Is ASX 200 tech share and former market darling Xero Limited (ASX: XRO) a ‘safe’ ASX share?

Well, it certainly hasn’t been for investors over the past year or two. The Xero share price last hit an all-time high back in November 2021. But since then, investors have been burned… badly burned, by Xero shares.

Since Xero clocked a share price of around $155 back in November last year, this cloud-based accounting software provider has fallen by a painful 55% or so. It’s going for under $70 a share today, less than half of what the company was worth a year ago.

The company is also down by more than 52% in the 2022 year to date:

So Xero shares certainly haven’t been a safe place to have had your capital invested. But, by most definitions, no share is truly ‘safe’.

If you are looking for somewhere to park your dollars that will never fall in value and steadily rise over time, no ASX share fits this description.

In fact, the only asset class that truly does is a government-guaranteed savings account or term deposit at a bank.

How ‘safe’ can an ASX 200 share like Xero be?

A company can be the most consistently profitable business in the world. But as the legendary investor Benjamin Graham once said, the share market is a voting machine in the short term. Day to day, the only thing that sways share prices is investor sentiment.

Looking at Xero shares over the past few years, this company does look like a safe place to have invested cash. Since 2012, the Xero share price has risen by an impressive 1,406%. Sound safe?

If it does, consider this as well. Even though Xero has given its investors these kinds of stunning returns, it has also severely clipped their capital several times.

Between March and October 2014, Xero shares went from around $40 to under $20. In 2018, the company fell from over $50 a share to under $38. In early 2020, the company crashed from $87 a share to $61. And now in 2022, investors have endured more than a 52% drop.

So Xero shares have never been safe. But then again, what is?

What we do know is that Xero has given investors a return of 1,406% since 2014.

The post Is Xero a ‘safe’ ASX share? appeared first on The Motley Fool Australia.

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More reading

• One ASX 200 share I’m buying for passive income before 2022 is over
• A bull market is coming: 3 ways Warren Buffett is preparing
• Could this help ANZ close the gap on its ASX 200 competitors?
• Is it safe to invest in ASX shares now? Take advice from Warren Buffett
• Telstra share price on watch following latest telco data breach

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 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 All Ordinaries Index (ASX: XAO) is 0.55% in the red today, but three ASX All Ords shares are charging higher.

The Nitro Software Ltd (ASX: NTO), Arafura Rare Earths Ltd (ASX: ARU) and Air New Zealand Limited (ASX: AIZ) share prices are all in the green today.

Let’s take a look at these three ASX All Ords shares in more detail.

Nitro Software

The Nitro Software share price is climbing 3.76% today from $2.13 to $2.21.

Nitro is the subject of a bidding war for a takeover. Alludo is proposing to acquire 100% of Nitro by scheme of arrangement with a revised price of $2.15 per Nitro share. This is 7.5% more than a previous offer. Nitro is recommending shareholders vote in favour of a revised takeover offer from Alludo in the absence of a superior proposal.

Last week, Potentia Capital Management offered to take over Nitro at $2 cash per Nitro share. The Nitro board recommends shareholders reject Potentia’s takeover offer.

Air New Zealand

Air New Zealand shares are climbing 2.78% today.

The company recently upgraded its half-year earnings guidance for the 2023 financial year. The airline is expecting to achieve earnings before significant items and taxation for the first half of the financial year to be between $295 and $325 million. This is an upgrade on the previous guidance of $200 million to $275 million.

Commenting on travel demand, Air New Zealand said:

Continued strong travel demand across the domestic and international networks, as well
as a recent decline in jet fuel prices has accelerated the airline’s financial recovery. As
a result, Air New Zealand is today upgrading half year earnings guidance for the 2023
financial year.

Arafura Rare Earths

The Arafura Rare Earths share price is soaring 8% today.

Arafura is exploring the Nolans Project in the Northern Territory for neodymium and praseodymium (NdPr). Nolans contains all the rare earths, but it is “particularly enriched” in magnet feed rare earths Nd and Pr. Arafura recently highlighted that the Nolans project is the “only advanced stage NdPR focussed project outside China that plans to mine and process ore to oxide at a single site”.

Arafura is conducting a capital raise of $133 million to accelerate construction.

The post It’s not all bad news for the ASX All Ords on Monday. Here are 3 big gainers appeared first on The Motley Fool Australia.

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• One ASX penny stock I’d buy for 2023 and hold for a decade
• Why Air New Zealand, Chalice, Evolution, and Origin shares are rising today
• 5 ASX shares involved with rare earths (aside from Lynas)
• Why Arafura, Mayne Pharma, Pilbara Minerals, and Tyro shares are dropping 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 Telstra Group Ltd (ASX: TLS) share price is up 0.25% as we head into the lunch hour, having earlier posted gains of more than 0.5%.

Telstra shares closed on Friday at $4.00, with shares currently trading for $4.01 apiece.

While that’s not exactly shooting the lights out, it comes as the S&P/ASX 200 Index (ASX: XJO) is down 0.5%.

The Telstra share price gain also comes despite news breaking over the weekend of a significant data breach. This saw the details of 132,000 customers, who had asked to remain unlisted, published in directory assistance and an online version of the White Pages directory.

How was the customer data published?

As reported earlier today, the Telstra data breach was not the result of cybercriminals but rather, according to Telstra, due to a “misalignment of databases”.

Commenting on the incident that does not appear to be having a material impact on the Telstra share price today, chief financial officer Michael Ackland said the mistake was uncovered during the company’s regular auditing processes.

16,000 of the 132,000 customers had their phone numbers published in an online version of the White Pages directory, with the rest of the customer’s information accidentally made available via directory assistance.

Ackland told Today, “We found there were misalignments where customers, who in our databases we believed should have been unlisted, were flagged as listed in the directory assistance database, and those 16,000 customers in the White Pages database.”

The customer details from the White Pages were removed immediately after Telstra realised its mistake. The telco is still working to expunge all the customer details from its directory assistance servers.

How has the Telstra share price performed longer-term

As you can see in the chart below, the Telstra share price has dropped 1% over the past 12 months.

Longer-term, the ASX 200 telco is up 9% over five years.

The post Telstra share price outperforming despite data breach impacting 132,000 customers appeared first on The Motley Fool Australia.

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More reading

• Telstra share price on watch following latest telco data breach
• Top brokers name 3 ASX shares to buy next week
• 2 safe and reliable ASX dividend shares to buy for 2023: analysts
• 10 ASX shares to buy in 2023
• Why Domino’s, New Hope, PolyNovo, and Telstra shares are pushing higher today

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

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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:

Aristocrat Leisure Limited (ASX: ALL)

According to a note out of Citi, its analysts have retained their buy rating and $41.20 price target on this gaming technology company’s shares. The broker notes that digital bookings showed signs of rebasing in November. Citi sees this as a positive, particularly given that its Pixel United business continues to outperform peers. Outside this, the broker continues to view Aristocrat’s land-based business as well positioned and remains optimistic on the real money gaming opportunity. The Aristocrat share price is trading at $33.69 this afternoon.

BHP Group Ltd (ASX: BHP)

A note out of Macquarie reveals that its analysts have retained their outperform rating and lifted their price target on this mining giant’s shares to $50.00. Macquarie made the move after lifting its estimates to reflect stronger than expected iron ore prices. However, based on current spot prices, these estimates could yet prove conservative. Macquarie’s current estimates imply the payment of a fully franked 6.1% dividend yield in FY 2023. The BHP share price is currently fetching $47.00.

HMC Capital Ltd (ASX: HMC)

Analysts at Morgans have retained their add rating on this property development company’s shares with a trimmed price target of $5.85. Morgans highlights that HMC’s shares haven fallen heavily due to weakness in the REIT sector this year. It feels that this has created a buying opportunity. The broker points out that it has a capital light business model and a track record for executing on complex deals. The HMC share price is trading at $4.46 on Monday.

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

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• 3 ‘strong’ ASX 200 dividend shares for 2023 revealed: expert
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• Could the VAS ETF outperform the BHP share price in 2023?
• These are the explosive ASX growth shares to buy for 2023 according to experts
• Why did ASX 200 iron ore shares like BHP have such a cracking 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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With the S&P/ASX 200 Index (ASX: XJO) once again falling this Monday, it’s becoming clear that the end of the year might shape up to be a rather volatile time for the share market.

At least, that’s the way things look to be heading as we approach the middle of December. ASX 200 shares started December at a seven-month high. But it has been downhill ever since for the ASX. As it stands today, the index has lost around 2.5% of its value over December thus far.

But, volatility can be the patient investors’ best friend. After all, being able to obtain ASX shares at lower prices usually does wonders for future returns. So here’s one ASX dividend share I’m eyeing off for passive income amid all this volatility.

It’s Brickworks Limited (ASX: BKW).

Why is this ASX 200 share on my buy list?

Brickworks is a rather interesting ASX share. It is a market leader in the manufacturing of bricks and other construction materials, of course.

But this isn’t just a building supplies company. Brickworks is far more diversified than its name suggests. Construction materials is a notoriously cyclical business. When there’s a boom, everyone wants to build houses and buy more bricks and other materials.

But this demand can go just as easily as it can come. When the economy is tight, demand for new properties is scant.

So Brickworks also has a property investment strategy that helps the company overcome the cyclical nature of making construction materials. Brickworks places land it no longer uses for manufacturing into its ‘Brickworks Manufacturing Trust’.

It then uses this land to create a supplementary income stream, which helps it to ride out the ups and downs of its primary business.

Brickworks has another earning avenue outside the construction centre as well. It’s Brickworks’ investment portfolio. This is primarily made up of a massive chunk of another ASX company – Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Brickworks owns around $2.6 billion worth of Soul Patts shares or around 26.1% of the whole company. Soul Patts is a diversified conglomerate with large shareholdings of its own.

It has the unique distinction of being the only ASX 200 share to have delivered an annual dividend rise every year since 2000. This gives Brickworks a useful stream of dividend income for its coffers too.

So all of this adds up to an ASX dividend share I want to buy before 2022 is over.

Why buy Brickworks now?

At present, Brickworks has a trailing dividend yield of 2.89%, fully franked, on the table today. That number doesn’t look overly impressive, I’ll admit.

But when you consider that Brickworks is a company that also consistently raises its dividend and hasn’t cut its payouts since 1976, that yield looks a whole lot more appealing from a passive income standpoint.

At its latest annual general meeting, Brickworks claimed that its shares have returned an average of 12.3% per annum over the last 54 years. That is a record I want to be a part of.

The post One ASX 200 share I’m buying for passive income before 2022 is over appeared first on The Motley Fool Australia.

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More reading

• A bull market is coming: 3 ways Warren Buffett is preparing
• Could this help ANZ close the gap on its ASX 200 competitors?
• Telstra share price on watch following latest telco data breach
• 5 things to watch on the ASX 200 on Monday
• Here’s how I’d invest $20,000 in ASX 200 shares for a 7% dividend yield

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson And. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson And. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson And. 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 AGL Energy Ltd (ASX: AGL) share price is down 2.88% in late morning trade, having earlier posted losses of 6.8%.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy company closed on Friday trading for $8.00 and are currently changing hands at $7.77 apiece.

It’s not just the AGL share price under pressure.

While the ASX 200 is down 0.7%, utilities stocks are broadly underperforming, as witnessed by the 4.01% fall in S&P/ASX 200 Utilities Index [ASX: XUJ] at this same time.

Here’s what’s happening.

Why are utilities stocks selling off today?

The AGL share price and other utilities stocks look to be under pressure following Friday’s announcement by Prime Minister Anthony Albanese of a pending price cap on domestic coal and gas sales.

On Thursday, 15 December, Parliament will vote on Labor’s plan to cap gas prices at $12 per gigajoule. The price for thermal coal (used to generate electricity) would be capped at $125 per tonne for the domestic market.

Those prices are well below what gas and coal producers have been receiving since energy prices rocketed in the wake of Russia’s invasion of Ukraine, resulting in some record profits for the companies.

Commenting on the planned price cap, Energy Minister Chris Bowen said (quoted by Bloomberg):

We were facing gas price rises next year of 36%, that’s not acceptable. Either you intervene and take the sting out of those price rises, or you don’t. We believe in intervening…

It’s Australian gas, under Australian soil and Australians should not be paying elevated war prices for that gas.

Bowen noted that the proposed price caps would not apply to exports or any new gas projects. He said if companies “want to make money from exports, that’s okay”.

With major energy stocks likely to come under pressure, as with the AGL share price today, not everyone is pleased with the price cap plan.

As Reuters reports, Australian Petroleum Production & Exploration Association CEO Samantha McCulloch said the price caps would reduce confidence and investment in energy projects and lead to lower supplies in the future. McCulloch called the plan a “fundamental dismantling” of the Australian gas market.

“This may be taken as a declaration of war on the gas industry on the east coast,” Credit Suisse analyst Saul Kavonic added.

AGL share price snapshot

Despite today’s dip, the AGL share price (pictured below) is up an impressive 32% over the past 12 months. That compares quite favourably to the 3% full-year loss posted by the ASX 200.

The post Why is the AGL share price tumbling on Monday? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price jumps amid Twiggy’s $4b renewables takeover
• Buying AGL shares for the dividends? Read this first
• How did the AGL share price outperform the ASX 200 by 11% in November?
• Are AGL shares a good investment right now?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bernd Struben 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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This year has likely left many investors disappointed. The S&P/ASX 200 Index (ASX: XJO) is currently 5% lower than it was at the start of 2022 and the All Ordinaries Index (ASX: XAO) has had an even rougher trot, falling 7% year to date.

However, as history has shown, a bull market is coming to the ASX. Here’s how billionaire Warren Buffett is likely preparing for a market uptick.

How Buffett’s likely gearing up for a bull market

Buffett famously advises investors “be fearful when others are greedy, and be greedy when others are fearful”.

That guidance is born from the fact that markets have historically always recovered from previous downturns. Here’s a compilation of some of the investing great’s advice that might help disenchanted market watchers regain their optimism.

Look to the horizon

A bear market, or ASX downturn, is inevitably disappointing for Aussie investors. Still, it’s worth remembering that a market tumble has never lasted forever.

For instance, the ASX 200 plunged 30% amid the onset of the COVID-19 pandemic. Before the worst of the pandemic was over, however, the index hit an all-time high of more than 7,600 points in August 2021.

Of course, that was an incredibly fast onset of a bear market and an even faster return to bull territory, and past performance doesn’t guarantee future performance, but it highlights Buffett’s point.

It takes a lot more than a simple downturn to derail the market. Over the long term, the ASX has always bounced back to its prior highs.

Take advantage of a downturn

Buffett’s confidence in the market’s long-term upwards trajectory means the investor takes advantage of downturns.

The ‘Oracle of Omaha’ is arguably the face of value investing. That is, buying into a company trading at below its intrinsic value and waiting for the market to catch up.

Value investing is often amplified during downturns when fearful investors sell and others sit on the sidelines waiting for an ‘opportune moment’, thereby increasing supply over demand.

As a result, quality companies often see their share prices fall below their true value, thereby presenting a buying opportunity before a bull market.

Focus on quality

Speaking of quality companies, that’s where Buffett aims to invest. In a 2021 letter to Berkshire Hathaway shareholders, the billionaire wrote:

[W]e own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves.

That point is crucial: Charlie [Munger] and I are not stock-pickers; we are business-pickers.

Thus, if Buffett were to set his sights on Australia, he would likely turn to ASX shares with solid balance sheets, competitive advantages, and strong leadership – among other factors – that also happen to be trading cheaply.

And since it’s near impossible to predict when the next bull market will occur, now could be the best time to invest in quality ASX shares to capitalise on a future green streak.

The post A bull market is coming: 3 ways Warren Buffett is preparing appeared first on The Motley Fool Australia.

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• Could this help ANZ close the gap on its ASX 200 competitors?
• Telstra share price on watch following latest telco data breach
• 5 things to watch on the ASX 200 on Monday
• Here’s how I’d invest $20,000 in ASX 200 shares for a 7% dividend yield
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Monday.

In morning trade, the lithium developer’s shares are up 3.5% to 22.25 cents.

This means the Sayona Mining share price is now up almost 70% over the last 12 months.

Why is the Sayona Mining share price pushing higher?

Investors have been bidding the Sayona Mining share price higher this morning after the company provided an update on the North American Lithium (NAL) project in Québec, Canada. This operation is co-owned with fellow lithium developer Piedmont Lithium Inc (ASX: PLL), with Sayona Mining holding a majority 75% interest.

According to the release, the company has been awarded the final permit for NAL’s restart ahead of the planned recommencement of production in the first quarter of 2023.

Management believes this has effectively de‐risked its NAL operation and follows an extensive process by Sayona Québec.

And when Sayona Mining says extensive, it means extensive! The latest regulatory approval is one of more than 130 permits that were required to resume mining operations. These were required to ensure the successful restart of NAL’s lithium mine and concentrator in compliance with all necessary environmental regulations and obligations.

NAL to help satisfy lithium demand

Sayona Québec’s CEO, Guy Laliberté, was pleased with the news. He commented:

Since acquiring the NAL complex in August 2021 in conjunction with Piedmont Lithium (SYA 75%; Piedmont 25%), our team has been working hard to quickly restart operations to establish ourselves as a leader in lithium production, while maintaining a small environmental footprint and exemplary community engagement. Global demand for lithium is increasing weekly and it is essential that NAL go into production to help satisfy this demand.

This sentiment was echoed by Sayona Mining’s managing director, Brett Lynch. He said:

Securing all the necessary permits for NAL’s restart is another important step in the de‐risking process, and I would like to congratulate our team in Québec for this new milestone. With the planned expansions of our resource base both at NAL and at our northern lithium hub, Sayona is well placed to become the leading lithium producer in North America, facilitating the EV and battery revolution in North America.

The post Sayona Mining share price higher on North American Lithium news appeared first on The Motley Fool Australia.

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• Here are the 10 most shorted ASX shares
• Why are ASX 200 lithium shares taking a lashing today?
• The Sayona Mining share price went backwards in November. What now?
• ASX index beaters: 5 shares that have supercharged portfolios in 2022
• Here are the 10 most shorted ASX shares

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 St Barbara Ltd (ASX: SBM) share price won’t be going anywhere on Monday.

That’s because this morning the struggling gold miner requested a trading halt.

Why is the St Barbara share price halted?

The St Barbara share price was placed in a trading halt this morning after the company announced plans to merge with Genesis Minerals Ltd (ASX: GMD).

According to the release, the two gold miners plan to merge their Leonora District operations in Western Australia to form a new gold company, Hoover House.

The release notes that the merger will result in the following:

• 7Moz Mineral Resources
• 2Moz Ore Reserves
• Fully funded “capital-light” base case production target +300koz per annum (almost double St Barbara’s Leonara production target)

After a year of struggles for the St Barbara share price, as you can see below, investors will no doubt be hoping this is the catalyst to getting its shares heading higher again.

What else?

As you may have noticed above, the merger will be focused on St Barbara’s Leonora District assets.

The remainder of its assets will be demerged to form a new junior gold company, Phoenician Metals, which is then expected to be listed on the ASX.

Phoenician Metals will be focused on realising the long-term value of a portfolio including the Atlantic (Canada) and Simberi (PNG) operations, which have 6.2Moz mineral resources and 3.7Moz ore reserves. It was also have a portfolio of St Barbara royalties, $34 million in listed ASX investments, and $85 million cash.

St Barbara shareholders will receive an in-specie distribution of shares in Phoenician Metals and Hoover House will retain a 20% shareholding as a supportive cornerstone investor.

Why merge?

St Barbara’s chair, Tim Netscher, believes the merger will deliver significant value for shareholders. He said:

I am confident that this unique transaction will deliver significant value for all shareholders. The merger with our Leonora neighbour, Genesis, to create Hoover House, will accelerate our Leonora Province Plan. Shareholders will reap the benefits of more production at lower cost and lower risk from this prolific mining district.

A significant component of the value delivered by the creation of Hoover House is the unique synergies delivered by the resultant combination of assets, such as the ability to sensibly stage the development of the various orebodies and to match one party’s ore to the other party’s mill capacity.

Netscher also believes that the demerger of non-Leonora assets to form Phoenician Metals will realise value for shareholders. He added:

In parallel, select assets including Atlantic and Simberi will be de-merged to create Phoenician Metals. This will provide an opportunity for shareholders to realise the long-term value of this well-endowed portfolio in a dedicated vehicle with a high-quality management team. Phoenician Metals will attract stronger investor attention and valuation in a stand-alone entity, while allowing Hoover House to focus 100% on the Leonora District.

The post St Barbara share price halted amid major gold merger plans with Genesis Minerals appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• 3 ASX gold shares rocketing higher on Thursday
• Which ASX mining shares have had their dividend yields slashed the most in 2022?
• Why Beach, Block, Magellan, and St Barbara shares are dropping

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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Quality S&P/ASX 200 Index (ASX: XJO) dividend shares will likely remain high on investor wish lists in 2023.

And that’s especially true for dividend stocks paying fully franked dividends.

With inflation looking to remain well above the RBA’s target range next year and governor Philip Lowe predicting more interest rate rises on the horizon, ASX 200 dividend shares should continue to offer investors reliable income streams.

According to Plato Investment Management’s managing director Don Hamson, “I think the current environment is quite similar to 1994 when global interest rates went up, inflation spiked, and there was negative returns on bonds and equity, yet dividends kept rising.”

ASX 200 shares to deliver a 6.0% gross dividend yield

Plato forecasts that ASX 200 shares will deliver a gross yield of 6.0% in 2023.

“Our modelling is projecting that at an index level in 2023, the ASX 200 will deliver a cash yield of 4.4%, and 6.0% when including franking credits,” Hamson said.

According to Hamson:

Despite much being said about the impact of rate rises on cash-backed asset classes like term deposits and bonds, investors who rely on them continue to lose money in real terms, with inflation rising faster than interest rates.

The Australian stock market is also one of a select few that pays imputation, or franking, credits, reducing investor tax burdens. And Hamson advises seeking out stocks offering 100% franked payouts.

“I think it goes without saying that favouring companies that pay fully franked dividends, where possible, in 2023 is a no-brainer,” he said.

Three specific ASX 200 dividend shares that Plato believes will be “strong dividend payers” in 2023 are:

• Macquarie Group Ltd (ASX: MQG), 3.8% trailing yield
• Woodside Energy Group Ltd (ASX: WDS), 9.0% trailing yield
• BHP Group Ltd (ASX: BHP), 9.8% trailing yield

A word of caution

Hamson adds that investors should be aware of dividend traps in the year ahead.

Remember, the yields you see (and those quoted above for the three ASX 200 dividend shares) tend to be trailing yields. That means they’re based on current share prices and the dividends paid out over the past 12 months. There are no guarantees those payments will be maintained in 2023.

According to Hamson:

We think many companies in the resources and financials sectors are likely to continue to be strong and sustainable dividend payers into 2023. However, it’s imperative investors avoid dividend traps – and there’ll be many to emerge over the coming year.

With that word of caution noted, Hamson added, “We believe investors must move to where the dividends are flowing.”

How have these three ASX 200 dividend shares been performing?

Atop their dividend payouts, here’s how these ASX 200 shares have been performing: the BHP share price has gained 16% over the past 12 months; Woodside shares have gained 53%; and the Macquarie share price has gone the other direction, down 17%.

You can see their performance in the charts below:

The post 3 ‘strong’ ASX 200 dividend shares for 2023 revealed: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Could the VAS ETF outperform the BHP share price in 2023?
• Why did ASX 200 iron ore shares like BHP have such a cracking Friday
• The difference between uncertainty and risk’: 5 ASX shares this fundie is backing for 2023
• Forecast for ASX 200 iron ore shares in 2023: bull vs bear

Motley Fool contributor Bernd Struben 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 Macquarie 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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