If you’re looking to bolster your income portfolio with some ASX dividend shares, then you may want to check out the ones listed below.

Here’s why analysts rate these dividend shares as buys:

Dexus Industria REIT (ASX: DXI)

The first ASX dividend share that could be in the buy zone is Dexus Industria.

The company, which was previously known as APN Industria, has a focus on industrial and office  properties that provide functional and affordable workspaces for businesses.

One broker that is very positive on the company is Morgans. Its analysts appear confident that Dexus Industria is well-placed to deliver sustainable income and capital growth prospects for shareholders over the long term.

Its analysts are forecasting attractive dividends per share of 17.3 cents in FY 2022 and 17.6 cents in FY 2023. Based on the current Dexus Industria share price of $2.71, this will mean yields of 6.4% and 6.5%, respectively.

Morgans has an add rating and $3.65 price target on the company’s shares.

Telstra Corporation Ltd (ASX: TLS)

Another ASX dividend share that could be in the buy zone is Telstra.

After a long period of earnings declines and dividend cuts, the telco giant is back on form and now targeting solid and sustainable growth. This is being driven by the success of its transformative T22 strategy and the upcoming growth-focused T25 strategy.

The team at Morgans is also very positive on Telstra. It was pleased with the telco giant’s first half results in February, noting that its “performance is tracking in the right direction” again.

As for dividends, it expects fully franked dividends per share of 16 cents in FY 2022 and FY 2023. Based on the current Telstra share price of $3.86, this will mean yields of 4.15%.

Morgans has an add rating and $4.56 price target on its shares.

The post Here are 2 quality ASX dividend shares to buy according to experts appeared first on The Motley Fool Australia.

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More reading

• Own Telstra shares? Here are details on the telco’s 2,000 new Australian call centre workers
• How big will the Telstra dividend yield be in FY23?
• Here’s why brokers rate these ASX dividend shares as buys
• Experts name 2 ASX dividend shares to buy with big yields
• Telstra share price in the red despite taking out green crown

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 positions in and has recommended Telstra Corporation 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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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Redpoint Australian Equity Income Fund portfolio manager Max Cappetta names three ASX shares he’d buy right now, which all pay out dividends.

Hottest ASX shares

The Motley Fool: What are the three best stock buys right now?

Max Cappetta: First one is Orora Ltd (ASX: ORA) — a packaging company. 

They operate in about 70 countries. Key markets are, obviously Australia, but also North America. Now, for people that may not know the company name, there’s every chance that you interact with Orora many times every day, because they provide bottling and caps, aluminium beverage cans, soft packaging boxes, and cartons. They’re really the dominant player in Australia. 

They’re less dominant in North America. And I think this is the interesting part of their business because being able to grow their market share in North America really gives them an interesting growth runway over the next couple of years.

Now the company has a stated payout ratio of around 60% to 80% of their net profit after tax (NPAT). So at the moment, with the share price having fallen down recently, it’s at a pretty attractive yield of 4.5%. That’s unfranked, so you do get that cash dividend yield and look, it’s about 30% below its pre-COVID price of $4. We think that this looks pretty attractive for a globally diversified business that is quite defensively positioned overall, in providing all of this packaging across a range of markets and products.

MF: It’s fallen about 8% just in the last couple of trading days. No concerns there?

MC: It really wasn’t about the company. It was more that really one of the brokers downgraded their view to hold. I actually think … there’s probably a little bit of an overreaction, and that this probably presents a really good buying opportunity for a business of this quality, given their cash flow and their profitability.

MF: And the second one?

MC: The other one is sort of related, Endeavour Group Ltd (ASX: EDV). 

Again, people may not recognise the company name — but you’ve probably done business with them many times, particularly if you’ve been to a Dan Murphy’s, or to a BWS, or if you’ve actually gone into one of their 340-odd hotels that they own around the country. 

Endeavour was spun out of Woolworths Group Ltd (ASX: WOW) last year, and, at the moment they have 75% of their revenues derived from beverage distribution and 25% comes from their hotel portfolio. We think that it has this real interesting balance of operating within public venues, as well as beverage supply to venues and retailers.

It’s not as strong [as Orora] in terms of its gross yield. So again, for income-focused investors, as we are in our Equity Income Fund, the gross yield is 3.2%. That does include franking credits. 

The other thing is it has been a standout performer so far in 2022. While the market has gone backwards, it has actually risen to $7.80 from around $6.80 at the start of the year. We still find it attractive. We think that the benefits of it now being a standalone entity enables management to clearly focus on converting really what is their absolute market-leading position into profit margin improvement in the years ahead.

MF: Does the market like it because it expects the hotel side of the business to grow now that people are more out and about in the post-lockdown era?

MC: Yeah, absolutely. And I think this was one of the real interesting standouts for this business over the last couple of years, whereby when public venues were obviously constrained through COVID, they actually picked up more in terms of their retail and distribution of beverages through the retailers of those beverages. 

So what we see is that there is this nice diversity, and as we’re starting to see people obviously get back out and about in hopefully a post-COVID world, then they do actually pick up that incremental uplift through having that portfolio of around 350 venues around the country.

MF: Your third pick?

MC: The next one is WiseTech Global Ltd (ASX: WTC). This is one in the IT sector. Yes, it has actually fallen along with the broader IT sector over the last few months. But, for those that don’t know WiseTech, it is a global logistics software business. 

I think one of the real things that we like is their very impressive history of being able to grow revenue and to actually improve their profit margins year on year. 

Even today, it’s not the kind of company that you would call a valuation pick — it trades at around 80 times next year’s earnings or FY22, which will be reported shortly. But it does have a global dominant position. 

The thing that we like is that it has been able to grow its profits faster than the growth in its revenue, and that’s a really nice metric that you want to have behind some of these growth stocks, because that’s what the market really wants.

Now, in terms of the fallback in its price, it is now probably back in line with its pre-COVID highs. However, its profit expectations for financial year 2022 is actually about three times what it earned in the financial year ended 2019.

MF: Wow.

MC: It has had this really great profit expansion, but as I said, even today it does trade at a forward PE of 80 times. There obviously still [are] massive growth expectations for the company. But if you think about it, if they can triple earnings again, over the next three to five years, we don’t actually expect that it’ll be trading at 25 times earnings in three years’ time because just those profits have multiplied. 

So, yes, there is risk in terms of interest rates in the broader IT sector, continuing to weigh on that valuation. But obviously the one thing that we like is that it is a profitable business. We see that there’s profit growth through a market-leading position. As I said, their ability to grow profit faster than revenue, if they can maintain that, then for people that are looking for that IT growth thematic within their portfolio. 

It also pays a dividend, albeit very low yield.

We think it could be one to keep an eye on, given how far it’s fallen back to date.

MF: For these tech businesses, once they get to that maturity stage where they do make a profit, it’s much easier going than earlier stages, isn’t it? Because they’ve got their product already made and it’s just scalable at the press of a button?

MC: Absolutely. That’s exactly right. And that’s one of the key things that we do like about the business, that software is very scalable. And if we do start to see supply chains, cargo movements, et cetera, returning back to normal, I know we’re still talking about higher inflation, which means higher interest rates and maybe lower global growth, but if you are taking a longer-term view, then it’s a stock that you’d say in that industry would be worthwhile having exposure to.

The post ‘Pretty attractive’: Expert reveals 3 ASX shares to buy right now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• ASX 200 supermarket shares lead as household spending jumps
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Why Eagers Automotive, Viva Energy, Woolworths, and Zip shares are rising
• The Endeavour share price just hit a new 52-week high!

Motley Fool contributor Tony Yoo 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. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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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An uplift in energy prices led the Woodside Energy Group Ltd (ASX: WDS) share price to post-COVID highs in 2022.

The Russian war in Ukraine sparked oil prices to touch US$120 a barrel last month before retracing to US$100 today.

Woodside shares have moved in sync with the price of oil, reaching a year-to-date high of $35.77 in early June.

Subsequently, the company paid its biggest-ever dividend to shareholders after reporting robust growth in its full-year results.

This is in sharp contrast to the previous dividends paid by Woodside over the years, given the market’s volatility since COVID-19.

A quick recap on the Woodside dividend history

Here’s a quick look at the Woodside dividends distributed to shareholders over the last five years.

• September 2017 – 61.95 cents (interim)

• March 2018 – 62.61 cents (final)

• September 2018 – 72.80 cents (interim)

• March 2019 – 127.06 cents (final)

• September 2019 – 53.24 cents (interim)

• March 2020 – 83.13 cents (final)

• September 2020 – 36.24 cents (interim)

• March 2021 – 15.29 cents (final)

• September 2021 – 41.03 cents (interim)

• March 2022 – 146.15 cents (final)

In total, Woodside has paid $6.99 in dividends to shareholders from this time in 2017.

At yesterday’s closing price of $31, the company has a trailing dividend yield of 6.03%.

How does this compare with the Santos dividend?

Like Woodside, the Santos Ltd (ASX: STO) share price has also surged recently.

In fact, Australia’s second-largest energy company by market capitalisation is up 10% year to date, and up around 140% since 2017.

When looking at the dividend history, Santos has distributed a total of 58.5 cents to shareholders since 2017.

Although this may seem minuscule, it’s worth noting that Santos shares fetch considerably lower than its peer at $6.97 apiece.

However, when comparing the energy giants against each other, the Woodside dividend offers better value.

Currently, Santos has a trailing dividend yield of 2.79%.

Woodside share price snapshot

The Woodside share price is up 32% over the last 12 months and more than 40% in 2022.

The company has a price-to-earnings (P/E) ratio of 16.50 and commands a market capitalisation of roughly $58.58 billion.

The post How does the Woodside dividend compare to Santos over the last 5 years? appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Wednesday
• What’s the outlook for ASX 200 energy shares in FY23?
• Worley shares dip despite deal with Santos
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 on Monday

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 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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A prominent fund manager has revealed the latest ASX share that she has bought for her fund.

The share price for insurance building repairer Johns Lyng Group Ltd (ASX: JLG) has dropped almost a quarter year to date.

And Tribeca portfolio manager Jun Bei Liu this week disclosed that her fund took advantage of this price weakness.

“I really like this company,” she told Switzer TV Investing.

“It recently got into my portfolio.”

Bad weather is not bad news for this ASX share

Unfortunately, Australia’s east coast has been battered with excessive rain for much of this year.

But for a company whose clients are insurance companies, this provides a surge of business.

“No analyst [can] forecast those natural disasters,” said Liu.

“Once you have the natural disaster, it takes a couple of years to build.”

This has a snowball effect on Johns Lyng’s financial performance.

“It’s a constant upgrade cycle. Last year it upgraded 12 times, and this year it’s already done it three or four times.”

The market has appreciated Johns Lyng’s worth in recent times, sending the stock price up a stunning 450% over the past five years.

But this year’s sell-off has made it cheaper than it has been for quite some time.

“The share price cratered because it was expensive. But now it looks pretty good value.”

More tailwinds: acquisition and strata

Many of Liu’s peers agree with her assessment. According to CMC Markets, seven out of eight analysts are rating the stock as a strong buy.

QVG Capital analysts, in a memo to clients last week, boasted that they hold Johns Lyng shares.

They said:

Looking forward into FY23, Johns Lyng Group will benefit from a full year contribution of their US acquisition Reconstruction Experts and a full pipeline of ‘cat’ [catastrophe] work, given the sequence of extreme weather events experienced over this financial year.

As well as all the rain, Liu identified another tailwind that could boost performance even further.

“They just recently got into strata, as well, for the large buildings,” she said.

“It’s just been incredibly consistent in terms of earnings.”

The post I just bought this ASX company enjoying ‘a constant upgrade cycle’: fundie appeared first on The Motley Fool Australia.

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• 2 ASX shares you never heard of ready to make hay
• These 2 ASX shares are ‘compelling opportunities’: fund manager
• Why is the WAM Capital share price down 20% in June?

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited. The Motley Fool Australia has recommended Johns Lyng 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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Fears of rising interest rates have really taken their toll on growth and small-cap ASX shares.

That’s because smaller, rapidly expanding businesses are typically the ones who have taken on debt to fuel their growth.

And when a company borrows funds to operate, investors revise down its valuation as interest rates rise. This is because every dollar of future earnings will cost more to produce.

As such, during frightening times for small cap and growth shares, it could be worthwhile checking out the businesses that have plenty of cash on their books.

This theoretically means rate hikes don’t affect their future performance. If anything, it can help them marginally, as they can earn a better return on their cash.

And of course, not needing to do equity raising rounds means existing shareholders don’t have their investments diluted.

Small caps with so much cash they gave some back

In a shocking month, small-cap specialist fund Cyan C3G saw almost every stock in its portfolio suffer a freefall in June.

But portfolio managers Dean Fergie and Graeme Carson feel especially comfortable about their holdings that boast useful cash reserves.

In fact, two of those companies actually implemented a share buyback to return some of that excess capital back to investors.

“Touch Ventures Ltd (ASX: TVL) holds almost all of its current market capitalisation in cash — $74 million market cap vs $67 million in cash, plus investment assets valued in May 2022 at over $120 million!” Fergie and Carson said in a memo to clients.

“And, quite prudently, has activated an aggressive share buyback, repurchasing over 1 million shares in June.”

Despite this, Touch shares lost 24% in June.

ReadCloud Ltd (ASX: RCL) suffered even more, shaving 29% off its valuation last month.

“Digital textbook company ReadCloud holds $5.4 million on its balance sheet, made a net profit of over $1 million in 1H22 and has also announced a share buy-back.”

Price crashes don’t make sense

The memo also named three other cashed-up businesses that Cyan is keeping the faith in.

“Other companies that hold significant net cash balances include Alcidion Group Ltd (ASX: ALC) $18 million; Raiz Invest Ltd (ASX: RZI) $19 million; and Vita Group Limited (ASX: VTG) $20 million.”

The portfolio managers spoke of their angst in seeing great businesses like Alcidion and Raiz respectively lose 21% and 22% of their valuation last month.

“With Alcidion having a strong balance sheet, significant recurring revenues derived from government and private domestic and international hospitals and health care providers, there are numerous reasons to expect this stock could be a strong performer again in FY23,” read the memo.

“With almost 300,000 active and engaged financial customers in Australia, Raiz is generating strong recurring revenues and is likely to garner the interest of a myriad of local financial institutions.”

The post 5 small-cap ASX shares sitting on a pile of cash: experts appeared first on The Motley Fool Australia.

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• 2 ASX shares we’re sticking with after 60% falls: fund managers
• ‘Frustrating’: Fund backs 3 great ASX shares with plunging prices

Motley Fool contributor Tony Yoo 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 Alcidion Group Ltd and ReadCloud Limited. The Motley Fool Australia has recommended Alcidion Group Ltd and ReadCloud Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Tuesday, the S&P/ASX 200 Index (ASX: XJO) gave back the majority of its intraday gains to finish the day a fraction higher. The benchmark index rose 4.1 points to 6,606.3 points.

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

ASX 200 expected to edge lower

The Australian share market looks set to edge lower on Wednesday following a poor night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 3 points lower this morning. On Wall Street, the Dow Jones fell 0.6%, the S&P 500 dropped 0.9%, and the Nasdaq tumbled 0.95%. Investors were selling stocks ahead of the release of a key US inflation report.

Oil prices crash

Energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a tough day after oil prices crashed overnight. According to Bloomberg, the WTI crude oil price is down 8.1% to US$95.64 a barrel and the Brent crude oil price has sunk 7.5% to US$99.10 a barrel. Demand concerns weighed heavily on prices.

IDP Education rated as a buy

The IDP Education Ltd (ASX: IEL) share price has major upside potential according to analysts at Goldman Sachs. This morning the broker reiterated its buy rating with a $35.50 price target. It commented: “We view this as a structural growth story as international student markets open up. India is a key driver of this trend.”

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult day after the gold price tumbled lower again overnight. According to CNBC, the spot gold price is down 0.5% to US$1,723.2 an ounce. Looming rate hikes are weighing on the safe haven asset.

South32 sells royalties

The South32 Ltd (ASX: S32) share price will be on watch today after the miner announced the sale of four non-core base metals royalties to Anglo Pacific Group for US$185 million. This comprises US$103 million in cash and US$82 million in scrip. The latter will leave South32 with a ~16.9% interest in Anglo Pacific. These royalties are from third party interests in copper and nickel projects in Australia, USA and Chile.

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

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• What are experts predicting will be the best-performing ASX sectors in FY23?
• Here are the top 10 ASX shares today
• What’s the outlook for ASX 200 energy shares in FY23?
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Here are the 3 most heavily traded ASX 200 shares 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 Idp Education Pty Ltd. 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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Are you interested in adding some ASX shares to your portfolio this month?

Three ASX 200 shares that could be worth considering are listed below. Here’s what you need to know about them:

NextDC Ltd (ASX: NXT)

The first ASX 200 share to look at is data centre operator NextDC. With more and more services shifting to the cloud, demand for data centre space has been growing at a rapid rate in recent years. The good news is that the shift to the cloud is still a work in progress, which bodes well for demand over the next decade. And with NextDC owning some of the highest quality data centres in the world, it appears well-placed to capture this demand. In addition, the company is constructing new centres in regional markets and looking at the Asian market.

Goldman Sachs is positive on the company and has a buy rating and $14.20 price target on its shares.

Seek Limited (ASX: SEK)

Another ASX 200 share that could be in the buy zone is this leading job listings company. Seek has been tipped to continue its solid growth over the long term thanks to its leadership position in the ANZ market and its international operations.

Credit Suisse is a fan of Seek. Last month, its analysts put an outperform rating and $36.90 price target on its shares. It expects Seek to outperform its guidance in FY 2022.

TechnologyOne Ltd (ASX: TNE)

A final ASX 200 share to look at is enterprise software provider TechnologyOne. It has been tipped to deliver strong earnings growth over the coming years thanks to its transition to a software-as-a-service (SaaS) focused business. As of its last update, management believes it is on track to almost double its annual recurring revenue (ARR) to $500 million by FY 2026.

The team at Goldman Sachs is also very positive on Technology One. The broker currently has a buy rating and $13.30 price target on its shares.

The post Experts name 3 ASX 200 shares to buy now appeared first on The Motley Fool Australia.

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• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
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• Why experts rate these ASX growth shares as buys
• Here are the top 10 ASX shares today
• Top broker picks two ASX 200 tech shares for today’s economy

Motley Fool contributor James Mickleboro has positions in NEXTDC Limited and SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited and TechnologyOne Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX uranium shares broadly benefited in the first part of the 2022 financial year (FY22) amid fast rising prices for the metal.

What happened with uranium prices in FY22?

Uranium prices tracked higher over the first nine months, reaching more than US$64 per pound in mid-April, according to data from Trading Economics. Since then, prices have fallen back to US$48 per pound, though that’s still well above the US$30 per pound on 30 June 2021.

Global interest in the metal, used in nuclear reactors to generate electricity, was rekindled in 2021 amid increased focus on slashing carbon emissions. Whilst nuclear energy entails having to deal with the radioactive waste post electricity production, it essentially produces no greenhouse gases.

Soaring energy prices in 2022, spurred higher by Russia’s invasion of Ukraine, has also seen more political interest in using uranium to provide baseload power.

So, how did all this impact ASX uranium shares?

ASX uranium shares broadly beat the benchmark

All up, it was a mixed bag for investors of ASX uranium shares in FY22, though most beat the benchmark index.

Here’s how some of the top producers and explorers stacked up against the All Ordinaries Index (ASX: XAO) over the 12 month period.

• All Ordinaries Index(ASX: XAO) lost 11.1%
• Paladin Energy Ltd (ASX: PDN) closed FY21 trading for 52 cents and finished FY22 at 58 cents, a gain of 11.5%
• Deep Yellow Limited (ASX: DYL) kicked off FY221 at 72 cents and finished at 60 cents, a loss of 16.7%
• Bannerman Energy Ltd (ASX: BMN) opened and closed the 2022 financial year at 17 cents per share, for a change of 0.0%
• Boss Energy Ltd (ASX: BOE) finished FY21 at 18 cents and closed FY22 at $1.77, a gain of 22%

Looking over that list you’ll see that three of the four ASX uranium shares handily outperformed the All Ordinaries in FY22.

You may also be questioning our maths.

If the Boss Energy share price went from 18 cents to $1.77, surely that’s a gain of 833%, not 22%?

The discrepancy there is in the share consolidation that Boss Energy carried out back in November. That saw every eight Boss Energy shares consolidated into one ‘new’ share. With that in mind, the FY22 closing price for this ASX uranium share in relatable terms to its FY21 closing price needs to be divided by eight.

So instead of $1.77, we get 22 cents.

Still, an impressive 22% year-on-year gain for Boss Energy.

The post The ups and downs for ASX uranium shares in the 2022 financial year appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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With the new financial year underway, it’s time for investors to think about positioning their portfolios for the new macroeconomic regime.

The benchmark S&P/ASX 200 Index (ASX: XJO) has recently bounced from a low on 20 June. It closed the day on Tuesday at 6,606.3, 0.06% higher.

Themes of inflation, central bank tightening, surging interest rates, and – even after two long years – COVID-19 continue to dominate the narrative for ASX shares.

In FY22, energy and mining shares were the dominant players and, by all accounts, look set to perform into the new financial year.

The chart below shows the returns for each of the ASX’s major sector indices this year to date. Energy and utilities have outperformed whilst all other sectors are in the red.

What sectors will perform in FY23?

According to a blend of its global macro models and analyst expectations, Trading Economics expects the S&P/ASX 200 Index to trade around 6,500 points by the end of this quarter.

“Looking forward, we estimate it to trade at 6079.65 in 12 months time,” it added.

It’s a bold prediction that points to further downside, but it may have some merit, according to some experts.

Analyst Chris Savage at Bell Potter is cautious on the technology sector in FY23 due to the shifting interest rates cycle. He wrote in a recent note:

We remain cautious on the outlook for the tech sector in the second half of 2022 given the likelihood that interest rate rises will continue both domestically and offshore due to inflation remaining stubbornly high.

With this in mind we are more attracted to stocks in the tech sector with reasonable cash flows/earnings.

Meanwhile, energy shares look set to continue flourishing in FY23, with a number of tailwinds still behind the sector.

Analysts at JP Morgan note there’s still plenty of uptake of fossil fuels forecast into the next decade. It’s a view shared by Lazard Asset Management.

It says that the energy sector, being so crucial to the economy’s functioning, could continue to rate higher in FY23.

Healthcare shares could also be set to catch a bid in FY23, with the sector already showing signs of recovery in July.

Recent Deloitte analysis found that the “health care sector [had] a powerful opportunity to accelerate innovation and reinvent itself” after battling through COVID-19.

Analysts at Goldman Sachs reckon the average earnings per share (EPS) could grow by around 30% in H2 FY22, suggesting health care could offer some upside this year.

Bringing all the opinions and information together, it appears that cash-rich, fundamentally sound ASX sectors trading at respectable valuations will be the net performers in FY23.

This aligns with the stage in the current macroeconomic cycle whereby investors are increasingly pricing in a number of macro-risks, namely inflation, recession fears, and surging interest rates.

The post What are experts predicting will be the best-performing ASX sectors in FY23? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• What’s the outlook for ASX 200 energy shares in FY23?
• Has a turnaround already begun for ASX tech shares? Experts reveal the outlook for FY23
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• These were the best (and worst) performing ASX 200 sectors of FY22

Motley Fool contributor Zach Bristow 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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At the current Fortescue Metals Group Limited (ASX: FMG) share price, the company is expected to pay a huge dividend yield. But is this enough to make it attractive?

Firstly, let’s look at how much income Fortescue is actually expected to pay.

Considering FY22 has finished, we’ll look at the projected dividend yield for FY23 and FY24.

Using the numbers on CMC Markets, Fortescue could pay a grossed-up dividend yield of 16% in FY23 and 9.8% in FY24.

Compared to most other ASX dividend shares, those projected yields are much larger than what many other businesses are expected to pay over the next couple of financial years. Fortescue has a dividend policy to pay out between 50% to 80% of full-year net profit after tax (NPAT).

So, on the income side of things, it looks like Fortescue is going to be a ‘gold mine’ for dividends.

There’s more to returns than dividends

Getting cash dividends can be very rewarding. Fortescue dividends are very generous – I’m a shareholder myself, so I am getting the benefit of those dividends.

But, I’ll acknowledge that dividends are only part of the picture. The share price returns are important too. It could be pointless to get a 10% dividend yield but suffer a 10% fall of the share price.

The Fortescue share price has, indeed, fallen by 14% over the past month and 22% since 8 June 2022.

I think it’s important to remember that Fortescue’s current NPAT and investment sentiment is tied to the iron ore price because that’s where nearly all of its profit currently comes from.

The iron ore price has been falling. It’s down around US$25 per tonne since the start of June 2022.

Fortescue’s profit potential can change quickly, which is why the Fortescue share price can move so quickly as well. The iron ore price and Fortescue profit are expected to settle at a lower level over the next couple of financial years.

The price of iron ore is highly dependent on China buying vast quantities of the commodity. For people reliant on dividend income, it may not be helpful that Fortescue relies on China for its profit generation. That demand can change.

The dividends are definitely an attractive feature of Fortescue shares. But, for me, there is another reason to be interested in the business, particularly at this lower Fortescue share price.

Fortescue Future Industries (FFI)

FFI is a green energy and green technology company. It is being allocated 10% of Fortescue’s NPAT each year to help develop a global portfolio of renewable energy and green industry opportunities.

Fortescue Future Industries has a goal of making green hydrogen the most globally traded seaborne commodity in the world. FFI wants to produce 15mt of green hydrogen per annum by 2030. E.ON has agreed to purchase up to a third of that production – five million tonnes.

Another exciting area is Williams Advanced Engineering (WAE), which is described as a leading provider of high-performance battery and electrification technology. FFI says that WAE has already demonstrated a track record of success in advanced engineering in premium automotive and motorsports sectors.

WAE has an important part to play in Fortescue’s decarbonisation. For example, it’s helping Fortescue create an ‘infinity train’. This promises zero emissions by using a regenerating battery, utilising gravitational energy to fully recharge its battery electric systems without any additional charging requirements for the return trip to reload. It will also reportedly lower operating costs and create maintenance efficiencies

Foolish takeaway

Fortescue’s dividends are attractive but are expected to reduce in the coming years. I’m cautious about the outlook for the iron price. However, the green FFI division has a very promising outlook in my opinion, which is why I like the business.

The post Should investors buy Fortescue shares for dividends? appeared first on The Motley Fool Australia.

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More reading

• Investors were seeking out ASX shares in June. Here’s why
• ASX 200 mining shares glide lower as expert reduces commodity targets
• Is this a good time to go digging for ASX 200 mining shares for FY23?
• Where is the Fortescue share price headed in 2023?
• Own BHP shares? Top broker warns of looming oversupply of iron ore in 2H 2022

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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