Category: Stock Market

ASX healthcare shares are one of only two market sectors trading in the green at the time of writing.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is up 0.55% and is the best sector of the day so far.

These two ASX healthcare shares are having a particularly good day following company updates.

2 ASX healthcare shares soaring on exciting news

Two ASX healthcare shares are flying higher today after the companies announced significant news.

Let’s check them out.

Avita Medical Inc (ASX: AVH)

The Avita Medical share price is currently 10.2% higher at $2.81 per share after the ‘spray-on skin’ burns treatment company announced its first quarter results for 2024.

For the three months ending 31 March, Avita reported a 5.8% lift in commercial revenue, compared to the first quarter of 2023, to $11.1 million. The gross profit margin came in at 86.4%.

Cash and cash equivalents fell 23% to $16,951,000, with Avita’s CFO David O’Toole explaining that the big spend mostly related to several non-recurring expenses.

O’Toole commented:

We acknowledge the significant cash utilization this quarter, however we remain confident in our financial stability and our ability to reach cashflow break even as guided.

The company expects to reach cashflow break even no later than the third quarter of 2025.

As for forward guidance for 2024, Avita said commercial revenue for the second quarter was expected to be in the range of $14.3 million to $15.3 million.

Avita expects full-year commercial revenue at the low end of its previously provided guidance range of $78.5 million to $84.5 million.

During the quarter, Avita launched PermeaDerm, a co-branded biosynthetic wound matrix, in the United States.

Avita CEO Jim Corbett said:

We believe we have taken the necessary measures to invigorate our burns business and improve our commercial sales process to return to sustained growth.

We remain dedicated to establishing RECELL as the standard of care for burn and full-thickness skin defects.

Simultaneously, we are actively transforming AVITA Medical into a broad wound care business by expanding our portfolio to address the full spectrum of clinical needs.

The ASX healthcare share is down 32.7% in the year to date and down 23% over the past 12 months.

Race Oncology Ltd (ASX: RAC)

The Race Oncology share price is currently 7.1% higher at $1.66 per share after the clinical-stage cancer drug biotech announced positive preclinical study results.

Race said bisantrene and decitabine used together had “significantly improved cancer cell killing across a broad panel of 143 tumour cell lines than either drug used alone”.

The company said the results support the use of the combined drugs as a potential treatment for many cancers. These include solid tumours such as lung, prostate, pancreas, breast, and head and neck cancers.

The two drugs will be explored further in a proposed Phase 1/2 investigator-initiated AML clinical trial.

Race CEO Dr Daniel Tillett commented:

These results open exciting new treatment opportunities for both bisantrene and decitabine. While decitabine has proven its effectiveness in haematological cancers, it has not demonstrated clinical utility in solid tumours, like lung or breast cancer.

This new body of work is highly supportive of the results from the University of Newcastle in preclinical AML models using a combination of bisantrene and decitabine.

Race Oncology also released a new investor presentation yesterday.

The ASX healthcare share has streaked 95.3% higher in 2024 so far and is down 0.90% over the past year.

The post 2 ASX healthcare shares rocking higher on big news appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares at 52-week lows or worse
• Morgans names the best small cap ASX shares to buy in May
• Why Avita Medical, NextDC, Predictive Discovery, and Star shares are tumbling today

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 positions in and has recommended Avita Medical. The Motley Fool Australia has recommended Avita Medical. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A trade ban on enriched uranium could further fuel the explosive run witnessed across ASX uranium shares over the past year.

While Australia continues to squabble over whether nuclear energy is viable, the United States is taking steps to secure the energy source domestically.

A glance at ASX uranium shares today may not show it, but the land of the free implemented a major sanction on enriched uranium supply overnight. Despite the tempered reaction, the decision is a major one that will affect 24% of the uranium used by nuclear power stations in the United States.

Biden takes action on Russian reliance

United States President Joe Biden signed the Prohibiting Russian Uranium Imports Act last night.

As per the White House statement, the act aims to bolster the country’s energy and economic security. To do this, the United States will reduce — and eventually eliminate — its dependence on Russia for the inputs needed for nuclear power.

Unpacking the magnitude of the decision further, U.S. National Security advisor Jake Sullivan wrote:

This new law reestablishes America’s leadership in the nuclear sector. It will help secure our energy sector for generations to come. And—building off the unprecedented $2.72 billion in federal funding that Congress recently appropriated at the President’s request—it will jumpstart new enrichment capacity in the United States and send a clear message to industry that we are committed to long-term growth in our nuclear sector.

The ban on Russian enriched uranium imports into the United States will take effect 90 days from today.

Shifting away from Russian supply will be a major undertaking. According to the U.S. Energy Information Administration, nuclear energy accounted for 18.6% of all electricity generation in the country last year.

This might explain why the government is allowing exceptions until 2028 when the absence of Russian supply would result in a reactor shutting down.

What could it mean for ASX uranium shares?

Aussie investors aren’t making much of the news today. At the time of writing, some of the most prominent ASX uranium shares are skating lower:

• Paladin Energy Ltd (ASX: PDN) down 1.49% to $16.225
• Boss Energy Ltd (ASX: BOE) down 1.58% to $5.60
• Deep Yellow Limited (ASX: DYL) down 3% to $1.615

There’s always a chance the market had already ‘factored in’ the sanction before today. Hence, the common phrase, ‘buy the rumour, sell the news’ among traders.

Alternatively, some may see this move as a negative for all uranium producers outside the United States. The country is actively pouring billions into making a local industry, which may present a risk to all foreign demand.

Nevertheless, the price of uranium is still perched near its 17-year-high of US$100 per pound.

The post Will ASX uranium shares run higher on this ‘historic’ supply ban? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Why Judo Capital, NAB, Paladin Energy, and Perpetual shares are falling today
• How to invest in uranium on the ASX
• Here are the top 10 ASX 200 shares today
• Paladin Energy share price hits a 12-year high: Too late to buy?

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 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.

Four S&P/ASX 300 Index (ASX: XKO) shares were just re-rated by top brokers.

One operates in the credit-impaired consumer debt segment.

The second is a biopharmaceutical company.

The third provides vehicle fleet leasing, fleet management, and diversified financial services.

And the fourth is a New Zealand-based building and materials company.

Any guesses?

Keep those in mind.

(Broker figures courtesy of The Australian.)

ASX 300 shares getting re-rated

The first ASX 300 share getting re-rated is Credit Corp Group Ltd (ASX: CCP)

The Credit Corp share price is up 4.0% in intraday trading at $15.47 a share. That sees the stock up more than 23% over six months.

And Macquarie believes it’s still undervalued after that strong run. The broker raised Credit Corp to an ‘outperform’ rating with an $18.32 price target. That represents a 19% potential upside from current levels.

Credit Corp shares also have a strong history of delivering reliable passive income. Over the past 12 months, the company has paid out 62 cents a share in fully franked dividends. That equates to a current trailing yield of 4.0%.

Which brings us to the second ASX 300 share getting a broker re-rate today, Neuren Pharmaceuticals Ltd (ASX: NEU).

The Neuren Pharmaceuticals share price is up 6.1% in intraday trading at $20.22 a share. Shares are now up a whopping 42% over six months.

And according to JP Morgan it still looks like a bargain at these levels.

The broker gave Neuren an ‘overweight’ rating and a $23.60 price target, representing a potential 17% upside from current levels. The company does not pay dividends at this time.

Also getting re-rated

Also getting re-rated today is ASX 300 share FleetPartners Group Ltd (ASX: FPR).

The FleetPartners share price is down 4.1% today at $3.31 a share. However, shares remain up 19% over six months.

And Morgan Stanley thinks today’s sell-down is likely misguided. The broker increased its price target for FleetPartners by 22% to $3.90 a share and maintained its ‘overweight’ rating. That represents a potential 18% upside from current levels.

FleetPartners shares last delivered dividends in 2018.

Rounding off the list, the fourth ASX 300 share getting re-rated today is Fletcher Building Ltd (ASX: FBU).

(Did you guess all four?)

The Fletcher Building share price is down 3.0% today at $2.79 a share. The stock has tumbled 35% over six months.

Fortunately, Morgan Stanley believes the worst of the pain should be over.

While the broker cut its price target by 23% to $2.84 a share, Morgan Stanley maintained its ‘equal-weight’ rating.

Fletcher Buildings suspended its interim dividend payment for FY 2024 due to challenging trading conditions.

The post Guess which four ASX 300 shares were just re-rated by top brokers appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 3 ASX shares at 52-week lows or worse
• Why ANZ, Fletcher Building, Macquarie, and Sayona Mining shares are dropping today
• This ASX 200 stock just slashed its earnings guidance by 17%
• Brokers name 3 ASX shares to buy now

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 JPMorgan Chase and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One of my personal investing mottos is “the market is straight up kooky dooks“.

Not only did I think of this saying again today, I also felt it fitting that it was paraphrased from a movie – in this case the Disney (NYSE: DIS) animated movie Moana.

That is because, as I woke up this morning and checked the overnight news, I saw that the share price of American cinema company, AMC Entertainment (NYSE: AMC), increased by over 78% overnight.

On a whim, I then looked at the share price of GameStop (NYSE: GME), a company whose story is now intrinsically linked with AMC Entertainment. Yep, it too saw its share price rise dramatically overnight. In this case 75%.

It appears the “meme stock” days are back.

My first feeling was one of sadness.

I hoped that this was a saga that we left back in the dark days of the COVID pandemic. Whilst many saw it as an entertaining side show, or even a David vs Goliath story, I saw it differently. I knew that a lot of regular people were going to lose a lot of money that they couldn’t afford to lose.

I watched with horror as people, many who were entering the markets for the very first time, piled into, what I believed to be, “bad” companies.

I’ve seen this film before. I know how it ends and I don’t like it.

Unsurprisingly, fast forward a few years later, and the share price of AMC Cinemas is down over 99% and GameStop down 59% from their 2021 peaks. I am sure many of those who were wiped out will never trust the share market again despite it being, overall, a great tool for people looking to build wealth.

So, it is again I feel my stomach churn seeing the potential sequel with people piling into companies which, in my opinion, have really bad fundamentals and are suffering from an enormous list of structural headwinds that they will struggle to overcome.

I could go on and on about the various tips, techniques and lessons that I have learned to become the investor I am today. I could also go on for pages highlighting why I personally wouldn’t touch the shares of the above businesses with a 100-foot pole. However, in this case, I feel there is only one thing to remind you all…

Whilst the share market can, and will, do almost anything in the short term. Over the long term, share prices tend to, almost always, track the fundamentals of the underlying business.

Some meme stockers will tell you that fundamentals don’t matter. They are playing a different game. They’ll tell you to just trust them. That I am part of the enormous Wall Street conspiracy looking to keep the regular folk down.

But fundamentals do matter. In fact, if you plan on holding for years, you can argue that they are the only thing that matter.

So, if you find yourself looking at the recent share price rise of companies like AMC Entertainment and GameStop and getting tempted to press “Buy”, ask yourself, do I think these companies have good fundamentals? Do I think these companies are going to be earning significantly more revenue and profits in 2, 3, 5, 10 years’ time than they are today?

If you, like a lot of others, think the answer is no. Then don’t buy.

There are countless other opportunities (both from listed companies and passive investment vehicles like ETFs) that offer high quality, growing and profitable opportunities. So, don’t waste your time trying to ride a wave of what many consider to be irrationality.

All you really need to do is buy great companies, at fair prices, and hold on to them for as long as they remain great companies.

It is that simple.

This is also the best way to make a short seller‘s life miserable, much better than trying to outsmart them by trying to fight them directly when the fundamentals are against you.

The post Invest in quality, not meme stocks appeared first on The Motley Fool Australia.

More reading

• Will ASX uranium shares run higher on this ‘historic’ supply ban?
• Guess which four ASX 300 shares were just re-rated by top brokers
• Short sellers up the ante on Qantas shares
• Why this $1.5 billion ASX 200 stock just surged 10%
• Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy)

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

Qantas Airways Limited (ASX: QAN) shares are changing hands for $6.24, up 0.24% at the time of writing.

The share price of the ASX travel stock is up 16.45% in the year to date but down 2.3% over 12 months.

Following many dramas for the company over the past year, it seems some professional traders have lost faith in Qantas, with an increasing amount of short selling going on of late.

This means traders are placing bets that the Qantas share price will fall.

Let’s look at what’s happening.

More short sellers betting against Qantas shares

The beleaguered airline has been in the headlines for all the wrong reasons over the past year.

Scandals include illegally sacking 1,700 workers, advertising tickets for tens of thousands of flights it had already decided to cancel, and cancelling other flights without immediately informing ticketholders.

The Australian Financial Review (AFR) reports today that hedge funds are once again targeting Qantas shares and driving short selling back to multi-year highs.

The AFR reported that short bets peaked at 2.69% of Qantas shares on 6 May, which was the highest level since late 2020 when a once-in-a-century pandemic had essentially shut global travel down.

On 6 May, that short interest was worth $258.8 million based on the closing Qantas share price that day.

On the same day, Qantas announced it would pay a civil penalty of $100 million plus $20 million to more than 86,000 customers in a settlement with the Australian Competition and Consumer Commission (ACCC) over those cancelled flights.

That news appears to have sparked some trading, with some short sellers closing their positions.

By the next day, the short interest in Qantas shares had fallen from 2.69% to 2.58%, according to the daily short position report published by the Australian Securities and Investments Commission.

That’s the equivalent of 1,813,143 shares no longer being shorted.

While 2.58% short interest is significant in historical terms for this ASX 200 blue-chip, it’s not high when compared to the most shorted ASX stocks on the market at the moment.

Australian Eagle Trust, a long-short fund, told clients that it was still shorting Qantas shares but had reduced its short position in March.

In a recent quarterly update (courtesy AFR), the fund said:

Despite a clean-out of top executives and an aggressive public relations campaign, the company has been forced to decrease airfares due to increasing flights from competitors while cost inflation and fuel prices have put further pressure on margins.

The post Short sellers up the ante on Qantas shares appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 5 ASX shares to buy following the market selloff
• Are Qantas shares too expensive at over $6?
• 4 reasons this fund manager thinks Qantas shares are a cheap buy
• Qantas share price sinks on $120 million ‘egregious and unacceptable’ ruling

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.

S&P/ASX 200 Index (ASX: XJO) stock GUD Holdings Ltd (ASX: GUD) is off to the races on Tuesday.

Shares in the diversified automotive market products company closed yesterday trading for $9.77. At the time of writing in late morning trade today, shares are changing hands for $10.71 apiece, up 9.6%.

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

Here’s what’s piquing investor interest.

ASX 200 stock soars on confirmed earnings guidance

Investors are bidding up the GUD Holdings share price after the company confirmed that its full 2024 financial year (FY 2024) underlying earnings before interest, taxes and amortisation (EBITA) is forecast to be at least $193.5 million.

That’s in line with management’s prior expectations, and based on updated April 2024 unaudited, management estimates.

Excluding its AutoPacific Group (APG) segment, the ASX 200 stock’s automotive was reported to be continuing to trade well across all its key business units.

Management said this reflects the ongoing execution of its diversification strategy and the resilience of the aftermarket. They added that the end user workshop demand also remains positive.

As for APG, the company now expects this business, which it acquired in November 2021, to deliver approximately $63 million in underlying EBITA for the full financial year. That’s $3 million below what was expected when GUD reported on its half-year results (H1 FY 2024).

The ASX 200 stock cited various headwinds impacting APG’s earnings.

Among those is the New Zealand market’s slower-than-expected recovery. The New Zealand market was reported to be operating “marginally above breakeven to date” in FY 2024. However, the NZ business has delivered some $10 million less in EBITA in FY 2024 to date than management’s base case assumptions.

APG was also impacted by lower Toyota volumes, with second-half volumes declining, along with “emerging consumer-related softness in the trailering market”.

Despite that weak caravan market, management said earnings from Cruisemaster are in line with FY 2023, “reflecting market share gains”.

Looking ahead, the company expects revenue and EBITA growth from APG in FY 2025 “as headwinds partially moderate and new business wins begin to contribute”.

GUD Holdings’ corporate costs, cash conversion and leverage were also said to be tracking in line with management’s expectations.

As for passive income

The ASX 200 stock is also popular among passive income investors for its long-term track record of paying two fully franked dividends per year.

GUD Holdings paid a final dividend of 22 cents per share on 14 September and an interim dividend of 18.5 cents per share on 8 March.

That works out to a full-year payout of 40.5 cents per share.

At the current share price of $10.71, this ASX 200 stock trades on a fully franked trailing yield of 3.8%.

The GUD Holdings share price is up 16% over 12 months.

The post Why this $1.5 billion ASX 200 stock just surged 10% appeared first on The Motley Fool Australia.

More reading

• 9 ASX All Ords shares elevated to ‘strong buy’ status in April

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.

Given the topic, let’s try to keep this article as light-hearted as possible. Let’s assume that one day, out of the blue, you get a call from a lawyer telling you that your mysterious great aunt Holga recently passed away at the ripe old age of 106. You can only remember meeting Holga once – on a family trip to Dusseldorf when you were still a toddler – but you must have made a good impression, because she decided to leave you all her worldly possessions, including a significant sum of money.

Sure, you feel sad for poor old Holga, but she had a good run. And so, before long, your thoughts turn to how you should spend this sum of money. It could set you up for the future – and might even allow you to retire early!

But you’ve never had so much money before, and it’s hard to work out where to start. Should you invest it all in stocks? Should you use it to pay off your debts? Should you blow it all at the casino?

In this article, we take a look at some of the most prudent ways you can use your surprise cash injection. After all, it’s what Holga would have wanted.

Pay off your debts

The first thing you should do – before you even think about investing your inheritance on the ASX – is pay off as much of your outstanding debts as possible. Debt is the finance universe’s equivalent of a black hole. It sucks all your cash into oblivion and significantly diminishes your ability to grow your wealth.

Trust me – although it might sound a bit boring, the best thing you can do if you come into a significant amount of money is to use it to wipe out your debt. It will be a huge weight off your mind, and a first step towards financial freedom.

Set aside an emergency fund

The second-best thing you can do (after getting rid of your debts) is to set aside an emergency fund. This is an amount of money you squirrel away to use in case something unfortunate happens – like you suddenly lose your job, have to pay a medical bill or have some other large, unexpected expense crop up.

Advice differs on how much you need to put into your emergency fund, but enough to cover between 3 and 6 months of expenses is a good rule of thumb. Ensure your emergency fund is somewhere you can access quickly and easily, like a high-interest savings account. Don’t invest it in shares or other at-risk assets, because if you need that money in a hurry and those investments have lost some of their value, you’ll be forced to sell them for a loss.

Income or growth?

OK, now that we’ve got the boring things out of the way, it’s time to use whatever cash you have left to build a portfolio. But what sort of portfolio do you want to build?

You may decide to use your portfolio to supplement your income. In that case, you should build a portfolio weighted towards blue-chip stocks with stable valuations and consistently high dividends.

Good places to start would be leading Aussie bank Commonwealth Bank of Australia (ASX: CBA), mining giant BHP Group Ltd (ASX: BHP), or a favourite of mine, investment house Washington H Soul Pattinson & Company (ASX: SOL). A portfolio made up of just these stocks would pay you a dividend yield of about 4%, meaning you can expect an annual dividend income of $4,000 for every $100,000 invested.

Alternatively, you can park some of your money in a dividend exchange-traded fund (ETF) like the Vanguard Australian Shares High Yield ETF (ASX: VHY). This fund invests in a diversified portfolio of 71 ASX large-cap high-dividend stocks, including CBA and BHP, as well as diversified conglomerate Wesfarmers Ltd (ASX: WES) and telco Telstra Group Ltd (ASX: TLS), among many others. Its dividend yield is a little over 5% and charges an annual management fee of 0.25%.   

If you’d rather target growth there are plenty of great options on the ASX. I believe tech market darling WiseTech Global Ltd (ASX: WTC) is a good stock to watch, as is cancer drug company Telix Pharmaceuticals Ltd (ASX: TLX) and digital audio company Audinate Group Ltd (ASX: AD8). And a left-field choice to add to your watch list is Las Vegas-based gambling machine company Light & Wonder Inc (ASX: LNW).

There are also ETFs available for growth-oriented investors. The Betashares Diversified High Growth ETF (ASX: DHHF) provides exposure to a portfolio of about 8,000 global stocks with high growth potential – and charges an annual management fee of just 0.19%.

The post Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy) appeared first on The Motley Fool Australia.

More reading

• BHP share price slides amid no deal on ‘compelling opportunity’
• BHP shares on watch after new $64b Anglo American takeover offer rejected
• 5 things to watch on the ASX 200 on Tuesday
• 4 founder-led ASX 300 shares that have helped this fund outperform
• 3 ASX shares at 52-week lows or worse

Motley Fool contributor Rhys Brock has positions in Audinate Group, Commonwealth Bank Of Australia, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group, Light & Wonder, Telix Pharmaceuticals, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Audinate Group, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and WiseTech Global. The Motley Fool Australia has recommended Light & Wonder, Telix Pharmaceuticals, and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The BHP Group Ltd (ASX: BHP) share price is in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $43.25. In morning trade on Tuesday, shares are swapping hands for $43.07 apiece, down 0.4%.

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

This comes as investors digest the news that BHP returned with an improved takeover offer for Anglo American (LSE: AAL) last week. And that the sweetened offer was rejected by Anglo American’s board overnight.

Here’s what’s happening.

BHP share price slips as sweetened takeover deal rebuffed

As a quick recap, BHP announced it had made a non-binding offer to acquire Anglo American on 26 April for an all scrip offer valued at approximately AU$60 billion.

Interestingly, the BHP share price closed down 4.6% on the day.

BHP is looking to expand its copper footprint. And copper represents 30% of Anglo American’s total production. If BHP were to acquire Anglo, it would become the world’s top copper producer.

Anglo American’s board rejected BHP’s offer on 29 April, with chairman Stuart Chambers saying the bid significantly undervalued the company and its growth potential.

Which brings us to the improved offer from BHP, which values the copper miner at 34 billion pounds (AU$64 billion).

But the Anglo board clearly feels this remains too little.

Commenting on the improved takeover offer, Chambers said, “The latest proposal from BHP again fails to recognise the value inherent in Anglo American.”

Mike Henry responds

This morning BHP responded to the rejection of its improved offer, stating, “BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders.”

Commenting on the rejection that’s seeing the BHP share price dip this morning, CEO Mike Henry said, “BHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.”

Henry added:

BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.

The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets…

The combination is consistent with BHP’s strategy and the revised proposal is underpinned by a focus on delivering long term fundamental value.

The BHP share price is down 15% so far in 2024.

The post BHP share price slides amid no deal on ‘compelling opportunity’ appeared first on The Motley Fool Australia.

More reading

• BHP shares on watch after new $64b Anglo American takeover offer rejected
• 5 things to watch on the ASX 200 on Tuesday
• 4 founder-led ASX 300 shares that have helped this fund outperform
• ASX 200 banks vs. mining stocks: Which is the better buy today?
• 4 excellent ASX 200 dividend shares to buy for your income portfolio

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.

ASX growth shares aren’t known for their dividends, but I’m going to tell you how growing businesses could become great options for passive income.

Investors may think of blue-chip names like ANZ Group Holdings Ltd (ASX: ANZ) and Rio Tinto Ltd (ASX: RIO) for income because of their high dividend yield. However, the dividends usually don’t grow at a strong compound annual growth rate (CAGR).

According to Commsec, in FY24, ANZ is predicted to pay a grossed-up dividend yield of 8.4% and Rio Tinto is predicted to pay a grossed-up dividend yield of 7.5%.

I will show you how smaller, growing businesses can become very compelling picks for big dividends. However, keep in mind that not every growth stock turns into a major dividend success.

The strength of compounding

The dividends of some ASX large-cap shares have gone sideways, or even downward over the past decade. At the current share price, the 2014 payout from ANZ represents a grossed-up dividend yield of 9%. It’s lower now than it was then.

There are a number of ASX growth shares that have grown their dividends substantially over the past decade, such as TechnologyOne Ltd (ASX: TNE), REA Group Limited (ASX: REA), Lovisa Holdings Ltd (ASX: LOV) and Johns Lyng Group Ltd (ASX: JLG). It’s thanks to the power of their compounding.

Profits generated pay for dividends. If a business can grow its profit, then the dividend can grow too, assuming the company maintains (or increases) its dividend payout ratio.

Smaller ASX growth shares are capable of scaling their profit significantly over the long term, particularly if they expand overseas. If the dividend keeps growing at the same pace as profit, the dividend payout can eventually become impressive on that original cost base.

The TechnologyOne dividend payout per share increased by around 250% between FY13 and FY23. The FY23 payout represents a grossed-up dividend yield of around 17% compared to the TechnologyOne share price at the start of 2013.

The REA Group dividend payout per share has increased by approximately 200% comparing the last 12 months of dividends to the FY14 payout. The last two dividends from REA Group represent a grossed-up dividend yield of over 13% compared to the REA Group share price at the start of 2013.

And there has been excellent capital growth by these two stocks in that time.

Lovisa and Johns Lyng haven’t been paying dividends as long as TechnologyOne and REA Group, but they already have an impressive longer-term growth history. I’m backing them for longer-term success.

Where I’d invest for long-term dividend growth

I wouldn’t pick TechnologyOne and REA Group today for long-term dividends – their valuations are much higher today than a decade ago, and the profit growth rate will probably be slower because it’s harder to keep growing at a fast pace the bigger a business becomes.

I’m a fan of the international growth outlooks of both Lovisa and Johns Lyng (and I’m a shareholder in both). In a decade from now, I think their payouts could be a lot bigger, particularly if they can both execute well on the US growth plans.

Other dividend payers I’d keep my eye on include Collins Foods Ltd (ASX: CKF), Corporate Travel Management Ltd (ASX: CTD) and Step One Clothing Ltd (ASX: STP).

The post How ASX growth shares can become top dividend stocks appeared first on The Motley Fool Australia.

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• Here’s the ANZ dividend forecast through to 2026
• What are 3 of the safest ASX 200 tech shares in Australia right now?
• Why ANZ, Fletcher Building, Macquarie, and Sayona Mining shares are dropping today
• 2 top ASX growth shares I’d buy today

Motley Fool contributor Tristan Harrison has positions in Collins Foods, Johns Lyng Group, and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management, Johns Lyng Group, Lovisa, REA Group, and Technology One. The Motley Fool Australia has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Collins Foods, Johns Lyng Group, Lovisa, REA Group, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Owning ASX dividend shares can be a very rewarding experience – receiving cash every year for very little effort sounds like a good life.

A big dividend yield alone is not enough; in my opinion, there should also be a good chance of long-term dividend growth. That’s because it’s useful to protect against inflation so the value of the dividend dollars isn’t being eroded. Plus, if the dividend is growing then it’s obviously not being cut. Dividend stability is usually an important factor to me.

Dividend growth is not guaranteed (in FY24 or any year), but over the long term, I think these two ASX dividend shares are good options for big yields.

Universal Store Holdings Ltd (ASX: UNI)

This retailing business owns a number of premium youth fashion brands, including Universal Store, THRILLS, Worship and Perfect Stranger. It currently operates 100 physical stores across Australia.

The business has been growing Perfect Stranger as a separate business rather than selling through Universal Store locations. In the FY24 first-half result, Perfect Stranger sales soared 59.7% to $6.6 million. In the HY24 period, the ASX share opened six new stores, with three new Perfect Stranger stores and two Universal Stores.

Universal Store has done a good job of growing its dividend every year since it first started paying one in 2021.

I think the ASX dividend share can keep growing the profit and dividend if its existing stores collectively deliver rising sales over time while opening new stores in good locations.

According to the estimate on Commsec, the business is projected to pay a grossed-up dividend yield of 6.6% in FY24 and 8.25% in FY26.

Metcash Ltd (ASX: MTS)

This business supplies a large number of independent stores around Australia including IGA, Foodland, Thirsty Camel, Cellarbrations, The Bottle-O, IGA Liquor, and Porters Liquor. It also owns a number of hardware businesses, including Mitre 10, Home Timber & Hardware, Total Tools and more.

Everyone needs to eat food, and lots of people drink liquor, so in my view, the business has a lot of defensive earnings built into it.

Australia’s population keeps growing which is a useful tailwind for the hardware earnings – it means more dwellings are needed, plus more potential hardware work in the future from DIY projects and renovations.

The ASX dividend share has used acquisitions to diversify and boost its earnings, with Total Tools, Superior Food (food distribution to businesses like restaurants), Bianco Construction Supplies and Alpine Truss being some of the latest deals.

It has a dividend payout ratio of 70% of underlying net profit after tax, which I think is a good balance between rewarding shareholders and retaining some profit to invest in the business.

According to Commsec, it could pay a grossed-up dividend yield of 7.4% in FY24 and 8.2% in FY26.

The post Get paid huge amounts of cash to own these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• How to choose ASX shares for passive income
• Telstra shares and 4 other defensive income stocks to buy now
• Almost ready to retire? I’d buy cheap ASX dividend shares for income
• This ASX 200 stock gained in April while the market sank 3%. Is it a buy?
• 5 ASX dividend shares to buy next week

Motley Fool contributor Tristan Harrison has positions in Metcash. 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 Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.