Fortescue Metals Group Limited (ASX: FMG) shares are suffering after the company’s latest dividend was slashed by 43% this morning, leaving many wondering how it stacks up against BHP Group Ltd (ASX: BHP)’s most recent payout.

The smaller of the two S&P/ASX 200 Index (ASX: XJO) iron ore giants has offered investors a $1.21 final dividend per share they hold. Meanwhile, BHP will pay a US$1.75 per share final dividend next month.

Obviously, the latter is offering a larger payout per share, but is it really superior to that of Fortescue? Keep reading as we compare the pair.

Is the BHP dividend better than that of Fortescue?

Fortescue revealed its $1.21 final dividend for financial year 2022 on Monday and, while the company’s share price is being weighed down by its results, its payout might actually compete with that of BHP.

Fortescue’s latest dividend brings its full-year offerings to $2.07. Considering the Fortescue share price at the time of writing – $18.98 – it’s trading with a dividend yield of 10.9%.

The offering also represents a payout ratio of 75% of net profit after tax (NPAT) and comes fully franked. That means it could bring additional benefits for some investors at tax time.

Meanwhile, the true value of BHP’s latest dividend in Australian Dollars will be revealed next week. However, US$1.75 represents $2.55 Aussie bucks at today’s exchange ratio – which would bring BHP’s full-year dividends to $4.63.

Considering that figure and the BHP share price right now – $42.08 – the materials giant could arguably boast a dividend yield of 11% – a fraction higher than that of Fortescue.

On top of that, its final dividend represents a 77% payout ratio and also comes fully franked.

Both companies offer a dividend reinvestment plan (DRP), allowing investors to receive dividends in the form of new shares.

All in all, both companies are offering a decent dividend at a strong yield. But that of BHP represents slightly better value right now.

Investors wanting to get on board for BHP’s upcoming final dividend better do so quickly. The stock will trade ex-dividend on Thursday, meaning Wednesday will be the last chance for new investors to secure the payout.

The post How does the BHP dividend stack up against the latest Fortescue payment? appeared first on The Motley Fool Australia.

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More reading

• Everything you need to know about the trimmed-down Fortescue dividend
• Fortescue share price backtracks as final dividend is slashed by 43%
• 5 things to watch on the ASX 200 on Monday
• 2 ASX 200 dividend shares to buy now according to analysts
• Earnings preview: Here are 3 ASX 200 shares reporting next week

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 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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It’s been a brutal day for ASX shares and the S&P/ASX 200 Index (ASX: XJO) so far this Monday. At the time of writing, the ASX 200 has lost a nasty 1.9% and is back to around 6,970 points. It’s a similar story for the Northern Star Resources Ltd (ASX: NST) share price.

Northern Star shares have not escaped the bad mood of the markets today. The gold miner is presently down by 2.1% at $7.42 a share, underperforming the broader market.

This move comes after the ASX gold share reported its full-year earnings for the 2022 financial year this morning.

As we covered at the time, this saw Northern Star report a 35% lift in revenues to $3.735 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) also rose, by 31% to $1.517 billion. But underlying net profit after tax (NPAT) dropped 27% to $273 million.

The company also announced an on-market share buyback program worth up to $300 million.

Everything you need to know about Northern Star’s dividend

But let’s talk about Northern Star’s dividend announcement. The gold miner declared a final dividend of 11.5 cents per share, fully franked.

This is a 15% improvement on the interim dividend of 10 cents per share the gold miner paid out back in March. It’s also a big increase over FY2021’s final dividend of 9.5 cents per share.

It brings Northern Star’s total dividend payments for FY22 to 21.5 cents per share, again an improvement on the 19 cents per share of FY21.

NorthernStar shares will trade ex-dividend for this payment on 6 September, which means investors have until that date to buy Northern Star shares if they want to receive this dividend. It will then be paid out on 29 September.

Northern Star is running a dividend reinvestment plan (DRP), so investors also have the option of receiving additional shares instead of a cash payment if they so choose.

As it stands today, Northern Star shares have a dividend yield of 2.61%.

The post Everything you need to know about the latest Northern Star dividend appeared first on The Motley Fool Australia.

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More reading

• Northern Star share price backtracks despite revenue lifting 35% to $3.7b
• 5 things to watch on the ASX 200 on Monday
• Can the gold price outshine sticky inflation?
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Monday

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 Bitcoin (CRYPTO: BTC) price has fallen back below the psychologically important US$20,000 level.

The world’s original crypto is currently trading for US$19,773 (AU$28,775).

That sees Bitcoin down 2% over the past 24 hours, 8% since this time last week, and down a painful 59% year-to-date, according to data from CoinMarketCap.

And it’s not just the Bitcoin price in retreat.

Ethereum (CRYPTO: ETH), the world’s number two crypto by market cap, is trading for US$1,448, also down 2% today and 10% over the past week.

Why is the Bitcoin price dropping?

Bitcoin, and indeed the vast majority of top cryptos, have all lost significant ground since US Fed chair Jerome Powell addressed his fellow global central bankers at the Jackson Hole financial summit in Wyoming. Powell made his speech on Friday morning (Friday night Aussie time).

In the lead-up to the Fed chair’s speech, the Bitcoin price was trading for US$21,761.

Investors hoping to hear the world’s most influential central bank might be approaching the end of its tightening cycle were left wanting.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” Powell said. “The historical record cautions strongly against prematurely loosening policy.”

Powell said that “higher interest rates, slower growth, and softer labour market conditions will bring down inflation”, adding that “they will also bring some pain to households and businesses”.

Crypto investors watching the Bitcoin price dip back below US$20,000 will be feeling some of that pain today as risk assets have sold off across the board.

On Friday, the NASDAQ closed down 3.9%. And so far in 2022, cryptos have moved in line with growth shares.

Could this be a buying opportunity?

However, not everyone is bearish following the latest retrace in the Bitcoin price.

Mark Newton, technical strategist at Fundstrat, believes the token’s recent trading pattern presents a buying opportunity.

According to Newton (courtesy of Bloomberg):

Friday’s break looks important and negative in the short run but should line up with buying opportunities into early September as cycles remain bullish and project higher prices into November 2022.

The post Here’s why the Bitcoin price just dipped back below US$20,000 appeared first on The Motley Fool Australia.

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More reading

• Everything you need to know about the latest Northern Star dividend
• What makes ‘Dividend Aristocrats’ a great investment for you?
• Why did the Galileo Mining share price just leap 30%?
• Everything you need to know about the trimmed-down Fortescue dividend
• Everything you need to know about the latest A2 Milk share buyback

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 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.

From time to time, you might read about the S&P 500 Dividend Aristocrats. These companies are S&P 500 index members that have paid and raised a dividend for at least 25 consecutive years.

Those looking for total returns might scoff at dividend stocks as mature companies that have left their best growth days in the rearview mirror. But consider that the Dividend Aristocrats have collectively outperformed the S&P 500 index by an average of 0.74% annually, which creates a significant margin over the course of decades.

What’s the secret to their success and what can that mean for your portfolio? Here is why every investor should at least consider adding some Aristocrats to their long-term investment strategy.

The anatomy of a dividend

Most investors know what a dividend is: Companies that have available cash will sometimes share it with shareholders. But many investors skip over the anatomy of a dividend and how it impacts a business.

For example, a dividend is a cash expense. Accounting rules can twist a lot of the financial jargon and metrics you see in a company’s financials. A company like Netflix can show a bottom-line profit but generate little free cash flow simultaneously because accounting rules can affect how companies report their earnings.

NFLX net income (TTM). Data by YCharts. TTM = trailing 12 months.

A company can only pay a dividend in cash; it can borrow money to pay a dividend, but that’s a losing game that never lasts long. A business that can not only pay you part of its cash profits but also keep increasing its annual payout can only do so if it’s growing over the long term. You can’t fake it.

Successful investing can be as simple as buying quality businesses and letting them do their magic over time. A Dividend Aristocrat often fits that bill simply because of what is entailed with paying and raising a cash expense like a dividend.

An additional level of compounding

A steadily growing business will generate capital gains as earnings grow over time, but what you can do with dividends propels Aristocrats as investments. Dividends are essential to investment returns; they made up 31% of total returns from the S&P 500 from 1926 to 2021.

You can also reinvest dividends, taking the cash and buying more shares. Those new shares don’t cost you any out-of-pocket money beyond your initial investment, and will pay dividends of their own, creating a compounding effect.

PG data by YCharts.

This can have a considerable impact on your total investment returns over time. Consider a stock like Procter & Gamble, a Dividend King with 66 consecutive years of dividend increases. Investors have earned 4,720% in lifetime returns from capital appreciation since the early 1970s. That’s great, but that would have nearly tripled to 12,120% by reinvesting the dividends to take advantage of compounding!

You don’t need home runs to win the game

Ultimately, you don’t need to find the next Amazon to have a lucrative investment journey. Derek Jeter is one of baseball’s greatest players because he could consistently hit the ball year in and year out, even if it didn’t often go out of the park.

The same applies to investing. A Dividend Aristocrat probably won’t make you rich overnight, but you can become wealthy by buying and holding Aristocrats as part of a diversified portfolio with a long-term outlook.

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

The post What makes ‘Dividend Aristocrats’ a great investment for you? appeared first on The Motley Fool Australia.

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More reading

• 3 great foreign companies to invest in right now
• Did Bill Ackman give up on Netflix too soon?
• Why Apple stock popped today
• Netflix shares rose 29% last month, but the stock is still cheap
• Warren Buffett has 10% of Berkshire Hathaway’s portfolio in this recession-resistant sector

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Justin Pope 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 Amazon and Netflix. The Motley Fool Australia has recommended Amazon and Netflix. 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 S&P/ASX 200 Index (ASX: XJO) is having a dreadful start to the trading week so far this Monday. As it currently stands, the ASX 200 has lost a painful 2.07% and is back around 6,950 points. But the A2 Milk Company Ltd (ASX: A2M) share price is a conspicuous outlier.

A2 Milk shares are comprehensively defying the gloom on the markets today. The ASX 200 dairy share is currently up a healthy 9.06% at $5.355 a share. This move comes after A2 Milk reported its FY22 full-year earnings to the markets this morning.

As we went through at the time, these earnings saw A2 Milk report a pleasing 19.8% rise in revenues to NZ$1.45 billion. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose an even better 59% to NZ$196.2 million. Meanwhile, net profit after tax (NPAT) was up 42.3% to NZ$114.7 million.

But perhaps the biggest piece of news this morning was the announcement that A2 Milk would initiate a NZ$150 million ($133.65 million) on-market share buyback program.

Are share buybacks boosting the A2 Milk share price today?

A2 Milk’s managing director and CEO David Bortolussi said that “our on-market buyback of up to NZ$150 million demonstrates effective capital management and the improved confidence we have in our strategy, execution and outlook”.

This might be part of what is delighting investors today with this report.

Share buybacks, like dividends, are a form of capital return for shareholders. A buyback involves the company buying its own shares on the open market and ‘retiring’ them. This has the effect of reducing the supply of the shares. This, under the laws of supply and demand, should result in share price appreciation.

Further, buybacks reduce the overall share count for a company. As such, they are usually accretive to earnings per share (EPS) growth, seeing as there are fewer shares to divide a company’s earnings between.

Many investors (including the legendary Warren Buffett) prefer buybacks to dividends, seeing as the positive effects of share buybacks can be enjoyed without being initially taxed, unlike a dividend. So it’s perhaps no surprise that the A2 Milk share price is performing so well today.

At the current A2 Milk share price, this ASX 200 dairy share has a market capitalisation of $3.97 billion.

 

The post Everything you need to know about the latest A2 Milk share buyback appeared first on The Motley Fool Australia.

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More reading

• A2 Milk share price soars 8% as company regains money-making mojo
• A2 Milk share price on watch amid earnings beat and NZ$150m buyback
• 5 things to watch on the ASX 200 on Monday
• Earnings preview: Here are 3 ASX 200 shares reporting next week
• A2 Milk share price lags ASX 200 ahead of Monday’s earnings result

Motley Fool contributor Sebastian Bowen has positions in A2 Milk. 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 A2 Milk. 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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I have a question for you:

What do you think the economy will be like on June 30, 44 weeks from now?

And with what level of confidence?

Now, let’s make sure you’ve considered all of the inputs into that decision: interest rates, inflation, local and global economic growth, currency, wages, government spending, the savings rate, house prices, and more.

Still confident?

Okay, let’s overlay the X-factors.

You know, like, oh… Maybe a pandemic? Geopolitical tensions (or worse). Terrorism. Drought. Floods. Fires.

And they’re just the ones I can think of.

How confident are you in your prediction, now?

But we’re not done.

Our predictions don’t count for much – no-one is paying attention, anyway.

But what if you’re, say, an ASX-listed company CEO.

And investors want to know what you’re expecting for the current financial year.

You get up in the morning, look at yourself in the mirror, and what do you think to yourself?

The best ones – the honest, self-aware ones – will shake their heads ruefully and mutter “Why are they asking me? I’m doing my best to run the business as well as possible, but I don’t have a crystal ball…”

The less-great ones – those for whom hubris and arrogance are regular bedfellows – will rely on their overinflated egos and self-assurance and think “I’m glad they asked. I’m so good, I can forecast these things with confidence!”

I jest.

A little.

But the biggest problem?

Both of our mirror-gazing CEOs will, that day, make a forecast anyway.

They’ll tell the ASX what they think will happen.

It’ll be (mostly) honest, based on their best guesses, usually with a strong dose of optimism and self belief thrown in.

And investors, who, like Mulder and Scully (from the X-Files – ask your parents) just ‘want to believe’ will duly listen, and factor those forecasts into their own investment decisions.

The blind leading the visually-impaired?

You betcha.

Why do CEOs do it?

Because, as John Kenneth Galbraith observed, “…pundits forecast not because they know, but because they are asked.”

Because investors have become so used to management forecasts, we expect it. We demand it.

Because CEOs want to be popular, and liked, and respected, and supported. So, when the market asks, they answer.

Which begs the question: Why do investors expect them to know?

The answer to this one isn’t much better.

Because we hate uncertainty. Because we want to believe that CEOs have magical powers of foresight. Because we like to believe they can somehow magically manifest the future they forecast.

Because, as one industry insider once said, in response to my question “Well, what else would we put into our spreadsheets?”

True story.

We turn a blind eye, choosing to believe the fiction, rather than question. Because it’s easier that way.

Doesn’t this whole thing just sound a little bit bonkers.

Or more than just a little bit.

We are so desperate to avoid uncertainty that we’ll willingly suspend disbelief in exchange for the emotional comfort of an almost-baseless forecast.

CEOs are so keen to please (and to be seen as being ‘in control’) that they’ll consciously and subconsciously go along with the charade, publishing a forecast because, well, we asked.

Truly, it is the stuff of collective delusion.

Worse, when those forecasts are missed, we blame the CEO, as if it was their fault.

Perhaps more insidiously, we slap those who guessed correctly on the back, praising their foresight.

My 9-year old knows better than that.

He might try the same thing, sometimes, but at least he’s honest enough to ‘fess up when we call him on it.

The bad news?

It’s not going to change.

The charade will roll on, month after month and year after year.

And if you reckon that’s bad, I have even worse news for you.

There is no-one more hell-bent than a CEO who’s given a public forecast.

They will move heaven and earth to hit that number.

Reckon that’s a good thing?

Ask anyone who’s worked for one of those CEOs.

The long term damage done in pursuit of short-term objectives is frightening.

I’ve worked for businesses that have sold weeks and weeks of extra inventory in the last week of a year, just to get a number.

I’ve known companies to destroy brand equity by giving massive discounts to try to get a few more drops of juice out of a dry lemon.

They tell themselves it’s a one-off.

They tell themselves they’ll make up for it next year.

But when ‘next year’ comes, there’s a sales hole already (from all of that end-of-year stupidity), so they end up having to go even harder, just to catch up.

And on and on it goes.

It is corporate madness. Pure and simple.

The solution?

I’m glad you asked.

I have a few:

– Look for great management. People who say ‘I don’t know’. Or who don’t give baseless / best guess forecasts.

– Ignore the predictions of those who do give forecasts. But know that they’ll be sorely tempted to make suboptimal choices if they start to fall short.

– Focus on the long term. And prioritise businesses they do the same.

Frankly, I will give a management team bonus points for refusing to give a forecast, even if the professional investing class cry foul.

I wish more of them did it.

In the meantime?

It’s up to us to choose wisely.

And to remember that we don’t have to play the investing game by rules that don’t make sense.

Fool on!

The post The most useless thing a CEO can do… appeared first on The Motley Fool Australia.

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• ASX 200 tech shares are getting hammered on Monday. Here’s why
• AVZ Minerals shares are scheduled to resume trading this week. Here’s what to watch
• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Ready to get rich with stocks? You can’t go wrong with these 3 investments
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Motley Fool contributor Scott Phillips 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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S&P/ASX 200 Index (ASX: XJO) tech shares are taking a beating today.

The broader market is facing a sharp sell-off as well, with the ASX 200 down 2.2% in early afternoon trade.

But the S&P/ASX All Technology Index (ASX: XTX) – which also contains some smaller tech stocks outside of the ASX 200 – is down a much steeper 4%.

ASX 200 tech shares in the red

Looking at some of the bigger companies in the sector, shares in global logistics software provider WiseTech Global Ltd (ASX: WTC) are down 3.7%, trading for $56.95 per share.

Cloud-based accounting software provider Xero Ltd (ASX: XRO) is under selling pressure as well, with the Xero share price down 5.1% to $83.50 per share.

Then there’s ASX 200 tech share NextDC Ltd (ASX: NXT).

The data centre developer and operator released some solid full-year results this morning. That included an FY22 statutory net profit after tax (NPAT) of $9.1 million, compared to the $23.6 million loss the company posted in FY21.

But those results have been unable to lift the company above the sea of red in the tech sector today, with the NextDC share price down 8.3%.

Why are investors selling today?

ASX 200 tech shares are under particularly heavy selling pressure today following a big sell-off on the NASDAQ on Friday, with the tech-heavy US index closing the day 3.9% lower.

The Aussie market is reacting to the same forces that drove down US stocks. Namely the decidedly hawkish speech delivered by US Federal Reserve chair Jerome Powell. Powell spoke at the Jackson Hole central banking summit in Wyoming on Friday morning (overnight Aussie time).

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” Powell told the gathered delegates. “The historical record cautions strongly against prematurely loosening policy.”

Powell noted that a period of higher interest rates would, over time, bring down inflation. But he admitted higher rates “will also bring some pain to households and businesses”.

Today’s market action looks to be a sign of that pain already hitting businesses.

Commenting on Powell’s speech, Cliff Hodge, chief investment officer at Cornerstone Wealth, said (courtesy of Bloomberg):

Powell can’t come right out and say that the Fed is fine walking us right into recession in order to crush inflation, but that is what this messaging unequivocally implies. What does this mean for markets? Drastically reduces the chance of a soft landing and the bull case for new highs this year.

ASX 200 tech shares are particularly susceptible to the pain of higher rates. That’s because most tech shares are valued on future earnings growth potential. And as interest rates rise, the present cost of that future revenue growth increases.

The post ASX 200 tech shares are getting hammered on Monday. Here’s why appeared first on The Motley Fool Australia.

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• NextDC share price powers down 7% despite turning a profit
• Here are the top 10 ASX 200 shares today
• Why are ASX 200 tech shares having such a cracker of a day?
• Why Domino’s, Iluka, Netwealth, and WiseTech shares are storming higher
• WiseTech share price surges 11% on record profits

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 WiseTech Global and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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All eyes will likely be on AVZ Minerals Ltd (ASX: AVZ) shares this week. The company is expected to return to trade following an ownership dispute over its flagship lithium project.

The S&P/ASX 200 Index (ASX: XJO) mineral exploration company put its stock in the freezer way back in early May and has continued to extend its halt ever since. It’s now expected to return to normal trade on Thursday.

The last AVZ Minerals share price was 78 cents.

Here’s what market watchers need to know about the company’s dramatic dispute.

What‘s going on with AVZ Minerals shares?

The AVZ Minerals share price could be pulled from the freezer for the first time in nearly four months on Thursday, likely on the back of news of the company’s Manono Lithium and Tin Project in the Democratic Republic of Congo.

The company has 75% ownership of the project’s mining licence. The other 25% is owned by La Congolaise D’Exploitation Miniere SA (Cominiere).

Or is it?

This is where it gets complicated. Cominiere was to cede 10% of its stake to the government of the Democratic Republic of Congo after a mining licence was awarded in early May.

AVZ Minerals then planned to snap up the other 15% held by Cominiere, giving it a 90% share in the project.

But Cominiere allegedly went behind its partner’s back, selling 15% of its stake to another company: Jin Cheng. AVZ Minerals is arguing the sale breached an agreement between it and Cominiere and is, therefore, invalid.

Making the situation more complicated, AVZ Minerals previously agreed to sell a 24% stake to Suzhou CATH Energy Technologies.  

Therefore, if all goes wrong, the ASX-listed company could walk away with a far smaller stake in the project than it previously anticipated.

With all that in mind, market watchers should keep an eye out for news from the company this week. Most important will be any word on its mining and exploration rights for the Manono Project.  

However, the trading halt on AVZ Minerals’ shares could very well be extended once more before Thursday’s open.

The post AVZ Minerals shares are scheduled to resume trading this week. Here’s what to watch appeared first on The Motley Fool Australia.

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More reading

• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Ready to get rich with stocks? You can’t go wrong with these 3 investments
• Core Lithium share price dips despite Tesla extension
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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 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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Motley Fool Australia Chief Investment Officer Scott Phillips joined Peter Overton for Nine’s Late News on Sunday night to discuss a big economic week ahead, including retail sales, the construction industry, home loan data… and a tough start to the week for the ASX.

[youtube https://www.youtube.com/watch?v=kD6q3kruHDo?feature=oembed&w=500&h=281]

The post A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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More reading

• Ready to get rich with stocks? You can’t go wrong with these 3 investments
• Core Lithium share price dips despite Tesla extension
• A2 Milk share price soars 8% as company regains money-making mojo
• Northern Star share price backtracks despite revenue lifting 35% to $3.7b
• Michael Hill share price surges 7% on record profit

Motley Fool contributor Scott Phillips 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.

A big hurdle to launching your investment plan is figuring out where to start. You might have a few high-profile stocks in mind, like Apple or Walmart. But concentrating all your money in one or two stocks doesn’t feel like a good idea.

Fortunately, a quality ETF or mutual fund can give you the best of both worlds. The right funds hold those high-profile stocks you like, plus hundreds of other positions too. You’ll get the long-term growth you want, along with diversification — all rolled up in each share.

Here are three types of fund that can anchor your investment strategy and deliver long-term returns. Over 20 years or more, you can expect these funds to grow about 7% annually on average, net of inflation.

1. S&P 500 index ETF

The S&P 500 fund is a popular choice for new investors, and for good reason. The S&P 500 index includes 500 of the largest, most successful public companies in the U.S. In terms of value, the index accounts for roughly 80% of all stocks — which is why the index is often used as a gauge for the overall market.

S&P 500 ETFs mimic the index’s performance. There are many S&P 500 funds out there, but the best choices are those with low expense ratios and minimal tracking errors.

• The expense ratio is the percentage of your investment that pays for the fund’s operating costs.
• Tracking error is the difference between the fund’s performance and the index’s performance. There is always a slight discrepancy here. Funds have expenses and timing issues, while indexes do not. A fund’s expense ratio typically accounts for most of the tracking error.

The table below shows three popular S&P 500 index funds, along with their expense ratios, size, and 10-year growth performance.

Fund Name	Expense Ratio	Net Assets	10-year Average Annual Growth
Vanguard S&P 500 ETF (NYSEMKT: VOO)	0.03%	$780 billion	13.76%
SPDR S&P 500 ETF  (NYSEMKT: SPY)	0.09%	$373 billion	13.65%
iShares Core S&P 500 ETF (NYSEMKT: IVV)	0.03%	$309 billion	13.75%

Table data source: Vanguard, SPDR, iShares

2. Total market fund

Another solid option is a total market fund, which replicates the performance of — you guessed it — the entire stock market.

Total market funds vary more in their holdings vs. S&P 500 funds, for a couple reasons. First, total market funds can track different indexes, such as the Wilshire 5000 or the Russell 3000. These funds can also either replicate their entire benchmark index or take a sampling approach.

Sampling means the fund holds a smaller representative group of stocks that mirrors an index’s performance. The advantage is that sampling can be more cost-efficient vs. owning every stock in a large index. As with S&P 500 ETFs, low expenses are better.

Even a total market fund that samples will provide diversification across thousands of stocks, including small, medium, and large companies.

See the table below for three total market funds with low expense ratios.

Fund Name	Expense Ratio	Total Net Assets	10-year Average Annual Growth
Vanguard Total Stock Market Index Fund (NYSEMKT: VTI)	0.03%	$1.2 trillion	13.42%
iShares Core S&P Total U.S. Stock Market ETF (NYSEMKT: ITOT)	0.03%	$43 billion	12.50%
Schwab U.S. Broad Market ETF (NYSEMKT: SCHB)	0.03%	$21 billion	13.39%

Table data source: Vanguard, Schwab, Fidelity

3. Quality-screened dividend fund

If you don’t like the idea of waiting decades to cash in on your investment returns, a dividend fund might be a better choice. To be clear, you’ll get rich faster if you reinvest those dividends. But the quarterly payments, even if they are reinvested, can feel more tangible than unrealized gains. And tangible returns are comforting — particularly in bear markets.

Quality-screened dividend funds invest in dividend-paying companies that meet thresholds for stability and reliability. The fund might track a quality dividend index, like the Northern Trust Quality Dividend Index. Or the fund may have its own screening methodology that looks at dividend payout ratio and dividend consistency, among other things.

The table below shows three screened dividend funds that may have roles to play in your portfolio.

Fund Name	Expense Ratio	Total Net Assets	Dividend Yield
Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD)   Â	0.06%	$38 billion	3.3%
FlexShares Quality Dividend Index Fund (NYSEMKT: QDF)	0.38%	$1.6 billion	2.3%
Franklin U.S. Low Volatility High Dividend Index ETF (NASDAQ: LVHD)   Â	0.27%	$686 million	3.4%

Table data source: Schwab, FlexShares, Franklin Templeton

Getting rich with broad-based funds

These funds won’t carry you to overnight riches, but you can double your invested capital about every 10 years. Repeat that process four times over, and you’ll be well richer than when you started. 

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

The post Ready to get rich with stocks? You can’t go wrong with these 3 investments appeared first on The Motley Fool Australia.

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More reading

• A tough start to the week for the ASX. Plus a big week of data. Scott Phillips on Nine’s Late News
• Core Lithium share price dips despite Tesla extension
• A2 Milk share price soars 8% as company regains money-making mojo
• Northern Star share price backtracks despite revenue lifting 35% to $3.7b
• Michael Hill share price surges 7% on record profit

Catherine Brock has positions in Vanguard S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Vanguard S&P 500 ETF, Vanguard Total Stock Market ETF, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. 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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