The Brainchip Holdings Ltd (ASX: BRN) share price is trading lower today.

In afternoon trade, the artificial intelligence technology company’s shares are down by 5.33% to 50 cents.

Putting a few chips in the back pocket

It appears investors are today taking a leaf out of co-founder Peter Van Der Made’s book as he sold down his Brainchip shares last week.

The interim chief and co-founder reduced his holdings by selling a total of 2.57 million shares at an average price of 54 cents. The sale netted Van Der Made a total of $1.39 million dollars.

According to the disclosure, Van Der Made continues to hold a significant holding of some 173.7 million shares in the company, worth about $86.85 million at the current Brainchip share price.

Despite the sale, the co-founder remains Brainchip’s largest shareholder with a 10.6% stake in the company.

Investors might be concerned about the sale, considering the company is yet to appoint a new chief executive officer. Previous CEO Louis DiNardo suddenly exited Brainchip back in March by mutual agreement.

The silence is deafening

Shareholders rarely look fondly on insiders selling. Especially when there has been a lack of announcements from the company regarding its Akida chip more recently.

In the past year, ASX-listed Brainchip reported US$26.8 million in losses. This is due to the company still awaiting production completion and sales.

Meanwhile, Van Der Made has not been the only insider taking some money off the table. Co-founder and chief development officer Anil Mankar sold $9.55 million worth of Brainchip shares back in April.

Despite the sell downs, the company insists it is on track to produce its ultra-low power edge-computing processor.

Brainchip share price recap

Brainchip shares have weakened since March, falling 34% from a high of 75 cents. But it’s not all doom and gloom — the company’s shares are still up a staggering 534% over the last year.

However, it has been a subdued 2021 for the chip developer. Much of the market is now patiently awaiting production and revenue. Until then, the Brainchip share price offers little more information for investors to speculate over.

The post Brainchip (ASX: BRN) share price weakens after co-founder sells shares appeared first on The Motley Fool Australia.

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• Why Collins Foods, Genworth Mortgage Insurance, Kathmandu, & ResMed are sinking
• Why this expert thinks commodities are about to rally again
• ASX construction shares like Brickworks (ASX:BKW) are falling today

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 S&P/ASX 200 Index (ASX: XJO) is on course to record a reasonably disappointing decline on Tuesday. In afternoon trade, the benchmark index is down 0.4% to 7,276.4 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are sinking:

Collins Foods Ltd (ASX: CKF)

The Collins Foods share price is down 5% to $12.06 following the release of its full year results. The KFC-focused quick service restaurant operator’s shares hit a record high in early trade before sinking. In FY 2021, Collins Foods reported a 12.4% increase in revenue to $1.07 billion and an 18.2% increase in underlying net profit after tax from continuing operations to $56.9 million. The latter was ahead of the expectations of Wilsons but still not enough to stop its shares from falling.

Genworth Mortgage Insurance Australia Ltd (ASX: GMA)

The Genworth Mortgage Insurance share price has crashed 15% lower to $2.16. This morning the mortgage insurance company was dealt a blow when Commonwealth Bank of Australia (ASX: CBA) advised that it intends to issue a request for proposal relating to its Lenders Mortgage Insurance requirements. Genworth has provided this to CBA for over 50 years, with its current deal contributing more than half of its gross written premiums.

Kathmandu Holdings Ltd (ASX: KMD)

The Kathmandu share price has fallen 3.5% to $1.43. Investors have been selling the adventure retailer’s shares after it warned that COVID-19 lockdowns would lead to it falling short of expectations in FY 2021. Kathmandu estimates that the current lockdowns will hit its earnings by NZ$13 million.

ResMed Inc (ASX: RMD)

The ResMed share price is down 2% to $32.00. The catalyst for this decline appears to be a broker note out of Citi this morning. According to the note, the broker has downgraded the medical device company’s shares to a neutral rating with an improved price target of $32.50. Citi made the move on valuation grounds after a strong gain in June following a competitor product recall.

The post Why Collins Foods, Genworth Mortgage Insurance, Kathmandu, & ResMed are sinking appeared first on The Motley Fool Australia.

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• ResMed (ASX:RMD) share price tumbles on broker downgrade
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• Collins Foods (ASX:CKF) share price hits record high after reporting strong FY 2021 growth
• Kathmandu (ASX:KMD) share price on watch after COVID lockdowns hit sales

Motley Fool contributor James Mickleboro owns shares of Collins Foods Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Collins Foods Limited and ResMed Inc. 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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Apprehension is creeping back into the market but this could be the time to be buying ASX resources shares as commodity prices are set to rally.

The bullish near-term outlook for hard commodities and energy was forecasted by Citigroup.

The prediction comes at a time when the BHP Group Ltd (ASX: BHP) share price, South32 Ltd (ASX: S32) share price and Woodside Petroleum Limited (ASX: WPL) share price have pulled back from their recent highs.

Commodity price and ASX mining shares disconnected

You can tell investors are getting jittery. Shares of ASX miners are being sold-off even on days when commodity prices jump.

Today’s one example as the Fortescue Metals Group Limited (ASX: FMG) share price and Rio Tinto Limited (ASX: RIO) share price are on the back foot. This is despite the iron ore price gaining 0.5% to around US$215 a tonne.

Investors don’t believe the good times will last and are reluctant to bid up ASX mining shares. Rising interest rates and the risk of runaway inflation are keeping buyers at bay.

Commodities could rebound in 2HCY21

But history is on the side of commodity bulls, according to Citigroup.

“Commodities naturally sell-off in recessions but rebound rapidly as economies recover,” said the broker. “The deeper the recession the stronger the recovery tends to be.”

Citi looked at recessions from the early 1990s and believes that commodities should continue to perform, if not outperform, in the second half of this calendar year. This is in part due to COVID-19 stimulus being unleashed to aid the economic recovery.

“We examine the performance of key US$ asset classes during the 6 [month] periods following global recessions,” said Citi.

“Notably, commodities outperformed equities, rates and credit indices on average, while the macro-sensitive industrial metals and energy complexes were the best-performing sectors within commodities during recoveries.”

ASX energy shares set to power up

Oil also outperforms and Citi noted a positive correlation between oil demand growth and GDP growth. The relationship is accentuated during “V-shaped” economic recoveries.

“Given the outsized weight of crude oil in commodity benchmarks and the energy intensity of mining and ag production, higher oil prices can accentuate a broader commodities rebound via cost inflation,” added Citi.

“Investor flows also improve substantially exiting steep recessions. In 2H’09, net inflows totalled ~$82Bn, including ~$42Bn to energy.

“This is consistent with the pattern we have seen YTD, where energy leads in sector performance and accounts for over half of the net inflows.”

Oil and copper look most bullish

The Brent oil price looks particularly well placed to rally, in the broker’s opinion. It also expects buyers to step in to buy the dip for copper.

If Citi is on the money, ASX energy and mining shares could outperform through to the end of this calendar year, if not beyond.

The post Why this expert thinks commodities are about to rally again appeared first on The Motley Fool Australia.

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• BHP (ASX:BHP) announces first deal in thermal coal selloff
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• Here are 3 of the most actively traded ASX 200 shares today
• ASX 200 Weekly Wrap: Share market breaks 5 week winning streak

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Fortescue Metals Group Limited, Rio Tinto Ltd and South32 Ltd. Connect with me on Twitter @brenlau.

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 S&P/ASX 200 Index (ASX: XJO) is not having a great trading day so far. At the time of writing, the ASX 200 is down 0.56% to 7,266 points.

One sector joining the malaise is ASX construction and building materials shares. They’re down across the board.

Take Brickworks Ltd (ASX: BKW). This company has retreated from its all-time high of $24.99 a share that we saw yesterday and is down 0.24% today to $24.70 a share.

It’s not alone either. CSR Limited (ASX: CSR) is down a hefty 2.2% today. James Hardie Industries plc (ASX: JHX) has lost 1.4% to $45.16 a share. And Boral Limited (ASX: BLD) is down 0.2% to $7.32 a share.

So what’s going on here? Well, an article in The Australian points to a possible catalyst. According to the report, the Australian building industry is in the midst of a “severe shortage of timber”. A fall in domestic timber production thanks to the Black Summer bushfires, coupled with a global supply squeeze, is to blame.

Reportedly, timber prices have risen “three to fourfold” in the US. This is resulting in the US market “sucking timber from around the world”.

Got wood? That’s what ASX construction shares are wondering

A report from the ABC corroborates this story. According to the national broadcaster, the South Australian construction industry is feeling a particularly acute shortfall in timber supplies, leading to calls for more supply to be unlocked.

The report tells us Masters Builders South Australia has called for both immediate and long-term solutions. Here’s some of what association chief executive Will Frogley told the ABC:

We’ve got a situation here where we’ve got record [timber] demand, record high building approvals because of the massive popularity of the federal government’s HomeBuilder Grant… The price of timber has gone up 400 per cent in the last year in America … and that’s really hurting supply.

If timber prices remain so elevated, it could obviously have the potential to damage the construction industry. As such, it could be a reason why ASX construction shares have come off the boil today.

The post ASX construction shares like Brickworks (ASX:BKW) are falling today appeared first on The Motley Fool Australia.

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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 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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Over the last five years, the Telstra Corporation Ltd (ASX: TLS) share price has thoroughly underperformed the Australian share market.

During this time, the telco giant’s shares have lost a disappointing 36% of their value.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) has gained 38% during the same period. Both figures exclude dividends.

The tides are changing

However, the good news for shareholders is that 2021 has been very different for the Telstra share price.

In fact, the tides are now changing, and it is the Telstra share price that is outperforming the ASX 200. Since the start of the year, the company’s shares have risen 18%, compared to a gain of 9% by the ASX 200.

Why is the Telstra share price outperforming in 2021?

The catalyst for the Telstra share price rise in 2021 has been its significantly improved outlook and the belief that its dividend cuts are now over. This is due to the early success of its T22 strategy, its leadership position in 5G, asset monetisation plans, and rational competition in the telco industry.

Things are looking so positive that management is now talking about returning to growth again after years of declines.

In February, Telstra’s CEO, Andy Penn commented: “After a decade of disruption following the creation of the nbn, and with its rollout now declared complete, we can clearly see the path to underlying growth ahead of us.”

“Our investment in innovation and technology, digitisation and networks, improving our customer experience and being disciplined in our capital management, mean that at the start of this decade, as Australia digitises its economy, Telstra is in a strong position to grow,” he added.

Should you buy Telstra shares for its dividend yield?

Analysts at Goldman Sachs believe that Telstra would be a good option for income investors.

Earlier this month, the broker retained its buy rating and $4.00 price target on the company’s shares.

The broker also continues to expect fully franked dividends of 16 cents per share through to FY 2023, before a long-awaited increase to 18 cents per share in FY 2024. Based on the current Telstra share price of $3.57, this will mean annual yields of 4.5% until FY 2023 and then 5% thereafter.

The post Should you buy Telstra (ASX:TLS) shares for its dividend yield? 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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Bitcoin (CRYPTO: BTC) is edging higher, up 0.4% over the past 24 hours to US$34,659 (AU$45,604). That still leaves the world’s biggest token a long way off its mid-April record high of US$64,829.

Ethereum (CRYPTO: ETH) is having a stronger run, up 7.8% in 24 hours to US$2,126. That also remains well below Ether’s own mid-May record high of US$4,382.

Yet the recent falls don’t appear to be dissuading millions of retail investors from buying – or intending to buy – cryptocurrencies.

In fact, a recent survey conducted by cryptocurrency exchange Kraken and YouGov revealed 40% of Aussie millennials plan to invest in crypto assets as a way to save for a home.

And it’s not just Australians. According to Chainalysis, even gold-hungry Indians are snapping up crypto, with some US$40 billion worth of crypto investment over the past year.

With interest in Bitcoin, Ether and other cryptos showing no signs of abating, the Motley Fool reached out to Leigh Travers, CEO of blockchain consulting and development services company Digitalx Ltd (ASX: DCC), for his unique insight.

How China’s crackdown is long-term bullish for Bitcoin

You’ve likely heard about China’s crackdown on Bitcoin mining, along with the ban on Chinese financial institutions facilitating crypto transactions.

With 65% of global Bitcoin mining taking place in China in 2020, the crackdown has fuelled the price falls of the world’s biggest cryptos.

However, Travers told the Motley Fool he sees this as a short-term issue. In fact, he thinks Bitcoin and Ether are likely to come out better for it:

Our view on the two biggest risks for Bitcoin at the start of the year was China dominance in the market, as well as ESG (environmental, social, and corporate governance) headlines about carbon usage of Bitcoin mining.

The current short-term exodus of Bitcoin miners and Bitcoin traders out of China is absolutely long-term bullish. China had a significant percentage of Bitcoin miners that were powered by coal. That’s particularly true during their summer, as in winter it’s more hydro.

Travers points out that with Bitcoin miners fleeing Chinese soil, more activity is heading elsewhere in Asia and to the US state of Texas, with a greater percentage of renewable energy in the mix.

“To see how quickly both of these key risks are being reduced is giving us a significant increase in confidence for the long-term outlook for Bitcoin and the digital asset sector,” Travers told us. He added:

As Bitcoin moves towards a more renewable energy mix, and as Ether transitions towards a security model that utilises 99% less energy, the ESG concerns fade and some of the positive elements of ESG that digital asset markets provide will become evident.

El Salvador adopting Bitcoin as legal tender is one example of this, Travers said. He noted that financial inclusion in the Latin American country is only around 30%.

“A digital wallet that enables access to markets that have governance frameworks programmed is a positive opportunity for many,” he said.

Avoid these 2 big crypto pitfalls

While some crypto investors have made fortunes, others have lost some or all of the money they invested.

We asked Travers about the most common scam used to part would-be Bitcoin investors from their hard-earned money. He said:

Any direct emails from private cryptocurrency investment funds must be avoided. There are zero licensed private retail investment fund products in Australia, or the world, from my knowledge. At best they are offering you an unlicensed investment product. At worst, it could be a scam.

Travers also stressed never to invest more than you feel comfortable with:

The sector is highly volatile. If you haven’t done any research and the investment size is too large, you’re much more likely to be a seller when prices drop. If you have a strong investment thesis and your investment is sized appropriately, it is much easier to hold for your investment time horizon.

The best 3 cryptos to buy

We rounded off our questions by asking Travers which digital tokens he believes may outperform. He said:

Bitcoin and Ether are the digital assets experiencing the most institutional growth and really should be considered first before any other digital assets. We are seeing some incredible growth from Uniswap over the past 6 months, so that’s another that we like.

Uniswap (CRYPTO: UNI) is currently trading for US$18.30, up 8.0% in the past 24 hours.

According to CoinMarketCap, Uniswap is “a popular decentralised trading protocol, known for its role in facilitating automated trading of decentralised finance (DeFi) tokens”.

The post Investing in Bitcoin? How to avoid these 2 costly pitfalls appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin. 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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Independent oil and gas producer Santos Ltd (ASX: STO) has today launched the front-end engineering and design (FEED) phase for its Dorado project, located off the coast of Western Australia.

At the time of writing, the Santos share price is 1.24% in the red, currently trading at $7.16 per share.

What did Santos say?

Dorado is an integrated oil and gas project located in the Bedout Sub-basin, which is planned for 2 exploration and production phases. Santos has an 80% stake in the project and is also an operator, sharing the interest with Carnarvon Petroleum

Phase 1 of the project includes the production of oil and condensate through a floating production, storage and offloading facility (FPSO) and has an estimated cost of ~$2 billion.

Following a competitive phase amongst top-tier contractors, the tenders for the FPSO design are currently being finalised and are expected to be assigned over the next few months.

In today’s statement, Santos chief executive office Kevin Gallagher said:

Entering FEED for the Dorado project is a significant milestone and has the project on schedule for a final investment decision around mid-2022.

Dorado is on track to be the first development in the Bedout Sub-basin, with its high-quality
reservoirs and shallow-water setting, making it a very cost-competitive project globally.

The company is also seeking interest from market participants in non-operated equity interests in Dorado and other potential WA oil assets.

In the same release, Gallagher also commented on the potential of the project:

Potential nearby tie-in opportunities, starting with the Pavo and Apus prospects to be drilled early next year, could be easily tied-back into the Dorado infrastructure and materially increase the value of the project, due to the very low cost of development.

Santos share price snapshot

The Santos share price is down 1.24% intraday following the release, and is also in the red 3.5% over the previous 5 days at the time of writing.

Santos shares have climbed more than 11% year-to-date with a major jump from $6.77–$7.73 from 31 May–4 June, before pulling back to today’s level.

At a current share price of $7.16, Santos has a market capitalisation of $15 billion, and trades at a price-to-earnings ratio (P/E) of 12.84.

The post Santos (ASX:STO) share price sinks despite project update appeared first on The Motley Fool Australia.

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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 Australian Strategic Materials Ltd (ASX: ASM) share price has rocketed another 9.15% higher, trading at $7.75 the time of writing.

Shares in the integrated critical metals producer’s have spent most of this month in the green, surging more than 63% in June.

The company has not announced any price sensitive news this month, so let’s take a look at what else might be driving the Australian Strategic Materials share price run to record all-time highs.

What’s the latest?

Sustainable production of critical materials

Australian Strategic Materials has a “mine to manufacturer” business model, leveraging its rare earths and oxides resource at the Dubbo project to supply its strategic plants which refine the raw material into metals, alloys and powders.

According to its investor presentation on 11 May, the Dubbo project has received all required environmental approvals and ready for construction.

Additionally, the company said that the Dubbo project was targeting zero carbon emissions through large scale renewables.

In terms of its metallisation and refining plants, the company previously announced its first proposed Korean Metals Plant to produce high purity metals, alloys and powders.

Australian Strategic Materials has described this as:

A springboard for proposed global expansion in strategic locations, identifying partnership opportunities to push further downstream into magnets and other applications.

Right place at the right time

The Australian Strategic Materials share price isn’t the only ASX-listed producer of ‘critical metals’ running into record territory.

ASX lithium shares including Pilbara Minerals Ltd (ASX: PLS), Galaxy Resources Ltd (ASX: GXY) and Orocobre Limited (ASX: ORE) have all surged to multi-year highs this year. The jump in lithium miner valuations has been underpinned by higher lithium prices and strong demand across key markets.

A similar narrative is taking place for Lynas Rare Earths Ltd (ASX: LYC), the second largest producer of rare earths (ex-China).

The Lynas share price has lifted 33% year-to-date to an 8-year high of $5.60.

Globally, exchange-traded funds (ETFs) such as the Global X Lithium & Battery ETF and Invesco Solar ETF have lifted ~80% and ~147% respectively since February 2020.

It appears the Australian Strategic Materials share price is reflecting the overall bullish performance of renewable related industries.

The post Up 63% this month, Australian Strategic Materials (ASX:ASM) share price rockets higher appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is off its lows but still trading notably lower. At the time of writing, the benchmark index is down 0.5% to 7,267.5 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are storming higher:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price has risen 2% to 23.5 cents. This morning this lithium explorer revealed that leading global environmental and sustainability consultants ERM Group has completed its Greenhouse Gas Assessment of Finniss Project. According to the release, the study found that the project has lower emissions that its Western Australian peers and the lowest transport-related emissions than any other Australian lithium project.

Life360 Inc (ASX: 360)

The Life360 share price is up 4% to $6.21. Investors have been buying the family app maker’s shares following the release of a broker note out of Morgan Stanley. According to the note, the broker has initiated coverage on Life360 with an overweight rating and $8.60 price target. The broker believes that the market under appreciates the quality of Life360 and its significant user base.

Marley Spoon AG (ASX: MMM)

The Marley Spoon share price has stormed 4.5% higher to $2.95. This is despite there being no news out of the meal kit delivery company. However, with lockdowns occurring in Australia, investors may believe that demand for its meal kits will surge again.

Metcash Limited (ASX: MTS)

The Metcash share price has pushed 3% higher to $3.80. Investors have been buying the wholesale distributor’s shares after brokers responded positively to its full year results release. Credit Suisse and Morgan Stanley were among the most positive brokers. They have retained their equivalent of buy ratings and lifted their price targets to $4.16 and $4.15, respectively.

The post Why Core Lithium, Life360, Marley Spoon, & Metcash are storming higher 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 recommended Life360, Inc. The Motley Fool Australia has recommended Marley Spoon AG. 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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Investors of ASX-listed bank shares have enjoyed the spoils of a rebounding economy. Yet, the best may still be to come as the big four Aussie banks deliberate over how to return an estimated $34 billion of excess capital to shareholders.

Analysts are already debating whether the returns will be via beefed-up dividends or share buybacks.

Let’s look at what analysts are expecting.

Big bucks from ASX bank shares

Despite a global pandemic, all of the big four banks delivered share price returns in excess of 40% over the past year. For shareholders, it has been somewhat bittersweet. While enjoying capital appreciation, they have had to suffer a hit to dividend payments.

However, with the economy springing back, those dividend cuts quickly stacked up as spare cash. Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking GrpLtd (ASX: ANZ), National Bank of Australia Ltd (ASX: NAB), and Westpac Banking Corp (ASX: WBC) are now all flushed with cash.

Analysts over at Morningstar estimate around $34 billion of excess capital will be returned to shareholders over the next few years. But the real question is, how will the spoils be shared?

Equity analyst, Nathan Zaia expects that all the ASX’s major bank shares will make off-market buybacks in the next 12 months. Zaia forecasts the remaining capital to be returned through bigger annual dividends between 2021 and 2024. Additionally, Zaia sees on-market buybacks occurring once franking balances are run dry.

We think the Commonwealth Bank could kick things off in August 2021 with an approximate AUD 5.5 billion off-market buyback. However, the bank’s conservatism around loan loss provisioning and dividends during 2020 and 2021 suggests shareholders may need to wait until 2022.

Divs or buybacks for CBA?

Morningstar analysts estimate Commonwealth Bank has around $10 billion of excess capital.

Based on the research firm’s numbers, it considers CBA to be trading a significant premium to its fair value estimate of $77 a share.

Hence, Morningstar would prefer Australia’s biggest bank to return capital via dividends. If the bank pursued this path, analysts estimate it could cover a 100% dividend payout ratio through to 2023.

At the time of writing, ASX bank shares are in the red. Furthermore, CBA is trading 0.40% lower to $99.47.

The post ASX bank shares weigh up $34 billion dosh-dishing decision appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler owns shares of Commonwealth Bank of Australia. 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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