The Bitcoin (CRYPTO: BTC) price has edged up 1% over the past 24 hours, currently trading for US$19,548 (AU$29,062).

The world’s top crypto has been overshadowed in the media in recent weeks by the second biggest token in virtual circulation, Ethereum (CRYPTO: ETH).

That’s because Ethereum finally underwent its long-awaited merge last Thursday. The process sees the token transition from proof of work (PoW) to proof of stake (PoS). PoS requires far fewer computers to maintain the blockchain security and cuts energy use by more than 99%.

The Ethereum price is down some 13% since the day the merge went fully active, while the Bitcoin price has dropped 3%, according to data from CoinMarketCap. But there’ve been other short-term forces at work pressuring cryptos and risk assets more broadly. Namely the prospect of further aggressive tightening from the world’s top central banks.

As for the longer-term potential impacts of the merge on the Ethereum price, we explored that here.

But will the Ethereum merge also impact the Bitcoin price in the eyes of investors over the long term?

For some insight into that question, we defer to head of marketing at CoinSpot Ray Brown.

How might the merge affect the Bitcoin price?

“Ethereum has long been the ‘number two’ cryptocurrency in terms of value and cultural relevance, with Bitcoin synonymous with cryptocurrency as a whole,” Brown said.

As for whether Bitcoin remains number one, Brown said that will depend somewhat on the success of the new proof of stake protocol used across such a massive network:

It remains to be seen whether the merge will have any real impact on Bitcoin’s dominance in the long term. If the merge proves to be completely successful, an increased popularity of proof-of-stake chains could rattle Bitcoin’s dominance, as the leading crypto is effectively married to a proof-of-work protocol, which many are already hypothesising could grow more unpopular as demand for less energy-intensive solutions intensifies.

The Bitcoin price might also lose ground to its rival should the merge prove to drive greater interest in Ethereum’s smart contract solutions.

According to Brown:

The increased versatility of Ethereum could also work significantly in its favour over Bitcoin. And if Ethereum’s utility as a smart contract provider gains further traction thanks to higher efficiencies and lower costs post-merge, this could easily be reflected in a shift in market values.

The post How will the Ethereum merge impact the Bitcoin price? appeared first on The Motley Fool Australia.

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More reading

• Why Bitcoin, Dogecoin, and Shiba Inu fell this morning
• Spinoff token EthereumPOW price crashes 86% post merge. Here’s why
• 3 cryptocurrencies to buy and hold forever
• Ethereum’s merge is done: now what?
• 3 reasons the Ethereum price could gain in the post-Merge months

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 positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. 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 article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Cryptocurrencies took a hit this morning as investors brace themselves for the Federal Reserve’s upcoming meeting this week, which is expected to end with yet another big rate hike.

As of 10:41 a.m. ET Monday, the price of the world’s largest cryptocurrency, Bitcoin (CRYPTO: BTC), traded roughly 3.3% lower over the last 24 hours. At one point earlier this morning, the price of Bitcoin had fallen to a three-month low below $19,000 per token.

The price of meme tokens Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB) traded 4.5% and 5.4% lower, respectively.

So what

The Fed will begin its September meeting tomorrow and then likely raise its benchmark overnight lending rate, the federal funds rate, on Wednesday followed by public comments from Fed Chairman Jerome Powell.

After new inflation data came in hotter than expected last week, sending markets tumbling, it became all but obvious the Fed would do at least a 0.75% rate hike at this September meeting, which would be its third such move in a row. But there is also a chance the Fed surprises the market and hikes rates by a full percentage point. Currently, the CME’s FedWatch tool has the likelihood of a full-point hike at 20%.

The U.S. economy is already in a technical recession after U.S. gross domestic product (GDP) contracted in both the first and second quarters of the year, but many are concerned that these aggressive rate hikes from the Fed could tip the economy into a much more severe recession. 

Continued rate hikes do not bode well for cryptocurrencies, which have already been hammered this year. As rates rise, safer assets start to yield more, which makes riskier assets like tech stocks less appealing.

Cryptocurrencies have moved a lot like highly valued tech stocks this year but are arguably even riskier because they are more difficult to value. While one can say that a tech stock looks appealing at a certain valuation, it’s a lot harder to make this case for the likes of Bitcoin because there is nothing really backing digital assets. Investors in cryptocurrencies also don’t receive any kind of capital distributions like dividends or stock repurchases.

Now what

It’s certainly tough to know what the Fed will do on Wednesday after recent inflation data came in higher than what economists had expected.

I’m hopeful the Fed will take a longer-term view and consider that recent rate hikes dating back to June have still not likely worked their full way into the economy, as it can take six months or more to do so, which is why I feel like another 0.75% hike right now is plenty.

I’m still bullish on Bitcoin on a long-term basis as I see growing adoption playing out, despite the ongoing crypto winter. I’m not interested in many altcoins right now like Dogecoin and Shiba Inu.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin, Dogecoin, and Shiba Inu fell this morning appeared first on The Motley Fool Australia.

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More reading

• How will the Ethereum merge impact the Bitcoin price?
• 3 cryptocurrencies to buy and hold forever
• Ethereum’s merge spotlights a key strength, says Coinbase exec
• 5 reasons I wouldn’t touch Shiba Inu with a 10-foot pole
• Why did the Bitcoin price just dip below US$20,000?

Bram Berkowitz has positions in Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Telstra Corporation Ltd (ASX: TLS) share price could have new life breathed into it over the next week amid plans to legally separate the company from its InfraCo business unit, as reported by the Australian Financial Review on Sunday.

Telstra shareholders can vote on the proposed company split at a scheme meeting next month. The first court hearing will be on Friday. If the split goes ahead, the business restructure will occur on 1 January 2023.

Some banking experts have given their take on what the Infraco split could mean for the company.

Let’s cover the highlights.

What could the Infraco split mean for Telstra?

Experts said Telstra will have more control over Infraco’s securities. This includes the ability to “sell, float, or demerge securities in InfraCo Fixed without NBN Co consent,” the article said. However, there are some conditions. One is that Telstra must own a 50.1% stake in InfraCo.

Separating Telstra’s business units could prove to be expensive, with a proposed $126 million one-off cost. Plus, there’s the potential for costs to add up quickly if Telstra sold more than 10% of its Infraco stake, the article said.

The broader picture is that Telstra deems the $126 million cost immaterial, according to a booklet sent to investors. The restructure will help unlock value from Telstra’s infrastructure and separate management teams will mean improved focus for each business unit.

When the announcement was made in March 2021, the Telstra share price moved up 0.26%.

At the time, Goldman Sachs described the restructuring as a positive move for shareholders, stating:

We remain positive on TLS, as this update outlines the next steps of the corporate restructure and potential asset monetization, and gives us confidence that its infrastructure value will ultimately be realized by shareholders. Based on our updated transaction multiples/illustrative SOTP valuations, TLS shares currently trade on just 4.1-4.7x ServeCo FY23E EBITDA or 5.7-6.3X at our unchanged A$4.00 12m TP, vs. SPK.NZ at 8.3x. We reiterate our Buy on TLS, our preferred ANZ Telco, ahead of its FY21 results and Nov-21 ID, both of which we view as positive catalysts.

Telstra share price snapshot

Shares of the telco opened this morning at $3.81 each.

The Telstra share price is down 10% year to date. The S&P/ASX 200 Index (ASX: XJO) is down 10.5%.

The company’s market capitalisation is $43.79 billion.

The post Could this prove to be a new cash cow for Telstra shares? appeared first on The Motley Fool Australia.

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• Experts name 2 ASX dividend shares for your retirement portfolio
• Why the Telstra share price could actually be a growth opportunity: fundie
• Why this top broker is tipping 17% upside for the Telstra share price
• Experts name 2 excellent ASX dividend shares to buy next week
• Telstra share price is caught in no man’s land as Optus feud continues

Motley Fool contributor Matthew Farley 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 Goldman Sachs. The Motley Fool Australia has positions in and has recommended Telstra Corporation 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 Fortescue Metals Group Limited (ASX: FMG) share price is trading slightly higher on Tuesday after the iron ore miner finally revealed how much it expects to spend to decarbonise its Pilbara operations.

In early trade, the Fortescue share price is up 0.8% to $17.57.

Fortescue share price higher on ‘industry-leading decarbonisation strategy’

This morning Fortescue unveiled its heavy industry decarbonisation strategy which is aiming to eliminate fossil fuel use and achieve real zero terrestrial emissions (Scope 1 and 2) across its iron ore operations by 2030.

Management notes that this investment will eliminate Fortescue’s fossil fuel risk profile and enable it to supply its customers with a carbon free product.

According to the release, although it will come at the significant cost of US$6.2 billion (A$9.2 billion), the company expects to generate attractive economic returns from operating cost savings due to the elimination of diesel, natural gas, and carbon offset purchases from its supply chain.

Management also believes that Fortescue is well positioned to capitalise on first-mover advantage and the ability to commercialise decarbonisation technologies.

Cost savings

It will take some time before the company’s savings are realised. This could explain the lukewarm response to the announcement from the Fortescue share price in early trade.

Fortescue expects net operating cost savings of US$818 million per annum from 2030 with a payback of capital by 2034. This is based on prevailing market prices of diesel, gas and Australian carbon credit units.

The capital estimate is US$6.2 billion, with the investment largely planned between FY 2024 and FY 2028.

This investment includes the deployment of an additional 2-3 GW of renewable energy generation and battery storage and the estimated incremental costs associated with a green mining fleet and locomotives.

Furthermore, the capital expenditure to purchase the fleet will be aligned with the scheduled asset replacement life cycle and included in Fortescue’s sustaining capital expenditure. Studies are underway to optimise the localised wind and solar resources.

Fortescue’s executive chairman, Dr Andrew Forrest AO, commented:

There’s no doubt that the energy landscape has changed dramatically over the past two years and this change has accelerated since Russia invaded Ukraine. We are already seeing direct benefits of the transition away from fossil fuels – we avoided 78m litres of diesel usage at our Chichester Hub in FY22 – but we must accelerate our transition to the post fossil fuel era, driving global scale industrial change as climate change continues to worsen. It will also protect our cost base, enhance our margins and set an example that a post fossil fuel era is good commercial, common sense.

No comments were made regarding Fortescue’s dividend policy. However, it appears inevitable that its payout ratio will need to be lowered in the coming years in order to compensate for this increased investment each year.

The post Fortescue share price edges higher amid $9b ‘industry-leading decarbonisation strategy’ appeared first on The Motley Fool Australia.

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More reading

• Why China’s slowdown isn’t as bad as it looks for ASX 200 mining shares
• I would only sell my Fortescue shares if this happened
• 5 things to watch on the ASX 200 on Monday
• Could the latest news out of China bode well for ASX 200 iron ore shares?
• How big will the Fortescue dividend be 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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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 analysts at Goldman Sachs. Here’s what the broker is saying about them:

Charter Hall Social Infrastructure REIT (ASX: CQE)

Goldman Sachs currently has a conviction buy rating and $4.35 price target on this dividend share.

The Charter Hall Social Infrastructure REIT is a real estate investment trust that invests in social infrastructure properties such as bus depots, police and justice services facilities, and childcare centres.

Goldman believes the company is well-placed for growth in the coming years thanks to the sector’s positive fundamentals and its strong balance sheet. The broker commented:

[W]e continue to believe the REIT is relatively well positioned given the sector’s positive fundamentals and CQE’s strong balance sheet, with headroom and liquidity to pursue investment opportunities, although rising interest costs will be a near term headwind in FY23. Furthermore, we remain attracted to its relatively resilient cash flows, underpinned by triple net leases to strong tenant covenants. CQE trades at an ~8% discount to NTA (versus a ~14% premium historically) and offers a potential 12m total return of ~20% at our revised TP of A$4.35, and we maintain our Buy rating (on CL).

As for dividends, Goldman is forecasting dividends per share of 17.3 cents in FY 2023 and 18 cents in FY 2024. Based on the current Charter Hall Social Infrastructure REIT unit price of $3.48, this will mean yields of 5% and 5.2%, respectively.

HomeCo Daily Needs REIT (ASX: HDN)

Goldman has a buy rating and $1.63 price target on this dividend share.

HomeCo Daily Needs is another real estate investment trust but this time with a focus on metro-located, convenience-based assets across neighbourhood retail, large format retail, and health and services.

The broker believes that its shares are cheap at current levels, particularly given its positive medium term growth outlook. It commented:

We continue to believe HDN is undervalued at its current valuation given its diversified tenant base, and see it as well positioned to benefit from the shift to omni channel retailing, with additional external growth opportunities to drive earnings growth over the medium-term.

Goldman is also forecasting some very generous dividend yields. It is expecting dividends of 8.3 cents per share in FY 2023 and 8.5 cents per share in FY 2024. Based on the current HomeCo Daily Needs REIT unit price of $1.26, this will mean yields of 6.6% and 6.75%, respectively.

The post Goldman Sachs names 2 ASX dividend shares to buy appeared first on The Motley Fool Australia.

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More reading

• The ‘in’ crowd: How are the ASX 200 newcomers performing today?
• The ASX 200 is getting a shakeup today. Here’s the tea
• Experts say these top ASX dividend shares are buys
• Experts say these high yield ASX dividend shares are buys
• Why these 3 ASX shares could be in for a massive boost this month

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 ex-dividend date is an important day for companies in the S&P/ASX 200 Index (ASX: XJO). 

When an ASX 200 share goes ex-dividend, buyers won’t be eligible to receive the company’s upcoming dividend payment. 

Plus, companies often see their shares drop when they turn ex-dividend as the value of the dividend payment leaves the share price.

With the ASX share market closed on Thursday as the nation commemorates Queen Elizabeth II, ASX 200 shares have been shuffling around their ex-dividend dates.

Here are three ASX 200 shares that will be calling time tomorrow on their upcoming dividend payments.

Cochlear Limited (ASX: COH)

First up, ASX 200 healthcare share Cochlear will be turning ex-dividend tomorrow.

This means that today is the last day to snap up the company’s partially-franked final dividend of $1.45.

If you’re on Cochlear’s share registry by the closing bell today, you can pencil in a payment date of 17 October.

Cochlear continued its recovery from COVID in FY22. Cochlear implant unit volumes grew by 5%, contributing to $935 million in cochlear implant sales revenue, up 3% from the prior year.

Meanwhile, underlying net profit after tax (NPAT) jumped 18% to $277 million.

The company returned 71% of these profits to shareholders through annual dividends of $3 per share, up 18% from FY21.

This puts Cochlear shares on a trailing dividend yield of 1.4%.

Cleanaway Waste Management Ltd (ASX: CWY)

The next cab off the rank is Cleanaway, which will be trading tomorrow without an unfranked final dividend of 2.45 cents per share.

The ASX 200 waste management company has a dividend reinvestment plan (DRP) available for shareholders. Those who don’t elect to participate should see this dividend payment come through on 7 October.

Cleanaway delivered double-digit sales growth in FY22 as revenue leapt 18% to $2.6 billion. This growth was driven by the acquisition of the Sydney Resource Network, new municipal contracts, and strong commodity prices.

However, operational challenges led to a 5% fall in underlying NPAT, which came in at $145 million.

Across the financial year, the company hiked its dividends by 7% to 4.9 cents per share. This means that Cleanaway shares are currently throwing out a trailing dividend yield of 1.8%.

In other news, last month, Cleanaway launched a $400 million capital raising to fund its ‘BluePrint 2030’ strategy. As part of this strategy, the company has acquired licensed composting business Global Renewables for $168.5 million.

Adbri Ltd (ASX: ABC)

Last but not least, Adbri will also be closing the curtain tomorrow on its upcoming dividend payment.

The ASX 200 construction materials company recently handed in its first-half 2022 results, trimming its interim dividend by 9% to 5 cents.

Shareholders should see this fully franked dividend land in their accounts on 5 October. 

Adbri shares have drudged up a 24% fall in the last month after the company’s HY22 results disappointed investors. 

The company grew its topline by 8% to $812 million on the back of strong construction and mining sector demand and improved pricing across most of its products.

However, Adbri’s profits didn’t hold up so well. Underlying NPAT dropped 1% to $54 million, weighed down by a series of operational challenges.

This included extreme wet weather events on the east coast of Australia, higher input costs, and anticipated lower lime volumes. 

Looking ahead, the company is expecting to grow its underlying earnings in the second half, driven by increased contributions from cement, concrete, aggregates, masonry, joint ventures, and recent acquisitions.

Adbri shares are currently trading on a trailing 12-month dividend yield of 5.9%, which grosses up to 8.4% with the benefit of franking credits.

The post Here are 3 ASX 200 shares turning ex-dividend tomorrow appeared first on The Motley Fool Australia.

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• ASX 200 better buy: Cochlear or CSL shares?
• Goldman Sachs says these ASX shares are flying under the radar post-results
• How do CSL shares stack up against Cochlear following earnings season?
• Here are the top 10 ASX 200 shares today
• ASX 200 reporting season weekly wrap: Top risers and fallers

Motley Fool contributor Cathryn Goh 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 Cochlear Ltd. The Motley Fool Australia has recommended Cochlear 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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Exchange traded funds (ETFs) continue to grow in popularity with investors and it isn’t hard to see why.

They give investors easy and low cost access to a large number of different shares that they wouldn’t ordinarily have access to. This can be a great way to build a diverse portfolio on a limited budget.

But which ETFs could be in the buy zone now? Two high quality options for investors to consider are listed below. Here’s what you need to know about them:

Betashares Global Sustainability Leaders ETF (ASX: ETHI)

The first ETF for investors to consider is the increasingly popular Betashares Global Sustainability Leaders ETF. As you might have guessed from its name, this ETF gives investors exposure to large global stocks that have been identified as “Climate Leaders.”

To be included in the fund, a company needs to be of a high quality and, importantly, pass strict ESG screens and be identified as climate leaders.

Among the companies that have been given the tick of approval are the likes of Adobe, Apple, Home Depot, Nvidia, Toyota, and Visa.

Shaw and Partners’ analyst Felicity Thomas is a fan of this ETF. She told Livewire earlier this year: “This is one of my favourites, so it’s definitely a buy for me. I really like that they do positive carbon screening.”

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another ETF for investors to look at is the Vanguard MSCI Index International Shares ETF.

This is one of the most popular ETFs on the Australian share market with over $4 billion of funds under management.

But that’s not overly surprising given that the Vanguard MSCI Index International Shares ETF provides investors with exposure to ~1,500 of the world’s largest listed companies. This makes it a great way for investors to instantly diversify their portfolio.

Among the companies you’ll be owning a slice of with this ETF are global giants such as Apple, Johnson & Johnson, Nestle, Procter & Gamble, and Visa.

The post Here are 2 high quality ETFs for ASX investors to buy right now appeared first on The Motley Fool Australia.

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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 Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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 S&P/ASX 200 Index (ASX: XJO) has had a difficult run so far this year, tumbling 11% against a backdrop of rising interest rates and soaring inflation.

There are two key ways investors can make money from the share market: capital growth (i.e., share price rises), and dividends.

So, with capital growth taking a back seat amidst the volatility, ASX dividend shares are well and truly in the spotlight.

We know Aussies love their dividends, especially when they are fully franked.

With this in mind, I’ve rounded up the five highest-yielding ASX retail shares right now with a market capitalisation above $250 million.

Let’s check them out.

Peter Warren Automotive Holdings Ltd (ASX: PWR)

To kick things off, ASX car dealership group Peter Warren is currently sitting in fifth place.

After hitting the ASX boards last year, Peter Warren declared maiden dividends in FY22.

The group declared total dividends of 22 cents across the financial year, fully franked, with the final dividend of 13 cents set to be paid on 7 October.

Based on these dividends, Peter Warren shares are flashing a trailing dividend yield of 7.7%. Including franking credits, this yield jacks up to 11%.

JB Hi-Fi Limited (ASX: JBH)

Just edging out Peter Warren for fourth place is the nation’s largest entertainment retailer, JB Hi-Fi.

JB Hi-Fi grew its net profit after tax (NPAT) by 8% in FY22, which helped the ASX 200 retail share hike its annual dividends by 10% to $3.16, fully franked.

As a result, JB Hi-Fi shares are currently printing a trailing dividend yield of 7.7%. Throwing in franking credits dials up this yield to 11.1%.

Harvey Norman Holdings Limited (ASX: HVN)

JB Hi-Fi’s biggest rival Harvey Norman has pipped it at the post, starting off our podium finishers.

Harvey Norman delivered a marginal dip in profits in FY22. However, this didn’t stop the ASX 200 retail share from raising its annual dividends by 7% to 37.5 cents, fully franked.

At current levels, this puts Harvey Norman shares on a chunky trailing dividend yield of 8.9%, which grosses up to 12.7%.

Harvey Norman is the only ASX retailer on this list that is yet to trade ex-dividend. Its fully franked final dividend of 17.5 cents will be on offer until 13 October, before shares turn ex-dividend the following day.

This final dividend alone equates to a dividend yield of 4.1%.

Adairs Ltd (ASX: ADH)

Taking out the silver medal is homewares and furnishings retailer, Adairs.

In FY22, the company struggled to match its record results from the prior year. Cycling strong comparisons, NPAT slid by 30% to $45 million.

While Adairs kept its final dividend steady, it slashed total FY22 dividends by 22% to 18 cents, fully franked.

Nonetheless, Adairs shares are spinning up an eye-catching trailing dividend yield of 9.9%, which is boosted to 14.1% with the addition of franking credits.

Best & Less Group Holdings Ltd (ASX: BST)

Topping this list as the highest-yielding ASX retail share right now is value apparel business Best & Less.

It was a tale of two halves for Best & Less in FY22, battling COVID-19 restrictions and reduced foot traffic in the first half.

Overall, the company’s sales backtracked by 6% to $622 million, while NPAT dropped by 13% to $41 million.

In its first year as a listed company, Best & Less declared annual dividends of 23 cents, fully franked.

This means that Best & Less shares are currently trading on a meaty trailing dividend yield of 10.3%. Including franking credits, this yield cranks up to an even meatier 14.8%.

A word of caution

It’s important to note these are trailing dividend yields. As such, they reflect what’s happened in the past. 

And as we’re often reminded, past performance is not a reliable indicator of future performance. 

This can be especially true in industries such as retail, which are often overly susceptible to the peaks and troughs of the economic cycle.

ASX shares can cut their dividend payments with little to no warning.

So, heed caution on taking trailing dividend yields at face value. It’s also important to assess the sustainability of these yields into the future.

The post 5 ASX retail shares spruiking the highest dividend yields right now appeared first on The Motley Fool Australia.

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Motley Fool contributor Cathryn Goh 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 ADAIRS FPO and Harvey Norman Holdings Ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO and Harvey Norman Holdings Ltd. The Motley Fool Australia has recommended JB Hi-Fi 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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Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one of this edition, we’re joined by Jesse Curtis, fund manager of the $4.1 billion Centuria Industrial REIT (ASX: CIP), Australia’s largest domestic pure-play industrial real estate investment trust. Today, Curtis explains how the REIT achieved revenue and dividend growth in FY22 and the impact of rising inflation and interest rates on the industrial and logistics sector moving forward.

The Motley Fool: CIP reported some solid FY22 results. The REIT increased total revenue by $44 million and bumped its dividend payout by 0.3 cents to 17.3 cents per share. How did you achieve that? 

Jesse Curtis: The REIT produced a strong set of results in FY22. It comes down to the composition of this portfolio being only industrial assets that sit in urban infill markets that are land constrained and have access to a large population within a short drive time.

What that means is we own assets that are in high demand from tenants with limited competition in the market, leading to the ability to achieve strong rental growth. In owning these assets, we’ve been able to execute some great leasing across the portfolio. As well as our value add strategies.

The strong FY22 results are really a credit to our in-house management team. We’ve got a large team who focus on the industrial business, right across development, leasing and asset management. They’re out there every day, understanding our customers’ needs to get the best results for our investors.

MF: Data centres and cold storage facilities were among the big acquisitions for the REIT the last time we spoke in February 2021. What’s the outlook for data centres today?

JC: With the continuing digitalisation of the world, we’re also continuing to see significant demand from users of data centre space. Think about your mobile, your computer, or even your smart TV. Everything is now stored in the cloud. That’s created a large amount of tenant demand in the data centre market to store this data.

More specifically, on our Telstra Corporation Ltd (ASX: TLS) data centre, that asset has been linked to CPI rent review. So we’ve been able to benefit from higher indexations as a result of a higher inflationary environment. Which, in turn, delivers more revenue to the REIT.

About 20% of our total portfolio is linked to CPI rent reviews. And the balance are fixed indexations within our contract leases.

MF: And what’s the outlook for cold storage facilities?

JC: On the cold storage side, since the beginning of the pandemic we have seen the percentage of total retail sales made online in Australia increase by 50%. It’s gone from about 9% of total retail sales made online to about 15% today.

One of the biggest drivers of that has been groceries. And in particular, fresh food. Think back to the lockdowns, a lot of people adopted e-commerce to get their groceries delivered to their front door. This has resulted in needing much more storage space in order to store those fresh products. So, we’ve seen a continued uptick in the amount of space required. Again, from the increased tenant demand, resulting in higher rents and higher revenues.

MF: The CIP share price reached all-time highs on 31 December. And it was still close to those highs shortly before the RBA announced its first interest rate hike in 11 years on 4 May. Following that announcement shares fell sharply. What do you think spooked investors? 

JC: Rising interest rates and prevailing inflation have resulted in stock price adjustments right across global equity markets. So, it’s not just an industrial theme, a REIT theme, or even an Australia theme. This has been an impact globally.

MF: How do you see this developing moving forward?

JC: I think our investors understand that property is a long-term play. A lot of people view property as an inflation hedge. So, when you get a higher inflation environment, you have more chance of keeping up with inflation or potentially even outperforming inflation with property backed assets.

If you think about where CIP is trading at its current price, we’re delivering a dividend yield of over 5%. And we think that’s very attractive given the strong fundamentals we’re seeing in the industrial market.

MF: What impact has the new inflationary environment had on your short-term outlook for the logistics space? 

JC: In the short term, the outlook is increasing revenue from our inflation-linked leases. As I mentioned earlier, 20% of our portfolio is linked to CPI rent reviews.

What’s also going to happen in the short-term as inflation rises, is that it creates an environment where rents are also rising, at varying levels, across different markets. That provides really strong fundamentals for our re-leasing spreads as well.

We’ve been able to achieve 11% re-leasing spreads. What I mean by that is the difference between what the tenant was paying before their lease expired and what they’re now paying on a new lease. As a result of that, we’re seeing really strong rental growth in the market, and this is flowing through to the CIP portfolio.

MF: And have fast-rising inflation and interest rates changed your long-term outlook for industrial and logistics markets?

JC: In the longer term, the view on industrial and logistics markets is strong. Long-standing tailwinds such as the growth of e-commerce and occupiers increasing their inventory levels for supply chain resilience are providing a resilient stream of tenant demand. Couple this with limited land supply and near-zero vacancy in national industrial markets, and the outlook remains strong.

We take a very long-term view when we’re buying industrial real estate and have focused on infill markets which are set to perform the strongest from these trends. As such we’ve built a great portfolio that we believe will continue to drive very good value for our investors.

What’s also worth noting is that in a higher inflationary and interest rate environment, economic rents to build new industrial space become higher. And with the amount of demand we’re seeing coming into the logistics market, that provides further upward pressure on rents.

As an existing asset owner, CIP has a portfolio of assets valued at over $4 billion. For existing asset owners, like CIP, we’ll see the benefit of those rising rents because people are developing less space and when they do develop it is more expensive.

***

Tune in tomorrow for part two of our interview, where Centuria’s Jesse Curtis looks at the threats and opportunities for investors in listed industrial and logistics space in the year ahead.

(You can find out more about the Centuria Industrial REIT here.)

The post How this ASX 200 REIT is delivering 5% plus dividend yields: fund manager appeared first on The Motley Fool Australia.

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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 Corporation 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Tesla, Inc. (NASDAQ: TSLA) jumped as much as 2.1% Monday after some news out of Germany this weekend. The stock gave up some of that gain, but remained up by 1.2% as of 12:50 p.m. ET today.

So what

A report from German automotive news outlet Automobilwoche this weekend said Tesla is focused on doubling its sales in Germany this year compared to 2021. If the electric-vehicle (EV) leader achieves that goal, it would surpass Toyota for market share in Europe’s largest economy.

Now what

Plans to grow sales in Germany don’t come as a surprise since Tesla continues to ramp up production at its new Gigafactory near Berlin. But the goal to double sales this year, moving it ahead of Toyota in overall German car sales, is aggressive. Through August, Tesla held an overall market share of only 1.5% in Germany. 

That compares to an approximate market share of 6% for overall passenger vehicles in the U.S. this year. In its home market, Tesla sells about two-thirds of all battery EVs, according to Barron’s. 

Tesla had been supplying German customers from its Shanghai factory prior to the opening of the German plant earlier this year. The company sold approximately 40,000 EVs in Germany last year. To hit 80,000 this year, Tesla would need to sell another 55,000 over the final four months of 2022. That volume would edge out Toyota’s estimated 75,000 vehicle sales in Germany this year. 

Investors are pushing the stock higher today partly because that achievement would be great news for the progress in ramping up the German Gigafactory. Earlier this year, CEO Elon Musk said that factory, along with its new Texas plant, were burning cash and having to throttle back production due to supply chain constraints. Tesla investors would like nothing more than to find out the two new facilities are cranking out vehicles and contributing to higher profitability. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares moved higher Monday appeared first on The Motley Fool Australia.

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Howard Smith 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 Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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