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There are a lot of ASX dividend shares to choose from on the Australian share market.

To narrow things down for income investors, I have picked out two that Morgans has put on its best ideas list this month.

Let’s see what the broker is saying about these shares:

Coles Group Ltd (ASX: COL)

Analysts at Morgans think this supermarket giant would be a top ASX dividend share to buy right now. The broker currently has an add rating and $18.95 price target on its shares.

It believes that recent share price weakness has been overdone and created a buying opportunity for investors. The broker explains:

In our view, the ongoing scrutiny on the supermarkets has affected short term sentiment in the sector, which we believe creates a good buying opportunity in COL. While Liquor sales remain soft, we expect the core Supermarkets division (~92% of earnings) to continue to be supported by further improvement in product availability, reduction in total loss, greater in-home consumption due to cost-of-living pressures, and population growth.

In respect to dividends, it is expecting Coles to be in a position to pay fully franked dividends of 66 cents per share in FY 2024 and 69 cents per share in FY 2025. Based on the current Coles share price of $16.21, this implies dividend yields of approximately 4.1% and 4.25%, respectively.

Dexus Industria REIT (ASX: DXI)

Another ASX dividend share that has been named as a buy by Morgans is Dexus Industria. It is a real estate investment trust with a focus on industrial warehouses. The broker has an add rating and $3.18 price target on its shares.

Morgans believes the company is well-positioned to benefit from solid demand for industrial property and its development pipeline. It commented:

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, the broker 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 $2.98, this will mean dividend yields of 5.5% and 5.6%, respectively.

The post Broker says these ASX dividend shares are top buys appeared first on The Motley Fool Australia.

More reading

• 4 ASX income stocks to buy for 4% to 8% dividend yields
• Top ASX dividend shares to buy in May 2024
• 2 of the best ASX 200 blue-chip shares to buy in May
• Why Goldman Sachs just upgraded Coles shares
• Brokers name 4 ASX 200 dividend shares to buy

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

The James Hardie Industries plc (ASX: JHX) share price was sold off on Tuesday.

The building materials company’s shares ended the day a sizeable 15% lower at $46.67.

Investors were hitting the sell button in response to the release of the ASX 200 stock’s fourth quarter and full year update.

James Hardie reported record fourth quarter sales of US$1,004.9 million and record full year sales of US$3,936.3 million. However, despite this strong top line performance, its earnings fell short of expectations for the fourth quarter.

And putting further pressure on the ASX 200 stock was its guidance for FY 2025, which was well below consensus estimates.

Broker reaction

Analysts at Goldman Sachs have been looking over the result. They note that James Hardie’s fourth quarter profit and guidance for FY 2025 disappointed. The broker said:

4Q24 result slightly below GSe. 4Q24 underlying NPAT of US$174m was 2% below GSe/Visible Alpha consensus estimates of US$178m/177m. Within this, EBIT of US$233m was 2% below GSe with sales 1% above GSe. JHX had previously guided to group NPAT of US$165-185m.

FY25 guidance disappoints. JHX issued group adjusted net income guidance US$630-700m vs prior GSe at US$761m and consensus at $762m (i.e. 13% lower at the midpoint).

Is this ASX 200 stock good value after the selloff?

Despite the disappointment, Goldman remains positive on James Hardie and believes yesterday’s selloff has created a buying opportunity for investors.

In response to the update, the broker has reiterated its buy rating on the company’s shares with a reduced price target of $57.85 (from $61.65).

Based on its current share price of $46.67, this implies potential upside of 24% for investors over the next 12 months.

To put that into context, a $10,000 investment would grow to become worth $12,400 if Goldman is on the money with its recommendation.

Why is Goldman staying bullish?

Goldman believes that the market is undervaluing the ASX 200 stock even after lowering its earnings estimates for the near term. It explains:

As a result of our earnings changes (partially offset by updated reference multiples), our DCF & EV/EBIT based TP declines 6% to A$57.85. Notwithstanding the forecast revisions we believe that the share price is capitalizing earnings levels that are below both FY25E GSe and (more meaningfully) FY26E levels.

We see upside from cyclical improvement and strategic execution against higher value product mix targets, which has scope to substantially improve group profitability.

The post Why this beaten down ASX 200 stock can jump 24% appeared first on The Motley Fool Australia.

More reading

• Why Infratil, James Hardie, Sonic Healthcare, and Star Entertainment shares are sinking today
• Which ASX 200 stock just plunged 12% despite record full-year earnings?
• Leading brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today

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 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.

ResMed CDI (ASX: RMD) shares closed at $32.80 apiece on Tuesday, up 1.14% for the day.

The stock is up 29% in the year to date and up 55% since their 52-week low in October.

The sleep apnoea device maker has been in recovery mode after a slump in the stock price last year.

ResMed shares staging an impressive recovery

As the chart above shows, ResMed shares were sold off in the second half of last year.

The stock fell for two reasons. There was a general healthcare sector sell-off; and investors were feeling increasingly concerned that GLP-1 obesity drugs like Ozempic would reduce ResMed’s earnings.

They feared this because obesity is a common pre-cursor to sleep apnoea. So their thinking was if Ozempic eradicates obesity, ResMed may not sell as many sleep apnoea machines in the future.

The ASX 200 healthcare share took a real beating on those fears. Resmed shares hit a four-year low of $21.14 on 13 October.

Many brokers slapped buy ratings on ResMed shares following the sell-off, reasoning that the global sleep apnoea market was huge and not all patients had obesity, so investors’ fears were unfounded.

ResMed CEO Mick Farrell tried to reassure investors by telling them the company was proactively tracking the impact of Ozempic and GLP-1 medicines through internal modelling.

How will Ozempic impact ResMed’s earnings?

By October, Farrell was ready to quantify the impact. Ozempic and GLP-1s may cost the company 200 million people in terms of the total addressable market (TAM) for sleep apnoea products.

That sounds like a lot, but not really when you consider the TAM for sleep apnoea worldwide will be 1.2 billion by 2050 after taking into account the impact of GLP-1s, according to Farrell.

And with just 22.5 million people using ResMed CPAP machines, the available TAM remained enormous.

At the time, Farrell said they were not seeing any reduced use of ResMed products among patients using both GLP-1s for their obesity and ResMed devices for their sleep apnoea.

Then in January, Farrell revealed that further internal research showed a 10% increase in patients on GLP-1s buying sleep apnoea machines.

Not only that, but as patients on GLP-1s lost weight, they were not abandoning their CPAP devices, either.

This is why Blackwattle Investment Partners is happy to have ResMed shares as its top active position in the Large Cap Quality Fund today. And they reckon the share price has more room to run.

ResMed has turned GLP-1s into ‘an opportunity’

In an update released last week, Blackwattle Large Cap portfolio managers Ray David, Joseph Koh and David Meehan said ResMed had delivered a strong March quarterly update.

They said this had further alleviated investors’ concerns over the threat of GLP-1 drugs, commenting:

… ResMed has turned the GLP threat into an opportunity. Patient funnel flow into CPAP diagnosis is accelerating due to ResMed’s efforts to raise awareness of the combined benefits of GLP weight loss therapy with its CPAP products.

In addition, profitability is accelerating due easing freight inflation, and the transition to ResMed’s new Airsense 11 platform.

This platform is a meaningful step up from the previous CPAP platform, featuring increased connectivity functions such as personal therapy and care check-in settings which have been years in development.

ResMed shares still trading at ‘hefty discount’

The managers said that ResMed shares had rebounded strongly but still offered value today.

Even after the recent share price outperformance, ResMed’s forward PE of 24x is still at a hefty discount to the 10-year average.

We still consider this an attractive valuation relative to ASX Industrials given ResMed generates superior returns on capital, generates strong cashflow, and has tailwinds from an aging population and obesity rates, despite the birth of the GLP drug class.

We also believe the competitive landscape will be benign for some time as its likely to take years for Koninklijke Philips NV (NYSE: PHG) to build back trust given its high-profile recall.

Blackwattle describes ResMed as “one of the most innovative medical equipment providers globally”.

The managers say this innovation is being shown in the application of cloud connectivity with 25 million devices. This provides data to payers and helps facilitate resupply.

The post ResMed shares higher as company ‘turns the GLP threat into an opportunity’: Fundie appeared first on The Motley Fool Australia.

More reading

• Buy, hold or sell these 3 ASX 200 healthcare shares: Experts
• 2 of the best ASX 200 blue-chip shares to buy in May
• 3 reasons ResMed shares ‘are just too cheap!’
• 4 founder-led ASX 300 shares that have helped this fund outperform
• Resmed share price higher despite CEO hitting sell on 14,683 shares

Motley Fool contributor Bronwyn Allen 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.

Superannuation is one of the most tax-effective retirement savings and investment vehicles around, and with about six weeks to go until the end of the financial year, it’s time to start thinking ‘strategy’.

One of the best ways to harness the ‘miracle of compounding‘ is to add more funds to your superannuation every year.

And if you do it by 30 June, you can collect a handsome tax break on your FY24 income, too.

There are also other ways you can boost your superannuation balance before the end of the year.

Helpfully, Vanguard Australia has outlined five easy ways to get more money into your super by 30 June.

You may know Vanguard as the global pioneer of index funds. The company is also one of the biggest ASX ETF managers in Australia and launched an Australian superannuation product in November 2022.

5 ways to boost superannuation before EOFY

Make extra concessional (pre-tax) contributions

For FY24, you’re allowed to have up to $27,500 in concessional (pre-tax) contributions paid into your superannuation account. This includes your employer’s compulsory Superannuation Guarantee payments, any salary sacrifice amounts, and any additional money you deposit yourself as a personal contribution.

Concessional contributions are taxed at 15% instead of your marginal tax rate. So, if you deposit $10,000 of your after-tax income into superannuation, you’ll be able to claim a tax deduction on your tax return.

There are forms involved to get all this organised, so get cracking on this task well before the EOFY.

Make use of carry-forward (catch-up) concessional contributions

You may be able to contribute more than the annual cap of $27,500 in concessional contributions if you have carry-forward concessional contributions available to use.

Carry-forward contributions are unused concessional contributions from the previous five financial years.

This measure was introduced in FY19, which means any unused concessional contributions you have from the FY19 year must be used in the FY24 year, or they’ll be lost forever!

Vanguard’s Tony Kaye explains:

For example, if $15,000 in employer and personal concessional contributions were made into your super account in 2018-19, you may be able to take advantage of your unused $5,000 gap from that financial year (the maximum concessional contributions limit was $20,000 in 2018-19) and roll it over into this financial year’s contributions.

This $5,000 would be in addition to the maximum $27,500 in allowable concessional contributions that can be made this financial year (allowing you to contribute up to $32,500 in this example).

Carry-forward contributions are only available for superannuation accounts worth less than $500,000.

You can find out how much you have available in carry-forward concessional contributions by visiting the ATO portal via MyGov.

Make non-concessional (after-tax) contributions

Non-concessional contributions are after-tax personal contributions that can’t be claimed as a tax deduction. The non-concessional contributions limit is $110,000 per financial year.

Home downsizer contributions

This contribution of up to $300,000 per person doesn’t have an EOFY deadline. But you have to do it within 90 days of receiving the proceeds from the sale of your home. (Kaye notes that the ATO will allow for a longer period if there are circumstances beyond your control.)

The downsizer superannuation contribution is an option available to Australians aged 55 or older.

They must have sold a home they have owned and lived in for at least 10 years. If a couple owns the home, they can both contribute $300,000 to their superannuation funds.

The downsizer contribution is a non-concessional contribution but doesn’t count toward the non-concessional contributions annual cap.

Once again, there are forms to fill in, and you’ll find them here.

Spouse contributions

If your superannuation fund allows it, then ATO rules give couples the option to split up to 85% of their annual concessional contributions.

The maximum amount you can apply to split is the lesser of 85% of your concessional contributions for that financial year, or 85% of the concessional contributions cap for that financial year.

Find out how much superannuation you need for a comfortable retirement lifestyle in Australia today.

The post 5 ways to get more money into your superannuation by June 30 appeared first on The Motley Fool Australia.

More reading

• ResMed shares higher as company ‘turns the GLP threat into an opportunity’: Fundie
• 5 ASX 200 blue chip shares to buy now
• Here are the top 10 ASX 200 shares today
• Are Westpac shares good value or expensive?
• Want $150 in monthly passive income? Buy 656 shares of this ASX 200 stock

Motley Fool contributor Bronwyn Allen 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.

If you are wanting to add some ASX 200 blue chip shares to your portfolio in May, then the five shares listed below could be worth a closer look.

These ASX 200 shares have all been named as buys recently by analysts and tipped to rise from current levels.

Here’s what you need to know about them:

Brambles Limited (ASX: BXB)

Analysts at UBS think that Brambles could be an ASX 200 blue chip share to buy. It is a supply chain solutions company that specialises in reusable pallets, crates, and containers for shared use.

The broker was pleased with its stronger than expected first-half results in February and recent third quarter update. In response, the broker has put a buy rating on its shares with an improved price target of $17.30.

CSL Limited (ASX: CSL)

Another ASX 200 blue chip share that could be a buy is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses. These are leaders in their respective fields of blood plasma products, kidney therapies, and vaccines.

Analysts at UBS are bullish on the company. They have a buy rating and $330.00 price target on its shares.

Goodman Group (ASX: GMG)

Another ASX 200 blue-chip share that could be a buy for investors according to analysts is Goodman Group. It is a leading integrated commercial and industrial property company with a world class portfolio of in-demand assets.

Morgan Stanley is very positive on the company’s outlook, especially given its exposure to the artificial intelligence boom through its data centre pipeline. The broker currently has an overweight rating and $36.65 price target on its shares.

Transurban Group (ASX: TCL)

Bell Potter thinks that this toll road operator could be a top blue chip option for investors this month.

It highlights that “the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators.”

Bell Potter has a buy rating $15.90 price target on the company’s shares.

Treasury Wine Estates Ltd (ASX: TWE)

Finally, a fifth ASX 200 blue chip share that has been named as a buy is Treasury Wine. It is the wine giant behind popular brands including Penfolds, Wolf Blass, 19 Crimes, and Blossom Hill. It also recently acquired US-based DAOU Vineyards for $1.4 billion.

Morgans is a big fan of Treasury Wine and sees a lot of value in its shares at current levels. The broker currently has an add rating and $14.03 price target on its shares.

The post 5 ASX 200 blue chip shares to buy now appeared first on The Motley Fool Australia.

More reading

• Guess which ASX 200 co-founder just sold $33 million worth of company shares
• These are the 2 ‘best’ ASX 200 stocks to buy now for the AI megatrend: expert
• Forget term deposits and buy these ASX dividend shares
• Top brokers name 3 ASX shares to buy next week
• Goldman says these 6 ASX retail shares are a buying opportunity

Motley Fool contributor James Mickleboro has positions in CSL and Treasury Wine Estates. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, and Transurban Group. The Motley Fool Australia has recommended CSL, Goodman Group, and Treasury Wine Estates. 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.

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• Why ALS, OFX, Skycity, and TechnologyOne shares are surging today
• Is this why Qantas shares are racing ahead of the ASX 200 on Tuesday?
• The ASX 200 was almost hit by an RBA interest rate hike in May. Now what?
• ASX 200 tech stock lifts off on another record-setting half-year profit
• 5 things to watch on the ASX 200 on Tuesday

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 Audinate Group, Idp Education, Life360, and Technology One. The Motley Fool Australia has positions in and has recommended Audinate Group and Smartgroup. The Motley Fool Australia has recommended IPH, Idp Education, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Westpac Banking Corp (ASX: WBC) shares have been strong performers in 2024.

Since the start of the year, the banking giant’s shares have risen an impressive 18%.

Can its shares continue to rise or are they fully valued now? Let’s find out what analysts are saying.

Can Westpac shares deliver good returns?

Unfortunately, it seems that almost all brokers believe that the banking giant’s shares are fully valued now.

For example, a note out of Citi on Monday reveals that its analysts have retained their sell rating and $24.75 price target on the bank’s shares.

Despite Westpac being the broker’s favourite big four bank, it is still predicting its shares to fall 8.5% from current levels.

Elsewhere, Macquarie currently has an underperform rating and $26.00 price target and Morgan Stanley has an underweight rating and $24.50 price target.

Why is nobody bullish?

The main reason for the bearish view on Westpac is the valuation of its shares. Together with a few niggling risks and analysts just don’t see a compelling risk/reward on offer with the big four bank right now.

Analysts at Goldman Sachs summarised this. They said:

We believe that low industry-wide RWA growth and WBC’s strong capital position, which even on a pro-forma basis is >12%, well above its 11.0-11.5% target ratio, underpins a sustainable payout ratio at the top of its 65-75% target range. However, against this, WBC’s technology simplification plan comes with a significant degree of execution risk, given historically banks’ large-scale transformation programs have struggled to stay on budget, and we are currently operating in a stickier-than-expected inflationary environment. Therefore, trading on a 12-mo forward PER of 14.5x (14.0x ex-dividend adjusted, which is one standard deviation above its 15-year historic average of 12.7x), we stay Neutral.

According to the note, the broker has a neutral rating and $24.10 price target on its shares. Based on the current Westpac share price, this implies potential downside of approximately 11% for investors over the next 12 months.

But that doesn’t include dividends. Goldman is forecasting fully franked dividends of $1.65 per share in FY 2024 and then $1.50 per share in FY 2025.

As its shares have already gone ex-dividend for its 90 cents per share interim dividend for FY 2024, this means that investors will receive a $1.50 per share over the next 12 months if buying today. This comprises a 75 cents per share final dividend for FY 2024 and then a 75 cents per share interim dividend for FY 2025. This equates to a 5.5% dividend yield, reducing the total 12-month potential loss from 11% to 5.5%.

Overall, investors should be able to find better returns elsewhere without much effort.

The post Are Westpac shares good value or expensive? appeared first on The Motley Fool Australia.

More reading

• Here’s when Westpac says the RBA will cut interest rates
• Here’s what Wilsons is saying about ANZ, CBA, NAB, and Westpac shares
• If I buy 1,000 Westpac shares, how much passive income will I receive?
• Here’s the Westpac dividend forecast through to 2027
• Top ASX shares to buy for your superannuation fund in May 2024

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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.

Call me eccentric, but I greatly enjoy running my slide rule over S&P/ASX 200 Index (ASX: XJO) stocks to uncover those passive income jewels.

In this process, I tend to stick to dividend stocks trading on the ASX 200. That’s because there’s usually more readily available information in the larger end of the market. And the bigger companies tend to be less volatile than their smaller peers.

It’s also worth screening for companies that offer fully franked dividends. This should enable me to hold onto more of that passive income at tax time.

And I prefer companies with long track records of making two (or more) annual payments, as well as those that have been growing their dividend payouts. This often bodes well for what to expect from their ongoing passive income stream.

Finally, we need to keep in mind that the yields we’re looking at are trailing yields. Future yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.

With that said, we move on to the big reveal.

Pumping $150 a month in passive income from this ASX 200 dividend jewel

The ASX 200 passive income jewel that’s at the top of my radar today is petroleum refiner and fuel distributor, Ampol Ltd (ASX: ALD).

Atop its dividend payouts, the Ampol share price has gained 13% over the past year, currently trading for $35.08 a share.

Although Ampol’s March quarterly update fell short of expectations, this was largely due to temporary refinery outages and disruptions to shipping in the Red Sea, both of which we hope won’t be repeated in the current quarter.

As for the full 2023 calendar year results, Ampol reported a 2% increase in earnings before interest and tax (EBIT) from 2022 – excluding significant items – to $1.30 billion.

And total sales volumes in 2023 soared 17% year on year to reach all-time highs of 28.4 billion litres.

Despite a 25% year on year drop in net profit after tax (NPAT) to $549 million, management declared a record final fully franked dividend of $1.80 a share. Eligible investors will have received that payout on 27 March.

This 16% increase in Ampol’s passive income is precisely the kind of dividend growth trend I look for, as mentioned up top.

Ampol shares also delivered a fully franked interim dividend of 95 cents per share on 27 September.

This sees the ASX 200 dividend jewel paying $2.75 a share over the past 12 months.

So, to pump $150 a month in passive income (or $1,800 a year) from Ampol shares I’d need to buy 655 shares today.

The post Want $150 in monthly passive income? Buy 656 shares of this ASX 200 stock appeared first on The Motley Fool Australia.

More reading

• Why Ampol, Endeavour, Northern Star, and Santos shares are falling today
• Why is this ASX 200 energy stock getting thumped by the market today?
• Own ASX mining shares? Experts say an upswing in commodity prices has begun
• This ASX 200 energy giant just signed an EV charging station deal with Stockland
• What a US$100 oil price would mean for ASX shares and petrol prices

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 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 Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is up another 0.3% following the S&P/ASX 200 Index (ASX: XJO) bank stock‘s update last week.

Today’s rise brings the gain over the last month to 12%, significantly outperforming the 2.5% gain for the ASX 200 over the same period.

The last five years have seen significant volatility for the Bendigo Bank share price, as seen on the chart below. Pleasingly, the stock price has just hit a four-year high of $11.04 during late trading on Tuesday. Is the bank entering a new phase of operating strength?

Investors liked the recent update for the ten months to 30 April 2024, with the Bendigo Bank share price up 10% since the update. The regional bank is scheduled to hold an investor day on 23 May 2024.

Trading update recap

Bendigo Bank reported cash earnings after tax of approximately $464 million for the financial year to date, down 2.3% from the previous year.

The net interest margin (NIM) in the financial year to date, after revenue-sharing arrangements, is 1.87%. Before the revenue share arrangement, the year to date NIM was 2.30%. Pleasingly for shareholders, the NIM in April 2024 was higher than the year to date average, possibly suggesting the FY25 NIM could be better than FY24.

Bendigo Bank also reported that its credit expenses remain at “low levels” across all its lending portfolios.

With the update, the Bendigo and Adelaide Bank CEO and managing director Marnie Baker said:

At our half year results in February we reiterated our commitment to managing the business for long term value. We have continued our focus on disciplined growth and prudent management of our costs.

Stronger margins led to upgrades

A number of brokers upgraded their forecasts for the ASX 200 bank stock after seeing that update.

UBS increased its cash earnings per share (EPS) estimates by 7.6%, 12.1%, and 11.1% for FY24, FY25, and FY26, respectively. This was due to the “notably higher net interest margin outlook.” The broker noted that competitive lending pressures and increasing funding costs continue to be offset by higher earnings on capital and deposits.

However, ongoing cost inflation and the ASX 200 bank stock’s investment in digitalisation led UBS to increase its operating expenditure expectations for Bendigo Bank.

How is Bendigo Bank delivering an improving NIM performance when other ASX bank shares are reporting margin compression? UBS said it was “maybe” down to three reasons:

1) the shorted duration of their capital hedge, 2) liquid asset unwind and 3) higher % of business originated through digital and prop channels. We would need more details on the sustainability of this performance, especially in the context of industry trends, but for now drive some of these changes into our NIM forecasts.

According to UBS’s numbers, the Bendigo Bank share price is now valued at 13.5x FY24’s estimated earnings.

Rating on Bendigo Bank shares

UBS increased its price target on the regional bank from $8 to $8.75, an increase of 9.4%.

However, the broker still rates the ASX 200 bank stock a sell because it’s trading 25% higher than its price target. Plus, the company is trading at “slightly above long-term historical averages” in terms of the price/earnings (P/E) ratio.

The post Guess which ASX 200 bank stock just hit a 4-year high? appeared first on The Motley Fool Australia.

More reading

• Why brokers just revised their outlook for these 4 top ASX All Ords shares
• Here are the top 10 ASX 200 shares today
• Why AIC Mines, Bendigo and Adelaide Bank, Patriot Battery Metals, and Vulcan Energy are racing higher today
• ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens

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

ASX lithium share prices remain volatile this year despite lithium commodity prices stabilising somewhat amid the ongoing surplus supply of lithium for electric vehicle (EV) battery manufacturers.

The lithium carbonate price began the year at US$13,384 per tonne. Today, it’s fetching US$14,579.48 per tonne, up 8.9% since January. The highest price it has reached this year is US$15,995 per tonne in March.

What’s happening with lithium prices?

Trading Economics says the EV industry is still working through battery gluts across the supply chain.

However, Chinese lithium producers have continued to expand capacity and look for new reserves, which has raised expectations of continuing surplus supplies.

According to Trading Economics:

… hopes that the market will eventually balance out drove Chile [to] set plans to double output for the world’s second-largest producer over the next decade.

Such developments follow cuts in battery prices as EV producers continued to take advantage of high inventories of input materials and finished product from extensive subsidies from Beijing in 2022.

Top broker Goldman Sachs predicts that lithium prices will not bottom till 2025.

For example, the broker thinks the carbonate price will average US$11,106 per tonne in 2024, down from an average of US$32,694 in 2023. It tips a further weakening to an average of US$11,000 per tonne in 2025.

Goldman says lithium prices will turn around in 2026, with the average rising to US$13,323 per tonne and then reaching US$15,646 per tonne in 2027.

With all of this in the background, Goldman Sachs recommends the following action on these two ASX lithium shares.

Which ASX lithium share is a buy?

Goldman has a buy rating on ASX lithium and nickel share IGO Ltd (ASX: IGO) and a 12-month share price target of $8.10.

The IGO share price is currently $7.87, down 2.11% on Tuesday and down 47.1% over the past 12 months.

Goldman analyst Hugo Nicolaci said:

We rate IGO as Buy, where on valuation IGO is trading on 0.95x net asset value (NAV) and pricing ~US$1,100/t spodumene, at a discount to peers (~1.2x NAV and ~US$1,300/t), with near-term FCF yields remaining >5% and attractive vs. peers (<0% on average) and supporting ahead of peer returns.

The broker noted that IGO’s Greenbushes mine is the lowest-cost lithium asset among the ASX lithium shares it monitors. It says production growth more than offsets the increasing strip ratio.

IGO owns 49% of Greenbushes and joint venture partner Tianqi Lithium Corp owns 51%.

The broker said IGO’s nickel business would likely decline without further developments or mergers and acquisitions activity.

The broker added:

We expect largely continued growth in net cash, with liquidity stable above the A$1bn threshold for excess capital management payouts from 2H FY25.

Why is this lithium stock a sell?

Goldman has a sell rating on ASX lithium junior Core Lithium Ltd (ASX: CXO) with a share price target of 11 cents. The Core Lithium share price is 15 cents, down 1.94% now and down 86% over the past year.

Nicolaci said the broker rated Core Lithium shares a sell for three main reasons.

The first is valuation, with Core Lithium looking “relatively expensive” trading at a premium of about 1.1x its NAV and an implied LT spodumene price of about US$1,200 per tonne. This compares to a peer average of about 1.05x NAV and about US$1,250 per tonne.

The second is ongoing risks to the timing of its production restart and the lesser likelihood of funding its BP33 exploration from cash flow due to weak declining lithium prices.

Lastly, the broker noted that further exploration activities underway may result in an expanded resource base. However, the development of any discoveries is likely a ways off.

The post Buy one, sell the other: Goldman’s verdict on these 2 ASX lithium shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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.