Fans of S&P/ASX 200 Index (ASX: XJO) copper shares will have one less horse in the race after today. OZ Minerals Ltd (ASX: OZL) shares are to be removed from the market this evening following BHP Group Ltd (ASX: BHP)’s takeover.

The $219 billion iron ore giant announced the completion of its $9.6 billion acquisition yesterday afternoon. That sees it become the official parent company of the copper miner.

Trading of OZ Minerals shares ceased on the close of 18 April. That stock has been halted at $28.19 since.

So, what’s next for the ASX 200 copper giant and its fans? Let’s take a look.

All OZ Minerals shares have been acquired by BHP

BHP has officially enveloped OZ Minerals shares, with those holding stock in the takeover target being paid $28.25 per share yesterday.

That means anyone wanting exposure to the company from today forward ­­will need to invest in BHP stock to get it.

The good news? The acquisition leaves BHP with a far larger critical metals footprint. CEO Mike Henry commented yesterday:

This acquisition strengthens BHP’s portfolio in copper and nickel and is in line with our strategy to meet increasing demand for the critical minerals needed for electric vehicles, wind turbines and solar panels to support the energy transition.

The payment made to the takeover target’s shareholders yesterday included $26.50 per share of cash from BHP and a fully franked $1.75 per share dividend offered by OZ Minerals. BHP’s portion of the payment was funded using cash reserves and the proceeds of a debt facility.

BHP first bid for the copper giant in August last year, first offering $25 per share before upping its offer to $28.25 per share. The OZ Minerals share price soared 35% on the initial bid and leapt another 4% on the revised offer.

Following the takeover’s implementation, BHP holds OZ Minerals’ major Prominent Hill and Carrapateena assets. They’re located nearby its existing Olympic Dam asset in South Australia.

Prominent Hill’s underground operations delivered 1.2 million tonnes of ore at 1.31% copper last quarter. Carrapateena, on the other hand, produced 15,080 tonnes of copper and 19,868 ounces of gold over the period.

Commenting in the company’s final quarterly production report late last month, CEO and managing director Andrew Cole said:

The board and management would like to thank all our stakeholders for their contribution to OZ Minerals’ success.

We trust that they feel value has been created for them in line with our strategy of creating value for all our stakeholders and our purpose, going beyond what’s possible to make lives better.

All that’s left to do now is bid farewell to the ASX 200 copper favourite before it delists this afternoon.

The post Bye bye OZ Minerals shares appeared first on The Motley Fool Australia.

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• Worried about the market? 2 ASX dividend stocks that could help you sleep at night
• Dalio says US and China ‘on brink of war’. Which ASX shares could be impacted?
• How I’d generate $400 in monthly passive income from 2 ASX 200 iron ore shares
• Why did the BHP share price dive 6% in April?
• Bull and bear factors impacting BHP shares

Motley Fool contributor Brooke Cooper 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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Exchange-traded funds (ETFs) are a popular way to invest. Certainly, I think ASX ETFs can be a very good way to build wealth. There are two in particular I’m going to tell you about which I think can deliver strong long-term capital growth.

There are some businesses that may deliver decent returns through dividends. But others can deliver good capital growth thanks to strong customer demand, a lot of re-investment by the companies, and an attractive return on equity (ROE).

With that in mind, I think ETFs that are focused on businesses with quality metrics can do well. Here are two that stand out.

VanEck MSCI International Quality ETF (ASX: QUAL)

This ASX ETF offers Aussie investors international diversification. It’s invested in around 300 businesses around the world. The following countries currently have a weighting of more than 1%: the US (74.2%), Switzerland (6.1%), Japan (3.7%), the Netherlands (3.3%), the UK (3.1%), Denmark (2.7%), Ireland (1.6%), France (1.3%), and Canada (1.2%).

But there’s more to this ETF than simply diversification. It is invested in what VanEck calls the world’s “highest-quality companies based on key fundamentals”, including a high return on equity, earnings stability, and low financial leverage.

As of 1 May 2023, its biggest holdings included Microsoft, Apple, Nvidia, Meta Platforms, and Home Depot.

Of course, past performance is not a guarantee of future results. But, in the five years to March 2023, the ASX ETF achieved an average return per annum of 14%. It outperformed the global share market (as measured by the MSCI World ex Australia Index) which returned an average of 11% per annum over the same time period.

I think the quality of the underlying businesses can help the ASX ETF continue to deliver good capital returns.

Vaneck Morningstar Wide Moat ETF (ASX: MOAT)

This is one of my favourite ETFs on the ASX.

It’s focused on US businesses that have a strong ‘economic moat’. An economic moat can also be called a company’s competitive advantage. It describes the ability of a business to fight off competitors or maintain its advantage. Economic moats can come in a number of different forms such as brand power, intellectual property, network effects, and cost advantages.

The analysts that decide which businesses to invest in decide on a watchlist of businesses that have an economic moat that will, in their eyes, almost certainly endure for the next decade and, more likely than not, the next two decades.

With that watchlist, the ETF invests in “targets companies trading at attractive prices relative to Morningstar’s estimate of fair value”.

The investment strategy has been effective. The Vaneck Morningstar Wide Moat ETF has returned an average of 16.8% per annum over the past five years.

On 1 May 2023, it had 49 holdings, with these five being the biggest holdings: Meta Platforms, Salesforce.com, Microsoft, Medtronic, and Comcast.

Foolish takeaway

I like the investment style of these two ASX ETFs and I think they can provide a mixture of both diversification and good returns.

Out of the two, I prefer the MOAT ETF but, let’s be clear, I also really like the QUAL ETF.

The post 2 top ASX ETFs I’d buy with the goal of long-term capital growth appeared first on The Motley Fool Australia.

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• Buy and hold these 3 ASX ETFs for a decade
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• 3 ETFs that could be top buys right now

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. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Home Depot, Meta Platforms, Microsoft, Nvidia, and Salesforce. The Motley Fool Australia has recommended Apple, Meta Platforms, Nvidia, Salesforce, 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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The Bank of Queensland Ltd (ASX: BOQ) share price is down a slender 0.3% in morning trade on Wednesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $5.84. Shares are currently swapping hands for $5.82.

It’s not just the Bank of Queensland share price that’s in the red today. In fact, the smaller bank is holding up better than its big four rivals.

Following yesterday afternoon’s surprise interest rate hike from the RBA and another day of losses in US markets, the ASX 200 is down 0.8% at this same time.

With the big banks all under pressure as well today, the S&P/ASX 200 Financials Index (ASX: XFJ) is down 1.5%.

Bank of Queensland share price dips amid US regional banking crisis

The fallout from the ongoing turmoil in US regional banks could throw up more headwinds for the Bank of Queensland share price and the broader financial sector over the coming weeks.

It was only Monday night Aussie time that the remnants of First Republic Bank were acquired by US banking giant JPMorgan.

The second-largest US bank failure in history came sharp on the heels of the collapse of US regional banks Silicon Valley Bank and Signature Bank in March. Fallout from those implosions helped send Credit Suisse to the brink before it was quickly taken over by UBS.

But it appears investors remain very jittery about the outlook for regional banks in the US.

In US markets yesterday shares in Western Alliance Bancorporation (NYSE: WAL) tumbled 15%. That puts the bank stock down 59% since 6 March.

Things were even more dire for PacWest Bancorp (NASDAQ: PACW). The PacWest share price crashed 28% yesterday. PacWest shares are now down 76% since 6 March and trading at all-time lows.

Which certainly helps put today’s 0.3% retrace in the Bank of Queensland share price in perspective.

What the experts are saying

Commenting on the latest sell-offs in US regional banks, Ed Moya, senior market analyst at Oanda said (quoted by Bloomberg):

Wall Street is quickly hitting the sell button as banking turmoil appears it is not going away anytime soon. Risk appetite did not stand a chance as traders focused on lingering doubts over the regional banks, rising recession odds, and growing risks that the US could default on its debt next month.

David Hunt, CEO of PGIM, cautioned that with tighter financial regulations in the pipeline, there’s likely to be more pain for the US economy ahead following the takeover of First Republic.

“There is a little bit of a tendency to kind of breathe a sigh of relief on mornings like this. Actually, we’re just starting the implications for the US economy,” he said (quoted by The Australian Financial Review).

Hunt continued:

First of all, we’re going to see a real ratcheting-up of regulation in the banking system, particularly on many … regional lenders… What that will do is … further hinder the supply of credit that’s going into the economy. And I think that we are going to see now a real slowing that begins to happen to aggregate demand.

Citigroup CEO Jane Fraser sounded a bullish tone on the outlook for US banks.

“When you take a step back and look at the structure of the US financial system, it’s incredibly sound,” she said.

Bank of Queensland share price snapshot

Over the past 12 months, the Bank of Queensland’s share price has dropped 28%. Shares are down 14% so far in 2023.

The post Bank of Queensland share price dips following more losses for US regional banks appeared first on The Motley Fool Australia.

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More reading

• Why did the Bank of Queensland share price just hit a new 52-week low?
• Bought $2,000 of Bank of Queensland shares five years ago? If so, here’s how much dividend income you’ve earned
• Lowest ASX bank yield: Are CBA shares still worth it?
• Are Bank of Queensland shares a buy following the latest results?
• Why Bank of Queensland, Lithium Power, Piedmont Lithium, and Rio Tinto are falling

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Western Alliance Bancorporation. 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 Flight Centre Travel Group Ltd (ASX: FLT) share price is in the green after the S&P/ASX 200 Index (ASX: XJO) travel giant updated its guidance on the back of a record-breaking month.

The company’s leisure and corporate legs saw their combined monthly total transaction value (TTV) surpass $1 billion for the first time ever in March as their COVID-19 recovery accelerates.

That helped to see the ASX 200 travel favourite “tracking comfortably” within its new full-year guidance range.

It’s now targeting between $270 million and $290 million of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA).

The Flight Centre share price is up 1.8%, trading at $20.92, in early morning trade.

That sees it outperforming the ASX 200 – the index is down 0.9% at the time of writing.

Let’s take a closer look at the latest update from the travel agency.

Flight Centre share price rises on record March performance

The Flight Centre share price is higher this morning on news the company has narrowed its earnings guidance and updated it to include the newly-acquired luxury tour operator Scott Dunn.

It also revealed its leisure business drove its record March – bringing in 47% of the group’s TTV. The segment’s TTV rose 280% year-on-year over the first nine months of financial year 2023.

Meanwhile, its corporate business is also outperforming. Its TTV over the 10 months to 30 April is already in line with its record financial year 2019 performance, with recent wins expected to boost future TTV.

The company’s revenue margin in the second half is expected to be in line with that of the first half and its underlying cost margin is sitting at a historic low.

Finally, it grew its cash and investments by $200 million last quarter to reach $1.3 billion.

Looking further ahead, Flight Centre is undergoing a capital management review, focusing on medium-term shareholder returns.

It’s targeting an underlying profit before tax margin of 2% for financial year 2025 and plans to reach its goal through revenue and cost margin improvements.

The Flight Centre share price has been on a roll this year, rising 41% year to date. Still, the stock remains the market’s most shorted, with a short interest of 11.6% at last count.

The post Flight Centre share price lifts following record, $1 billion month appeared first on The Motley Fool Australia.

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• Top broker upgrades Flight Centre share price
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• Is the Flight Centre share price handing ASX 200 investors a buying opportunity?

Motley Fool contributor Brooke Cooper 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 Flight Centre Travel 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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Retirees may like to consider ASX dividend shares for passive income in retirement because of a number of different reasons.

For starters, ASX dividend shares can pay investors an impressive dividend yield. People can use stocks to unlock a lot more sustainable cash flow than other types of assets may be capable of.

These businesses can also achieve capital growth over the long term, adding to the returns for investors. Retirees can build a portfolio of names that can provide diversification.

There has been a lot of volatility since the start of 2022. Lower share prices give investors the opportunity to buy these businesses with a better yield, and hopefully, there’s a better chance of capital growth in the short term and long term.

I think retirees could utilise these ASX dividend shares to create strong annual passive income.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop is not exactly a retail juggernaut, but it aims to be the leader when it comes to hair removal in Australia.

I think it’s in a good section of the retail market – whether the economy is booming or not, hair removal products could remain in demand.

The ASX dividend share has been steadily growing its scale, which is helping improve profitability. Shaver Shop has increased its dividend each year since it started paying a dividend in 2017. That’s a good record in my opinion.

Estimates on Commsec suggest the business could pay an annual dividend per share of 10.2 cents in FY23, which would be a grossed-up dividend yield of 13.5%. Further dividend growth is expected in FY24 and FY25.

GQG Partners Inc (ASX: GQG)

This is a global fund manager which offers investors a number of different investment strategies around the world.

GQG has committed to paying a quarterly dividend of 90% of its distributable earnings. This can enable the business to have a large dividend yield.

It helps that the fund manager is seeing good funds under management (FUM) inflows, while the investment funds are delivering long-term outperformance. If FUM rises, then earnings can grow and that means the dividend can grow as well.

Commsec numbers suggest that GQG could pay an annual dividend per share of 12.1 cents in 2023. This translates into a forward dividend yield of 8.3%.

Metcash Limited (ASX: MTS)

Metcash is a diversified business. It has a hardware division that owns the brands of Mitre 10, Total Tools and Home Timber & Hardware. The ASX dividend share supplies IGA supermarkets around Australia. It also supplies independent liquor retailers including Cellarbrations, Thirsty Camel, The Bottle-O, IGA Liquor, and Porters Liquor.

The business has seen a shift in shopper behaviour since COVID-19, with an increase in local neighbourhood purchasing.

Metcash continues to invest in its business to become even better – it’s focused on areas like loyalty, digital and e-commerce, data, network optimisation and development, as well as addressing legacy technology through ‘project horizon’.

The ASX dividend share has grown its dividend each year since 2020. Commsec numbers suggest it could pay an annual dividend per share of 22.1 cents in FY23. This would be a grossed-up dividend yield of 8.1%.

Foolish takeaway

Investing a total of $85,000 spread across these three ASX dividend shares would earn a total of $8,466 of annual dividend income, which amounts to monthly dividends of $705. I think that would be a very promising amount for retirees.

The post Retirees: How you could earn $705 a month in ASX dividends with less than $100K in savings appeared first on The Motley Fool Australia.

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• 2 small-cap shares I rate to beat the ASX 200 in 2023 (and beyond)
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Metcash. 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 managed to achieve a 1% rise in April. But, the S&P/ASX 200 Index (ASX: XJO) went up by 1.8%.

That represents underperformance of the index, but it also means that the ASX energy share did manage to achieve capital growth over the month.

What may have impacted the Woodside share price in April?

There were two notable events that happened during the month.

The first was the release of the first quarter report for the three months to 31 March 2023.

Woodside said it delivered quarterly production of 46.8 million barrels of oil equivalent (MMboe). This was down 9% from the fourth quarter of 2022 due to “planned turnaround and maintenance activities.” But, the ASX energy share said that full-year production guidance was unchanged.

The quarterly numbers showed sales volume of 50.4 MMboe, down 4% from the 2022 fourth quarter, primarily due to lower production.

Revenue amounted to US$4.33 billion, down 16% from the 2022 fourth quarter because of lower production and lower realised prices.

But, it’s worth pointing out that compared to the first quarter of 2022, Woodside is now producing a lot more and making more revenue thanks to the Woodside merger with the petroleum division of BHP Group Ltd (ASX: BHP).

Woodside said that its portfolio achieved an average realised price of US$85 per barrel of oil equivalent. So, the business didn’t produce as much and its revenue fell, but it’s still making quite a lot of cash flow.

At the Woodside annual general meeting (AGM), the business talked about the progress that it’s making on its projects.

For example, it noted that the Scarborough and Pluto train 2 projects combined are/were 30% complete and “remain on track for targeted first LNG cargo in 2026. It also said that it’s targeting final investment decision (FID) readiness in 2023 on the Trion oil project offshore Mexico, having completed front-end engineering design activities, issued tender packages for competitive bids and taken forward regulatory approval submissions.”

What’s the outlook for the Woodside share price?

Management sounded confident about demand for the company’s future at the AGM, which could be promising for the Woodside share price. The Woodside CEO and managing director Meg O’Neill said:

While there is considerable uncertainty over how the energy transition may unfold in the decades ahead, we can be confident that global energy demand will continue to grow, as the more than one billion people without access to reliable and affordable energy pursue the same quality of life that we enjoy.

That demand, and the role gas can play as a lower carbon source of the energy the world needs, underpins our confidence in the long-term strength of our business.

As I outlined in my speech to the National Press Club last week, the natural gas produced by Woodside can support three important, interrelated goals: providing affordable and reliable energy for Australians; maintaining strategic partnerships and energy security in our region; and progressing global decarbonisation.

Gas is not the only answer to achieve these goals. But it is, and will continue to be, an essential part of the equation.

Valuation snapshot

Between the start of 2023 to the end of April, the Woodside share price dropped around 5%.

The post What went down for the Woodside share price in April? appeared first on The Motley Fool Australia.

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• Worried about the market? 2 ASX dividend stocks that could help you sleep at night
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• How I’d invest $1,000 in May to make easy passive income
• Woodside share price in the green as Shell offloads stake in $30 billion JV gas project

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

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Bought Whitehaven Coal Ltd (ASX: WHC) shares in 2018? You’re likely pretty happy with your investment – now.

The coal stock has been on a roll as of late. However, the last five years haven’t been all sunshine.

It plunged more than 80% between May 2018 and September 2020 alongside coal prices. But all that turned around as activities kicked off again in the wake of the worst of the COVID-19 pandemic.

The black rock’s value surged again as Russia invaded Ukraine. Sanctions imposed on Russian coal and fears of a European energy crunch bolstered demand for coal, sending its price to a record high in 2022.

Of course, that benefited Whitehaven’s earnings and shares (and dividends, as readers will soon see).

An investor buying $12,000 worth of the coal producer’s stock in May 2018 likely would have walked away with 2,542 shares, paying $4.72 apiece.

Today, that holding would be worth $18,353. The Whitehaven share price has gained 53% over the last five years to reach $7.22.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has risen 20% in that time.

But what about the passive income offered to our figurative Whitehaven investor? Let’s take a look.

All dividends paid to those holding Whitehaven shares since 2018

Here are all the dividends paid to those holding shares in Whitehaven over the last five years:

Whitehaven dividends’ pay date	Type	Dividend amount
March 2023	Interim	32 cents
September 2022	Final	40 cents
March 2022	Interim	8 cents
March 2020	Interim	1.5 cents
September 2019	Final	13 cents
September 2019	Special	17 cents
March 2019	Interim	15 cents
March 2019	Special	5 cents
September 2018	Final	14 cents
September 2018	Special	13 cents
Total:		$1.585

As the chart above shows, each Whitehaven share has yielded $1.585 in dividends since May 2018.

That means our figurative parcel has likely brought in $4,029 of passive income over its life.

It also brings our total return on investment (ROI), considering both share price gains and dividends, to an impressive 86%.

Just imagine the returns one might have realised had they reinvested their dividends, thereby compounding their gains.

And the party isn’t over for the passive income-providing stock. Whitehaven shares trade with a 9.97% dividend yield right now.

The post Invested $12,000 in Whitehaven shares 5 years ago? Here’s how much passive income you’ve earned appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• No savings at 30? I’d invest $3 a day in ASX shares to target a second income of $10,824 a year
• Here are the top 10 ASX 200 shares today
• 12 ASX dividend shares with yields over 10%. Are they too good to be true?
• Leading brokers name 3 ASX shares to buy today

Motley Fool contributor Brooke Cooper 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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So, the RBA put interest rates up.

Again.

Which seemed to have surprised the markets, and many economists.

For what it’s worth, I don’t do predictions. In part because no-one knows for sure (and the times everyone ‘knows’ aren’t very useful anyway), and in part because they don’t really help me invest any differently.

Unless you trade currencies (and if you do, good luck with that) making interest rate predictions is just a parlour game.

So, when I’m asked what the RBA will do, I usually just give my stock line – ‘I don’t do predictions’ – then give a view on what they should do, instead.

And this time around, the RBA did what I thought they should do – raise the rate.

But also, and this is why I’m surprised the market was caught out, it was what they’d foreshadowed last month.

I’m sorry if you’re struggling under an enormous mortgage repayment.

I wish the RBA had another option.

But, realistically, with inflation at 7%, they don’t.

If you have your foot on the proverbial throat of your opponent (the opponent is inflation, for the record!), we all know the worst thing to do is to let them off the mat.

So while the RBA risks going a little too far, it would be much worse to not go far enough.

Inflation in the UK is 10.1%.

We really, really don’t want to end up there.

Sure, there are differences, but that’s a glimpse of one potential future if the inflation genie, half-way back into the bottle, is allowed to escape.

If it did?

If it did, we’d probably see another round of rate hikes in a few months’ time, to a higher level than if the RBA kills inflation, now, once and for all.

Which, I assume, was their thinking.

And which, I think, is the right approach.

Of course, it needn’t be the only weapon in the fight against inflation.

Thanks to – how do I put this delicately – ‘less ambitious’ government policy, the RBA is doing all the heavy lifting right now.

Not only is it trying to slow an overheating economy, it’s also trying to fill the hole created by the government (and the last government – this is a bipartisan shortcoming) running a budget deficit.

Yes, the government is stimulating the economy while the RBA is trying to cool it.

Just let that sink in for a second.

And before you put the boot into the current Treasurer, remember that the last Treasurer also left behind a budget that was also in structural deficit.

Which is why the RBA has to be the adult in the room.

It’s a thankless task, of course – everyone is blaming the RBA for raising rates – but it feels it has little in the way of options.

And I think it’s right.

Meanwhile, the government is raising a little extra revenue by whacking smokers with another 5% increase in the tobacco excise.

Not a bad thing, overall (though if you’re not quitting already, I’m not sure this makes a big difference, but it probably makes those poor smokers, well, poorer).

Would it be too cynical for me to assume that taxing smokers a little more isn’t going to draw much in the way of popular ire, while actually doing something about the deficit might be unpopular, and so, politically challenging?

I’ll let you be the judge.

And for investors?

Well, other than a lesson in realpolitik, a couple of thoughts:

First, on smokes, there’s a lesson here in pricing power and what my economics teacher called the ‘elasticity of demand’. If you can raise the price of something and not deter too much consumption, you can make some serious money.

(In case you missed high school economics, if demand changes with price, the product is called ‘elastic’. If you can raise the price without impacting demand, that’s known as ‘inelastic’. It’s a continuum, of course, but you get the idea.)

It’s why companies with ‘pricing power’ are so attractive for investors. If you can raise prices and not see much of a fall in your sales volume, most of that extra revenue falls straight to the bottom line as extra profit.

That is a very, very good thing.

It’s also relatively rare, as you’d expect. But if you can find it (and if you pay a decent price) it should make for a good investment.

And on rates, a reminder that a temporary increase in the cost of money (i.e. interest rates) is a far, far better thing than a permanent increase in prices (i.e. inflation), even if it doesn’t feel like it at the time.

And it often doesn’t feel like it, because inflation feels disembodied – it’s a general ‘thing’ that just happens. But interest rates? They’re controlled by a board (and usually represented by one man, Governor Phil Lowe).

And so while inflation feels unavoidable, rates feel (and are) deliberate choices. And that means we have someone to blame!

It’s yet another example of the psychological forces that are at play for all humans, and which we need to recognise, and hopefully control, as investors.

Yes, you need a basic understanding of accounting.

You absolutely need to know business models, and understand what makes companies tick.

But more than that?

Well, tell ‘em what you said, Warren Buffett:

“Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”

The urge to over-trade. To chase last year’s winners. To believe complexity is better than simplicity.

The urge to take on too much risk. To try to ‘get rich quick’. To do what the cool kids are doing.

We’ve seen those in spades, in recent years.

We saw them in 2007.

And in 1999.

The answer?

Keep a cool head. Don’t over-complicate things.

Focus on the long term.

Luckily for me, I’m not a footy player. Not just because I don’t have the required talent, but also because their careers are short, and over by 35.

Fortunately, I’m an investor. A game where compounding not only applies to money, but to experience and knowledge, if you let it.

Don’t get me wrong – age alone isn’t enough. I know some wise 26 year olds and some, well, less-than-wise retirees.

But if you are committed to understanding the basics, doing the simple things well, and learning from both history and experience?

I think there’s a very, very good chance that you’ll be very happy with the outcome.

As for politics? Well, that’s a whole other problem!

Fool on!

The post Buffett, rates and cigarettes appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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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Wouldn’t an extra $500 a month in passive income be nice? Unfortunately, there are no easy solutions to the problem of gaining a stream of secondary income of this size. But fortunately, ASX shares can provide a clear pathway to this goal, if not a short one.

So today, I’ll walk you through my five-step plan to secure a $500 per month stream of passive, dividend income from ASX shares.

A 5-step plan to building $500 a month in passive income from ASX shares

Step 1: Knowledge is power

The first step in this journey is understanding exactly how ASX shares can help you build a source of passive income. It is common to hear shares spoken about in terms of ticker codes, charts, and ‘picks’. But a better way to view a share is as a piece of a business.

Buying shares is really investing in the fortunes of a company. Buy the right company, and you share in its prosperity. Buy the wrong one, and well… we know what can happen.

The vast majority of ASX shares pay their shareholders dividends regularly. A dividend is a cash payment made to shareholders by the company as a way of encouraging ownership and rewarding investors.

Most companies’ dividends fluctuate from year to year, but the best ones tend to raise them consistently over long periods of time. Accumulating more and more of the best dividend shares should lead to more and more passive dividend income.

Step 2: Getting your house in order

Understanding dividend investing is one thing, but preparing your finances to be able to build up a stream of passive income is another. Everyone’s personal financial circumstances are different of course.

But as a good rule of thumb, you should not be investing until you have cleared any personal debts you may have (such as credit cards or personal loans), and you are in a position to save more of your income than you spend.

Only once you have your personal budget ‘in surplus’, and you have enough money stashed away for a rainy day, you should be thinking about deploying additional funds into building a secondary income.

Step 3: Choosing your ASX dividend shares

This is probably the hardest step of them all. Investors in dividend-paying shares should probably follow the same ‘best practice’ rules as any other investor, especially building a diversified portfolio of different shares. Just investing in the big banks, for example, exposes you to any issues that might only affect the banking sector.

So most investors should aim for a diverse grouping of the best businesses across different sectors. Those might include high-quality names like Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Brickworks Ltd (ASX: BKW), Coles Group Ltd (ASX: COL), and Telstra Group Ltd (ASX: TLS).

If that all sounds overwhelming, an alternative path is to pursue index exchange-traded funds (ETFs) like the Vanguard Australian Shares Index ETF (ASX: VAS). ASX index funds hold the largest 200 or 300 shares on our markets, giving you automatic diversification.

These funds have to pass on any dividend income they receive too, so you will get what could be called an average of all the dividends that the Australian share market is paying out every year.

Step 4: Build your passive income snowball

Once you have found your ideal dividend-paying shares, it’s time to get buying. Remember, the dividend yield you can expect from a company will rise as its share price falls. So it’s usually better to buy your favourite companies at the cheapest price you can.

Then, it’s just a case of rinse and repeat. When one starts out investing, it can be a little discouraging seeing your first dividends come in when you are getting a few dollars at a time. But if you relentlessly plough any surplus capital into buying ever more dividend shares, it should snowball. Make sure you reinvest your dividends back into buying more shares every time too – that will make a huge difference as the years tick by.

Step Five: Patience, grasshopper

The final step is both the easiest and hardest: waiting. Building up a dividend income stream takes even the best investors many years. To get to $500 a month, you will need to have a total of $150,000 in invested capital if you are getting an average yield from your shares of 4%.

But, although this is a tough ask, it is doable. If one invests $500 every month, reinvests dividends, and can get an average return of 7% per annum, then getting to $150,000 will take just over 15 years. If you can manage $1,000 a month, then this timespan drops to under a decade.

The post My 5-step plan to achieving $500 in monthly passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group, Vanguard Australian Shares Index ETF, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. 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 Qantas Airways Limited (ASX: QAN) share price hit a spot of turbulence on Tuesday.

The airline operator’s shares dropped 3% to end the day at $6.54.

This followed the announcement that Qantas’ long-serving CEO, Alan Joyce, would be retiring from the role later this year. Joyce will be replaced by the company’s current chief financial officer, Vanessa Hudson.

When Joyce finally departs in November, he will have been at the helm for approximately 15 years. Investors appear concerned what this change could mean for the company and ultimately their investment.

Well, the good news is that one leading broker appears to believe it will be business as usual for Qantas. As a result, it has retained its buy rating on Qantas’ shares.

What is being said about the Qantas share price?

According to a note out of Goldman Sachs, its analysts have retained their buy rating and $8.30 price target on its shares.

Based on the current Qantas share price, this implies potential upside of 27% for investors over the next 12 months. Goldman commented:

QAN has announced that Vanessa Hudson will succeed Alan Joyce as CEO of QAN from November 2023. Ms. Hudson is QAN’s current CFO and has held a number of roles (commercial, customer and finance) at the company since 1994. QAN highlighted that Ms. Hudson has been directly involved in shaping/executing the current strategy, including the fleet selection process for the renewal of the domestic aircraft fleet.

We are Buy-rated on QAN, and the shares are on our Conviction List. Our 12-month target price of A$8.30 is based on a 50%/50% weighted blend of our DCF and EV/EBITDA (QAN’s pre-COVID multiple and is discounted at QAN group WACC for a 12m fwd valuation) valuations. […] Our estimated FY24e EPS sits 65% above pre-COVID levels. Despite this, QAN’s market capitalisation is only 10% above pre-COVID levels (EV 8% lower).

The post Here’s what this broker is saying about the Qantas share price appeared first on The Motley Fool Australia.

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

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