I own a few ASX exchange-traded funds (ETFs). But, like a guilty parent, I confess to having one clear favourite. I have written about it before, and probably will again. It is none other than the VanEck Vectors Wide Moat ETF (ASX: MOAT).

The VanEck Wide Moat ETF is an actively managed fund. This means that, unlike a passive index fund, it follows an active share selection methodology.

In this case, the ETF, according to its provider, intends to offer exposure to “attractively priced companies with sustainable competitive advantages”. These are selected and periodically reviewed and rebalanced by Morningstar’s equity research team.

An economic moat is a term coined by the legendary investor Warren Buffett. It refers to a company’s intrinsic competitive advantage. An example would be the undisputed brand power of companies like Apple or Coca-Cola. Or the unavoidability of one of Transurban Group (ASX: TCL)’s toll roads.

So the Wide Moat ETF aims to select US shares with these kinds of characteristics. As of the fund’s most recent update, some of its top holdings included Microsoft, Disney, Amazon and Adobe. All companies that I think most investors would agree with are high-quality shares.

Why the Wide Moat ETF is a winner

I like this idea in theory. But a fund also has to display some compelling performance figures to persuade me to part with my cash.

The Wide Moat ETF does indeed have some impressive numbers on the board. It was first launched back in June 2015 on the ASX. Since that day, it has delivered an average performance of 13.55% per annum.

By contrast, the US S&P 500 Index (SP: .INX) has delivered 11.75% per annum over that same period. The Wide Moat ETF has also outperformed the S&P 500 over the past five years as well, not an easy task. It’s delivered an average of 14.05% per annum against the index’s 13.16%.

So it’s for this reason that the VanEck Vectors Wide Moat ETF is my favourite ETF investment, as well as being one of my favourite investments in my entire share portfolio. It’s been a winner for me, and I don’t see any reason why it won’t keep on winning.

The post Of all my ASX ETFs, this is my favourite. Here’s why appeared first on The Motley Fool Australia.

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• 3 superb ETFs for ASX investors to buy now
• 2 top ETFs for ASX investors to buy in October
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Adobe Inc., Amazon, Apple, Coca-Cola, Microsoft, VanEck Vectors Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Amazon, Apple, Microsoft, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $420 calls on Adobe Inc., long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe Inc., Amazon, Apple, VanEck Vectors Morningstar Wide Moat ETF, and Walt Disney. 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 cost of building a home is rising at its fastest pace since the GST was introduced in 2000. Interest rates are going up and housing values are going down. Construction companies are going bust due to labour shortages, lack of access to building materials, and the rising cost of these materials. And fewer people are choosing to build new houses, with approvals down 14.4% over the past 12 months.

Yet fund manager Allan Gray says it’s a great time to buy this ASX 200 share in the construction game. That share is Fletcher Building Limited (ASX: FBU).

Allan Gray managing director and chief investment officer, Simon Mawhinney says Fletcher Building is trading “at a discount to fair value”:

Most investors shy away from buying companies that are likely to exhibit a decline in earnings in the short term, regardless of the price at which the company trades. This creates the opportunity for us to
invest in companies at a discount to fair value. Fletcher Building Limited is one such company.

Why is this ASX 200 share falling?

The Fletcher Building share price is down 0.7% to $4.38 in late afternoon trading on Friday. The ASX 200 share has fallen 37.4% in 2022 so far and 36.5% over the past 12 months.

Allan Gray analyst Sudhir Kissun says:

While we can’t be sure exactly why Fletcher Building’s share price has been falling for the past year, the prospect of a downturn in building activity is a likely explanation.

Even though it might be tempting to sit on the sidelines and wait for the cycle to hit rock bottom, it is important to remember that sharemarkets are forward looking.

Share prices usually hit the bottom well before the cycle is at its lowest. In the case of Fletcher Building, its share price may already factor in the impact of a modest economic downturn.

A ‘compelling opportunity’

Allan Gray outlines the case to buy this ASX 200 share in its September 2022 quarterly commentary.

Firstly, Kissun reckons the business metrics look good. By the way, these numbers are in New Zealand currency because Fletcher is headquartered in New Zealand.

Kissun explains:

With a share price at the time of writing in late-September of NZ$5.16 per share, Fletcher Building has a market value of NZ$4.0b. Added to its very manageable net debt of NZ$0.9b, its enterprise value is NZ$4.9b.

… we estimate that its lowest EBIT in the past 15 years was around NZ$420m (this is after adjusting for businesses that Fletcher Building has disposed of and therefore will not contribute to earnings in the future). The market is valuing the company at a little less than 12 times this depressed level of EBIT.

Not only is this meaningfully below the broader sharemarket multiple today, but it is also likely that earnings from this depressed level would grow significantly faster than the market (and therefore
warrant a higher multiple than the market).

In our experience, this type of situation, in which the market is offering us a company at a lower-than-market multiple of depressed earnings, has the makings of a compelling investment opportunity.

Is the Fletcher Building share price a buy?

Kissun says:

When we value cyclical companies, we try to gauge what the company might earn on average through the cycle, across good times and bad. We believe a sustainable mid-cycle EBIT for Fletcher Building should be in the region of NZ$600m, which is almost 30% below management’s guided EBIT for FY23 of NZ$820m.

Mid-cycle EBIT of NZ$600m would result in net earnings after interest and tax of approximately NZ$400m. It might not be unreasonable to ascribe a price-to-earnings (P/E) multiple of 16 times to these mid-cycle earnings, which would equate to a market value of NZ$6.4b or approximately NZ$8.15 per share. Compared to the share price of NZ$5.16, this represents potential upside of over 50%.

The Allan Gray Australia Equity Fund holds $61.7 million worth of Fletcher Building shares.

The ASX 200 share represents 3% of the fund’s value as at 30 September.

The post Too cheap to ignore this ASX 200 share with a ‘compelling’ valuation: fundie appeared first on The Motley Fool Australia.

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More reading

• 2 high risk, high reward ETFs for ASX investors to buy
• Top brokers name 3 ASX shares to buy next week
• Expert reveals why these ASX All Ords shares are drumming up a ‘growing international appetite’ right now
• Don’t miss out on these buy-rated ASX dividend shares: analysts
• Analysts say these beaten down blue chip ASX 200 shares can rise 50%

Motley Fool contributor Bronwyn Allen 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 on the lookout for some exchange traded funds (ETFs) to buy? If you are and you have a high tolerance for risk, then it could be worth looking at the exciting ETFs that are listed below.

Here’s what you need to know about these high risk, high reward ETFs:

BetaShares Crypto Innovators ETF (ASX: CRYP)

There’s arguably no higher risk asset class to invest in than cryptocurrencies.

And while the BetaShares Crypto Innovators ETF doesn’t actually invest directly in coins, the companies included in the fund are well and truly part of the crypto ecosystem. They are the miners, the equipment providers, the trading platforms. So, if cryptocurrencies are booming, they are likely to roar alongside them.

But, as we have seen this year, cryptocurrencies aren’t always booming. Far from it. Furthermore, there’s nothing to say that they will ever return to their former glories. The crypto bubble could even burst further and eventually fade into insignificance.

However, if you’re a crypto bull and believe the industry is here to stay and thrive, then this ETF could be the one for you. The shares you’ll be owning through the fund include Canaan, Coinbase, Riot Blockchain, and Silvergate.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another ETF for investors to consider is the BetaShares Global Cybersecurity ETF.

While this ETF is nowhere near as risky as the BetaShares Crypto Innovators ETF, it still carries a higher than normal risk due to its overweight exposure to fledgling tech shares.

But with recent cyberattacks in Australia showing just how important cybersecurity services are in this day and age, the companies included in this fund appear well-placed for long term growth as demand increases. This could mean they now have a compelling risk/reward after falling heavily with the tech this year.

Among the companies included in the BetaShares Global Cybersecurity ETF are Accenture, Cisco, Cloudflare, Crowdstrike, Fortinet, Okta, and Splunk.

The post 2 high risk, high reward ETFs for ASX investors to buy appeared first on The Motley Fool Australia.

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• 2 top ETFs for ASX investors to buy in October
• 3 high quality ETFs for ASX investors to buy next week
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BETA CYBER ETF UNITS and Betashares Crypto Innovators ETF. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Costa Group Holdings Ltd (ASX: CGC)

According to a note out of Morgans, its analysts have retained their add rating but cut their price target on this horticulture company’s shares to $2.90. This follows the release of a disappointing update last week which revealed that worse than expected adverse weather is impacting its operations. As a result, its profits are now only expected to be marginally higher year on year in FY 2022. While disappointed, Morgans continues to believe that Costa is a buy for patient investors. This is due to its belief that its shares are undervalued based on more normalised earnings and its growth projects. The Costa share price ended the week at $2.23.

Metcash Limited (ASX: MTS)

A note out of UBS reveals that its analysts have retained their buy rating and $5.00 price target on this wholesale distributor’s shares. This follows the company’s investor day event last week which revealed strong growth from its hardware pillar and positive commentary on its new distribution centre. The former is benefiting from housing starts and the renovation market. The Metcash share price was fetching $3.90 at Friday’s close.

Pilbara Minerals Ltd (ASX: PLS)

Analysts at Macquarie have retained their outperform rating and $5.70 price target on this lithium miner’s shares. According to the note, the broker was pleased with the results of the company’s latest digital auction. Macquarie notes that Pilbara Minerals accepted a pre-auction bid that was once again higher month on month. Looking ahead, the broker is expecting more regular sales on the platform in the near future thanks to the ramp up of the Ngungaju project. The Pilbara Minerals share price ended the week at $5.07.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Friday
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• If I’d bought $5,000 of Pilbara Minerals shares at the end of June, here’s how much I could bank right now
• 5 big ASX announcements making news this week
• Here are the top 10 ASX 200 shares 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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended COSTA GRP FPO and Metcash Limited. 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 Russia-Ukraine war has motivated private and institutional investors, as well as superannuation funds, to reinvest in ASX All Ords defence shares and energy shares, according to a new study.

Investors began shunning these two sectors a while back due to “a growing focus on environmental, social, and corporate governance (ESG) factors in investment decisions”, according to Deakin University, which conducted the study.

They’re now happy to reinvest in defence and energy because big businesses in these sectors are now proactively mitigating their greenhouse gas emissions and formally reporting on sustainability goals.

Why are investors returning to defence and energy?

The ‘growing international appetite’ for international and ASX All Ords shares in these sectors is primarily due to the strong prospects for investment returns, according to the research.

However, investors are also feeling more ethically comfortable investing in these sectors again.

Of defence stocks, Deakin Business School Associate Professor and researcher, Harminder Singh said:

… the Russia-Ukraine war has meant many countries are moving to invest in their sovereign defence capabilities. Countries want to be able to defend themselves in case there are wider ramifications from the conflict.

This makes stocks in the defence sector more appealing for investors. With more government money pouring in, there are more investment opportunities and the potential to earn greater stock returns.

Investing in defence stocks can now be reframed in the more acceptable context of national security and community safety.

Published in the journal Finance Research Letters, the research is based on a sample of global investment data. The numbers cover a three-year period from April 2019 to May 2022.

Singh added his thoughts on energy shares:

Russia is one of the world’s major oil exporters, so the conflict and subsequent sanctions has left a gap in the market that needs to be met. This means other countries are developing their own alternative energy projects, offering the opportunity for greater investment and stock returns.

Like defence, the energy sector has faced ESG concerns. But we’re seeing that view can change, as global pressures change.

Associate Professor Singh said the trend toward defence and energy shares might remain “for at least a couple of years, depending, as time tells, whether it is the financially fruitful move that investors hope”.

Examples of ASX All Ords shares in defence

The ASX defence sector is fairly small with most stocks not in the ASX 200. But a few ASX All Ords shares in the sector have been going gangbusters in 2022 compared to the broader market.

In 2022 so far, the S&P/ASX All Ordinaries Index (ASX: XAO) has lost 13% in value. By comparison, defence shipbuilding company Austal Ltd (ASX: ASB) is up 21% in the year to date at $2.40 per share.

Some ASX defence shares are down.

ASX All Ords share Codan Limited (ASX: CDA) is down 49% in 2022.

Outside the ASX All Ords, military aircraft components manufacturer Quickstep Holdings Limited (ASX: QHL) is down 10% in 2022. DroneShield Ltd (ASX: DRO) is up 8% in the year to date at 20 cents per share.

Examples of ASX All Ords shares in energy

The stalwarts of the ASX energy sector include Woodside Energy Group Ltd (ASX: WDS), up 56% in 2022. There’s also Santos Ltd (ASX: STO), up 15% in 2022, and Beach Energy Ltd (ASX: BPT), up 21%.

The post Expert reveals why these ASX All Ords shares are drumming up a ‘growing international appetite’ right now appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Why Challenger, Novonix, Piedmont Lithium, and Woodside shares are racing higher
• Winner and Sinner: Woodside stock looks dirt cheap, whilst Megaport shares could have even further to fall

Motley Fool contributor Bronwyn Allen has positions in Woodside Petroleum Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Austal Limited, DroneShield Ltd, and Electro Optic Systems Holdings Limited. The Motley Fool Australia has recommended DroneShield 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 Australian share market index is home to a large number of companies that reward their shareholders with dividends each year.

Two highly rated dividend shares that offer investors good yields right now are listed below. Here’s why they have been tipped as buys:

Rural Funds Group (ASX: RFF)

The first ASX dividend share to look at is Rural Funds. It is an Australian agricultural property company with a portfolio of high quality assets.

Thanks to long leases and periodic rental increases, the company has been increasing its dividend at a solid rate for many years. This saw Rural Funds lift its distribution by its annual target rate of 4% in FY 2022 to 11.73 cents per share.

This and recent share price weakness has caught the eye of analysts at Bell Potter. The broker recently upgraded its shares to a buy rating with a $2.75 price target on valuation grounds. It notes that “the current discount to adjusted NAV reflects what historically would be considered an attractive entry point.”

Another reason for the broker’s positive view is its belief that Rural Funds will continue to pay generous dividends in the coming years. For example, it is forecasting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.46, this represents yields of 4.8% and 5.15%, respectively.

Wesfarmers Ltd (ASX: WES)

Another ASX dividend that has been tipped as a buy is Wesfarmers.

It is the conglomerate behind a growing portfolio of high quality businesses. These include Coregas, Covant Lithium, Kmart, Officework, Priceline, and, the jewel in the crown, Bunnings.

The team at Morgans is very positive on its outlook thanks to its “quality retail portfolio” and “highly regarded management team.” As a result, the broker has put an add rating and $55.60 price target on its shares.

As for dividends, Morgans is forecasting fully franked dividends per share of $1.82 in FY 2023 and $1.89 in FY 2024. Based on the current Wesfarmers share price of $43.29, this will mean yields of 4.2% and 4.4%, respectively.

The post Don’t miss out on these buy-rated ASX dividend shares: analysts appeared first on The Motley Fool Australia.

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• Wesfarmers shares could be one of the best options on the ASX 200: Morgans
• When it comes to ASX 200 dividend shares, is there any such thing as truly passive income?
• These ASX 200 dividend shares have been named as buys by analysts
• Which ASX All Ords shares could perform well in a recession?

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 positions in and has recommended RURALFUNDS STAPLED and Wesfarmers Limited. 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 wanting to strengthen your portfolio with some ASX 200 blue chip shares, you may want to look at the two listed below.

Both of these high quality blue chip shares have been beaten down this year, which could have created a buying opportunity for long term-focused investors.

Here’s why analysts think they could be blue chip shares to buy right now:

Goodman Group (ASX: GMG)

The first blue chip ASX 200 share to look at is Goodman Group. This leading integrated commercial and industrial property company’s shares have fallen over 40% since the start of the year.

This is despite the company’s strong performance continuing in FY 2022 and its guidance for further solid growth this financial year.

And with demand for its property, which includes warehouses, data centres, large scale logistics facilities, and business and office parks, expected to remain robust, Goldman Sachs is recommending investors take advantage of the weakness to buy its shares. It recently commented:

We expect solid rental growth as demand for high quality logistics space continues to outpace available supply. Although the macro environment remains challenged, we believe there is upside risk to its conservative guidance as the Group has historically “Guided light”, coming in ahead of initial estimates. Given GMG’s preference to own, develop and manage high-quality industrial assets in key infill markets globally, we believe it is well-positioned to capture market rental growth, which when coupled with elevated investment demand for industrial assets will assist in contributing to AUM growth over time.

Goldman currently has a buy rating and $25.40 price target on the company’s shares. Based on the latest Goodman share price of $15.92., this suggests potential upside of almost 60%.

SEEK Limited (ASX: SEK)

Another blue chip ASX 200 share that has been beaten down is job listings giant Seek. Since the start of the year, its shares have also tumbled 40%.

This has caught the eye of analysts at Morgans, which believe the company is one of the best options for investors on the ASX 200 index right now.

Its analysts commented:

Of the classifieds players, we continue to see SEEK as the one with the most relative upside, a view that’s based on the sustained listings growth we’ve seen over the period. The tailwinds that have driven elevated job ads (~250k currently, +35% on pcp) and strong FY22 result appear to still remain in place, i.e. subdued migration, candidate scarcity and the drive for greater employee flexibility. With businesses looking to grow headcount in the coming months and job mobility at historically high levels according to the RBA, we see these favourable operating conditions driving increased reliance on SEEK’s products.

Morgans has an add rating and $29.40 price target on its shares. Based on the current Seek share price, this implies potential upside of almost 50% for investors over the next 12 months.

The post Analysts say these beaten down blue chip ASX 200 shares can rise 50% appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Goodman share price hits two-year low: Time to buy?
• Why Dubber, Johns Lyng, Seek, and St Barbara shares are sinking today
• 5 things to watch on the ASX 200 on Monday
• 2 high quality blue chip ASX 200 shares that experts rate as buys

Motley Fool contributor James Mickleboro has positions in SEEK Limited. 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 SEEK Limited. 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 wanting to invest in the mining sector, then you may want to look at the ASX 200 shares listed below.

These mining shares have recently been tipped as buys by analysts at Bell Potter. Here’s what the broker is saying:

Chalice Mining Ltd (ASX: CHN)

This mineral exploration company could be a mining share to buy according to Bell Potter.

It is a fan of the company due to its Julimar PGE-Ni-Cu-Au project in Western Australia, which is home to the hugely promising Gonneville deposit. Last year this deposit was confirmed as a world class discovery.

The broker also notes that recent drilling appears to indicate that the resource could be even larger than expected. It commented:

CHN has reported that drilling to test the results of a recently completed 2D seismic survey has successfully intersected the interpreted extension of the Gonneville deposit. […]  In our view, the drilling achieves two objectives: i.) confirms the material extension of Gonneville intrusion to the north, where it remains open; and ii.) validates seismic surveys as a highly effective exploration tool, particularly in combination with EM methods.

Bell Potter has a speculative buy and $11.73 price target on the company’s shares.

Nickel Industries Ltd (ASX: NIC)

Another ASX mining share that Bell Potter is bullish on its Nickel Industries.

The broker notes that it is emerging as a globally significant, low cost producer of nickel pig iron, which is a key ingredient in the production of stainless steel.

And with its shares currently trading at a 52-week low, the broker sees plenty of value here for investors. It recently commented:

While margins are proving to be more volatile than forecast, the underlying operations continue to demonstrate their profitability. NIC’s assets are long-life, bottom-of-the-cost-curve projects and are currently being priced for margins at the low point of the cycle. We expect NIC to continue to make money through this period and be highly leveraged to expanding margins as they recover. As such, we believe NIC is excellent value at these levels.

Bell Potter has a buy rating and $1.83 price target on its shares.

The post Broker names the ASX 200 mining 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
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• Why is the Chalice Mining share price up 10% and the best performer on the ASX 200 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 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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As most investors would be acutely aware, 2022 has been a tough year for the markets. Year to date, the S&P/ASX 200 Index (ASX: XJO) has gone backwards by a nasty 12% or so.

That might put many investors off buying shares. These are uncertain times, after all.

But one investor has instead been buying up big. That would be the legendary Warren Buffett, of Berkshire Hathaway Inc (NYSE: BRK) fame.

As our Fool colleagues over in the US covered recently, Buffett has been spending big over the year so far. And one of his favourite shares to buy has been a dividend stock.

Buffett reportedly acquired 2.4 million shares of oil giant Chevron over the second quarter of 2022. Those 2.4 million shares would be worth approximately US$405.5 million on the latest pricing.

That brought Berkshire’s total holdings to 163.5 million shares, representing an 8.4% ownership of the entire company. That’s a stake worth more than US$27 billion.

Our Fool colleagues report that Buffett’s company will now enjoy almost US$929 million in dividend income per annum from this investment.

Following Buffett’s dividend example

Buffett’s enthusiasm for this dividend share highlights the value of a solid dividend payer during uncertain times. While share prices may fluctuate, nothing is more concrete than receiving hard cash.

As we discussed this morning, market volatility, even crashes, can be the discerning investor’s best friend. This is doubly true when it comes to dividend shares.

This is because the lower a dividend share’s price gets, the higher starting yield an investor can potentially enjoy. Take the Commonwealth Bank of Australia (ASX: CBA) share price.

Over 2022 thus far, CBA shares have endured significant volatility, having fluctuated between $108.35 and $86.98 a share this year. But CBA has still been raising its dividend consistently since 2020. Its two most recent dividend payments add up to $3.85 in dividends per share.

For an investor buying in at $108.35, this would give them a dividend yield of 3.55% on their capital. But if that same investor was braver and bought up at $86.98, they would be rewarded with a far better yield of 4.43% on their capital.

So it’s for this reason that all investors should strive to buy quality dividend shares at the lowest price possible. It’s one of the reasons Warren Buffett is one of the richest investors in the world, after all.

The post Warren Buffett has been buying up big on dividend stocks. Should you? appeared first on The Motley Fool Australia.

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More reading

• ASX dividend shares or distribution shares? Is there even a difference?
• No savings at 40? I’d use the Warren Buffett method to build wealth
• What could CBA shares stand to gain from a Tyro takeover?
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• How bear markets can be a blessing for dividend investors

Motley Fool contributor Sebastian Bowen has positions in Chevron. 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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One investment management company has decided to cut NAB shares and buy up another ASX 200 bank share instead.

National Australia Bank Ltd (ASX: NAB) shares finished trading down 1.54% at $31.40 on Friday. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) finished Friday down 0.80%.

Let’s take a look at which ASX 200 bank share this fundie recommends.

Virgin Money

NAB may be one of the big four banks in Australia, but Allan Gray Australia has decided to add Virgin Money Uk Plc (ASX: VUK) to its equity fund instead. Virgin Money shares closed flat on Friday at 2.25.

Investment specialist Julian Morrison said Virgin Money, along with QBE Insurance Group Ltd (ASX: QBE) has been added to the portfolio “on weakness”.

Morrison said Allan Gray Australia sold its last exposure to NAB shares in the September quarter.

Commenting on this decision in a September 2022 quarterly review, Morrison added:

Virgin Money faces some challenges – hence the depressed share price. But with the price reflecting around 0.5 times net tangible asset (NTA) value, the company is at a very material discount to other banks and factors in a significant margin of safety.

By comparison, CBA and NAB trade on a price-to-NTA multiple of around 2 and 1.7 times
respectively.

The Allan Gray Australia Equity Fund also includes exposure to Australia and New Zealand Banking Group Ltd (ASX: ANZ), Westpac Banking Corporation (ASX: WBC) and AMP Ltd (ASX: AMP). Morrison said:

Elsewhere in financials, AMP bucked the trend and contributed very strongly to outperformance. We also had positive contribution from exposures to ANZ and Westpac.

However, Macquarie analysts recently recommended investors buy the NAB share price. Analysts have placed a $32.25 price target on NAB shares. Out of all the big four banks, Macquarie sees NAB as the best bank to buy.

Share price snapshot

NAB shares have risen 9% in the past 12 months and the year to date. Meanwhile, Virgin Money shares have fallen 39% in the past year and 32% in the year to date.

In comparison, the ASX 200 has shed 10% in the past year and year to date.

The post Ditching NAB for this ASX 200 bank share instead: fundie appeared first on The Motley Fool Australia.

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More reading

• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Are NAB shares a good ASX 200 investment right now?
• Here are the top 10 ASX 200 shares today
• What could a possible Tyro takeover mean for NAB shares?
• Leading brokers name 3 ASX shares to buy 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 recommended Westpac Banking Corporation. 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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