Last year was a crazy one for S&P/ASX 200 Index (ASX: XJO) shares. The index slumped 7% over the 12 months ended Friday despite soaring energy and mining shares.

Meanwhile, stocks in other sectors – like retail and tech – suffered. The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) tumbled 24% last year while the S&P/ASX 200 Information Technology Index (ASX: XIJ) plunged 36%.

But I think the downturn may have provided an opportunity to build passive income. Here’s how I would invest $5,000 in ASX 200 dividend stocks if I were aiming for a second income stream.

Is now a good time to buy ASX 200 shares for dividend income?

Inflation, interest rate hikes, and major global events boosted some ASX 200 shares in 2022 while dragging others lower.

Fortunately, the market’s long-term performance may sow hope in the hearts of investors. The ASX 200 has historically always returned to and surpassed its previous highs following a downturn.

That means many of the market’s embattled sectors likely house some bargain shares right now.

And there’s a further silver lining for investors hunting a second income. Falling share prices tend to drive dividend yields higher.

Many companies’ dividends remained stable through 2022’s downturn, thereby potentially letting investors get a slice of the pie for less than they might’ve otherwise paid.

Thus, I believe now could be a good time to shift through the rubble in search of quality ASX 200 dividend shares trading for cheap prices. By doing so, I believe I could turn $5,000 into a passive income stream through the power of compounding.

Compounding returns

There’s no shortage of ASX 200 shares currently trading with dividend yields of around 8% following a disastrous 2022.

They include JB Hi-Fi Limited (ASX: JBH), Nine Entertainment Co Holdings Ltd (ASX: NEC), and Fletcher Building Limited (ASX: FBU), to name a few.

An 8% dividend yield would see a $5,000 investment returning $400 over the next 12 months.

That’s not exactly life-changing. However, I would aim to compound my dividends by reinvesting them in ASX 200 shares.

By doing so, and assuming my yield stays the same, I could turn my initial investment into $10,795 in 10 years’ time. At that point, it would be capable of paying out around $864 each year.

But the true magic comes later. In 30 years’ time, my figurative $5,000 investment – reinvested time and time again – could be worth $50,313. That, with an 8% yield, could return $4,025 annually.

And that’s without considering share price growth or a consistent investment strategy.

Choosing wisely

The ultimate challenge I face in putting my strategy to work is to identify oversold buys in the current environment.

While a high dividend yield might herald an oversold stock, it might also suggest a company isn’t spending its cash wisely, making its offerings unsustainable.

Thus, I would pay particular attention to a company’s cash flow and balance sheet to help determine if it’s a buy right now.

The post Here’s how I’d invest $5,000 in ASX 200 shares to earn a second income 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

• Bought $1,000 of AGL shares 10 years ago? Here’s how much dividend income you’ve received
• The 3 best-performing ASX 200 healthcare shares of 2022 revealed
• 5 things to watch on the ASX 200 on Tuesday
• These were the best-performing ASX 200 shares of 2022
• 3 steps to generating passive income with ASX 200 dividend shares in 2023

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Jb Hi-Fi and Nine Entertainment. 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/uTDe25Q

The ASX share market is full of interesting businesses. But, there are some compelling companies listed elsewhere around the world. We can get access to those with ASX exchange-traded funds (ETFs).

Some ETFs like the Vanguard Australian Shares Index ETF (ASX: VAS) track an index with businesses that are spread across a variety of sectors, such as the S&P/ASX 300 Index (ASX: XKO).

But, there are a growing number of ETFs that provide investors with access to a specific industry or theme.

A report by Sharesies has identified which ETFs investors have been buying. While the Vanguard Australian Shares Index ETF was the most popular, I’m going to outline the next two most popular ETFs that were bought in November 2022 on the Sharesies platform.

VanEck Global Clean Energy ETF (ASX: CLNE)

The purpose of the ETF is to give investors exposure to 30 of the largest companies involved in “clean energy production and associated technology and equipment globally”, according to VanEck. These businesses are from both ‘developed’ and ‘developing’ markets.

There are four main areas that this ASX ETF is invested in – independent power producers and energy traders (33% of the portfolio), electrical equipment (29.3%), semiconductors and semiconductor equipment (24.8%), and electric utilities (12.9%).

In terms of geographic weighting, the US is the biggest allocation with 41%, but many countries have a weighting of more than 2.5%: Spain (10%), China (9.2%), Israel (7.5%), New Zealand (6.6%), Denmark (5.3%), Canada (4.6%), Japan (4.2%), Brazil (2.9%), and Austria (2.6%).

At the end of November 2022, these were the ten biggest positions in the portfolio: Solaredge Technologies, Vestas Wind Systems, Sunrun, First Solar, Enphase Energy, EDP Renovaveis, Bloom Energy, Xinyi Solar, Chubu Electric Power, and Brookfield Renewable. Those positions make up around 48% of the total portfolio.

This ASX ETF comes with an annual management fee of around 0.65%.

BetaShares Climate Change Innovation ETF (ASX: ERTH)

This investment provides a more diversified exposure to the fight against climate change. It’s invested in up to 100 global companies that make at least 50% of their revenue from “products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions”.

Sectors covered within the ETF include clean energy providers, along with companies tackling “green transport, waste management, sustainable product development, and improved energy efficiency and storage”.

Looking at the allocations, green energy gets the biggest allocation with 23.8% of the portfolio, followed by ‘enabling solutions’ (21.9%), green transportation (21.3%), sustainable products (21.1%), and water and waste improvements (11.9%).

The portfolio is a bit more US-focused than the first one I outlined, with a weighting of 53.9% to the United States. Other weightings of more than 2% include China (8.6%), South Korea (6.2%), Denmark (5.1%), France (4.4%), Japan (3.5%), Spain (2.5%), Sweden (2.3%), and Germany (2.1%).

The top holdings of this ASX ETF look very different from the VanEck one. Here are the biggest 10 positions: Trane Technologies, Enphase Energy, Eaton, Vestas Wind Systems, American Water Works, Ecolab, Samsung, Cie De Saint-Gobain, East Japan Railway, and BYD.

This ETF comes with an annual management fee of 0.65%.

The post 2 ASX ETFs that investors are using to bet on the future 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

• Telstra shares fell short in 2022. Can they deliver in 2023?
• Morgans names 2 ASX 200 dividend shares to buy with 5%+ yields
• Bought $1,000 of AGL shares 10 years ago? Here’s how much dividend income you’ve received
• Growth stock crash: is now the time to buy Xero shares?
• 3 defining moments for Fortescue shares in 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brookfield Renewable. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Ecolab, First Solar, and SolarEdge Technologies. 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/xZdBo2O

The Telstra Group Ltd (ASX: TLS) share price saw a negative return in 2022, falling by around 5.5%. When the dividends are added to the return, the picture looks a bit better for the telco.

However, keep in mind that Telstra’s share price performance did beat the S&P/ASX 200 Index (ASX: XJO). The ASX 200 fell 7.25% over the year.

So, while Telstra shares did drop, it managed to slightly outperform the ASX index.

FY22 result revealed promise

On a guidance basis, Telstra reported that its FY22 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 8.4% to $7.3 billion, while free cash flow went up 5.9% to $4 billion. Total income was $22 billion (down 4.7%).

In FY23, the business is expecting to deliver total income of between $23 billion to $25 billion, which would represent growth. Underlying EBITDA is expected to be between $7.8 billion to $8 billion, which would be a growth of between 6.8% to 9.6%.

The above underlying EBITDA guidance includes a contribution from Digicel Pacific, which is a Pacific island-focused telco that Telstra bought during the year.

Telstra’s board decided to increase the final FY22 dividend by 6.25% to 8.5 cents, which could signal that future increases are intended.

Can Telstra shares deliver in 2023?

Investors often like to judge a business by its ability to generate profit. The more profit it makes, the higher the valuation could go. The fact that Telstra is predicting underlying profit growth in FY23 is promising.

If the ASX 200 hadn’t dropped by 7%, things may have been better for the Telstra share price. Higher interest rates were probably a key culprit for the decline. As billionaire Ray Dalio once said:

It all comes down to interest rates. As an investor, all you’re doing is putting up a lump sum payment for a future cash flow.

Commsec numbers suggest that Telstra is going to generate 17.1 cents of earnings per share (EPS) while paying a dividend per share of 17 cents in FY23. A higher dividend (up from 16.5 cents per share) could boost investor sentiment about Telstra shares.

Plus, Telstra is on its journey of the T25 strategy which aims to cut costs, roll out 5G coverage, increase dividends and improve customer and employee satisfaction.

One of the main boosts to Telstra’s earnings could be that it has announced it’s going to increase mobile prices in line with CPI inflation, which could be a sizeable boost to organic revenue.

The post Telstra shares fell short in 2022. Can they deliver in 2023? 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

• 23 ASX shares to buy in 2023 – brokers
• How I’d use a stock market crash to boost my passive income
• 3 steps to generating passive income with ASX 200 dividend shares in 2023
• Brokers name 3 ASX shares to buy today
• My best ASX passive income idea for 2023

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 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/2CMsmhS

If you’re looking for dividends for your income portfolio, then it could be a good idea to check out the two shares named below.

These ASX 200 dividend shares have been rated as buys by analysts at Morgans. Here’s what the broker is saying about them:

QBE Insurance Group Ltd (ASX: QBE)

The first ASX 200 dividend share that Morgans has tipped as a buy is insurance giant QBE.

The broker is feeling positive about the company’s outlook thanks to rising premiums and cost reductions. It explained:

With strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits to come, we expect QBE’s earnings profile to improve strongly over the next few years. The stock also has a robust balance sheet and remains relatively inexpensive overall trading on ~9.1x FY23F PE

In respect to dividends, Morgans expects QBE to pay a 41.5 cents per share dividend in FY 2022 and then a 76.5 cents per share dividend in FY 2023. Based on the latest QBE share price of $13.43, this equates to yields of 3.1% and 5.7%, respectively.

Morgans has an add rating and $14.93 price target on QBE’s shares.

South32 Ltd (ASX: S32)

Another ASX 200 dividend share that Morgans has named as a buy is South32.

It is a mining giant with a diverse collection of operations providing exposure to a range of commodities including aluminium, copper, manganese, and nickel.

Morgans remains positive on South32 despite its soft start to the financial year. The broker sees it as well-placed to benefit from China’s recovery from the pandemic and likes its portfolio transformation and strong balance sheet. Its analysts said:

Slow start to the year but S32 remains in robust shape, with clear exposure to a recovery scenario for China growth. […] We expect S32 to continue transitioning its portfolio further towards base metals, with a strong balance sheet supporting potential for further M&A. We view S32 as a key large-cap (ex-iron ore) sector pick.

As for dividends, Morgans is expecting South32 to pay fully franked dividends per share of 23 cents in FY 2023 and 21.6 cents in FY 2024. Based on the current South32 share price of $4.00, this will mean yields of 5.75% and 5.4%, respectively.

The broker has an add rating and $5.30 price target on the miner’s shares.

The post Morgans names 2 ASX 200 dividend shares to buy with 5%+ yields 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

• Better buy for 2023: BHP vs. Fortescue shares
• Forget Core Lithium shares! Experts say these cheap ASX 200 shares could be better buys
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 2 ASX dividend shares that could see big payout increases next year
• Buy these ASX dividend shares for a passive income: analysts

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/1efLtPO

If you invested $1,000 in AGL Energy Limited (ASX: AGL) shares in early 2013, you might be disappointed in your investment so far. Fortunately, however, the company’s dividends have offset the worst of its stock’s performance.

The energy provider’s share price has crumbled in recent years amid rising demand for greener power. AGL is Australia’s biggest greenhouse gas emitter. Thus, it’s been centre to such conversations – and it’s started a few of its own.

The company’s initial proposal to spin off its dirtiest assets was dramatically scrapped last year, replaced with a $20 billion plan to ditch coal in favour of renewables.

Its plan for a greener future, alongside the soaring energy sector, saw the AGL share price gain 28% last year. Zooming out, however, shows a bleaker picture.

The AGL share price has crashed around 45% over the last decade. A $1,000 investment in the energy giant in early 2013 would likely have seen a buyer walk away with 68 shares, paying $14.57 apiece, and $9 change.

Today, that parcel would be worth just $548.76. The AGL share price last traded at $8.07.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 49% over the last 10 years.

Have AGL’s dividends made up for its share price’s poor performance in that time? Let’s take a look.

How much have AGL shares paid in dividends in 10 years?

Here are all the dividends AGL has offered over the last decade:

AGL dividends’ pay date	Type	Dividend amount
September 2022	Final	10 cents
March 2022	Interim	16 cents
September 2021	Final	34 cents
March 2021	Interim	31 cents
March 2021	Special	10 cents
September 2020	Final	51 cents
March 2020	Interim	47 cents
September 2019	Final	64 cents
March 2019	Interim	55 cents
September 2018	Final	63 cents
March 2018	Interim	54 cents
September 2017	Final	50 cents
March 2017	Interim	41 cents
September 2016	Final	36 cents
March 2016	Interim	32 cents
September 2015	Final	34 cents
March 2015	Interim	30 cents
September 2014	Final	33 cents
April 2014	Interim	30 cents
September 2013	Final	33 cents
April 2013	Interim	30 cents
Total:		$7.84

While those invested in AGL shares haven’t realised much in the way of gains over the last decade, the company’s dividends have at least seen them break even.

The company has paid out $7.84 per share in that time, meaning our figurative parcel would have yielded $533.12 in dividend income in that time.

That leaves our imagined $1,000 purchase – considering both the AGL share price’s slump and the company’s offerings – with an 8.2% return on investment (ROI) over the last 10 years.

Additionally, many of the ASX 200 giant’s dividends have been franked. That means they might have brought extra benefits for some investors at tax time.

AGL shares are currently trading with a 3.2% dividend yield.

The post Bought $1,000 of AGL shares 10 years ago? Here’s how much dividend income you’ve received 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

• The 3 best-performing ASX 200 healthcare shares of 2022 revealed
• 5 things to watch on the ASX 200 on Tuesday
• These were the best-performing ASX 200 shares of 2022
• 3 steps to generating passive income with ASX 200 dividend shares in 2023
• Here are the top 10 ASX 200 shares today

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

from The Motley Fool Australia https://ift.tt/u0D4mCi

The Xero Limited (ASX: XRO) share price suffered heavily last year. It was one of the worst performers in the S&P/ASX 200 Index (ASX: XJO) in 2022. Xero shares dropped by 52% and the ASX 200 only fell by 7.25%.

With such a significant decline, you’d think the cloud accounting software business saw a big turn in conditions. But, it didn’t. The company has continued to report double-digit growth, which I will outline later.

However, the biggest impact on the Xero share price may have been rising interest rates. A wide range of ASX growth shares suffered major sell-offs last year.

Why do interest rates matter for ASX growth stocks?

Warren Buffett explained how interest rates affect things:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature…its intrinsic valuation is 100% sensitive to interest rates.

Investors may have an idea of what a business may look like in five or ten years, and potentially the valuation. But, to figure out how much an ASX growth share is worth today, an investor can ‘discount’ that value back through the years until the investor gets to today’s value. The higher the interest rate, the higher the discount rate.

So, with interest rates up so much, it is somewhat justified that the Xero share price is lower than it used to be. But, a decline of 50% may be too harsh.

Xero shares continue to see underlying growth

In the first half of FY23, the company reported that subscribers grew by 16% to around 3.5 million and the average revenue per user (ARPU) grew by 13% to $35.30. Operating revenue went up by 30% to $658.5 million and annualised monthly recurring revenue (AMRR) jumped 31% to $1.48 billion.

All of those statistics are what I’d want to see from a leading business, particularly with a high gross profit margin of 87%.

When a company has that strong of a gross profit margin, it means a vast majority of the new revenue that Xero generates can be turned into gross profit, which can then be spent on categories like software development, marketing, employees, and so on.

The business keeps over 99% of its subscribers each year, showing that loyalty is exceptionally high. Xero is taking advantage by implementing price increases in New Zealand, Australia, and the UK, which can boost its revenue and hopefully the margins.

In the long term, the business expects each of its major expense categories (eg marketing, and general administration) to be a smaller percentage of revenue. In other words, it’s expecting its profit margins to rise in the future.

Is the Xero share price a buy?

I think it is. There may be more volatility on the ASX in 2023, but there are few ASX businesses as high-quality as Xero in my opinion. It continues to grow its subscriber numbers globally, subscription prices are increasing and the business is still heavily focused on long-term growth. It’s a lot cheaper than it was before.

The post Growth stock crash: is now the time to buy Xero shares? 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

• 23 ASX shares to buy in 2023 – brokers
• 5 things to watch on the ASX 200 on Friday
• 3 five-star ASX 200 shares I would buy in 2023
• Why are ASX 200 tech shares having such a stellar run on Thursday?
• 10 ASX shares I think are buys for 2023

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended 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.

from The Motley Fool Australia https://ift.tt/8uDhey2

Fortescue Metals Group Limited (ASX: FMG) shares saw plenty of volatility during 2022. But, unlike many ASX growth shares, the ASX mining share managed to finish the year higher. It rose by 3.3%.

This means that the iron ore ASX share managed to beat the return of the S&P/ASX 200 Index (ASX: XJO). The index fell by 7.25% over 2022.

Plus, don’t forget that Fortescue paid a very large dividend in 2022. The business paid an FY22 dividend per share of $2.07. Excluding franking credits, the Fortescue dividend amounted to an additional 10.8% return.

While the changes in the iron ore price may have had the biggest short-term impact on the Fortescue share price, the last price change is quickly forgotten as the next day of trading occurs.

Here are three of the most significant announcements during the year.

Decarbonisation plan announced

The business revealed its US$6.2 billion plan to eliminate fossil fuel use within the business and achieve ‘real’ zero terrestrial emissions (scope 1 and 2) across its iron ore operations. The investment will “eliminate Fortescue’s fossil fuel risk profile and enable it to supply customers with a carbon free product.”

Fortescue said that it expects to generate attractive economic returns from its investment arising from the operating cost savings due to cutting out diesel, natural gas and carbon offset purchases from its supply chain.

The ASX mining share, by 2030, will avoid 3 million tonnes of CO2 emissions per year, with net operating costs savings of US$818 million per year, at the prevailing market prices of diesel, gas and Australian carbon credit units.

Fortescue believes this will lead to a significant new green growth opportunity by producing a carbon-free iron ore product and through the commercialisation of decarbonisation technologies. This could be a useful boost for Fortescue shares.

This will involve zero emission trucks, zero emission trains and zero emission drill rigs and excavators. Within the overall expenditure, it will spend billions on renewable energy, battery storage and infrastructure.

E.ON

At the end of March 2022, Fortescue revealed its biggest potential green hydrogen partnership. As a reminder, Fortescue is looking to create a global portfolio of locations that produce green hydrogen through Fortescue Future Industries (FFI) as a fuel source to replace fossil fuels in heavy machinery, boats and planes.

E.ON, is one of Europe’s largest operators of energy networks and energy infrastructure, and a provider of innovative customer solutions for 50 million customers.

Fortescue revealed that it’s aiming to deliver “up to five million tonnes per annum” of green hydrogen to Europe by 2030. The two businesses signed a memorandum of understanding, with binding elements between the parties.

This deal could represent a third of FFI’s green hydrogen production by 2030. It could be generating meaningful earnings for the company, and potentially boost the Fortescue share price.

WAE acquisition

In January 2022, which seems like a very long time ago, Fortescue announced a sizeable acquisition. It bought Williams Advanced Engineering (WAE) for £164 million.

Fortescue has been working with WAE since early 2021 to design and build a prototype battery system to power an electric mining haul truck.

The deal provided Fortescue with “critical technology and expertise in high-performance battery systems and electrification”.

In the 2021 calendar year, WAE generated revenue of around US$84 million, with customers in sectors such as premium automotive and motorsport.

Fortescue wants WAE to become a major player in the growing global market for heavy mobile equipment and rail.

If this goes well, it could be a boost for Fortescue shares.

The post 3 defining moments for Fortescue shares in 2022 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

• 2 ASX 200 shares I’m never selling
• Iron ore price in 2023: Bull vs. bear
• Better buy for 2023: BHP vs. Fortescue shares
• 25% of my retirement portfolio is in these 5 ASX shares: Here’s why I believe they’re winners for 2023 and beyond
• Can Fortescue stock maintain its dividend in 2023?

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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/qCFb1K3

On Friday, the S&P/ASX 200 Index (ASX: XJO) ended the week with a small gain. The benchmark index rose 0.25% to 7,038.7 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set to rise again on Tuesday following a decent night of trade in Europe. According to the latest SPI futures, the ASX 200 is poised to open the day 31 points or 0.5% higher. In Europe, the DAX rose 1.05% and the CAC climbed 1.9% amid upbeat economic data. Wall Street was closed for a public holiday.

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 2.7% to US$80.51 a barrel and the Brent crude oil price is up to US$85.91 a barrel. Oil prices rose on demand optimism.

Lithium miners on watch

It could be a better day for lithium miners such as Mineral Resources Ltd (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS) on Tuesday. On Wall Street on Friday, US-listed lithium miners such as SQM had a decent session. This has been followed up with a positive showing for European listed lithium shares overnight.

Gold price rises

Gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent day after the gold price rose overnight. According to CNBC, the spot gold price is up 0.2% to US$1,830.1 an ounce. Optimism that rates may not rise as much as feared has boosted the precious metal recently.

No RBA meeting

Borrowers can breathe a sigh of relief today. It may be the first Tuesday of the month, but the Reserve Bank will not be meeting to discuss the cash rate. The central bank doesn’t hold monetary policy meetings in January, so rates will stay as they are until at least the start of February.

The post 5 things to watch on the ASX 200 on Tuesday 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

• 23 ASX shares to buy in 2023 – brokers
• These were the best-performing ASX 200 shares of 2022
• With hardly any savings at 40, I’d use the Warren Buffett method for generating passive income
• Should I buy ASX 200 lithium shares for my portfolio in 2023?
• 3 steps to generating passive income with 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.

from The Motley Fool Australia https://ift.tt/K4pCebz

It’s no secret that inflation was one of the biggest concerns for investors over the 2022 investing year.

Rising inflation, as well as the higher interest rates that come with it, have shaken markets over the past 12 months and are probably almost single-handedly responsible for the sluggish performance we saw on the stock markets last year.

That was true for both here on the ASX and overseas on the US markets.

And while inflation might ease this year, it’s likely that it won’t be getting down to the passive levels that were ubiquitous for the decade preceding 2022.

So how does an investor put $1,000 to work if they are concerned about rising inflation?

Investing $1,000 in a high-inflation world

Well, there are a few things to keep in mind. Inflation is the process of currency debasement. In other words, high inflation rates make our dollar weaker. This increases the cost of pretty much everything. And if wages don’t keep up (which they haven’t been), it results in a falling standard of living for most Australians.

So what does this mean for ASX shares? Well, it means that the bar for providing real returns is higher. If inflation is running at 6% per annum, and an ASX share gives an investor a 2% dividend yield alongside a 3% capital appreciation, then it is still going backwards.

That’s because although its nominal rate of return is 5%, its actual rate of return (accounting for inflation ) is -1%.

So with this in mind, I would aim for ASX 200 shares that have the potential to provide both a mix of capital growth and dividend returns. Preferably with franking credits too, which boost returns even further. Potential candidates for these criteria could include Brickworks Ltd (ASX: BKW) or Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Shares that can thrive with rising prices

But I would also look to companies that have a structural advantage in times of high inflation. One option is ASX 200 bank shares like Westpac Banking Corp (ASX: WBC). Banks can quite quickly adapt to higher inflation because they can simply raise their loan rates alongside rising interest rates.

Higher customer rates on term deposits and savings accounts that stem from higher interest rates can boost the capital that banks have at their disposal too.

Another sector that tends to prosper during high inflation periods is ASX 200 resources shares. Commodities like iron ore, coal, gold and oil tend to keep up with, or even exceed, the rate of inflation.

Thus, miners like BHP Group Ltd (ASX: BHP) and drillers like Woodside Energy Group Ltd (ASX: WDS) could also be potential inflation winners. Just look at the share prices of BHP or Woodside over 2022 if you want proof that these companies can thrive when prices are rising.

Finally, consumer staples shares are in another sector with a reputation for being an effective inflation hedge. Higher inflation can reduce consumer spending.

But we all have to spend money on food, drinks and household essentials, pretty much regardless of how expensive they are. So another potential path for our $1,000 is in ASX 200 consumer staples shares like Coles Group Ltd (ASX: COL) or Metcash Ltd (ASX: MTS).

The post How I’d invest $1,000 in ASX 200 shares for rising inflation 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

• 23 ASX shares to buy in 2023 – brokers
• How I’d use a stock market crash to boost my passive income
• 3 pivotal moments you might have missed for BHP shares in 2022
• How I’d invest $10,000 in ASX shares if I was starting from scratch in 2023
• These were the best-performing ASX 200 shares of 2022

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Coles Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Metcash and 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/d5uX86e

The Core Lithium Ltd (ASX: CXO) share price has soared in 2022, but will it keep climbing higher in 2023?

Core Lithium shares have surged 75% in the year to date. In today’s trade, Core Lithium shares are surging 6%.

So what will impact the Core Lithium share price next year?

Finniss Project

Core Lithium is exploring the Finniss Lithium Project in the Northern Territory. A key factor that could impact the Core Lithium share price is production from this project. The Mineral Resource Estimate for the Finniss project lifted by 28% to 18.9 Mt at 1.32% lithium oxide in 2022. The company says first spodumene concentrate production is on track for the first half of 2023. Core Lithium plans to commence lithium concentrate sales in H1 2023.

If Core Lithium can deliver on its production targets, this may be a positive for the company’s cash flow and the Core Lithium share price. The team at Macquarie is tipping Core Lithium to deliver sold free cash flow in FY24 and FY25. Any new offtake agreements could also be a positive for Core Lithium.

Price of lithium

Lithium prices and electric vehicle (EV) demand could also weigh on Core Lithium shares. Lithium is an essential component of EV batteries. The price of lithium can impact investor sentiment about the company’s ability to generate profit from lithium at the mine.

A recent Industry Department report is tipping spodumene prices to rise from an average of US$2,700 a tonne in 2022 to US$4,010 in 2023 before pulling back to US$3,130 in 2024. The report states world demand for lithium demand is “forecast to rise by over 40%” in the next two years to reach 1,091,000 tonnes by 2024. The report adds:

Despite the spread of new battery manufacturing capacity into Europe and the US, Asia remains the major source of demand for lithium.

Core Lithium share price snapshot

Core Lithium shares have soared 78% in the last year. However, Core Lithium shares have descended 21% in the last month

For perspective, the ASX 200 has lost 6% in the last year.

The post Here’s what I think could impact the Core Lithium share price in 2023 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

• These were the best-performing ASX 200 shares of 2022
• What would it take for the Core Lithium share price to explode in 2023?  
• Why is the Core Lithium share price soaring 6% today?
• Why Appen, Core Lithium, Paradigm, and Sayona Mining shares are racing higher
• Why are ASX 200 lithium shares charging higher today?

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.

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