Index (ASX: XJO) in the last six months, rising by 17% compared to the index’s 11% increase.

After such a strong run, investors may be questioning whether the ASX bank share can still be a good investment with the price/earnings (P/E) ratio now above 20.

The higher the earnings multiple valuation goes, the more risk there is of overpaying. Valuation itself can be an issue with an investment.

Expert’s rating on CBA shares

Writing on The Bull, Arthur Garipoli from Seneca Financial Solutions has called Australia’s biggest bank a sell.

He gave his verdict after looking at the FY24 third-quarter result which was “marginally better than expected”. Garipoli noted the CBA update reflected “similar themes to its peers”. The expert then said:

We note a decline in net interest margins and lower revenue growth coupled with increasing cost pressures. We acknowledge CBA is the premier bank, but we can’t justify its valuation premium compared to competitors. Investors may want to consider taking a profit.

The quarterly profit generated by the bank was approximately $2.4 billion, down 5% year over year. CBA reported a loan impairment expense of $191 million, with collective and individual provisions “slightly higher”. The bank said its lending portfolio’s credit quality remained “sound”, though there were “moderate increases in both consumer arrears and corporate troublesome exposures”.

Valuation premium compared to other ASX bank shares

There are a few different ways to value a business, with the P/E ratio being one of the easiest methods.

As mentioned above, CBA shares are trading on a much higher earnings multiple than peers. According to the (independent) forecast on Commsec, the CBA share price is valued at 21x FY24’s estimated earnings.

Now, let’s compare that to the other major banks using the forecasts on Commsec.

The ANZ Group Holdings Ltd (ASX: ANZ) share price is valued at 12.6x FY24’s estimated earnings.

The Westpac Banking Corp (ASX: WBC) share price is valued at 14.5x FY24’s estimated earnings.

The National Australia Bank Ltd (ASX: NAB) share price is valued at 15.4x FY24’s estimated earnings.

Based on those numbers, CBA’s P/E ratio is 36% more expensive than NAB’s and over 66% more costly than ANZ’s.

Foolish takeaway

CBA is an excellent bank – that’s why investors value it so highly.

However, the high CBA share price means it’s much more expensive than its peers. The rise of the CBA share price has also pushed the current grossed-up dividend yield down to 5.3%.

Based on all of the above factors, it may be better to give CBA shares a miss until the forward P/E ratio becomes more attractive.

The post Would I be crazy to buy CBA shares at $121? 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 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.

Investors searching for passive income could do very well with ASX dividend stocks that offer big dividend yields.

When a business is trading at a cheap level compared to its earnings, or at a large discount to the underlying net asset value (NAV), it can push up the potential yield.

I believe the market is underestimating how much cash flow the below two businesses can generate and pay to shareholders. That’s why I’m calling them buys.

Centuria Office REIT (ASX: COF)

As the name suggests, this is a real estate investment trust (REIT) that owns office properties in Australia.

There is a lot of negative commentary about office buildings at the moment because of the COVID-19 effects of more people working from home, which seems to be a permanent shift.

According to Centuria, the worst areas of demand impact are the Melbourne and Sydney CBDs. However, areas seeing strong ‘net absorption’ of demand include the Melbourne fringe, Canberra, the Brisbane fringe, the Brisbane CBD, and Adelaide.

Centuria Office REIT says 92% of its portfolio is located outside of the Sydney and Melbourne CBD, so it’s actually a lot better positioned than the market seems to give it credit for.

At 31 March 2024, the ASX dividend stock’s portfolio occupancy was 94.3% and it had a “healthy” 4.4 year weighted average lease expiry (WALE). These are quite strong numbers in my opinion.

The business is expecting to pay a distribution per unit of 12 cents for FY24, which translates into a distribution yield of around 9.75%. I think that’s a high yield for a REIT and, to me, suggests it may be trading cheaply for how much rental profit it’s making.  

The Centuria Office REIT share price is down around 50% since September 2021, as seen on the chart below.

Accent Group Ltd (ASX: AX1)

Accent is a major shoe retailer in Australia. It is a local distributor for several global brands, including CAT, Dr Martens, Henleys, Herschel, Hoka, Kappa, Merrell, Skechers, Ugg, and Vans.

Pleasingly, the consumer stock is also growing its own portfolio of brands so it’s not as reliant on those international names. Some of its own brands include Glue Store, Platypus, Stylerunner and The Athlete’s Foot.

As the chart below shows, the Accent Group share price has dropped around 30% since April 2023, dramatically increasing the prospective dividend yield.

According to the estimates on CMC Markets, the ASX dividend stock is expected to pay an annual dividend per share of 11.5 cents in FY24 and 14.3 cents in FY26. This translates into forward grossed-up dividend yields of around 9% in FY24 and 11% in FY26.

It’s understandable why the Accent share price has fallen – the retail environment is uncertain amid high inflation and elevated interest rates. But, I believe the decline has gone too far.

I’m optimistic about Accent’s future because of an ongoing store rollout, long-term growth of digital sales, a growing portfolio of owned brands, and the potential for a recovery in household retail spending in the next couple of years.

The post 2 high-yield ASX stocks I’d buy for dividends appeared first on The Motley Fool Australia.

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

Are you on the hunt for some ASX dividend stocks to buy this week? If you are, it could be worth looking at the three in this article.

That’s because they have all recently been named as buys and could be a good source of passive income. Here’s what you need to know about them:

Centuria Industrial REIT (ASX: CIP)

Analysts at UBS think that Centuria Industrial could be an ASX dividend stock to buy. It is Australia’s largest domestic pure play industrial property investment vehicle with a portfolio of 88 high-quality, fit-for-purpose industrial assets worth a collective $3.8 billion. The company notes that these assets are situated in key in-fill locations and close to key infrastructure.

The broker is expecting Centuria Industrial to be in a position to pay dividends per share of 16 cents in both FY 2024 and in FY 2025. Based on the current Centuria Industrial share price of $3.22, this represents dividend yields of 5% in both years.

UBS currently has a buy rating and $3.71 price target on its shares.

NIB Holdings Limited (ASX: NHF)

Over at Goldman Sachs, its analysts think that this private health insurer could be an ASX dividend stock to buy.

It likes NIB due to its “defensive exposure to the private health insurance sector which is experiencing favourable operating trends.”

In respect to dividends, Goldman expects this to support fully franked dividends per share of 31 cents in FY 2024 and 30 cents in FY 2025. Based on the current NIB share price of $7.12, this would mean 4.35% and 4.2% yields, respectively.

Goldman currently has a buy rating and $8.10 price target on NIB’s shares.

Universal Store Holdings Ltd (ASX: UNI)

A final ASX dividend stock that has been given the thumbs up by analysts is youth fashion retailer Universal Store.

Morgans is a big fan of the company. It notes that its “retail proposition and investment opportunity is undiminished” and that its “growth opportunities are in place.” This includes the acceleration of its Perfect Stranger expansion.

Morgans believes that the above leaves the company well placed to reward shareholders with fully franked dividends per share of 26 cents in FY 2024 and then 29 cents in FY 2025. Based on its current share price of $5.45, this will mean yields of 4.8% and 5.3%, respectively.

The broker currently has an add rating and $6.50 price target on its shares.

The post Buy these ASX dividend stocks for a passive income boost appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Universal Store. 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 NIB Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Looking for the best S&P/ASX 200 Index (ASX: XJO) stocks to ride the artificial intelligence (AI) megatrend?

You’re not alone!

The meteoric rise of generative AI stock Nvidia Corporation (NASDAQ: NVDA) has seen the US-listed company’s market cap surge to US$2.3 trillion (AU$3.4 trillion).

That’s more than Australia’s annual GDP!

And it’s drawn plenty of investor interest.

So, which two ASX 200 stocks look best placed for revenue and profit growth from this booming market?

Read on.

Two ASX 200 stocks for the AI revolution

The massive recent growth and even more massive future growth potential that AI presents for ASX 200 stocks hasn’t been lost on Jun Bei Liu, a lead portfolio manager at Tribeca Investment Partners.

“We believe AI will be a mega investment trend that permeates every part of human life via business and household adoption,” Liu says (courtesy of The Australian Financial Review).

But with stocks like Nvidia already up 197% in 12 months, could the sector be getting a bit frothy? And might that not impact ASX 200 stocks connected to the industry?

Not according to Liu.

“We strongly disagree with the notion that the performance and weight of AI-related tech stocks is a signal that we are in a bubble,” she says.

Liu explains that demand for Nvidia’s generative AI chips is “projected to double again in the next six years”.

Importantly for Aussie investors, she says this will only increase the already booming demand for data storage and data centres. Already growing at double-digit rates, data centre capacity requirements are forecast to grow at 15% annually through to 2030.

She adds that, “Australia, which is already a top five global data centre hub, is forecast to grow from 1 [gigawatt] GW today to more than 2.5GW during this time.”

As for which ASX 200 stocks are best positioned to make hay from this mega investment trend, Liu notes that there are numerous different opportunities to tap into this “broad investment theme”.

She says the opportunities for AI “are in chips – used to power the process; storage – needed to house the enormous amounts of data processed; energy – used to power the infrastructure; and software – used to execute computer processes”.

Drilling down to the domestic market, Liu says (courtesy of The AFR):

For Australian investors who wish to play this theme on the ASX, storage is probably the easiest and most relevant given we don’t manufacture chips, energy tends to be localised and software developers and creators tend to be global…

Key components of a successful data centre include access to the grid, security of energy, connectivity and proximity to clients. With limited access to usable land that provides such access and long-term contracts for energy security, it is the incumbent data centre players that will continue to drive future growth.

Which brings us to the two “best” ASX 200 stocks to buy now for the AI revolution: real estate investment trust (REIT) Goodman Group (ASX: GMG) and data centre operator NextDc Ltd (ASX: NXT).

According to Liu:

The best listed players that we believe directly participate in this megatrend here in Australia are NextDc and Goodman Group – both have a strong pipeline of future contracted development…

In the case of Goodman Group, not only does it directly tap into the global data centre trend, it also has the opportunity to change much of its future data centre pipeline into a direct operating model where returns can be multiple folds of current development earnings.

The Goodman share price is up 69% over the past 12 months.

ASX 200 stock NextDc’s shares are up 50% over this same period.

The post These are the 2 ‘best’ ASX 200 stocks to buy now for the AI megatrend: expert appeared first on The Motley Fool Australia.

More reading

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• Up 73% in a year, this surging ASX 200 stock just hit another all-time high
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• What are 3 of the safest ASX 200 tech shares in Australia right now?

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