There are a number of S&P/ASX 200 Index (ASX: XJO) lithium shares that have shot higher in 2022.

As resource businesses, investor sentiment is quite heavily linked to how the commodity price performs. If the lithium price goes up, that can largely add to profitability. That’s because it still costs the same to get the resource out of the ground, but the extra revenue falls to the bottom line.

The lithium price has been climbing this year as demand continued to outstrip supply. Lithium is a key commodity in the production of electric vehicles.

ASX 200 lithium shares are not known for being dividend payers. Of course, it’s usually names like BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) that have the big dividend yields.

However, after a period of developing their projects and ramping up production, the lithium miners are now raking in the cash flow from the higher lithium prices.

With that in mind, it’s possible that the below two names could start dishing out sizeable dividends to shareholders.

Pilbara Minerals Ltd (ASX: PLS)

The company recently announced it was planning to start paying a dividend to investors.

It said that favourable market conditions and “strong” operating margins support the establishment of a capital management framework. Additionally, this will include an inaugural dividend policy. In the most recent Battery Material Exchange (BMX) platform auction, the highest bid was US$7,805 per dry metric tonne (dmt).

The idea behind this was to establish an “appropriate structure that prudently allocates available capital between investment into the existing business, sustainability commitments, strategic growth opportunities, as well as the provision of sustainable returns to shareholders”.

The ASX 200 lithium share has built up a cash balance of $1.375 billion at 30 September 2022. It’s going to target a dividend payout ratio of between 20% and 30% of free cash flow. What’s more, this will start in FY23 (the current financial year).

This dividend payout ratio intends to “provide a sustainable dividend return to shareholders, but also reflects the early stages of Pilbara Minerals’ growth cycle”.

According to estimates on CommSec, it could pay a grossed-up dividend yield of 4.6% in FY24.

Mineral Resources Limited (ASX: MIN)

Mineral Resources is a part iron ore, part ASX 200 lithium share. It has been paying dividends to shareholders for years. However, it’s possible that the dividend could soar higher in the next couple of years as the company’s growth projects come online.

The business is working on a number of things to try to boost its profitability in the future. For example, on the lithium side of things, it’s looking to double the Mt Marion capacity, ramp up the Kemerton hydroxide plant, convert spodumene to hydroxide and evaluate hydroxide development opportunities. It’s targeting 118kt per annum of hydroxide production.

While this is a lithium article, I’ll note that Mineral Resources also wants to increase its iron ore production.

CommSec numbers suggest that by FY24, the company could be paying a grossed-up dividend yield of 7.2%. On the broker Macquarie’s numbers, FY24 could see the ASX 200 lithium share pay a grossed-up dividend yield of 15.5%.

The post Are these ASX 200 lithium shares about to become dividend machines? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 shares with enormous insider ownership
• These are the ASX dividend shares to buy now: Goldman Sachs
• 5 things to watch on the ASX 200 on Wednesday
• Why is the Renascor Resources share price rocketing 46% this month?
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals 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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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.

It has been a challenging year for investors, but we can all take heart in the fact that some of the world’s most renowned investors are finding opportunities in the bear market and are initiating positions in new stocks.

These billionaires have long track records of building significant wealth, and according to the latest 13F filings, they were all adding new positions during the third quarter. Let’s look at three interesting new buys that billionaires made during the period.  

1. Warren Buffett: Taiwan Semiconductor 

Warren Buffett is arguably the most renowned investor of all time, so anytime his Berkshire Hathaway initiates a new position, it makes a splash within the investment community. His newly revealed position in Taiwan Semiconductor Manufacturing Company (NYSE: TSM) went a step further and made waves because the $4 billion investment instantly becomes a top-10 position for Berkshire.  

Buffett has said that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. TSMC seems to be both a wonderful company and available at a wonderful price. The company has a significant moat in that it makes some of the world’s smallest and most advanced computer chips.

Not many companies can simply set up shop and start competing with it. Apple, Buffett’s largest holding, is TSMC’s largest customer and the chipmaker is considered such an important supplier that it is building a foundry in Arizona to serve Apple further. Outside of Apple, Taiwan Semiconductor serves an array of end markets including artificial intelligence, high-performance computing, Internet of Things-enabled devices, and the automotive sector.

The stock is down 33% year to date as investors worry about an oversupply of semiconductors in the market. But this sell-off created an attractive price for Buffett. The stock trades for just 14 times forward earnings. While TSMC is down year to date, Buffett and his team recognize that semiconductor demand will continue to increase over the long term as chips go into more devices. As a leader in such an industry trading at an attractive valuation, it looks like a great long-term investment.    

2. Seth Klarman: Lithia Motors

While it’s not quite as catchy or alliterative as “the Oracle of Omaha,” Seth Klarman is sometimes called “the Oracle of Boston.” And Klarman, the portfolio manager of Baupost Group, is a noted value investor in his own right.

He founded the hedge fund in 1982 and has grown it to over $31 billion in assets under management. Klarman is notable in that he is a hedge fund manager who doesn’t even own a Bloomberg Terminal because he is unbothered by day-to-day price changes, which is a good lesson for all investors.

During the third quarter, he initiated a position in Lithia Motors (NYSE: LAD),  an Oregon-based company with a growing network of auto dealerships across the United States and Canada. Given Klarman’s penchant for value investing, it’s not surprising that Lithia Motors caught his eye. The stock has returned nearly 500% over the past decade, but after a 25% decline year to date in 2022, it trades at just 5 times earnings, which is music to Klarman’s ears.

The stock is down because investors are concerned about a cooling auto market and a slowing economy, but a long-term investor like Klarman recognizes that Lithia has grown earnings at an impressive 32% compound annual rate over the past 10 years. During the most recent quarter, Lithia reported the highest revenue and earnings per share (EPS) in its history.

Its goal is to grow EPS to $55 or more by 2025, up from about $45 today. Given Lithia’s track record, this seems like a credible target. It also returns considerable capital to shareholders via share repurchases and a small dividend. As the company continues to grow earnings and deliver buybacks and payouts, Lithia looks poised for solid returns over the long term.

3. Bill Gates: Waste Connections

While Bill Gates is best known as the founder of Microsoft, the Bill and Melinda Gates Foundation also has a $34 billion investment portfolio. Buffett is a trustee for the foundation, so Gates is getting insight from one of the best in the business. 

During the third quarter, Gates started a $290 million position in Waste Connections (NYSE: WCN), making the waste collection company a top-10 holding. While waste collection isn’t the most glamorous industry, it is resilient as an essential business that customers rely on no matter what type of market we are in. Gates seems to appreciate that durability — Waste Management (NYSE: WM) is another one of his largest holdings.

Waste Connections isn’t cheap at 24 times forward earnings, but this defensive stock has vastly outperformed the broader market in 2022 with a 3% gain year to date, while the S&P 500 and Nasdaq are deep in the red. The company has handled inflationary pressures on fuel and labor well, and is guiding to higher EPS, revenue, and free cash flow in 2023. In a volatile market, there’s something to be said for this type of consistency and stability. Waste Connections looks like a great choice for investors wanting to preserve their capital with a high-quality defensive stock.       

While investors should always do their own due diligence, it’s never a bad idea to study what some of the best investors are doing and to look for new ideas based on their buys. Billionaire money managers also wisely know that market pullbacks are buying opportunities over the long run.

All three of these stocks that billionaires bought last quarter look like good long-term investments, with Taiwan Semiconductor and Lithia Motors standing out based on their attractive valuations.  

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

The post 3 US stocks billionaires bought last quarter appeared first on The Motley Fool Australia.

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• 3 ASX 200 shares with enormous insider ownership
• Add these ASX 200 shares to your retirement portfolio: experts
• Could these be the best ASX growth shares to buy now for 2023?
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• These are the ASX dividend shares to buy now: Goldman Sachs

Michael Byrne 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 Apple, Berkshire Hathaway (B shares), Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Waste Management and 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 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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There are many factors and characteristics I look at when it comes to analysing ASX shares.

I like to understand the business inside and out. Identify if the company has any sustainable competitive advantages. Dig into the industry landscape, various growth drivers, and key risks.

But another important consideration is the management team.

And when it comes to assessing who’s steering the ship, one big tick in my book is skin in the game.

When a management team holds a meaningful chunk of shares in the business they’re running, it helps to align their interests with shareholders. After all, their money is on the line as well.

With this in mind, here are three ASX 200 shares boasting significant insider ownership.

Reece Ltd (ASX: REH)

First up, we have an ASX 200 share with a history that dates all the way back to 1920, when H.J. Reece started selling hardware supplies from the back of his truck. Later that year, he opened the very first Reece store in Caulfield, Victoria.

In 1969, on the same day that humans first stepped on the moon, the Wilson family became majority shareholders in Reece. And from here, a beautiful partnership was formed.

Fast forward half a century and Reece is a leading distributor of plumbing and HVAC-R products through more than 800 branches in Australia, New Zealand, and the United States.

Three generations of the Wilson family have been involved in taking Reece to new heights. The company is currently led by Peter Wilson. Meanwhile, his father Alan, who held the CEO reins for 40 years, remains an executive director on the board.

Over the years, there have been many family members involved in the business, several of whom hold shares through various investment vehicles. This makes it hard to pinpoint the exact number of shares held by the Wilson family, as various shareholding notices and disclosures often relate to the same shares.

But from Reece’s 2022 annual report, we know that the Wilsons hold interests in at least 362 million Reece shares. This represents roughly 56% of the company and is worth a monstrous $5.4 billion at current prices. 

Over the last 10 years, Reece shares have delivered share price gains of around 250%, not to mention consistent dividend income. 

Netwealth Group Ltd (ASX: NWL)

Next up, Netwealth is another ASX 200 share with strong family ties. 

With a passion for finance and building businesses, Michael Heine launched the wealth management platform in 1999.

Positioning itself as a superior, independent alternative to the incumbent platforms, such as those offered by AMP Ltd (ASX: AMP) and BT, Netwealth has shaken up the industry.

Today, it’s the fastest-growing platform provider by net funds flows in Australia. In the 12 months to June 2022, it accounted for 45% of industry net funds flows, raking in $13 billion. 

It’s a family affair at Netwealth, with Michael and his son Matt sharing the reins as joint managing directors.

Together, the pair hold combined interests in nearly 128 million Netwealth shares, representing roughly 52% of the business. With Netwealth shares last closing at $13.92, these holdings are currently worth a whopping $1.8 billion.

Since listing on the ASX almost five years ago to the day, Netwealth shares have soared 160% whilst also paying out dividends along the way.

Lovisa Holdings Ltd (ASX: LOV)

Last but not least, ASX 200 jewellery retailer Lovisa also boasts strong insider ownership. 

The company began in 2010 when former CEO Shane Fallscheer spotted a gap in the market for on-trend fashionable jewellery at ready-to-wear prices. 

Prior to this, Fallscheer had been managing Diva, a tween jewellery chain owned by veteran retailer Brett Blundy. Diva was growing quickly but its narrow, young customer demographic meant there were question marks over the company’s long-term sustainability.

So, Fallscheer came to Blundy with a proposal for Lovisa. And the rest is history.

In the years that followed, Diva’s stores were either closed down or rebranded to Lovisa, which had discovered a sweet spot in the market.

Today, Lovisa is truly a global force, with a network of 676 stores across 26 countries. Its store rollout and international expansion continue at pace, with the ASX 200 retailer on track to open its first stores in Italy, Mexico, and Hungary in the coming weeks.

After leading the company for 12 years, Fallscheer stepped away from Lovisa in 2021 and has sold his shares. 

But Blundy continues to chair the board and through his private investment company, BB Retail Capital, he retains a hefty 40% stake in Lovisa.

This stake seems to be getting more valuable by the minute, with the Lovisa share price going from strength to strength. It’s been able to brush aside concerns of rising interest rates and inflation to shoot 58% higher over the last six months, lasting trading at $24.45.

The post 3 ASX 200 shares with enormous insider ownership appeared first on The Motley Fool Australia.

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• Could these be the best ASX growth shares to buy now for 2023?
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• Why is the Renascor Resources share price rocketing 46% this month?
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor Cathryn Goh has positions in Netwealth. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa Holdings Ltd and Netwealth. The Motley Fool Australia has positions in and has recommended Netwealth. The Motley Fool Australia has recommended Lovisa Holdings 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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If you’re nearing (or currently in) retirement, it may be time to start focusing a little on capital preservation. This means investing in lower risk shares rather than fledgling growth shares.

But which ASX 200 shares might be suitable? Listed below are a couple of shares that could be good options for a well-balanced retirement portfolio. Here’s what you need to know about them:

Collins Foods Ltd (ASX: CKF)

The first ASX 200 share that could be worth considering for a retirement portfolio is Collins Foods.

Collins Foods is one of the largest operators of KFC restaurants in Australia. In addition, it has a growing presence in Europe and a growing network of Taco Bell restaurants across Australia.

The good news is that management still sees plenty of room to grow its network at home and abroad. This should be supportive of earnings and dividend growth in the coming years.

Speaking of dividends, Collins Foods shares a decent portion of its profits with shareholders each year. Morgans is expecting this to continue in FY 2023 and is forecasting a fully franked 28 cents per share dividend. Based on the current Collins Foods share price of $10.10, this will mean an attractive dividend yield of 2.8%.

Morgans currently has an add rating and $11.50 price target on its shares.

Woolworths Limited (ASX: WOW)

Another ASX 200 share to consider for a retirement portfolio is Woolworths.

It is of course the retail conglomerate behind the eponymous supermarket chain, Countdown supermarkets in New Zealand, and Big W.

Woolworths could be a top option for retirees due to its strong market position, defensive qualities, and positive exposure to inflation.

Goldman Sachs is a fan of the company. As well as the above, it likes Woolworths due to its digital and omni-channel advantage, which it expects to drive further market share and margin gains.

Goldman currently has a conviction buy rating and $41.70 price target on the company’s shares. It is also forecasting fully franked dividend yields of 3%+ in the coming years.

The post Add these ASX 200 shares to your retirement portfolio: experts appeared first on The Motley Fool Australia.

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There is plenty of uncertainty that investors can focus on at the moment, including widespread inflation, higher interest rates, Ukraine, China and so on. But, amid all this economic pain, I believe ASX growth shares could be an effective way to invest for 2023 and the longer term.

Companies that could grow revenue well over the long term may be able to grow their profit and also the share price, in time.

I think the names on the ASX with the most compelling potential are those that are expecting to grow internationally. I’m also looking for ones that are keeping shareholders in mind – it’s not just growth for growth’s sake.

Here are three of my favourite ideas.

Airtasker Ltd (ASX: ART)

With a market capitalisation of just $160 million, according to the ASX, I think Airtasker could be one of the most compelling ASX growth shares that could achieve global growth.

For readers that haven’t heard of the business before, it operates a platform that connects people who need work done with those that want to do the work. There are dozens of categories available such as furniture assembly, removalists, photography, bookkeeping, food delivery and many more.

I believe the future is bright for the company, particularly with the ongoing double-digit growth that it is achieving every quarter.

In the first quarter of FY23, the Airtasker platform (excluding Oneflare – an acquired business) saw revenue growth of 36% to $8 million.

Global growth continues – UK gross marketplace volume (GMV) grew 68% year over year, while US posted tasks jumped 4.7x year over year to 13,000.

It has a gross profit margin of more than 90% and it’s close to breakeven on an earnings before interest, tax, depreciation and amortisation (EBITDA) basis, so I think the business is financially well-positioned to invest strongly for longer-term growth.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is one of the most promising ASX retail shares, in my opinion. It sells affordable jewellery to younger shoppers.

The Lovisa share price has been a strong performer in 2022 already, it’s up by more than 20%. But I think there could be plenty more in the coming years.

It earns a high gross profit margin of close to 80%, and a typical store makes impressive profit considering how much it costs to set up. That’s why I think the global store rollout plan is very convincing.

In a recent FY23 update, Lovisa said it had opened another 47 net stores in the financial year to date, taking its total to 676 stores. I believe this will be a natural boost to sales, and therefore profit, once the stores are up and running.

Lovisa has opened in a number of new markets recently, including Canada, Poland, and Hong Kong. It’s quite possible the Hong Kong expansion is a prelude to expansion into China, which would be a huge market for the business to grow in.

The ASX growth share is also planning to open in Italy, Mexico, and Hungary in the near term.

With FY23 comparable store sales up 16.1% year over year and total sales up 60%, I think Lovisa is on track to achieve good profit growth in FY23 and beyond.

Betashares Global Quality Leaders ETF (ASX: QLTY)

This ASX exchange-traded fund (ETF) gives investors a way to get investment exposure to 150 businesses that are listed around the world. The portfolio is a globally-focused one, with US companies being around 61% of the total weighting.

But, there are a number of other places that represent more than 1.5% of the portfolio: Japan (13.7%), the Netherlands (4.2%), Switzerland (4%), France (3.3%), Denmark (3%), Hong Kong (2.5%), the UK (1.9%), and Sweden (1.7%).

What I like about the holdings in this ETF’s portfolio is that they rank well on a number of ‘quality’ metrics, including return on equity, debt-to-capital, cash flow generation ability and earnings stability.

In other words, they make good profit each year, generate attractive cash flow, have little debt and make high levels of profit for how much shareholder money is currently invested in the business.

The portfolio’s weightings are largely similar, but the biggest positions are a little bigger than the smaller ones. Currently, its biggest positions include ASML, Applied Materials, Nvidia, Automatic Data Processing and Cisco Systems. I think the overall portfolio composition means this ETF can be classified as an ASX growth share because of how the underlying businesses are growing.

With the ASX ETF down close to 20% this year, I think it’s a good time to get exposure to this portfolio of ‘quality’ companies.

The post Could these be the best ASX growth shares to buy now for 2023? appeared first on The Motley Fool Australia.

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• Is this ASX 200 share the gift that keeps on giving?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ASML Holding, Applied Materials, Cisco Systems, Lovisa Holdings Ltd, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Airtasker Limited. The Motley Fool Australia has recommended ASML Holding, Lovisa Holdings Ltd, and Nvidia. 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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Looking for dividend shares to buy? Listed below are two ASX dividend shares that Goldman Sachs rates as buys.

Here’s why the broker is bullish on these dividend shares:

Adairs Ltd (ASX: ADH)

The first ASX dividend share that Goldman Sachs is bullish on is Adairs. The broker has a buy rating and $2.65 price target on the furniture and homewares retailer’s shares.

Goldman believes its shares have been unnecessarily oversold, creating a buying opportunity for income investors. Particularly given its belief that the company can achieve guidance this year. The broker explained:

We view the re-affirmed guidance as a key positive for ADH, and we believe the market is pricing in EBIT that is 11-21% below the guidance range, and 12% below GSe. We view the core Adairs business as resilient in the current environment and do not believe the c.40% discount to discretionary retail peers is justified.

In respect to dividends, Goldman is forecasting fully franked dividends per share of 17 cents in FY 2023 and 20 cents in FY 2024. Based on the latest Adairs share price of $2.20, this will mean yields of 7.7% and 9.1%, respectively.

Mineral Resources Limited (ASX: MIN)

Another ASX dividend share that Goldman Sachs is bullish on is this mining and mining services company. It has a buy rating and $94.00 price target on its shares.

The broker is a fan of the company due to its lithium exposure, which it expects to support the tripling of its operating earnings and a big dividend increase in FY 2023.

We forecast a more than tripling of group EBITDA to over A$3.8bn in FY23 (same at spot) driven by higher lithium volumes (LiOH & spod), tailwinds from M-3 lithium pricing lags, and an improvement in low grade iron ore price realisations.

As for dividends, the broker has pencilled in fully franked dividends of 437 cents per share in FY 2023 and then 433 cents per share in FY 2024. Based on the latest Mineral Resources share price of $85.33, this will mean yields of 5.1% and 5%, respectively.

The post These are the ASX dividend shares to buy now: Goldman Sachs appeared first on The Motley Fool Australia.

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• Ballin’ on a budget: The best ASX shares to buy for under $5

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 ADAIRS FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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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Yes, 2022 has been tough enough with all the turbulence and uncertainty. But unfortunately the picture is still pretty vague as we head into 2023.

How hard will the steep interest rate rises from the past six months hit Australian consumers going into Christmas? Will the unemployment queues lengthen? Will Australia sink into recession?

These are all still legitimate questions without clear answers.

Amid such chaos, Switzer Financial Group director Paul Rickard feels like the healthcare sector might be the most reliable to invest in.

It is considered a defensive sector, as people will still spend money on their health through tougher economic times. And the population is rapidly ageing in most developed nations.

But there is also a growth flavour in many ASX-listed healthcare stocks.

“Australia’s a little bit different because we have companies that are really focused on a global marketplace — most of their revenues actually come from outside Australia,” Rickard said on Switzer TV Investing.

“So the companies that represent the major part of our healthcare sector tend to command pretty high price-earnings multiples.”

So which are the specific ASX shares that Rickard would go for at the moment?

Four top health stocks to buy now

Rickard is a “huge fan” of biotech giant CSL Limited (ASX: CSL).

The CSL share price has so far disappointed in the post-COVID era, remaining flat for the year to date.

“It hasn’t really done a lot this year. [But] brokers like it.”

CSL shares closed Tuesday at $297.32 apiece.

Rickard pointed out that it currently has a broker consensus target of almost $325, and he suspects “at some stage” the stock will burst out to that.

The Ramsay Health Care Limited (ASX: RHC) share price has sunk more than 10.6% since mid-September when a takeover bid was taken off the table.

Rickard suspects this now presents a great entry point.

“It’s a hospital operator but it’s diversified,” he said.

“In the low $60s, it’s looking like a pretty attractive proposition to me.”

Ramsay shares closed at $63 each on Tuesday.

Resmed CDI (ASX: RMD) has served investors admirably over recent years.

“It’s been a hugely successful growth story… Up from a low of about five years ago, it was trading about $8 to [last year] over the $40 mark.”

The price has pulled back this year, with the stock closing Tuesday at $34.09.

Rickard can’t see any reason why the respiratory equipment maker can’t continue its growth narrative.

“I think, again, another really good stock for your portfolio.”

Pathology provider Sonic Healthcare Limited (ASX: SHL) was Rickard’s fourth pick.

It was a major beneficiary of COVID testing volumes in Australia, but now its growth fortunes lay offshore.   

“Although Sonic really dominates the pathology sector in Australia, it’s now a company where over 60% of its revenue is coming in from outside Australia,” said Rickard.

“It’s big in the United States, it’s big in Europe and they’re even more important markets than what’s going on in Australia.”

The share price has lost 31% year to date, closing Tuesday at $31.65.

“It’s come back a bit as a result of the reduction in PCR testing,” said Rickard.

“In the low $30s, it looks to have reasonable value.”

The post 4 ASX 200 shares to buy in an unmissable sector: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool Australia has recommended Ramsay Health Care Limited and Sonic Healthcare 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 ASX is known for its dividend shares. But as well as the more notable dividend stocks, there are other potential ideas that are currently flying under the radar.

Certainly, investors have likely heard of many of the biggest names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Telstra Corporation Ltd (ASX: TLS).

But a business doesn’t need to have a market capitalisation of over $40 billion to be an effective ASX dividend share.

Brokers have recently labelled these two relatively unknown names as buys. They could also pay large dividends in FY23.

GQG Partners Inc (ASX: GQG)

GQG is currently one of the largest fund managers on the ASX with a market capitalisation of $4.5 billion according to the ASX.

It offers a number of different investment funds for investors, such as US shares, dividend shares, and global shares.

One of the main differences with this fund manager is that a vast majority of its revenue comes from management fees, rather than performance fees. This means there’s more consistency in the company’s earnings.

Funds under management (FUM) play a large part in the company’s earnings generation. In the month of October 2022, GQG saw FUM rise from US$79.2 billion to US$83.8 billion. In the three months to September 2022, the business saw net inflows of US$0.8 billion.

GQG looks to pay out approximately 90% of its quarterly distributable earnings, making it attractive as an ASX dividend share.

The broker Ord Minnett currently rates it as a buy, with a price target of $2.20 – that’s 40% higher than where it is right now. The estimated FY23 dividend yield could be 5.4%.

EQT Holdings Ltd (ASX: EQT)

This business is more than 130 years old. It describes itself as a leading specialist trustee company, offering services like asset management, estate planning, philanthropic services, and responsible entity services for external fund managers.

FY22 saw ongoing growth for the business. Funds under management, administration, advice, and supervision (FUMAS) grew by 3.3% to $148.9 billion, revenue rose 10.4% to $111.5 million, and net profit after tax (NPAT) went up 12.5% to $24.2 million. The FY22 dividend also grew 6.6% to 97 cents per share.

It’s currently in the process of buying Australian Executor Trustees for a total cash consideration of $135 million. This will add $5.4 billion of FUMAS, boost overall revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) by “more than a third”, and is expected to be “earnings accretive”.

The ASX dividend share is expecting to achieve synergies from a restructuring of its platform service business and additional investment revenue in relation to the trustee services business.

Ord Minnett also rates EQT as a buy, with a price target of $35. That implies a possible rise of more than 30%. EQT could pay a grossed-up dividend yield of 5.7% in FY23.

The post Broker reveals 2 of the best under-the-radar ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. 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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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 three of this edition, we’re rejoined by Andrew Martin, principal of Alphinity Investment Management. The Alphinity Concentrated Australian Share Fund has delivered an annual return of 7.6% after fees over the past five years.

The Motley Fool: With higher interest rates crimping share price gains, ASX dividend shares are gaining more retail investor attention. Do dividends play a role in determining your investment decisions? 

Andrew Martin: We care about dividends in terms of what it means from a valuation perspective. We care about franking credits and take those into account.

But we ultimately see the dividend yield as an outcome rather than something that drives our investment decisions.

There are points of the cycle where dividends mean more. But in a period where interest rates are rising, it puts more pressure on dividend yield types of stocks on average because the alternative in cash looks more attractive relative to yields. And cash has less risk obviously. So suddenly, you have competing assets that you can go into rather than buying a stock and getting yield on that.

That’s not to say you can’t find good dividend stocks in this environment.

I mentioned banks, for example [in part two of our interview]. Banks are reasonably decent value, they’re getting upgrades, and the yields are looking pretty decent. Unlike potentially other yield type stocks, banks are actually benefiting from rising rates rather than getting hit by the rising rates.

MF: If interest rates do continue to ratchet higher, perhaps reaching 4% or more in 2023, do you think this could significantly impact the banks via rising bad debts and lower levels of new loans?

AM: Yes, that’s one thing we have to keep our eyes on.

But I would say the banks are entering any kind of potential downturn in probably as good a position as they ever have. They all got prepared for a massive recession in 2020 that never happened. So they still have excess provisions, they still have very strong capital positions, and credit quality is pristine.

That’s largely off what happened in the pandemic. Everyone got handed free money and got ahead on their repayments. And interest rates went to nothing, so people built up savings buffers.

That’s not to say the banks won’t have losses in a downturn. They absolutely will. But at this stage, it appears very manageable.

MF: Are there parts of the market you believe will outperform over the next 12 months?

AM: We think the whole market is probably due a large proper earnings downgrade, frankly. And if you’re getting earnings downgrades hitting the whole market, there are parts of the market that can hold their earnings, that are much more defensive. That’s the part of the market that’s likely to do well.

So, we’re talking about the Telstra Group Ltd (ASX: TLS) companies of the world. Those staple type companies.

MF: And are there areas you’re more likely to steer clear of?

AM: Yes, on the flip side, you probably want to avoid sectors that are particularly impacted by slow income growth.

When you think about it, all central banks are trying to do is engineer a slowdown. As economies are slowing you want to avoid companies that get hit by falling economic growth.

Therefore, avoiding companies like consumer discretionary types of business, like some cyclical things that benefit from economic growth, and then some companies that are exposed to China as well. You want to be watching that pretty closely. Of course, if China decides to change tack and stimulate massively and open up, then we may need to change our view on that.

MF: If the market closed tomorrow for five years, which ASX share would you want to be sure to hold in your portfolio?

AM: Macquarie Group Ltd (ASX: MQG) is the bottom of the drawer stock. The last few months, it’s been hit by the market volatility, and it’s been a bit beaten up. And I think that volatility will probably continue for the next six months or so.

But over the next five years, the opportunity sitting in front of it is just so large. There’s the traditional infrastructure business they’re in, which is still pumping along.

Then there’s the whole green energy transition business they’ve been building for the last six or seven years. That’s really coming into its own. They’re world-leading in that area now, just as everyone is starting to focus on it. The global market in that space is growing at a huge rate. So the opportunity set is huge for them. It comes down to how they execute, frankly.

Over the next six months, as market volatility continues, they could jump around a bit. But the quality of the business, quality of the management, and the opportunity set in front of them is huge.

MF: What do see as the biggest threat for ASX investors in the year ahead? 

AM: We all know that there’s an economic downturn coming. The biggest risk is that will be bigger than the market expects.

I think the market is being a little complacent around earnings. We’re only at the tipping point of where earnings are starting to come off. Interest rates take up to 12 to 18 months to flow through to the real economy. We’re only six months in. So I think, as we head into next year, you’re going to start seeing the real earnings impact out of that.

That’s the biggest risk.

MF: And what’s the biggest opportunity for ASX investors? 

AM: The biggest opportunity is that things get cheaper. I’m not sure we’re all the way to the bottom yet. But a lot of the market is already negatively positioned. It lends itself to at some point if there is a change in direction – whether that’s from the Fed, or economies are holding up, or inflation is rolling over – it could well give you that bounce.

We may not be at the bottom, but we’re not at the top either. So I’d say, start to look out for some bargains around, particularly as we head into next year, as that real interest rate bites in terms of earnings and the economy.

That may be the opportunity to find some really interesting stocks at good prices.

***

If you missed part one of our interview with Andrew Martin, click here. For part two, click here.

(You can find out more about Alphinity’s Australian, Global, and Sustainable funds here.)

The post Why ASX shares in these sectors should outperform in 2023 while these are ones to avoid: 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 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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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) found its legs again and charged higher. The benchmark index rose 0.6% to 7,181.3 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to rise again

The Australian share market looks set to push higher on Wednesday following a positive night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 47 points or 0.65% higer this morning. In late trade on Wall Street, the Dow Jones is up 1%, the S&P 500 is up 1%, and the Nasdaq is up 0.8%.

Oil prices rise

Energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a good day after oil prices pushed higher overnight. According to Bloomberg, the WTI crude oil price is up 1.2% to US$81.04 a barrel and the Brent crude oil price has risen 1.2% to US$88.46 a barrel. News that Saudi Arabia is sticking to its output cuts boosted prices.

Annual general meetings

Another group of ASX 200 shares are scheduled to hold their annual general meetings today and could provide the market with trading updates. Among the companies holding events are property company Abacus Property Group (ASX: ABP), wealth management platform provider Netwealth Group Ltd (ASX: NWL), and logistics solutions company WiseTech Global Ltd (ASX: WTC).

Gold price edges lower

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price edged lower overnight. According to CNBC, the spot gold price is down a fraction to US$1,738.4 an ounce. Gold is on course to decline for five sessions in a row.

TechnologyOne shares downgraded

Although TechnologyOne Ltd (ASX: TNE) delivered a strong full year result on Tuesday, analysts at Morgans have downgraded the enterprise software provider’s shares to a hold rating with an improved price target of $13.50. It commented: “We view this as another high quality result […] following an 18% share price run in the last 6 months we move to a Hold recommendation.”

The post 5 things to watch on the ASX 200 on Wednesday 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 Netwealth and WiseTech Global. The Motley Fool Australia has positions in and has recommended Netwealth and WiseTech Global. The Motley Fool Australia has recommended TechnologyOne 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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