With interest rates unlikely to increase until 2023, the Australian share market looks set to remain one of the best places to generate a passive income for some time to come.

But which dividend shares should you buy to boost your income? Below are two dividend shares analysts have named as buys:

Coles Group Ltd (ASX: COL)

The first ASX 200 dividend share to look at is Coles. It is of course one of the big two supermarket operators. It could be a top option for income investors thanks to its defensive qualities, solid growth prospects, and focus on automation.

In respect to the latter, Coles is constructing new smart distribution centres with automation giant Ocado in an effort to cut costs and boost its online business. If all goes to plan, Coles will be a much stronger business and well-placed for the future.

Citi is positive on its outlook. Its analysts are forecasting solid earnings and dividend growth over the coming years. For example, Citi has pencilled in fully franked dividends of 65 cents per share in FY 2022, 72 cents per share in FY 2023, and then 77 cents per share in FY 2024.

Based on the current Coles share price of $17.81, this will mean yields of 3.65%, 4%, and 4.3%, respectively.

Citi has a buy rating and $19.60 price target on its shares.

Westpac Banking Corp (ASX: WBC)

The Westpac share price has fallen heavily since the release of its full year results. While this is disappointing for shareholders, it could be a buying opportunity for everyone else.

The team at Morgans certainly believe this is the case and feel the selling has been severely overdone.

It commented: “WBC shares have been sold off heavily following the FY21 result announcement, such that out of the major banks, WBC is now trading on the lowest FY22F P/NTA multiple, the lowest FY22F P/E multiple and the highest FY22F dividend yield. Such multiples or yields could only be justified if WBC is a value trap, which we think it is not.”

Morgans has therefore reiterated its add rating and $30.50 price target on the banking giant’s shares. Its analysts are also forecasting fully franked dividends per share of $1.23 in FY 2022 and then $1.62 in FY 2023.

Based on the current Westpac share price of $20.72, this will mean yields of 5.9% and 7.8%, respectively.

The post These ASX 200 dividend shares have generous fully franked yields appeared first on The Motley Fool Australia.

More reading

• What is the outlook for interest rates in Australia? Here’s what Westpac thinks
• 5 things to watch on the ASX 200 on Tuesday
• Can NAB (ASX:NAB) shares ever close in on CBA’s market cap?
• Is the Westpac (ASX:WBC) share price a value trap or a bargain buy?
• Why ANZ Bank (ASX:ANZ) is losing market share to other big ASX banks

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. 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 Bruce Jackson.

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The Brickworks Limited (ASX: BKW) share price has a potential upside of around 30% according to one of the leading brokers in Australia.

Brickworks is a building products business with operations across a number of sectors.

In bricks, where it’s the leader in Australia, it has brands like Austral Bricks and Bowral Bricks. Within its masonry division, it has businesses like Austral Masonry and Urban Stone. Bristle Roofing is a key player in the roofing space for the ASX share.

Terracade is Brickworks’ business for specialised building systems. Austral Precast is a leading provider of concrete building solutions. Capital Battens is a provider of timber battens.

Broker thoughts on the Brickworks share price

Citi currently rates it as a buy, with a price target of $30. That suggests a possible rise of 30% if the broker is right.

FY21 was better than the broker was expecting thanks to the strong property performance and it’s expecting further strong performance into the future.

Based on the FY22 numbers, Brickworks shares are priced at 15x FY22’s estimated earnings.

What is expected from the property division in the next couple of years?

For readers that don’t know, Brickworks as a 50% property joint venture with Goodman Group (ASX: GMG) where excess Brickworks land is sold into the trust.

Once a lease pre-commitment is secured, the serviced land can then be used as security, with debt funding used to cover the cost of constructing the facilities.

At the end of FY21, the total value of leased assets held within the property trust stood at $2 billion, generating $89 million of gross annual rent. Brickworks’ 50% share of net assets, after including debt and assets under development, was $911 million at the end of the year.

Brickworks says that there is strong demand for prime industrial property, which is being fuelled by structural tailwinds, resulting in an “unprecedented” development pipeline. Those developments are increasingly complex, with features like robotics, automation and multi-storey. These are a critical competitive advantage for many businesses in the new economy.

The trust is currently building huge warehouses, including one for Amazon. Other large facilities have been committed for Woolworths Group Ltd (ASX: WOW), Australia Post and Xylem.

Completion of the above facilities, and the “long pipeline” of other pre-committed developments, will result in an increase in lease assets of around $1.2 billion and gross rent of $50 million within the property trust over the next two years.

Brickworks dividend

At the current Brickworks share price, it has a grossed-up dividend yield of 3.75%.

Brickworks says that it’s proud to be one of the few S&P/ASX 200 Index (ASX: XJO) companies to increase the dividend to shareholders during COVID-19 in 2020.

It has maintained or increased its normal dividend every year for the last 45 years.

The post Top broker tips 30% upside for the Brickworks (ASX:BKW) share price. Here’s why appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Can NAB (ASX:NAB) shares ever close in on CBA’s market cap?
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares are topping the volume charts on Monday
• What do Wesfarmers (ASX:WES) and Amazon.com have in common?

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. owns shares of and has recommended Brickworks. The Motley Fool Australia owns shares of and has recommended Brickworks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Later today, the Reserve Bank of Australia will meet to discuss the cash rate.

Unfortunately for savers and income investors, no action is expected to be taken at this meeting. In fact, many economists believe there will still be some time to wait until the cash rate moves from the record low of 0.1%.

What is the outlook for interest rates?

According to the latest economics report from Westpac Banking Corp (ASX: WBC), its team continue to believe that the central bank will keep rates on hold until early in 2023. It is only at this point that the bank feels the two main drivers of rate increases – inflation and wage growth – will be at levels that support a rate hike.

Westpac’s Chief Economist, Bill Evans, commented: “We expect the RBA to begin raising the cash rate in February 2023. That will be in response to rising inflation (core inflation reaches 2.8% by end 2022) and increasing wage pressures (wages growth to 2.8% by year’s end).”

Mr Evans expects this to be underpinned by strong demand and constrained supply setting the scene for rising prices.

After which, by the end of 2023, Australia’s oldest bank believes the Reserve Bank will have lifted the cash rate to 0.75%.

What about house prices?

Westpac appears to expect house prices to pull back as the outlook for rate hikes improves.

“Those interest rate increases will be coincident with falling house prices. However, just as we have not factored in a significant positive wealth effect in 2022 given the ample income and savings boost to demand, we would expect the fall in prices to impact confidence and future activity although household spending will hold up, particularly in the first half of 2023,” Evans said.

What should you watch for at today meeting?

As for today’s meeting, Westpac suggests investors keep an eye on the central bank’s wording.

It commented: “The RBA is expected to keep policy settings unchanged at its last meeting of 2021. As such, the focus will again be on the wording of the Governor’s decision statement, particularly any assessments of the latest round of economic data, including the Q3 national accounts, and the shifting external environment, particularly with respect to price inflation in developed economies.”

“Westpac remains comfortable with our view that the bank’s first move will come in February 2023 although markets are anxious for a mid-2022 move while the Governor himself is still open to waiting till 2024,” it concluded.

The post What is the outlook for interest rates in Australia? Here’s what Westpac thinks appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Can NAB (ASX:NAB) shares ever close in on CBA’s market cap?
• Is the Westpac (ASX:WBC) share price a value trap or a bargain buy?
• Why ANZ Bank (ASX:ANZ) is losing market share to other big ASX banks
• Here are 6 of the worst performing ASX shares of November

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some top ASX shares that are rated as buys by leading brokers in December 2021.

Businesses that are liked by brokers could be opportunities for investors to consider for the longer-term with their growth plans.

One of these companies has global growth plans, whilst the other has a strong domestic outlook.

Here are two ASX shares that are rated as buys:

Treasury Wine Estates Ltd (ASX: TWE)

Treasury Wine Estates is a global wine business. It’s rated as a buy by Citi, with a price target of $13.80. If the TWE share price does get there over the next year, then it could increase by almost 20%. Citi notes the global growth moves of the Penfolds brand.

TWE says that it’s working on plans to support future growth for Penfolds in key global markets. Management said that the early momentum behind these plans is encouraging, particularly in Australia and Asian markets outside Mainland China where the Penfolds Bin revenue grew 15%.

With Penfolds, the ASX share is executing a multi-country origin strategy that will include propositions sourced from the US and France. It also said that an acquisition of additional winery and vineyards in Bordeaux that will provide incremental sourcing and production capacity for Penfolds.

Last month, TWE announced the acquisition of Frank Family Vineyards in the US for US$315 million. It’s a highly-acclaimed luxury wine business based in the Napa Valley, California with a track record of “strong revenue and EBITS growth, in addition to EBITS margins in the range of 35% to 40%.”

Management said this portfolio is highly complementary to Treasury Americas, filling a key portfolio gap for luxury chardonnay.

Based on Citi’s numbers, the TWE share price is valued at 20x FY23’s estimated earnings.

Adairs Ltd (ASX: ADH)

Adairs is a leading homewares and furnishings business. The recent acquisition of Focus on Furniture now makes it a sizeable competitor in the Australian furniture market too.

It’s currently rated as a buy by the broker UBS (among others). The price target from UBS is $5.90, so the implied upside is around 70% over the next year if the broker is right.

UBS likes all of the positives from the ASX share’s Focus acquisition and is expecting double digit growth of earnings per share (EPS) over the next few years.

Prior to the announced acquisition, Adairs said that growing store floor space through new and up-sized stores will continue to drive store sales. It’s expecting to grow its floor space by 8% in FY22 and at least 5% per annum for the following five years through those new and upsized stores.

For Adairs, the Focus acquisition gives “growth opportunities from a national store roll out, online growth and category/range expansion.”

Management thinks the ASX share can reach sales of more than $250 million over the next five years.

After the acquisition, Adairs CEO and managing director Mark Ronan said:

The Adairs Group now comprises a highly profitable and aligned portfolio of brands with significant growth potential targeting the middle market in the home category in Australia and New Zealand.

Based on the UBS estimates, the Adairs share price is valued at 8x FY23’s estimated earnings with a potential FY23 grossed-up dividend yield of 12.3%.

The post Brokers say these 2 top ASX shares are buys in December 2021 appeared first on The Motley Fool Australia.

More reading

• Drinking and gambling: 3 ASX shares to buy now
• Can Treasury Wine (ASX:TWE) ever fill the hole left by Chinese exports?
• Brokers name 3 ASX shares to buy today
• Are these 2 ASX dividend shares buys in December 2021?
• What happened with the Adairs (ASX:ADH) share price today?

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. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with the smallest of gains. The benchmark index rose a few points to 7,245.1 points.

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

ASX 200 expected to rise

The Australian share market looks set to rebound on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 33 points or 0.45% higher this morning. This follows a solid start to the week on Wall Street, which in late trades sees the Dow Jones up 2.1%, the S&P 500 up 1.5%, and the Nasdaq trading 1.25% higher.

RBA meeting

The Reserve Bank of Australia is meeting for the final time this year to discuss the cash rate. While the market isn’t expecting the central bank to increase rates just yet, it could provide an idea of when its first hike will occur. According to Westpac Banking Corp (ASX: WBC), its economics team expect the RBA to begin raising the cash rate in February 2023.

Oil prices jump

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a strong day after oil prices stormed higher. According to Bloomberg, the WTI crude oil price is up 4.2% to US$69.00 a barrel and the Brent crude oil price has risen 4% to US$72.65 a barrel. Oil prices rose amid hopes that Omicron isn’t as severe as feared.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued day after the gold price edged lower. According to CNBC, the spot gold price is down 0.2% to US$1,780.40 an ounce. The precious metal fell after investors switched back into risk assets.

Magellan CEO resigns

The Magellan Financial Group Ltd (ASX: MFG) share price could come under pressure today after the struggling fund manager announced the exit of its CEO. After the market close, Magellan advised that Dr Brett Cairns has resigned for personal reasons and will be leaving the company. He will be replaced on an interim basis by its CFO Ms Kirsten Morton.

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

More reading

• Can NAB (ASX:NAB) shares ever close in on CBA’s market cap?
• Here are the top 10 ASX shares today
• Own Woodside (ASX:WPL) shares? Why this expert is watching LNG demand in Asia
• These 3 ASX 200 shares are topping the volume charts on Monday
• What do Wesfarmers (ASX:WES) and Amazon.com have in common?

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The White Rock Minerals Ltd (ASX: WRM) share price was drowning in a sea of red today, reaching a 52-week low after the company announced an $11 million capital raise.

At market close, the White Rock Minerals share price was down 22.58%, trading at 24 cents.

White Rock Minerals is a mineral explorer going for gold at the Woods Point Gold Project in Victoria.

What is White Rock Minerals up to?

In its release today, the company advised it planned to raise $11.3 million before costs via a $2.25 million share placement and $9.1 million entitlement offer.

Capital raises can be a catalyst for a share price plunge (akin to today’s performance) due to share dilution. Indeed, the company said in its release the share offer represented a 23% discount on the trading price before the capital raise of 31 cents.

White Rock said eligible shareholders would also be offered a 1 for 4 pro-rata non-renounceable entitlement offer.

The money will be used for gold exploration at the Woods Point Gold Project. The company acquired this project via a merger with AuStar Gold in August 2021.

The exploration area of 660km is located in one of Victoria’s largest historic goldfields, 120km east of Melbourne.

Management commentary

White Rock managing director and CEO Matt Gill said:

This capital raise will see White Rock continue this aggressive exploration focus on the significant in-mine and regional exploration potential of the project.

The board is very appreciative of the support shown from current shareholders and the interest and support being shown from the new investors now joining the White Rock journey through this equity raising.

White Rock Minerals share price snapshot

White Rock Minerals share price has fallen 56.36% over the past 12 months and 59% in the year to date. The share price is currently trading at a 52-week low of 24 cents.

The company has a market capitalisation of about $34 million.

The post The White Rock Minerals (ASX:WRM) share price plunged 23% today appeared first on The Motley Fool Australia.

More reading

• Here’s why this top broker is tipping 20% upside for the Pilbara (ASX:PLS) share price
• Own QBE (ASX:QBE) shares? New CEO reveals insurer’s biggest challenges
• APA (ASX:APA) share price leaps 5% amid hydrogen disruption plans
• Why did the Fortescue (ASX:FMG) share price outperform its sector today?
• BHP (ASX:BHP) share price struggled on Monday despite acquisition talks ‘progressing’

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 Bruce Jackson.

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One top broker thinks that the Pilbara Minerals Ltd (ASX: PLS) share price offers upside of around 20% over the next year.

Brokers project where they think a share price is going to be in a year from now with what’s called a price target.

Price target on the Pilbara Minerals share price

The brokers at Macquarie Group Ltd (ASX: MQG) currently rate Pilbara Minerals as a buy.

Macquarie’s price target on Pilbara is $2.80, around 20% higher than it is today.

The latest note from Macquarie referred to the announcement regarding restarting the Ngungaju Plant.

Ngungaju Plant

Near the end of November 2021, the lithium miner said that it has upsized its finance facility by US$20 million to US$130 million and increased the working capital facility by US$10 million to US$25 million. That means that total senior secured debt facilities increased by US$30 million to US$155 million.

Those additional funds will primarily be used to fund the staged restart of Ngungaju Plant, including the reimbursement of amounts already by the company.

Wet commissioning at the Ngungaju Plant, and first ore produced from the coarse production circuit, commenced on 7 October 2021, which is the first step of the re-commissioning of the operation.

First concentrate from the Ngungaju Processing Plant was delivered on 13 October 2021. The fines spodumene processing circuit is expected to commence production during the quarter for the three months to March 2022.

Management said the increased facility limit is another demonstration of the strength of the business, the quality of the asset and follows an “extraordinary year of growth and transformation”.

Strong lithium prices

Another thing that both the broker and the company itself is focused on, is the strong lithium price. In investor minds, the higher lithium price is helpful for the Pilbara Minerals share price.

On 26 October 2021, Pilbara announced the results of its third Battery Material Exchange (BMX) auction. It said that it was selling a cargo of 10,000 of dry metrics tonnes (dmt) with a target trade of 5.5% lithia, with a deferred delivery date of February 2022. There was “strong interest”, with 25 bids during the 45-minute auction window. It said it intends to accept the highest bid of US$2,350 per dry metric tonne.

Pilbara Minerals notes the continuing strong conditions in the global lithium market. Price reviews under existing off-take agreements have commenced in light of the stronger lithium prices.

Other broker ratings on the Pilbara Minerals share price

Other brokers are less optimistic about the business.

Citi is currently ‘neutral’ on the business with a price target of $2.20 – lower than where it is now.

Credit Suisse has a price target of just $2.05, with a sell rating, or ‘underperform’.

The post Here’s why this top broker is tipping 20% upside for the Pilbara (ASX:PLS) share price appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Monday
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in QBE Insurance Group Ltd (ASX: QBE) kicked off the week with a slight fall today.

At the end of the session, the insurance company was down 1.4% to $11.84. Though, investors have watched as the QBE share price has floated between ~$11 and ~$12.50 since the beginning of August.

While the market hasn’t received any major announcements recently, investors might be watching on to see how the company tracks with its relatively new CEO at the helm.

Andrew Horton joined the company as its group CEO in September 2021. Shortly after, Horton shared what he thought were QBE’s greatest challenges that lay in front of him.

People maketh the company

The QBE share price might be up nearly 55% from its COVID-19 lows, but the company’s new CEO still foresees some big challenges ahead.

During an interview with Insurance Business, Horton suggested the biggest challenge would be getting the people and culture right. In fact, the former CEO of Beazley — a London-based insurance company — went as far as to say, “If we can get the people and culture bit right, then everything else is relatively straightforward.”

Horton explained that while this task might sound easy, it poses a very difficult mission when dealing with an organisation with over 11,500 people.

Horton stated:

It sounds very easy, but if it’s not natural to everybody, it’s going to be quite hard. That’s why I need to start with the executive group, being supportive of each other and thinking towards the enterprise, and then cascade that down to the organization. I think that will be the challenge.

The increased focus on people follows a high turnover in senior leadership. This is an aspect of the business that Horton hopes to address and bring some stability to.

Furthermore, from his experience at Beazley, Horton recognises that once the culture and people are in good order, external interactions also improve. The example given was better interactions with brokers and clients, which feed into the success of the overall company.

How have QBE shares performed?

Impressively, QBE shares have outpaced the S&P/ASX 200 Index (ASX: XJO), both on a year-to-date and 12-month basis. Since the beginning of 2021, the QBE share price has appreciated 38.5% in value. Meanwhile, the Australian benchmark has climbed a much lower 8.4%.

Oddly, the Australian insurance company is beating the benchmark despite its trailing 12-month earnings still being in the negative. Potentially, investors are more focused on the 12.9% increase in revenue for the year at the end of June 2021.

The post Own QBE (ASX:QBE) shares? New CEO reveals insurer’s biggest challenges appeared first on The Motley Fool Australia.

More reading

• Why a leading broker is bullish on these 3 ASX shares
• Could it be time to consider buying QBE (ASX:QBE) shares in November?
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• Why is the QBE (ASX:QBE) share price outperforming IAG lately?

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 Bruce Jackson.

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The APA Group (ASX: APA) share price had a brilliant day on Monday despite no price sensitive news released by the company.

However, it did announce its plan to test if Victoria’s high-pressure gas transmission system can be safely used to blend hydrogen.

As of Monday’s close, the APA share price is $9.85. That’s 4.45% higher than it was at the end of Friday’s session.

For context, the S&P/ASX 200 Index (ASX: XJO) closed 0.05% higher today.

Let’s take a closer look at today’s news from the energy infrastructure company.

APA share price gains amid hydrogen proposal

Australia’s latest hydrogen project has been put forward, with APA planning to test if Victoria’s existing infrastructure can accommodate part of the transition to low-carbon energy.

APA CEO and managing director Rob Wheals said:

This landmark hydrogen study… could put Victoria in the box seat to achieve the least cost, fastest, and most efficient transition to a low-carbon future…

Victoria’s gas infrastructure will be vital to connecting Victorians to the energy solutions of tomorrow… and APA’s pipelines are adjacent to some of the best geographical areas for hydrogen production in Australia.

The company’s proposition is part of its Victorian Transmission System access arrangement submission to the Australian Energy Regulator.

The Victorian Transmission System transports nearly all the natural gas used in Victoria through its network of pipelines.

APA’s submission still needs the approval of the regulator.

Other benefits?

Wheals also noted, if approved, the project would benefit from APA’s pilot project in Western Australia. The project is investigating converting a section of gas pipe to carry hydrogen:

Our work in Western Australia will significantly reduce the costs of the proposed Victorian study as a result of the advancements we have already made in partnership with Future Fuels CRC and the University of Wollongong.

The proposition follows the Australian Energy Ministers’ recent decision to speed up the process of amending the National Gas Law.

Doing so could help include hydrogen blends, biomethane, and other renewable methane gas blends in the national energy regulatory framework.

The proposal will test 9 sections of the Victorian network under pressurised hydrogen conditions.

Right now, the APA share price is 0.7% higher than it was at the start of 2021. It has also gained 13.2% since this time last month.

The post APA (ASX:APA) share price leaps 5% amid hydrogen disruption plans appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• The APA (ASX:APA) share price has gone backwards in 2021 so far. What’s next?
• This ASX share is a buy after it dodged a MASSIVE bullet: analyst
• 2 ASX 200 shares with strong dividend income prospects
• Why is the APA (ASX:APA) share price pushing higher 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 no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) has actually finished up in the green this Monday, after spending most of the day scaring investors with red ink. The ASX 200 ended up at 7,245 points at market close today, up 0.05%. The Fortescue Metals Group Limited (ASX: FMG) share price did a little better though.

Fortescue shares closed the trading day at $17.15 each, up 0.3%. But that was a pretty decent showing for Fortescue. Why? Because most of its iron ore mining peers fared far worse.

BHP Group Ltd (ASX: BHP), for example, ended up finishing up the trading day down a nasty 1.6% at $39.59 a share. Rio Tinto Limited (ASX: RIO) travelled even worse. Its last trade was at $93.82 a share, down 1.78%.

So why did Fortescue come out on top in a sector that seemed to be targeted for a selloff today?

Fortescue shares defy the share market

Well, one possible cause could be the iron ore price itself. According to Business Insider, iron ore has been on an upward trajectory for the past week. At the start of December, iron ore was being priced at roughly US$95 a tonne. Today, it is commanding US$101.50 a tonne.

But why would that benefit Fortescue and not the other major iron ore miners like BHP and Rio?

Well, Fortescue, unlike its two rivals, is more of a ‘pure’ iron ore miner than the others, despite its recent moves into the hydrogen space.

BHP has extensive operations in oil, coal and copper. Likewise, Rio also is in the business of extracting aluminium, titanium, copper and diamonds.

As such, one could argue that a higher iron ore price benefits Fortescue to a greater degree than the other more diversified ASX 200 miners like BHP and Rio. That might be why we saw the smaller pure-play iron ore miner Champion Iron Ltd (ASX: CIA) also rise today (up 0.45% a $4.43 a share).

Of course, this means Fortescue (and Champion Iron by extention) could be more exposed than the others if the iron ore price falls. But fortunately for investors, that isn’t the case today.

At the current Fortescue share price, this ASX 200 miner has a market capitalisation of $52.8 billion, with a trailing dividend yield of 20.87%

The post Why did the Fortescue (ASX:FMG) share price outperform its sector today? appeared first on The Motley Fool Australia.

More reading

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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 Bruce Jackson.

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