If you’re an income investor on the lookout for big dividends, then take a look at the two ASX shares listed.

Both of these ASX dividend shares have been tipped to provide investors with generous yields in the near term. Here’s what they are saying about them:

Deterra Royalties Ltd (ASX: DRR)

The first high yield ASX dividend share for investors to consider is Deterra Royalties.

It is the owner of a portfolio of royalty assets across a range of commodities, primarily focused on bulks, base and battery metals.

One of the key royalty assets in its portfolio is the Mining Area C (MAC) iron ore operation which is operated by mining giant BHP Group Ltd (ASX: BHP). Another for the future is the Eneabba Project owned by Iluka Resources Limited (ASX: ILU). This project has the potential to be a major rare earths producer in the coming years.

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

As for dividends, it is expecting fully franked dividends per share of 26 cents in FY 2023 and 28 cents in FY 2024. Based on the current Deterra Royalties share price of $4.69, this will mean yields of 5.5% and 6%, respectively.

Stockland Corporation Ltd (ASX: SGP)

Another high yield ASX dividend share that has been named as a buy is Stockland.

It is a residential and land lease developer and retail, logistics and office real estate property manager.

While trading conditions are not easy at present, analysts at Goldman Sachs “believe the potential headwinds are factored into the share price and see SGP as attractively valued.” The broker feels this is particularly the case given its recently refreshed corporate strategy and the sale of its low returning Retirement division.

Goldman has a buy rating and $4.40 price target on its shares.

In respect to dividends, its analysts are forecasting dividends per share of 27.6 cents in FY 2023 and 28.3 cents in FY 2024. Based on the current Stockland share price of $3.87, this will mean yields of 7.1% and 7.3%, respectively.

The post Brokers expect very big dividends from these ASX 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
• The ASX 200 mining shares to buy for big dividends in 2023: analysts
• Dividends! Goldman Sachs says these ASX 200 shares are buys for income investors
• These are the ASX dividend shares income investors should buy now: brokers
• Time to buy? Which ASX 200 shares are trading on single-digit P/E ratios?

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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Are you looking to add some growth shares to your portfolio for 2023?

If you are, two ASX shares that could be worth considering are listed below. Here’s why Goldman Sachs rates them as buys:

Allkem Ltd (ASX: AKE)

The first ASX growth share to consider is Allkem. It is one of the world’s largest lithium miners with projects in Argentina, Australia, and North America.

From these projects, Allkem is aiming to grow its production in a way that allows it to maintain a 10% share of global lithium supply over the long term.

Goldman Sachs is bearish on the lithium industry right now due to its belief that lithium prices will tumble in the coming years. However, it is positive on Allkem due to the aforementioned production growth and exposure to several lithium types. This includes moving downstream from spodumene into lithium chemicals, which it sees as a margin accretive opportunity. It commented:

Of our covered Australian lithium companies, Allkem has the best LCE growth outlook with production growing >4x to FY27E with further downstream optionality on carbonate production

Goldman has a buy rating and $15.20 price target on Allkem’s shares.

Webjet Limited (ASX: WEB)

Another ASX growth share that Goldman rates as a buy is online travel booking company Webjet.

The broker is a fan of Webjet due to its belief that it has exited the pandemic as a significantly stronger company. It is expecting this to underpin a six-year compound annual growth rate of 15.3% for its earnings. It added:

Our near term earnings changes remain modest given that we already price in a strong recovery for WEB in FY24/25. What these results have given us greater confidence is in the group’s longer term outlook for both the Bedbanks and OTA businesses. WEB also continues to report strong cash generation.

Goldman has a conviction buy rating and price target of $6.90 on its shares.

The post Lithium and travel: Goldman Sachs names the ASX growth shares to buy now appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy today
• Why are ASX 200 lithium shares taking another beating on Friday?
• I’d aim for $1 million, buying just 10 cheap ASX shares
• Goldman Sachs names the only ASX lithium share to buy today
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX tech stock sector has taken a real whacking in 2022. Despite plenty of names displaying solid revenue growth over the last couple of years, they have been among the worst performers this year.

However, when a bull market eventually comes back, we could see some of these fallen former darlings be the ones that outperform as they recover.

The below three businesses may be contenders to consider for a medium-term to long-term investment after they all fell more than 50% this year.

Xero Limited (ASX: XRO)

Xero has seen one of the biggest declines in the S&P/ASX 200 Index (ASX: XJO) in 2022 to date. The cloud accounting software company has dropped 52%, closing on Monday at $70.63 a share.

While Xero may be suffering from the higher interest rates, investors may also be somewhat concerned about its subscribers, which are small and medium enterprises, in a downturn. However, I think Xero’s subscription fee is relatively small, but integral for business operations, so I believe customers will keep paying it.

Plus, subscriber numbers and average revenue per user (ARPU) continue to grow for the ASX tech stock. In the FY23 half-year result, subscribers grew 16% to 3.5 million, while ARPU went up 13% to $35.30. This helped operating revenue jump 30%. With the company having such a high gross profit margin, I think ongoing revenue growth could change people’s minds about the business when investor confidence returns.

Megaport Ltd (ASX: MP1)

The company says it’s a global ASX tech stock that is at the “leading edge of cloud connectivity”. It helps customers adopt cloud infrastructure, and enables them to quickly increase their usage, if needed.

The Megaport share price has declined by around 65% in 2022 to date to its current price of $6.72.

In the first quarter of FY23, Megaport saw monthly recurring revenue (MRR) rise by 9% quarter on quarter to $11.6 million. Excluding foreign currency changes, underlying MRR increased 6% to $11.3 million. The ASX tech stock achieved a profit at the earnings before interest, tax, depreciation and amortisation (EBITDA) level, which is a positive sign for FY23.

At the recent annual general meeting, Megaport CEO Vincent English said:

Our network infrastructure expertise allowed us to build and operate one-of-a-kind highly efficient global network with healthy operating leverage built-in. With the continued rapid growth in the cloud connectivity space, we have the scale and capital position necessary to drive our business to profitability. This will be a key focus in fiscal year 2023 as we leverage our channel programmes and operational efficiency.

Frontier Digital Ventures Ltd (ASX: FDV)

This is the smallest ASX tech stock of the three in this article, with a market capitalisation of $270 million, according to the ASX.

Frontier Digital Ventures is a company that owns and operates online marketplace businesses in fast-growing emerging markets. Its portfolio consists of 16 “market-leading companies operating across 20 markets” in Latin America, Asia, and the Middle East and North Africa.

While there will sometimes be a mixed performance with that many different businesses, collectively, the company is seeing growth. The third quarter of 2022 saw record quarterly EBITDA on the company’s ownership share basis, doubling the previous quarterly portfolio EBITDA. All three operating regions saw positive EBITDA for the first time.

It’s focused on keeping a lid on costs, improving the financial profile and profitability of the overall business during this uncertain period.

Despite the improving profit, the Frontier Digital Ventures share price is down 55% in 2022.

The broker Morgans thinks it’s a buy, with a price target of $1.28. That suggests a possible rise of around 80% over the next year from its current price of 71 cents.

The post 3 incredible ASX tech stocks down over 50% to buy before the next bull market appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why Arafura, Megaport, Nitro, and Sayona Mining shares are storming higher today
• Why this one top fund manager is optimistic about 2023, and one little-known IPO that has hit it out of the park
• Is Xero a ‘safe’ ASX share?
• Is it safe to invest in ASX shares now? Take advice from Warren Buffett

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.

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The CSL Limited (ASX: CSL) share price is in focus amid news the company’s long-term CEO and managing director will step down from the role.

Paul Perreault has been with the biotechnology icon for more than 25 years, 10 of which have been in the top job. He will be succeeded by Dr Paul McKenzie.

The CSL share price closed Monday’s session trading at $298.20.

Let’s take a closer look at the latest news from the S&P/ASX 200 Index (ASX: XJO) healthcare giant.

CSL announces Perreault’s retirement and new CEO

The CSL share price could be one to watch on Tuesday after the company’s CEO announced he plans to retire from the role and its board in March.

Perreault will continue to work as a strategic advisor for six months after handing over the reins, retiring in September next year.

Successor McKenzie currently serves as CSL’s chief operating officer and will join the company’s board immediately.

McKenzie has held leadership positions in the global biotechnology industry for more than 30 years. He has been with CSL since 2019, working to optimise the company’s operations and grow the Seqirus, Plasma, and Vifor businesses.

Prior to joining the ASX 200 giant, McKenzie was executive vice president of pharmaceutical operations and technology at Biogen. He also previously held progressively senior-level roles at Johnson & Johnson, Bristol-Myers Squibb, and Merck.

Perreault commented on his retirement from the CEO position, saying:

Leading CSL during the last decade has been a privilege as we grew, innovated, and globalised to new levels – all while fostering a values-based culture focused on our promise to patients and public health around the world.

In working closely with Dr McKenzie for more than three years, I am confident he will continue to innovate and build on CSL’s track record of growth for years to come.

Speaking on his appointment to the top job, McKenzie said:

I am excited, honoured and humbled for the opportunity to continue building CSL’s legacy following the strong foundation established by Paul Perreault over the last decade.

We will continue focusing on executing our 2030 strategy, investing in innovation, and continue achieving sustainable and profitable growth.

CSL share price snapshot

The CSL share price has gone next to nowhere this year, gaining just 0.75% since the start of 2022. It’s also 0.3% higher than it was this time last year.

Though, that’s a better performance than the broader market.

The ASX 200 has fallen 5.4% year to date and 2.7% over the last 12 months.

The post CSL share price on watch as CEO announces retirement appeared first on The Motley Fool Australia.

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More reading

• Why is the CSL share price in the spotlight on Wednesday?
• If you bought 100 shares of CSL 10 years ago, this is how much you would have today
• To retire early, I’d invest $100 each week in ASX 200 shares
• 5 popular ASX 200 stocks I’m avoiding, plus one that still looks dirt cheap
• Is Core Lithium the hottest stock on the ASX 200 right now?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bristol-Myers Squibb, CSL, and Merck. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Biogen and Johnson & Johnson. 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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With a new year on the horizon, what better time to look at making some new additions to your portfolio.

The good news is that analysts at Bell Potter have been busy picking out their “favoured” picks for 2023.

Three that have made the cut are named below. Here’s what the broker is saying about them:

Aristocrat Leisure Limited (ASX: ALL)

Bell Potter’s analysts are bullish on this gaming technology company and believe it well-placed for growth in 2023 and beyond. They commented:

The group has a dominant position in the North American gaming industry and the land-based operations should underpin medium term growth while the digital business offers opportunities in a rapidly growing market.

Goodman Group (ASX: GMG)

It has been a difficult year for the Goodman share price, as you can see on the chart below.

The good news is that Bell Potter appears to believe that 2023 could be much better for the integrated industrial property company and its shareholders. It explained:

The long term outlook for industrial and logistics properties is favourable given the continuing growth in ecommerce (or on-line retail sales) and data storage requirements as well as supply chain optimisation and the growing middle class in developing countries.

Suncorp Group Ltd (ASX: SUN)

Finally, the broker is feeling positive about this insurance and banking giant. This is thanks partly to company offloading its banking operations to Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Its analysts commented:

The cash sale of Suncorp Bank to ANZ is expected to yield net proceeds of $4.1 billion and the group’s intention is to return the majority of these proceeds to shareholders through a combination of a fully franked special dividend and a pro-rata capital return after completion of the transaction, which is targeted for the second half of calendar 2023.

The post Bell Potter names 3 ‘favoured’ ASX shares to buy in 2023 appeared first on The Motley Fool Australia.

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• Leading brokers name 3 ASX shares to buy today
• These are the explosive ASX growth shares to buy for 2023 according to experts
• Down but not out: Expert names 2 slaughtered ASX shares to buy right now
• To retire early, I’d invest $100 each week in ASX 200 shares
• 10 ASX shares to buy 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 dreaded ‘i’ words — inflation and interest rates — have monopolised financial headlines for most of the year. As such, whilst the S&P/ASX 200 Index (ASX: XJO) has delivered average capital growth of around 8% per annum over the past 20 years, it has fallen painfully short of this in 2022.

But, even during years when the stock market is struggling and share price gains are more difficult to lock in, it’s still possible for investors to build wealth. One way of doing this is by owning dividend shares.

We asked our Foolish contributors which ASX dividend shares they reckon are ‘cracker’ buys in December for some new-year passive income. Here’s what the team came up with

7 best ASX dividend shares for December 2022 (smallest to largest)

Universal Store Holdings Ltd (ASX: UNI), $387.44 million

Adairs Ltd (ASX: ADH), $380.32 million

Codan Limited (ASX: CDA), $681.19 million

TechnologyOne Ltd (ASX: TNE), $4.51 billion

Medibank Private Ltd (ASX: MPL), $8.15 billion

Westpac Banking Corp (ASX: WBC), $81.79 billion

BHP Group Ltd (ASX: BHP), $236.87 billion

(Market capitalisations as at market close on 12 December 2022)

Why our Foolish writers love these ASX dividend shares

Universal Store Holdings Ltd

What it does: Universal Store is an omnichannel retailer focused predominately on the youth apparel industry through its Universal Store and Thrills brands. The company is also trialling the Perfect Stranger brand as a standalone retail concept.

By James Mickleboro: Although the retail sector is facing some tough times due to the cost of living crisis, I believe Universal Store is well-placed for further solid sales growth, thanks to its focus on younger consumers. That’s because the company’s target demographic will be less impacted by rising interest rates and also stands to benefit from an increase in the minimum wage.

Combined with its store expansion plans, I believe Universal Store can deliver robust earnings and dividend growth for the foreseeable future. Goldman Sachs expects this to be the case and is forecasting fully-franked dividends per share of 26.1 cents in FY 2023, 29.9 cents in FY 2024, and 33.2 cents in FY 2025. Based on the latest Universal Store share price of $4.71, this equates to yields of 5.5%, 6.3%, and 7%, respectively.

Motley Fool contributor James Mickleboro does not own shares in Universal Store Holdings Ltd.

Adairs Ltd

What it does: Adairs is a retailer of homewares and furniture with three different businesses – Adairs, Mocka, and Focus on Furniture.

By Tristan Harrison: Adairs has major plans to grow its product range and increase its market share. The company says there is a strong link between retail floor space and sales and, in turn, between sales and membership numbers.

Adairs is looking to grow its floor area by 5% per annum over five years and thinks it can increase its total members from around one million (as at the end of FY22) to 1.5 million over this time.

Furthermore, the company has plans to add 30 new Focus on Furniture stores nationwide and grow online sales across each of its businesses. It’s also planning to sell online-only business Mocka’s furniture in its bricks and mortar stores in future, creating further synergies.

Adairs wants to increase its sales from $564.6 million in FY22 to more than $1 billion over five years.
After a 45% fall of the Adairs share price in 2022, Commsec numbers imply an 11.6% grossed-up dividend yield in FY23.

Motley Fool contributor Tristan Harrison does not own shares in Adairs Ltd.

Codan Limited

What it does: Codan may not be a household name, but the products it manufactures and supplies span broadly. After acquiring Zetron and Demo Tactical Communications (DTC), the Adelaide-based company is now heavily involved in communications technology used in defence, emergency response, and sporting sectors.

In addition, Codan makes and sells advanced metal-detecting devices under its popular Minelab brand.

By Mitchell Lawler: I originally highlighted Codan back in our August instalment of top ASX dividend shares. Unfortunately, six days later in its FY 2022 results, Codan pointed to a weak outlook for its metal detector segment. Since then, the Codan share price has tumbled 57% – not my finest display!

However, I believe the sell-off is overdone, and investors lack appreciation for the value in Codan’s communications business.

DTC received its largest-ever order for supplying software-defined mesh radios to the military in FY22, and Zetron is one of only two full-suite integrated emergency response technology providers globally. All of this for a price-to-earnings (P/E) ratio of 6.7.

Given the critical nature of its products, Codan might be able to lift prices with inflation. I believe the company’s 20% bottom-line margin suggests a reasonable level of pricing power exists. Codan currently offers a dividend yield of 7.5%.

Motley Fool contributor Mitchell Lawler does not own shares in Codan Limited.

TechnologyOne Ltd

What it does: TechnologyOne develops and provides enterprise software to clients across industries, including government, education, utilities, and financial services.

By Brooke Cooper: I often highlight strong balance sheets and competitive advantages as some ‘green flags’ I look for in a stock, and I think TechnologyOne has both in spades.

The company boasted $175.9 million of cash and no debt at the end of financial year 2022 while its customer retention sat at industry-leading levels – more than 99% for the period.

The company also posted record full-year profits and currently offers a dividend yield of around 1%. Whilst this yield may not sound overly enticing right now, I believe the company has the potential for significant growth and, thereby, higher payouts in the future.

Looking to the future, TechnologyOne is targeting $500 million of annual recurring revenue by financial year 2026 and expects to continue doubling in size every five years.

Motley Fool contributor Brooke Cooper does not own shares in TechnologyOne Ltd.

Medibank Private Ltd

What it does: Medibank is an Australian health insurance company that provides services to around 3.9 million Australians via its Medibank and AHM brands.

By Matthew Farley: The Medibank share price currently trades near the bottom of its 52-week range, which I believe makes it potentially undervalued. As at Monday’s close, the company’s shares were trading hands for $2.96, with a dividend yield of 4.53%.

One expert from global fund manager Schroders believes the sell-off in Medibank shares after the company’s data breach in November is partially irrational. The investing team at QV Equities appears to agree, having recently used the opportunity to scoop up additional shares for its portfolios.

I believe Medibank is a defensive stock worth considering for today’s volatile market conditions and uncertain economic outlook.

Motley Fool contributor Matthew Farley does not own shares in Medibank Private Ltd.

Westpac Banking Corp

What it does: Westpac is an ASX 200 blue chip that needs little introduction. It is one of the largest retail banks in the country and is also one of the oldest companies in Australia.

By Sebastian Bowen: Most ASX bank shares have a well-earned reputation as generous dividend payers, and Westpac is no different. After COVID crippled Westpac’s shareholder payments, the bank has spent the past two years finding its dividend feet. In 2022, Westpac will dole out $1.25 in dividends per share, a nice increase over 2021’s total of $1.18.

ASX broker Morgans has recently come out with an add rating on Westpac. It’s expecting Westpac shares to rise to $25.80 apiece over the coming 12 months and pay out attractive dividends going forward.

At Monday’s closing price of $23.36, Westpac shares offer a fully-franked dividend yield of more than 5%.

Motley Fool contributor Sebastian Bowen does not own shares in Westpac Banking Corp.

BHP Group Ltd

What it does: BHP is among the world’s largest producers of iron ore with a growing footprint in the copper sector. The S&P/ASX 20 Index (ASX: XTL) miner is the largest company, by market cap, on the ASX.

By Bernd Struben: BHP is a long-term reliable dividend stock, traditionally paying two fully-franked dividends each year. The miner also offers a dividend reinvestment plan (DRP).

With iron ore and copper prices soaring in early 2022, BHP paid some outsized dividends. Shares currently trade on a trailing yield of 10.1%. Whilst that’s unlikely to be sustainable long term, Citi does forecast a resilient iron ore price for 2023, potentially retesting US$150 per tonne.

And Goldman Sachs forecasts that the copper price could hit new record highs next year. Should that eventuate, it could mean another year of outsized dividends.

The BHP share price is up 10% year to date.

Motley Fool contributor Bernd Struben does not own shares in BHP Group Ltd.

The post Top ASX dividend shares to buy in December 2022 appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Leading brokers name 3 ASX shares to buy today
• 3 ‘strong’ ASX 200 dividend shares for 2023 revealed: expert
• Westpac share price slumps as Tyro takeover scrapped
• Tyro share price crashes 22% after ending takeover talks with Westpac and Potentia

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Technology One 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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If you’re looking for dividend shares to add to your income portfolio, then it could be a good idea to check out the two listed below.

These ASX dividend shares have been rated as buys by experts. Here’s what they are saying about them:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX 200 dividend share that could be a buy is Charter Hall Social Infrastructure REIT.

Goldman Sachs is very bullish on this real estate investment trust, which invests in social infrastructure properties such as bus depots, police and justice services facilities, and childcare centres. The broker currently has a conviction buy rating and $4.13 price target on its shares.

The broker notes that “despite the challenging macroeconomic backdrop, childcare fundamentals are solid, and we remain attracted to CQE’s resilient underlying cash flows.”

As for dividends, Goldman Sachs is forecasting dividends of 17.2 cents per share in in FY 2023 and then 18 cents per share in FY 2024. Based on the current Charter Hall Social Infrastructure REIT unit price of $3.32, this will mean yields of 5.2% and 5.4%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another ASX 200 dividend share that has been named as a buy is insurance giant QBE.

Morgans is positive on the insurance giant and currently has an add rating and $14.89 price target on its shares.

The broker is expecting “QBE’s earnings profile to improve strongly over the next few years.” This is expected to be underpinned by “strong rate increases still flowing through QBE’s insurance book, and further cost-out benefits.”

Morgans expects this to lead to a 42 cents per share dividend being paid in FY 2022 and then a 90 cents per share dividend in FY 2023. Based on the latest QBE share price of $13.01, this equates to yields of 3.2% and 6.9%, respectively.

The post Experts name 2 ASX 200 dividend shares to buy now appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Morgans names the top ASX dividend shares to buy before it’s too late
• Experts name the ASX dividend shares for income investors to buy now
• Top brokers name 3 ASX shares to buy next week

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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There is a broad range of ASX dividend shares for investors to consider. The question is: Are those high-yield ASX dividends a mirage? Can the payments continue?

Firstly, it’s important to remember that dividends are not guaranteed. Companies may reduce or completely cut their dividend payments.

Let’s first consider how large dividend yields can occur.

What makes a high dividend yield?

Three main factors could lead to a big yield, in my opinion.

First, a low price/earnings (p/e) ratio can lead to a higher dividend yield.

For example, imagine a business makes $100 million in profit and has a market capitalisation of $1 billion. The p/e ratio is 10 – the market cap is 10x the earnings. If it paid out $50 million as a dividend, that’s a dividend yield of 5% with a dividend payout ratio of 50%. If franking credits were involved and the dividend was fully franked, the grossed-up dividend yield would be 7.1%.

Secondly, the business could have a high dividend payout ratio.

Now, let’s say a business makes $100 million in profit, but has a market cap of $1.5 billion. In this case, the p/e ratio is 15. This business is priced noticeably higher than the first example. But, if it paid out $80 million of its net profit, the dividend payout ratio would be 80%, and the dividend yield 5.3%. It’s a 7.6% grossed-up dividend yield, including franking credits.

The third factor is that last year’s dividend could be a lot bigger than what the market is expecting this year’s dividend to be.

This could be because the company paid a one-off special dividend last year or business profitability has significantly reduced since then. Or perhaps the business just wants to hold onto its cash.

Are high-yield ASX dividend shares safe?

I think it depends on each business.

There are plenty of examples of special dividends that are unlikely to be repeated again and again. For example, a business may have sold off a division and sent the sale proceeds to shareholders. It can’t sell the same business segment again.

A business that is going through pain may cut its dividend. For example, Magellan Financial Group Ltd (ASX: MFG) paid a total dividend of $1.79 per share in FY22, a trailing 19.5% dividend yield. But, Commsec numbers suggest Magellan could pay an annual dividend per share of 87 cents per share in FY23 and 68 cents per share in FY24, which is a yield of 9.5% and 7.4%, respectively.

Resource companies and retailers often have quite a low p/e ratio.

But, resource companies such as miners heavily depend on what happens with the commodity price. They will probably see both boom times and weaker times, so I wouldn’t call them ‘safe’, but they can be rewarding.

Retails can also see cyclical earnings as households go through cycles, so the dividend may go up and down as well.

Businesses with low p/e ratios may not necessarily offer safe dividends. If business earnings are not consistent or defensive, then the dividend may well be volatile as well.

Companies with high dividend payout ratios may well be able to pay consistent dividends if their actual earnings are also consistent. Businesses that operate in defensive sectors, such as APA Group (ASX: APA), Sonic Healthcare Ltd (ASX: SHL), Metcash Limited (ASX: MTS) and Propel Funeral Partners Ltd (ASX: PFP) may be able to keep paying resilient dividends.

Foolish takeaway

So, high dividend yields may or may not be safer than lower yields – it depends on the company, the industry they come from and how resilient the underlying earnings are.

I wouldn’t count on resource companies paying reliable dividends year after year, but some businesses with a high dividend payout ratio could be candidates to consider.

The post Can a high-yield ASX dividend stock still be safe? appeared first on The Motley Fool Australia.

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More reading

• Why I’d invest in these 3 ASX shares to combat this one inflationary megatrend
• 3 top ASX 200 dividend shares I think are bargain buys right now
• 2 ASX dividend shares that have raised their payouts by 20% in 5 years
• Here are the top 10 ASX 200 shares today
• Why Beach, Block, Magellan, and St Barbara shares are dropping

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 Apa Group. The Motley Fool Australia has recommended Metcash, Propel Funeral Partners, and 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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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a decline. The benchmark index fell 0.45% to 7,180.8 points.

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

ASX 200 expected to rise

The Australian share market looks set to rebound on Tuesday following a decent night of trade on Wall Street amid interest rate worries. According to the latest SPI futures, the ASX 200 is poised to open the day 28 points or 0.4% higher. In late trade in the United States, the Dow Jones is down 1.6%, the S&P 500 is down 2.05%, and the NASDAQ has tumbled 2.2%.

Treasury Wine named as a buy

The Treasury Wine Estates Ltd (ASX: TWE) share price remains good value according to analysts at Goldman Sachs. This morning, the broker reiterated its buy rating on the wine giant’s shares with a $14.70 price target. It said: “We continue to forecast sustainable growth (Sales 7% and EPS 16% CAGR FY22-25e) from penetration and mix growth across Asia, as well as US.”

Oil prices rise

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a great day after oil prices rebounded overnight. According to Bloomberg, the WTI crude oil price is up 2.9% to US$73.12 a barrel and the Brent crude oil price has risen 2.4% to US$77.95 a barrel. Oil prices jumped on supply risks following a major outage in North America.

Mining giants under pressure

BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) shares could come under pressure on Tuesday after the iron ore price pulled back by almost 2% to US$110.25. This appears to have been the catalyst for the two miners dropping approximately 2% on Wall Street overnight.

Gold price falls

Gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a tough day after the gold price dropped overnight. According to CNBC, the spot gold price is down 1.1% to US$1,790.7 an ounce. Nervous trades sold down the gold price ahead of the release of US inflation data and the US Fed meeting.

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

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More reading

• Down 20% so far this year, are Wesfarmers shares now a no-brainer buy?
• Here are the top 10 ASX 200 shares today
• Why is the Woodside share price smashing the ASX 200 on Monday?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Is Xero a ‘safe’ ASX share?

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 Treasury Wine Estates. 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 has soared 264% year to date, but could it go any higher?

Whitehaven shares closed 1.96% lower at $9.50 today. The S&P/ASX 200 Index (ASX: XJO) also ended the day in the red, sliding 0.45% to close at 7180.8 points.

Let’s take a look at the latest outlook for coal and how it relates to the Whitehaven Coal share price.

What’s the outlook for coal?

Whitehaven is a major ASX coal producer with four mines in NSW and two development assets in Queensland.

Against the backdrop of war between Russia and Ukraine, analysts at the ANZ are tipping coal demand to remain strong as European countries restart coal-fired power plants.

ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said in a recent research report:

Coal demand is likely to be sustained for another year or two as countries prioritise energy security over climate commitment.

The strategists are also tipping China’s reliance on coal to increase as well, lifting the “price of seaborne coal”. In an ANZ commodity report, Hynes and Kumari added:

Coal market tightness has persisted as Asian demand has risen because of a return to coal for electricity generation. And China’s reliance on coal-fired power is likely to increase this winter, lifting the price of seaborne coal.

With energy security increasingly on its radar, Beijing is likely to resort to coal-fired power over winter. However, it may struggle to boost domestic supply enough to meet the country’s needs.

An increase in demand naturally bodes well for ASX coal shares.

Whitehaven achieved an average realised coal price of $581 Australian dollars in the September quarter. Commenting on the coal price in a quarterly report released in October, Whitehaven CEO Paul Flynn said:

With demand for high quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.

Whitehaven Coal share price snapshot

Shares in Whitehaven Coal have soared nearly 296% in the past 12 months, as shown in the chart below.

This ASX coal share has a market capitalisation of $8.57 billion based on today’s closing price.

The post Could this give the Whitehaven Coal share price a further boost? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Top brokers name 3 ASX shares to buy next week
• 3 best-performing ASX 200 energy shares in November
• On the back of a cracking year, these 3 ASX 200 coal shares soared again in November
• Climate and energy: Analyst tips 2 ASX shares perfectly placed for global crises

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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