Some ASX dividend share payouts have been growing for shareholders every year for many years, which could be good for retirees. However, other dividend payers are somewhat volatile with their passive income.

If I were relying on dividend income in retirement, I don’t think I’d want to see my dividend income jump around. That’s why I’m cautious about buying names like BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS) after a strong run.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a portfolio of farmland around Australia including cattle, almonds, macadamias, vineyards and cropping (sugar and cotton).

With interest rates now a lot higher, it has pushed down the Rural Funds share price. Since the end of 2021, it has fallen by around 20%. This has the effect of pushing up the prospective distribution yield for the ASX dividend share.

How much passive income could the business pay? Rural Funds aims to grow its distribution by 4% per annum, which is normally faster than inflation.

It’s expected to pay a total distribution of around 12.2 cents per unit, which would be a forward distribution yield of around 5%. That’d probably be a good yield for retirees.

On the rental side, the business is benefiting from inflation because some of the rent is linked to CPI inflation.

Farmland has been a useful asset for centuries, which I think will continue for more than the foreseeable future.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

The ASX dividend share could be the steadiest eddy in terms of passive income. It has grown its dividend every year since 2000, which is the longest streak on the ASX.

Soul Pattinson is an investment house that’s invested in a variety of assets, including ASX shares like Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), Pengana Capital Group Ltd (ASX: PCG), New Hope Corporation Limited (ASX: NHC), Macquarie Group Ltd (ASX: MQG) and many more.

It also has a portfolio of unlisted businesses including electrical parts, agriculture, swimming schools, luxury retirement living and so on.

Soul Pattinson expands its portfolio every year while paying out a majority of its cash flow each year as a dividend.

The business’ portfolio is focused on investments that can provide good cash flow through the economic cycle, while also looking for platforms of growth. I think retirees would like this combination of dividends and growth.

How much passive income will the company pay in FY23? Commsec numbers currently suggest that Soul Pattinson could pay an annual dividend per share of 77 cents, which translates into a grossed-up dividend yield of 3.8%. The Soul Pattinson share price is down around 25% since September 2021.

The post Retirees: 2 steady eddies to provide ASX passive income on the cheap appeared first on The Motley Fool Australia.

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More reading

• Buying ASX shares as a beginner? Here are 3 things I wish I’d known
• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023
• 3 of the safest ASX 200 dividend stocks in Australia
• Forget bonds, I’d much rather buy this ASX 200 stock for its 4% dividend yield
• Buy NAB and this high yield ASX dividend share: experts

Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, 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, Macquarie Group, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. 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.

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Earnings season is now underway and companies have started to release their report cards for the last six months.

While there will inevitably be some results that disappoint the market, history shows us that there are plenty that positively surprise.

Goldman Sachs has been busy analysing the month ahead and has named 10 buy rated ASX stocks that it believes could deliver stronger than expected updates.

Which ASX stocks could surprise?

The 10 ASX stocks that Goldman Sachs is tipping to positively surprise are as follows:

• Breville Group Ltd (ASX: BRG)
• Corporate Travel Management Ltd (ASX: CTD)
• Data#3 Limited (ASX: DTL)
• Endeavour Group Ltd (ASX: EDV)
• Judo Capital Holdings Ltd (ASX: JDO)
• Qantas Airways Limited (ASX: QAN)
• QBE Insurance Group Ltd (ASX: QBE)
• Qualitas Ltd (ASX: QAL)
• Telstra Group Ltd (ASX: TLS)
• Temple & Webster Group Ltd (ASX: TPW)

Financials

In respect to QBE, the broker has a buy rating and $16.67 price target on this insurance giant’s shares. Goldman believes that “COR guidance & underlying insurance margins for FY23 likely to surprise to the upside.”

Judo Capital could surprise thanks to its strong customer deposits growth. Goldman highlights that “JDO continues to grow materially above system levels on customer deposits (10x in the month of Nov-22). Overall, this would translate into an additional tailwind to NIM.” The broker has a buy rating and $1.70 price target on the bank’s shares.

Goldman has a buy rating and $3.45 price target on Qualitas’ shares. It is tipping a strong result from the investment company thanks to “developers and asset owners look to alternative financiers.”

Retail

Breville could deliver a stronger than expected half year and full year result in FY 2023. This is due to Goldman’s belief that “the secular trend of coffee consumption upgrade will continue globally and that BRG will stand to benefit structurally as a leader in this upgrade.” The broker has a buy rating and $23.50 price target on its shares.

Goldman believes the market is being “too negative on near-term revenue” of Temple & Webster. It has a conviction buy rating and $7.60 price target on the online furniture retailer’s shares.

The broker also believes that Endeavour finished the half better than the market was expecting. It feels this “suggests that trading in 1H23 is likely to offer positive surprise vs. consensus.” Goldman has a buy rating and $7.80 price target on the drinks company’s shares.

Tech and telco

Goldman expects Data#3 to deliver “continued strong top-line growth from digital transformation projects delayed through COVID.” The broker also expects operating leverage to flow through as it scales. It has a buy rating and $9.20 price target on Data#3 shares.

Telco giant Telstra has been named as a positive surprise candidate. This is due to “top line momentum more than offsetting the higher costs.” Goldman has a buy rating and $4.60 price target on Telstra’s shares.

Travel

Goldman Sachs is feeling positive about Corporate Travel Management’s prospects in the first half and full year. As a result, it has put a buy rating and $20.30 price target on its shares. Goldman expects “upside surprise in both 1H23 earnings vs. the Street as well as outlook statements.”

Finally, Qantas, which Goldman has a conviction buy rating and $8.20 price target on, has been tipped to have finished the first half strongly. It notes that “US airlines’ 4Q results also reflected strength in pricing in the current environment, with American Airlines, Delta Airlines and United Airlines unit revenue averaging +19% vs. pre-covid level in the quarter.”

The post 10 ASX stocks to buy before they report this earnings season: Goldman appeared first on The Motley Fool Australia.

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• Beat the RBA hikes with these ASX dividend shares in February: experts
• Virgin IPO talks are heating up. So why is the Qantas share price still climbing?
• 3 ASX dividend shares for lazy investors
• Top ASX value shares to buy in February 2023
• How to create a million-dollar ASX share portfolio in two decades

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Judo Capital and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Corporate Travel Management and Temple & Webster 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 this week? If you are, then the two listed below could be worth considering.

Both have been named as buys and tipped to provide investors with good yields. Here’s what you need to know about them:

Centuria Industrial Reit (ASX: CIP)

The first ASX 200 dividend share to consider is Centuria Industrial, which is Australia’s largest domestic pure play industrial REIT.

Centuria Industrial has a portfolio of high-quality industrial assets that are situated in urban infill locations throughout Australia and underpinned by a quality and diverse tenant base.

This is a great part of the property market to be right now given robust demand and tight supply conditions.

UBS is positive on the company and has a buy rating and $3.60 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 16 cents in both FY 2023 and FY 2024. Based on the current Centuria Industrial share price of $3.52, this represents yields of 4.5% in both years.

National Australia Bank Ltd (ASX: NAB)

Another ASX 200 dividend share that has been named as a buy is NAB, which is of course one of Australia’s big four banks.

Goldman Sachs is a fan of NAB in the current environment due to its exposure to commercial lending. Its analysts “see volume momentum over the next 12 months as favouring commercial volumes over housing volumes and NAB provides the best exposure to this thematic.”

Goldman Sachs has a buy rating and $35.60 price target on its shares.

In respect to dividends, Goldman is forecasting fully franked dividends of $1.66 per share in FY 2023 and $1.73 per share in FY 2024. Based on the current NAB share price of $31.88, this implies yields of 5.2% and 5.4%, respectively.

The post Buy NAB and this ASX 200 dividend share now: brokers appeared first on The Motley Fool Australia.

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• 3 ASX dividend shares I’m backing to outperform in 2023
• Should I buy NAB shares for 2023 dividend potential?
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• Analysts name 2 strong ASX 200 shares for a retirement portfolio
• How I’d invest $20,000 in ASX 200 dividend shares in 2023

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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The Transurban Group (ASX: TCL) share price is on watch after the toll road operator dropped its earnings for the first half of financial year 2023.

It also announced the upcoming departure of long-term CEO Scott Charlton and a new partnership with CDPQ.

The S&P/ASX 200 Index (ASX: XJO) infrastructure share last traded at $14.03.

Transurban share price surges on record earnings

• Proportional toll revenue reached a record $1.66 billion – up 42.6% on the prior comparable period (pcp)
• Proportional total revenue jumped 41.1% on the pcp to $1.72 billion
• Proportional earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 53.7% to $1.24 billion
• Post-tax profit of $55 million– up from a $106 million loss in the pcp
• Free cash, including capital releases, increased 88% to $863 million
• Declared a 26.5 cents per share interim dividend – a 76.7% increase

Transurban saw record traffic volumes last half, with its average daily traffic (ADT) surpassing 2.5 million trips in November 2022.

The company’s record revenue and EBITDA were supported by such traffic levels, as well as inflation-linked toll increases.

Transurban continued work at many of its developments last half, with Sydney’s M4-M8 link opening last month. Work also continued at Melbourne’s West Gate Tunnel Project. The tunnel excavation is expected to be done by the middle of the year.

Transurban announces CEO resignation and new partnership

Transurban also announced its CEO of 11 years will be stepping down at the end of 2023. The company has begun a global search for a new CEO. Commenting on Charlton’s resignation, chair Craig Drummond said:

Scott has been a visionary in the industry … under his leadership, the company has grown to become an ASX 20 listed entity, increasing its market capitalisation by more than five times to over $43 billion and has delivered total security holder returns of 289%.

Meanwhile, it’s again partnered with global investment group CDPQ, this time on its A25 asset in Montreal, Canada. The group was also a co-investor in Sydney’s WestConnex. CDPQ will take on a 50% partnership in the asset for CAD$355 million (around $383.7 million).

What did management say?

Charlton commented on the earnings release likely to drive the Transurban share price today, saying:

Our roads have benefitted from freight volumes which achieved an all-time high, ongoing traffic growth in our core markets, and the continued investment in business capability to improve the experience for our more than 10 million customers.

We have seen record traffic in Brisbane, as well as in Sydney … This performance was underpinned by the urban nature of our roads, demonstrating that the diversity of everyday journeys across commuting, travel and leisure trips provides resilience throughout economic cycles

What’s next?

Charlton said around 68% of the company’s toll revenue is linked to CPI escalations, but the timing of the escalations can be delayed.

As such, the flow through from recent higher inflation figures hasn’t yet been recognised in some markets.

It also upped its previous full-year dividend guidance by 4% to 57 cents per share.

Transurban share price snapshot

The Transurban share price has been outperforming the ASX 200 as of late.

The stock has gained 9.5% year to date compared to the index’s 8.5% increase.

Transurban shares have also risen 9.2% over the last 12 months. Meanwhile, the ASX 200 has lifted 6%.

The post Transurban share price in focus following record first half appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Invest like Warren Buffett with these ASX shares
• Buy Westpac and this ASX 200 income share: experts
• Top ASX dividend shares to buy in February 2023
• ASX shares investors rejoice! RBA says inflation has now peaked

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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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one of this edition, we’re joined by Adam Lund, analyst, head of trading & co-founder of Spheria Asset Management.

The Motley Fool: What sets the Spheria Australian Smaller Companies Fund and Spheria Australian Microcap Fund apart from the competition?

Adam Lund: The small and microcap sector is filled with hype and investor exuberance, which is usually concentrated around aspirational companies that tell a good story.

Our approach to investing in smaller companies is to invest in fundamentals, not narratives. This alone helps set us apart from the small and microcap crowd.

MF: So, how do you go about that?

AL: To summarise our core investment process, we have a strong focus on risk management and seek to purchase securities where the present value of future free cash flows can be reasonably ascertained and the stock is trading at discount to its intrinsic value.

Additionally, it’s worth mentioning the small and microcap space is under-researched and has little broker coverage. So, there are phenomenal opportunities for the few investors applying disciplined fundamental analysis to build exposure to great smaller companies well before the wider market catches on.

MF: What were some of your top-performing ASX shares in 2022?

AL: We added The a2 Milk Co Ltd (ASX: A2M) back into our portfolio in 2021. We hadn’t held it for a few years. However, we’d owned it as far back as 2014 when it was a relatively unknown company. So, our team knows the business well.

We thought it was being irrationally priced by the market, and the re-rate we anticipated came as new management returned the business to growth, cleaned up the inventory position and steadied the strategy of the business.

Additionally, a buy-back was activated, providing good share price support. And renewed interest came as FDA approval allowed A2 to import infant formula into the US, and China’s reopening saw further expectations of growth.

A2 is a high-quality growth business, and even after the recent rally, it still remains somewhat overlooked by the market. The turnaround driven by CEO David Bortolussi, who stepped into the business in 2021, is well underway.

The company has an enviable position in the imported infant formula market in China, with a high margin and highly differentiated product. It’s a strong cash-generative business, capex-light and has multiple potential longer-term growth drivers.

A2 has significant cash on its balance sheet, with over $780 million of net cash. And it trades at only around 2.5 times enterprise value (EV) to sales and some 18 times enterprise value to earnings before interest and taxes (EBIT).

MF: What other ASX shares have stood out for you?

AL: The second stock that’s been a good performer for us over the past year is Monadelphous Group Ltd (ASX: MND). This is a high-class engineering group that provides construction, maintenance and industrial services to resources, energy, and infrastructure industries.

With commodity spot prices firming up, the capex cycle finding a new gear, and labour markets loosening, investors have woken up to MND, and the company has delivered stellar returns to patient long-term shareholders.

The valuation is much fuller today than it was in early 2022 when this business was trading on an undemanding EV/EBIT multiple of 10 times, with a net cash balance sheet and a strong track record of returns.

MF: And what’s your outlook for Monadelphous shares for 2023?

AL: We think MND has great further upside potential as it continues to benefit from an extended CAPEX cycle and a strong and growing pipeline of work.

The business was under pressure with the WA border closures limiting the access of interstate and offshore workers, which drove labour cost inflation while restricting project commitments. But this will now hopefully be history.

MF: After a volatile 2022, what’s your outlook for the market in 2023?

AL: We are in a complex and extremely challenging economic environment, but the volatility in the market is creating opportunities aplenty for active long-term investors that have a focus on valuations, strong cash flows and balance sheet risk.

On the flipside, it is a particularly troublesome environment for passive investors, who allocate their capital to index funds, which indiscriminately invest with no consideration for fundamentals or risk management.

It is our view that we are closer to the top of the rate hike cycle than the bottom and given the market tends to overreact both ways, we expect the volatility to persist, which will continue to create opportunities to buy good quality businesses at reasonable prices.

***

Be sure to tune in tomorrow for part two of our fund manager interview series with Adam Lund.

(You can find out more about Spheria Asset Management’s fund offerings here.)

The post Why this ASX 200 share has ‘great further upside potential’ in 2023: fund manager appeared first on The Motley Fool Australia.

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• A2 Milk shares are up 30% in a year, is this price sweet or sour?
• 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
• 3 small-cap ASX shares to rocket from this year’s mega-trends: fund manager
• If I invest $1,000 in A2 Milk shares now, what could my return be this year?
• 5 ASX All Ords shares cracking new 52-week highs on Tuesday

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 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 ASX share market went through plenty of pain last year. But, some of the hardest-hit names could be the ones that rebound the strongest.

I think it makes sense that ASX shares related to property and ASX tech shares would be impacted by higher interest rates, as it hurts the valuations of ASX growth shares and could impact demand for housing.

However, with confidence now improving about the situation, I think the long-term outlook for the below two ASX shares is very positive, so I’d use this period to jump on these names.

Brickworks Limited (ASX: BKW)

Brickworks is a market leader when it comes to building products in Australia. It sells bricks and paving, roofing, cement, masonry and stone, and specialised building systems. The business is also a brick market leader in the north east of the US.

Plus, excitingly, the business has signed an agreement with Brickability – a “market-leading building products distributor” in the UK. The ten-year supply agreement includes a minimum purchase quantity of 10 million bricks per year, and it expects to build on this over time.

Brickworks recently said that its net property trust assets are expected to exceed $2.2 billion at the end of the FY23 first half. The industrial joint venture trust recently completed an independent revaluation process, resulting in a profit of around $112 million to the ASX share. I think that its future plans for more industrial properties on the land are very promising.

It’s benefiting from strong customer rental demand, with “significant” rental growth across its new developments and lease renewals. The property rental growth is outstripping the effect of capitalisation rate expansion because of higher interest rates.

Brickworks is also benefiting from the long-term dividend and asset growth of the investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which Brickworks owns a large chunk of.

Bailador Technology Investments Ltd (ASX: BTI)

Bailador is a business that describes itself as a growth capital fund that’s focused on the IT sector. It aims to provide exposure to a portfolio of IT companies with global addressable markets. Bailador invests in “private technology companies at the expansion stage.”

There are a few different characteristics that Bailador typically looks for when investing in technology companies which include: being run by the founders, having been operating for between two to six years, having a “proven business model with attractive unit economics”, international revenue generation, a huge market opportunity and the ability to generate repeat revenue.

The Bailador share price has fallen around 20% since the end of August 2022, despite the ASX share having a large amount of cash on the balance sheet as it searches for opportunities.

At the end of December, it had a pre-tax net tangible asset (NTA) value of $1.74. That suggests the Bailador share price is at a 26% discount to this value. It could also pay a grossed-up dividend yield of more than 7.5% at the current values.

I think small technology companies have a very promising future.

The post A bull market is coming: Here’s which ASX shares I’m buying to prepare appeared first on The Motley Fool Australia.

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More reading

• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023
• 3 of the safest ASX 200 dividend stocks in Australia
• Can these next-gen dividend heroes provide a passive income for life?
• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• How I’d invest $200 a month in ASX shares to make a $20,000 passive income for life

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments, Brickworks, 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 Bailador Technology Investments, Brickworks, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Bailador Technology Investments. 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 Macquarie Group Ltd (ASX: MQG) share price will be one to watch on Tuesday.

That’s because the investment bank has just released its third quarter update.

Macquarie share price on watch after ‘good quarter’

While no numbers have been provided, Macquarie revealed that it experienced “varied conditions” for its diverse businesses in the three months to 31 December, resulting in a “good quarter” for the company.

According to the release, this led to the bank’s net profit after tax for the nine months to 31 December being “slightly up” on the prior corresponding period. This is a decent showing given that the prior period included a record December quarter result.

The stars of the show for Macquarie were its markets-facing businesses, Commodities and Global Markets (CGM) and Macquarie Capital.

Their combined third quarter net profit contribution was “substantially up” on prior corresponding period primarily due to the CGM business. This was driven by commodities including gas and power contributions across all regions, partially offset by a lower level of realisations and lower fee and commission income in Macquarie Capital.

This strong performance offset a weaker performance from Macquarie’s annuity-style businesses, Macquarie Asset Management (MAM) and Banking and Financial Services (BFS).

Their combined quarterly net profit contribution was “substantially down” on the prior corresponding period. This was mainly due to larger green energy sector asset realisations in MAM in the prior corresponding period, which was partially offset by continued growth in BFS.

It is the same story for Macquarie’s performance year to date, with its markets-facing businesses delivering profit growth and its annuity-style businesses recording softer profits.

Nevertheless, a solid fourth quarter is likely to see Macquarie achieve a record result for FY 2023.

Outlook

The good news is that Macquarie’s CEO, Shemara Wikramanayake, appears positive on the company’s outlook. She said:

Macquarie remains well-positioned to deliver superior performance over the medium term. This is due to our deep expertise in major markets; strength in business and geographic diversity and ability to adapt the portfolio mix to changing market conditions; an ongoing program to identify cost saving initiatives and efficiency; ongoing technology spend across the Group; a strong and conservative balance sheet; and a proven risk management framework and culture.

The post Macquarie share price on watch amid ‘good quarter’ appeared first on The Motley Fool Australia.

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• 3 ASX dividend shares for lazy investors
• Investing in ASX 200 dividend shares? Here’s what to look for in 2023: fund manager
• Two ‘top prospect’ ASX 200 dividend shares for 2023 revealed: fund manager
• Experts say these ASX dividend shares are top buys right now
• $20,000 invested in these ASX shares 10 years ago is worth how much now?

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 Macquarie 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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ASX shares have proven to be a very good wealth-building tool over prior decades. Is the current period another opportunity to accelerate wealth?

Higher interest rates and strong inflation are hitting businesses in many different ways.

While valuations of some ASX growth shares are still down significantly, the S&P/ASX 200 Index (ASX: XJO) as a whole isn’t down much at all.

In fact, the ASX 200 is close to its all-time high. It had fallen quite a way by June 2022 and at the end of September 2022. But it has significantly recovered since then.

So, with the ASX 200 as a whole doing well, thanks to strong commodity prices and higher projected bank profits, I think the short-term opportunity there has already passed.

However, remember that the ASX 200 has returned an average of around 10% per annum over the ultra-long term. I believe that investors can still do well over the longer term with an exchanged-traded fund (ETF) focused on larger ASX shares, such as the Vanguard Australian Shares Index ETF (ASX: VAS) (though this ETF tracks the S&P/ASX 300 Index (ASX: XKO) ).

Can ASX shares still make mega returns?

Of course, the index is made up of different constituent businesses – the great performers and the ones going through tough times as well.

Over the last decade, names like CSL Limited (ASX: CSL), Pro Medicus Ltd (ASX: PME), and Altium Limited (ASX: ALU) have flourished.

I think there are probably going to be a few names on the ASX now that are on their journey to achieve very good returns. Time will tell which names end up being those big winners.

The Motley Fool can hopefully help identify those upcoming winners, but I think there are a couple of factors that will help generate stronger returns.

First, I’d look for a business that is looking to expand overseas because that increases the total addressable market. This gives the ASX share a bigger growth runway, meaning possible stronger returns. But it’s also important to evaluate how effective the business could be at winning market share.

Second, I’d only want to go for businesses that seem like they have good gross profit margins with the potential to become very profitable in the future. I regularly write articles outlining some of the ASX shares that I think could perform very well.

I think smaller ASX shares have more room for growth because they are earlier on in their growth journey, with more compounding potential.

The post ASX shares: Is this my once-in-a-lifetime chance for mega returns? appeared first on The Motley Fool Australia.

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More reading

• Here’s why analysts rate these blue chip ASX 200 shares as buys
• Why top brokers say surge in CSL share price will continue
• How to create a million-dollar ASX share portfolio in two decades
• Buying ASX shares as a beginner? Here are 3 things I wish I’d known
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, CSL, and Pro Medicus. The Motley Fool Australia has positions in and has recommended Pro Medicus. 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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Every expert seems to be warning investors to be selective about which ASX shares to buy at the moment.

With consumers and businesses starting to tighten their belts after a year of interest rate hikes, “quality” is an often-used word currently among professional investors.

“The market is fairly priced, but there’s still pockets of value and there’s pockets of overvaluation,” Schroders portfolio manager Ray David told The Motley Fool last week.

“The market, we think, is going to be volatile going forward.”

Fortunately, two of David’s peers named a pair of stocks that they deem high enough quality to buy in the current market:

Revenue up 50% already but further boost coming

Medallion Group analyst Jean-Claude Perrottet told The Bull that international education services provider IDP Education Ltd (ASX: IEL) delivered “strong results” for the last financial year.

“The company lifted revenue by 50% on the prior corresponding period.”

As the world gradually shifted to a post-COVID era in 2022, the IDP share price crept upward as investors anticipated the free movement of students across borders once again.

Since mid-June, the stock has rocketed 50% higher.

But a recent catalyst makes Perrottet believe the party will continue for a while yet.

“China recently banned its students from online learning at overseas universities,” he said.

“We expect IDP Education to benefit from an influx of Chinese students returning to Australia.”

IDP shares are currently something of a darling among the professional community. According to CMC Markets, eight out of 10 analysts call it a buy.

Higher cash margins to come

Bell Potter Securities investment advisor Christopher Watt named Netwealth Group Ltd (ASX: NWL) as a buy.

“Netwealth is a financial services company. Funds under administration increased 10.2% or $5.8 billion for the 12 months to December 31, 2022, despite negative market movement of $4.6 billion.”

The Netwealth share price is down 9% over the past 12 months.

Watt admitted recent in-flows had been “weaker than expected” but was upbeat about the future.

“We anticipate an improvement underpinned by recent client wins,” he said.

“Further, higher cash margins and slowing cost growth are expected to result in stronger earnings growth.”

Other professionals aren’t quite as convinced about Netwealth. Only six out of 13 analysts currently surveyed on CMC Markets rate it as a buy.

The post Buy these 2 ASX 200 shares growing earnings as we speak: expert appeared first on The Motley Fool Australia.

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More reading

• The ASX 200 is still full of cheap shares despite this year’s surge and I’m ready to buy more
• 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
• Why Fisher & Paykel, Netwealth, Stanmore, and Terracom shares are dropping
• Which ASX fintech stock is hot to buy right now?
• 3 all-star ASX 200 shares ECP is going all-in on

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education and Netwealth Group. The Motley Fool Australia has positions in and has recommended Netwealth 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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While S&P/ASX 200 Index (ASX: XJO) shares in most sectors suffered last year, one bright spot was the energy sector.

With a war in Ukraine disrupting supplies from Russia, energy prices rocketed and the industry benefited from a favourable supply-demand ratio.

Despite the boom in 2022, many experts reckon energy stocks will continue their golden run into 2023.

“The energy sector is quite cheap. We’re overweight energy,” Schroders portfolio manager Ray David told The Motley Fool last week.

“The multiples that they’re trading on are still quite low. They’re trading on about six or seven times earnings.”

If you agree with this thesis, here are two energy-related ASX 200 shares that experts have named as buys this week:

‘Favourable industry dynamics paint a bright outlook’

Oil and gas producer Santos Ltd (ASX: STO) is one that David named as an example of a cheap buy, and Medallion Group analyst Jean-Claude Perrottet agreed.

“Santos’ fourth quarter result met production expectations. Sales revenue hit record levels of US$7.8 billion in fiscal year 2022, up 65% on the prior year,” Perrottet told The Bull.

“Favourable industry dynamics paint a bright outlook for the energy sector.”

The Santos share price is actually 7.3% down over the past 12 months, while paying out a 2.8% dividend yield.

Another reason to buy Santos stock now, for Perrottet, is a just-announced sweetener.

“Santos recently announced an increase in its share buy-back, offering an additional US$350 million increase to now total US$700 million.”

Santos shares are a favourite among David and Perrottet’s peers too.

According to CMC Markets, all 18 analysts covering the stock recommend it as a buy. Fourteen of them rate it as a strong buy.

Profit up 100% but stock’s the same price as a year ago

On the other end of the energy supply chain, Ampol Ltd (ASX: ALD) is going well in the retail space.

Bell Potter Securities investment advisor Christopher Watt would buy it right now.

“Australia’s largest refined fuel retailer reported a statutory net profit after tax of $695.9 million in the 2022 first half,” he said.

“It represented an increase of more than 100% on the prior corresponding period.”

The Ampol share price, surprisingly, has dipped 1.44% over the past year. And that’s only after a 10.47% rally since the start of 2023.

The stock does pay out an attractive 5.23% dividend yield.

Watt is positive about the business looking ahead. 

“We expect stronger refiner margins and capital management to drive future success,” he said.

“The stock offers attractive fully franked dividends.”

The post 2 ASX 200 shares to buy while energy shortage rages on: experts appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Should I buy Santos shares right now for dividend income?
• 5 things to watch on the ASX 200 on Monday
• Morgans names 2 high yield ASX dividend shares to buy this month
• 5 things to watch on the ASX 200 on Thursday

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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