The Macquarie Group Ltd (ASX: MQG) share price is down 2.6% this week but up 4.6% over the past month. So, why the lacklustre start to August?

Did the interest rate rise have an impact?

The S&P/ASX 200 Financials Index (ASX: XFJ) is up 0.66% over the past five days. The big news of the week was the Reserve Bank of Australia (RBA) lifting interest rates for a fourth consecutive month.

The RBA Board lifted the rate by 50 basis points. This was the third rise of this size in consecutive months to take the cash rate to 1.85%. On the day of the rate rise, the Macquarie share price lost 0.46%.

The RBA is raising rates to help bring inflation down. Inflation is currently running at 6.1% per year.

As my colleague Bernd reported this week, higher rates mean larger net interest margins (NIMs) for the banks. This means they can simply charge more interest on their variable loans.

But higher rates can also lead to more bad debts, along with fewer new mortgages as the property market cools.

Looking at the share price performance of the big four, we see a mixed bag of results alongside Macquarie this week.

Since the market close on Friday 29 July, there’s been a 1.9% gain for Westpac Banking Corp (ASX: WBC) shares. Commonwealth Bank of Australia (ASX: CBA) shares got an 0.8% bump.

National Australia Bank Ltd (ASX: NAB) shares gained 0.65%. Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares dipped 0.26%.

Of the ASX 200 bank shares, JP Morgan reckons CBA is “most leveraged to a rising cash rate”, enabling it to squeeze the most out of increased NIMs as rates go higher.

Why has the Macquarie share price dipped this week?

Perhaps a broker note from Goldman Sachs last Friday has taken some wind out of Macquarie’s sails.

As my Fool colleague James reported, its analysts retained a neutral rating on Macquarie. They also trimmed their price target on Macquarie shares to $194.03.

This is despite them being pleased with Macquarie’s performance during the first quarter.

Goldman commented:

MQG 1Q23 performance was solid, which despite difficult conditions, was up on a strong pcp with annuity style businesses up significantly and capital markets facing businesses up slightly.

That said, management noted conditions did soften during the quarter and did update its divisional guidance, which implied broadly consistent Group NPAT to our previous forecasts.

While it believes Macquarie’s growth outlook is strong, Goldman expects the bank to report a decline in profits in FY23.

They say the Macquarie share price is at a premium to long-term averages, hence the neutral rating.

Other brokers are bullish. James also reports that Morgans has an add rating on Macquarie shares with a price target of $215.

Morgans likes Macquarie because of its exposure to long-term structural growth areas. The broker also thinks Macquarie’s trading businesses are well-placed to profit in the current volatile markets.

Morgans explained:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while the company continues to gain market share in Australian mortgages.

The Macquarie share price is down 16.5% in the year to date.

The post Why has the Macquarie share price had such a lacklustre start to August? appeared first on The Motley Fool Australia.

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More reading

• Morgans names 3 more of the best ASX shares to buy in August
• 5 things to do during ASX results season
• Broker gives its verdict on the Macquarie share price
• Macquarie share price lifts as CEO spruiks ‘very good inflation protection’
• ASX 200 midday update: Rio Tinto drops, tech shares jump, Macquarie impresses

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, Macquarie Group Limited, and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Macquarie Group Limited and 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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It’s been a busy week for the Westpac Banking Corp (ASX: WBC) share price amid the Reserve Bank of Australia’s (RBA’s) decision to hike the nation’s cash rate by another 50 basis points.

Luckily, one top broker is still expecting big things from the bank. Indeed, it’s been tipped to gain anther 19%.

At the time of writing, the Westpac share price is $21.94. That’s nearly 2% higher than it ended last week.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 0.9% so far this week while the S&P/ASX 200 Financials Index (ASX: XFJ) has gained just 0.7%.

So, what’s been going on with the banking giant and why are experts bullish on its future? Let’s take a look.

Is the Westpac share price set to surge 19%?

The Westpac share price has been on the up and up this week despite Australia’s interest rate being hiked to 1.85% on Tuesday.

The RBA made the decision to up the offical cash rate for a fourth consecutive month in a continuing effort to battle inflation.

Such moves spell both good and bad news for ASX 200 banks. It means they can reprice their loans and, as a result, increase their net interest margins (generally resulting in higher profits). However, it can also drag on housing prices and increases the risk of mortgage foreclosures.

Westpac followed the Commonwealth Bank of Australia (ASX: CBA)’s lead yesterday, upping interest rates on its home loans and deposits by the full 50 basis points.

But, despite this year’s cacophony of interest rate news, one broker is still notably bullish on Westpac.

Goldman Sachs has slapped Westpac shares with a $26.12 price target and a ‘conviction buy’ rating, as my Fool colleague James reports.

The broker is also tipping the bank to pay out $1.23 of dividends in financial year 2022 and $1.35 in financial year 2023.

That represents dividend yields of 5.6% and 6.2% respectively on its current share price or 4.7% and 5.2% on the broker’s targeted price.

The post Can Westpac shares deliver a competitive dividend yield and 20% upside in FY23? appeared first on The Motley Fool Australia.

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More reading

• Broker says Westpac share price ‘offers the most upside of the banks’
• How are ASX 200 bank shares responding to the RBA rate increase?
• 5 things to watch on the ASX 200 on Tuesday
• Will the RBA increase rates today?
• Leading brokers name 3 ASX shares to buy 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 Goldman Sachs. 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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TGIF! The S&P/ASX 200 Index (ASX: XJO) has seen fit to give investors a happy end to the trading week, at least so far. At the time of writing, the ASX 200 has risen by a healthy 0.52% and is back above the 7,010 point mark.

But let’s delve deeper into these gains and check out the ASX 200 shares currently at the top of the market’s trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Friday

Evolution Mining Ltd (ASX: EVN)

Our first ASX 200 share today is making a rare guest appearance on this list. Gold miner Evolution has had a sizeable 12.48 million shares change owners so far this Friday.

There’s been no news or announcements out of the company itself. Thus, we can probably lay the blame for this volume on the movements of the miner’s shares themselves.

Fortunately for investors, Evolution has had a cracking day, currently up a pleasing 2.83% at $2.72 a share.

Core Lithium Ltd (ASX: CXO)

Next up this Friday is lithium stock Core Lithium. So far, a hefty 14.56 million Core Lithium shares have bounced around the markets. This one’s not too hard to figure out. The Core Lithium share price is rocketing more than 7% so far this Friday to $1.30 a share.

This follows the announcement that the company has named its first CEO in Gareth Manderson, formerly of mining giant Rio Tinto Limited (ASX: RIO).

Investors are clearly very approving of this appointment, which explains the elevated volumes we are witnessing.

Pilbara Minerals Ltd (ASX: PLS)

Our third, final and most traded share today is another ASX 200 lithium stock in Pilbara Minerals. This Friday has seen a notable 16.68 million Pilbara shares swap hands as it currently stands. We haven’t heard anything of note out of Pilbara either today.

But that hasn’t stopped the Pilbara share price from gaining an eye-catching 3.43% to $2.86 a share today. This has possibly been spurred by the buying action we are also seeing in its stablemate Core Lithium.

It’s likely that it is this strong price rise that has prompted Pilbara to top today’s volume charts.

The post Here are the 3 most heavily traded ASX 200 shares on Friday appeared first on The Motley Fool Australia.

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More reading

• Why Core Lithium, European Lithium, Incannex, and Qantas shares are pushing higher
• Why did the Arafura share price plunge 19% today?
• ASX lithium shares facing ‘insatiable’ demand amid global funding gap
• Core Lithium share price leaps 5% as industry veteran takes reins
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts

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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a high. At the time of writing, the benchmark index is up 0.5% to 7,010.7 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are pushing higher:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up over 6% to $1.29. This morning this lithium developer announced the appointment of its new CEO. According to the release, former Rio Tinto Limited (ASX: RIO) senior leader Gareth Manderson will take the helm on Monday. Manderson has 28 years of experience in the mining and minerals sector.

European Lithium Ltd (ASX: EUR)

The European Lithium share price is up 8% to 8.85 cents. Investors have been buying this lithium explorer’s shares after it announced an agreement with BMW. According to the release, the two parties have entered into a non-binding memorandum of understanding for European Lithium’s first offtake of battery grade lithium hydroxide.

Incannex Healthcare Ltd (ASX: IHL)

The Incannex Healthcare share price is up 22% to 27.5 cents. Management notes that this acquisition adds 22 clinical and pre-clinical research and development projects to the Incannex pipeline. It rather ambitiously estimates that these projects represent aggregate addressable markets of approximately US$400 billion per annum.

Qantas Airways Limited (ASX: QAN)

The Qantas share price is up 2% to $4.65. This may have been driven by a broker note out of UBS this morning. According to the note, the broker has reiterated its buy rating and $6.55 price target on the airline operator’s shares. Its analysts believe that recent weakness has created a compelling buying opportunity for investors.

The post Why Core Lithium, European Lithium, Incannex, and Qantas shares are pushing higher appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Core Lithium share price leaps 5% as industry veteran takes reins
• Guess which ASX lithium share is rocketing 18% on a new deal with BMW
• ‘Higher costs and lower capacity’: Why this broker tips the Qantas share price to nosedive
• Are Qantas shares worth buying ahead of this month’s earnings result?

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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Ever since the Medibank Private Ltd (ASX: MPL) share price was first listed on the ASX boards back in 2014, the company has made a name for itself as a strong and consistent dividend payer.

Medibank use to be a government-owned company. But this changed when it was privatised in 2014 and subsequently listed on the ASX. Today, Medibank competes on a level playing field as a private company against its rivals in the health insurance business.

So on the surface, Medibank has built itself quite an impressive track record as an ASX dividend share. It began paying dividends to shareholders right off the bat in 2015 and increased its annual dividend payments every single year between 2015 and 2019. 2019 saw the company’s payouts peak at 15.6 cents per share.

But the pandemic has had an impact on this track record, and in 2020 Medibank cut its dividend for the first time. It doled out a total of 12 cents per share in 2020 and only slightly raised this in 2021 to 12.7 cents per share.

In 2022 thus far, Medibank has paid an interim dividend of 6.1 cents per share, fully franked. That was an increase on 2021’s interim payment of 5.8 cents per share, but not quite as high as the company’s last final dividend. That was a payment of 6.9 cents per share, also fully franked, that investors received back in September last year.

So this means that Medibank’s last two dividends were the interim dividend of 6.1 cents from March and the final dividend of 6.9 cents from last year.

Together, that’s an annual trailing dividend of 13 cents per share. On the current Medibank share price of $3.46 (at the time of writing), this gives the company a trailing yield of 3.76%.

How does the Medibank dividend stack up?

So how does this yield compare to Medibank’s largest ASX-listed rival NIB Holdings Limited (ASX: NHF)? NIB’s dividends have followed a similar upward trajectory over the past few years (including a 2020 dip).

The company’s last two dividend payments were an interim dividend of 11 cents per share, fully franked, from March. As well as the final dividend of 14 cents per share, also fully franked, that investors received last year.

Together, these two payments give NIB shares a trailing dividend yield of 3.43% on current pricing.

So we have Medibank with a 3.76% yield, and NIB with a yield of 3.43%. So clearly Medibank comes out on top in the dividend stakes today. Interestingly, Medibank trades at a higher price-to-earnings (P/E) ratio than NIB today.

Medibank’s current P/E ratio is 22.03, which is higher than NIB’s current ratio of 18.94. If both companies commanded the same P/E, the gap between both companies’ dividend yields would be even greater.

Something to consider for any income investor evaluating the Medibank share price today.

The post Medibank shares are currently trading on a 4% dividend yield. How does this compare to NIB? appeared first on The Motley Fool Australia.

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More reading

• What could a tighter household budget mean for NIB shares?
• Is the Medibank share price a smart buy for rising inflation?
• Why Allegiance Coal, LiveHire, NIB, and Pendal shares are dropping
• Here are the top 10 ASX shares today

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 recommended NIB Holdings 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 Arafura Resources Limited (ASX: ARU) share price crashed after the company emerged from a trading halt this morning. 

The mineral explorer’s shares are currently trading for 27.5 cents a share, down 14.06%. Earlier today, they hit an intraday low of 26 cents a share — an 18.75% fall.

The selloff puts the company’s losses for the week at more than 21%.

Arafura also announced the details of a capital raise this morning. Let’s check the details.

What did Arafura Resources announce? 

Arafura Resources shares were frozen on Wednesday 3 August pending its capital raising announcement. Today the company announced a $41.5 million placement of 156.7 million new fully paid ordinary shares.

Shares will sell for $0.265 each at a discount of 17.2% to the closing price on 2 August. They’ll be available on or around 12 August.

In addition to the new issue, the company will also allow investors to purchase new free attaching stock options. The total value of options proposed is $78.4 million with an issuance date of 25 August.

The new options will have an exercise price of $0.34 with an expiry date 18 months from the date of issue. The company is offering one free attaching option for every two new shares purchased. Arafura Resources intends to lodge a prospectus with ASIC for the options on or around 22 August.

What the funds will be used for?

Arafura Resources said it will use the funds to increase the company’s capacity to secure neodymium oxide as part of its Nolans project. Neodymium oxide is a rare earth material used in the production of motors for electric vehicles as well as other applications.

The capital will also help speed up progress in completing the Nolans project. Some activities include launching the tendering for new construction contracts and for front-end engineering, as well as for general working capital purposes.

Share price snapshot

Despite this week’s slump, the Arafura Resources share price is up 34% year to date and 109% over the last 12 months.

That’s well above the S&P/ASX 200 Index‘s loss of 6% so far in 2022 and a 7% loss in the past year.

The company has a current market capitalisation of around $443 million.

The post Why did the Arafura share price plunge 19% today? appeared first on The Motley Fool Australia.

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More reading

• Why Amcor, Arafura, Block, and Janus Henderson shares are dropping
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts
• 5 things to watch on the ASX 200 on Friday
• ‘We are in for the long haul’: Rio Tinto CEO defends future spending in the face of recession fears
• NRW share price leaps 11% on guidance upgrade for FY22

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 on track to end the week with a solid gain. In afternoon trade, the benchmark index is up 0.45% to 7,006.8 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Amcor (ASX: AMC)

The Amcor share price is down almost 3% to $17.80. This appears to have been driven by a broker note out of Morgan Stanley this morning. According to the note, the broker has downgraded the packaging company’s shares to an equal-weight rating from overweight. Morgan Stanley has concerns about Amcor’s outlook.

Arafura Resources Limited (ASX: ARU)

The Arafura share price is down 14% to 27.5 cents. This morning this rare earths company announced that it has received firm commitments to raise $41.5 million via a placement. These funds are being raised at 26.5 cents per new share, which represents a 17% discount to its last close price. Proceeds will be used to progress the development of the Nolans Project.

Block Inc (ASX: SQ2)

The Block share price is down 6% to $118.48. Investors have been selling this payments company’s shares after its second quarter update disappointed. Although Block delivered a result largely in line with the market’s expectations, its guidance appears to have underwhelmed investors. The company is expecting its growth to moderate early in the third quarter.

Janus Henderson Group (ASX: JHG)

The Janus Henderson share price is down 3% to $35.35. This morning this fund manager’s shares traded ex-dividend for its latest distribution. Eligible shareholders can now look forward to receiving its 55.8 cents per share quarterly unfranked dividend later this month on 24 August.

The post Why Amcor, Arafura, Block, and Janus Henderson shares are dropping appeared first on The Motley Fool Australia.

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More reading

• Did Zip really outgrow former ASX favourite Afterpay in the June quarter?
• Block share price tumbles 6% as quarterly earnings sink
• Block share price in danger of sinking following Q2 update
• Brokers name 2 ASX dividend shares to buy now
• 5 things to watch on the ASX 200 on Friday

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 Block, Inc. The Motley Fool Australia has positions in and has recommended Amcor Limited and Block, Inc. 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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You heard it here first, folks. Zip Co Ltd (ASX: ZIP) outperformed former market darling Afterpay in some crucial measures in the June quarter. One of which was growth in customer spending.

Perhaps the company’s comparatively strong growth has helped bolster the Zip share price lately.

Zip’s stock has gained more than 140% over the last 30 days to trade at $1.24. Though, it’s still 71% lower than it was at the start of 2022.  

So, how did the former S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) giant succumb to its comparatively minute competitor in the June quarter? Let’s take a look.

Did Zip really outgrow the former ASX fave?

Owners of Zip shares, rejoice. The company recorded notably higher growth than Afterpay in the June quarter, beating its former ASX peer’s total transaction growth by 7%.

On releasing Block Inc (ASX: SQ2)’s latest quarterly results today, the US-based tech monolith announced its recently acquired Afterpay brought in US$5.3 billion of total transactions over the three months ended 30 June.

That represents a year-on-year increase of 13%.

Afterpay’s transaction growth was slowed by shifts to online spending, competition, and foreign currency impacts.

Block chief financial officer Amrita Ahuja noted Afterpay’s growth held up better in its “more mature regions” like Australia, continuing:

Trends have flowed more in North America, a newer market for Afterpay, where the primary vertices of fashion and beauty are both discretionary retail, and where the Afterpay in-person product is still ramping up.

Meanwhile, as my Fool colleague James reported last month, Zip boasted $2.2 billion of transactions in the June quarter – a 20% year-on-year increase. That’s not too shabby.

Its growth was mostly driven by an uptick in the US – the same market Afterpay is seemingly struggling in.

Zip’s transaction volume in the nation rose 17% year on year last quarter. That in Australia and New Zealand lifted just 7%.

Whether the remaining ASX 200 BNPL stock can continue to compete, however, remains to be seen. Particularly as Ahuja pointed to Afterpay’s potential upwards trajectory, saying:

As we integrate Afterpay, we see an opportunity to further diversify, particularly in the US with our base of millions of Square sellers across a range of high ticket verticals and omni-channel products.

The post Did Zip really outgrow former ASX favourite Afterpay in the June quarter? appeared first on The Motley Fool Australia.

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More reading

• Why Amcor, Arafura, Block, and Janus Henderson shares are dropping
• Block share price tumbles 6% as quarterly earnings sink
• Block share price in danger of sinking following Q2 update
• 5 things to watch on the ASX 200 on Friday
• 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 Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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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Shares in the global energy giant Woodside Energy Group Ltd (ASX: WDS) are down 2% and other ASX energy shares are also having a day in the red.

At the time of writing, the Woodside share price is trading at $30.89. It has fallen almost 5% over the past month.

The Santos Ltd (ASX: STO) share price is also down today by 1% to $6.93 and the Ampol Ltd (ASX: ALD) share price is down 2.17% to $32.49.

ASX coal shares are also lower — Whitehaven Coal Ltd (ASX: WHC) by 3.62% and Yancoal Australia Ltd (ASX: YAL) by 2.67%.

The S&P/ASX 200 Energy Index (ASX: XEJ) is down 1.85% today.

Why are ASX energy shares having a tough day?

This is likely a response to falling oil prices overnight.

As my Fool colleague James reported this morning, the WTI crude oil price dropped 2.5% to US$88.42 a barrel and the Brent crude oil price lost 3% to US$93.91 a barrel.

Fears of a demand slowdown after a build-up in US crude and gasoline inventories sent the oil prices to multi-month lows.

They are rebounding now though, with Brent up 0.08% and WTI crude up 0.26% at the time of writing.

Woodside share price snapshot

The Woodside share price is up 36% in the year to date but down 5% over the past five trading days.

The last price-sensitive news released by Woodside was its second quarter 2022 report on 21 July.

As my Fool colleague Bernd wrote, the report revealed a 44% boost to revenue compared to Q1 2022. This also represented a 159% boost compared to Q1 2021.

Woodside produced 33.8 million barrels of oil equivalent (MMboe), which was a 60% increase from the prior quarter and up 49% from Q2 2021.

The Woodside share price dipped 0.55% on the day the report was released.

The post Why is the Woodside share price in a slump on Friday? appeared first on The Motley Fool Australia.

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• Which ASX 200 shares will prove to be dividend heavyweights this earnings season?
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Motley Fool contributor Bronwyn Allen has positions in Woodside Petroleum Ltd. 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 pleasing end to the trading week so far this Friday for the South32 Ltd (ASX: S32) share price.

At the time of writing, South32 shares are up a healthy 2.41% at $3.83 each. That looks pretty good against the S&P/ASX 200 Index (ASX: XJO), which is also up today but only by 0.39%.

But this diversified miner has had a lacklustre few months. South32 shares remain down by almost 6% over 2022 thus far, although the company is up a far more pleasing 29.4% over the past year.

So where might this mining company be heading next?

This ASX broker rates South32 share price as a buy

Well, it’s a decisive ‘higher’ if you ask one of ASX’s most prominent brokers. As my Fool colleague James covered earlier this week, broker Morgans is currently very bullish on the South32 share price.

Morgans currently rates the miner as an add. It has a 12-month share price target of $6 on the company’s shares.

If this share price target became reality, it would mean that South32 shares are heading more than 56% higher over the coming 12 months. Here’s some of how Morgans justified this optimistic share price target:

S32 has transformed its portfolio by divesting South African thermal coal and acquiring an interest in Chile copper, substantially boosting group earnings quality, as well as S32’s risk and ESG profile.

Unlike its peers amongst ASX-listed large-cap miners, S32 is not exposed to iron ore. Instead offering a highly diversified portfolio of base metals and metallurgical coal (with most of these metals enjoying solid price strength).

We see attractive long-term value potential in S32 from de-risking of its growth portfolio, the potential for further portfolio changes, and an earnings-linked dividend policy.

Morgans is also expecting big things from South32 when it comes to dividends. It has pencilled in a fully franked annual dividend of 28 cents per share for FY2022, which it sees rising to 35 cents per share for FY2023.

If this did turn out to be accurate, investors would enjoy forward yields of 7.25% and 9.07% on today’s pricing.

Another broker who sees $6

Morgans is not the only broker licking its lips over the South32 share price today though. As we covered last month, brokers at Macquarie are also eyeing off the company “due to the company’s attractive valuation, strong free cash flow generation, and positive dividend outlook”.

Macquarie has an outperform rating on South32 shares, also with a share price target of $6. It’s expecting even higher dividends from the miner, forecasting payments of 34.5 cents per share for FY2022 and 40.6 cents per share for FY2023.

At the current South32 share price, this ASX 200 miner has a market capitalisation of $17.75 billion, with a dividend yield of 4.36%.

The post Top broker predicts 50% upside for South32 share price. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Broker names 3 of the best ASX shares to buy in August
• These ASX dividend shares have been named as buys for income investors
• Top ASX shares to buy in August 2022
• Here’s why experts say these are the ASX mining shares to buy now

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 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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