If you’re wanting some exposure to the resources sector, then the Rio Tinto Limited (ASX: RIO) share price could be one to consider.

That’s the view of the team at Goldman Sachs, which has just reiterated its buy rating.

What does the broker think about the Rio Tinto share price?

According to a note out of the investment bank this morning, its analysts have retained their buy rating and $121.00 price target on the mining giant’s shares.

Based on the current Rio Tinto share price of $94.65, this implies potential upside of 28% for investors over the next 12 months.

But it gets better! Goldman also expects an US$8.10 per share fully franked dividend to be paid to shareholders in FY 2022. This equates to a ~12% yield at current levels and exchange rates.

What did Goldman say?

Goldman recently attended a briefing with Rio Tinto’s Chief Executive of Aluminium, Ivan Vella.

The note reveals that the broker left the briefing feeling just as bullish on the company’s aluminium operations as before.

It commented: “RIO continues to see a favourable outlook for the Aluminium market. As outlined at its recent Capital Markets Day (CMD), Rio expects Al demand growth of 3.3%/yr from 2020-2030 (vs. GSe c. 3%), and on supply, Rio expects 5.5% growth in scrap and 2.3% growth in primary production, with growing differentiation in production costs between hydro and coal powered smelters, with coal-powered smelter cash costs doubling to 2030 under a US$100/t carbon price, with nuclear power for smelting viewed as expensive.”

Why does the broker like Rio Tinto?

Goldman’s buy rating on the Rio Tinto share price is predicated on four key factors.

These are its valuation (0.82x NAV), strong free cash flow and dividend yield, its return to production growth in FY 2022, and its compelling low emission aluminium exposure.

In respect to the latter, the broker said: “In addition to copper production growth, Rio has one of the highest margin, lowest carbon emission aluminium businesses in the world, with over 2.2Mt of Ali production powered by hydro, and we think ELYSIS inert anode technology could be worth billions of $. Aluminium will contribute 20% of RIO’s group EBITDA in 2022 on our estimates.”

The post Why the Rio Tinto (ASX:RIO) share price could be a bargain buy appeared first on The Motley Fool Australia.

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

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The A2 Milk Company Ltd (ASX: A2M) share price is having a year to forget.

Since the start of 2021, the embattled infant formula company’s shares are down a disappointing 52%.

Is the A2 Milk share price weakness a buying opportunity?

According to a note out of Bell Potter, its analysts remain positive on the A2 Milk share price.

This morning the broker retained its buy rating and $7.70 price target on the company’s shares.

Based on the current A2 Milk share price of $5.61, this implies potential upside of 37% over the next 12 months.

What did the broker say?

Bell Potter has been looking at industry and export data and remains positive.

The broker highlights that Australia-China exports, which are a daigou proxy, were up 8% in October. And while it notes that Christchurch exports to China were down 33% year on year in October, they remain up 10% year to date over the same period last year.

Commenting on the latter, its analysts said: “Based on the four month lead time in shipments to revenues, early indicators of 2H22e would imply activity ~7% higher than 1H22 levels.”

Finally, Bell Potter notes that overall China infant formula imports continue to demonstrate double digit year on year declines, with volumes falling 21% year on year in September. However, it feels that volumes may have formed a bottom, and is encouraged by a noticeable spike in export to Hong Kong (CBEC). The broker feels this is “notable and coincides with a similar notable uptick in volumes moving into China from Hong Kong.”

Remaining buy-rated

In light of the above, Bell Potter is holding firm with its buy rating on the A2 Milk share price.

The broker concluded: “There is no change to our Buy rating. We see the scope for EPS to double by FY26e, if A2M can execute on the China offline expansion strategy, while recovering 50% of the lost sales (from FY20-21) in English label IMF. Exiting the loss making US assets or navigating a turnaround at the MVM asset would likely accelerate this turnaround. We do not see the current share price as reflecting this potential.”

The post This broker thinks the A2 Milk (ASX:A2M) share price is heading to $7.70 appeared first on The Motley Fool Australia.

More reading

• How the A2 Milk (ASX:A2M) share price tanked 5% in November
• Down 50% in 2021, is the A2 Milk share price a cheap buy?
• Top brokers name 3 ASX shares to buy next week
• Are A2 Milk (ASX:A2M) and this beaten down share bargain buys?
• A2 Milk (ASX:A2M) share price dips on news of a second class action

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 recommended A2 Milk. 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 AMP Ltd (ASX: AMP) share price continued its downward trend last month, falling to a low of 97 cents. Investors dumped the financial services company’s shares following a busy month of announcements from the company.

For the month of November, the AMP share price recorded a loss of around 4.17%.

In comparison, the S&P/ASX 200 Index (ASX: XJO) also ended November in the red, shedding 1.56% over the same timeframe.

At market close on Tuesday, AMP shares finished flat for the day at 92 cents apiece. It’s worth noting the company’s share price is nearing its multi-decade low of 88.5 cents reached in September.

What’s happened to AMP recently?

Last month, AMP provided an update regarding its planned demerger for AMP Limited and AMP Capital’s Private Markets business (PrivateMarketsCo).

The company noted that it is making strong progress on the operational separation of PrivateMarketsCo. The demerger is expected to occur during the first half of 2022.

Furthermore, AMP advised that a clear perimeter has been set with the agreed sale of the Global Equities and Fixed Income (GEFI) business. This will see the transfer of the Multi-Asset Group (MAG) to AMP Limited.

Creating a more simplified company is expected to improve efficiency, as both businesses operate in very different markets. The demerger will enable AMP to accelerate the growth strategies for each and focus on servicing the diverse customer base.

On the back of the release, investors pushed up the AMP share price by 3% to $1.035 on the day. However, this was short-lived as the company’s shares fell by 10% over the following two days.

Investment house Macquarie believes AMP shares are trading at attractive levels. While cutting its outlook by 1.8% to $1.10, the broker still sees value in the company.

Swiss investment bank UBS had a different approach though, reducing its rating by a sizeable 21% to 90 cents. UBS also downgraded its view to “sell” from the previous “neutral” stance. The broker appears reserved on AMP demerger plans. It believes the company won’t unlock any near-term value for shareholders.

It appears investors are taking on UBS’s advice, leaving the company’s shares to hover around the 90-cent mark.

AMP share price snapshot

Over the last 12 months, the AMP share price has moved almost 50% lower with year-to-date down by more than 40%.

On the other hand, the S&P/ASX 200 Financials Index (ASX: XFJ) has gained 15% from this time last year and is up 18% year-to-date. The sector also registered a 52-week high of 6,956.4 points in late October.

Undoubtedly, AMP shares are lagging the Financial Index which has continued to accelerate since March 2020.

On valuation grounds, AMP presides a market capitalisation of roughly $3 billion, and has approximately 3.27 billion shares outstanding.

The post November was a rollercoaster month for the AMP (ASX:AMP) share price. Here’s why appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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There are a select number of ASX shares out there that are growing very quickly and might be impressive buys in December 2021.

Businesses that are growing their revenue and/or profit at a very fast pace give themselves a good chance of generating pleasing shareholder returns thanks to the power of compounding.

With that in mind, here are two ASX shares that are very intriguing:

Pinnacle Investment Management Group Ltd (ASX: PNI)

Pinnacle is an investment business that partners with investment managers, which it calls affiliates, that can demonstrate growth potential and whose management teams have strong track records.

Its latest move has been to acquire (convertible redeemable preference) shares that would give Pinnacle a 25% stake in the Australian-based private equity Five V Capital for an investment of $65 million. Pinnacle says that Five V Capital has a high-quality investment team.

In FY21, the business saw aggregate affiliate funds under management (FUM) rise 52% year on year to $58.7 billion, with net inflows of $16.7 billion, of which $4.5 billion was retail. The FUM growth helped net profit after tax (NPAT) increase by 108% to $67 million in FY21.

Pinnacle says that it has an excellent platform in place for sustained growth. It thinks that it has the potential for both organic and acquisition-based growth, both domestically and offshore.

The ASX share is currently rated as a buy by the broker Ord Minnett, with a price target of $17. The Pinnacle share price is valued at 33x FY23’s estimated earnings. Its shares have fallen by 13% over the last month.

Temple & Webster Group Ltd (ASX: TPW)

Temple & Webster describes itself as Australia’s leading online retailer of furniture and homewares.

It sells over 200,000 products from hundreds of suppliers. It operates a drop-ship model where products are sent directly to customers by suppliers which helps with faster delivery times and reduces the need to hold inventory, allowing for a larger product range.

Temple & Webster also has its own private label range, which is sourced directly by Temple & Webster from overseas suppliers.

The ASX share continues to grow very quickly. Year on year revenue growth for the period of 1 July 2021 to 27 August 2021 was 49%.

Management say the business is benefiting from a number of trends including the ongoing adoption of online shopping due to structural and demographic shifts. The COVID-19 pandemic has seemingly accelerated these trends.

Not only is Temple & Webster rapidly growing its active customer base (up 62% year on year to 778,000), but those customers are spending more as well. In FY21, revenue per active customer increased 12% year on year.

The ASX share is expanding its spending on advertising to increase its customer awareness as well as increase the number of returning customers.

Temple & Webster is investing in a number of areas to make itself more efficient, profitable and/or attractive for customers. For example, it has increased its investment into an artificial intelligence interior design service start-up in Israel after a successful pilot of the service.

It’s currently rated as a buy by Credit Suisse, with a price target of $15.89.

The post Are these 2 impressive ASX shares buys in December 2021? 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. owns shares of and has recommended PINNACLE FPO and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended PINNACLE FPO. The Motley Fool Australia has recommended Temple & Webster Group Ltd. 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 Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Wednesday.

This follows the release of an announcement by the telco giant this morning.

Why is the Telstra share price on watch?

Investors may want to keep an eye on the Telstra share price today after it released an announcement relating to mobile spectrum.

According to the release, Telstra has invested $616 million to secure 2x10MHz in the Australian Communications and Media Authority’s 850/900 MHz band auction.

This represents the maximum amount of low band spectrum Telstra was allowed to bid for under the competition limits set by the Government.

The telco giant believes this is a win for its Telstra customers, especially for the people, businesses and communities of regional and rural Australia.

Telstra’s Chief Financial Officer and Group Executive, Strategy & Finance, Vicki Brady, explained: “We now hold 2x40MHz of low-band spectrum in the major cities and 2x45MHz in regional and remote areas. This is more than any other carrier, which is important given our larger customer base, and will help us continue to provide the best mobile coverage and service.”

“Mobile and wireless broadband are key components of a successful digital economy, and this low band spectrum will help us support Australia’s digital economy ambitions which is critical to our nation’s pandemic recovery. The spectrum is essential for carrying mobile data, particularly 5G, over the vast distances needed across regional and remote areas and also enables us to provide better coverage indoors and other difficult to reach places in metro locations,” she added.

5G coverage expansion

At present, Telstra’s 5G network extends to more than 4,000 sites across the country, reaching 75% of the population. This new spectrum will help the company meet its T25 commitment of providing 5G coverage to 95% of the population by 2025.

It also extends its lead over rivals by an unthinkable amount.

Ms Brady explained: “Over the seven years to end FY22, we will have invested $11 billion in our mobile network nationally with $4 billion of this invested in our regional mobile network. Because of this our mobile network now covers one million square kilometres more than any other telco – that’s the size of New South Wales and Victoria combined.”

But it won’t stop there. Telstra advised that it will keep investing to ensure it maintained its leading mobile coverage and helped regional and remote communities fully participate in the digital economy.

Payment for the 20-year licences is not expected until shortly before they commence in mid-2024.

The post Why the Telstra (ASX:TLS) share price is on watch on Wednesday appeared first on The Motley Fool Australia.

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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 owns shares of 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 Bruce Jackson.

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Are you looking for some quality dividend shares to buy in December? If you are, then you may want to look at the two high yield dividend shares listed below.

Here’s why Morgans is bullish on them:

Adairs Ltd (ASX: ADH)

The first ASX dividend share to look at is Adairs. It is the leading homewares and furniture retailer behind the Adairs and online-only Mocka brands.

The company has also just signed an agreement to acquire Focus on Furniture for $80 million. Focus currently operates 23 stores across Australia and generated revenue greater than $150 million during FY 2021.

The team at Morgans is positive on the deal. It believes it will complement its core business and provide network expansion opportunities. In response, the broker retained its add rating and lifted its price target on the company’s shares to $4.80.

The broker is also forecasting fully franked dividends per share of 23 cents in FY 2022 and 29 cents in FY 2023. Based on the current Adairs share price of $3.57, this will mean yields of 6.4% and 8.1%, respectively.

Morgans commented: “We believe ADH is too cheap for the growth and dividend income it offers. On our estimates, it trades on a single digit PE multiple of less than 9x in FY23. The forecast dividend yield in that year is 8.0%.”

BHP Group Ltd (ASX: BHP)

Another ASX dividend share for investors to look at is this mining giant.

While recent weakness in the BHP share price has been disappointing for investors, analysts at Morgans believe this could be a buying opportunity. The broker has recently put an add rating and $45.70 price target on the company’s shares.

As for dividends, the broker is forecasting fully franked dividends of $3.40 per share in FY 2022 and $2.44 per share in FY 2023. Based on the current BHP share price of $39.95, this will mean yields of 8.5% and 6.1%, respectively.

Morgans commented: “While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.”

The post Morgans names 2 high yield ASX dividend shares to buy now appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended ADAIRS FPO. The Motley Fool Australia owns shares of and has recommended ADAIRS FPO. 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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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Alphinity Investment Management client portfolio manager Elfreda Jonker reveals the 2 ASX shares that are the hottest buys currently.

Hottest ASX shares

The Motley Fool: What are the 2 best stock buys right now?

Elfreda Jonker: I can share 2 examples of stocks that we’ve recently bought into our fund. So the first one is Lifestyle Communities Limited (ASX: LIC). It’s quite an interesting little company. Well, it’s not that little, it’s got a $2 billion market cap. But effectively what they do is they’re a Melbourne-based provider of affordable housing for people over 50 — retired or pre-retired. 

They offer a community-style shared facility. They use the land lease model. You pay for the home, but you lease the land from them. So it’s not aged care or retirement homes. It’s all houses that self-care, but it’s built on shared facilities for the community. 

For us, this is a very interesting concept. It’s quite well-known internationally, but not necessarily here. 

At this point in time, Lifestyle is based in Melbourne and the outskirts of Melbourne. They have around 24 communities, but they are really growing with plans to grow across Victoria. If you look at the current sales and their pipeline, we think it’s quite exciting that, even through all 6 of the recent lockdowns, they’ve been consistently able to continue to sell. Now after the lockdowns in November… it’s really accelerated once again. 

As soon as they find the land, they will get developers in. They develop the land and they pretty much pre-sell at least 50% of those properties beforehand.

So the risk of the model is relatively low. The cost of the model is relatively low to them. And particularly for, I think, those kinds of retirees or pre-retirees at that age, given that the property market has been so strong, they have not had any issues to sell their [old] houses for really good prices and then, I guess, downscale to a bit of a lower-cost house within these communities. 

From Lifestyle’s perspective, their revenue streams would be the development fee when they sell the units. And then the ongoing land rental and house selling value, obviously. So they’ve got an internal rate of return of around 20% on those units that they sell — the development fees. 

The key really is that we think they can certainly expand faster than what the market’s currently anticipating.

At the end of the day, the biggest risk for a company like this is probably a house price decline if you see a huge fall in the market. But given that they are quite a bit lower than the overall housing market price, there’s certainly already a buffer built into that price of theirs. 

Obviously, you can see competition, and you can see construction costs increasing. So you always need to look at this and say, are you aware of all the risks? What is priced in for us? 

We have the expectation here that you can see consistent earnings growth coming through from this company, and a valuation that we don’t think is particularly expensive, and also with a very strong balance sheet. So there’s not a lot of risk that they can’t raise enough cash or continue to expand at the current strength of the balance sheet. So it’s really about winning market share, growing faster than the market [is] expecting, and just a really well-run business with a very good management team. We really like that opportunity.

MF: I see the share price has almost doubled this year.

EJ: Yes… it’s up around 70% over the last year. We’ve had [the stock] in our sustainable fund for quite a bit. We’ve also recently added it to our Australian share fund. But yeah, it’s definitely outperformed the market very well. 

It’s trading on a 23-times PE [ratio], so it’s not really seen a massive re-rating in this period, but it’s really been an earnings growth story. And I think that’s the crux of what we look at, to try and identify those companies where we believe the market’s underestimating the potential earnings growth of a company. So it is definitely a nice little niche company. 

The other one that we’ve recently added back into our funds — we used to have it a while ago — is Treasury Wine Estates Ltd (ASX: TWE). 

It’s one of the largest premium wine producers in the world. And one of the largest listed wine players and possibly even the largest listed pure wine producer in the world. 

What happened with this company is that they had a very big setback last year when China slapped the 200% tariffs on Australian wines. That really caused the share price to tank. Subsequently what’s happened is that you have actually seen them really back-fill that book that they used to have in China, into other parts of the world. 

Also, over that time, they have seen a huge amount of earnings downgrades, and obviously, China was very disappointing and very disruptive for the business. But what’s happened of late is that they actually also have a very, very good, strong management team and they’re realigning their business. They’re busy transforming, particularly their US business. They recently bought a business called Frank Family Vineyards in California, which I would love to go and visit one day. 

It’s a luxury wine business. They’ve got a very strong margin, 35% to 40%. And I think that’s really what Treasury is trying to do, to focus more on that premium side of the business. They have got a range of very strong brands now, and all areas of the business in Australia, as well as abroad, are now actually growing again. 

If you think about how much you do pay for a glass of wine in a restaurant or so forth, it’s really a high-margin business in general. And given the pullback that the [share price]’s had of late, and now the new acquisitions, relatively strong balance sheet, as well as the ability to now just continue to grow into other areas and particularly into the US, we’re very excited about their potential scope for growth there. 

We’ve put that company back into our portfolio. So definitely one to watch for the next year.

MF: I remember when the China tariff came in last year people feared the worst about Treasury Wines, but they’ve done really well to get around that, haven’t they?

EJ: Yeah. And it’s all in the last year that they’ve really been able to find other clients in Asia and US and pretty much across the board. And I think that’s a nice thing. It’s actually a stronger business now because they’re more diversified. They are focusing more on the premium brands, so yeah, I think it’s exciting. 

And on a 25x PE, we don’t think it’s incredibly expensive for the sort of earnings growth and margins that this business can generate.

The post 2 hot ASX shares to snap up right now: expert appeared first on The Motley Fool Australia.

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• Morgans rates these ASX 200 shares as buys

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 no position in any of the stocks mentioned. 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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If you’re wanting to gain exposure to the small side of the market, the shares listed below could be worth considering.

Both of these small cap ASX shares have been tipped as buys by analysts. Here’s why:

Adore Beauty Group Limited (ASX: ABY)

The first small cap ASX share to look at is Adore Beauty. It is an integrated content, marketing, and ecommerce retail platform with a focus on the beauty market.

At the last count, the company had 874,000 active customers, which was up 24% over the prior corresponding period. From these customers, the company generated revenue of $63.8 million during the first quarter of FY 2022. This represents a 25% increase on the same period last year.

The good news is that even if you annualise its Q1 revenue to $255 million, it is still only a small slice of the $11 billion a year Australian beauty and personal market. This provides Adore Beauty with a long runway for growth over the next decade as more and more industry sales shift online.

Shaw and Partners is a fan of Adore Beauty. Its analysts currently have a buy rating and $6.00 price target on its shares.

Serko Ltd (ASX: SKO)

Another small cap ASX share to look at is Serko. It is an online travel booking and expense management provider.

It recently announced the completion of a NZ$75 million placement to support its growth. This includes supporting Serko’s global marketplace strategy, which is aiming to transform the company from an online booking tool into a distributed marketplace.

In addition, some of the proceeds will be used to support its Booking.com for Business offering. Management advised that following the successful migration of Booking.com business customers onto the new Zeno powered Booking.com for Business platform, Serko will undertake targeted investment to optimise customer engagement and extend the offering across global markets to maximise the potential of the opportunity.

All in all, this appears to have left Serko well-placed for growth once travel markets return to normal.

Ord Minnett certainly believes this to be the case. Last week the broker retained its buy rating and lifted its price target to $8.10.

The post 2 small cap ASX shares to get excited about appeared first on The Motley Fool Australia.

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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. owns shares of and has recommended Serko Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and Serko Ltd. 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 high-quality ASX dividend shares that may compelling options for long-term income.

A handful of businesses have committed to paying investors with high levels of income.

There are more options out there than just the biggest ASX companies like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Scentre Group (ASX: SCG).

These two ASX dividend shares could be options for income:

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that owns a large and growing portfolio of farming properties across the country.

It has a goal of growing the distribution by 4% each year for investors, which it has done so for a number of years since it listed. That goal is driven by contracted rental increases as well as productivity investments.

Rural Funds has farms across a number of sectors: cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).

The ASX dividend share regularly adds to its portfolio. At the end of November 2021, it announced another acquisition. It’s buying 27,879 hectare of cattle and cropping farms across four properties in Queensland.

Those acquisitions have the potential for productivity improvements. Included in the purchase is 12,448 ML of water entitlements, which will be used to improve the productivity, including expanding irrigated cropping areas and increasing cattle carrying capacity through pasture improvement and additional water points.

Rural Funds is expecting to pay a FY22 distribution of 11.73 cents per unit, translating to a distribution yield of 4%. It is expecting to generate adjusted funds from operations (AFFO) of 11.8 cents per unit in FY22.

Metcash Limited (ASX: MTS)

Metcash is a business with operations across food, liquor and hardware. It supplies IGAs across the country and also is the second biggest hardware player in the country with Mitre 10, Home Timber & Hardware and Total Tools.

It’s currently rated as a buy by the broker Credit Suisse, with a price target of $4.55.

Credit Suisse thinks Metcash is good value and could pay a grossed-up dividend yield of 7.1% in FY22. On the broker’s numbers, the Metcash share price is valued at 15x FY22’s estimated earnings.

The ASX dividend share did just report its FY22 half-year result, which came with a 31% increase to the interim dividend to 10.5 cents per share after a 15% increase to underlying earnings per share (EPS) to 14.6 cents.

Metcash says that it has a strong focus on shareholder returns. It has successfully completed its off-market buy-back of $200 million. It now has a target dividend payout ratio of 70% of underlying profit after tax.

The second half of FY22 has seen sales growth continue, with hardware sales increasing 20.1% and playing an important part in profit generation for the business.

The post 2 leading ASX dividend shares for compelling income appeared first on The Motley Fool Australia.

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• ASX 200 (ASX:XJO) midday update: Metcash jumps, Kogan and Zip sink
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. 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 RURALFUNDS STAPLED. 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 Tuesday, the S&P/ASX 200 Index (ASX: XJO) was on form and stormed notably higher. The benchmark index rose 0.95% to 7,313.9 points.

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

ASX 200 expected to rise again

The Australian share market looks set to continue its positive run on Wednesday following another strong night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 53 points or 0.7% higher this morning. In late trade in the United States, the Dow Jones is up 1.45%, the S&P 500 is up 2.1%, and the Nasdaq is trading a massive 3.1% higher.

Life360 added to ASX 200

The Life360 Inc (ASX: 360) share price could have a strong day on Wednesday. As well as benefiting from improving investor sentiment in the tech sector, the app maker’s shares have been given a boost from their inclusion in the ASX 200 index at the quarterly rebalance later this month. Life360 joins amid the exit of Oil Search Ltd (ASX: OSH) due to its merger with Santos Ltd (ASX: STO).

Oil prices jump

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a great day after oil prices jumped again. According to Bloomberg, the WTI crude oil price is up 3.8% to US$72.14 a barrel and the Brent crude oil price has risen 3.4% to US$75.55 a barrel. Easing Omicron concerns and delays to Iranian crude returning to the market boosted prices.

Gold price rises

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) will be on watch after the gold price pushed higher. According to CNBC, the spot gold price is up 0.35% to US$1,785.7 an ounce. The gold price pushed higher despite Omicron concerns easing.

CBA remains a sell

The Commonwealth Bank of Australia (ASX: CBA) share price is overvalued according to the team at Goldman Sachs. According to a note, the broker has retained its sell rating on the banking giant’s shares with an improved price target of $82.57. Goldman doesn’t believe CBA’s shares deserve to trade at such a premium to the rest of the big four banks.

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

More reading

• ASX 200 retail shares lift as Aussies head into Christmas with $240bn in savings
• RBA maintains interest rate but removes 2024 reference. What could this mean for ASX shares?
• CBA share price struggling today amid sliding home buying intentions
• Here are the 3 heaviest traded ASX 200 shares this Tuesday so far
• Leading brokers name 3 ASX shares to sell today

Motley Fool contributor James Mickleboro owns shares of Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Life360, Inc. 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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