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.

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• 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.

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• 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.

More reading

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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.

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• This ASX 200 stock gained in April while the market sank 3%. Is it a buy?
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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.