Investors rarely appreciate it when an insider of an ASX company is selling their shares. Even more so when it is a CEO. Yet that is the situation confronting shareholders of ASX 200 gold share Northern Star Resources Ltd (ASX: NST) today.

The Northern Star share price has had a fantastic start to the trading week. So far this Monday, Northern Star shares have put on an impressive 5.02% to $11.20 a share. Most ASX gold shares are shining today after the precious metal pushed higher late last week.   

Gold is now back over US$1,800 an ounce, which is giving ASX gold shares a major boost this Monday. Gold Road Resources Ltd (ASX: GOR) shares have gained 2.5% so far today to $1.69 each, while St Barabara Ltd (ASX: SBM) shares have risen by 5.6% to 76 cents each.

But one person might not be feeling too good about these moves today. Ironically, this is Northern Star managing director and CEO, Stuart Tonkin.

Last Friday, well after market close, Northern Star released an ASX announcement regarding Tonkin. This revealed that the CEO had sold 223,112 Northern Star shares between 15 and 16 December.

These were offloaded at an average price of $10.74 a share, reportedly to “meet Mr Tonkin’s estimated tax liability”. 223,112 shares at $10.74 each would have netted Tonkin around $2.4 million.

It’s rather poor timing for Tonkin in hindsight, who would have bagged an extra $100,000 or so if he had sold his shares at the current share price today.

Is it a big deal when ASX 200 CEOs sell shares?

It’s easy to bag a senior member of management for selling shares in their own company. But CEOs face the same financial risks and challenges as we all do, such as wealth diversification and tax liabilities. CEO share sales are rarely welcomed by investors but are not uncommon on the ASX.

Even after this rather hefty sale, Tonking retains 1,160,000 shares in Northern Star, which would be worth approximately $13 million at today’s pricing. So when you consider that, this share sale doesn’t seem too consequential.

The Northern Star share price has been a real ASX 200 winner in 2022 thus far, with the company’s shares up a healthy 18.5% or so year to date. Northern Star shares are also up more than 19.7% over the past 12 months, and up almost 90% over the past five years:

At the current Northern Star share price, this ASX 200 gold share has a market capitalisation of $12.94 billion, with a trailing dividend yield of 1.93%.  

The post Guess which ASX 200 gold CEO just sold $2 million worth of shares appeared first on The Motley Fool Australia.

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More reading

• Why Core Lithium, MMA, Northern Star, and Warrego Energy are charging higher
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday
• What’s driving ASX 200 gold shares to outperform this week?

Motley Fool contributor Sebastian Bowen 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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Given how many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Allkem Ltd (ASX: AKE)

According to a note out of Citi, its analysts have retained their buy rating on this lithium miner’s shares with an improved price target of $17.80. While Citi feels that lithium prices could have peaked amid slowing EV demand in China, it isn’t overly concerned due to contracted prices. Combined with production growth, Citi remains positive on Allkem’s outlook. The Allkem share price is trading at $12.30 on Monday.

Chalice Mining Ltd (ASX: CHN)

A note out of Bell Potter reveals that its analysts have retained their speculative buy rating and $11.10 price target on this mineral exploration company’s shares. Bell Potter notes that Chalice has delayed its scoping study at the Gonneville deposit. However, it is happy to overlook this delay given how it could result in a stronger study. In fact, Bell Potter sees potential for Chalice to increase its gross-revenue-per-tonne well ahead of current estimates. The Chalice share price is fetching $6.38 this afternoon.

Core Lithium Ltd (ASX: CXO)

Analysts at Macquarie have upgraded this lithium developer’s shares to an outperform rating with a $1.30 price target. According to the note, the broker made the move largely on valuation grounds after some significant weakness. In addition, Macquarie believes recent exploration activity has the potential to deliver a big boost to the company’s resource base. All in all, the broker believes Core Lithium is well-placed to generate bumper free cash flow in FY 2024 and FY 2025. The Core Lithium share price is trading at $1.09 on Monday afternoon.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Why Core Lithium, MMA, Northern Star, and Warrego Energy are charging higher
• Why is the Core Lithium share price having such a stellar start to the week?
• ASX lithium shares have just been crunched. Time to buy?
• 5 things to watch on the ASX 200 on Monday
• Can Core Lithium shares really live up to the hype surrounding them?

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) looks set to start the week with a small decline. At the time of writing, the benchmark index is down 0.1% to 7,141.8 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Appen Ltd (ASX: APX)

The Appen share price is down 3.5% to $2.41. Investors have been selling Appen and many other ASX tech shares on Monday following a poor night for the Nasdaq index on Friday. Investors were selling tech shares amid global recession concerns.

Arafura Rare Earths Ltd (ASX: ARU)

The Arafura share price is down over 6% to 48.2 cents. This appears to have been driven by profit taking after some stellar gains in recent sessions. For example, even after today’s decline, the rare earths explorer’s shares are up a sizeable 24% since 8 December. They are now also up 110% since the start of the year.

Aurizon Holdings Ltd (ASX: AZJ)

The Aurizon share price is down 2.5% to $3.78. The catalyst for this is likely to have been a broker note out of Morgans this morning. According to the note, the broker has downgraded the rail freight operator’s shares to a hold rating and cut the price target on them to $4.00. Morgans was a touch disappointed with the price Aurizon received for the East Coal Rail business.

Star Entertainment Group Ltd (ASX: SGR)

The Star share price is down 11% to $2.29. Investors have been selling this casino operator’s shares amid concerns over potential reforms to the New South Wales casino tax regime. New South Wales Treasurer, The Honourable Matt Kean MP, is proposing gaming tax increases for the two casinos in New South Wales. These are anticipated to commence on 1 July 2023 and forecast to raise an additional $364 million in taxes over the next three years.

The post Why Appen, Arafura, Aurizon, and Star shares are sinking today appeared first on The Motley Fool Australia.

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More reading

• Star Casino share price tumbles 11% on proposed new gambling tax
• Here are the top 10 ASX 200 shares today
• Why are ASX 200 tech shares being fried on Friday?
• 3 ASX All Ordinaries shares smashing the market on Friday
• Why Aurizon, Norwest, Rio Tinto, and Strike Energy shares are rising 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 positions in and has recommended Appen. The Motley Fool Australia has recommended Aurizon. 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 Star Entertainment Group Ltd (ASX: SGT) share price is sinking today amid a NSW Government proposal to increase taxes on casinos.

Star Casino shares are currently falling 11% and are trading at $2.285. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.26% in the red at the moment.

So what is this new tax and how is Star Casino reacting?

New gambling tax

Star Casino shares are descending today amid a proposed plan from the NSW Government to reform casino tax rates.

Star has responded to a media release from NSW Treasurer Matt Kean on Saturday where he announced a proposal to lift tax rates on gaming tables and poker machines at casinos from 1 July 2023. This plan is expected to raise $364 million over the next three years for the government.

Star said it is seeking to “urgently engage” with the NSW Government on the “sustainability” of the potential tax changes and the impact on the company. Managing director Robbie Cooke said:

We are not sure how the Government modelled its financials nor the basis for suggesting The Star does not pay its fair share of taxes.

Specifically, in addition to state gaming taxes, The Star also pays millions in corporate taxes, with total taxes paid as a percentage of The Star’s profits being around 70%, and as high as 80% in the last 5 years when all the tax regimes are considered.

Star highlighted it is seeking to fast-track cashless gambling and carded play to “deliver safer gambling”.

Minister Kean said the proposed changes would ensure casinos continue to make an “appropriate contribution” to the community. He added:

It’s important that casinos pay their fair share of tax. These reformed tax rates will replace the existing regime under which casinos pay less tax on poker machines than hotels and clubs.

Star Casino share price snapshot

The share price has fallen 35% in the last year. In the past month, Star Casino shares have slipped 21.75%.

fool_stock_chart ticker=ASX:SGT

Star Casino has a market capitalisation of about $2.2 billion based on the current share price.

The post Star Casino share price tumbles 11% on proposed new gambling tax appeared first on The Motley Fool Australia.

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More reading

• Why Appen, Arafura, Aurizon, and Star shares are sinking today
• Seeing stars: ASX 200 casino operator hit with another blow
• Why PolyNovo, Smartgroup, Star, and WiseTech shares are falling
• 5 things to watch on the ASX 200 on Tuesday

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a small decline. The benchmark index is currently down a few points to 7,144.7 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are charging higher:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up almost 4% to $1.10. This appears to have been driven by a broker note out of Macquarie this morning. According to the note, the broker has upgraded Core Lithium’s shares to an outperform rating with a $1.30 price target. It made the move partly on valuation grounds after the lithium developer’s shares crashed over 40% since mid-November.

MMA Offshore Ltd (ASX: MRM)

The MMA Offshore share price is up almost 16% to 92.5 cents. Investors have been buying this marine service provider’s shares following the release of a trading update. MMA revealed that it expects to deliver first half EBITDA in the range of $30 million to $32 million. This will be up approximately 70% on the second half of FY 2022.

Northern Star Resources Ltd (ASX: NST)

The Northern Star share price is up 5% to $11.22. Northern Star and other gold miners are rising today after the gold price pushed higher on Friday night. This has led to the S&P/ASX All Ordinaries Gold index rising 2.3% this afternoon.

Warrego Energy Ltd (ASX: WGO)

The Warrego Energy share price is up 10% to 33 cents. This morning, Strike Energy Ltd (ASX: STX) revealed that it plans to make a takeover offer for the energy explorer. It is offering 1 share for every Warrego share it does not already own. Based on Strike’s last close price, this equated to an offer of 33.5 cents per share. All eyes will be on Gina Rinehart’s Hancock Energy business to see if it increases its 28 cents per share offer.

The post Why Core Lithium, MMA, Northern Star, and Warrego Energy are charging higher appeared first on The Motley Fool Australia.

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More reading

• Why is the Core Lithium share price having such a stellar start to the week?
• 5 things to watch on the ASX 200 on Monday
• Can Core Lithium shares really live up to the hype surrounding them?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why is the Core Lithium share price gaining on Friday?

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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Two ASX mining shares are a buy at the moment according to an analyst at a Sydney financial firm.

Sandfire Resources Ltd (ASX: SFR) and Renascor Resources Ltd (ASX: RNU) share prices have been recommended to investors.

Let’s take a look at these two ASX mining shares in more detail.

Sandfire Resources

Sandfire Resources is a buy according to Jean-Claude Perrottet from Medallion Financial Group. Sandfire is a copper explorer. Commenting on The Bull, Perrottet highlighted the miner’s record sales revenue of $922.7 million in FY2022. He also noted the company’s MATSA copper operations in Spain delivered a “positive operational performance”. Perrottet said:

We remain optimistic about the longer term outlook for copper producers given the shift towards cleaner energy.

The Sandfire Resources share price has fallen 11.97% in the last year. However, it has climbed 12.94% in the last month.

Renascor Resources

Renascor Resources is also a buy according to Perrottet. Renascor is developing the Siviour Graphite Project on the Eyre Peninsula in South Australia. Perrottet highlighted Renascor has “the world’s second biggest graphite reserve”. He added:

RNU aims to become a supplier of purified spherical graphite (PSG) for lithium-ion battery anode makers across the world. RNU will reach a final investment decision in 2023. Keep an eye on the news flow.

The Renascor Resources share price has soared 100% in a year. However, it has declined nearly 21% in the last month.

The post ‘Optimistic’: Broker names 2 ASX mining shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares that have ‘significant share price upside’: fund manager
• Here are the top 10 ASX 200 shares today
• Goldman tips record copper prices in 2023. Which ASX shares have exposure?
• Which ASX mining shares have had their dividend yields slashed the most in 2022?
• Here are the top 10 ASX 200 shares 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.

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The BWX Ltd (ASX: BWX) share price will be returning to trade tomorrow after a four-month hiatus.

This follows the release of the embattled personal care products company’s long-awaited results for FY 2022.

In case you’re not aware, BWX shares were suspended in August after the company requested additional time to prepare its results due to certain revenue recognition issues and the likely impairment of its intangible assets to a level significantly below their carrying value.

BWX shares on watch following long-awaited update

The BWX share price will be on watch following the release of its results for the 12 months ended 30 June. Here’s a summary of how it performed against restated figures from a year earlier:

• Underlying revenue up 11.5% to $204.5 million
• Underlying EBITDA down from $24.9 million to negative $0.2 million
• Statutory loss of $335.6 million, down from a profit of $17.5 million

All metrics are short of the guidance it provided at the end of June to support its capital raising.

What were the drivers of this result?

Management advised that the decline in EBITDA was predominantly driven by the end of investment buys in June, as well as a 34% increase operating expenses to $112.2 million.

Investment buys is an incredibly vague term that BWX uses in place of “channel stuffing.” This is a deceptive practice that involves selling large volumes of products to distributors just before the end of the financial year to inflate sales and earnings figures for the period.

On the bottom line, the company behind the Sukin skincare range reported a statutory loss of $335.6 million, which is almost three times as large as its market capitalisation. This was driven largely by a $322.6 million non-cash impairment related to a reduction in the carrying value of intangible assets.

For the 12 months, the company recorded an operating cash outflow of $22.2 million. This left BWX with net debt of $64.3 million.

The company is also sitting on $65.3 million of inventory following a $19.1 million increase in FY 2022. This reflects the end of channel stuffing activities and the flow-on effect of retail partners unwinding their own inventory levels.

Management commentary

BWX’s CEO and managing director, Rory Gration, apologised for the disastrous turn of events. He said:

I apologise to all shareholders for the delay in releasing our Financial Year 2022 accounts and thank them for their patience as the Board and leadership team, with the assistance of our strategic advisors, continue to implement a comprehensive financial and operational re-set. FY22 was a disappointing year for financial performance.

As a business we are facing into the challenges, by stopping historical unsustainable sale practices, recalibrating our cost base, and committing BWX to return to a stronger, more focused and disciplined organisation with a consistent revenue and earnings profile.

Business update

BWX has announced a number of changes in the board room. This includes Ian Campbell stepping down as chairman with immediate effect. However, despite overseeing this disastrous period for the company, he will stay on as an independent non-executive director.

Replacing Campbell as chair will be Steven Fisher, who currently serves as the chair of Reject Shop Ltd (ASX: TRS) and Laybuy Holdings Ltd (ASX: LBY).

Guidance downgrade

Finally, although BWX is experiencing good “in-market demand” in Australia and the United States and expects a stronger second half, it has downgraded its full year guidance.

Management now expects revenue in the range of $205 million to $230 million and EBITDA in a range of $25 million to $30 million excluding one-offs.

This compares to the $260 million to $270 million and $45 million to $49 million guidance that it provided in June to support its capital raising. Ouch to anyone taking part in that raise!

BWX also revealed that it expects net debt to peak at $95 million as it completes its debt restructuring program.

The post BWX share price on watch amid $335m loss and guidance downgrade appeared first on The Motley Fool Australia.

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More reading

• What on earth is going on with BWX shares?
• 5 of the craziest things making news on the ASX this week
• ASX All Ords share BWX tipped to start trading next week after 3-month trading halt

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 BWX. 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’s that time of year again when everyone loves to make a prediction. And with the S&P/ASX 200 Index (ASX: XJO) down nearly 6% this year, many are painting even bloodier scenes for what may come for ASX shares in 2023.

Last month, banking giant Deutsche Bank pulled back the curtain on its forecast — expecting a 25% plunge sometime next year. Last week, Blackrock — one of the world’s largest asset managers — suggested investors should avoid investing in shares altogether next year and go after bonds instead. Now, an independent Australian sovereign wealth fund is casting its own doubts on equities.

The Future Fund — home to more than $200 billion dollars of assets — is moving away from investing in companies. In a paper, the fund lamented the end of the ‘traditional portfolio construction’, pointing to a ‘new investment world’.

Same siren, different decade

Can you hear the alarm bells ringing? Are you overwhelmed with fear? Are you convinced that investing is a worthless endeavour for your future wealth?

The world is in a terribly unpredictable state right now, without a doubt. However, I would caution against taking ‘smart money’s’ word for what will come during our next trip around the sun. It may not pan out as they proclaim.

Here’s an example…

Ray Dalio is an incredibly successful investor, making billions through his hedge fund Bridgewater Associates. In his career, Dalio was accustomed to building robust models for making investment decisions with a high degree of confidence.

After executing many successful trades and investments, Dalio was faced with the high inflation and interest rate environment of the late 1970s and early 80s.

As explained in his book Principles: Life and Work, Dalio was convinced that the US would be forced into a depression as bad, if not worse, than that of the 1930s. As such, the investor went heavy into gold and bonds, believing it would outperform investing in shares.

To Dalio’s dismay, he was dead wrong…

The United States economy began to grow again while inflation fell. As shown above, the S&P 500 produced returns in excess of 1,000%, basking in nearly two decades of noninflationary growth.

How did Dalio get it so wrong?

Instead of letting the entire global financial system collapse, debts were restructured and bad debts were written off over a long time span. This helped mitigate the concentration of financial impact on economies.

Why I’d keep investing in ASX shares

There is no shortage of doom and gloom for 2023. However, I’m of the mind that the pessimists have it wrong again, just like Dalio had it wrong in 1982.

Sure, we might see ASX shares move lower again next year. But do I think the value of investing will fundamentally change for the next 10, 20, or 30 years ahead? My answer is no.

I’m of the belief that humans will continue to solve the problems we are faced with. In turn, unbelievable value and wealth will be created in doing so.

Why do I think this?

Because there are still plenty of problems to be solved. It may not be the most elegant explanation, but sometimes simplicity is all that is needed.

The post Invest, or not to invest in ASX shares: Why I think the pessimists are wrong again appeared first on The Motley Fool Australia.

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More reading

• Is the Pinnacle share price the ASX 200’s biggest bargain right now?
• Why this blue-chip stock is a no-brainer buy for dividend growth investors
• 2 reasons I think the Fortescue share price can keep rising (and 2 why it can’t)
• 5 things to watch on the ASX 200 on Monday
• Shopping spree: What happened to the Woolworths share price 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 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 silly season is upon us, complete with Christmas parties, perhaps too much food and drink, and of course, public holidays. Alas, that means the ASX won’t be trading as usual during the holiday period.

If you’re wondering which days a market watcher can relax and spend time with friends and family over the coming weeks without fear of missing out, you’ve come to the right place.

When will the ASX be open over the holiday period?

This year has truly flown by, if I do say so myself. We’re now just days away from Christmas. That means the ASX will be shutting shop for a few upcoming sessions.

Fortunately, there’s still plenty of time to complete any final ASX trades of the year. The market will be trading as normal for all of this week.

It will close at 4pm AEDT this Friday as many Aussie families prepare to herald Santa’s arrival on Sunday morning. Here’s a breakdown of ASX’s operating hours over the upcoming holiday period:

Upcoming events	Date	Is the ASX open?	Operating hours (AEDT)
Last business day before Christmas	Friday 22 December	Yes	10am to 4pm
Boxing Day	Monday 26 December	No	–
Christmas Day public holiday	Tuesday 27 December	No	–
ASX reopens after Christmas	Wednesday 28 December	Yes	10am to 4pm
Last business day of the year	Friday 30 December	Yes	10am to 4pm
New Year’s Day public holiday	Monday 2 January	No	–
First trading day of 2023	Tuesday 3 January	Yes	10am to 4pm

As the above chart shows, the Boxing Day public holiday will follow Sunday’s festivities. It falls on Monday 26 December.

The following day –Tuesday 27 December – the ASX will recognise the Christmas Day public holiday

Thus, the ASX won’t reopen until Wednesday 28 December at 10am AEDT. It will then trade as normal for the remainder of next week before the official end of 2022.

New Year’s Eve and New Year’s Day will be celebrated next weekend. The ASX will close for the official New Year’s Day public holiday on Monday 2 January.

The first ASX trade of 2023 will occur on Tuesday 3 January and the market will operate as normal once more.

The post Wondering when the ASX is open and trading over the Christmas holidays? Here’s the lowdown appeared first on The Motley Fool Australia.

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

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BHP Group Ltd (ASX: BHP) shares pay a very large dividend to shareholders. I’m not referring to the total amount, which runs into the billions of dollars. The BHP dividend yield is high compared to many other S&P/ASX 200 Index (ASX: XJO) shares.

With a market capitalisation of $231 billion according to the ASX, it’s the biggest Australian business and one of the largest in the world.

Firstly, let’s look at how large the payout might be in 2023.

BHP projected dividend yield

With how volatile and cyclical resource shares can be, I think it’s worthwhile considering what the payout could be over the next two financial years. But remember, forecasts are just educated guesses.

According to projections that are on Commsec, BHP could pay an annual dividend per share of around $3.10 per share in FY23. At the current BHP share price, this would represent a grossed-up dividend yield of 9.7%.

A fall in the annual dividend per share is then predicted for FY24. Commsec numbers imply a fall of around 15% of the shareholder payout to $2.63 per share. This would represent a grossed-up dividend yield of 8.25%.

The share price movement of a business is very important, perhaps more important than the dividend. But, with a dividend that large, a lot of the returns are coming in the form of cash payments to BHP shareholders.

How does this happen?

There are two elements to consider when it comes to the BHP dividend yield.

The first part is the dividend payout ratio. If BHP pays out more of its annual net profit after tax (NPAT), then shareholders are getting more cash. So naturally, the dividend yield will be higher.

BHP says that its dividend policy:

Provides a minimum 50% payout of underlying attributable profit at every reporting period. The board will assess, every reporting period, the ability to pay amounts additional to the minimum payment, in accordance with the capital allocation framework.

When taking into account the projected earnings per share (EPS) on Commsec for BHP, the calculated dividend payout ratios are 72% in FY23 and 69.4% in FY24. Those are quite high, but only explain part of the story.

Low earnings multiple

BHP typically trades on a low price/earnings (P/E) ratio. This means that the share price is at a low multiple to its EPS. The higher the P/E, the lower this pushes the dividend yield.

When the P/E is low, it means the dividend yield can be quite high.

Using the Commsec numbers, the BHP share price is valued at under 11 times FY23’s estimated earnings.

If the BHP share price were double the price, the dividend yield would be half as high.

Foolish takeaway

Owning BHP shares can be very rewarding when it comes to the dividend. But, investors should also consider whether the resource share price is closer to a cyclical high or cyclical low, as it’s important not to overpay with resources shares.

The post Why is BHP’s dividend yield so high? appeared first on The Motley Fool Australia.

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More reading

• Why did the iron ore price just hit a 6-month high?
• 3 ASX 200 dividend shares with payouts that jumped more than 10% this year
• Here’s why BHP shares are this fund manager’s favourite ASX iron ore pick
• Lithium, miners, and tech shares, oh my! Here’s where Aussies put their ASX money in 2022
• BHP shares: 2 reasons to buy, and 2 to sell

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

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