Now could be the time to snap up Telstra Group Ltd (ASX: TLS) shares.

That’s the view of analysts at Goldman Sachs, which have just reiterated their buy rating on the telco giant’s shares with an improved price target.

According to the note, the broker has lifted its valuation to $4.70, which implies potential upside of 9.3% for investors over the next 12 months.

It is also forecasting a 4% dividend yield in FY 2023, boosting the total potential return beyond 13%.

What did Goldman say about Telstra shares?

Goldman Sachs highlights that Telstra’s mobile pricing across prepaid and JB Hi-Fi Limited (ASX: JBH) has been lifted meaningfully ahead of its postpaid pricing review.

It believes this is a sign that the telco will increase its prices by the full CPI rate, which is more than it was expecting. And while this won’t be good news for consumers, the broker expects it to give Telstra’s earnings a boost. It explains:

Following recent (and significant) mobile prices changes from Telstra (Prepaid, JB-HiFi), we now believe they are more likely to fully utilize CPI (GSe +7% in Mar-23) at the upcoming postpaid mobile price review – raising plan pricing by c.$4-6/m. This is ahead of our prior forecast for a c.$2-3/m, so drives our FY24-25E EBITDA +1.6%/+1.1% and EPS +4%/+2% (higher pricing, partly offset by lower postpaid sub growth).

Ahead of the July price rise, Telstra needs to ensure that its postpaid/prepaid premium is correctly managed, to prevent significant ‘spin-down’ to prepaid (noting stronger prepaid SIO growth in 1H23). Hence the announced $5 increase on Prepaid plans in July provides scope to increase postpaid plans by $4/m (or CPI), while keeping the postpaid/prepaid premium below its historical +41% average (+$4 increase results in +38% premium).

In light of the above, Goldman Sachs believes that the market is underestimating the company’s mobile earnings growth. As a result, it sees the upcoming price increase announcement as a potential catalyst to driving Telstra shares higher. It concludes:

Ultimately, we continue to believe consensus mobile forecasts look conservative, and now sit +3% ahead of FY24 postpaid ARPUs. We expect updated mobile pricing expected to be announced in coming weeks (to give sufficient notice to the Jul-23 introduction), which should be positively received. We re-iterate our Buy rating on Telstra, and increase our 12m TP to $4.70, in-line with earnings.

The post Here’s why Goldman Sachs just became even more bullish on Telstra shares appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Better ASX blue-chip share to buy for safe returns: CBA vs. Telstra
• Building wealth through dividend investing: 5 ASX shares to boost your income
• Own Telstra shares? Here are 3 things you might have missed in the last 30 days
• Here are the 3 most heavily traded ASX 200 shares on Friday

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Jb Hi-Fi. 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 hectic 2022, the energy industry is expected to enjoy continued hot demand this year.

The war in Europe is still going, and the transition to renewable energy requires years for infrastructure to be built and brought online.

That means ASX shares of existing energy producers will cash in.

Marcus Today equity analyst Damien Shaw this week helpfully picked out two S&P/ASX 200 Index (ASX: XJO) energy stocks he would buy into right now:

‘Optimistic’ this gas producer will meet its targets

Shaw is a fan of Beach Energy Ltd (ASX: BPT) even though the company’s third-quarter production dropped 5%.

“The decrease can be attributed to planned and unplanned outages,” Shaw told The Bull.

“Guidance remains on target. Progress is continuing at the Waitsia gas plant, with first gas targeted by the end of 2023.”

The balance sheet is “robust”, he added.

“We remain optimistic that Beach Energy will achieve its full year production targets, supported by expanding existing projects and a new gas plant.”

The Beach Energy share price has fallen 5.4% year to date, while paying out a 2% dividend yield.

Shaw’s peers seem to largely agree with his bullishness for the gas producer.

According to CMC Markets, 13 out of 19 analysts currently rate Beach as a buy.

‘It’s presented a buying opportunity’

Karoon Energy Ltd (ASX: KAR) has also experienced recent hardships, seeing its stock price dive more than 11% over the past 10 days or so.

“The oil and gas producer recently suspended production at its Bauna project in Brazil. Also, the Brazilian Government announced a tax increase on oil exports,” said Shaw.

“These events caused the stock price to marginally slip.”

But for those investing with a long-term horizon, the dip is an incentive to dive in right now.

“In our view, it’s presented a buying opportunity, as Karoon Energy offers strong management and high growth potential.”

The short-term crash hasn’t impacted longer-term performance too badly. Karoon is only down 1.8% year to date, and has actually gained 5.9% over the past 12 months.

Again, many other professionals also reckon Karoon is headed up. Nine out of 11 analysts currently surveyed on CMC Markets rate it as a buy.

The post ‘High growth potential’: 2 ASX 200 energy shares to buy this week appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday

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 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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Flight Centre Travel Group Ltd (ASX: FLT) shares were known as an attractive ASX dividend share before the COVID-19 pandemic occurred and smashed the global travel sector. Could the good times return for passive income?

The signs are certainly looking positive for the ASX travel share, with Flight Centre generating $95 million of underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half of FY23, beating its initial target of between $70 million to $90 million.

That represented a $280 million turnaround from the FY22 first-half loss.

The company reported that its first-half total transaction value (TTV) increased by 203% to $9.9 billion and tracked at 80% of the record FY20 first-half result. The corporate business is delivering record TTV and was “set to top $10 billion during FY23”.

Flight Centre has targeted a 2% underlying profit before tax (PBT) margin by the end of FY25 and said there were positive margin trends.

Is this good news for Flight Centre dividends?

The ASX travel share didn’t declare an interim dividend. Flight Centre said:

The company has initiated a review of its capital structures ahead of an anticipated uplift in earnings and cash generation. The review will consider the business’ cash requirements to fund growth, shareholder returns and debt structures, including FLT’s convertible notes.

Commsec estimates currently suggest that there will be no dividend from the company in 2023.

But, in the 2024 financial year, projections on Commsec indicate that Flight Centre might pay an annual dividend per share of 30.8 cents.

Then, in the following year (FY25), it might pay an annual dividend per share of 64.5 cents per share. Now, that payment would be lower than what was paid per share in FY10, so there’s a long way to go for the business’ payouts to get back to former heights.

Will earnings keep rising?

Projections are just an educated guess, but the forecasts on Commsec suggest that earnings per share (EPS) could be 30.9 cents in FY23 and by FY25, it could be $1.23.

The company suggested that through its “diverse global leisure and corporate networks, Flight Centre is also well placed to capitalise on pent-up demand as travel continues to recover towards pre-pandemic levels.”

In FY23, Flight Centre is targeting underlying EBITDA of between $250 million to $280 million. It’s expecting improving profit margins and will consider acquisitions to fast-track growth in sectors that it is under-represented in or to secure new models, revenue streams, systems or technology.

When it announced its result on 22 February 2023, the company said it continued “to monitor trading conditions globally but has not seen any noticeable impacts on customer trading patterns as a result of changing macroeconomic dynamics”.

Things are looking promising for the ASX travel share over the next couple of years.

The post When will my Flight Centre shares start paying income again? appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares this week
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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 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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The A2 Milk Company Ltd (ASX: A2M) share price could come under pressure on Wednesday.

This is because the infant formula company has just released an update, which reveals that trading conditions have not been favourable in the daigou channel.

A2 Milk share price on watch following shock update

This morning, A2 Milk responded to the release of an update from its dairy processing partner, Synlait Milk Ltd (ASX: SM1).

That update revealed that Synlait Milk has downgraded its full-year earnings guidance by NZ$20 million less than a month after releasing it to the market. It now expects its earnings to be in the range of a NZ$5 million loss to a NZ$5 million profit.

Management blamed this largely on “further advanced nutrition demand reductions, mostly from one of Synlait’s customers, which impact consumer-packaged infant formula volumes and base powder production.”

A2 Milk response

In response to this announcement, A2 Milk has revealed that it has lowered its total forecast production volume needs for English label consumer-packaged infant milk formula by ~1,650 metric tonnes for the period March through to June.

There were three reasons for this reduction. These are significant daigou weakness, inventory buildup, and distribution model adjustments. It explained:

This is mainly due to: continued weakness in the ANZ Daigou / reseller market which is down 49% in the most recently reported quarter from Kantar; the impact of significant cumulative delays in English label consumer-packaged IMF deliveries from Synlait to a2MC over an extended period expected to be fulfilled in 4Q234 resulting in a material amount of inventory arriving within a relatively short period which needs to be managed; and ongoing refinement of the Company’s English label distribution model resulting in more customers and distributors being supplied directly out of Hong Kong and China leading to lower future a2MC and channel inventory requirements.

Guidance unchanged

Despite the above, A2 Milk has reaffirmed its previous guidance for FY 2023.

It continues to expect FY 2023 revenue growth in the low-double digits, with softer English label infant formula sales to be partially offset by continued strong double-digit growth in China label revenue. Though, it does concede that its revenue growth is likely to be at the low end of its previous expectations (ie 10% growth).

Finally, A2 Milk’s EBITDA margin as a percentage of sales is still expected to be similar to FY 2022.

The question now, though, is what will demand look like in FY 2024 and is its inventory buildup a sign of tough times and inventory write-offs ahead? Time will tell.

The post A2 Milk share price on watch following worrying update appeared first on The Motley Fool Australia.

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• The A2 Milk share price has fallen 16% in around two months: Time to buy?
• Here are the top 10 ASX 200 shares today
• Why have A2 Milk shares come off the boil again?
• Why did the A2 Milk share price crash 12% in March?
• Why is the A2 Milk share price underperforming on Tuesday?

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 recommended A2 Milk. 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 downfall of ASX growth shares over the past 18 months has meant many investors have flocked to the safety of dividend stocks.

However, a high yield does not necessarily make a great investment.

This is because a stock might offer outstanding dividend yields because its valuation has fallen. And a point-in-time yield percentage does not say anything about the future prospects of the business.

So in order to pick an income-producing stock that also has sound business fundamentals, the yield might need to come down a tad from the highest on offer.

8% dividend with excellent growth? Yes, please

SG Fleet Group Ltd (ASX: SGF) is not a name often spoken about, but the company currently offers a chunky dividend yield of 8.15%.

The Sydney company, with a market capitalisation of around $660 million, provides fleet management services.

With a resurgence in private transport since the emergence of COVID-19, the company has posted an impressive performance in recent times.

In fact, during February’s reporting season, SG Fleet shares rocketed 10% in just a couple of hours after posting a 41% leap in half-year profit.

“We have demonstrated the strength of our competitive position and our ability to turn the steady stream of new business opportunities into further customer wins and vehicle orders,” the company announced at the time.

Add to that a 100% franked dividend stream, and you have yourself a handsome income stock in your portfolio.

Another bonus is that currently, the share price is trading about 23% lower than it was a year ago, presenting a tempting buying opportunity.

On CMC Markets, all four analysts covering the fleet manager rate the stock as a buy.

Rules are changing for more efficient vehicles 

Earlier this month, finance expert and accountant John-Louis Judges named SG Fleet as a stock that’s set to benefit from a changing Australian economy.

“Recent changes to the fringe benefits tax for electric and low-emission vehicles in Australia have made it more attractive to lease rather than buy these vehicles, benefiting SGF’s business model,” Judges said in The Bull.

“There is an expected increase in demand for SGF’s services following [a] global… shift towards environmentally friendly vehicles.”

He noted how the company operates in Australia, New Zealand, and the United Kingdom.

“SGF’s global spread indicates a diversified revenue stream, and allows them to weather any economic downturns or market volatility,” he said.

“SGF’s ability to adapt to changing market conditions and strong financial performance make it a sound investment choice for investors who may be looking for long-term growth.”

The post My top high-yield ASX dividend stock to buy in 2023 appeared first on The Motley Fool Australia.

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More reading

• A2 Milk share price on watch following worrying update
• Pro Medicus shares: Bull vs. Bear
• 5 things to watch on the ASX 200 on Wednesday
• Analysts say income investors should buy ANZ and these ASX dividend shares
• Goldman Sachs says buy these ASX 200 shares for passive income

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 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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Growing shareholder wealth by 50 times in a single lifetime is something very few listed companies can attest to. Believe it or not, ASX healthcare share Pro Medicus Limited (ASX: PME) has achieved this since listing back in the year 2000.

Fast forward to the past year, and the medical imaging software company is still putting the S&P/ASX 200 Index (ASX: XJO) to shame. Shares in the ASX 200 member have flown 27.2% higher, while the benchmark has climbed a lesser 5.5%.

Nevertheless, let’s put the past in the past and focus on what matters most… the future. Assigned with painting the possible path forward, two of our writers have gone to town on whether investing now in Pro Medicus shares makes sense.

Priced to perfection despite a huge rise in interest rates

By Tristan Harrison: Pro Medicus is one of the best businesses on the ASX, in my opinion. Clients seem to love the software offering, it has excellent margins, and recent contract wins have been impressive. I wish I’d bought it a while ago.

Having said that, however, I think a company’s valuation can be a major risk to the investment case. As investors, we’re trying to buy a piece of the profit/cash flow for a price that will reward us in the future.

According to Commsec, Pro Medicus could generate 55.5 cents of earnings per share (EPS) in FY23 and 87.6 cents in FY25. This would put its share price at 113x FY23 and 71x FY25’s estimated earnings.

In a low-interest environment, those would be pricey valuation numbers. Interest rates have shot higher, yet the Pro Medicus share price is where it was at the end of 2021.

But other high-quality ASX shares have fallen hard. Shares in Xero Limited (ASX: XRO), for example, have plunged 35% over the same period, while the Altium Limited (ASX: ALU) share price is down 15% since December 2021.

Arguably, I don’t think the Pro Medicus share price reflects the higher interest rate considering how much growth is priced in.

While I believe the business has a very promising future, there is little room for error when it comes to the share price. That may mean that anything less than perfection is treated harshly by investors. Future success is not guaranteed.

With Pro Medicus having such high profit margins, it could attract competition from other software providers over time, which could slow growth or mean that clients are considering price comparisons. I think this would be bad news for Pro Medicus’ longer-term growth prospects. 

Motley Fool contributor Tristan Harrison does not own shares in Pro Medicus Limited and owns shares in Altium Limited.

What are the bears overlooking in Pro Medicus shares?

By Mitchell Lawler: Let’s address the elephant in the room… there’s no denying that Pro Medicus looks expensive at an earnings multiple of around 130 times. For comparison, the average price-to-earnings (P/E) ratio for the global healthcare services industry is approximately 39 times.

However, Pro Medicus is not your average healthcare services company. Scratch that… Pro Medicus is not your average company, period. When it comes to earnings growth and return on capital, the medical imaging software provider ranks among the top tier — both locally and against US-listed businesses.

Over the past five years, earnings per share have grown at a compound annual growth rate (CAGR) of 45.6% — the ninth highest of all ASX and US-listed companies. Furthermore, its return on capital of 40.7% places it as the 24th most efficient with capital — making it a truly world-class company.

Based on the attractive unit economics of Pro Medicus’ software product, earnings should be able to grow faster than revenue. As such, the all-important metric for the company’s future success is the number of customer deals and deal size.

Historically, the annual value of total deals (in dollar terms) with healthcare groups has followed an upward trajectory of 22% growth per annum, as pictured above.

I believe there is the possibility of Pro Medicus accelerating beyond this rate over the coming five years if it can negotiate contract renewals at an enlarged deal size while also adding new customers.

On top of this, the company has yet to meaningfully develop its presence in the European market, offering another avenue of growth once established.

Lastly, Pro Medicus has built up a sizeable war chest of cash in recent years. The amount tallied up to $94.2 million at the end of 2022.

Although the company’s thick margins are surely attracting competition, its balance sheet should give it the option to either invest in maintaining its leadership or acquire upcoming competitors.

Motley Fool contributor Mitchell Lawler owns shares in Pro Medicus Limited.

The post Pro Medicus shares: Bull vs. Bear appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Pro Medicus, and Xero. The Motley Fool Australia has positions in and has recommended Pro Medicus and Xero. 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 Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a small decline. The benchmark index fell 0.1% to 7,322 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall on Wednesday following a difficult night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 22 points or 0.3% lower this morning. On Wall Street, the Dow Jones was down 1%, the S&P 500 fell 1.6% and the Nasdaq sank 2%. Investors were hitting the sell button after US-based First Republic Bank’s earnings release reignited concerns about the sector.

Oil prices tumble

It could be a tough session for ASX 200 energy shares such as Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) after oil prices tumbled overnight. According to Bloomberg, the WTI crude oil price is down 2.1% to US$77.11 a barrel and the Brent crude oil price has fallen 2.4% to US$80.72 a barrel. This was driven by concerns that rising interest rates could slow economic growth, impacting oil demand.

BHP named as a buy

The team at Morgans has responded reasonably positively to the BHP Group Ltd (ASX: BHP) quarterly update. Its analysts have retained their add rating with a slightly trimmed price target of $50.40. They commented: “3Q23 operational result that was in-line with our estimates while trailing consensus in some areas. Already in accumulate territory, further market jitters could uncover an attractive buying opportunity.”

Gold price edges higher

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged higher overnight. According to CNBC, the spot gold price is up 0.5% to US$2,009.4 an ounce. The precious metal rose on banking sector concerns.

Buy Telstra shares: Goldman Sachs

The Telstra Group Ltd (ASX: TLS) share price could be great value according to Goldman Sachs. This morning, the broker has reiterated its buy rating with an improved price target of $4.70. Goldman has boosted its earnings estimates to reflect its belief that postpaid mobile plan prices will increase by the full CPI rate (7%), which is more than Goldman was expecting.

The post 5 things to watch on the ASX 200 on Wednesday 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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There are plenty of options for income investors on the Australian share market. This can make it hard to decide which ASX dividend shares to buy for your portfolio.

To narrow things down, I have picked out a couple of dividend shares that analysts are very positive on. Here’s what you need to know:

ANZ Group Holdings Ltd (ASX: ANZ)

The first ASX dividend share for income investors to consider buying is banking giant ANZ.

Thanks partly to its institutional business, the team at Citi believe the bank is on course to deliver a stronger than expected result during the first half.

In light of this, the broker recently put a buy rating and $29.25 price target on its shares. It also named ANZ as its top pick in the banking sector.

Another positive is that Citi expects some big dividend yields from its shares in the near term. It is forecasting fully franked dividends of 166 cents per share in FY 2023 and then 168 cents per share in FY 2024. Based on the current ANZ share price of $24.22, this will mean yields of 6.85% and 6.9%, respectively.

Rural Funds Group (ASX: RFF)

Rural Funds could be another dividend share for income investors to consider buying. It is an agriculture-focused real estate property trust.

With Australia the food bowl of Asia, Rural Funds appears well-positioned for growth over the long-term. Especially given its long-term leases and periodic rental increases.

Bell Potter is positive on the company and has a buy rating and $2.65 price target on its shares.

As for dividends, the broker is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.2 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $1.97, this represents yields of 5.9% and 6.2%, respectively.

The post Analysts say income investors should buy ANZ and these ASX dividend shares appeared first on The Motley Fool Australia.

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• Lowest ASX bank yield: Are CBA shares still worth it?
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• Passive income plan: I’d invest $100 a week in ASX 200 shares to earn $7,500 of annual dividends
• 5 reasons I’m still positive about this ASX 300 share despite the 40% drop

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 positions in and has recommended Rural Funds 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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Are you looking for ASX 200 dividend shares to buy? If you are, you may want to check out the two listed below that Goldman Sachs has tipped to provide attractive yields.

Here’s what you need to know about these ASX dividend shares today:

Elders Ltd (ASX: ELD)

The first ASX 200 dividend share that Goldman rates as a buy is agribusiness company, Elders.

Its analysts are very positive on the company’s outlook and feel that recent weakness has created a buying opportunity for investors. Particularly given its belief that “the fundamentals of this company remain unchanged, and strong” and that “ELD is very well positioned to grow through the cycle.”

The broker currently has a buy rating and $13.20 price target on the company’s shares at present.

As for dividends, Goldman is forecasting fully franked dividends per share of 47 cents in FY 2023 and 52 cents in FY 2024. Based on the current Elders share price of $8.39, this will mean yields of 5.6% and 6.2%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share that has been named as a buy by Goldman Sachs is banking giant Westpac.

Its analysts highlight that “while NIM pressures are accelerating across the sector, WBC’s shorter-duration replicating portfolio, and current balance sheet performance, should see its NIM outperform peers.”

The broker currently has a conviction buy rating and $25.86 price target of the banking giant’s shares. This compares very favourably to the latest Westpac share price of $22.25.

In addition, it is forecasting some very attractive fully franked dividend yields in the coming years.

For example, Goldman Sachs expects fully franked dividends of 144 cents per share in FY 2023 and then 150 cents per share in FY 2024. This equates to yields of 6.5% and 6.75%, respectively.

The post Goldman Sachs says buy these ASX 200 shares for passive income appeared first on The Motley Fool Australia.

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More reading

• Lowest ASX bank yield: Are CBA shares still worth it?
• Building wealth through dividend investing: 5 ASX shares to boost your income
• Brokers name 3 ASX shares to buy now
• Can Westpac shares really deliver 15% upside AND a 6% dividend yield?
• These are the best ASX 200 bank shares to buy: brokers

Motley Fool contributor James Mickleboro has positions in Westpac Banking. 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 Elders and Westpac Banking. 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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Commonwealth Bank of Australia (ASX: CBA) shares have been one of the ASX’s most popular constituents ever since the bank was privatised in the 1900s. Today, CBA is the undisputed king of the pile when it comes to ASX 200 bank shares.

With its market capitalisation of almost $170 billion, only BHP Group Ltd (ASX: BHP) can boast of beating CBA when it comes to Australia’s largest listed company.

But one thing stands out when comparing CBA to its fellow ASX 200 bank shares. And it’s the first metric most ASX investors look at when analysing an ASX bank: the dividend yield.

Right now, CBA shares have a trailing dividend yield of 4.2%. That’s fully franked, of course. This yield stems from CBA’s last two dividend payments, which together came to $2.10 per share.

Now 4.2% is nothing to turn one’s nose up against, of course. But it is decidedly on the smaller end of the ASX financial sector yield curve.

For instance, the next ASX 200 bank on the scale is National Australia Bank Ltd (ASX: NAB). It currently offers a dividend yield of 5.24%. Westpac Banking Corp (ASX: WBC) stands at 5.62%, while ANZ Group Holdings Ltd (ASX: ANZ) is sitting at a meaty 6%.

Outside the big four, things get even more interesting still. Bendigo and Adelaide Bank Ltd (ASX: BEN) currently has a trailing yield of 6.36%. And Bank of Queensland Ltd (ASX: BOQ) is sitting on a whopping 7.31% (although this might be in jeopardy).

All in All, CBA’s yield looks a little diminutive compared to all of its peers.

So with that in mind, should ASX investors even bother with CBA shares right now?

Are small-yield CBA shares still a buy today?

Yesterday, the CBA share price closed at $100.11.

As my Fool colleague Bronwyn comprehensively covered last week, that sits fairly close to what the majority of ASX brokers reckon the shares will be in a year’s time.

ASX broker UBS currently has a neutral rating on the CBA share price, with a 12-month price target of $100. Morgans is even less optimistic, with a target of just $96.11.

So not a lot of enthusiasm for CBA from ASX brokers right now.

In fact, many brokers are recommending investors go with one of CBA’s big four stablemates. UBS is buy-rated on ANZ shares at the moment, with a $25 share price target instead.

Morgans prefers Westpac and has an add rating on those shares, with a share price target of $25.80. Whereas fellow ASX broker Goldman Sachs picks NAB as its favourite, with a buy rating and a $35.42 share price target.

Not too many ASX experts appear to like the CBA share price right now. But only time will tell whose picks prove to be on the money. 

The post Lowest ASX bank yield: Are CBA shares still worth it? appeared first on The Motley Fool Australia.

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More reading

• Leading brokers name 3 ASX shares to buy today
• Why BHP, InvoCare, Lake Resources, and South32 shares are dropping today
• Better ASX blue-chip share to buy for safe returns: CBA vs. Telstra
• Are Bank of Queensland shares a buy following the latest results?
• Are BHP shares a buy following the ASX 200 miner’s latest update?

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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 Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Westpac Banking. 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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