The lithium industry was a great place to invest in 2022 despite an end of year pullback.

A good number of ASX 200 lithium shares have recorded strong gains this year in a volatile stock market.

The big question now, though, is whether it is too late to invest in the industry? Let’s take a look:

Should I buy ASX 200 lithium shares in 2023?

Buying ASX 200 lithium shares or not in 2023 is perhaps not as easy a choice to make as it was a year ago.

The recent online auction held by Pilbara Minerals Ltd (ASX: PLS) revealed a spot of weakness in pricing month on month. This has sparked fears that prices could soon collapse in line with Goldman Sachs’ bearish estimates. As a reminder, it is forecasting:

• Spodumene 6%
  • 2022 US$4,233
  • 2023 US$4,330
  • 2024 US$800
  • 2025 US$800

These forecasts compare unfavourably to the latest Pilbara Minerals’ auction price of US$8,299 per dry metric tonne. In fact, these estimates imply a whopping 90% decline in spodumene prices by 2024.

As a result of this, it will come as no surprise to learn that Goldman Sachs has a preference for producers rather than developers or explorers right now.

After all, lithium developers such as AVZ Minerals Ltd (ASX: AVZ) and Liontown Resources (ASX: LTR) could miss the boat on the high prices and commence production when prices have collapsed.

For this reason, Goldman Sachs is recommending ASX 200 lithium miner Allkem Ltd (ASX: AKE) as a buy with a price target of $15.20.

Any other buys?

This month the team at Morgans initiated coverage on Pilbara Minerals with a hold rating. However, with its shares being hammered on that day, the broker upgraded the lithium miner’s shares to an add rating with a $4.70 price target the very next day. It commented:

Given the steep drop in the share price today, we see more opportunity than we did when we published our initiation yesterday. […] Sentiment towards the sector could weaken further in the very short term but we expect that strong 2Q cash flows and the potential for capital management may change investors’ minds.

Morgans also recently initiated coverage on Mineral Resources Ltd (ASX: MIN) shares with an add rating and $94.00 price target. It described the company as a “formidable resource player with lithium clout.” The broker adds:

MIN is a business that is transforming from being primarily leveraged to high-cost / short-life iron ore operations to low-cost / long-life iron ore and lithium assets. This transition accelerated in the September quarter 2022 post Wodgina’s restart. We expect the growth planned for all segments will see MIN remain supported.

All in all, there’s still plenty of support for select ASX 200 lithium shares in 2023 in the broker community. Time will tell if they have made the right call.

The post Should I buy ASX 200 lithium shares for my portfolio in 2023? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 lithium shares charging higher today?
• Could the superprofits of ASX lithium shares be in danger next year?
• Could investing in the ASX 200 make me a millionare within a decade?
• 5 things to watch on the ASX 200 on Friday
• The top five ASX 200 shares in Macquarie’s model portfolio

Motley Fool contributor James Mickleboro has positions in Allkem. 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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It certainly has been a volatile 12 months for the Australian share market in 2022. This has seen a number of ASX shares tumbling deep into the red over the last 12 months.

While this is disappointing for investors, it may have created an excellent buying opportunity.

However, before rushing in, investors may want to listen to some of Warren Buffett’s advice about cheap shares first.

Cigar butt investing

In Berkshire Hathaway’s 1989 letter, Mr Buffett warned investors to stay away from terrible companies even if you could make a quick profit. He said:

If you buy a stock at a sufficiently low price, there will usually be some hiccup in the fortunes of the business that gives you a chance to unload at a decent profit, even though the long- term performance of the business may be terrible. I call this the “cigar butt” approach to investing. A cigar butt found on the street that has only one puff left in it may not offer much of a smoke, but the “bargain purchase” will make that puff all profit.

Instead of cigar butt investing, the Oracle of Omaha thinks investors should focus on making long term investments in “wonderful” companies. He adds:

Unless you are a liquidator, that kind of approach to buying businesses is foolish. First, the original “bargain” price probably will not turn out to be such a steal after all. In a difficult business, no sooner is one problem solved than another surfaces – never is there just one cockroach in the kitchen. Second, any initial advantage you secure will be quickly eroded by the low return that the business earns. For example, if you buy a business for $8 million that can be sold or liquidated for $10 million and promptly take either course, you can realize a high return. But the investment will disappoint if the business is sold for $10 million in ten years and in the interim has annually earned and distributed only a few percent on cost. Time is the friend of the wonderful business, the enemy of the mediocre.

Buffett then famously concludes:

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. Charlie understood this early; I was a slow learner.

The post I would follow Warren Buffett’s advice when buying ASX shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• I’m listening to Warren Buffett and buying cheap ASX shares
• A recession could be coming in 2023. Here’s Warren Buffett’s investing advice
• Is it safe to invest in ASX shares now? Take advice from Warren Buffett
• Almost ready to retire? I’d follow Warren Buffett’s tips to enjoy a growing passive income from ASX dividend shares
• One Warren Buffett-style stock I’m ‘never’ selling

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 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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If you’re at that stage in your investment journey where a passive income is your number one priority, then you’re not alone.

Generating an income from ASX dividend shares is something that countless Australians are doing right now.

But how should you do it in 2023? Listed below are three key steps that could help you on your journey next year:

Step 1: Find the right ASX 200 dividend shares

Picking the most suitable ASX 200 dividend shares to generate a passive income is of course the best place to start. Sticking with blue chip shares could be the smart move here. These companies tend to be stable and have a long history of paying dividends. There’s plenty to choose from here. Retail giant Woolworths Group Ltd (ASX: WOW), utilities company APA Group (ASX: APA), and even mining behemoth BHP Group (ASX: BHP) could be worth investigating.

Step 2: Work out your investment time horizon

The next thing for investors to look at is their investment time horizon. The time you plan to spend in the market to build your income will have a big impact on the type of ASX 200 dividend shares you might want in your portfolio. For example, if you’re just out of university and are thinking ultra-long term, you could invest in growth companies that pay dividends. Altium Limited (ASX: ALU) and Domino’s Pizza Enterprises Ltd (ASX: DMP) are two dividend payers that are aiming to double the size of their businesses in the medium term. They may only offer modest dividend yields now, but they have the potential to grow their payouts significantly in the future.

Whereas if you are nearing retirement, you might want to buy ASX 200 dividend shares that offer larger and more stable yields now. Telco leader Telstra Corporation Ltd (ASX: TLS), supermarket giant Coles Group Ltd (ASX: COL), or big four bank Westpac Banking Corp (ASX: WBC) might be worth considering.

Step 3: Active monitoring

Finally, another thing for investors to consider is the active monitoring of their portfolio. After all, past performance is not a guarantee of future returns. There’s always the potential for unexpected changes, like we saw during the COVID-19 pandemic, that put even historically strong companies in a difficult place and lead to dividend cuts or even suspensions. If that happens, investors may want to re-evaluate their investments and look to see if their capital could generate better returns in other shares.

The post 3 steps to generating passive income with ASX 200 dividend shares in 2023 appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• What are brokers saying about the BHP share price in 2023?
• The 5 biggest threats to the stock market in 2023
• Could investing in the ASX 200 make me a millionare within a decade?
• Brokers say these top ASX dividend shares are buys for 2023

Motley Fool contributor James Mickleboro has positions in Altium, Domino’s Pizza Enterprises, and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has positions in and has recommended Apa Group, Coles Group, and Telstra Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking for some dividend shares to add to your retirement portfolio?

If you are, then the two listed below could be top options according to experts. Here’s what they are saying about them:

Charter Hall Long WALE REIT (ASX: CLW)

The first ASX dividend share to consider for a retirement portfolio is the Charter Hall Long Wale REIT.

As you might have guessed from its name, this property company invests in high quality real estate assets that have long weighted average lease expiries (WALEs). These properties are leased mainly to corporate and government tenants and had a WALE of 12 years at the last count.

Citi is positive on the company and has a buy rating and $4.70 price target on its shares.

Citi likes the Charter Hall Long WALE REIT due to its attractive valuation, big yield, and low risk income stream. It explained

The inorganic growth story remains challenged but at current price, we see relative value given the -36% discount to NTA, >7% yield (much higher than triple net peers), c. 50% of the rents indexed to CPI and a low risk income stream with c. 12 year WALE and 99.9% occupancy.

Citi expects this to underpin dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT unit price of $4.43, this will mean yields of 6.3% and 6.5%, respectively.

Suncorp Group Ltd (ASX: SUN)

Another ASX dividend share that could be a top option for retirement portfolio is insurance giant Suncorp.

Morgans currently has an add rating and $13.98 price target on its shares.

The broker believes that Suncorp’s shares are trading at an attractive level. Particularly given underlying business trends and its efficiency program. It said:

While weather remains volatile, we think SUN’s underlying business trends continue to broadly track in the right direction. SUN will also reap the full benefits of its efficiency program in FY23 and we see SUN’s current valuation as undemanding, e.g. FY23 PE multiple of 13x and a 6% dividend yield.

As for dividends, Morgans is forecasting fully franked dividends per share of 77.5 cents in FY 2023 and 80 cents in FY 2024. Based on the current Suncorp share price of $12.04, this will mean yields of 6.4% and 6.6%, respectively.

The post 2 ASX dividend shares to buy for a retirement portfolio – experts appeared first on The Motley Fool Australia.

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More reading

• How to swap your job for $75,000 in retirement income using ASX dividend shares
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Brokers say these ASX 200 shares are buys for income investors
• Analysts expect 6% yields from these ASX 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 Whitehaven Coal Ltd (ASX: WHC) share price exploded in 2022, but what could be ahead?

Whitehaven Coal shares soared 261% in 2022 to $9.42. For perspective, the S&P/ASX 200 Index (ASX: XJO) has slid 6% in a year.

Let’s take a look at the outlook for Whitehaven Coal in 2023.

What’s ahead for the coal price?

Whitehaven is a coal producer that operates four mines in New South Wales and is developing two assets in Queensland.

Whitehaven exports coal globally to Japan, Korea and Taiwan. The price of coal is likely to weigh on the Whitehaven coal price again in 2023.

A recent report from the Office of the Chief Economist is predicting thermal coal prices to lift from US$245 a tonne in FY22 to US$360 a tonne in FY23 before declining to US$239 a tonne in FY24.

The report said:

Thermal coal earnings in 2022–23 and 2023–24 have been revised up by $13 and $17 billion, respectively. Weather problems in major producing nations have hurt supply and helped keep the price of thermal coal (especially high quality grades) very high.

Meanwhile, the report tips metallurgical coal prices to fall from US$404 a tonne in FY22 to US$262 a tonne in FY23 and US$238 a tonne in FY24. Commenting on the metallurgical coal price, the report said:

Metallurgical coal prices have lifted since early August, but remain well below levels reached in the March-June 2022 period.

Meanwhile, Saxo Capital Markets strategist Jessica Amir is predicting shareholder returns for ASX coal companies to lift in the new year. She said in quotes cited by Bloomberg:

Demand for coal usually peaks in January, so some of these shareholder returns could grow into the new year as the energy crisis continues.

However, she predicted coal prices may “lose heat before the mid year, as Europe and US head into summer and thus demand for coal will cool.”

Whitehaven coal achieved a record average coal price of $581 Australian dollars in the September quarter.

The company recently updated its guidance on coal production for FY23 from 20 to 22 Mt to 19 to 20.4 Mt.

Whitehaven Coal share price snapshot

The chart below shows Whitehaven Coal’s share price performance in 2022.

Whitehaven Coal has a market capitalisation of nearly $8.5 billion based on today’s closing price.

The post The Whitehaven share price skyrocketed 261% this year, what could 2023 look like? appeared first on The Motley Fool Australia.

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• 9% and 12% dividend yields! Should I buy these ASX 200 income shares?
• Why Invictus Energy, Star, Whitehaven Coal, and Woodside shares are dropping
• This Whitehaven Coal director just sold 25% of their company shares. What’s going on?
• Guess which ASX 200 share turned a $10,000 investment into $40,000 in 2022
• Little downside protection for popular ASX 200 shares as 2023 looms a much tougher year for blue chip stocks

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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Ending the year on a high note, the S&P/ASX 200 Index (ASX: XJO) rallied on the last trading day of 2022. The benchmark index climbed 0.26% to 7,038.7 points, following in the footsteps of the US stock market last night.

Nearly all sectors of the Australian share market were walking with a spring in their step on Friday. All except for one, the real estate sector — slipping slightly lower with broad weakness among popular property names.

The most significant move inside the top 200 came from Link Administration Holdings Ltd (ASX: LNK), taking a woeful 40% tumble. Although, the move was due to the company’s shares trading ex-distribution of its holding in the online conveyancing platform PEXA Group Ltd (ASX: PXA).

Top 10 ASX 200 shares countdown

It’s been an underwhelming year for the BrainChip Holdings Ltd (ASX: BRN) share price, but that didn’t stop the chip developer’s shares from taking off today. Despite the rather sizeable 12% move, there didn’t appear to be any information to explain the move.

Meanwhile, it was a sea of green for ASX lithium shares on Friday. Several lithium names made it into the top 10 following news in the United States that leased electric vehicles will also qualify for the US$7,500 in tax credits.

ASX-listed company	Share price	Price change
BrainChip Holdings Ltd (ASX: BRN)	$0.745	12.03%
Imugene Limited (ASX: IMU)	$0.145	7.41%
Lake Resources N.L. (ASX: LKE)	$0.80	5.96%
Costa Group Holdings Ltd (ASX: CGC)	$2.75	5.77%
Sayona Mining Ltd (ASX: SYA)	$0.19	5.56%
Core Lithium Ltd (ASX: CXO)	$1.025	5.13%
Liontown Resources Ltd (ASX: LTR)	$1.32	4.35%
Block Inc CDI (ASX: SQ2)	$91.94	4.12%
Novonix Ltd (ASX: NVX)	$1.47	3.89%
Telix Pharmaceuticals Ltd (ASX: TLX)	$7.27	3.71%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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• The 5 biggest threats to the stock market in 2023
• Could investing in the ASX 200 make me a millionare within a decade?
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why is the Flight Centre share price in the red today?

Motley Fool contributor Mitchell Lawler 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 Link Administration and PEXA Group. The Motley Fool Australia has recommended Costa 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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It has been a stinker of a year for the Bank of Queensland Ltd (ASX: BOQ) share price. In the space of 12 months, shares in the $4.5 billion Brisbane-based bank have fallen 17% in value — severely underperforming the S&P/ASX 200 Index (ASX: XJO).

However, shareholders were lucky enough to land more dividends in 2022 than the previous year. This begs the question: are Bank of Queensland shares worthwhile for passive income purposes?

Let’s delve into the details.

Is the dividend competitive with other banks?

When it comes to investing, we are all looking for the best place to deploy our cash. That’s why it would make sense to assess how the dividends from the Bank of Queensland stack up against the big four.

ASX-listed company	Dividend yield	Income from $5,000 invested
Bank of Queensland Ltd (ASX: BOQ)	6.7%	$335
Commonwealth Bank of Australia (ASX: CBA)	3.7%	$185
Westpac Banking Corp (ASX: WBC)	5.3%	$265
National Australia Bank Ltd (ASX: NAB)	5.0%	$250
Australia and New Zealand Banking Group Ltd (ASX: ANZ)	6.2%	$310

The table above shows that the Bank of Queensland can lay claim to the highest dividend yield of the bunch for now. Yet, the latest data shows that the Queensland bank holds the thinnest profit margin of those listed above.

At the end of FY22, the 148-year-old recorded a bottom-line margin of 25.5%. Meanwhile, the big four — except for Westpac — achieved a margin above 30% for the financial period. A deeper look into the financial statements would be needed to understand why.

Would I buy Bank of Queensland shares?

At a price-to-earnings (P/E) ratio of 10.7 times, this Aussie bank share looks considerably cheaper than CBA (read more here for my verdict on CBA shares).

Furthermore, the dividend yield on Bank of Queensland shares has historically hovered above 5%. That is certainly a respectable passive return. However, my concerns arise when considering total shareholder returns.

In the past five years, shareholders are down 27% even with the inclusion of dividends. Since the Bank of Queensland commenced trading on the ASX in 1999, the share price has climbed approximately 29%. That works out to be a compound annual growth rate (CAGR) of 1.1%.

Now, the next 20 years could be entirely different. However, being a bank outside of the big four is a tough business. It truly is a David and Goliath story if an outsider can outperform the big dogs of Aussie banking.

For that reason, I’d personally look for my passive income elsewhere.

The post Should I buy Bank of Queensland shares for passive income? appeared first on The Motley Fool Australia.

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• ‘I want to explain’: Why did the Bank of Queensland share price pop then drop on Tuesday?

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Core Lithium Ltd (ASX: CXO) share price is in the green today.

Core Lithium shares are soaring 6.15% to $1.035. For perspective, the S&P/ASX 200 (ASX: XJO) is climbing 0.46% today.

Let’s take a look at what could be impacting the Core Lithium share price.

What’s going on?

Core Lithium is not the only ASX lithium share in the green today. Sayona Mining Ltd (ASX: SYA) shares are soaring nearly 10%, while Pilbara Minerals Ltd (ASX: PLS) shares are jumping 2.85%.

Multiple US lithium giants also jumped higher overnight. The Sociedad Quimica y Minera de Chile (NYSE: SQM) shares leapt 2.9%, while Livent Corp (NYSE: LTHM) shares climbed 1.43%.

This follows news from the US Treasury Department that electric vehicles leased by consumers will qualify for a $7,500 commercial clean vehicle tax credit. This will also apply to EV’s made outside of North America. Lithium is an essential component of EV batteries.

Meanwhile, multiple big brands including Toyota, Fiat, Subaru and Ford are planning to launch EV’s in Australia for the first time in 2023, the Sydney Morning Herald reported.

Core Lithium is aiming to produce first spodumene concentrate from its Finniss Lithium Project in the first half of 2023.

A recent Industry Department report is predicting spodumene prices to soar from US$2,700 a tonne in 2022 to US$4,010 a tonne in 2023. The lithium price is then predicted to fall to US$3,130 in 2024. The report stated:

The strong growth in spodumene prices that saw Australia’s export revenue reach a record $4.9 billion in 2021–22 — up from $1.1 billion in 2020–21 — is expected to drive a further tripling in annual export earnings over the outlook period

Core Lithium share price snapshot

The Core Lithium share price has exploded 80% in the last year.

In comparison, the ASX 200 has lost 6% in the last year.

The post Why is the Core Lithium share price soaring 6% today? appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Core Lithium, Paradigm, and Sayona Mining shares are racing higher
• Why are ASX 200 lithium shares charging higher today?
• Could the superprofits of ASX lithium shares be in danger next year?
• Could investing in the ASX 200 make me a millionare within a decade?
• 5 things to watch on the ASX 200 on Friday

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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The Link Administration Holdings Ltd (ASX: LNK) share price is ending the week with a huge decline.

In afternoon trade, the financial administration company’s shares are down 39% to $2.01.

This is an improvement on its performance earlier in the day when the Link share price was down as much as 45% to a record low of $1.80.

Why is the Link share price crashing lower?

The good news for shareholders is that today’s decline is not necessarily a bad thing.

Last month, Link announced that it had agreed to sell 10% of its existing 42.77% shareholding in property settlements platform company PEXA Group Ltd (ASX: PXA). This led to Link generating total net proceeds of $101.9 million, which will be used to repay its borrowings.

At the same time, management revealed that it would distribute its remaining shares in PEXA to Link shareholders via an in-specie distribution.

Shareholders approved this plan earlier this month. As a result, next month they will receive one PEXA share for every 7.52 Link shares held at the record date rounded down to the nearest whole PEXA share.

This means that if you owned 1,000 Link shares valued at $3,290 at yesterday’s close, you would receive 132 PEXA shares valued at approximately $1,569 next month.

This morning, Link shares traded ex-distribution for these PEXA shares, which means that the rights to the distribution are now with the shareholders on its share registry at yesterday’s close. They won’t transfer to buyers.

As a result, the Link share price has dropped to reflect this. After all, you wouldn’t want to pay for something that you won’t receive.

Eligible shareholders can now look forward to receiving their PEXA shares on 10 January.

When this distribution takes place, Link will have no direct ownership in PEXA. Instead, it will comprise of four global businesses with total revenue of over $1.1 billion and Operating EBITDA of over $250 million.

The post Why is the Link share price crashing 39% at the end of the week? appeared first on The Motley Fool Australia.

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• Why is the Link share price crashing 10% on Thursday?
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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 Link Administration and PEXA Group. 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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Income seekers are naturally drawn to ASX dividend shares for their regular payouts. Yet, many make the mistake of solely prioritising the dividend yield on offer.

Everyone’s personal circumstances are different. For younger investors, the focus might be capital appreciation potential — making a small, unpredictable yield perfectly fine. Whereas, those closer to retirement (or in it) are generally going to be more concerned about the predictability and longevity of their dividend income.

If I needed peace of mind that the dividends would keep flowing in for years — if not decades — to come, these are the 3 ASX dividend shares I would be holding.

These ASX dividend shares have moats for safety

A moat is some form of advantage that a company holds that gives it some level of protection from competition. If a moat is in place, there is a good chance the dividends will continue to grow as challengers are unable to take a bite out of the company’s profits.

Loyalty and network effects

The first ASX dividend share I’d be confident in saying will still be around in a decade and paying shareholders is Medibank Private Ltd (ASX: MPL).

This private health insurance provider holds the largest market share in Australia at 27.4%. Importantly, this affords Medibank the ability to hold greater bargaining power when negotiating for lower out-of-pocket expenses when customers visit health providers.

Additionally, the company provides a loyalty bonus to its longstanding members which can act as a type of switching cost. Members of Medibank are less inclined to go elsewhere as it will mean giving up an accumulated discount.

I believe these moats make Medibank a much safer dividend payer than other areas of the market. Right now, the company offers a 4.5% yield.

Recognition and switching costs

Sleeping disorders are becoming more prevalent in the modern era and one of the most trusted names in sleep solutions is Resmed CDI (ASX: RMD).

With earnings growing at a compound annual growth rate (CAGR) of 14.7% over the last six years; and a profit margin above 20%; it isn’t hard to see the evidence of some form of a moat in the hands of this medical device maker.

Once purchased, continuous positive airway pressure (CPAP) machines require ongoing part replacements. To its advantage, these devices can cost in excess of $1,500, deterring customers from going out and buying a competing product. As a result, the company continues to collect high-margin sales of its replacement parts.

Resmed currently pays a modest 0.8% dividend yield. However, there could be room for this to increase in the future as it only represents roughly 32% of profits at present.

Hard to beat this ASX dividend share

This final ASX dividend share on the list is a major beneficiary of economies of scale and cost leadership, in my opinion. Sonic Healthcare Limited (ASX: SHL) is one of the world’s largest providers of laboratory, pathology, and radiology services — holding a market presence that is hard to replicate.

Conducting medical testing requires extremely expensive equipment. That’s why Sonic has built a robust hub and spoke model over its 88 years of operation. This allows samples to be collected around the world and fed back to a handful of sites, running testing equipment 24/7.

The breadth of the testing equipment and the extensive reach of this model would take billions of dollars to contest. That’s why I’d be content relying on dividends to keep landing in my account from this ASX share for many years to come.

Sonic Healthcare is offering a dividend yield of 3.3% at the time of writing.

The post 3 of the safest ASX dividend shares on Earth appeared first on The Motley Fool Australia.

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More reading

• I think these are the 10 best ASX shares to buy for 2023
• Bell Potter names 3 stellar ASX 200 shares to own in 2023
• Here are the top 10 ASX 200 shares today
• 3 ASX shares I’d buy after each fell by over 30% this year
• Looking to buy ASX shares for your kids this Christmas? I think these are great options

Motley Fool contributor Mitchell Lawler has positions in Sonic Healthcare. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Sonic Healthcare. 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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