Often investors think that they have to invest in an exciting tech stock for mega returns.

But that isn’t always the case. In fact, sometimes even boring ASX All Ords shares can deliver the goods for investors.

For example, Bell Potter believes that Australian beef company Australian Agricultural Company Ltd (ASX: AAC) could generate huge returns for investors.

It owns and operates Australia’s largest cattle herd with around 433,000 head spread over its properties across Queensland and the Northern Territory.

Why buy this ASX All Ords share?

Bell Potter believes that the company’s shares are thoroughly undervalued at the current level.

Particularly given that since reporting its latest results, its analysts “have witnessed a sharp upward movement in cattle market indicators.”

This bodes well for the company and has led to the broker increasing its earnings estimates for the near term. It said:

Operating EBITDA upgrades of +1% in FY24e, +24% in FY25e and +2% in FY26e.

In response to this, the broker has retained its buy rating and lifted its price target on the ASX All Ords share to $2.00 (from $1.90 perviously).

Based on its latest share price, this implies potential upside of approximately 42% for investors over the next 12 months.

The broker highlights that Australian Agricultural Company’s shares are trading at a deep discount to net asset value (NAV). It explains:

Our Buy rating is unchanged. Cattle prices have rebounded strongly and US meat pricing indicators remain fairly firm. AAC has not benefited from the same recovery in its share price to date and continues to trade at a material 40% discount to 1H24 NAV, despite a 50% rally in the heavy steer indicator and an 87% rally in the EYCI post balance date.

The post A boring ASX All Ords share offering an exciting 40% return appeared first on The Motley Fool Australia.

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More reading

• Here’s how I think you can make a predictable 5% in passive income in 2024
• Buy ANZ and these ASX dividend stocks now
• 3 ASX ETFs for tech investors to buy and hold
• 5 ASX shares I think you can confidently invest $500 in right now
• Buy these ASX dividend shares with 5%+ yields

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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Passive income is a really appealing way of receiving investment returns. We don’t need to do anything as the pleasing payments keep rolling in every six (or three) months. ASX shares in particular are a great way to potentially get a resilient 5% passive income return.

I think investors who want yield should pay closer attention to ASX dividend shares because savings options are starting to reduce their payout. For example, a number of financial institutions recently cut their term deposit rates.

One of the most appealing things about investing in income-paying businesses is that they can pay an appealing yield this year and deliver growth for the next year because they are regularly investing to grow the business to make more profit.

It can be tricky to find businesses that provide a mixture of good yield and predictable dividends. But, there are a couple I’ll point to: global pathology ASX share Sonic Healthcare Ltd (ASX: SHL) and energy infrastructure business APA Group (ASX: APA).

Here are three things I really want to tell you about both businesses.

Passive income yield and growth

I’m going to tell you about two ASX dividend shares that, between them, could pay an average dividend yield of 5% in FY24.

On Commsec, the projection is that Sonic Healthcare could pay an annual dividend per share of $1.07, which would translate into a grossed-up dividend yield of 4.8%. It has grown its annual dividend each year since 2013 and the board has a “progressive dividend policy”.

APA is expected to pay a distribution per security of 56 cents in FY24, which would translate into an FY24 distribution yield of 6.7%. It has grown its distribution each year since 2004. That’ll be 20 years of consecutive growth if it grows this year.

If an equal amount is invested in both, the average yield would be 5.75% if the forecasts become a reality.

Organic growth

For me, it’s essential that an ASX share’s core business is delivering decent growth. That helps protect against competition, it can offset long-term inflation and it can fund bigger passive income payouts to shareholders.

APA owns a large network of gas pipelines, transporting half of the country’s gas usage. A large majority of its revenue is linked to inflation, so this inflationary period has led to pleasing revenue growth for the business.

Sonic Healthcare’s core business is also seeing pleasing growth – in the first four months of FY24, it saw organic revenue growth of 7%. It can benefit from tailwinds like an ageing population and an increasing population.  

Investing in growth

These two ASX dividend shares are putting a lot of money towards expanding and diversifying their earnings.

APA continues to expand its pipeline network to new places, which can enable stronger cash flow. It’s also investing in renewable energy and electricity transmission. The business is also exploring the possibility of using hydrogen in its pipes.

Sonic Healthcare is looking to use technology developments to help its operations. It’s looking at microbiome testing and also investing in developing AI. The business is expanding geographically through acquisitions, with a recent focus on Germany and Switzerland.  

The post Here’s how I think you can make a predictable 5% in passive income in 2024 appeared first on The Motley Fool Australia.

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More reading

• Beginner investors: 5 top Aussie stocks I’d buy for 2024
• The 3 best ASX dividend shares for 2024
• 2 defensive ASX income shares I think investors should consider buying for bumper returns!
• This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me
• 3 ASX shares I think are ready for dividend hikes in 2024

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool Australia has recommended Sonic Healthcare. 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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If you’re an income investor on the lookout for some new dividend options, then read on!

That’s because analysts are tipping the three ASX dividend stocks as buys with attractive dividend yields.

Here’s what you need to know:

Accent Group Ltd (ASX: AX1)

Accent could be an ASX dividend stock to buy according to analysts at Bell Potter.

The broker likes the footwear retailer due to its strong market position and its “growth adjacencies via exclusive partnerships with globally winning brands such as Hoka and growing vertical brand strategy.”

Bell Potter has a buy rating and $2.50 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends per share of 11.8 cents in FY 2024 and then 13.7 cents in FY 2025. Based on the latest Accent share price of $2.11, this represents dividend yields of 5.6% and 6.5%, respectively.

ANZ Group Holdings Ltd (ASX: ANZ)

Goldman Sachs thinks that this banking giant could be an ASX dividend stock to buy right now.

It continues to prefer ANZ due largely to “the improving profitability of its Institutional business.” It also sees “further upside risk to ANZ Group returns from mix shifts in its Institutional division.”

Goldman currently has a buy rating and $27.85 price target on its shares.

In respect to income, Goldman is forecasting fully franked dividends per share of $1.62 in both FY 2024 and FY 2025. Based on the current ANZ share price of $27.42, this will mean dividend yields of 5.9%.

Super Retail Group Ltd (ASX: SUL)

A final ASX dividend stock that has been given the thumbs up by analysts is Super Retail.

It is the retail conglomerate behind the BCF, Macpac, Rebel, and Super Cheap Auto brands.

Citi is feeling very positive about the retailer and feels that the market underestimates its earnings potential. The broker has a buy rating and $19.00 price target on its shares.

It also expects some attractive yields from the retailer. It has pencilled in fully franked dividends per share of 82.5 cents in FY 2024 and then 93.5 cents in FY 2025. Based on the latest Super Retail share price of $15.87, this will mean good yields of 5.2% and 5.9%, respectively.

The post Buy ANZ and these ASX dividend stocks now appeared first on The Motley Fool Australia.

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More reading

• Better ASX bank buy: ANZ or NAB shares?
• ASX news: ANZ share price hits new 52-week high
• Want to buy ASX 200 bank shares? You need to read this
• 3 ASX dividend shares for income investors to buy now
• 1 ASX dividend giant I’d buy before ANZ shares for February onwards

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. 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.

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If you want exposure to the tech sector but aren’t sure which shares to buy, then it could be worth looking at exchange traded funds (ETFs).

A number of ASX ETFs have been setup to provide investors with access to some of the best tech stocks that the world has to offer.

Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first ASX ETF to look at is the BetaShares Global Cybersecurity ETF. It provides investors with access to the cybersecurity sector, which is forecast to grow very strongly over the coming decades as cybercrime becomes even more prevalent. Among the companies included in the fund are industry leaders such as Accenture, Cisco, Crowdstrike, and Palo Alto Networks.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

Another ASX ETF for investors to consider for tech sector exposure is the popular BetaShares NASDAQ 100 ETF. It allows investors to buy a slice of many of the most iconic companies in the world. This includes tech giants such as Amazon, Apple, Meta (Facebook), Microsoft, Netflix, and Nvidia. BetaShares highlights that the ETF provides diversified exposure to a high-growth potential sector that is under-represented on the Australian share market.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

A final ASX ETF that gives investors access to the tech sector is the VanEck Vectors Video Gaming and eSports ETF. As its name implies, this ETF is focused on the growing global video game market, which is estimated to currently comprise almost 3 billion active gamers. Among its holdings are gaming industry giants such as Electronic Arts, Nintendo, Roblox, and Take-Two. VanEck highlights that this ETF allows investors to get diversified tech exposure away from Apple, Amazon, Facebook, Google and Microsoft.

The post 3 ASX ETFs for tech investors to buy and hold appeared first on The Motley Fool Australia.

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More reading

• 2 ASX ETFs I wish I’d bought for my portfolio
• 4 quality ASX ETFs to buy in February
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• Looking for growth? I’d buy these 2 ASX ETFs

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Accenture Plc, Amazon, Apple, BetaShares Global Cybersecurity ETF, BetaShares Nasdaq 100 ETF, Cisco Systems, CrowdStrike, Meta Platforms, Microsoft, Netflix, Nvidia, Palo Alto Networks, Roblox, and Take-Two Interactive Software. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Electronic Arts and Nintendo and has recommended the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF and BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Amazon, Apple, CrowdStrike, Meta Platforms, Netflix, Nvidia, and VanEck Vectors Video Gaming And eSports ETF. 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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If you have $500 of your hard-earned money to invest and can’t decide which ASX shares to buy, then read on.

Listed below are five ASX shares that I think investors can confidently buy right now. They are as follows:

Life360 Inc (ASX: 360)

The Australian share market doesn’t have a lot of high-quality tech stocks. But in Life360, it certainly does. This Silicon Valley-based location technology company is behind the eponymous Life360 app, which boasts approximately 60 million monthly active users. Despite this large user base and its rapid EBITDA growth, the company still trades at a deep discount to peers. I feel this makes it an ASX share to buy with confidence for the long term.

Qantas Airways Limited (ASX: QAN)

I think Qantas could be a great ASX share to buy this month. The airline operator’s shares are currently trading on lower multiples than pre-COVID times. That’s despite the company having structurally stronger earnings now following its transformation. In addition, I suspect that it may not be long until dividends return.

ResMed Inc. (ASX: RMD)

Despite rebounding strongly in recent months from an Ozempic-related sell-off, I still think that this sleep treatment company’s shares are undervalued at current levels. This is because I believe ResMed has very strong long-term growth potential even in a world with weight loss wonder drugs. Especially given that sleep apnoea is estimated to affect more than three in ten men and nearly one in five women. This gives it a huge growth runway for the next decade and beyond.

Treasury Wine Estates Ltd (ASX: TWE)

Another ASX share that I think could be a good option for a $500 investment is Treasury Wine. It is the wine giant responsible for a portfolio of popular brands including Penfolds, 19 Crimes, Squealing Pig, Blossom Hill, and Lindeman’s. In addition, the company just acquired US-based wine brand DAOU Vineyards for $1.4 billion. I believe this leaves Treasury Wines well-placed for growth over the long term. In addition, it is widely expected that China will soon remove its restrictions on Australian wine, giving the company a major boost. So, with its shares down by almost 25% over the last 12 months, I think now is the time to buy.

Vaneck Morningstar Wide Moat ETF (ASX: MOAT)

When buying shares, I think it is important to focus on quality, strong and sustainable business models, and fair valuations. The good news is that this popular ETF gives ASX investors easy access to approximately 40 shares from the United States that have these qualities. Over the last five years, the ETF has beaten the market with an average 16.5% per annum total return. I suspect that this trend could continue over the long term.

The post 5 ASX shares I think you can confidently invest $500 in right now appeared first on The Motley Fool Australia.

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• What’s happening with the ResMed share price on Wednesday?
• Own Resmed shares? Here are 3 impactful points from the results of its feared disruptor
• ‘Long and bullish’: 2 classic ASX 200 shares to buy while they’re still cheap
• Morgans names the best ASX 200 stocks to buy in February
• Don’t miss out on these 3 excellent ASX ETFs in February

Motley Fool contributor James Mickleboro has positions in Life360, ResMed, and Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360 and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Treasury Wine Estates and VanEck Morningstar Wide Moat ETF. 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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If you’re on the lookout for some generous dividend yields for your income portfolio, then it could be worth checking out the two ASX dividend shares listed below.

Here’s what analysts are saying about them:

Baby Bunting Group Ltd (ASX: BBN)

The team at Morgans thinks that this beaten down baby products retailer could be an ASX dividend share for income investors to buy.

While it was not overly impressed with its performance during the first half, it thinks investors should stick with it. Morgans has faith that management’s strategy is the right one to turn things around and drive growth.

For now, the broker is forecasting fully franked dividends per share of 9.5 cents in FY 2024 and then 12.4 cents in FY 2025. Based on the current Baby Bunting share price of $1.60, this will mean dividend yields of 6% and 7.8%, respectively.

Morgans has an add rating and $2.00 price target on the company’s shares.

Suncorp Group Ltd (ASX: SUN)

Over at Goldman Sachs, its analysts think that Suncorp could be an ASX dividend share to buy right now.

It is the insurance company behind brands including AAMI, Apia, Bingle, CIL Insurance, GIO, Shannons, Terri Scheer, and Vero.

Goldman likes the company due largely to “the tailwinds that exist in the general insurance market – i.e., very strong renewal premium rate increases and the benefit of higher investment yields.”

The broker is expecting these tailwinds to underpin the payment of fully franked dividends per share of 75 cents in FY 2024 and 80 cents in FY 2025. Based on the current Suncorp share price of $14.19, this will mean yields of 5.3% and 5.6%, respectively.

Goldman has a buy rating and $15.00 price target on the company’s shares.

The post Buy these ASX dividend shares with 5%+ yields appeared first on The Motley Fool Australia.

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• Morgans names the ASX cyclical shares to buy for earnings season
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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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) returned to form and record a decent gain. The benchmark index rose 0.45% to 7,615.8 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to open flat

The Australian share market looks set for a flat session on Thursday despite a solid night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day flat this morning. In late trade on Wall Street, the Dow Jones is up 0.45%, the S&P 500 has risen 0.8%, and the Nasdaq is 0.9% higher.

Oil prices rise

ASX 200 energy shares including Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good day after a decent night for oil prices. According to Bloomberg, the WTI crude oil price is up 0.7% to US$73.84 a barrel and the Brent crude oil price is up 0.7% to US$79.15 a barrel. Slower than expected production growth in the US boosted prices.

REA results

REA Group Ltd (ASX: REA) shares will be on watch today when the property listings company releases its half year results. According to a note out of Goldman Sachs, it is expecting EBITDA of $416 million and earnings per share of $1.85. This is broadly in line with the consensus estimate of $417 million and $1.87 per share. Goldman also notes that it will be looking at its “2H24 cost outlook given stronger market trends.”

Gold price flat

ASX 200 gold shares such as Newmont Corporation (ASX: NEM) and Northern Star Resources Ltd (ASX: NST) could have a soft session after the gold price traded flat overnight. According to CNBC, the spot gold price is steady at US$2,051.2 an ounce. Traders appear undecided about where rates and gold are heading in the near term.

AGL half-year update

The AGL Energy Limited (ASX: AGL) share price will be in focus today when the energy giant releases its half year results. Investors may want to see if AGL remains on track to achieve its full year guidance. It is guiding to FY 2024 underlying EBITDA of between $1,875 million and $2,175 million underlying net profit between $580 million and $780 million.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and REA Group. The Motley Fool Australia has recommended REA 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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After a couple of years of severe underperformance, many experts have been tipping 2024 could be the year when ASX small-cap shares come roaring back.

Already some green shoots have popped up.

The analysts at LSN Emerging Companies Fund have invested in a couple of those, and have explained why they are bullish:

‘Higher barriers to entry and attractive long term cash flows’

Financial services provider EQT Holdings Ltd (ASX: EQT) enjoyed an 8% rise in share price in January, all while delivering a 3.5% fully franked dividend yield. 

The LSN analysts are looking forward to more of the same.

“Strong growth in funds under management, tailwinds from rising equity markets and the benefits from its AET acquisition will see earnings compound 17% over the next 3 years,” read their memo to clients.

Both Ord Minnett and Wilsons agree with the LSN team, rating EQT shares a strong buy, according to CMC Invest.

The LSN memo noted that the company is led by “a capable management team”.

“We think the company is well positioned to deliver substantial returns for shareholders over the years ahead with recent M&A in the sector further highlighting the higher barriers to entry and attractive long term cash flows these businesses produce.”

The small cap that’s been the exception to the rule

MMA Offshore Ltd (ASX: MRM) has defied the small-cap malaise for a while now, doubling its share price over the past 12 months.

It’s an incredible 350% rise if you go back two years.

After the stock added another 11.2% last month, the LSN team admitted they took some profits — but it still holds MMA Offshore for the long run.

“MMA Offshore has enjoyed a meteoric share price rise over the past two years as the marine and subsea service sector benefits from strong demand and limited supply of vessels.”

The turnaround in the business has been remarkable.

“MMA has transformed from a loss-making company saddled with onerous debt obligations to now generating around $50 million profit and balance sheet with net cash.

“The outlook remains favourable given increasing customer capex, particularly in offshore wind and rig decommissioning projects.”

It’s no wonder all five analysts surveyed on CMC Invest insist MMA Offshore is still a strong buy.

The post ‘Substantial returns over years ahead’: 2 ASX small caps starting 2024 with a bang appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 Mma Offshore. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s a no-brainer that the ASX shares most impacted by 13 interest rate rises would be in the finance sector.

With rates nearing their peak, and maybe even a cut looming soon, the analysts at Celeste Funds recently named two such small-cap stocks that they think will shoot up in the coming period.

Let’s check out why they’re bullish:

A ‘sound’ and ‘well-capitalised’ business

Judo Capital Holdings Ltd (ASX: JDO) will certainly be happier when its small and medium-sized business clientele have more confidence to borrow.

Maybe it’s already starting to happen, with the shares rocketing an amazing 18% in January.

The Celeste team, in a memo to clients, attributed the excitement to a trading update.

“Front book lending margins expanded, reflecting the attractiveness of Judo’s customer proposition and resulted in a net interest margin (NIM) of 3.02%.”

This boost in margin fed into an improved bottom line.

“This saw 1H24 profit before tax of $67 million, ahead of consensus estimates.”

The full year prospects remain positive.

“Ongoing cost management should result in a FY24 cost-to-income ratio of 55-57%. Credit quality remains sound and the business is well-capitalised.”

The small-cap looking good for a major comeback

As a debt buyer, Credit Corp Group Limited (ASX: CCP)’s prospects are brighter when consumers are struggling.

However, last year was a shocker for its stock price as the US arm performed poorly.

But the shares rose 6.2% last month, perhaps ushering in a new phase of revival.

“Pleasingly, US collections productivity has shown steady improvement over 2023 following a challenging 2022,” read the Celeste memo.

“The US delinquency environment has stabilised since the AGM, with debt ledger prices significantly lower.”

This improvement has allowed the company to narrow down its full-year purchasing guidance towards the top end of the previously mentioned range.

“Australian collections lagged as system volumes remained subdued, however prudent management saw relatively flat cost metrics. 

“The lending business experienced strong demand, with net lending guidance upgraded from $50 million to $145 million.”

The Celeste team’s peers are largely in agreement, with six out of nine analysts surveyed on CMC Invest rating Credit Corp as a strong buy.

The post 2 small-cap ASX shares licking their lips over interest rate cuts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 Judo Capital. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Woodside Energy Group Ltd (ASX: WDS) share price is, as you’d expect, highly influenced by global gas and oil prices.

While the oil price and gas price don’t move in lockstep, the two do tend to trend higher and lower together.

Here’s what I mean about the Woodside share price and the oil price.

On 28 September, Brent crude oil was trading for US$96.55. Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed the day trading for $36.69 apiece.

By 13 December, the Brent crude oil price had fallen to US$74.26 per barrel. Woodside stock dropped more than 18% over that same period to close the day at $30.02 a share.

The oil price has undergone some ups and downs since then, with more ups than downs seeing Brent crude currently trading for US$78.59 per barrel. Alongside that uptick in the oil price, the Woodside share price is up 9% since 13 December.

So, what’s all this about a promising forecast out of the United States?

Why US oil producers could boost the Woodside share price in 2024

The US has always been sitting on a small ocean of oil. But much of it is locked up in oil shale rock fragments.

It wasn’t until revolutionary technology advancements, which made unlocking that oil from the shale economically viable, that US shale production began to boom in 2008.

By 2018 the US had unseated Saudi Arabia and Russia to become the world’s top crude oil producer. And as it produces more crude, the oil price – and by connection the Woodside share price – tends to get pressured.

Which brings us to the latest forecast from the US Energy Information Administration (EIA).

According to the EIA, US crude oil production reached an all-time high in December of more than 13.3 million barrels per day (b/d).

The EIA noted that, “Crude oil production fell to 12.6 million b/d in January because of shut-ins related to cold weather.”

That drop in US production likely helped boost the Brent crude oil price by 7.6% in January. A month that saw the Woodside share price gain 4.4%.

Looking ahead, the EIA said:

We forecast production will return to almost 13.3 million b/d in February but then decrease slightly through the middle of 2024 and will not exceed the December 2023 record until February 2025.

Atop a retrace in US oil output, which would come atop the recently extended production cuts from OPEC+ members, the EIA noted that “ongoing risks of supply disruptions in the Middle East create the potential for crude oil prices” to run hotter than its mid-2024 forecast of around US$85 per barrel.

With this decreased US supply forecast in mind, it’s not only my outlook for the Woodside share price that’s been lifted.

A rising oil price could also usher in boosted Woodside dividends in 2024.

Having paid out $3.40 in fully franked dividends over the past 12 months, Woodside stock trades on a trailing yield of 10.4%.

Looking further ahead, Woodside could face fresh headwinds out of the US in early 2025. The EIA expects the US will notch new record oil production levels in February 2025.

What happened with the Santos merger deal?

In other news that gave the Woodside share price a handy boost on Wednesday, CEO, Meg O’Neill announced that the company had ceased discussions regarding a potential merger with Santos Ltd (ASX: STO).

That merger had been expected to come at a premium for Woodside with Santos shareholders more likely to benefit.

The post Why this US forecast just lifted my 2024 outlook for the Woodside share price appeared first on The Motley Fool Australia.

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More reading

• Santos shares incinerate 8% as Woodside walks away
• 5 things to watch on the ASX 200 on Wednesday
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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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