Earlier this week, The Motley Fool readers heard IML portfolio manager Michael O’Neill declaring 2023 as the time to double down on dividend shares.

His theory was that a global economic slowdown this year will force investors to rely on the consistency and reliability of income-producing stocks.

Even longer term, with the era of near-zero interest rates behind us, capital growth will be anaemic, according to O’Neill.

This means that investors will have no choice but to turn to shares that pay dividends for decent returns.

“While markets may or may not perform well in 2023, what is very unlikely is that we’ll enter another long bull market with a similar amount of capital growth,” O’Neill said on the IML blog.

“For us, with capital growth likely to be lower in the medium-long term, it’s the right time to place greater focus on income.”

Helpfully, he named four specific ASX dividend shares that his team loves at the moment:

High dividends with pricing power and market dominance

In general, the IML team prefers industrials for “long-term, consistently high dividends”. 

“We are also looking at which sectors and stocks are likely to perform well, and so provide a steady or growing dividend in a high inflation environment.”

All four of his picks are “currently trading at reasonable valuations”:

Company	FY2024 price-to-earnings ratio	FY2024 dividend yield
Aurizon Holdings Ltd (ASX: AZJ)	12.3x	7.3%
Metcash Limited (ASX: MTS)	11.9x	5.9%
Orica Ltd (ASX: ORI)	16.1x	3.4%
Suncorp Group Ltd (ASX: SUN)	12.1x	6.8%

O’Neill’s stocks each have slightly different strengths, which demonstrate the range of qualities that his team seeks in income-producing shares.

Suncorp is a classic example of a business that has pricing power.

“Their strong market position gives them the ability to pass on rising costs to their customers.”

Explosives maker Orica is an example of a company operating in a “rational” industry.

“The main players are motivated by profit and act ‘rationally’ to maximise long-term profits – not spending large amounts of capital at the top of the cycle, or chasing market share at all costs through unprofitable discounting.”

Grocery wholesaler Metcash is in the great position of selling goods that are considered “essential”, which will not see waning demand due to a lagging economy or inflation.

Finally, O’Neill loves rail operator Aurizon due to the nature of its client agreements.

“Ideally, contracts are structured with adjustments for inflation and pass-through of essential input costs such as fuel,” he said.

“Aurizon benefits from such contractual protections.”

The post 4 best ASX dividend shares to buy right now: expert appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Are ASX 200 retail shares on sale in 2023?
• Why ASX dividend shares are so ‘critical’ right now: fundie
• When it comes to ASX 200 dividend shares, is boring better?
• How to minimise risk using ASX 300 dividend shares: fundie

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

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Imagine what $1 million could do for you and your future. If you’re anything like me, it’s a lot. However, for billionaire Warren Buffett, $1 million is likely pocket change.

The investing great currently boasts a net worth of more than US$110 billion, and he built the most of it by buying and holding shares.

In fact, Buffett’s company, Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) reportedly returned 20% on average between 1965 and 2019.

Fortunately for us, Buffett has freely given his investing advice over the years. Here are three key lessons I’ll be taking into 2023 in my aim to build a $1 million portfolio of ASX shares.

3 pieces of Buffett advice I’ll be using in 2023

Buy ASX shares I understand and believe in

The first Buffett tip I’ll be following in 2023 is only invest in a business you appreciate and truly believe will succeed in the future. There are two quotes from the billionaire that speak to this idea:

#1: Investment must be rational; if you can’t understand it, don’t do it.

#2: Risk comes from not knowing what you’re doing.

There are hundreds of business models among the 2,000 companies listed on the ASX. It’s entirely unlikely that any single person could learn the intricacies of them all.

That’s why I plan to focus on what I truly know to build my portfolio. Personally, I’ll spend the most time looking at shares in retailers and real estate investment trusts (RIETs) this year. Though, I will work to diversify my investments as well.

Focus on valuations

Secondly, the billionaire famously said:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

Once Buffett identifies a share he believes is a good buy, he doesn’t go out and snap it up straight away. The investing great first determines if it’s trading at a good price.

In doing so, he looks at whether the company offers a ‘moat’ – or competitive advantages over peers – to protect against hard times.  

Be consistent like Buffett

Finally, I believe consistency will be the key to growing my portfolio to $1 million, starting in 2023.

That means consistently setting aside funds to invest, consistently buying shares offering the above qualities, and consistently reinvesting any dividends I might receive, no matter what the market might do.

By reinvesting dividends, I can compound my investments, thereby growing my portfolio without forking out extra cash. And the first rule of compounding is, according to Berkshire vice chair Charlie Munger:

Never interrupt it unnecessarily.

After all, Buffett is well known for not making investment decisions based on what’s happening or might happen, with the broader market.   

The post I’m aiming for $1 million by following Warren Buffett’s advice in 2023 appeared first on The Motley Fool Australia.

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More reading

• 4 best ASX dividend shares to buy right now: expert
• ASX 200 mining shares: To buy or not to buy?
• 5 things to watch on the ASX 200 on Wednesday
• Top ASX value shares to buy in 2023
• 3 fantastic ETFs for ASX investors to buy this month

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 Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. 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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Many ASX 200 mining shares have had a top run in the past year, but are they still a buy?

Analysts have just downgraded the outlook for multiple ASX miners. These include BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), Fortescue Metals Group Ltd (ASX: FMG), Core Lithium Ltd (ASX: CXO), and Newcrest Mining Ltd (ASX: NCM).

So what are brokers saying about some of these ASX 200 mining shares?

Multiple mining shares cut

Capital market company CLSA has cut the Fortescue share price outlook to a sell with a $19 price target, the Australian Financial Review reported. Meanwhile, BHP has been cut to reduce with a $48.50 price target. And Rio Tinto has also been downgraded to reduce at a $117.50 price target.

Rio Tinto, BHP, and Fortescue are all major producers of iron ore, along with other minerals.

Fortescue shares closed on Tuesday at $22.03 each, meaning CLSA is tipping a 13.8% downside. BHP shares closed at $49.14, while Rio Tinto shares finished the day at $120.67. At those prices, CLSA analysts are forecasting BHP shares to have downside of 1.3% and Rio Tinto shares to slide 2.6%.

Meanwhile, Macquarie has slashed gold miner Newcrest to a neutral rating with a $25 price target, the AFR reported. Newcrest shares finished at $22.75 on Tuesday. This means despite the rating downgrade, Macquarie still sees nearly 10% upside for the Newcrest share price.

Lithium miner Core Lithium has also been slapped with a new “underweight” rating by JPMorgan. Core Lithium shares closed at $1.02 apiece on Tuesday.

What else?

Despite the broker downgrades, not everyone is negative on commodities. Goldman Sachs global head of commodities research Jeff Currie is very optimistic on the outlook for 2023.

In a presentation in London, Currie stated commodities have “the strongest outlook of any asset class in 2023″, Bloomberg reported. Currie said:

You cannot come up with a more bullish concoction for commodities.

Lack of supply is apparent in every single market you look at, whether it is inventories at critical operating levels or production capacity exhausted.

Share price snapshot

Most of the ASX 200 mining shares hit by broker downgrades have soared ahead in the last year.

For example, BHP shares have leapt 19.59% in the past 52 weeks.

Rio Tinto shares have gained 9.67% in the past year.

Fortescue shares have climbed 6% in the past 52 weeks.

The Core Lithium share price has jumped 15.91% in the last year.

However, Newcrest shares have slid nearly 7% in the last year.

The post ASX 200 mining shares: To buy or not to buy? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 3 catalysts for Core Lithium shares to rip higher in 2023
• Why Baby Bunting, Origin, Rio Tinto, and South32 shares are dropping today
• Rio Tinto share price falls on Q4 update

Motley Fool contributor Monica O’Shea 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) ended its winning streak with a very small decline. The benchmark fell 1.9 points to 7,386.3 points.

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

ASX 200 expected to rebound

The Australian share market looks set to bounce back on Wednesday despite a mixed night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 15 points or 0.2% higher this morning. In late trade on Wall Street, the Dow Jones is down 1%, the S&P 500 is down 0.2%, and the Nasdaq is up 0.1%.

Oil prices mixed

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) will be on watch after a mixed night for oil prices. According to Bloomberg, the WTI crude oil price is down 0.15% to US$79.74 a barrel and the Brent crude oil price has risen 1.1% to US$85.40 a barrel. Oil prices hit two-week highs at one point on Chinese demand optimism.

Rio Tinto named as a buy

The Rio Tinto Ltd (ASX: RIO) share price is in the buy zone according to analysts at Goldman Sachs. In response to the miner’s quarterly update, the broker reiterated its buy rating and lifted its price target to $134.40. Goldman notes that the miner delivered “record 4Q Pilbara production, [and] group production to lift ~8% in 2023.”

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could come under pressure today after the gold price dropped overnight. According to CNBC, the spot gold price is down 0.7% to US$1,907.8 an ounce. Traders may have been taking profit after the precious metal hit a multi-month high.

JB Hi-Fi shares rated as a buy

The JB Hi-Fi Limited (ASX: JBH) share price may be good value after its trading update. That’s the view of analysts at Morgans, which have retained their add rating with an improved $53.00 price target. The broker commented: “Although trading conditions will be more difficult in 2H23, we believe JBH is well placed to ride out the turbulence and deliver shareholder value over the medium-term.”

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Top ASX value shares to buy in 2023
• Here are the top 10 ASX 200 shares today
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• Why I’ll be buying more ASX dividend shares for my portfolio in 2023
• Here’s why the JB Hi-Fi share price is smashing the ASX 200 today

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 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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Warren Buffett is perhaps the world’s most famous and successful value investor. If like him, and the father of value investing, Benjamin Graham, you believe fear and greed often result in the mispricing of shares, you may already be a value investor.

But the value investing strategy is not without its pitfalls. Investors need to be able to sniff out genuine value shares they believe are trading below their intrinsic value, whilst at the same time avoiding the perils of value traps.

So, if you’re keen for some insights into which ASX shares could potentially be trading at bargain prices right now, you’re in luck! Because we asked our Foolish contributors which companies they believe could be flying well under the radar in the new year. Here is what the team came up with:

6 best ASX value shares for 2023 (smallest to largest)

Shaver Shop Group Ltd (ASX: SSG), $150.66 million

Michael Hill International Ltd (ASX: MHJ), $419.56 million

Universal Store Holdings Ltd (ASX: UNI), $435.01 million

Adairs Ltd (ASX: ADH), $497.5 million

MFF Capital Investments Ltd (ASX: MFF), $1.42 billion

JB Hi-Fi Limited (ASX: JBH), $5.15 billion

(Market capitalisations as at market close on 17 January 2023)

Why our Foolish writers love these ASX value shares

Shaver Shop Group Ltd

What it does: Shaver Shop operates in Australia and New Zealand. It has been operating since 1986 and now has more than 120 stores selling male and female hair removal products such as electric shavers, clippers and trimmers, and wet shave items. It also sells a wide range of products across oral care, hair care, massage, air treatment, and beauty categories.

By Tristan Harrison: Starting with how good value Shaver Shop is, this ASX share is currently priced at around eight times FY24’s estimated earnings and less than 10 times FY23’s estimated earnings, according to Commsec data. As such, the dividend income alone could amount to a dividend yield of around 12.6% in 2023.

The beauty and personal care market is growing, and Shaver Shop’s sales have steadily grown over the past decade. Reopened stores after lockdowns are generating good sales levels (up 13% year over year) to 6 November 2022, with a higher gross profit margin.

Growth of exclusive products generates around 60% of gross profit for Shaver Shop. The company is looking to grow these sales, as well as expand its store network in New Zealand. Plus, it’s expanding the range of products it’s selling.

For these reasons, I believe Shaver Shop would make a top buy for ASX value investors right now.

Motley Fool contributor Tristan Harrison does not own shares of Shaver Shop Group Ltd.

Michael Hill International Ltd

What it does: Founded in 1979, Michael Hill is a jewellery retailer spanning Australia, New Zealand, and Canada with 280 stores. The company’s brand has become synonymous with high-quality rings, earrings, necklaces, and more through its prominent advertising.

By Mitchell Lawler: Michael Hill does not have the hallmark traits of an ASX share I’d typically be interested in. It operates in a highly competitive market that is difficult to differentiate in, and the lack of meaningful revenue growth compared to five years ago leaves plenty to be desired.

However, management has done a great job of guiding the company through the pandemic. Where other retailers went boom and then bust – or simply went bust – Michael Hill has maintained a commendable earnings margin.

Furthermore, the company’s balance sheet is now in impeccable condition. At the end of June 2022, Michael Hill held $95.8 million in cash and no debt – allowing the company to conduct a $10.2 million share buyback and pay 7.5 cents per share in dividends in FY22.

At a price-to-earnings (P/E) ratio of nine times, based on the current share price, I think there could be some decent upside to Michael Hill shares this year.

Motley Fool contributor Mitchell Lawler does not own shares of Michael Hill International Ltd.

Universal Store Holdings Ltd

What it does: Universal Store is the retail company behind the eponymous Universal Store brand. It also recently completed the acquisition of Byron Bay-based fashion brand Thrills.

By James Mickleboro: Although Universal Store’s shares have rebounded strongly from their 52-week low, I don’t believe it is too late to invest. Based on Goldman Sachs’ earnings per share (EPS) forecast of 37.3 cents, at the time of writing, the company’s shares are trading at around 15 times forward earnings.

I feel this is great value given that Goldman is forecasting a 22.4% earnings before interest and tax (EBIT) compound annual growth rate (CAGR) over the next three years (FY22-25). This is expected to be underpinned by the company’s exposure to younger consumers, which should remain resilient relative to the broader population in the current environment, thanks to an increase in the minimum wage.

Goldman has a buy rating and $7.20 price target on Universal Store shares. 

Motley Fool contributor James MIckleboro does not own shares of Universal Store Holdings Ltd.

Adairs Ltd

What it does: Adairs retails home furnishings in Australia and New Zealand, boasting more than 170 stores. It also operates subsidiaries Mocka and the recently acquired Focus on Furniture.

By Brooke Cooper: The Adairs share price has suffered lately, falling by around 27% in 12 months. However, I believe it’s now trading at a decent price.

The company posted earnings per share (EPS) of 26.4 cents for financial year 2022 (FY22) – leaving it with a price-to-earnings (P/E) ratio of 10.5.

Additionally, Adairs’ paid loyalty program has more than a million members – a competitive advantage expected to grow by up to 10% annually in coming years. The company also has a five-year target of $1 billion in annual sales – up from $565 million in FY22.

Finally, Goldman Sachs says the company’s business is more resilient than some may assume and tips its dividends to grow 11% by FY24.

Motley Fool contributor Brooke Cooper does not own shares of Adairs Ltd.

MFF Capital Investments Ltd

What it does: MFF Capital is a listed investment company (LIC) that invests in a portfolio of mostly US-listed shares.

By Sebastian Bowen: I think MFF Capital shares represent compelling value right now. This LIC invests in a concentrated portfolio of international shares. Some of its current holdings include Mastercard, Asahi Group, and Amazon.

By investing in top-quality names like these, MFF has been able to deliver double-digit returns, on average, for many years now.

However, as it stands today, this LIC is trading at a significant discount to the underlying value of its investment portfolio. As such, I think investors are getting a bargain at the current price, the equivalent of buying $1 worth of assets for 90 cents.

Motley Fool contributor Sebastian Bowen owns shares of MFF Capital Investments Ltd, Mastercard, and Amazon.

JB Hi-Fi Limited

What it does: JB Hi-Fi sells home entertainment and technology products through its eponymous stores, and home appliances through its Good Guys stores. It operates through a network of physical stores across Australia and New Zealand and its growing online platform.

By Bronwyn Allen: I like this business because it’s simple to understand. JB Hi-Fi sells TVs, laptops, mobile phones, and loads of other electronic gadgets that people seem to love buying and endlessly upgrading. JB Hi-Fi also sells home appliances, which we all need to replace now and then.

Plus, Aussies are a property-mad bunch who love renovating, which means thousands of householders are buying a whole slew of appliances at once for every new kitchen, laundry, and living room created per year. So, I believe the ongoing demand for JB Hi-Fi’s products is strong. It’s no surprise to me that the company was among the top three best-performing ASX 200 retail shares in 2022.

While the JB Hi-Fi share price actually lost 13.2% in value last year, this followed a 99% surge from its COVID-crash trough through to the end of 2021. So, this pull-back looks like a buy-the-dip opportunity for 2023 to me.

From a value perspective, JB Hi-Fi shares are trading on a very low and, for me, extremely appealing price-to-earnings (P/E) ratio of 9.54, according to the ASX.

Motley Fool contributor Bronwyn Allen does not own shares of JB Hi-Fi Limited.

The post Top ASX value shares to buy in 2023 appeared first on The Motley Fool Australia.

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More reading

• Why I’ll be buying more ASX dividend shares for my portfolio in 2023
• Here’s why the JB Hi-Fi share price is smashing the ASX 200 today
• 2 passive income ideas I’d use to generate $100 a week in 2023
• Are ASX 200 retail shares on sale in 2023?
• Guess which ASX 300 share is forecast to pay a dividend yield of 11% in FY24

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, Amazon.com, and Mastercard. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Amazon.com, Jb Hi-Fi, and Mastercard. 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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If you’re looking for an easy way to invest, then exchange traded funds (ETFs) could be the answer.

But which ETFs might be top options right now?

Named below are three quality ETFs that could be worth considering right now:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF to look at is the BetaShares Asia Technology Tigers ETF.

With China reopening from the pandemic, it could be a quality option for investors. That’s because it provides investors exposure to many of the best tech stocks in the Asian region.

This means you’ll be buying well-known companies such as ecommerce giant Alibaba, search engine company Baidu, and WeChat owner Tencent.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Another ETF to consider is the VanEck Vectors Morningstar Wide Moat ETF. It could be a quality option for anyone that is keen to follow in the footsteps of legendary investor Warren Buffett.

This ETF tracks an index which has been designed to replicate the type of investments that Buffett makes. These are companies with fair valuations and sustainable competitive advantages or moats. And given the Oracle of Omaha’s incredible track record, it’s hard to argue against this strategy.

The ETF changes its constituents regularly to reflect valuation changes, but generally comprises approximately 50 companies with the aforementioned qualities. At present, these include the likes of Alphabet, Boeing, Kellogg Co, Meta Platforms, and Walt Disney.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

A final ETF to look at is the Vanguard MSCI Index International Shares ETF. This could be a good option if you’re looking to diversify your portfolio.

That’s because this popular ETF gives investors access to approximately 1,500 of the world’s largest listed companies.

This also allows investors to take part in the long term growth potential of international economies. Among the shares that you’ll be owning are giants including Amazon, Apple, Nestle, Procter & Gamble, Tesla, and Visa.

The post 3 fantastic ETFs for ASX investors to buy this month appeared first on The Motley Fool Australia.

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More reading

• With almost no investments at 30, can ASX shares still make me rich?
• I think these two ASX ETFs are great buys as inflation cools
• 3 of the best ASX ETFs for investors to buy in January
• 2022 wasn’t kind to the Vanguard MSCI Index International Shares ETF (VGS). What now?
• How I’d invest $300 a month in ASX dividend shares to target a $30,000 annual second income

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 Vanguard Msci Index International Shares ETF. The Motley Fool Australia has recommended Betashares Capital – Asia Technology Tigers Etf, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Xero Limited (ASX: XRO) share price descended 39% in the last year, but could it bounce back in the future?

Xero shares fell 2.27% today to close at $72.62. For perspective, the S&P/ASX 200 Index (ASX: XJO) fell 0.03% today.

Let’s take a look at the outlook for the Xero share price.

What’s ahead in the future?

Xero is a global cloud technology company with a presence in Australia, the United States, New Zealand and the United Kingdom.

Analysts at Morgans tip Xero’s earnings per share to explode 185% from 10.6 cents per share in FY23 to 30.2 cents per share in FY24.

Investment adviser Jabin Hallihan, commenting on The Bull, said:

Selective exposure to technology stocks is likely to deliver value due to their ability to grow earnings faster than GDP, regardless of interest rate movements. 

We prefer high quality technology companies with net cash balance sheets and pricing power.

Xero reported a $9.2 million increase in free cash flow in the half year ended 30 September 2022. The company had $1.1 billion in total available liquid resources at this time.

Morgans is recommending shareholders buy Xero. The broker has placed a $77 price target on the company’s share price. This implies a 6% upside based on the current share price.

Meanwhile, Goldman Sachs is also recommending investors buy the Xero share price. Goldman sees Xero as a “compelling global growth story”. Analysts said:

We see Xero as very well placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$76bn TAM.

Following the recent underperformance (absolute/relative), we see an attractive entry point into a compelling global growth story and our preferred large-cap technology name in ANZ, and are buy rated.

Xero share price snapshot

The Xero share price has climbed more than 3% in the year to date but has fallen 1% in the last month.

For perspective, the benchmark ASX 200 index has slid 0.42% in the last year.

Xero has a market capitalisation of about $10.9 billion based on the current share price.

The post Xero earnings per share forecast to surge 180% in FY24: Morgans appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Waiting for ASX shares to bottom? Why you could miss out on a stock market rally
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• Analysts say these ASX growth shares can generate huge returns for investors

Motley Fool contributor Monica O’Shea 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 Xero. The Motley Fool Australia has positions in and has recommended 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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If you are looking to bolster your portfolio with some ASX 200 blue chip shares, you may want to look at the two listed below that Goldman Sachs rates highly.

Here’s why its analysts think they are in the buy zone now:

Cochlear Limited (ASX: COH)

The first ASX 200 blue chip share that Goldman has named as a buy is this leading hearing solutions companies.

Thanks to its portfolio of world class products in an industry with high barriers of entry, Cochlear has been growing at a strong rate for well over a decade. And with the industry now benefiting from favourable tailwinds such as ageing populations, it appears well-placed to continue this trend long into the future.

Goldman Sachs currently has a buy rating and $247.00 price target on its shares. The broker feels that Cochlear is well-placed to hit the top end of its guidance in FY 2023. It said:

In our view, the backdrop for this year appears relatively more favourable, and we see clear scope for COH to deliver at the upper-end of another solid guidance (+8-13% to $290-305m, with further accretion possible from the Oticon Medical transaction, which is yet to close).

REA Group Limited (ASX: REA)

Another ASX 200 blue chip share to Goldman rates highly is property listings company REA Group.

It is the company behind the realestate.com.au website, which is dominating the ANZ market with an average of well over 100 million monthly visits. This is over three times greater than its nearest competitor.

It is thanks to this dominant market position, together with acquisitions and new revenue streams, that REA Group has been tipped to deliver the goods again in FY 2023 despite the housing market downturn.

Goldman Sachs has a buy rating and $158.00 price target on its shares. It said:

We remain confident that REA can continue deliver > 10% yield growth in FY23, despite the challenging backdrop, supported by ongoing increases in Premiere All attachment, Price rises, and Premiere Plus attachment (contributes GSe +4%/+3% yield driver in FY23/24).

The post Goldman Sachs says these ASX 200 blue chip shares are buys appeared first on The Motley Fool Australia.

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More reading

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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 positions in and has recommended Cochlear. The Motley Fool Australia has recommended Cochlear and REA 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 2023 hunt for income is already underway and the current landscape might position ASX dividend shares as the frontrunner this year.

Last week, Australians were informed that inflation had rebounded to a 7.3% year-on-year increase. Yet, returns on cash in the bank with the big four are sitting between 3.25% to 3.75%. In other words, cash is producing a negative real return.

Even if the Reserve Bank of Australia lifts rates again next month, cash won’t yield a positive real return until inflation is near the target range. That’s why I would much rather invest my money in fantastic businesses that are creating value for shareholders.

The total dividend yield of the S&P/ASX 200 Index (ASX: XJO) is expected to be 4.4% before franking credits this year, according to Don Hamson of Plato Investment Management. That means an investment in an indexed-based exchange-traded fund (ETF) alone could provide better returns than cash in 2023.

However, there are two ASX dividend shares that I believe could deal out even better dividend yields.

Cash cow to keep mooing

If I was looking to supercharge my passive income this year, it would be hard to pass on Queensland coal producer New Hope Corporation Limited (ASX: NHC). The company is currently trading a monstrous dividend yield of 13.4%.

The exceptionally high yield could be due to an unwillingness among investors to push the share price of this ASX 200 company higher in fear of falling coal prices. Since May last year, the commodity has floated sideways.

I personally find it hard to believe that the energy squeeze will be solved this year. Sanctions on Russian oil will remain in place while the Ukraine invasion persists; new sources of energy supply take time to reach production; and market interventions could amplify the issues.

Additionally, even if coal prices weaken throughout 2023, New Hope holds around $625 million in net cash that it could dip into to fund its payments.

Another ASX 200 dividend share I’d set my sights on

The other individual stock I’d be picking for beefing up my income stream is Smartgroup Corporation Ltd (ASX: SIQ). The provider of various employment packaging solutions has had a rough trot over the past year — shares are down 25%.

Many investors have parted ways with Smartgroup shares after a takeover failed to materialise in 2022 and the company lost one of its top 20 customers. In turn, the dividend yield has been inflated to a tall 12%.

Being realistic, I believe Smartgroup will reduce its dividends this year. My forecast is for dividends per share to decrease by 40% to 60% compared to last year. However, this could still beat the 4.4% yield of the ASX 200.

The attractive proposition in Smartgroup is the potential capital appreciation alongside a respectable income. At the current price-to-earnings (P/E) ratio of 11 times earnings, I’d estimate the potential for 25% growth in the Smartgroup share price to trade more in line with its peers.

The post ASX 200 to yield 4.4% in 2023. These 2 dividend shares pay more than twice that appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Attention income investors! These 7 ASX 200 dividend shares are projecting yields of 7%+ in FY24
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Motley Fool contributor Mitchell Lawler has positions in Smartgroup. 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 Smartgroup. 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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Given the market’s aversion for loss-making tech stocks, Brainchip Holdings Ltd (ASX: BRN) shares would likely be given a major boost if the semiconductor company became profitable.

But what are the chances of that happening in 2023?

Will Brainchip be profitable in 2023?

Unfortunately, it is difficult to say if Brainchip will be profitable this year. However, it seems highly unlikely that it will be profitable any time soon given that it has just diluted shareholders by raising funds through its agreement with alternative investment company LDA Capital.

Brainchip is issuing LDA Capital with 30 million shares (and possibly 10 million more if shareholders approve) at a yet to be determined price.

You would imagine that if it were confident that its sales would grow enough to reach profitability, it wouldn’t be seeking these funds.

No broker coverage

Unlike almost all ASX 200 shares, Brainchip doesn’t have any coverage by the major brokers.

This could mean that analysts don’t believe the company is investment grade.

As well as being a bit of a red flag, it also means investors can’t use broker data as a guide for if and when the company achieves profitability.

Big quarterly update coming

In light of the above, investors may want to look out for the company’s upcoming quarterly update.

For a couple of quarters, the company has been talking up its sales pipeline. For example, in its last quarterly update, which saw Brainchip report pitiful cash receipts of US$100k, its CEO Sean Hehir commented:

We are seeing the greatest amount of sales activity and engagement in the Company’s history […] We remain positive on future market penetration and broad adoption of Brainchip’s technology.

Its next update will likely demonstrate whether there is meaningful demand for its technology in a market dominated by tech behemoths and whether it deserves its whopping $1.2 billion market capitalisation.

And with short sellers targeting the company, shareholders will no doubt be hoping Brainchip delivers the goods.

Time will ultimately tell if Brainchip can become profitable and be more than just a meme stock.

The post Will BrainChip turn a profit in 2023? appeared first on The Motley Fool Australia.

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More reading

• Why Brainchip, Core Lithium, Deterra Royalties, and Mesoblast shares are falling
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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