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It was another disappointing session for the Core Lithium Ltd (ASX: CXO) share price.

During Friday’s trade, the lithium miner’s shares tumbled to a new multi-year low of 9 cents.

And while it ended the day a fraction higher at 9.2 cents, this doesn’t change much for shareholders.

Over the last 12 months, the Core Lithium share price is down over 90%.

To put that into context, if you had invested $20,000 into its shares a year ago, you would have just $2,000 left.

That’s $18,000 gone seemingly in a blink of an eye.

Why is the Core Lithium share price at a multi-year low?

The decline in the company’s share price over the last 12 months shouldn’t come as a big surprise. I have warned for some time now that its shares could crash deep into the red.

And while I hadn’t expected such a large decline, in hindsight it isn’t surprising given what has transpired over the period.

With lithium prices at low levels and some analysts forecasting them to remain that way for some time due to a potential surplus of the white metal, it has become unprofitable for Core Lithium to continue mining operations.

As a result, it has suspended its mining activities and there’s no word on when things will change.

If prices remain at current levels for the next three years, it could conceivably mean that no shovels are in the ground at the Finniss Operation during that time.

Though, it is worth highlighting that management has revealed that it is looking beyond lithium. So, there’s potential for the company to expand into other metals or minerals that are experiencing stronger pricing.

What are analysts saying?

As things stand, it seems that even the most bearish analysts are starting to see value emerge from the Core Lithium share price.

For example, Goldman Sachs has a sell rating on its shares but a price target of 11 cents. This implies potential upside of 20% for investors from current levels.

But whether Goldman believes that is enough of a reward to justify the risk of investing in the company at this stage, remains to be seen. So, don’t count on the broker adjusting its recommendation in a hurry.

Elsewhere, Macquarie currently has a neutral rating and 15 cents price target on the lithium stock and Citi rates it as a sell with a 9 cents price target.

The post Core Lithium share price hits a multi-year low: Will the tide change soon? 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 positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s another day and another loss for the S&P/ASX 200 Index (ASX: XJO) so far this Friday. At the time of writing, the ASX 200 has shed another 0.4%, leaving the index at around 7,720 points.

But this loss for the broader market hasn’t stopped a series of ASX exchange-traded funds (ETFs) from smashing out new record highs today.

Let’s start with the BetaShares Nasdaq 100 ETF (ASX: NDQ). NDQ units closed at $44.77 each yesterday afternoon. But those same units opened at $44.86 this morning before rising as high as $44.93 after lunchtime today. That’s a new all-time high for this ETF.

But it’s not just NDQ that’s on fire today. We’re seeing something similar happening with the Vanguard MSCI Index International Shares ETF (ASX: VGS). VGS units finished up at $125.43 yesterday, and opened at $125.38 this morning. But since then, this index fund has climbed to a new record high of $125.58.

Keeping the train rolling, let’s now look at what’s happening with the iShares S&P 500 ETF (ASX: IVV). IVV units finished their Thursday at $54.55 each. But this morning, those units opened at $54.68 before hiking up to a new record of $54.75.

A final ASX ETF hitting new records today is the VanEck MSCI Index International Quality ETF (ASX: QUAL). This ETF isn’t an index fund like these other three record smashers. But it has still clocked a new all-time high of $57.26 a unit today after closing at $57.02 yesterday and opening at $57.19 this morning.

What’s up with these record-smashing ASX ETFs today?

It might seem strange that no fewer than four ASX ETFs are breaking new record highs this Friday on a day that has seen the Australian stock market decisively lose value.

But this isn’t new. It was only Tuesday that we were discussing a previous batch of new record heights for three of these four funds. As we covered then, none of the ASX ETFs listed above actually track or cover ASX shares. Rather, they are all funds that are almost entirely exposed to the United States markets.

NDQ and IVV are index funds that mirror the NASDAQ-100 Index (NASDAQ: NDX) and S&P 500 Index (SP: .INX), respectively.

VGS is also an index fund, but it tracks the MSCI World ex-Australia Index. This index covers dozens of advanced economies around the world but is predominantly invested in American shares, as is the QUAL ETF.

As it happens, the US markets have been on a tear themselves this week. We’ve seen fresh new all-time highs for the S&P 500 Index and the NASDAQ 100. This has, in turn, been driven by new highs for many of the US’s largest companies, including Apple, Microsoft, and NVIDIA.

Given this favourable backdrop, it’s not surprising that these US-based ASX ETFs vaulted higher this Friday despite the bad mood the broader ASX is in.

The post Records tumble! Hot ASX ETFs smash all-time highs again on Friday appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Apple and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, BetaShares Nasdaq 100 ETF, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Apple, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The AGL Energy Ltd (ASX: AGL) share price is down 0.6% right now while the S&P/ASX 200 Index (ASX: XJO) is down 0.3%. Competitor Origin Energy Ltd (ASX: ORG)’s share price is also down by 0.3%, so AGL is underperforming. Investors are digesting AGL’s comments about its energy investment plans.

As one of the largest energy generators and retailers, AGL is important in Australia’s efforts to achieve net zero emissions by 2050.

While AGL and Origin have long-term plans to exit coal, questions remain about where to invest to enable the energy transition.

AGL’s energy investment plans

According to reporting by the Australian Financial Review, AGL’s chief operating officer Markus Brokhof has revealed AGL is going to focus on hydro, gas and batteries, as well as renewable energy purchase contracts and rooftop solar.

Brokhof believes the investment case for new wind and solar generation is “tricky”, so the business will focus on a strategy that minimises solar and wind asset ownership. The solar peak generation time during the day coincides with the lowest demand, while wind generation’s revenue is “relatively low”.

Brokhof said to the AFR:

Everything from a battery, from a pumped hydro facility, or even a gas-fired power station, we will put on our balance sheet. We want to invest in this.

[In] renewables, we will partly invest but also underwrite power purchase agreements. We don’t need to be the owner of a wind farm.

Hydro is underappreciated

Hydropower is undervalued in AGL’s eyes because it opens up deep storage and firming capabilities for the energy market, which can help during times when renewable energy isn’t able to perform.

However, Brokhof also warned that the cost of building hydro facilities was “huge” and suggested support from the government is possible. He commented on the prospect of government funding:

I think that’s partly foreseen, but the terms and conditions are not clear.

AGL hopes the federal government’s Capacity Investment Scheme includes pumped hydro projects, which may prioritise batteries according to the AFR‘s reporting.

As reported by the AFR, hydropower can work by pumping water uphill using low-cost (renewable) energy and then releasing it when demand increases after the sun has set (and wholesale electricity prices are higher). The water is then released and goes downhill, which powers a turbine to produce electricity.

AGL is looking at upgrading three of its hydro power plants to operate as pumped hydro facilities.

Brokhof said:

Firming capacity is key for us. It will allow us to use our trading capability. Being the largest private owner of hydro assets in Australia is a differentiator for us.

AGL share price snapshot

As shown on the chart below, the AGL share price has gone up 5% since the start of 2024, compared to a 1% rise for the ASX 200.

The post What’s put the wind up AGL shares on Friday? 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.

Ever since Medibank Private Ltd (ASX: MPL) shares were first wrested from government hands and privatised back in 2014, investors have been anticipating hefty dividend income from this health insurance giant.

Those investors haven’t been disappointed. Medibank has paid out remarkably consistent dividend payments since its ASX debut. That’s despite the Medibank share price itself delivering fairly lacklustre growth in recent years.

Sure, today the company is around 70% above the ~$2.20 share price it hit the ASX boards at back in late 2014. But Medibank shares have only appreciated by around 9.3% over the past five years.

Have a look at the Medibank share price’s recent (and not so recent, if you wish) performance for yourself below:

But let’s get down to Medibank’s dividends. 

What’s the current dividend yield on Medibank shares?

The ASX 200 health insurance provider has paid out two dividends every year since 2015. Over the past 12 months, Medibank has doled out a final dividend worth 8.3 cents per share (back in October 2023) and an interim dividend (March) of 7.2 cents per share. Both dividend payments came with full franking credits attached, as is the norm for Medibank stock.

That’s an annual total of 15.5 cents per share. Plugging that into the current Medibank stock price of $3.71 (at the time of writing), we get a trailing dividend yield of 4.18%. If we include the value of Medibank’s full franking credits, this yield grosses up to 5.97%.

As we touched on before, Medibank’s dividends have been on a generally upward trajectory ever since the company’s ASX listing. Back in 2016, Medibank funded an annual total of 11 cents per share in dividend payments. But over 2023, the company forked out a total of 14.3 cents per share in payouts.

Medibank has also increased its annual dividend every year since 2020. That year saw shareholders receive 12 cents per share in dividends. But 2021 had Medibank fork out 12.7 cents per share, rising to 13.4 cents in 2022 and to 14.3 cents by 2023.

What about the future?

The interim dividend of 7.2 cents per share from March this year was a hefty rise over 2023’s equivalent payout of 6.3 cents. So it looks as though this streak of delivering consistently rising dividends is set to continue this year.

That’s a belief held by one ASX expert, anyway. As my Fool colleague James covered earlier this month, ASX broker Goldman Sachs is predicting Medibank will pay out a total of 16 cents per share in dividend income over FY2024, rising to 17 cents per share in FY2025.

If Goldman is on the money here, investors can expect a forward yield from Medibank stock of 4.19% and 4.6%, respectively.

Let’s see if Goldman is on the money and Medibank shareholders continue to enjoy a rising dividend yield.

The post Medibank shares: Here’s the dividend yield you’ll get 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 positions in and has recommended Goldman Sachs Group. 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.

Over the past three years, the Lynas Rare Earths Ltd (ASX: LYC) share price has been disappointing. Lynas shares have dropped more than 40% from their all-time high in January 2022 to just over $6 today.

Despite this underperformance, the Lynas share price is still 130% higher over the last five years, handily outpacing the S&P/ASX 200 Index (ASX: XJO), which gained approximately 18% over the same period.

Weak consumer demand for electric vehicles (EVs) and falling global rare earth prices are largely behind such dramatic share price fall.

However, after a 40% drop in its stock value, is this battery metal miner ready to rebound when the global commodity market recovers?

Why did the Lynas share price drop so much?

China dominates the rare earths market with a 70% share in mining and a 90% processing capacity. Lynas is one of only two non-Chinese companies selling rare earths, the critical element in producing EVs and military devices. The other producer is MP Materials Corp (NYSE: MP) located in the United States.

Behind the sluggish share price movement is underwhelming consumer demand for EVs, which heavily use rare earth materials for batteries and other critical components.

The weak demand has pushed down the global rare earths prices, impacting revenue and profitability for producers like Lynas.

According to Lynas’ quarterly updates, China’s domestic prices for neodymium and praseodymium (NdPr) oxide, one of the important types of rare earth elements, have halved to US$43 per kilogram in a year. This is less than a third of the metal’s peak price of $144 per kilogram in March 2022.

What experts say about global rare earths price outlook

Former BHP copper boss Darryle Cuzzubbo is optimistic about the long-term outlook for the rare earths market. In a May 2024 interview with the Australian Financial Review, he referenced projections from Arafura Rare Earths Ltd (ASX: ARU), predicting a supply shortfall by 2032 with global production expected to reach only 65,000 tonnes, far below the anticipated demand of around 126,000 tonnes.

That said, price predictions for any commodities are difficult as the supply and demand dynamics keep on changing. Just yesterday, Europe’s largest deposit of rare earth elements was discovered at Fen, Norway. This news, as my colleague James summarised, pushed down the share prices of rare earths producers.

The good news is that Lynas is one of the few producers generating positive operating cash flows at the current low prices. Many other producers remain in the red. This means there could be industry consolidation ahead of us, and if it happens, Lynas has a better chance of becoming the survivor.

What do brokers say, and who else is positive about Lynas?

Mining magnate Gina Rinehart seems to think it’s a good time to invest in this critical metal producer. In April 2024, she became a major shareholder in Lynas, holding 5.8% through her company, Hancock Prospecting.

The same company bought 5.3% of the other non-China rare earth producer MP Materials in the US earlier this year. This series of share purchases sparked speculation that she may play a pivotal role in a potential merger between Lynas and MP Materials, as the Australian Financial Review reported.

Brokers see an upside from the current Lynas share price. UBS is cautiously optimistic saying rare earths prices have likely bottomed while not ruling out the possibility of further downside.

Goldman Sachs is another broker remaining optimistic. In a report in April 2024, summarised by my colleague Bronwyn, Goldman highlighted better-than-expected production volume from Lynas Advanced Materials Plant (LAMP) in Malaysia and the Lynas shares’ cheap valuation metrics.

Foolish takeaway

In the mining sector, navigating the ups and downs of global commodity cycles is inevitable. Lynas stands out as a key rare earths producer outside of China, offering a unique market position amid intensifying geopolitical tensions.

In my view, the recent dip in Lynas’s share price could present a compelling buying opportunity for long-term investors.

The post Down 40% in under 3 years, is the Lynas share price due a bounce? appeared first on The Motley Fool Australia.

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Motley Fool contributor Kate Lee 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.

The S&P/ASX 200 Index (ASX: XJO) is up 0.3% so far in June, with three ASX 200 shares doing a lot of the heavy lifting.

Which three stocks have really been going gangbusters this month?

I’m glad you asked!

ASX 200 shares flying higher in June

The first high-flying ASX 200 share in June is electronics retailer JB Hi-Fi Ltd (ASX: JBH).

JB Hi-Fi shares closed out May, trading for $58.23. In afternoon trade today, shares are changing hands for $63.39. That puts the JB Hi-Fi share price up 8.6% so far in June. Shares are now up 50% since this time last year.

JB Hi-Fi shares also trade on a fully franked dividend yield of 4.3%.

The last price-sensitive announcement from the company was a reasonably strong quarterly sales update on 9 May.

Investors appear to have been bidding up the ASX 200 share in June ahead of the pending stage 3 tax cuts and a raft of cost-of-living relief measures contained in the Federal budget. With most Aussies looking at pocketing significantly more money in the year ahead, JB Hi-Fi could enjoy a material uptick in sales.

Pro Medicus Ltd (ASX: PME) is the second ASX 200 share to charge higher in these first two weeks of June.

Shares in the health imaging company closed out May trading for $120.12. At the time of writing, shares are changing hands for $132.54 apiece, up 9.3% in June. That sees the Pro Medicus share price up an eye-watering 104.5% since this time last year. Pro Medicus shares trade on a fully franked 0.3% dividend yield.

The most recent share price momentum was driven by the company’s 28 May announcement that its wholly owned US subsidiary, Visage Imaging, had signed five new customer contracts. Pro Medicus said the new contracts have a total value of at least $45 million.

In a nod to its growing AI ambitions, the new contracts will be fully cloud-deployed and are expected to be completed within the next six months.

“Despite record new contract signings this year, our pipeline remains strong with a broad range of opportunities both in terms of size and market segments likely helping,” Pro Medicus CEO Sam Hupert said on the day.

Also soaring in June

Rounding off the list of ASX 200 shares going gangbusters in the first half of June is Bapcor Ltd (ASX: BAP).

Shares in the auto parts company closed out May trading for $4.25. In afternoon trade today shares are changing hands for $5.00 apiece, up 17.7%. The Bapcor share price remains down 14.8% since this time last year. Bapcor shares also trade on a 4.2% fully franked trailing dividend yield.

The big June boost for the Bapcor share price came on Tuesday this week.

Investors sent the ASX 200 share up 14.0% on the day after management confirmed media speculations that the company had received a non-binding takeover proposal from United States-based private investment firm Bain Capital.

The $5.40 per share cash offer values Bapcor at more than $1.8 billion.

There is not yet any guarantee that the takeover offer will proceed.

The post 3 ASX 200 shares going gangbusters in June appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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 Pro Medicus. The Motley Fool Australia has recommended Bapcor, Jb Hi-Fi, and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Reserve Bank will make its next decision on interest rates next Tuesday.

All of the Big Four banks are expecting rates to remain on hold. For several months, they’ve all been tipping the first cut to occur in November, with four more cuts to follow over the course of 2025.

This week, ANZ Group Holdings Ltd (ASX: ANZ) became the first of the four to alter its view.

ANZ now expects the first cut to occur in February, with only two more to follow by the end of the year.

What are the experts saying on interest rates?

Gareth Aird, Head of Australian Economics at Commonwealth Bank of Australia (ASX: CBA), is sticking with his November forecast for the first interest rate cut.

However, he says the chances of it being delayed are increasing due to signs of stickier inflation.

Aird commented:

Our expectation for a more material loosening in the labour market relative to the RBA’s forecasts is a key reason why our base case sees the RBA commence an easing cycle in late 2024.

But given the challenging underlying inflation backdrop and a shortening runway between now and November, the risk to our call is increasingly moving towards a later start date for an easing cycle.

Luci Ellis, Chief Economist at Westpac Banking Corp (ASX: WBC), is also tipping November or thereabouts for the first rate cut.

Ellis said:

The likely trajectory of disinflation from here precludes a rate cut much before November.

The trimmed mean measure of inflation was still a full percentage point above the top of the target range over the year to the March quarter. The Bank will be watching this measure more closely as temporary factors buffet the headline measure in coming quarters.

However, even with a further moderation in trimmed mean inflation, it will take time for enough evidence to accumulate to convince the Board that the disinflation is firmly on track to reach 2-3% on a sustained basis.

The main thing that would cause the RBA to push back the timing of its first rate cut is inflation remaining sticky above the target range.

AMP Ltd (ASX: AMP) Chief Economist Share Oliver said 25% of the world’s central banks had begun cutting rates.

The central banks in Canada and Europe cut rates by 25 basis points earlier this month.

However, Australia began its interest rate hiking cycle later than other major economies. Therefore, we are not as far along in taming inflation as other economies, so we are likely to cut rates later.

Dr Oliver said:

The RBA will still want to see lower inflation readings, how the economy responds to the tax cuts next month and more confidence that inflation will decline sustainably into the 2-3% target …

But we continue to see the first rate cut coming by year end as continuing weaker than expected economic conditions provide the confidence it needs regarding the inflation outlook.

Interestingly, after the GDP data the money market removed the probability of another rate hike and is now allowing for around a 46% chance of a cut by year end.

The post Is there any chance of an interest rate cut in Australia next week? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Anz Group and 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 Scott Phillips.

It has been another busy week for many of Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone right now:

Bega Cheese Ltd (ASX: BGA)

According to a note out of Bell Potter, its analysts have retained their buy rating on this diversified food company’s shares with an improved price target of $5.35. The broker has been looking at recent movement in indicators for the branded and bulk business as well as farmgate milk prices. While this has resulted in an earnings downgrade for FY 2024, it has lifted its earnings estimates for the next two years. In light of this, the broker estimates that Bega Cheese is trading at around 10x FY 2025 EBITDA. It notes that this is a reasonable discount to its 10-year average of 12.3x forward EBITDA. And with the broker feeling confident about Bega Cheese’s five-year outlook, it thinks this has created a buying opportunity for investors. The Bega Cheese share price is trading at $4.41 on Friday afternoon.

BHP Group Ltd (ASX: BHP)

A note out of Citi reveals that its analysts have retained their buy rating and $48.50 price target on this mining giant’s shares. Citi notes that its global commodities team has lifted its copper forecast by 20% to US$12,000 per pound to reflect increased demand due to the decarbonisation megatrend. In light of this, the broker has lifted its earnings estimates for the coming years. In addition, Citi is now forecasting an attractive 6%+ dividend yield from the Big Australian’s shares in FY 2025, boosting the total potential return further. The BHP share price is fetching $43.14 at the time of writing.

Life360 Inc (ASX: 360)

Analysts at Morgan Stanley have retained their overweight rating and $17.50 price target on this location technology company’s shares. According to the note, the broker has been looking into the potential of Life360’s recently announced advertising business. It highlights that Lyft Inc (NASDAQ: LYFT) has also announced similar ambitions. And given how ride sharing and location technology have similarities, it believes Lyft’s targets can be a guide to see what is possible for Life360. The good news is that the broker believes that Life360 can generate significant revenue from its advertising business even if it penetrates a much smaller portion of its massive user base compared to Lyft. The Life360 share price is trading at $15.02 today.

The post Brokers name 3 ASX shares to buy now appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Life360. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. 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.

The VanEck Morningstar Wide Moat ETF (ASX: MOAT) has achieved some eye-watering returns for its investors over the past few years.

To illustrate, this exchange-traded fund (ETF)‘s latest update informs us that, as of 31 May, investors have banked an average return of 16.16% per annum over the past five years. MOAT unitholders have also received an average of 15.34% per annum since this ETF’s ASX inception back in 2015.

That beats the pants off what most ASX ETFs have returned over that time frame. For example, the Vanguard Australian Shares Index ETF (ASX: VAS), which is currently the most popular ETF on the ASX, has returned an average of 7.81% per annum over the five years to 31 May 2024.

So how has this high-flying ASX ETF pulled off such a consistently high return over so long? What is the secret sauce that enables these returns?

What’s the VanEck Wide Moat ETF’s secret ASX sauce?

To answer this question, let’s dive into how this ETF works. Unlike most popular ETFs, MOAT is not an index fund. Rather, it is an actively managed ETF that contains a curated and concentrated portfolio of around 70 stocks.

These stocks are selected from the US markets based on an assessment of their possession of what’s known as a ‘wide economic moat‘.

A ‘moat’ is a term coined by Warren Buffett that refers to an intrinsic competitive advantage that a company can possess over its competitors.

It might be a strong brand or providing a product that consumers find difficult not to use or switch away from. It could also be a company’s cost advantage over competitors.

Learning from Warren Buffett

Buffett has made no secret about his love of a company with a strong moat. In fact, he usually only buys companies that have at least some form of moat. It clearly works for Buffett, given Berkshire Hathaway‘s incredible growth over the past 60 or so years.

This is the secret sauce that the VanEck Wide Moat ETF attempts to harvest within its portfolio.

As such, it’s no surprise to see names like Alphabet, Adobe, Disney, Altria, Pfizer, Nike, Microsoft, Amazon and Starbucks in MOAT’s current portfolio. All of these companies have a clear moat that they can use to keep competition at bay and profits growing.

Just think of Disney’s intellectual property portfolio. Or Amazon’s ability to provide products at rock-bottom prices and have them at your door within a day or two. Or the reach of Microsoft’s Office and Windows software and the power of the Starbucks and Nike brands.

Buffett told us that the best companies in the world usually have some kind of MOAT. The VanEck Wide MOAT ETF has taken this concept and run with it, which explains why this ETF is able to bang out such compelling returns.

The post 16% per annum: What is the VanEck Wide Moat ETF’s secret sauce? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Sebastian Bowen has positions in Adobe, Alphabet, Altria Group, Amazon, Berkshire Hathaway, Microsoft, Nike, Starbucks, VanEck Morningstar Wide Moat ETF, Vanguard Australian Shares Index ETF, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe, Alphabet, Amazon, Berkshire Hathaway, Microsoft, Nike, Pfizer, Starbucks, and Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2025 $47.50 calls on Nike, long January 2026 $395 calls on Microsoft, and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Adobe, Alphabet, Amazon, Berkshire Hathaway, Microsoft, Nike, Starbucks, VanEck Morningstar Wide Moat ETF, and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Few ASX shares on the All Ordinaries (ASX: XAO) Index have delivered the kind of returns that DroneShield Ltd (ASX DRO) stock has over the past few months.

Today, the Droneshield share price is trading at $1.44, down 1.03% for the day thus far. But even so, this share price still leaves Droneshield stock with a jaw-dropping year-to-date gain of 277.6% over 2024 so far. Over the past 12 months, this defence share has risen by an even more impressive 524%.

So needless to say, Droneshield investors would be a pretty happy bunch right about now. Check out Droneshield’s incredible stock price trajectory for yourself below:

This monstrous rise in value hasn’t come unprovoked. Droneshield is a stock that has been growing at breakneck speed. Back in April, the company released a quarterly cash flow report, which revealed Droneshield’s revenues for the quarter ending 31 March came in at $16.4 million. That was up a stupendous 925% from the $1.6 million the company reported for the same quarter last year.

So given Droneshield’s stunning recent success, many investors might be wondering whether this company pays out a dividend, perhaps even a fully franked one. So today, let’s dive into what kind of dividends Droneshield stock pays, or at least, has paid, out.

Will you get dividend income from Droneshield stock?

Well, this won’t take long.

Droneshield stock has never paid out a dividend. And it doesn’t look like it will, at least on a short-term horizon.

Most companies only start paying dividends when they are comfortably profitable, and with a business model that has reached some sort of maturity. Remember, every dollar that a company forks out in dividend payments is a dollar it can’t reinvest into its business.

It was only in the 2023 financial year that Droneshield achieved profitability for the first time. The company reported a net profit of $9.3 million for FY2023, up from a net loss of $900,000 for FY2022.

Right now, the company is clearly prioritising growth, with a $15 million capital raising program recently completed.

If Droneshield continues to grow at this stunning rate, I still wouldn’t expect a dividend until it has scaled up to its full potential and is sitting on a comfortable stream of free cash flow with net profits consistently high.

Even so, Droneshield stock owners arguably shouldn’t complain too loudly about this lack of dividend income, considering their lucrative capital gains over just the past six months alone.

The post Does DroneShield stock pay dividends? appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. 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.