Is it time for investors to jump onto the Westpac Banking Corp (ASX: WBC) share price?

Westpac shares just keep going higher and higher. Over just the last two months it has risen by 13.3%.

What’s driving the Westpac share price higher?

Westpac saw most of its recent gain occur after releasing its FY21 first quarter update during reporting season. 

The major ASX bank reported a quarterly statutory net profit of $1.7 billion, which was up significantly from the FY20 second half quarterly average of $550 million.

Its cash earnings came in at $1.97 billion, which was much stronger than the second half of FY20’s quarterly average of $808 million (up 54% excluding notable items).

Westpac reported an impairment benefit of $501 million from improved credit quality, better economic outcomes and a better economic outlook.

Despite the low rate interest environment and all of the difficulties that Westpac is facing, it managed to increase its net interest margin (NIM) by 3 basis points, compared to the second half of FY20, up to 2.06%. The increase was 2 basis points excluding notable items.

However, Westpac did provide detail about the underlying numbers – core earnings were up 28%, or just 3% excluding notable items.

Westpac’s balance sheet has been improving, just like the other big banks of Commowealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

The Westpac common equity tier 1 (CET1) capital ratio improved by 74 basis points to 11.9% compared to 30 September 2020.

One thing that investors may want to note is that Westpac is now looking at its New Zealand business. Westpac said that given the changing capital requirements in New Zealand and the Reserve Bank of New Zealand requirement to structurally separate Westpac’s New Zealand business operations from its operations in Australia, it’s assessing the best structure for these businesses going forward.

Management thoughts

Westpac CEO Peter King said:

While uncertainty remains around the impact of local COVID outbreaks, there is cause of optimism. The economy is recovering, consumer and business confidence is strong, and the labour market has been much more resilient than expected. At the end of December there were 12.9 million employed Australians compared to 13 million in March 2020.

We are also beginning to improve momentum in mortgages and while the book was little changed over the half, we have processed a significant increase in applications. Low interest rates, rising house prices, new construction, and high consumer confidence all point to continued recovery in home lending activity in 2021.

Is the Westpac share price a buy?

The broker Morgan Stanley rates Westpac shares as a buy because of how exposed it is to the home loan market. Loan growth is increasing and the improvement in credit demand is likely to mean that the Westpac share price can keep rising.

On Morgan Stanley’s numbers, Westpac is valued at 16x FY21’s estimated earnings with a grossed-up dividend yield of 6.2%.

More reading

• The Coinbase (NASDAQ:COIN) IPO price has been announced
• ASX 200 rises, Zip (ASX:Z1P) flies, bank ratings upgraded
• Why Westpac (ASX:WBC) could be about to deliver a dividend surge
• Why the NAB (ASX:NAB) share price could push higher from here
• ASX 200 Weekly Wrap: ASX sees 7,000 points once more

Motley Fool contributor Tristan Harrison 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.

The post Is it time to jump on the Westpac (ASX:WBC) share price? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2QqPc1C

Last week, we discussed how one of the ASX banks in Westpac Banking Corp (ASX: WBC) was set to enjoy an upcoming windfall. The source of this windfall? An investment the Westpac-backed venture capital fund Reinventure made in a US company by the name of Coinbase. Coinbase provides an exchange for investors to buy and sell cryptocurrencies, where users can trade popular cryptocurrencies like Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and Ripple (CRYPTO: XRP)

Reinventure made a $50 million investment in Coinbase back in 2015. That investment could now be worth much more tomorrow. Coinbase is about to list over in the US on the Nasdaq exchange (ticker to be NASDAQ: COIN). And we’ve just found out its listing price.

Coinbase set to debut tonight

According to an article from Nasdaq.com, Coinbase will list at a price of US$250 per share. That share price would value Coinbase at almost US$50 billion. As the Nasdaq notes, that price is “not an offering price for investors to purchase shares, but rather a benchmark for performance when the stock starts trading”. And there’s a fair bit of evidence to suggest it will rise above that benchmark. Firstly, Coinbase is in an area (cryptocurrencies) that garners a lot of attention from retail investors these days. We have seen how a hyped up and enthusiastic retail base of shareholders can drive a newly listed tech company to massive initial gains on listing. Just look at the Snowflake Inc (NYSE: SNOW) last year. Or the recent ASX listing of Airtasker Ltd (ASX: ART). As such, we can reasonably expect to see a generous level of interest for Coinbase when it lists.

Further, the Nasdaq report notes that Coinbase shares were trading with a US$343.58 volume-weighted average price per share on private markets in the first quarter of this year.

All of this also comes as the price of cryptocurrencies like Bitcoin hit all-time highs – which is perhaps a fortuitous coincidence for Coinbase at this time. Or, as my Fool colleague Bernd Struben noted the other day, perhaps this is a chicken-and-egg scenario where interest in the Coinbase IPO is actually feeding into the Bitcoin price. 

Either way, this is shaping up to be quite the blockbuster share market event. For both Coinbase and Bitcoin. Of course, we ASX investors will need to stay up late tonight to see how it all unfolds (the US markets will open trading at 11:30 pm AEST). See you then, perhaps.

More reading

• Is it time to jump on the Westpac (ASX:WBC) share price?
• Bitcoin price hits new record high as Bitcoin ETF tops $1.3 billion
• The DigitalX (ASX:DCC) share price is up 30% this week
• ASX 200 rises, Zip (ASX:Z1P) flies, bank ratings upgraded
• Why Westpac (ASX:WBC) could be about to deliver a dividend surge

Sebastian Bowen owns Bitcoin, Ripple and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin and Snowflake 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.

The post The Coinbase (NASDAQ:COIN) IPO price has been announced appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3uPkMVO

It has been a very eventful day for the Zip Co Ltd (ASX: Z1P) share price on Wednesday.

At one stage today, the buy now pay later (BNPL) provider’s shares were up as much as 9% to $10.61.

However, the Zip share price began to fade in afternoon trade, leading to it giving back its gains and more.

This left the company’s shares trading 1% lower at $9.61 before being hurried into a trading halt.

Why is the Zip share price in a trading halt?

This afternoon Zip requested a trading halt pending the release of an announcement relating to a capital raising.

The company expects that the trading halt will remain in place until the commencement of normal trading on Friday 16 April.

What is Zip aiming to raise?

While the company has not revealed what it is seeking to raise, the AFR understands that it is aiming to raise $300 million-plus.

According to the report, Zip will follow the lead of rival Afterpay Ltd (ASX: APT) by raising these funds via a convertible notes offering. Last month Afterpay completed its $1.5 billion notes offering.

With the Zip share price up 72% since the start of the year, it appears as though management sees now as an opportune time to raise money at good price.

Though, some shareholders will no doubt be disappointed with the news given that it wasn’t that long ago that Zip raised funds.

In January the company completed a placement and share purchase plan which raised a total of $176.7 million at an issue price of ~$5.34. This led to Zip having almost $1.5 billion of liquidity in Australia at the end of March, according to yesterday’s third quarter update.

Positively, the report suggests that Zip will not struggle to raise the funds given the appetite for convertible notes from institutional investors. And given the rate in which its US-based Quadpay business is growing, Zip’s convertible notes are likely to be an attractive proposition for many investors.

More reading

• 3 latest ASX shares that top brokers have upgraded to “buy” today
• Why BWX, Fortescue, Webjet, & Zip shares are dropping
• How does Afterpay’s (ASX:APT) growth rates compare to peers?
• Top brokers name 3 ASX shares to buy today
• Are brokers bullish on the Zip (ASX:Z1P) share price after quarterly results?

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

The post Why the Zip (ASX:Z1P) share price is in a trading halt appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3a8dW67

The path of least resistance is up for our market and top brokers have just boosted these ASX shares to “buy”.

The S&P/ASX 200 Index (Index:^AXJO) rallied 0.6% in after lunch trade and is closing in on its record high from just before the COVID-19 market meltdown.

Many experts have a bullish 2021 outlook for ASX shares and here are three that just got put on the broker buy list.

Supply deficit boosts Sandfire share price to buy

The first is the Sandfire Resources Ltd (ASX: SFR) share price. Goldman Sachs upgraded the copper miner to “buy” from “neutral” as it revised up its copper price forecasts.

The broker reckons the red metal will jump by a third from the current spot price to US$5.39 a pound next year. It also lifted its long-term price forecast by 24% to US$4 a pound.

Goldman believes copper and aluminium are facing a supply deficit over the long term. Miners cannot keep up with demand from renewables – a problem made worse by a lack of investment in new mining projects.

The broker’s 12-month price target on the Sandfire share price is $7.60 a share.

The ASX share zipping higher     

Another ASX share that got an upgrade is the Zip Co Ltd (ASX: Z1P) share price. Citigroup increased its rating on the buy now, pay later (BNPL) company to “buy” from “neutral”.

A better-than-expected update from Zip Co’s US business, Quadpay, prompted the bullish turn.

“The key highlight from Zip’s 3Q update was stronger than expected volume growth, with Quadpay TTV +31% ahead of CitiE and up +14% qoq on a seasonally strong Dec qtr,” said Citi.

“With Quadpay accelerating and continuing to beat our expectations, we upgrade Zip to Buy.”

The broker’s 12-month price target on the Zip Co share price is $11.30 a share.

The ASX share upgraded on potential earnings surprise

Meanwhile, the newest ASX share to make it on Jarden’s buy list is the Computershare Ltd (ASX: CPU) share price.

The broker initiated coverage on the share registry services group and called it an “underappreciated macro recovery play”.

While the Computershare share price has bounced since the onset of COVID-19, investors are underestimating the pace of its earnings recovery, particularly following the acquisition of Wells Fargo’s US Corporate Trust Services (CTS) business.

“Annual cost synergies of $80m should support proforma FY21E EPS accretion of 15%+ and a 9% ROIC (emerges over 5 yrs),” said Jarden.

“However, leverage to rising interest rates could boost EPS accretion and ROIC to 25% by FY25E.”

The broker’s 12-month price target on the Computershare share price is $18.65 a share.

More reading

• Why the Zip (ASX:Z1P) share price is in a trading halt
• Why BWX, Fortescue, Webjet, & Zip shares are dropping
• How does Afterpay’s (ASX:APT) growth rates compare to peers?
• This could be boosting the Kogan (ASX:KGN) share price today
• Top brokers name 3 ASX shares to buy today

Brendon Lau owns shares of Sandfire Resources Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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.

The post 3 latest ASX shares that top brokers have upgraded to “buy” today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3ddjZrV

The Bitcoin (CRYPTO: BTC) price is up 6.4% over the past 24 hours. One Bitcoin is currently worth US$64,347 (AU$83,568).

That puts the Bitcoin price at a new all-time high (achieved as I was penning this), replacing the freshly minted record high of US$63,825, which the crypto currency reached overnight.

According to data from CoinDesk, Bitcoin remains heavily traded, with US$72.9 billion worth of the digital currency transacted over the last 24 hours.

At the current Bitcoin price, the world’s most popular crypto asset has a market cap of US$1.2 trillion.

First North American Bitcoin ETF surges

The United States is still awaiting legislative approval to launch the first US listed Bitcoin exchange traded fund (ETF). Though, as Bloomberg reports, a growing number of companies are chomping at the bit to do so. “At least eight firms including VanEck Associates Corp. and WisdomTree Investments now have live applications… with the Securities and Exchange Commission.”

But, much as with the legal cannabis markets, the Canadians have forged ahead without their southern neighbours. Although the name they chose for the pioneering North American Bitcoin ETF could use a bit of work.

The Purpose Bitcoin CAD ETF Non-Currency Hedged (TSE: BTCC.B) – see, told you it was a mouthful – listed on the Toronto stock exchange on 18 February this year. And highlighting investor demand for exposure to Bitcoin without going through a digital wallet or crypto exchange, the ETF saw more than $165 million worth of shares change hands on its first day.

As of yesterday, the Bitcoin ETF reached US$1 billion (AU$1.3 billion) in assets.

The ETF gained 4.9% yesterday (overnight Aussie time), and is up 17.3% year-to-date.

Bitcoin price snapshot

At this time last year, you could have picked up a Bitcoin for US$6,887. That puts the Bitcoin price up 835% over the past 12 months.

Year-to-date the Bitcoin price has gained 121%.

More reading

• The DigitalX (ASX:DCC) share price is up 30% this week
• What’s driving the Bitcoin price higher?
• Will this Nasdaq IPO send the Bitcoin price back to record highs?
• ASX 200 Weekly Wrap: ASX sees 7,000 points once more
• With the Bitcoin price up overnight your crypto Tesla just got cheaper

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends 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.

The post Bitcoin price hits new record high as Bitcoin ETF tops $1.3 billion appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3mMjS9G

The Novonix Ltd (ASX: NVX) share price is jumping today. This comes as the lithium battery producer rebounds after falling for the past two days. 

The Novonix share price is up 3.14% to $2.30 at the time of writing. However, it has lost value this week and the past month. 

Novonix’s principal activity includes the development and implementation of a downstream integration strategy. This strategy transformed the business into a supplier of advanced battery materials, equipment, and services to the global Lithium-ion Battery (LIB) market.

To the layman, it’s a lithium battery producer that also specialises in a range of materials and technology for building batteries.

Formerly known as Graphitecorp Limited, Novonix is an integrated developer and supplier of materials, equipment, and services for the global lithium battery industry. The brunt of its operations occurs in the USA and Canada. Novonix also owns a natural graphite deposit in Queensland.

Novonix share price ups and downs

The Novonix share price fell for the past two days. Overall, it has lost ground this week and month. This can generally be seen as a rarity for the surging battery company. Despite this recent slip, Novonix has otherwise enjoyed a year return of 1,087%.

Currently, the share price is down 0.8% this week and 17% this past month. The Novonix share price lost ground in February due to a $115 million placement. Consequently, the equity raising led to an 18% decline in the Novonix share price in the first week of March, which it still hasn’t recovered from.

The company was clearly unprepared for the slow extent of its share price recovery over recent weeks. On 4 March 2021, Novonix announced the deferral of its Share Purchase Plan. This was planned as a capital raising initiative.

On 7 April, it announced it was cancelling the planned placement altogether.

This decision was made following the share price trading below the Share Purchase Plan offer price of A$2.90. It’s still well below that point at the current time. Additionally, Novonix said it has no intention to re-issue the Share Purchase Plan at a lower price.

Novonix and Sayona for the future

Novonix shares have had some good news of late, rising 8% at the beginning of this month after an announcement from emerging lithium miner, Sayona Mining Limited (ASX:SYA).

Sayona plans to conduct product trials with Novonix. These trials will be focused on delivering a clean and green 99.97% lithium hydroxide battery. Furthermore, the produced batteries will be suitable for North American electric vehicle makers. 

That research is set to commence in May.

More reading

• Why the Sayona Mining (ASX:SYA) share price is storming higher today
• Why is the Novonix (ASX:NVX) share price up 8% this morning?
• The Sayona (ASX:SYA) share price is tumbling 5% today
• Piedmont Lithium (ASX:PLL) shares in trading halt after proposed US public offering
• Why the Sayona Mining (ASX:SYA) share price is rocketing 25%

Motley Fool contributor Lucas Radbourne-Pugh 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.

The post What’s happening with the Novonix (ASX:NVX) share price today? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/32bgqvQ

Are you wanting to add a growth share or two to your portfolio this week?

Then you might want to take a look at Pro Medicus Limited (ASX: PME).

What is Pro Medicus?

Pro Medicus is a healthcare technology company that provides radiology information systems (RIS), picture archiving and communication systems (PACS), and advanced visualisation solutions to healthcare organisations globally.

The company’s RIS offering covers everything from medical accounting, clinical reporting, appointments, scheduling, marketing and management information applications.

But the key product in its arsenal is arguably the Visage 7 Enterprise Imaging Platform. It is fast, clinically rich, and highly scalable growth platform deliverable entirely from the cloud or on premise.

Management notes that Visage 7 supports the simplicity of a One Viewer philosophy, that enables diagnostic, clinical, specialty, research, and mobile imaging workflows from a singular platform. It also offers future-proof flexibility with enterprise workflow, vendor-neutral archive, and artificial intelligence solutions that are all 100% native to Visage 7.

Strong demand

Due to the quality of this technology and the need for healthcare organisations to shift away from legacy systems, Pro Medicus has been winning a lot of lucrative contracts.

This has underpinned strong earnings growth, even during the pandemic.

For example, for the six months ended 31 December, Pro Medicus delivered a 7.8% increase in revenue to $31.6 million and a 25.9% jump in underlying profit before tax to $18.76 million.

Positively, since the end of the half, the company has continued to win a number of lucrative long term contracts with major healthcare institutions.

Can the Pro Medicus share price climb higher?

Although the Pro Medicus share price is up 33% since the start of the year, one leading broker believes it can still go higher.

In February, Goldman Sachs upgraded Pro Medicus’ shares to a buy rating with a $53.80 price target. This price target implies potential upside of 15% over the next 12 months.

Goldman believes it is well-positioned to grow its earnings at a rapid rate over the coming years.

It explained: “Whilst not cheap in absolute terms, our new estimates imply a +42% EBITDA CAGR (FY20-23E). In the context of ASX Healthcare, which trades at a ‘multiple to growth’ ratio of 2.9x, we do not see PME’s ratio of 1.4x as demanding, particularly given its position as a technology leader in a market we believe is set for further technology upgrades, and a recurrent revenue model with inherent upside.”

More reading

• 2 excellent ASX shares to buy in April
• 3 great reasons to own Pro Medicus (ASX:PME) shares
• 2 highly rated ASX growth shares to buy now
• Here’s why the Pro Medicus (ASX:PME) share price is charging higher
• 2 exciting ASX growth shares to buy next month

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 recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Pro Medicus (ASX:PME) share price could be in the buy zone appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3th4aGn

The Vulcan Energy Resources Ltd (ASX: VUL) share price is surging again today following the company’s reveal of a pilot plant to extract lithium from the Upper Rhine Valley.

The Vulcan share price is up 8.9% to $6.93 today in its third successive day of gains on the S&P/ASX 200 Index (ASX: XJO).

A quick take on the company

Vulcan is focused on lithium supply solutions to European electric vehicle manufacturers, a booming market at the current time.

Principally, it is engaged in exploring and developing copper-zinc projects and other mineral opportunities. The company’s projects are located in the Trondelag region in Norway, namely the Lokken, Tverrfjellet, Grimsdal, Killingdal, and Storwartz projects.

Additionally, the company acquired the Vulcan Lithium Project in Germany which comprises the production of battery-grade lithium hydroxide from geothermal brines. Its operating segment includes energy metals exploration in Germany; copper and zinc mineral exploration in Norway, and administration.

This is where its current pilot plant is staged, in the Upper Rhine Valley that connects Germany and Switzerland.

Vulcan’s pilot plant for lithium extraction

Vulcan has designed, built, commissioned and is now operating its pilot plant to demonstrate direct lithium extraction (DLE) from Upper Rhine Valley geothermal brine.

Vulcan is using live geothermal brine from existing wells in its piloting programme for DLE and brine chemistry test work. Vulcan is working with major suppliers, including one of the world’s largest company’s, DuPont, to test DLE products similar to those already used commercially in the lithium industry, on Upper Rhine Valley geothermal brine.

Given the highly publicised boom in demand for lithium – a key element in powering electric batteries – the Vulcan share price has been rocketing over recent months.

What next?

Vulcan is now focused on demonstrating pre-treatment and DLE processes, as well the durability of the process over hundreds of cycles, which will feed into its definitive feasibility study.

Vulcan will use the data from the pilot plant to inform and finalise the design of a larger demonstration plant, which will also contribute information towards the DFS.

Vulcan’s technology partners and internal experts have indicated that key process operations will scale up to a commercial level with minimal risk from the demonstration scale.

What Vulcan management says

Vulcan managing director Dr Francis Wedin was bullish about the company’s progress, saying:

Getting our pilot plant up and running on live geothermal brine is a significant milestone for Vulcan. This has already started producing crucial data needed for de-risking the lithium extraction process. It took less than 6 months to design, build, and commission the pilot plant.

This aggressive timeline was enabled by the project’s world-class technology partners and location in Germany, where access to chemical engineering expertise is unparalleled.

This is a critical step towards our strategy of producing lithium hydroxide, using our unique Zero Carbon Lithium process, for the European battery electric vehicle market, and building a combined renewable energy and chemicals business.

Vulcan share price snapshot

The Vulcan share price has lifted 151% in 2021 so far. It’s also up 2,930% over the past 12 months.

More reading

• Why the Vulcan (ASX:VUL) share price is on watch
• These 3 ASX companies are leading the way to net zero emissions
• Why Kathmandu, Pushpay, Sigma, & Vulcan shares are storming higher
• Why the Vulcan Energy (ASX:VUL) share price is charging 9% higher
• Why Corporate Travel Management, Silver Lake, Volpara, & Vulcan are pushing higher

Motley Fool contributor Lucas Radbourne-Pugh 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.

The post The Vulcan (ASX:VUL) share price has rocketed 9% today. Here’s why appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3uPhnq0

Time does go by fast, doesn’t it? It’s now mid-April, which means that the end of the financial year is just 2-and-a-half months away. And the end of the financial year walks hand-in-hand with tax time.

While some (if not most) of us find tax time, well… taxing, it is, unfortunately, part of the deal for anyone who invests in ASX shares. So let’s have a quick look at what kind of considerations you need to think about when it comes to taxes and shares. None of this is anything more than general advice, so make sure you also speak to your tax professional too!

Dividends

The Australian Taxation Office (ATO) typically views dividend income as regular income. That means that any dividends you receive from your ASX share portfolio will have to be added to your personal income for tax purposes. However, that does come with a caveat. If your ASX dividends also come with franking credits (which many do), you are entitled to claim those credits as a tax deduction. If you have no taxable income (if you receive a government or superannuation pension for example), you may still be able to claim those franking credits as a cash refund. 

One more thing to remember. If you have your dividends set to automatically reinvest under a dividend reinvestment program (DRIP), the ATO will still treat these dividends as income, even though you didn’t receive an actual cash payment. 

Capital gains tax

If you buy an ASX share, and sell it later for a profit, the gained amount is also taxable income from the ATO’s perspective. However, the taxation of capital gains functions a little differently than that on other forms of income. If you have held an ASX share longer than one year, you may be able to claim a 50% discount on your CGT. Yet another incentive to invest for the long-term! Further, if you have previously sold shares for a loss, you can use that capital loss to offset any gains you have made subsequently. 

Deductions

Under ATO rules, any expenses that you may incur in the course of investing in, or receiving income from, ASX shares may be tax deductible. That might include tax agent expenses, investing courses, publications or services, or accounting software fees. Of course, this can vary from person to person, and from investment to investment. So again, make sure you check with your tax professional. But you also want to make sure that you claim a deduction for any expenses you are legally entitled to. 

More reading

• The Vulcan (ASX:VUL) share price has rocketed 9% today. Here’s why
• Top fundie picks this ASX 200 resource share for the EV revolution
• 2 quality ASX shares rated as top buys by brokers
• Why is the Candy Club (ASX:CLB) share price falling today?
• Why BWX, Fortescue, Webjet, & Zip shares are dropping

Motley Fool contributor Sebastian Bowen 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.

The post How does tax on ASX shares in Australia work? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3a9fCMA

S&P/ASX 200 Index (ASX: XJO) resource shares are in the spotlight this year as talk of a new commodity super cycle percolates through the financial markets.

Today we drill down to a single ASX 200 resource share. One primarily involved in exploring for and producing lithium.

Why lithium?

Because, though you may not yet notice it here in Australia, the electric vehicle (EV) revolution is well and truly underway.

Elon Musk’s Tesla Inc (NASDAQ: TSLA) is likely the first to spring to mind when you think about EVs. But the world’s biggest car manufacturers by production figures, including Ford Motor Company (NYSE: F) and Volkswagen are close on Musk’s heels with plans to go all-electric over the coming years.

The EV effect

EVs may not require any oil or gas. But, as the name implies, the lithium-ion batteries that power most of them do require lithium to get the cars from point A to B. And, perhaps after a little charging, back to point A.

The majority of analysts believe that growing demand from the battery boom will continue to support the soaring lithium price in the foreseeable future.

According to Argonaut Funds Management chief investment officer David Franklyn (quoted by the Australian Financial Review), “The tipping point is here. Even a year ago, it would have been hard to believe that one of the world’s major car brands would make a comprehensive switch to electrical vehicles.”

With nary a car manufacturer in sight on the ASX 200 (or anywhere in Australia), Aussie investors can still get aboard the EV revolution.

As Franklyn says:

We believe that resource companies are the best way to gain exposure to the EV thematic, as the rapid growth in the EV market will create enormous additional demand for commodities such as copper, nickel, cobalt, lithium and rare earths. It is unlikely that supply will keep pace with demand, given the long lead times involved in bringing a new mine into production, so prices are likely to move higher.

Franklyn adds, “We see this as a multi-decade transition and Australia is perhaps best placed to capitalise, given its huge resource endowment, its strong legal and financial systems and strong ESG frameworks.”

Why this ASX 200 resource share is ideally placed

According to Argonaut Funds Management’s Franklyn, companies that are able to ramp up production of core elements like lithium and nickel are likely to reap the biggest early rewards as increased demand from the fast-growing EV market fuels higher prices.

Franklyn points to ASX 200 listed IGO Ltd (ASX: IGO) as being “ideally positioned” to benefit:

IGO is ideally positioned as our preferred EV exposure, given its existing highly profitable nickel operations and its proposed acquisition of a 25 per cent interest in the Greenbushes lithium mine and a 50 per cent interest in the associated lithium hydroxide plants.

Greenbushes produces about 20 per cent of global lithium supplies and has the capacity to ramp up production quickly, and the integrated nature of its operations enables it to capture more margin and provides a secure supply source for major battery manufacturers.

IGO share price snapshot

Over the past 12 months, IGO shares have gained around 38%, handily beating the 28% gains posted by the ASX 200.

Year to date, the ASX 200 resource share’s price is up 2%. At the current share price of $6.85, IGO has a market capitalisation of $5.2 billion. IGO pays an annual dividend yield of 0.74%, unfranked.

More reading

• Why Tesla stock soared higher on Tuesday
• The stock that I’d hold for the next 5 years: fundie
• ASX 200 rises, Zip (ASX:Z1P) flies, bank ratings upgraded
• Tesla and Palantir were some of the most popular US shares last week
• ASX 200 flat: Zip rockets, Cleanaway higher, Regis-IGO announce Tropicana deal

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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.

The post Top fundie picks this ASX 200 resource share for the EV revolution appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3tma3C0