At lunch on Thursday, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a strong gain. The benchmark index is currently up 0.8% to 7,240.3 points.

Here’s what is happening on the ASX 200 today:

AGL demerger scrapped

The AGL Energy Limited (ASX: AGL) share price is tumbling lower on Monday after the energy giant announced that it is scrapping its demerger. Although the AGL board continues to believe the demerger would have been “the best way forward,” it concedes that it was unlikely to secure the required shareholder votes. AGL estimates that it has spent $160 million on the demerger process to date. In response to the news, AGL’s chairman and CEO announced their exits.

A2 Milks jumps

The A2 Milk Company Ltd (ASX: A2M) share price is racing higher today. This follows news that its smaller rival Bubs Australia Ltd (ASX: BUB) has signed a deal with the Biden Administration for the supply of 1.5 million tins of infant formula. Investors appear to be hoping that the embattled infant formula company will also strike a similar deal. The US is currently facing major shortages due to the closure of a major manufacturing plant.

Tech shares storm higher

The tech sector has played a key role in driving the ASX 200 higher on Monday. Strong gains from the likes of Block Inc (ASX: SQ2) and Zip Co Ltd (ASX: ZIP) have driven the S&P ASX All Technology index 3.1% higher. Investors were scrambling to buy tech shares after data showed that US inflation is slowing.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the A2 Milk share price with a 10% gain amid hopes that the company will get a boost from US infant formula shortages. Going the other way, the Appen Ltd (ASX: APX) share price is the worst performer with a 3% decline. Investors have been selling this struggling artificial intelligence data services company’s shares since its takeover approach was withdrawn.

The post ASX 200 midday update: AGL demerger scrapped, A2 Milk jumps appeared first on The Motley Fool Australia.

More reading

• Why is the A2 Milk share price climbing 11% on Monday?
• AGL share price deflates 4% in light of new future
• Why is the Block share price surging 8% higher today?
• Why these ASX coal shares could be ‘bigger than Ben-Hur’: fundie
• ‘Intestinal fortitude’ or just wishful thinking? Why do some investors stick with Zip shares?

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 Appen Ltd, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. 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 believe that this could be a good time to consider investing in the exchange-traded fund (ETF) Vanguard Msci Index International Shares ETF (ASX: VGS).

There are plenty of ETFs on the ASX to choose from. However, I believe that the VGS ETF may be one of the leading picks for investors to choose from in the ETF space.

The ETF is about investing in a portfolio of global shares from a wide variety of major developed economies.

When people talk about the ‘global’ share market, they are sometimes talking about the benchmark that this Vanguard ETF seeks to follow.

I believe that by simply tracking the long-term return of the global share market, investors can see decent results. There are a few different reasons why I like the VGS ETF.

Low fees

One of the main reasons why this ETF is so popular is because it enables regular investors to track the returns of the global share market for a very low fee.

According to Vanguard, this ETF has an annual management fee of just 0.18% per annum. It’s not the cheapest ETF that Vanguard offers, but I think that this low cost is very compelling because it means investors get a vast majority of the net returns that the underlying shares deliver.

I think that the fees are also reasonable when looking at the diversification of the ETF.

Diversification

For me, the Vanguard Msci Index International Shares ETF could be one of the best options for diversification.

According to Vanguard, at the end of April 2022, the ETF had around 1,500 different positions. That’s a lot different businesses. I think this level of holdings is useful for reducing the risk for individual companies.

It’s not just a technology ETF, though IT does get the biggest allocation at 22.1% of the portfolio as at April 2022. There are many different sectors represented including healthcare, financials, consumer discretionary, industrials, consumer staples, communication services, energy, materials, utilities, and real estate.

Strong portfolio holdings

The biggest positions in an ETF’s portfolio can have the largest effect on the returns.

Many of the world’s strongest technology names are held by the VGS ETF. Within the top ten holdings are names like: Apple, Microsoft, Alphabet, Amazon, Tesla, Meta Platforms, and Nvidia. Berkshire Hathaway is also one of the biggest holdings.

I think that strong businesses can generate good investment returns over time.

As always, past performance is not a reliable indicator of future performance. However, with the quality names in this portfolio, it’s not too surprising that even after the recent declines, the VGS ETF has returned an average of 11.4% per annum in the five years to April 2022.

Why invest now with the VGS ETF?

I’ve talked about what investors get with this ETF. I think the current price is now much more attractive after a fall of more than 10% in 2022.

Investing is about picking a good long-term investment, but it’s also about buying assets at a good price in my opinion. The VGS ETF is now cheaper and I think being able to buy a large group of businesses at a cheaper price is attractive.

The post Why now could be a good time to invest in Vanguard Msci Index International Shares ETF appeared first on The Motley Fool Australia.

More reading

• 3 fantastic ETFs for ASX investors to buy next week
• Why I think it’s a good time to buy the Vanguard MSCI Index International Shares ETF (VGS)
• 3 top ETFs for ASX investors to buy now
• VGS: Were you better off buying the S&P 500 ETF?
• 3 fantastic ETFs for ASX investors to buy this week

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Meta Platforms, Inc., Microsoft, Nvidia, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Meta Platforms, Inc., Nvidia, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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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 well-rounded investment portfolio should include dividend-paying companies. As a shareholder, dividends are a way to be rewarded for holding on to your investments, and when utilized the right way, they can make up a good portion of your portfolio’s total return. However, not all dividend-paying companies are created equal. If you’re looking for consistent, well-established companies, look no further than Dividend Kings.

Here’s why you should let them lead you to the promised land.

They’ve stood the test of time

Dividend Kings got their honorable title because they’ve managed to increase their yearly dividend for at least 50 consecutive years. Being able to maintain a dividend for that long is an accomplishment in itself, but being able to increase it for that many years is a completely different feat. With Dividend Kings, you know you’re investing in companies that have stood the test of time.

Any company with the Dividend King title in 2022 has increased its dividend since 1972, at a minimum. During that time, these companies have made it through some of the toughest economic conditions the U.S. has seen. Dividend Kings have made it through:

• Black Monday (1987).
• Dot-com bubble collapse (2000).
• The Great Recession/Financial crisis (2008-2009).
• COVID-19 pandemic (2020).

There are many solid companies who had to cut their dividends during those times, including prominent Fortune 500 companies, but Dividend Kings stood tall and weathered the storm. 

There’s power in the DRIP

While receiving dividends can be a great source of income, the real power comes when you enroll in your brokerage company’s dividend reinvestment program (DRIP). With DRIP, any dividends you receive are automatically used to buy more shares of whatever company or fund paid them out. This adds to the power of compound interest.

Let’s imagine we have two funds — one without a dividend and one with a 2.5% dividend yield — and you contributed $500 into both monthly, receiving a 10% annual return (the historical average of the S&P 500). Assuming the dividend yield stays the same, here’s how the account totals would look in 25 years:

Fund	Dividend Yield	Amount Contributed in 25 Years	Account Total After 25 Years
Fund 1	0%	$150,000	$590,000
Fund 2	2.5%	$150,000	$864,000

Data source: author calculations

With zero additional effort, receiving (and reinvesting) dividends increased your account total by roughly $274,000. As a dividend investor, it helps to delay receiving payouts in cash until retirement, when having an additional source of income can be more beneficial. Until then, you can reap major rewards by using a DRIP. Even if you manage to accumulate $500,000 in a fund with a 2.5% yield, that’s $12,500 in yearly payouts.

More importantly, it helps to invest in Dividend Kings because you can, in good faith, not only rely on the dividend but also anticipate it increasing. Your dividend payout increases, your number of shares increases, and you receive higher payouts; it’s a cycle you want to get stuck in. 

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

The post Let Dividend King stocks lead you to the promised land appeared first on The Motley Fool Australia.

More reading

• Why is the A2 Milk share price climbing 11% on Monday?
• AGL share price deflates 4% in light of new future
• Why is the Block share price surging 8% higher today?
• Why is the Elders share price in reverse today?
• 2 ETFs I’d buy in June 2022

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.

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

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It’s proving to be a good day for the A2 Milk Company Ltd (ASX: A2M) share price despite the company’s silence. However, there has been good news from one of its peers.

At the time of writing, the A2 Milk share price is $4.79, 10.88% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 1%.

Let’s look at what might be driving the milk and infant formula company’s stock higher.

What’s going on with A2 Milk on Monday?

A2 Milk shares are surging on Monday. The gains come amid news the United States is addressing a major baby formula shortage.

That’s particularly good news for ASX-listed baby formula company Bubs Australia Ltd (ASX: BUB). It’s shaken on an agreement with the US Government that will see it providing 1.25 million tins of formula to the country.

It comes after a major US formula plant was shut down due to a bacterial infection.

While the news might have helped spur A2 Milk shares’ gains, it’s done wonders for the Bubs Australia share price.

Right now, the latter is 45% higher than it was at the end of Friday’s session.

A2 Milk’s revenue from infant nutrition products dropped 10.5% over the first half of financial year 2022. The dip was mostly due to fewer sales in China.

Thus, some market participants might be hopeful that a shortage in the US could bring higher demand for A2 Milk’s formula products.

A2 Milk share price snapshot

Sadly, today’s gains haven’t been enough to boost A2 Milk shares into the long-term green.

Right now, the company’s stock is 16% lower than it was at the start of 2022. It has also fallen 15% since this time last year.

At the current share price, the A2 Milk company presides a market capitalisation of more than $3.2 billion.

The post Why is the A2 Milk share price climbing 11% on Monday? appeared first on The Motley Fool Australia.

More reading

• Bubs share price rockets 77% on US deal with Biden Administration
• Low on milk? Fear not, here’s why Citi is bullish on the A2 Milk share price
• These 3 ASX shares have plunged this year: Expert reveals what to do
• Why is the Bubs share price toddling higher on Monday?
• Can A2 Milk shares benefit from the US baby formula shortage?

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 recommended A2 Milk and BUBS AUST 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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The AGL Energy Limited (ASX: AGL) share price is feeling the sting of uncertainty on Monday morning.

In early morning trade, shares in the polarising energy giant are down 2.5% to $8.65. However, moments ago the AGL share price was in the red by as much as 4.6%.

The undesirable performance comes amid news AGL will no longer proceed with its plan to split the company. Further, shareholders are making sense of what the path that lies ahead may now look like.

No more demerger, but now what?

As I covered in my earlier article today, the devised demerger of AGL Energy has been the target of ridicule for months. No one has been more vocal about potential shareholder destruction than tech billionaire Mike Cannon-Brookes.

Today, it appears the substantial AGL shareholder stands victorious in his battle against the demerger proposal. Triumphantly tweeting this morning, Cannon-Brookes said: “We embrace the opportunities of decarbonisation with Aussie courage, tenacity & creativity.”

Wow. A huge day for Australia

Had to sit down & take it in. This live shot couldn’t be a better metaphor for a better, greener path ahead

We embrace the opportunities of decarbonisation with Aussie courage, tenacity & creativity.

Lots of work but we CAN do this pic.twitter.com/mSCQl554C0

— Mike Cannon-Brookes (@mcannonbrookes) May 29, 2022

https://platform.twitter.com/widgets.js

However, now the activism comes to the pointy end of the stick: what does AGL do from here? It’s a question that is especially important to shareholders as the AGL share price slips today.

Furthermore, the question holds significant weight considering the company is estimated to have forked out $160 million to date on a now canned concept.

According to the announcement, the first order of business in the post-demerger world is to conduct a strategic review. This will encompass a broad assessment of what will create long-term value for shareholders amid an increasingly environmentally conscious landscape.

Additionally, the review will do the following:

• Leverage the analytical work carried out for the demerger proposal
• Assess any new approaches from third parties in terms of financial transactions; and
• Conduct further consultation with stakeholders including Grok Ventures, regulators, governments, and communities

The company added it believes the closure dates of its coal-fired power stations will continue to be accelerated.

AGL share price stumbles on board breakup

On Friday, reports flowed through financial media indicating that Cannon-Brookes’ Grok Ventures will scout out two seats at the AGL table if the demerger fell through. Well, here we are a few days later with that exact scenario.

Notably, the spots are already being made available by AGL board incumbents. Both Jacqueline Hey and Diane Smith-Gander are two non-executive directors resigning from the board. Meanwhile, chair Peter Botten and CEO Graeme Hunt are relinquishing their positions.

The AGL share price may potentially be on shaky ground until shareholders have a clearer outlook.

The post AGL share price deflates 4% in light of new future appeared first on The Motley Fool Australia.

More reading

• AGL share price on watch as demerger scrapped
• 5 things to watch on the ASX 200 on Monday
• How do ASX shares typically perform following a demerger?
• Australia’s renewable energy output could triple by 2030 under Labor. Will that impact these ASX 200 shares?
• AGL share price lifts despite intensifying demerger opposition

Motley Fool contributor Mitchell Lawler 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 has been a great start to the week for the Block Inc (ASX: SQ2) share price.

In morning trade, the payments giant’s shares are up a sizeable 8% to $126.25

Why is the Block share price surging higher?

The rise in the Block share price on Monday mirrors the gains made by the company’s NYSE listed shares on Friday night.

Block’s shares stormed 8.5% higher on Wall Street amid a big rebound in the tech sector. This rebound helped drive the tech-focused Nasdaq index a hefty 3.3% higher during the session.

This has rubbed off on the Australian tech sector this morning, with the S&P ASX All Technology index up an equally strong 3.1% at the time of writing.

But what’s driving tech shares higher?

Investors were flooding back into the tech sector on Friday night following the release of inflation data out of the United States.

That data revealed that US inflation slowed in April after reaching a forty-year high in March.

This has sparked hopes that inflation won’t be as bad as feared and that the US economy won’t fall into a recession.

It could also mean the US Federal Reserve doesn’t have to be as aggressive with its rate hikes, which would bode well for tech sector valuations.

The post Why is the Block share price surging 8% higher today? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week
• Here are the top 10 ASX shares today
• What’s happening with ASX 200 tech shares today?
• Here’s why ASX 200 tech shares are under pressure on Tuesday

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 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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Elders Ltd (ASX: ELD) shareholders might be wondering why the share price is shedding 2.44% to $13.20 today.

The agribusiness company released its half-year results last week, reporting double-digit growth across key financial metrics.

Subsequently, the board opted to significantly increase its interim dividend to eligible investors.

Let’s take a look below at why Elders shares are falling during early morning trade.

Shareholders lock in the Elders interim dividend

The Elders share price is in reverse after trading ex-dividend today.

This means if you purchased shares in the company before today, you’ll receive the dividend. However, if you purchase Elders shares from today, the upcoming dividend will go to the seller.

Historically, when a company reaches its ex-dividend day, its shares tend to fall in proportion to the dividend paid out.

If you’re wondering why, eligible shareholders tend to quick offload after securing the dividend, looking for other alternative investments.

In addition, the company’s value is worth a tad less after paying out a portion of its profits to shareholders.

When can shareholders expect payment?

For those eligible for Elder’s interim dividend, shareholders will receive a payment of 28 cents per share on 17 June.

The upcoming dividend is 30% franked.

Franking credits, otherwise known as imputation credits, are highly regarded in the investing world. This is a type of tax credit that is passed onto shareholders when dividend payments are made by a company.

Furthermore, investors who elect for the dividend reinvestment plan (DRP) will see a number of shares added to their portfolio. This will be based on a 10-day volume-weighted average price from 31 May to 9 June.

There is no DRP discount rate and the last election date for shareholders to opt in is 2 June.

Elders share price summary

Since the beginning of 2022, Elders shares have edged 7.7% higher following an improvement in seasonal trading conditions.

It’s worth noting that Elders shares touched a multi-year high of $15.32 on Monday 23 May.

In comparison, the S&P/ASX 200 Index (ASX: XJO) surged in the earlier months of 2022, but has reversed its gains.

The ASX 200 benchmark index is down around 3% year to date.

Based on valuation grounds, Elders commands a market capitalisation of roughly $2.06 billion, and has a trailing dividend yield of 3.18%.

The post Why is the Elders share price in reverse today? appeared first on The Motley Fool Australia.

More reading

• Experts name 2 top ASX dividend shares to buy now
• This ASX 200 company just hiked its latest dividend by almost 70%, here’s what you need to know
• Here are the top 10 ASX shares today
• 3 ASX All Ordinaries shares starting the week with new 52-week highs
• Why BrainChip, Codan, Elders, and Karoon Energy are storming higher

Motley Fool contributor Aaron Teboneras 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 Elders 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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I think there are plenty of good exchange-traded fund (ETF) opportunities to find on the ASX share market for June 2022.

At times like this, I think it’s worth remembering one of the cliché phrases of investing: ‘Buy low, sell high’. Investors don’t necessarily need to sell when prices go higher. But I do think that when prices are lower, it’s good to have a look for potential investments.

Sometimes it can be tricky to know which investment to go for. So, why not pick an ETF?

ETFs allow investors to buy a whole group of shares at once, which is pretty handy for diversification.

With that in mind, I like the look of these two ETFs.

VanEck MSCI International Quality ETF (ASX: QUAL)

This ETF is a portfolio of around 300 international businesses which are rated as quality businesses.

What counts as quality? These businesses should rank well on three factors: return on equity (ROE), stable year-on-year earnings growth, and low financial leverage.

In other words, it’s a portfolio of businesses that are consistently growing profit, have low levels of debt, and require a lot of shareholder funds to make a profit.

At the end of April 2022, the biggest positions in the portfolio were familiar names: Apple, Microsoft Corporation, Meta Platforms, Nvidia, Johnson & Johnson, UnitedHealth Group, Alphabet, Visa and Mastercard.

I think that the QUAL ETF is looking much better value after its almost 20% decline in 2022. The 0.4% annual management fee also seems very reasonable to me.

With this portfolio focused on quality, I think it will do well over the longer term, starting from this lower price.

BetaShares Global Sustainability Leaders ETF (ASX: ETHI)

This ETF is another one that gives exposure to a portfolio of global names. However, it is different compared to most other options.

BetaShares Global Sustainability Leaders ETF is about investing in a portfolio of “large global companies that meet strict sustainability and ethical standards”.

This portfolio excludes a number of industries including fossil fuel producers, armaments, gambling, alcohol and junk foods. Companies also have to be in the top third of performers in terms of ‘carbon efficiency’ for their industry. Or they must engage in activities that can help reduce carbon use by other industries.

Interestingly, the returns of the ETHI ETF have been solid, in my opinion. However, it’s important to note that past performance is not a reliable indicator of future performance. At end of April 2022, the ETHI ETF has returned an average of 17.3% per annum over the last five years. That return compares to an 11.4% return per annum for the widely-used global shares benchmark, the MSCI World ex-Australia Index, over the last five years.

At the latest disclosure, these are some of the biggest holdings: Visa, Home Depot, Apple, Mastercard, Toyota Motor Corp, Nvidia, UnitedHealth Group, Cisco Systems, Adobe and ASML Holding. I think these holdings tick the ‘quality’ box as well.

The post 2 ETFs I’d buy in June 2022 appeared first on The Motley Fool Australia.

More reading

• 2 great ETFs I’d buy for my portfolio
• 2 high quality ETFs for ASX investors to buy
• 2 buy-rated quality ETFs for May 2022: experts

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Adobe Inc., Alphabet (A shares), Alphabet (C shares), Apple, Cisco Systems, Mastercard, Meta Platforms, Inc., Microsoft, Nvidia, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Apple, Mastercard, Meta Platforms, Inc., 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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The future of ASX coal shares could be burning bright. This is despite their product falling out of favour with the majority of Australians.

While environmentally-conscious investors have shunned the polluting sector, at least one fund manager believes there is significant upside to some ASX coal miners.

The portfolio manager of the Atlantic Pacific Australian Equity Fund, Nicolas Bryon, is a big believer. He reckons the financial results to be reported by coal companies will be “bigger than Ben-Hur”, as reported by the Australian Financial Review.

ASX coal shares are on fire

ASX coal shares are already on fire over the past year. The share prices of Whitehaven Coal Ltd (ASX: WHC) and Yancoal Australia Ltd (ASX: YAN) have tripled in value over the period.

The New Hope Corporation Limited (ASX: NHC) share price isn’t far behind with a 160% advance. In contrast, the S&P/ASX 200 Index (ASX: XJO) is barely in the black over the last 12 months.

Overflowing coffers

It seems ASX coal shares have not finished outperforming either. Bryon believes the market remains slow to appreciate the fundamental upside that is yet to come. Some coal shares could even outpace their iron ore brethren.

Bryon commented to the AFR:

As we saw with the rally in iron ore over the past couple of years post-COVID-19, the extreme cashflow generation led to dramatically increased dividends and buyback potential of more than 10 per cent of equity.

In the case of thermal coal companies over the coming year, this increases by at least a factor of two. I have never seen anything like this in my entire career which spans 25 years.

Mega share buybacks and capital returns

What has gotten him so excited is his belief that the cash ASX coal miners will produce over the next few quarters will be so large that they could buy back all their shares on market – “and then some”.

ASX iron ore shares like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have won favour thanks to their outsized dividends and capital management programs.

They have funded their generous handouts through the high prices they are getting for their iron ore.

Top buy picks among ASX coal shares

Coal is also in hot demand, particularly since the outbreak of the Russian-Ukraine war. The large cap ASX coal miner that Bryon is backing is Whitehaven.

At the smaller end of the market, the fundie likes the Terracom Ltd (ASX: TER) share price.

However, there is such a thing as too much of a good thing. Bryon acknowledges that he is worried that extreme coal and energy prices could trigger a recession.

The post Why these ASX coal shares could be ‘bigger than Ben-Hur’: fundie appeared first on The Motley Fool Australia.

More reading

• Here’s why the Yancoal share price is crashing 15% lower today
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• Here are the top 10 ASX shares today
• Here are the 3 most traded ASX 200 shares on Friday

Motley Fool contributor Brendon Lau 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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Experts have named some ASX dividend shares as opportunities.

A business isn’t necessarily a buy just because it pays a dividend. Brokers look for investments that look good in value and have a compelling future.

It’s important to keep in mind that brokers can be wrong about projections for a business, and that no one is perfect. In saying that, below are two potential ASX dividend share ideas.

Super Retail Group Ltd (ASX: SUL)

Super Retail is a retailing business that operates a number of brands including Supercheap Auto, Rebel and BCF.

One of the brokers that currently rates the business as a buy is Credit Suisse, with a price target of $14.40. That implies a possible upside of around 50% over the next year if the broker ends up being right.

Credit Suisse points to a recent trading update as a reason for its optimism.

The ASX dividend share noted that FY22 second half like for like sales for weeks 27 to 43 (compared to FY21) for Supercheap Auto were up 8.4%, for Rebel were down 1.8%, for BCF were up 7.6% and for Macpac were up 1.2%. For the group, like for like sales were up 4.4%.

Supercheap Auto and BCF delivered record Easter trading results, with both of them benefiting from strong consumer demand and high stock availability in categories.

Credit Suisse pointed to the company’s potential to keep growing its store network over the next few years.

The broker thinks that Super Retail is going to pay a grossed-up dividend yield of 10.75% in FY22 and 8.3% in FY23.

Inghams Group Ltd (ASX: ING)

Inghams is one of the largest poultry businesses in Australia.

Credit Suisse also rates Inghams as a buy, with a price target of $4.05. That implies a potential rise of more than 40%.

Inghams has provided commentary that means the second half of FY22 could be weak, according to the broker.

Indeed, in the ASX dividend share’s own words, it said that the second half has been “seriously impacted by the ongoing effects of the COVID-19 Omicron outbreak.” Costs remained elevated across the business, mainly driven by feed, supply chain and transport costs.

While employee attendance levels have improved, COVID-19 continues to affect operations and role vacancies remain elevated due to labour shortages.

However, the company has managed to achieve some price increases. The business is actively seeking price increases to offset the higher costs. Wholesale pricing has recently improved.

It also reported that there has been a product mix shift, which has had a detrimental effect on the profit margin.

That’s why Credit Suisse is expecting the Inghams grossed-up dividend yield to be 4.8% in FY22 and 9.6% in FY23.

The post Experts say these 2 ASX dividend shares are buys 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 positions in and has recommended Super Retail Group Limited. The Motley Fool Australia has positions in and has recommended Super Retail 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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