The banking sector has been under significant pressure this month amid a number of high profile global bank collapses.

This means that all ASX 200 bank shares are now trading meaningfully lower than their recent highs. That’s despite having some of the strongest balance sheets and risk settings in the world.

All in all, this could have created a buying opportunity for investors that are looking for exposure to the sector.

Two options that are popular with investors are ANZ Group Holdings Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) shares. But which of these is the better buy?

Should you buy ANZ or Westpac shares?

The good news is that most brokers are positive on both of these ASX 200 bank shares. So, either of the two could arguably make for a great portfolio addition right now. Furthermore, as I covered here recently, both banks have strong capital positions and significantly higher than required liquidity. These are great qualities to have in the current environment.

But if you were to ask the team at Goldman Sachs, its analysts would say that Westpac shares are the ones you should be buying right now.

This is due to the broker’s belief that it stands to benefit from rising interest rates more than peers. It also highlights that its cost cutting plans should be supportive of earnings growth in the current inflationary environment.

In addition, it highlights that Westpac shares trade at a sharp discount to peers. And who doesn’t love buying things on sale? Goldman explained:

We reiterate our Buy (on CL) recommendation on WBC given: i) 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, ii) despite WBC recently revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in underlying costs expected over the next two years, iii) the stock is trading at a 25% 12-month forward PER discount to peers (historically a 3% discount), and iv) our TP of A$27.74 offers 36% TSR.

What about ANZ?

Interestingly, while Citi is bullish on Westpac and has a buy rating and $30.00 price target on its shares, it has a preference for ANZ. This is due to its institutional business, which is expects to support solid earnings growth in FY 2023 and FY 2024. Citi has a buy rating and $29.25 price target on its shares. It commented:

ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

Overall, there’s not much to split the two. But Westpac shares are arguably slightly ahead given the discount they trade at compared to historical averages and their stronger potential returns.

The post Best ASX 200 bank share to buy now: ANZ vs Westpac appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ASX 200 bank shares lift despite Deutsche Bank stock tumble
• How I’d aim for $250 in monthly passive income from ANZ shares
• Want $10,000 of passive income? Check out these ASX shares
• The Westpac share price is down 6% this month, should you buy the dip?
• Want passive income? Analysts say you can get 6%+ yields with these ASX dividend shares

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 Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/WwIoZtu

The TPG Telecom Ltd (ASX: TPG) share price is down around 30% since August 2022. That’s a hefty decline considering telecommunications is meant to be a defensive sector. But, at this lower level, could the S&P/ASX 200 Index (ASX: XJO) share be a good passive income play?

There has been significant change in the telecommunication sector in the last few years. The shift to the NBN has hurt margins. However, there have also been some acquisitions and mergers in the sector, such as TPG merging with Vodafone Australia.

I think the change in the telco market has meant that competition is less intense, which has enabled both Telstra Group Ltd (ASX: TLS) and TPG to increase their mobile prices.

While the TPG share price has dropped, its dividend has continued to grow. But can it keep growing?

Dividend expectations

Using the estimates on Commsec, TPG is expected to maintain its dividend at 18 cents per share in FY23. That would translate into a grossed-up dividend yield of 5.3%.

Earnings and the dividend are expected to rise in FY24. TPG is expected, according to Commsec numbers, to pay an annual dividend per share of 20 cents. That would be an increase of 11%. With that possible passive income payment from the ASX 200 share, it’d be a grossed-up dividend yield of around 6%.

TPG could then increase its 2025 financial year dividend by another 5% to 21 cents per share. If the Commsec number is right, then it would translate into a grossed-up dividend yield of 6.25%.

Can earnings improve?

Analysts are certainly expecting profit to rise in FY24 and FY25.

The business could make earnings per share (EPS) of 13.7 cents, which could then rise to 17.4 cents in FY24 and 26.3 cents in FY25.

The ASX 200 share is expecting that FY23 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) will be between $1.85 billion to $1.95 billion, which excludes “material one-offs and transformation costs”.

TPG noted that in 2022, the ASX 200 share recorded a net increase in mobile subscribers of 300,000, with a 6% increase in mobile customers. Average revenue per user (ARPU) for mobile was up 1.9% in the period to $32.4 per month, primarily reflecting “higher international roaming levels”. The postpaid mobile ARPU was $42.7 per month, up 3.1%.

In terms of 5G, TPG says its rollout is on schedule, with more than 2,000 mobile sites completed at the time of the FY22 result. It’s expecting to upgrade 1,000 new 5G mobile sites in 2023, with a similar number planned each year to 2025.

TPG and Telstra were blocked by the Australian Competition and Consumer Commission (ACCC) for their proposed network-sharing agreement, which would have boosted TPG’s network coverage in regional Australia. TPG and Telstra are challenging this decision through the Australian Competition Tribunal.

The business is working on synergies between the TPG businesses and Vodafone. It reports it has achieved $140 million of cost synergies.

If TPG is to keep increasing its ARPU, that would be a natural boost for the company’s earnings — if it outstrips cost increases. Such an outcome could be conducive to generating returns for investors looking for passive income.

TPG share price snapshot

As of Friday’s close, the ASX 200 share was down 0.6% in 2023 to date.

The post Is this beaten-up ASX 200 share an underrated passive income opportunity? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• ‘Significant growth potential’: Expert names 2 unfashionable ASX 200 shares to buy
• 5 things to watch on the ASX 200 on Wednesday
• 4 ASX 200 shares trading ex-dividend on Wednesday
• Was I dumb to sell my TPG shares?
• 4 ASX shares to grab now after boom results: expert

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

from The Motley Fool Australia https://ift.tt/0TCEY5m

Deutsche Bank AG (ETR : DBK) shareholders are the latest to take a haircut from the ongoing global banking crisis.

Shares in the German banking giant tumbled 8.5% in Europe on Friday. That puts the Deutsche Bank share price down a painful 26% over the past month.

While the banking crisis remains largely mired in the United States and Europe, S&P/ASX 200 Index (ASX: XJO) bank shares are again in focus as analysts assess their relative strength.

And judging by this morning’s performance, the big Aussie banks are stacking up well to their international peers.

Here’s how the big four ASX 200 banks are tracking in early trade on Monday:

• Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are up 0.58%
• National Australia Bank Ltd (ASX: NAB) shares are up 0.88%
• Westpac Banking Corp (ASX: WBC) shares are up 0.59%
• Commonwealth Bank of Australia (ASX: CBA) shares are up 0.31%

The ASX 200 is up 0.35% at this same time.

So, why is Deutsche Bank the latest to come under pressure?

What’s happening with Deutsche Bank?

Deutsche Bank is the latest institution to be hit by investor fears of a global banking meltdown.

Those fears were ignited only weeks ago with the implosion of United States-based Silicon Valley Bank – formerly the 18th largest in the US – as well as Signature Bank. Other smaller regional US banks remain under pressure.

The contagion quickly spread across the pond to hit Credit Suisse. That bank was said to be a day from collapse when the Swiss government engineered a takeover by rival bank, UBS.

Unlike Credit Suisse, which was running at a loss, Deutsche Bank reported a net profit of €5.7 billion (AU$9.2 billion) in 2022.

Instead, the woes at Deutsche Bank stem from a steep rise in the cost of insuring its bonds against the risk of defaulting.

The German bank has also drawn the interest of short sellers, who’ve reportedly made some $150 million bettering against its shares over the past two weeks.

In a sign that investors fear the contagion has some ways to run yet, the European bank shares index, STXE 600 BANKS PR.EUR (INDEXSTOXX: SX7P) ended Friday down 3.8%.

What the experts are saying

European officials were quick to try to calm the markets.

Addressing concerns around Deutsche Bank, German Chancellor Olaf Scholz said, “It’s a very profitable bank. There’s no reason to worry.”

Joseph Trevisani, senior analyst at FXstreet.com advised investors to have patience, saying the banking crisis would take some time to play out.

“The market is suspicious, or weary is maybe a better way to put it, that there are more problems out there that have come forth,” Trevisani said (quoted by Reuters).

“It takes time. It’s going to have to be weeks without any problems in the banking system before markets will be convinced that it’s not a systemic problem.”

Most analysts were positive about the outlook for Deutsche Bank, including the team at JPMorgan.

They said the bank’s fundamentals are “solid”, adding, “we are not concerned”.

Commenting on the banking turmoil before Friday’s big tumble for Deutsche Bank shares, ANZ Bank chief executive Shayne Elliott said (quoted by The Australian Financial Review):

The GFC was fundamentally a crisis around the quality of assets and the loans that banks make, and that’s not what the risk is here. This is a different issue.

This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties.

With the big four ASX 200 banks all well into the green today, investors appear to believe they won’t be amongst those casualties.

The post ASX 200 bank shares lift despite Deutsche Bank stock tumble appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• How I’d aim for $250 in monthly passive income from ANZ shares
• Want $10,000 of passive income? Check out these ASX shares
• The Westpac share price is down 6% this month, should you buy the dip?
• Want passive income? Analysts say you can get 6%+ yields with these ASX dividend shares
• Should ASX 200 banks pay more for this implicit government backstop?

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 recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/GSMO9dn

It’s shaping up to be a big week for All Ordinaries Index (ASX: XAO) dividend shares. Many are gearing up to trade ex-dividend after reporting in the February earnings season.

Anyone buying a company’s stock after its ex-dividend date will miss out on its next payment. So, investors wanting a piece of these dividends better get in quick.

It’s also worth bearing in mind that on their ex-dividend trading day, ASX shares typically fall approximately equal to the value of their next dividend.

8 ASX All Ords shares trading ex-dividend this week

First off the bat will be Australian Clinical Labs Ltd (ASX: ACL). The ASX All Ords pathology services provider will pass its ex-dividend date today.

That means new shareholders have already missed out on its 7-cent per share dividend. It will be paid on 26 April.

And that might not be all weighing on the stock. The company’s takeover target Healius Ltd (ASX: HLS) has responded to its all-scrip offer, noting the bid likely won’t meet the required acceptance.

Cedar Woods Properties Limited (ASX: CWP) will be the next All Ords share to trade ex-dividend this week. Shares in the property developer will surpass the milestone on Tuesday.

Investors will see a 13-cent per share dividend paid on 28 April.

Shares in mining equipment provider Emeco Holdings Ltd (ASX: EHL) will trade ex-dividend on Wednesday.

Those holding shares in the All Ords company will receive a 1.25-cent per share dividend from 13 April.

Come Thursday, all eyes will be on agriculture-focused real estate property trust Rural Funds Group (ASX: RFF) and property investor Garda Diversified Property Fund (ASX: GDF). The pair will trade ex-dividend on Thursday.

After that, Garda will pay a 1.8-cent per share dividend on 19 April, while Rural Funds will hand out a 2.9-cent per share offering on 19 April.

Industrial- and office-focused real estate investment trusts (REITs) Centuria Industrial REIT (ASX: CIP) and Centuria Office REIT (ASX: COF) will also trade ex-dividend on Thursday.

They’ll pay out their respective 4-cent per share and 3.5-cent per share offerings on 28 April.

And finally, All Ords share Harvey Norman Holdings Limited (ASX: HVN) will also trade ex-dividend this week, passing the milestone on Friday.

The furniture retailer will pay a 13-cent per share dividend on 1 May.

The post 8 ASX All Ords shares trading ex-dividend this week appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Passive income beasts: 3 ASX dividend shares I’d buy for retirement
• Buy these ASX 200 dividend shares for a second income: analysts
• Get a passive income boost with these ASX dividend shares: experts
• $72m and counting: ASX 200 director’s massive share buy-up continues
• Want high income right now? These are the ASX dividend shares I would buy

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

from The Motley Fool Australia https://ift.tt/47bKBnT

The Premier Investments Limited (ASX: PMV) share price is pushing higher on Monday.

In early trade, the retail conglomerate’s shares are up 2% to $25.90.

This follows the release of the company’s half-year results this morning.

Premier Investments share price higher on record result

• Retail sales up 17.6% to a record of $905.2 million
• Online sales down 12.5% to $170.9 million
• Retail earnings before interest and tax (excluding one-offs) up 12.2% to $220.4 million
• Net profit after tax up 6.5% to a record of $174.3 million
• Record fully franked interim dividend of 54 cents per share
• Special fully franked 16 cents per share dividend

What happened during the first half?

For the six months ended 28 January, Premier Investments reported a 17.6% increase in retail sales to a record of $905.2 million.

Key drivers of this growth were its Peter Alexander and Smiggle brands. The former delivered a 15.1% increase in sales to a record of $261.7 million, whereas the latter reported a 30.3% lift in sales to $190.7 million.

This was supported by its Apparel Brands, which collectively delivered record sales of $452.8 million, which was up 14.3% on the prior corresponding period despite operating less stores.

On the bottom line, Premier Investments reported a more modest 6.5% lift in net profit after tax to $174.3 million. This reflects weaker gross margins due to currency headwinds.

Nevertheless, those currency headwinds couldn’t stop the Premier Investments board from increasing its fully franked interim dividend by 17.4% to a record 54 cents per share. Nor could it stop the company from rewarding its shareholders with a fully franked special dividend of 16 cents per share.

Though, you’ll have to be patient for these dividends. They will be payable together on 26 July, with a record date of 21 June.

Management commentary

Premier’s Chairman, Solomon Lew, was pleased with the half. He said:

Our teams have executed strongly to support the delivery of record results in an uncertain economic environment. Pleasingly, Premier’s statutory NPAT of $174.3 million is up 75.0% on prepandemic 1H20. We are delighted to continue our track record of strong returns for our shareholders, approving record interim ordinary and special dividends for the half of 70 cents per share.

Over the past three years and including the 1H23 dividends, Premier shareholders have been rewarded with a total of half a billion dollars in fully franked dividends. Premier Retail EBIT is up 74.8% on 1H20. Today, Premier Retail is uniquely positioned to continue to deliver with our brands identifying key growth paths for the future, whilst leveraging synergies within the Group’s global operations.

Outlook

No guidance has been given for the second half or full year.

However, management advised that the second half has started positively. It stated:

2H23 trading has opened strongly with total sales for the first 6 weeks through February and into March up 7.7% on 2H22. Premier Retail’s solid start to 2H23 and its clean inventory position has given the Group confidence that it is well positioned to maximise sales through the trading period ahead.

The post Premier share price higher on record profit and special dividend appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• I’m bullish about these 2 beaten-up ASX 200 shares and I’ll tell you why
• The one ASX share we’re holding onto for dear life: experts
• How I’d aim to replace an entire salary with passive income from ASX dividend shares
• For $750 in monthly passive income, buy 8,572 shares of this ASX 200 stock

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 Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/lWKioLE

The Bank of Queensland Ltd (ASX: BOQ) share price is on the move on Monday.

At the time of writing, the regional bank’s shares are up 1.5% to $6.50.

Why is the Bank of Queensland share price rising?

Investors have been bidding the Bank of Queensland share price higher today after the bank announced the appointment of its new CEO.

Potentially in an effort to ease investor nerves during the ongoing banking crisis, the bank has opted to name its current chairman, Patrick Allaway, as its new leader. This follows the exit of George Frazis, which was announced late last year.

This will be a relatively short term appointment, with Allaway taking on the roles of managing director and CEO until December 2024.

Replacing him as chairman will be Warwick Negus with immediate effect.

Why switch roles?

The company revealed that it believes the appointment will provide some stability in the current environment. It explained:

Mr Allaway’s appointment will provide stability and continuity during this period, enabling the management team to continue delivering BOQ’s priorities, as announced at the December 2022 AGM, of strengthening, simplifying, digitising, and optimising BOQ.

It also revealed that the search process for a long-term CEO will continue. This includes considering a wider pool of external candidates and the further development of internal candidates.

Commenting on his appointment, Allaway said:

I am honored to serve BOQ stakeholders in my new role and to play a part in our 150-year history. I will continue to lead by living our purpose and values and to progress our work to build an even stronger and better bank for our customers, our people, and our shareholders. Our focus is strong financial resilience whilst simplifying our operations and digitising for our future state.

We have made material progress in strengthening our capital and liquidity position over the past six months and have maintained quality lending portfolios as we prepare for a more challenging economic environment. BOQ has several programs underway to improve the effectiveness of our control environment and organisational efficiency, building a leaner more agile and digitally enabled bank.

The post Why is the Bank of Queensland share price pushing higher today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Want to bank more passive income? This ASX 200 bank share’s dividend yield outstrips all others
• Why are the smaller ASX 200 banks rebounding so strongly on Wednesday?
• Why did the Bank of Queensland share price just hit a multi-year low?
• Why Bank of Queensland, Brainchip, Pilbara Minerals, and Yancoal shares are sinking today
• ASX 200 bank shares: Are they better prepared than Silicon Valley Bank?

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.

from The Motley Fool Australia https://ift.tt/sEADBUH

The Rio Tinto Ltd (ASX: RIO) share price has outperformed the S&P/ASX 200 Index (ASX: XJO) over the last five years, gaining 56% in that time.

The stock has lifted from around $72.70 in late March 2018 to trade at $114.43 as of Friday’s close.

That means a $7,000 investment in Rio Tinto shares back then would likely have seen an investor walk away with 96 of the iron ore giant’s stocks.

Today, that parcel would be worth $10,985.28. And that’s before considering the dividends paid over the same period.

For comparison, the ASX 200 has gained around 21% over the last five years.

Let’s dive into all the dividends provided to Rio Tinto shareholders during that time.

All dividends paid to those holding Rio Tinto shares since 2018

Here are all the dividends paid to those holding Rio Tinto shares since March 2018, rounded to the nearest cent:

Rio Tinto dividends’ pay date	Type	Dividend amount
September 2022	Interim	$3.84
April 2022	Final and special	$5.77 and 86 cents
September 2021	Interim and special	$5.09 and $2.51
April 2021	Final and special	$3.97 and $1.20
September 2020	Interim	$2.16
April 2020	Final	$3.50
September 2019	Interim and special	$2.19 and 89 cents
April 2019	Final and special	$2.51 and $3.39
September 2018	Interim	$1.71
April 2018	Final	$2.29
Total:		$41.88

All up, Rio Tinto investors have likely received $41.88 of passive income for each share in the iron ore producer they’ve held since this same date in 2018.

That means our figurative $7,000 investment has probably yielded around $4,020.48 in dividends over its life, leaving it with a total return on investment (ROI) of approximately 115%.

And that’s before considering the franking credits that have been attached to all the company’s offerings, potentially bringing tax benefits over the years.

Not to mention, one may have realised an even greater return if they were to have reinvested their dividends, thereby employing the power of compounding.

Rio Tinto will pay its upcoming final dividend – worth $3.26 per share – on 20 April.

Right now, the mining favourite’s stock offers a 6.2% dividend yield.

The post Invested $7,000 in Rio Tinto shares 5 years ago? Here’s how much passive income you’ve earned appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Dividend devotee: I’d buy Rio Tinto shares for $2,000 of monthly passive income
• 2 ASX 200 mining shares to buy with huge upside potential: analysts
• Buy these ASX dividend shares with 5%+ yields: analysts
• 3 top ASX mining shares I’d buy right now
• How I’d aim to retire rich enough to live on passive income from my ASX dividend 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.

from The Motley Fool Australia https://ift.tt/YqcgSVv

The AMP Limited (ASX: AMP) share price has gone through a major decline. It’s down 20% since 15 February 2023, reversing its gains over the past year. It’s now down around 80% over the past five years.

But, the company is finally generating a profit after a period of difficulty.

In the recent 2022 financial year result, it reported an underlying net profit after tax (NPAT) of $184 million and a statutory NPAT of $387 million, reversing a $252 million loss from FY21.

The company’s progress with its transformation now has analysts thinking that it’s going to start paying a regular and growing dividend.

AMP dividend estimates

Commsec numbers currently suggest that AMP is going to pay a full-year dividend of 4.2 cents for the 2023 financial year. Excluding the effect of franking credits, this would be a yield of 4%. If it were to be fully franked, it’d be a grossed-up dividend yield of 5.7%.

In the 2024 financial year, Commsec numbers suggest AMP may then increase its dividend by 19% to 5 cents per share. This would be a 4.75% dividend yield, or 6.8% grossed-up if it were fully franked.

Then, in the 2025 financial year, the current forecast is that the dividend could grow by another 20% to 6 cents per share. At the current AMP share price, that would translate into a dividend yield of 5.7%, or 8.2% grossed-up if it were fully franked.

But, keep in mind that these are just projections and there’s no guarantee that the dividends will be fully franked.

Earnings to rise?

AMP has done some strategic repricing in its wealth management businesses to offer a more competitive product for clients and their advisers.

This could be helpful for the business retaining and growing its client base.

AMP Bank also saw residential mortgage book growth of $2 billion over FY22. Growth of the mortgage book can help the bank’s earnings, as long as the credit quality of the bank’s borrowers remains strong during 2023 and beyond.

The ASX financial share also said that it has been disciplined with a focus on costs across the group. Controllable costs, excluding AMP Capital’s discontinued operations, were reduced by $54 million

Commsec forecasts currently suggest that AMP shares could generate 7.1 cents of earnings per share (EPS). This puts the current forward price/earnings (P/E) ratio at 15.

By FY25, the company could make EPS of 10 cents – this would represent growth of around 40% from FY23 if that prediction comes true. While it’s a long way away, the FY25 P/E ratio is 10.5.

Foolish takeaway

If AMP can do as well as analysts expect, then AMP shares may become a dividend machine from here. But, I’m not sure how much long-term growth AMP will be able to achieve beyond the next few years, so I’m not looking at it as an ultra-long-term idea.

Instead, I’d be looking at other ASX dividend shares for growth.

The post Are AMP shares set to become a dividend machine? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• If I had bought $5,000 AMP shares a week ago, here’s how much I’d have now!
• Here are the top 10 ASX 200 shares today
• AMP share price dips despite $337m sale win
• AMP shares: Keep calm and carry on or cash out?
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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.

from The Motley Fool Australia https://ift.tt/dJ1nFzU

The Pilbara Minerals Ltd (ASX: PLS) share price has drifted below $4. Since 25 January 2023, it has dropped by around 30%.

That’s a hefty decline for an ASX lithium share that has a market capitalisation of more than $10 billion, according to the ASX.

It has been very beneficial to be an owner of Pilbara Minerals shares over the long term, with the company’s share price rising by around 375% in the past five years. The S&P/ASX 200 Index (ASX: XJO) has only gone up by 20% over the past five years.

However, I’d say there are two key reasons why the Pilbara Minerals share price has done so well over the last few years. One is that the company has ramped up production at its Pilgangoora project and is benefiting from a significantly higher lithium price.

But, after recent volatility, can the business turn things around and make more returns for investors?

Can the Pilbara Minerals share price keep rising?

I think the shorter-term outlook for the business will be decided by the lithium price. The lithium price has reportedly sunk over the last few months. This could have a sizeable impact on the month-to-month profitability of the business, though it’s still making a good level of profit.

In the first half of FY23, Pilbara Minerals said that its average realised sales price was US$4,993 per dry metric tonne (dmt), which was 305% higher than for the prior corresponding period. This helped statutory net profit after tax (NPAT) increase by 989% to $1.24 billion while the cash on its balance sheet increased by $1.63 billion since June 2022 to $2.23 billion.

I’m not sure if the lithium price is going to recover, or even just stabilise, at this level. But it does seem as though demand is going to keep rising.

Rio Tinto Limited (ASX: RIO) notes that lithium is a vital component for technologies like electric vehicles and batteries. According to Rio Tinto, double-digit growth in lithium demand is expected over the next decade.

According to a KPMG report about the mining outlook, it said regarding lithium:

We estimate lithium production would need to grow by around 12 percent per year every year until 2050 to produce enough of that mineral to have two billion EVs on the roads. Given that, lithium production is expected to grow at nearly double that pace in the near term.

So while the demand for lithium is expected to increase, the supply is expected to increase in that time too. We’ll just have to see what the balance of supply and demand looks like in future years.

For me, I’m not expecting the lithium price to reach a new all-time high any time soon. But I do like that the company is looking to increase its exposure to more of the lithium value chain, as well as increase its production.

According to Commsec, earnings are expected to fall in FY24 and then in FY25. This would put the current Pilbara Minerals share price at 7x FY25’s estimated earnings. I think there is a bit of leeway for the ASX lithium share to rise in the double-digits and still be at a fair valuation.

However, I think Pilbara Minerals has seen a lot of share price growth. There are other, smaller businesses which could grow more and, therefore, be more likely to produce good returns.

The post Could buying Pilbara Minerals shares under $4 make me rich? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Analysts say 2 of these ASX lithium shares can double in value
• Here are the top 10 ASX 200 shares today
• The first-ever Pilbara Minerals dividend is being paid today. Here’s what to expect
• 5 things to watch on the ASX 200 on Friday
• Buy Pilbara Minerals and this exciting ASX growth share: analysts

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.

from The Motley Fool Australia https://ift.tt/tlIr7XH

The Myer Holdings Ltd (ASX: MYR) share price has done very well in recent months. It has risen around 30% in 2023 to date and gained 60% in the last 12 months.

That compares very favourably to the performance of the S&P/ASX 200 Index (ASX: XJO). In 2023 to date, it’s only up by 0.1%. Over the past year, the ASX 200 has dropped by 6%.

The ASX retail share has managed a strong turnaround in its sales and financials. This has enabled the business to largely hold onto the gains it has achieved, though investors may have been hoping for even more.

Let’s have a look at some of the highlights from the recent FY23 half-year result.

Earnings recap

Myer reported that in the six months to 28 January 2023, it grew total sales by 24.2% to $1.88 billion. Despite the end of lockdowns, online sales still represented around 20% of total sales.

The operating gross profit grew by 17.4% to $683.2 million. This margin decreased 212 basis points to 36.3% which included the “unfavourable impact of higher shrinkage and foreign exchange movements”.

The cost of doing business (CODB) was $442.5 million, or 23.5% of total sales, representing an improvement of 126 basis points.

Myer’s net profit after tax (NPAT) was $65 million, an increase of 101.4%. Profit growth can be key for the Myer share price going higher. This was the company’s highest profit since the first half of FY14.

The business also said its balance sheet was stronger, with net cash at the end of the period up $50 million to $267 million and inventory “well-controlled at the same level as the prior corresponding period”.

Myer also declared a total interim dividend of 8 cents per share, comprising an ordinary dividend per share of 4 cents per share and a special dividend of 4 cents per share. This is “utilising significant accumulated franking credits“.

Can the Myer share price keep rising?

Myer is now focused on ensuring that it’s making profitable sales. Profit growth can certainly help drive the Myer share price upwards. And, in turn, sales growth can be a boost for profit.

Therefore, it’s very promising that Myer was able to reveal its sales after Christmas had made a good double-digit rise.

According to the ASX retail share, in the eight weeks after Christmas, department store sales were up 16.1% compared to the prior corresponding period. The Myer boss John King said:

Like all retailers we remain cautious about the macro-economic environment, however, we are pleased with the momentum we are generating through the customer first plan and have a strong pipeline of initiatives still to come, which will ensure we are well placed for the future.

According to Commsec, Myer is expected to generate earnings per share (EPS) of 10 cents. That means that Myer is valued at less than 9x FY23’s estimated earnings. I think it would be quite reasonable for Myer to trade with a price/earnings (P/E) ratio of 10, which would be a rise of around 15%. It could also keep paying a very attractive dividend yield.

However, I’m not sure if Myer is the best ASX retail share to buy – I think Myer will need to keep growing its online sales to offset the long-term uncertainty of department store sales.

The post Up 30% in 2023, can the Myer share price keep rising? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why Latitude, Myer, Regis Resources, and Service Stream shares are dropping today
• Why is the Myer share price crashing 10%?
• 4 ASX All Ordinaries shares trading ex-dividend on Wednesday
• 7 ASX All Ordinaries shares smashing new 52-week highs today
• Why Arafura, Myer, Volpara, and Xero shares are zooming higher

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.

from The Motley Fool Australia https://ift.tt/oVSChQv