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.

Every so often, a company comes along and has so much success that many investors end up retiring millionaires by simply going along for the ride. Apple (NASDAQ: AAPL) is one of those companies. The tech giant has seen success matched by very few in history, and it has been rightfully earned. After all, it has world-class products, top-tier brand loyalty, and a bank account that other companies can only dream of having.

Past results are great, but a company’s future outlook should be driving investing decisions. And although it’s the largest public company in the world with a market cap of over $2.4 trillion — more than Amazon, Berkshire Hathaway, and Tesla combined — there’s still room for noticeable growth for Apple.

Here’s why it’s a must-own for 2023.

Apple is just getting started in the finance industry

Apple first began its journey into the financial services space in 2014 with the announcement of Apple Pay, which allowed people to pay from their iPhones. However, this move was seen as more about convenience than Apple making its way into the space. Then came 2019 and the announcement of the Apple Card — a sign Apple was clearly taking a step in that direction.

With the Apple Card, Apple relied on Goldman Sachs to approve applications and fund the loans, which is why when they announced Apple Pay Later — their move into the buy now, pay later space — it was no longer a mystery whether Apple was serious about becoming a player in the financial services industry. Apple Pay Later is the first time Apple is underwriting and funding loans by itself.

Apple has an advantage that no other financial institution can duplicate: Its iPhone is in more than 100 million hands in the US. Between the iPhone’s world-class technology and the convenience it can provide, the company’s play into the financial services space is bound to test even the most formidable of financial technology (fintech) competitors.

The iPhone still reigns supreme

The iPhone is arguably the greatest consumer product ever made; it has quite literally changed the world. Apple reportedly spent over $150 million developing the original iPhone, and to say they’ve reaped the returns on their investments would be the understatement of the century. In its 2022 fiscal year, Apple brought in $394.3 billion in revenue — roughly $28.5 billion more than it did in 2021. The iPhone accounted for more than half of that, bringing in $205.4 billion.

The fact that the iPhone managed to increase its sales in a year defined by inflation not seen in decades is very telling of its power. In fact, this year was the first time ever that more people in the US used an iPhone than an Android phone. That’s a remarkable milestone when you consider the iPhone’s market share growth and much higher price point.

As long as the iPhone is padding Apple’s bottom line, there’s no reason to believe it won’t continue to be one of the biggest cash cows you’ll see from any business in any industry.

Apple is ramping up its research and development

Apple has historically spent a smaller portion of its revenue on research and development (R&D) than its other Big Tech competitors like Alphabet and Amazon. In 2020, here’s how much the three companies spent on R&D and the percentage that was of their net sales:

• Alphabet: $27.6 billion (15%)
• Amazon: $42.7 billion (11%)
• Apple: $18.8 billion (7%)

In 2021, Apple’s R&D budget increased to $21.9 billion, and in 2022, it jumped up to $26.2 billion — a company record. Although this still represents a relatively low percentage of Apple’s revenue, it’s a sign the company isn’t getting complacent and is putting more emphasis on taking advantage of potential growth opportunities.

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

The post Is Apple a must-own US stock in 2023? appeared first on The Motley Fool Australia.

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• 3 reasons to buy Amazon stock right now
• Down 17%, is Apple stock a buy now
• Should you back up the truck and load up on Amazon stock?
• Will the Nasdaq or S&P 500 have a better 2023?
• What Warren Buffett can teach us about handling bear markets

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stefon Walters has positions in Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), and Goldman Sachs. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Berkshire Hathaway (B shares). 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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Is a stock market crash coming for us in 2023?

It’s no secret that 2022 has been a rough-and-tumble year for ASX shares and the share market. As we sit on the cusp of December, the S&P/ASX 200 Index (ASX: XJO) remains down by 4.34% year to date in 2022 thus far, with many swings and roundabouts along the way.

Much of these market gyrations have been caused by central banks and inflation. As inflation around the world rose to decades-high levels in some cases, central banks like our own Reserve Bank of Australia (RBA) have been aggressively jacking up interest rates this year.

Rising rates are hugely detrimental to share markets, seeing as they reduce the appeal of having money in ‘risky‘ assets like shares. That’s partly why we have seen such temperamental markets this year.

But could this be just a warning of what’s to come in 2023? Could we really see a stock market crash next year?

That’s a prospect that will probably terrify at least some investors out there. Stock market crashes can be scary, brutal events, and wealth-destroying ones at that if approached in the wrong way.

And it’s one that Deutsche Bank is predicting will turn out to be accurate.

Investment bank predicts stock market crash for 2023?

According to reporting from the ABC this week, Deutsche Bank is warning that central banks’ efforts to reduce inflation will “come at a significant global cost”. The investment bank warns that “it will not be possible to [reduce inflation] without at least moderate economic downturns in the US and Europe, and significant increases in unemployment”.

The bank predicts that a stock market crash is almost certain to accompany these downturns:

We see major stock markets plunging 25 per cent from levels somewhat above today’s when the US recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters.

A stock market crash is conventionally defined as a drop in a share market of 20% or greater, usually in a short space of time. So this seems to be what Deutsche Bank is predicting for 2023.

So should we all sell out now and run for the hills?

Well, a few points. Firstly, no one knows what the markets will do tomorrow, let alone next month or next year. Not you, I, Warren Buffett or Deutsche Bank.

So while it’s possible Deutsche Bank’s predictions come true, it’s also possible that they are wildly off. Predictions of a market crash are always a dime a dozen in the world of investing, and occur regularly, despite what the share market is doing. Very few turn out to be piercingly accurate.

Buffett loves a bargain, so should you

But even if there is a share market pullback or crash next year, it could be a red-hot opportunity for savvy investors. Stock market crashes can be scary, confidence-sapping, and traumatic. But they also represent a rare opportunity to pick up some of the best shares on the market at a bargain basement price.

When there is widespread fear in the markets, investors tend to throw everything out the window, not just the worst-hit poor performers. That’s why investors like Warren Buffett love a crash. It gives them the chance to make some life-changing investments.

Remember the stock market crash of 2020? That saw BHP Group Ltd (ASX: BHP) drop to under $27 a share. Today, it’s over $45.

Commonwealth Bank of Australia (ASX: CBA) got down to $57 or so in March 2020. Now it’s back over $108 a share today.

So remember that if there is indeed a crash next year. It could be the best thing that has ever happened to your portfolio, if you let it.

The post Is a stock market crash coming for us in 2023? appeared first on The Motley Fool Australia.

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• ASX 200 lifts on lower-than-forecast inflation data
• Woolworths shares: To buy or not to buy?
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is back in positive territory in early afternoon trade.

The benchmark index was 0.4% lower this morning but has reversed that trend and is currently up 0.2% to 7,270 points.

The ASX 200 looks to have received this boost following the latest inflation data just released by the Australian Bureau of Statistics (ABS).

Why is the ASX 200 lifting on the ABS report?

Inflation in Australia remains high.

Indeed, the ABS reported that the monthly Consumer Price Index (CPI) indicator increased by 6.9% in the year to October 2022.

But the ASX 200 is rallying as this came in lower than the prior month, indicating that the series of interest rate increases from the Reserve Bank of Australia (RBA) may be having an impact.

Should inflation begin to slow significantly, investors can expect fewer rate rises from the central bank. And a more dovish RBA spells good news for equities.

Commenting on the latest data, Michelle Marquardt, ABS head of prices statistics, said:

This month’s annual movement of 6.9% is lower than the 7.3% movement in September, however CPI inflation remains high… High levels of building construction activity and ongoing shortages of labour and materials contributed to the rise in new dwellings.

The ABS reported that the biggest contributors to inflation in October were new dwellings (+20.4%), automotive fuel (+11.8%) and fruit and vegetables (+9.4%).

ASX tech shares rallying

ASX tech shares have seen some of the biggest reversals since the intraday release of the ABS inflation data.

Tech shares are particularly vulnerable to higher interest rates, as many of these companies are priced with future earnings in mind. And when interest rates ratchet higher, so too does the present cost of investing in those future earnings.

While the ASX 200 leapt from a 0.4% loss to a 0.2% gain on the inflation report, the S&P/ASX All Technology Index (ASX: XTX) went from a 0.9% loss to a 0.3% gain.

The post ASX 200 lifts on lower-than-forecast inflation data appeared first on The Motley Fool Australia.

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• Is a stock market crash coming for us in 2023?
• Woolworths shares: To buy or not to buy?
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• Why this ASX 200 dividend share could be an income gold mine hiding in plain sight

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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The Woolworths Group Ltd (ASX: WOW) share price has been a rather disappointing ASX 200 share over 2022 thus far. Woolworths shares have spent the year losing value. At the start of 2022, this supermarket giant was going for almost $38.50 a share.

But today, Woolies shares are asking just $34.52 at the time of writing, down a nasty 1.43% for the day thus far. That puts Woolies’ year-to-date losses at a painful 10.35%. That’s well over the broader S&P/ASX 200 Index (ASX: XJO)’s loss of 4.34%.

This might be a bit of a letdown for many investors. After all, Woolworths, as an ASX 200 consumer staples share, is supposed to be an inflation-resistant investment. Not to mention one that holds up well during times of economic uncertainty – a scenario that accurately describes this calendar year.

Woolworths shares: Inflation killer or not?

A possible explanation for this disappointing performance comes from Firetrail Investments’ Blake Henricks. As we covered yesterday, Henricks believes Woolworths’ reputation as an inflation hedge is overcooked. Here’s some of what he said:

It’s very stable, it’s very good, but our view is that supermarkets aren’t going to be huge winners from inflation. To date, that’s been proven to be true because they’ve struggled to pass through some of those costs and we haven’t seen big earnings upgrades.

And the multiples are fairly extended because people are gravitating towards those defensive sectors. So if there’s one I’d call out, it’d be supermarkets as a controversial loser from inflation.

So are Woolworths shares worth buying today in light of this rather poor performance over 2022?

Well, one broker still thinks so. As my Fool colleague James went through earlier this month, ASX broker Goldman Sachs is so bullish on Woolworths shares that it gave the grocer a conviction buy rating. It also slapped a 12-month share price target of $41.70 on the company. That implies a potential upside of almost 21% from today’s pricing.

Goldman acknowledges that Woolies had a soft quarter last month. But it still remains confident that the company has “a clear growth pathway to deliver ~3% sales and ~9% [net profit after tax growth]” until at least FY2025.

So a mixed review for Woolies shares today from these two ASX experts. Only time will tell who ends up being right.

In the meantime, the current Woolworths share price gives this ASX 200 blue chip share a dividend yield of 2.66%.

The post Woolworths shares: To buy or not to buy? appeared first on The Motley Fool Australia.

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• Almost ready to retire? I’d buy ASX dividend shares now to capitalise on a stock market recovery
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• 5 things to watch on the ASX 200 on Wednesday
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Macquarie Group Ltd (ASX: MQG) share price is up slightly at $178.44 in lunchtime trading, 0.25% above yesterday’s closing price. Over the year to date, Macquarie shares are down 16%.

Not to worry, says this fund manager. He reckons Macquarie is an “obvious” pick for investors due to the high quality of its business. Plus he thinks the Macquarie share price will outperform in the medium term.

Green energy infrastructure to boost Macquarie share price

Australian Eagle Asset Management chief investment officer Sean Sequeira said Macquarie is a quality business that the fund has held since 2013.

He writes on Livewire:

The positive view on the company would seem obvious…

In terms of the Australian Eagle process, we try to determine, not just the quality of the company, but the changes that are evidently taking place that may drive an improvement in earnings growth and/or quality of those earnings.

Sequeira said this is the second time Australian Eagle has taken a position in Macquarie shares. Last time they held Macquarie, they sold it in 2007 before the global financial crisis struck.

At its highest point in 2007, the Macquarie share price was trading at about $95. This followed a phenomenal 460% increase since listing on the ASX in 1999.

Then in 2013, Australian Eagle bought back in when Macquarie sold its Sydney Airport holdings “to recycle this investment into less capital-intensive but higher-returning assets”.

The fund liked this pivot by Macquarie management, saying:

This redeployment of capital confirmed management’s willingness and ability to meaningfully adjust the company’s portfolio into higher returning exposures.

The change in corporate focus and subsequent improving Return on Equity (RoE) metrics provided us with the improvement in quality that we needed to see for the stock to command a position in our portfolio.

Fund has higher conviction in Macquarie shares today

Sequeira said the fund has a higher conviction and investment in Macquarie shares this time around.

A big factor giving them confidence in Macquarie shares was the 2.3 billion pound acquisition of the United Kingdom’s Green Investment Bank Limited in 2017.

At the time, Green Investment Bank was a leading investor in green infrastructure in the UK and Europe.

Sequeira said the acquisition was “likely to support an acceleration in earnings growth”.

Today, he reckons Macquarie is “the market leader in infrastructure projects for both financial advice and as a fund manager”.

Macquarie FUM could grow by 20%

Sequeira points to Macquarie’s 1H FY23 results announced last month. The numbers showed $30 billion in committed funds management equity waiting to be spent.

Sequeira said:

This means Macquarie’s Real Asset FUM has the potential to grow by 20 per cent as deals are consummated.

This is further evidence that the structural nature of energy transition infrastructure spending supported by international government policy is expected to support a stronger medium term earnings growth profile.

He believes these tailwinds should result in medium-term outperformance for the Macquarie share price.

The post Positive view on Macquarie shares ‘would seem obvious’: fundie appeared first on The Motley Fool Australia.

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• ‘Back a winner’: Expert names his 3 best ASX shares for 2023
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Motley Fool contributor Bronwyn Allen has positions in Macquarie Group 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 Macquarie Group 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 Woodside Energy Group Ltd (ASX: WDS) share price is down 0.92% at lunchtime on Wednesday, at $36.49 per share.

It marks a partial recovery from its low of $35.71 this morning, a 3% drop on yesterday’s closing price.

Unless there’s an afternoon reversal in the selling trend, today will mark the fifth consecutive day of losses for the S&P/ASX 200 Index (ASX: XJO) oil and gas stock darling. All told, that’s left the Woodside down almost 6% since the closing bell on Tuesday, 22 November.

So, what’s going on?

What are ASX 200 investors considering?

The Woodside share price has been hit on two fronts over the past week.

First, there’s the oil price.

Tuesday last week was the last time the Woodside share price closed in the green. At the time, Brent crude oil was trading for US$88.36 per barrel.

But oil prices have come under pressure over the week. Today that same barrel of oil is worth US$83.03, down 6%.

The fall has been largely driven by concerns that the spike in COVID infections in China, combined with the nation’s strict COVID zero lockdown policies, will see a fall in energy demand from the world’s most populous nation.

The second headwind hitting the Woodside share price over the past week looks to be the release of the company’s FY23 guidance yesterday. This marks the first full year of production since its petroleum transaction with BHP Group Ltd (ASX: BHP).

Woodside forecast production of 180-190 million barrels of oil equivalent (MMboe) for the full financial year, which came in lower than consensus expectations.

And as my Fool colleague James Mickleboro pointed out:

Woodside recently delivered third quarter production of 51.2 MMboe, which annualises to 204.8 MMboe. So, investors could be a touch underwhelmed with FY 2023’s production guidance

Woodside share price snapshot

Despite the past five days of selling, the Woodside share price remains up an impressive 68% over the past 12 months. That compares to a flat full-year performance by the ASX 200.

The post The Woodside share price has dropped for 5 days in a row. What’s going on? 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 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 AGL Energy Limited (ASX: AGL) share price has added 16% over the course of November so far. And it did so amid plenty of excitement.

After closing October at $6.81, the energy provider’s stock lifted to trade at $7.93 today – marking a 16.45% gain.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has lifted just 5.27% over the last 30 days. That leaves the stock having outperformed the index by 11.18% in that time.

Let’s dive into all the drama that occurred at the 180-year-old energy company over the course of November.

What went right for the AGL share price in November?

Three major happenings likely drew investor attention to AGL this month. Perhaps the most notable was the company’s annual general meeting (AGM). There, billionaire shareholder Mike Cannon-Brookes secured a second win over the AGL board.

All four nominees for the company’s board put forward by the Atlassian Corp (NASDAQ: TEAM) co-founder and co-CEO were elected by shareholders despite only one being recommended by AGL.

The win could insinuate investors may be more aligned with Cannon-Brookes’ vision for the company’s future than that of its board. The billionaire previously urged shareholders to vote for the four nominees, saying:

John Pollaers, Kerry Schott, Mark Twidell, and Christine Holman have no alignment with [Cannon-Brookes’ investment vehicle] Grok other than broadly agreeing with our view – and that of AGL shareholders – that this transition needs to occur as quickly as possible and with an ambition for AGL to lead Australia’s energy transition.

The company also received a first strike on its remuneration report, with more than 25% of shareholders voting against it.

Another major happening likely putting AGL shares in the spotlight this month was a proposal offered to Origin Energy Ltd (ASX: ORG).

And who was behind the asking? A consortium including none other than former AGL suitor Brookfield Asset Management.

Finally, the AGL share price slipped 1% on news the company plans to close its Torrens Island ‘B’ Power Station in 2026 last week. The South Australian asset will be transformed into a low-carbon industrial energy hub.

Coming into the end of November, the AGL share price is 26% higher than it was at the start of 2022. It has also gained 47% since this time last year.

Comparatively, the ASX 200 has dumped 4% year to date and is trading flat year-on-year.

The post How did the AGL share price outperform the ASX 200 by 11% in November? appeared first on The Motley Fool Australia.

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• Are AGL shares a good investment right now?
• Here are the top 10 ASX 200 shares today
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• 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 Atlassian. 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 Mayne Pharma Group Ltd (ASX: MYX) share price is having a day to forget.

At the time of writing, the pharmaceutical company’s shares have crashed 27% to a multi-year low of 20 cents.

Why is the Mayne Pharma share price crashing?

Investors have been selling down the Mayne Pharma share price on Wednesday following the release of a trading update at the company’s annual general meeting.

According to the release, the company’s revenue has fallen sharply during the first four months of FY 2023.

For the four months ended 31 October, Mayne Pharma’s revenue from continuing operations came to $59 million. This is down 29.5% over the prior corresponding period. This is despite the company generating $6.3 million in revenue from its new Nextstellis product, which wasn’t on sale a year ago.

The main drag on its performance has been dermatology sales in the Portfolio Products segment. This weakness has offset sales growth from retail generics and led to Portfolio Products revenue almost halving during the four months.

Management blamed this on higher than expected sales and channel inventory levels in June 2022, discontinued products, and higher gross to net charges. The latter includes patient savings (copay card costs).

Outlook

Management’s outlook for the remainder of the half also appears to have spooked investors and put pressure on the Mayne Pharma share price.

It advised that first half cash and earnings are expected to be impacted by a number of items. This includes normalised trading patterns with suppliers and customers, higher than expected copay card costs in dermatology, and a Nextstellis direct to consumer campaign in the US.

Though, one positive is that its focus on driving improved profitability and cash flow is expected to lead to a return to positive EBITDA in FY 2024.

Time will tell if that is the case. Nothing Mayne Pharma has done in recent years appears to have gone to plan. As a result, its shares are now down over 90% from 2016’s highs.

The post Why is this ASX All Ords share crashing 27% today? appeared first on The Motley Fool Australia.

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• The Woodside share price has dropped for 5 days in a row. What’s going on?
• How did the AGL share price outperform the ASX 200 by 11% in November?
• A recession could be inevitable. Don’t panic — do this instead
• Why is the Whitehaven share price surging 7% on Wednesday?
• Almost ready to retire? I’d buy ASX dividend shares now to capitalise on a stock market recovery

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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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.

Before the start of 2022, the prior 13 years had been nothing short of remarkable for investors. The broad-based S&P 500, which is typically viewed as the best indicator of health for both the U.S. economy and the stock market, surged 600% from its Great Recession low. That’s a compounded rate of return of 17.7% annually.

As the old saying goes, though, what goes up, must come down. Year to date, the broad market index has lost 16%, and all the signs are pointing to the economy sliding into an official recession early next year.

Although we recently endured two consecutive quarters of gross domestic product (GDP) contraction, the rule of thumb many use for a recession, the National Bureau of Economic Research says the definition is much less specific. It looks for “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

We may be getting that soon. Perhaps the surest sign of a recession is on the way was Amazon and FedEx both announcing they were preparing to lay off tens of thousands of workers before Christmas. Still, there is no reason for you to panic.

The gathering storm

The Dallas branch of the Federal Reserve just released its latest regional report showing that its new orders index tumbled to a reading of negative 20.9 in November, making this the sixth straight month in negative territory and the lowest point since May 2020 during the depths of the pandemic. New order growth rates, capacity utilization, and shipments have all deteriorated for multiple months.

Manufacturers in the Fed survey had a mix of dour comments. One food manufacturer, for example, noted that while demand was still present, “there is just no cash to buy food.” While a machinery manufacturer pointed to continued supply chain problems, a miscellaneous manufacturer said, “Our order backlog is growing because we cannot buy electronic components at any price.”

One metal manufacturer declared, “Recession is coming! We are just waiting for the backlog to evaporate. Then layoffs start.”

Indeed, JPMorgan Chase‘s Jamie Dimon said in October he expected the U.S. to fall into a recession within the next six to nine months because a “very, very serious” combination of problems would be buffeting businesses; inflation has risen to such a degree that the Federal Reserve is now overcorrecting to rein it in by drastically raising interest rates.

The silver lining amid the clouds

This is scary stuff, and investors do need to protect themselves, but not by burying their heads in the sand and hoping the storm blows over. Pulling all your money out of the stock market and stuffing it in a mattress is not a winning strategy.

As savvy investors know, market downturns are unique buying opportunities because former high-flying stocks are now available at far more reasonable valuations. But if a recession is coming, those high-flyers may still have further to fall.

Certainly, dollar-cost averaging is a worthwhile strategy to deploy, buying shares in good stocks with solid long-term potential that continue to fall. It means you acquire more shares when they’re cheap and fewer when they’re more expensive, all the while establishing a stake in a business that will rally when the storm passes.

Another option is to buy dividend stocks, which helps protect your portfolio as stock prices fall.     

Unparalleled opportunity

The asset managers at Hartford Financial Services looked at the performance of the S&P 500 going all the way back to 1930 and found that dividends contributed 40% to the total return of the index over that 91-year period.

They also found that from 1960 on, dividends represented an amazing 84% of the index’s total return. Moreover, reinvesting dividends in the benchmark index, coupled with the power of compounding, would have turned a $10,000 investment into more than $4.9 million compared to just $795,823 that grubstake would have become based just on the index’s price alone.      

Even more remarkable, there has not been a single decade in which dividend stocks in the index didn’t generate positive returns, even when the broader market was losing money for investors. That includes the so-called “lost decade” of the 2000s when the S&P 500 produced negative returns, but dividend-paying stocks in the index produced 1.8% positive returns.

Fortify your portfolio now with dividend stocks

Market corrections, bear markets, and recessions can all be painful times. It behooves investors to remain calm during such periods of turmoil and look at how to make lemonade from the lemons they’ve been handed.                                    

As Warren Buffett has said, be fearful when others are greedy, and greedy when others are fearful. That doesn’t mean buying stocks willy-nilly, but targeted investments like those that pay dividends will benefit you over the long haul. 

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

The post A recession could be inevitable. Don’t panic — do this instead appeared first on The Motley Fool Australia.

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• Why is the Whitehaven share price surging 7% on Wednesday?
• Almost ready to retire? I’d buy ASX dividend shares now to capitalise on a stock market recovery
• Why is the Rio Tinto share price marching higher again today?
• Why did the CBA share price jump to a 52-week high in November?
• 3 reasons to buy Amazon stock right now

Rich Duprey has no position in any of the stocks mentioned. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, FedEx, and JPMorgan Chase. The Motley Fool Australia has recommended Amazon. 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 Whitehaven Coal Ltd (ASX: WHC) share price is among the best performers on the ASX 200 index on Wednesday.

In morning trade, the coal miner’s shares are up 7.5% to $9.96.

This means the Whitehaven Coal share price is now up over 250% since the start of the year.

Why is the Whitehaven Coal share price charging higher again?

Investors have been buying the coal miner’s shares today after the company was the subject of a couple of bullish broker notes.

One of those notes came from the team at Morgans, which has retained its add rating with a slightly trimmed price target of $11.20.

Based on the current Whitehaven Coal share price, this implies potential upside of 12.5% over the next 12 months.

But Morgans doesn’t expect the returns to stop there. It has pencilled in a massive fully franked $1.15 per share dividend in FY 2023, which equates to an 11.5% yield for investors.

Morgans likes the company due to its significant cash flow generation thanks to strong coal prices. It commented:

For investors, we see strong potential for a prolonged energy market dislocation where supply security commands a higher premium for longer. WHC is trading on a +30% free cash flow yield, with clear upside earnings/valuation risk, supporting further outsized shareholder returns over time.

Who else is bullish?

Another broker that sees further upside for the Whitehaven Coal share price is Bell Potter.

This morning the broker upgraded the company’s shares to a buy rating and lifted its price target on them to $11.00. This suggests potential upside of 10.5% over the next 12 months.

And like Morgans, Bell Potter is expecting a big dividend. It is forecasting a 96 cents per share fully franked dividend in FY 2023, which equates to a 9.6% yield for investors.

Its analysts are positive on Whitehaven Coal due to their belief that coal prices will stay high in the near term and drive strong earnings and dividend payments. The broker commented:

Upside risk to pricing across the energy complex in the northern hemisphere winter, exacerbated by sanctions on Russian supply, are the key drivers of our strong coal price, near-term WHC earnings and dividend outlook and recommendation upgrade.

The post Why is the Whitehaven share price surging 7% on Wednesday? appeared first on The Motley Fool Australia.

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More reading

• Broker says this ASX 200 coal share could offer a market-beating 29% return in 2023
• 5 things to watch on the ASX 200 on Wednesday
• Morgans tips these ASX 200 shares to jump 20%
• Up 240% in 2022, is it time to cash in the chips on Whitehaven shares?
• 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 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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