The BHP Group Ltd (ASX: BHP) share price has dropped more than 14% in 2024 to date, while the S&P/ASX 200 Index (ASX: XJO) has managed a gain of more than 4%. As the chart below shows, it has been a disappointing period for the ASX mining share.

It’s certainly possible that the BHP valuation could keep falling. The question is – how likely is that?

Commodity prices can be difficult to predict, but we’ve certainly seen the iron ore price worsen during 2024.

Commodity pain

BHP’s biggest profit generator is normally the iron ore segment. However, according to Trading Economics, the iron ore price has gone from above US$140 per tonne at the start of the year to under US$110 per tonne now. I think that explains why BHP shares have fallen in the last several months.

We’ve seen the iron ore price drop below US$100 per tonne a handful of times in the last few years, so it’s not impossible for it to drop another 10%.

Trading Economics reported that recent data showed iron ore inventories in Chinese ports have reached a near two-year high, which implies weaker demand from Chinese steel mills for metal production. There was also weaker-than-expected inflation in China during June.

Optimistic analysts are hopeful that China will introduce new stimulus at the Third Plenum next week as the country aims to achieve 5% economic growth this year.

Trading Economics’ forecast for the iron ore price, based on global models and analyst expectations, suggests it will fall to US$99 per tonne in 12 months. If it does fall below US$100 per tonne, then I’d suggest BHP shares would face headwinds.

The copper price is lower than its 2024 highs earlier in the year, falling to US$4.55 per pound because of the weak demand in China. Trading Economics predicts the copper price could rise to US$4.73 per tonne. Copper is becoming increasingly important in the BHP portfolio as it looks to build exposure to the electrification commodity and take advantage of forecasted growing demand.

Where to next for the BHP share price?

On the whole, analysts are more positive than negative on the business. According to a Commsec collation of analyst recommendations, there are no sell ratings, 16 hold ratings and nine buy ratings.

The broker UBS currently has a neutral rating on BHP shares, with a price target of $44, which implies only a slight increase over the next year.

UBS forecasts BHP could generate $55.5 billion in revenue, $23.6 billion in earnings before interest and tax (EBIT), $13 billion in net profit after tax (NPAT), and pay a dividend per share of $1.54.

The post Will the BHP share price keep falling? 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. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

After a heavy selloff in FY 2024, several ASX lithium shares are starting to show sprouts of green.

One major catalyst for the sector’s underperformance is the price of lithium, with the battery metal down heavily last financial year. It had plunged more than 70% to CNY90,500 per tonne at the time of writing.

Now, with heavily compressed stock prices in the sector, brokers have identified three ASX lithium shares with potentially compelling catalysts.

Let’s dive into why these lithium shares are gaining traction and what brokers suggest for their future.

Core Lithium Ltd (ASX: CXO)

Core Lithium shares have jumped more than 20% this past week and are now trading at 11 cents per share. The ASX lithium share caught a strong bid on Thursday after a company announcement.

The update said Core Lithium has initiated reverse circulation (RC) drilling at its Shoobridge Project in the Northern Territory. This is part of its FY25 exploration program.

While the site potentially contains lithium-containing pegmatites, it is also prospective for gold, uranium, and other base metals. Given the recent prices of some of these metals, this could potentially add more value.

Broker Goldman Sachs is more bullish on the ASX lithium share after its review of the sector. In a recent note, it stated:

While we still expect developers to underperform ramped-up producers into the declining lithium price environment, we upgrade CXO to Neutral on valuation, with ongoing production restart risk now more priced in at 1.1x NAV (peers 0.8-1.0x NAV).

It also says that approximately 40% of the company’s market capitalisation at the time of reporting was “now in cash on hand (with no debt), potentially partially mitigating exposure to falling lithium prices.”

IGO Ltd (ASX: IGO)

IGO closed on Friday at $6.07 apiece and is one ASX lithium share that has lifted 3% into the green this week. Aside from its nickel-copper-cobalt assets in Western Australia, IGO is also a major lithium player.

It has a large stake in the Greenbushes lithium mine, one of the world’s most largest hard-rock lithium mine.

IGO shares were heavily sold in FY24, with the stock plunging from highs of $16.12 per share in July last year. Shares are down 32% in the past 12 months.

Despite this, Goldman Sachs has a buy rating on the ASX lithium share with a $7.15 price target. This implies around 17% potential upside at the time of writing.

It views “a widening discount” that supports its “relative preference for IGO”, adding:

With Greenbushes expansion (and opportunity for value optimisation) and JV balance sheet risks overdone, with the AISC of Greenbushes well below peers. For recently initiated ALTM/LTM, we see current discounts (~0.75x NAV) as fair and in part representative of upcoming growth/ execution risk with >60% of CY30E raw material production yet to be built/ramped up.

IGO is rated a hold by consensus, according to CommSec.

Liontown Resources Ltd (ASX: LTR)

Liontown Resources are up by more than 9% this week. The company’s Kathleen Valley Lithium Project is nearing production, marking a critical shift from development to mining.

This is the ASX lithium share’s flagship asset, with first production expected soon.

Liontown recently secured a US$250 million convertible note agreement with LG Energy Solution to fund Kathleen Valley’s development. This funding boosts the company’s cash reserves to around A$501 million, giving it stable footing for the prospective operations at the site.

Analysts have mixed views, but Bell Potter maintains a speculative buy rating with a $1.85 price target on the ASX lithium share. The broker praised the funding arrangement with LG, and eagerly awaits production at Kathleen Valley.

Goldman Sachs, however, holds a neutral view. Despite this, it has a $1.15 price target on the stock, implying around 15% upside from the current market price.

It says the projected Liontown’s revenue could reach $1.46 billion by FY29, with a significant profit increase if production ramps up as planned.

ASX lithium shares takeaway

ASX lithium shares may have found a bottom after a turbulent FY24. Whether these stocks will flourish this year is yet to be seen. Nevertheless, the analysts appear to think the worst is over.

As always, it’s wise to conduct your own due diligence before investing.

The post Here 3 ASX lithium shares to watch for FY25 appeared first on The Motley Fool Australia.

More reading

• Are Liontown Resources shares a buy after surging 9% this week?
• Why did Goldman Sachs just upgrade Core Lithium shares?
• Is it time to dive back into ASX lithium shares?
• Buy this ASX lithium stock and sell this one
• Up 20% in a week, why is the Core Lithium share price racing higher again today?

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

With inflation still running hot, many investors are understandably attracted to ASX shares offering high dividend yields.

After all, if you can earn 5%, 6%, 7% or even more on your money, this can go a long way in helping offset today’s surging cost of living.

But just because a stock is trading on a lofty dividend yield doesn’t necessarily make it a good investment.

A high yield can reflect low investor confidence and, thus, a falling share price. It can also be the result of a one-off special dividend payment that won’t be repeated any time soon.

So, we asked our Foolish writers to sort the treasure from the trash and tell us which high-yielding ASX dividend shares they think are worth buying right now.

Here is what they told us:

6 best high-yielding ASX shares for July 2024 (smallest to largest)

• Shaver Shop Group Ltd (ASX: SSG), $154.59 million
• Rural Funds Group (ASX: RFF), $811.43 million
• Nick Scali Limited (ASX: NCK), $1.21 billion
• IPH Ltd (ASX: IPH), $1.55 billion
• Vanguard Australian Shares High Yield ETF (ASX: VHY), $3.84 billion
• Bendigo and Adelaide Bank Ltd (ASX: BEN), $6.65 billion

(Market capitalisations as of market close 12 July 2024).

Why our Foolish writers love these ASX dividend stocks

Shaver Shop Group Ltd

What it does: Shaver Shop sells personal grooming products for men and women. It currently has 123 Shaver Shop stores across Australia and New Zealand and retails through its own websites, as well as eBay, Amazon, TradeMe, and MyDeal online marketplaces.

By Tristan Harrison: When it comes to investing for a high dividend yield, I look for ASX dividend shares that have fairly good track records of consistently paying dividends. I’m not interested in just one good year of big payments.

Shaver Shop has grown its annual dividend payout every year since it first started paying dividends in 2017, which is an impressive record considering it’s an ASX retail stock.

While that dividend record isn’t guaranteed to continue amid this high cost of living era, I’d suggest personal grooming products may have fairly consistent demand. After all, hair keeps growing in all economic conditions!

The latest two dividends declared by Shaver Shop amount to 10.2 cents, which translates into a fully franked dividend yield of 8.6%, or 12.2% grossed-up with the franking credits. Of course, it’s possible the next two declared dividends may not be quite as large. But, even a 10% dividend reduction would still translate into a double-digit grossed-up dividend yield. 

Furthermore, I believe Shaver Shop can increase its profit over the long term by growing its store network, increasing its online sales, improving efficiencies/margins, and expanding its product range. The business retails various products across oral care, hair care, massage, air treatment, and beauty categories. 

Motley Fool contributor Tristan Harrison does not own shares of Shaver Shop Group Ltd.

Rural Funds Group

What it does: Rural Funds Australia is a real estate investment trust (REIT) focused on agricultural assets across Australia.

By Kate Lee: In addition to dividend yields, two other important considerations for dividend investing are the sustainability of future dividends and the potential for invested capital appreciation. 

In this regard, Rural Funds Group stands out as a strong ASX dividend share worth considering buying today. 

Rural Funds Group provides exposure to the agricultural sector, an essential and growing component of the economy. The REIT’s business model focuses on long-term leasing arrangements with agricultural tenants, providing stable rental income. 

Over the last 12 months, Rural Funds paid a total distribution of 11.6 cents per unit, implying a 5.6% yield from its closing price of $2.09.

Trading at a price-to-book (P/B) ratio of just 0.7x, Rural Funds Group appears undervalued compared to its asset base, offering potential upside. The company estimates its net asset value (NAV) to be $3.07 per unit as of 31 December 2023, including the market value of its water entitlements. This means its adjusted P/B ratio, based on the company’s NAV estimate, is at just 0.66x.

Motley Fool contributor Kate Lee does not own shares of Rural Funds Group. 

Nick Scali Limited

What it does: Nick Scali is a high-end furniture retailer. As of February, the company had 108 store locations across Australia and New Zealand. The sofa-seller also operates 21 stores in the United Kingdom following its recent acquisition of Fabb Furniture.

By Mitchell Lawler: Retail is a tough industry. You only need to look to the financial struggles of Booktopia for an example of this. 

It’s incredibly hard to differentiate yourself in this often cutthroat industry. However, I believe Nick Scali is one company that has successfully separated itself from the pack. This is evidenced by the abnormally high return on capital it has generated — 27.4% in the past year. 

Moving into a market two-and-a-half times the size of Australia may come with challenges. However, I’m confident Nick Scali will leverage economies of scale to give local UK competitors a run for their money. 

Nick Scali currently yields 4.9% of passive income.  

Motley Fool contributor Mitchell Lawler does not own shares of Nick Scali Limited.

IPH Ltd

What it does: IPH is an intellectual property solutions company with operations across the world.

By James Mickleboro: In the current uncertain economic environment, I think income investors ought to focus on companies with defensive qualities. 

IPH has these qualities and more, thanks to the ever-growing patent market. In addition, the company is no stranger to making acquisitions to bolster its growth in a fragmented market. This ultimately led to IPH reporting a 21% increase in revenue and a 13% lift in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) during the first half of FY 2024.

Analysts at Goldman Sachs have highlighted these defensive earnings as a reason to buy. They recently stated their belief that IPH was “well-placed to deliver consistent and defensive earnings with modest overall organic growth.”

The broker expects this ASX share to pay fully franked dividends per share of 34 cents in FY 2024, 37 cents in FY 2025, and then 39 cents in FY 2026. Based on the recent IPH share price of $6.16, this represents yields of 5.5%, 6%, and 6.3%, respectively. Goldman Sachs has a buy rating and $8.70 price target on IPH’s shares.

Motley Fool contributor James Mickleboro does not own shares of IPH Ltd.

Vanguard Australian Shares High Yield ETF

What it does: This exchange-traded fund (ETF) holds a select portfolio of blue chip ASX dividend shares, selected on their current yields and future income potential. 

By Sebastian Bowen: With many ASX dividend shares surging in value in recent months, I think this ETF from provider Vanguard is a prudent choice for a high-income investment this July and beyond. 

VHY holds a portfolio of around 70 mature ASX businesses, automatically providing a bucketload of diversification benefits. These stocks range from many different corners of the market, too, and include everything from Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) to Woodside Energy Group Ltd (ASX: WDS) and Telstra Group Ltd (ASX: TLS). 

Given the kinds of companies this ETF holds, it goes without saying that there is a lot of dividend income potential here.

The Vanguard Australian Shares High Yield ETF also pays quarterly dividend distributions, which will be a welcome change for many investors who are used to the typical biannual ASX schedule. 

This ETF’s most recent four payments add up to an annual total of $4.24 per unit. That gives VHY units a hefty dividend yield of 5.88%. You could certainly do worse if you’re looking for an income heavy-hitter right now. 

Motley Fool contributor Sebastian Bowen owns shares of Telstra Group Ltd.

Bendigo and Adelaide Bank Ltd

What it does: Bendigo and Adelaide Bank operates in the personal, small business, and rural banking sectors. The company is one of Australia’s leading regional banks and commands a market cap of around $6.6 billion.

By Bernd Struben: I think there’s a lot to like about Bendigo and Adelaide Bank.

First, there’s its lengthy track record as a reliable passive income payer and the relatively high yield the S&P/ASX 200 Index (ASX: XJO) bank stock is currently trading at.

Over the past 12 months, it has paid out two fully franked dividends, totalling 62 cents a share. At the recent share price of $11.65, that equates to a trailing yield of 5.3%, with potential tax benefits from those franking credits.

And this high trailing dividend yield comes after the Bendigo and Adelaide Bank share price has soared 37% over the full year. That strong share price performance, and the ongoing uptrend, is the second reason I like this stock.

The third reason is its attractive valuation. Despite the 37% share price surge, the bank has a price-to-earnings (P/E) ratio of 13.8 times. That’s near the lowest P/E ratio you’ll find among any of the ASX 200 bank stocks.

Motley Fool contributor Bernd Struben does not own shares in Bendigo and Adelaide Bank Ltd.

The post Top high-yield ASX shares to buy in July 2024 appeared first on The Motley Fool Australia.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tamara Stein has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Goldman Sachs Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Booktopia Group and eBay and has recommended the following options: short July 2024 $52.50 calls on eBay. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank, Rural Funds Group, and Telstra Group. The Motley Fool Australia has recommended Amazon, IPH, Nick Scali, Shaver Shop Group, and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.