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Just an extra $100 of additional passive income a week could make a big difference during your retirement years.

Of course, $200 or $300 a week would be even more welcome.

That could open the door to extra travels in your golden years. Or you may choose to spend some on gifts for your partner, or your kids or grandkids. Or perhaps just spoil yourself.

However you may choose to put the extra funds to use, here’s how I’d go about securing that passive income stream today.

Building passive income for retirement

I think ASX dividend shares offer one of the best means for Aussies to secure potentially life-changing passive income in their retirement.

One of the advantages offered by many leading ASX dividend shares is that they come with franking credits. That’s something you won’t get on most international exchanges, including in the United States.

With 100% franking, you’ll get the full credit for the 30% corporate tax the company has already paid, which could reduce your own tax burden. That can be an extra big bonus for self-funded retirees with a low annual income, who can receive franking credits as cash refunds.

Another thing to keep in mind when building your retirement-enhancing passive income stream is that the sooner you get started, the larger that extra income pool is likely to be.

For example, let’s say you invest $5,000 a year and achieve 5% capital gains and 5% dividend yields for a 10% average annual gain.

After 10 years, you’ll have invested $50,000, and your ASX portfolio will be worth $92,656.

But if you keep at it for 30 years, you’ll have invested $150,000, and your ASX portfolio will have grown to $909,717.

At that point, you could stop investing and begin drawing out your weekly passive income.

From the 5% dividend yield alone, that would equate to $45,856 a year or some $875 a week.

Finally, when looking for retirement-boosting ASX passive income stocks, you’ll want to invest in a diverse range of companies operating in various sectors and, ideally, across different geographic locations.

That will help reduce the risk of your overall portfolio taking a big hit if any one company or sector hits some turbulence.

One ASX dividend share with instant diversity

I think it’s worth finding a range of top ASX dividend gems to buy and hold in your passive income portfolio.

But one simpler way to get rolling is to invest in the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

The ASX exchange traded fund (ETF) holds anywhere from 40 to 60 blue-chip ASX dividend shares at any given time, offering instant diversity.

The ASX ETF’s top four holdings at the time of writing are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL) and Rio Tinto Ltd (ASX: RIO).

On the passive income front, the ETF makes convenient monthly payments.

As at 28 June, HVST had a 12-month gross dividend yield of 8.4%. The gross yield incorporates the 78.5% in franking credits.

As of the same date, the BetaShares Australian Dividend Harvester Fund had delivered 14.0% in gross returns after fees over 12 months.

The post Looking to boost your retirement with extra passive income? Try this! appeared first on The Motley Fool Australia.

More reading

• 3 ASX dividend shares to buy next week
• How I’d aim to build a $75,000 income from ASX shares and never work again!
• These ASX 200 stocks turned $20,000 into $100,000+ in 10 years
• Why mum and dad investors aren’t buying ASX bank shares like they used to
• Xero shares doubled the ASX 200 return in FY24. What’s next in FY25?

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 CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you looking for some income options for when the market reopens next week?

If you are, then check out these ASX dividend shares listed below. They have recently been tipped as buys by analysts. Here’s what they are saying about them:

Challenger Ltd (ASX: CGF)

Goldman Sachs is tipping this annuities company as be an ASX dividend share to buy.

It likes the company due to its exposure to the massive superannuation market and the favourable outlook for annuities demand. It explains:

CGF is Australia’s largest retail and institutional annuity provider across Term and Lifetime annuities with a funds management business. We are Buy rated on the stock. We like CGF because: 1) it has exposure to the growing superannuation market across Life and Funds Management; 2) higher yields should drive a favorable sales environment for retail annuities as well as an improvement in margins; 3) its annuity book growth looks well supported through a diversified distribution strategy.

In respect to dividends, the broker is forecasting fully franked dividends of 26 cents per share in FY 2024 and 27 cents per share in FY 2025. Based on the current Challenger share price of $6.89, this will mean dividend yields of 3.8% and 3.9%, respectively.

The broker currently has a buy rating and $7.50 price target on its shares.

Dexus Industria REIT (ASX: DXI)

Analysts at Morgans see Dexus Industria as an ASX dividend share to buy when the market reopens. It is a real estate investment trust with a focus on industrial warehouses.

Morgans believes the company is positioned to benefit from solid demand for industrial property, its development pipeline, and the positive rental growth outlook. It said:

The portfolio is valued at $1.6bn across +90 properties with 89% of the portfolio weighted towards industrial assets (WACR 5.38%). The portfolio’s WALE is around 6 years and occupancy 97.5%. Across the portfolio 50% of leases are linked to CPI with the balance on fixed increases between 3-3.5%. While we expect cap rates to expand further in the near term, DXI’s industrial portfolio remains robust with the outlook positive for rental growth. The development pipeline also provides near and medium-term upside potential and post asset sales there is balance sheet capacity to execute.

As for income, Morgans is forecasting dividends per share of 16.4 cents in FY 2024 and then 16.6 cents in FY 2025. Based on the current Dexus Industria share price of $2.89, this will mean dividend yields of 5.7% and 5.75%, respectively.

The broker has an add rating and $3.20 price target on its shares.

Worley Ltd (ASX: WOR)

The team at Goldman Sachs is also positive on this engineering company.

It believes the company is well-positioned to benefit from the decarbonisation megatrend and sees a lot of value in its shares at current levels. It said:

WOR is well positioned to play a role in enabling the transition from fossil fuels to a more sustainable energy mix in the LT, leveraging its experience in providing engineering and maintenance services for complex energy/chemicals works, existing client relationships, and management’s stated focus on expanding the company’s transition footprint. We expect the energy transition segment to gain increased investor attention as Covid-19 related impacts fade and the company continues to highlight the strong growth potential of the business via increased disclosure. We expect WOR’s ST/MT margins to improve with an incrementally positive operating environment. Vs the S&P/ASX 200, WOR is trading broadly in line with market vs a premium in the last 3yr/5yr.

Goldman is forecasting dividends per share of 52 cents in FY 2024 and then 58 cents in FY 2025. Based on its current share price of $14.73, this equates to dividend yields of 3.5% and 3.9%, respectively.

The post 3 ASX dividend shares to buy next week appeared first on The Motley Fool Australia.

More reading

• 2 outstanding blue chip ASX 200 stocks to buy for FY25
• Forget CBA and buy these ASX dividend stocks
• Brokers says these ASX 300 dividend shares are top buys
• 3 ASX dividend shares to buy with 5%+ yields
• 3 ASX dividend stocks to buy with 5% to 7% yields

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. The Motley Fool Australia has recommended Challenger. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Passive income from ASX shares can be a great way to build up a second income and eventually achieve financial independence from relying on the work paycheque.

According to the Australian Bureau of Statistics (ABS), the average weekly total earnings for an Australian employee translates into annualised earnings of around $75,000. To receive that level of annual dividends, we’re talking about building up a large portfolio value.

To get a satisfactory wealth level, I’d want to build up investments that can achieve good underlying growth themselves.

How I’d build towards $75,000 of annual passive income

Unless someone wins the lottery or inherits significant wealth, it will take time, patience and a lot of compounding to grow to $75,000 of investment income.

Therefore, I’d suggest focusing on businesses that are investing in their operations to ensure they are supporting their own dividend and earnings growth.

If a business is paying out all of its profit each year (with a 100% dividend payout ratio), it’s unlikely the profit will grow much if it’s not reinvesting for more growth. For example, an 8% dividend yield could remain at that level forever, whereas other businesses deliver impressive long-term growth.

I’d want to invest in those growing investments, even if the upfront dividend yield isn’t that high. The yield-on-cost in the future could grow substantially.

For example, the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a century-old company that is steadily adding to its growing portfolio of business holdings. The ASX share has grown its annual ordinary dividend every year since 2000. In FY13, it paid an annual dividend of 46 cents per share, and in FY23, it paid an annual dividend of 87 cents – an increase of 89% over a decade. That’s the type of investment, in my opinion, that can result in significant organic growth of my portfolio’s value and dividends.

Globally focused exchange-traded funds (ETFs) could also be excellent long-term investments to help build a portfolio value up towards the required wealth to make $75,000 of annual passive income. I’d be thinking about quality global ETFs like Betashares Global Quality Leaders ETF (ASX: QLTY), VanEck MSCI International Quality ETF (ASX: QUAL), or Vanguard MSCI Index International Shares ETF (ASX: VGS). Reinvesting dividends can help with compounding.

If someone were able to invest an average of $1,500 per month and the portfolio generated an average return of 10% per year over 25 years, it would reach $1.77 million at the end of that 25-year period. Someone who is 25 could reach that figure by 50.

Choose the right dividend yield from ASX shares

Someone with a portfolio value of $1.77 million would need a dividend yield of approximately 4.25% to make $75,000 of annual dividends.

In my opinion, it’s important to choose investments that can continue to deliver growth over our lifetimes. Our portfolios may need to last many decades, and inflation means the required amount of dividends is probably going to keep rising to keep up with rising costs.

Once I reach a portfolio value that could generate a yearly income of $75,000, my strategy would be to choose investments that provide a decent yield but still deliver underlying growth.

Washington H. Soul Pattinson, Wesfarmers Ltd (ASX: WES) and Brickworks Limited (ASX: BKW) are ASX shares that may offer that mix of yield and long-term compounding.

I don’t know what the ASX will look like in 25 years, but at the moment, real estate investment trusts (REITs) like Rural Funds Group (ASX: RFF), Charter Hall Long WALE REIT (ASX: CLW) and Centuria Industrial REIT (ASX: CIP) all have appealing starting distribution yields and are seeing underlying rental income growth.

Or, another strategy to generate passive income could be to stick with the sort of global ETFs I mentioned before, like the QUAL ETF, and just sell 4.25% of the ETF’s value each year and unlock cash flow that way. Hopefully, the ETF’s long-term capital growth could outperform 4.25% per year, and investors could see both wealth growth and good cash flow.

The post How I’d aim to build a $75,000 income from ASX shares and never work again! appeared first on The Motley Fool Australia.

More reading

• Top high-yield ASX shares to buy in July 2024
• Buying shares and 5 other ways investors intend to spend tax cuts: report
• ASX 200 re-writes history. Which companies are leading the charge?
• Wesfarmers vs Woolworths: Which are the best ASX shares to buy today?
• The 5 most popular ASX shares bought by investors

Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Brickworks, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I think that buy and hold investing is one of the best ways to grow your wealth.

This is because it allows investors to take advantage of the power of compounding. This is what happens when you generate returns on top of returns.

To demonstrate just how successful this investment strategy can be with ASX 200 stocks, I like to look at how much a single $20,000 investment in certain shares 10 years ago would be worth today.

Let’s now see how investments in these three shares have fared during this time:

Aristocrat Leisure Limited (ASX: ALL)

The first ASX 200 stock that we are going to look at is Aristocrat Leisure. It is one of the world’s leading gaming technology companies.

Over the last decade, its shares have smashed the market with some very strong gains. This has been underpinned by its leadership position in the poker machine market, its expansion into digital gaming, and several acquisitions.

This has led to Aristocrat Leisure’s shares delivering its shareholders an average total return of 26.4% per annum since 2014. This would have turned a $20,000 investment in its shares 10 years ago into ~$208,000 today.

Cochlear Limited (ASX: COH)

Another ASX 200 stock that has delivered market-beating returns for its shareholders is Cochlear. It is a leading designer, manufacturer, and distributor of cochlear implantable devices for the hearing-impaired.

Thanks to its industry-leading position, significant (and ongoing) investment in research and development, its global distribution network, and the ageing population tailwind, Cochlear has been able to report solid earnings and sales growth over the last decade.

This has unsurprisingly caught the eye of investors and helped drive its shares higher and higher since 2014. This has led to Cochlear’s shares providing investors with an average total return of 18.9% per annum over the period. This would have turned a $20,000 investment into almost ~$113,000 today.

Goodman Group (ASX: GMG)

A third ASX 200 stock that has turned $20,000 into more than $100,000 in 10 years is Goodman Group.

It is a global integrated industrial property company focused on building sustainable properties that are close to consumers and provide essential infrastructure for the digital economy.

This strategy has been incredibly successful and underpinned consistently strong earnings growth over the last decade. This has put a rocket under its shares and led to Goodman shares recording an average total return of 22.3% per annum since 2014. This would have seen a $20,000 investment turn into almost $150,000 over the period.

Overall, I believe this demonstrates that buying quality companies with a long term view could make you wealthy.

The post These ASX 200 stocks turned $20,000 into $100,000+ in 10 years appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy now
• How a $10,000 investment in this ASX 200 stock ballooned to $17,460 in FY24!
• CBA and 7 other ASX 200 shares smashing new highs on Thursday
• Goldman Sachs names 1 ASX 200 stock to buy and 2 to hold
• 5 things to watch on the ASX 200 on Thursday

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 Cochlear and Goodman Group. The Motley Fool Australia has recommended Cochlear and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A change of focus for retail investors may be at hand, as Australian household ownership of ASX bank shares appears to be reducing.

As reported in the Australian Financial Review, analysis by investment outfit Jarden found that retail (household) investors sold down three major ASX bank shares in the three months to 30 June 2024.

The Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) reportedly saw retail ownership levels reach a record low.

However, Jarden noted that Westpac Banking Corp (ASX: WBC) was an exception due to its “higher franked dividend yield and the appeal of its recent special dividend“.

Who is buying the ASX bank shares?

Jarden said in a note that overseas ownership of banks continued to rise quarter over quarter. ANZ’s offshore ownership increased to 30%, which is the highest among the big banks. CBA’s offshore ownership has reached 23.8%.

Jarden analyst Jeff Cai told the AFR:

Anecdotal industry feedback suggests the recent increase in offshore buying in CBA is more driven by index funds rather than active asset allocation away from Asia, but this is difficult to conclusively validate.

According to the AFR, market participants have reported that some Asian investors are exiting China and “seeking shelter” with ASX bank shares.

Tribeca Investment Partners portfolio manager Jun Bei Liu pointed out that Australia’s economy was performing quite strongly compared to other Asian markets:

Australia stacks up pretty well compared to its peers within the region. Our economy is not slowing down as fast and it’s holding up OK. And as a foreign investor, you’ll look at Australia and realise it’s a safe place to be and hence why you’re seeing this transition into a lot of foreign ownership.

Are the financial stocks actually opportunities?

Tribecca’s Liu thinks the banks continue to perform relatively well, so she is “neutral” on the ASX bank shares:

The next six months still look pretty OK for the banks, unless our economy is heading for a recession and a tail-risk event takes place.

They only continue to do better than expected, and I think they will continue to have capital return opportunities, whether it’s buybacks or special dividends. So combine all of that and you’re looking at reasonable returns.

However, the ASX bank share valuations are increasing in price/earnings (P/E) ratio terms, with their share prices rising faster than earnings in the last 12 months.

According to Commsec forecasts, the CBA share price is valued at 23x FY25’s estimated earnings; NAB is valued at 16x; Westpac is 15x, and ANZ is valued at 13x FY25’s estimated earnings.

When the P/E ratio keeps climbing, short-term returns could become more unlikely because the valuation becomes more unsustainable. In my opinion, the shorter-term earnings updates will need to be relatively positive to uphold these forward P/E ratios.

The post Why mum and dad investors aren’t buying ASX bank shares like they used to appeared first on The Motley Fool Australia.

More reading

• CBA share price rallies to become the new top dog on the block
• 3 reasons everyone’s talking about CBA shares this week
• ASX 200 re-writes history. Which companies are leading the charge?
• Do ANZ shares offer the biggest dividend yield in the ASX bank sector?
• ANZ shares hit 52-week high despite alleged $54 billion problem

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.

The Xero Limited (ASX: XRO) share price materially outperformed the S&P/ASX 200 Index (ASX: XJO) during the 12 months to 30 June 2024, rising by 14.7% compared to 7.8% for the index.

Of course, a 12-month period isn’t everything. What happens in the coming years is more important than the past because of how investors factor future profit and revenue generation into their valuation models.

Xero is a fast-growing technology business that provides accounting software for business owners and accountants around the world.

The May update from Xero was promising and is the latest evidence to justify a higher Xero share price.

Earnings recap

Xero’s financial calendar runs differently from the typical financial year (1 July to 30 June) that individuals and many businesses follow.

The ASX tech share reported its 2024 financial year earnings in May this year for the 12 months to 31 March 2024.

It revealed that total subscribers rose by 11% to 4.16 million, and average revenue per user (ARPU) grew by 14% to $39.29. This helped operating revenue grow by 22% to $1.7 billion, the annualised monthly recurring revenue (AMRR) increased 26% to $1.96 billion, and the total lifetime value of subscribers grew by 16% to $15.5 billion.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 75% to $526.5 million, operating profit rose $198.4 million to $255.7 million. Net profit after tax (NPAT) grew $288.2 million to $174.6 million and free cash flow improved $239.8 million to $342.1 million.

Xero said it had an opportunity to double the size of its business and deliver high profit margins. In FY25, it expects its total operating expenses as a percentage of revenue to be around 73%.

Outlook for Xero shares in FY25

The broker UBS currently rates Xero shares as a buy with a price target of $156, suggesting a possible rise of around 10% in the next year.

UBS thinks Xero can continue to grow its ARPU over the medium term while waiting for subscriber momentum to reaccelerate. Subscribers in the United Kingdom are expected to accelerate in FY27.

One reason UBS thinks Xero’s ARPU will increase is that UK prices will rise between 7% and 10% in September 2024. In May, it was also announced that Australian prices were increasing by 9%.

UBS suggested the ASX tech share could increase prices much more than inflation because of the “stickiness of the Xero product”.

UBS has predicted that Xero will generate $2.02 billion in revenue and $240 million in net profit in FY25.

The post Xero shares doubled the ASX 200 return in FY24. What’s next in FY25? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 3 reasons I’m still buying ASX stocks in July despite record prices
• US inflation easing: What does it mean for ASX shares?
• ASX 200 re-writes history. Which companies are leading the charge?
• Why did ASX retail shares rise 19% in FY24 amid a cost of living crisis?

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 positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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.

More reading

• CBA share price rallies to become the new top dog on the block
• ASX 200 re-writes history. Which companies are leading the charge?
• BHP shares tumble on nickel bombshell
• Is it time to dive back into ASX lithium shares?
• 5 things to watch on the ASX 200 on Friday

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.

More reading

• Which Australian shares ASX ETFs have dished out the best returns over 3 years?
• Do ANZ shares offer the biggest dividend yield in the ASX bank sector?
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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.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• 3 reasons I’m still buying ASX stocks in July despite record prices
• US inflation easing: What does it mean for ASX shares?
• ASX 200 re-writes history. Which companies are leading the charge?
• Why did ASX retail shares rise 19% in FY24 amid a cost of living crisis?
• 5 things to watch on the ASX 200 on Friday

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 ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.