Tag: Fool

Given the topic, let’s try to keep this article as light-hearted as possible. Let’s assume that one day, out of the blue, you get a call from a lawyer telling you that your mysterious great aunt Holga recently passed away at the ripe old age of 106. You can only remember meeting Holga once – on a family trip to Dusseldorf when you were still a toddler – but you must have made a good impression, because she decided to leave you all her worldly possessions, including a significant sum of money.

Sure, you feel sad for poor old Holga, but she had a good run. And so, before long, your thoughts turn to how you should spend this sum of money. It could set you up for the future – and might even allow you to retire early!

But you’ve never had so much money before, and it’s hard to work out where to start. Should you invest it all in stocks? Should you use it to pay off your debts? Should you blow it all at the casino?

In this article, we take a look at some of the most prudent ways you can use your surprise cash injection. After all, it’s what Holga would have wanted.

Pay off your debts

The first thing you should do – before you even think about investing your inheritance on the ASX – is pay off as much of your outstanding debts as possible. Debt is the finance universe’s equivalent of a black hole. It sucks all your cash into oblivion and significantly diminishes your ability to grow your wealth.

Trust me – although it might sound a bit boring, the best thing you can do if you come into a significant amount of money is to use it to wipe out your debt. It will be a huge weight off your mind, and a first step towards financial freedom.

Set aside an emergency fund

The second-best thing you can do (after getting rid of your debts) is to set aside an emergency fund. This is an amount of money you squirrel away to use in case something unfortunate happens – like you suddenly lose your job, have to pay a medical bill or have some other large, unexpected expense crop up.

Advice differs on how much you need to put into your emergency fund, but enough to cover between 3 and 6 months of expenses is a good rule of thumb. Ensure your emergency fund is somewhere you can access quickly and easily, like a high-interest savings account. Don’t invest it in shares or other at-risk assets, because if you need that money in a hurry and those investments have lost some of their value, you’ll be forced to sell them for a loss.

Income or growth?

OK, now that we’ve got the boring things out of the way, it’s time to use whatever cash you have left to build a portfolio. But what sort of portfolio do you want to build?

You may decide to use your portfolio to supplement your income. In that case, you should build a portfolio weighted towards blue-chip stocks with stable valuations and consistently high dividends.

Good places to start would be leading Aussie bank Commonwealth Bank of Australia (ASX: CBA), mining giant BHP Group Ltd (ASX: BHP), or a favourite of mine, investment house Washington H Soul Pattinson & Company (ASX: SOL). A portfolio made up of just these stocks would pay you a dividend yield of about 4%, meaning you can expect an annual dividend income of $4,000 for every $100,000 invested.

Alternatively, you can park some of your money in a dividend exchange-traded fund (ETF) like the Vanguard Australian Shares High Yield ETF (ASX: VHY). This fund invests in a diversified portfolio of 71 ASX large-cap high-dividend stocks, including CBA and BHP, as well as diversified conglomerate Wesfarmers Ltd (ASX: WES) and telco Telstra Group Ltd (ASX: TLS), among many others. Its dividend yield is a little over 5% and charges an annual management fee of 0.25%.   

If you’d rather target growth there are plenty of great options on the ASX. I believe tech market darling WiseTech Global Ltd (ASX: WTC) is a good stock to watch, as is cancer drug company Telix Pharmaceuticals Ltd (ASX: TLX) and digital audio company Audinate Group Ltd (ASX: AD8). And a left-field choice to add to your watch list is Las Vegas-based gambling machine company Light & Wonder Inc (ASX: LNW).

There are also ETFs available for growth-oriented investors. The Betashares Diversified High Growth ETF (ASX: DHHF) provides exposure to a portfolio of about 8,000 global stocks with high growth potential – and charges an annual management fee of just 0.19%.

The post Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy) appeared first on The Motley Fool Australia.

More reading

• BHP share price slides amid no deal on ‘compelling opportunity’
• BHP shares on watch after new $64b Anglo American takeover offer rejected
• 5 things to watch on the ASX 200 on Tuesday
• 4 founder-led ASX 300 shares that have helped this fund outperform
• 3 ASX shares at 52-week lows or worse

Motley Fool contributor Rhys Brock has positions in Audinate Group, Commonwealth Bank Of Australia, and WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Audinate Group, Light & Wonder, Telix Pharmaceuticals, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Audinate Group, Washington H. Soul Pattinson and Company Limited, Wesfarmers, and WiseTech Global. The Motley Fool Australia has recommended Light & Wonder, Telix Pharmaceuticals, 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 BHP Group Ltd (ASX: BHP) share price is in the red today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $43.25. In morning trade on Tuesday, shares are swapping hands for $43.07 apiece, down 0.4%.

For some context, the ASX 200 is down 0.1% at this same time.

This comes as investors digest the news that BHP returned with an improved takeover offer for Anglo American (LSE: AAL) last week. And that the sweetened offer was rejected by Anglo American’s board overnight.

Here’s what’s happening.

BHP share price slips as sweetened takeover deal rebuffed

As a quick recap, BHP announced it had made a non-binding offer to acquire Anglo American on 26 April for an all scrip offer valued at approximately AU$60 billion.

Interestingly, the BHP share price closed down 4.6% on the day.

BHP is looking to expand its copper footprint. And copper represents 30% of Anglo American’s total production. If BHP were to acquire Anglo, it would become the world’s top copper producer.

Anglo American’s board rejected BHP’s offer on 29 April, with chairman Stuart Chambers saying the bid significantly undervalued the company and its growth potential.

Which brings us to the improved offer from BHP, which values the copper miner at 34 billion pounds (AU$64 billion).

But the Anglo board clearly feels this remains too little.

Commenting on the improved takeover offer, Chambers said, “The latest proposal from BHP again fails to recognise the value inherent in Anglo American.”

Mike Henry responds

This morning BHP responded to the rejection of its improved offer, stating, “BHP continues to believe that a combination of the two businesses would deliver significant value for all shareholders.”

Commenting on the rejection that’s seeing the BHP share price dip this morning, CEO Mike Henry said, “BHP put forward a revised proposal to the Anglo American Board that we strongly believe would be a win-win for BHP and Anglo American shareholders. We are disappointed that this second proposal has been rejected.”

Henry added:

BHP and Anglo American are a strategic fit and the combination is a unique and compelling opportunity to unlock significant synergies by bringing together two highly complementary, world class businesses.

The combined business would have a leading portfolio of high-quality assets in copper, potash, iron ore and metallurgical coal and BHP would bring its track record of operational excellence to maximise returns from these high-quality assets…

The combination is consistent with BHP’s strategy and the revised proposal is underpinned by a focus on delivering long term fundamental value.

The BHP share price is down 15% so far in 2024.

The post BHP share price slides amid no deal on ‘compelling opportunity’ appeared first on The Motley Fool Australia.

More reading

• BHP shares on watch after new $64b Anglo American takeover offer rejected
• 5 things to watch on the ASX 200 on Tuesday
• 4 founder-led ASX 300 shares that have helped this fund outperform
• ASX 200 banks vs. mining stocks: Which is the better buy today?
• 4 excellent ASX 200 dividend shares to buy for your income portfolio

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.

ASX growth shares aren’t known for their dividends, but I’m going to tell you how growing businesses could become great options for passive income.

Investors may think of blue-chip names like ANZ Group Holdings Ltd (ASX: ANZ) and Rio Tinto Ltd (ASX: RIO) for income because of their high dividend yield. However, the dividends usually don’t grow at a strong compound annual growth rate (CAGR).

According to Commsec, in FY24, ANZ is predicted to pay a grossed-up dividend yield of 8.4% and Rio Tinto is predicted to pay a grossed-up dividend yield of 7.5%.

I will show you how smaller, growing businesses can become very compelling picks for big dividends. However, keep in mind that not every growth stock turns into a major dividend success.

The strength of compounding

The dividends of some ASX large-cap shares have gone sideways, or even downward over the past decade. At the current share price, the 2014 payout from ANZ represents a grossed-up dividend yield of 9%. It’s lower now than it was then.

There are a number of ASX growth shares that have grown their dividends substantially over the past decade, such as TechnologyOne Ltd (ASX: TNE), REA Group Limited (ASX: REA), Lovisa Holdings Ltd (ASX: LOV) and Johns Lyng Group Ltd (ASX: JLG). It’s thanks to the power of their compounding.

Profits generated pay for dividends. If a business can grow its profit, then the dividend can grow too, assuming the company maintains (or increases) its dividend payout ratio.

Smaller ASX growth shares are capable of scaling their profit significantly over the long term, particularly if they expand overseas. If the dividend keeps growing at the same pace as profit, the dividend payout can eventually become impressive on that original cost base.

The TechnologyOne dividend payout per share increased by around 250% between FY13 and FY23. The FY23 payout represents a grossed-up dividend yield of around 17% compared to the TechnologyOne share price at the start of 2013.

The REA Group dividend payout per share has increased by approximately 200% comparing the last 12 months of dividends to the FY14 payout. The last two dividends from REA Group represent a grossed-up dividend yield of over 13% compared to the REA Group share price at the start of 2013.

And there has been excellent capital growth by these two stocks in that time.

Lovisa and Johns Lyng haven’t been paying dividends as long as TechnologyOne and REA Group, but they already have an impressive longer-term growth history. I’m backing them for longer-term success.

Where I’d invest for long-term dividend growth

I wouldn’t pick TechnologyOne and REA Group today for long-term dividends – their valuations are much higher today than a decade ago, and the profit growth rate will probably be slower because it’s harder to keep growing at a fast pace the bigger a business becomes.

I’m a fan of the international growth outlooks of both Lovisa and Johns Lyng (and I’m a shareholder in both). In a decade from now, I think their payouts could be a lot bigger, particularly if they can both execute well on the US growth plans.

Other dividend payers I’d keep my eye on include Collins Foods Ltd (ASX: CKF), Corporate Travel Management Ltd (ASX: CTD) and Step One Clothing Ltd (ASX: STP).

The post How ASX growth shares can become top dividend stocks appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares I’d buy for instant diversification
• Here’s the ANZ dividend forecast through to 2026
• What are 3 of the safest ASX 200 tech shares in Australia right now?
• Why ANZ, Fletcher Building, Macquarie, and Sayona Mining shares are dropping today
• 2 top ASX growth shares I’d buy today

Motley Fool contributor Tristan Harrison has positions in Collins Foods, Johns Lyng Group, and Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Corporate Travel Management, Johns Lyng Group, Lovisa, REA Group, and Technology One. The Motley Fool Australia has positions in and has recommended Corporate Travel Management. The Motley Fool Australia has recommended Collins Foods, Johns Lyng Group, Lovisa, REA Group, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Owning ASX dividend shares can be a very rewarding experience – receiving cash every year for very little effort sounds like a good life.

A big dividend yield alone is not enough; in my opinion, there should also be a good chance of long-term dividend growth. That’s because it’s useful to protect against inflation so the value of the dividend dollars isn’t being eroded. Plus, if the dividend is growing then it’s obviously not being cut. Dividend stability is usually an important factor to me.

Dividend growth is not guaranteed (in FY24 or any year), but over the long term, I think these two ASX dividend shares are good options for big yields.

Universal Store Holdings Ltd (ASX: UNI)

This retailing business owns a number of premium youth fashion brands, including Universal Store, THRILLS, Worship and Perfect Stranger. It currently operates 100 physical stores across Australia.

The business has been growing Perfect Stranger as a separate business rather than selling through Universal Store locations. In the FY24 first-half result, Perfect Stranger sales soared 59.7% to $6.6 million. In the HY24 period, the ASX share opened six new stores, with three new Perfect Stranger stores and two Universal Stores.

Universal Store has done a good job of growing its dividend every year since it first started paying one in 2021.

I think the ASX dividend share can keep growing the profit and dividend if its existing stores collectively deliver rising sales over time while opening new stores in good locations.

According to the estimate on Commsec, the business is projected to pay a grossed-up dividend yield of 6.6% in FY24 and 8.25% in FY26.

Metcash Ltd (ASX: MTS)

This business supplies a large number of independent stores around Australia including IGA, Foodland, Thirsty Camel, Cellarbrations, The Bottle-O, IGA Liquor, and Porters Liquor. It also owns a number of hardware businesses, including Mitre 10, Home Timber & Hardware, Total Tools and more.

Everyone needs to eat food, and lots of people drink liquor, so in my view, the business has a lot of defensive earnings built into it.

Australia’s population keeps growing which is a useful tailwind for the hardware earnings – it means more dwellings are needed, plus more potential hardware work in the future from DIY projects and renovations.

The ASX dividend share has used acquisitions to diversify and boost its earnings, with Total Tools, Superior Food (food distribution to businesses like restaurants), Bianco Construction Supplies and Alpine Truss being some of the latest deals.

It has a dividend payout ratio of 70% of underlying net profit after tax, which I think is a good balance between rewarding shareholders and retaining some profit to invest in the business.

According to Commsec, it could pay a grossed-up dividend yield of 7.4% in FY24 and 8.2% in FY26.

The post Get paid huge amounts of cash to own these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• How to choose ASX shares for passive income
• Telstra shares and 4 other defensive income stocks to buy now
• Almost ready to retire? I’d buy cheap ASX dividend shares for income
• This ASX 200 stock gained in April while the market sank 3%. Is it a buy?
• 5 ASX dividend shares to buy next week

Motley Fool contributor Tristan Harrison has positions in Metcash. 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 recommended Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If we look at the ASX share market, around half of the weighting consists of ASX bank shares and ASX mining shares. Therefore, I think it could be a good idea to diversify by investing in different industries.

Ideally, we want to choose investments that can diversify and grow. I don’t think investing in something with a high chance of not delivering any long-term growth is ideal. Hence, that’s why I like the potential of the below three ASX shares.

Propel Funeral Partners Ltd (ASX: PFP)

Propel is the second-largest funeral operator in Australia and New Zealand. It’s a morbid industry, but it’s a necessary service. Indeed, as the saying goes, there are two things certain in life – death and taxes.

The company describes how a “death boom” is expected in the next two decades. The number of deaths in Australia is expected to grow at a compound annual growth rate (CAGR) of 2.5% between 2024 to 2030 and then 2.9% between 2031 to 2040.

Propel’s average revenue per funeral continues to grow – in the first half of FY24, it saw a 4.5% year-over-year increase, driven by inflation. The average revenue per funeral has increased every year since FY14, at a CAGR of around 3.1%.

Revenue is growing at a fast rate organically, and the company is also regularly making acquisitions to expand geographically.

HY24 revenue was up 22.8% and operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased 18.5%.

In the long-term, this business could make stronger profits with Australia’s growing and ageing population.

Corporate Travel Management Ltd (ASX: CTD)

This ASX share describes itself as a leader in business travel management services in Australia, New Zealand and beyond. It also has a presence in North America, Asia and Europe.

It has done a good job of growing its market share over the years, partly due to its very high client retention rate of 97%. The return of travel after COVID-19 has been very beneficial for its earnings.

The business has a goal of delivering revenue growth of at least 10% per annum over the next five years, partly by winning new clients. Any acquisitions would be an extra. It’s aiming to grow its EBITDA by an average of 15% per annum in the next five years.

Corporate Travel Management is aiming to maintain a 50% dividend payout ratio, invest in high-performing projects, use excess cash for share buybacks, and make acquisitions.

According to Commsec, the Corporate Travel Management share price is valued at under 13x FY26’s estimated earnings.

VanEck MSCI International Quality ETF (ASX: QUAL)

This ASX exchange-traded fund (ETF) is all about investing in high-quality global shares that score well on a few different quality metrics – high return on equity (ROE), earnings stability and low financial leverage. When you combine those metrics, you’re left with a group of strong businesses.

In total, this fund is invested in 300 businesses, so that’s more diversification (in terms of the number of stocks) than the S&P/ASX 200 Index (ASX: XJO).

Banking and mining make up half of the ASX but account for less than 10% of this fund. Instead, it has large allocations to stocks like Nvidia, Microsoft, Meta Platforms, Apple, Eli Lilly, Alphabet, Novo Nordisk and Visa.

The QUAL ETF has performed well over the long term, and I’m optimistic it can beat the ASX 200 share index over time because of the screening process for quality.

The post 3 ASX shares I’d buy for instant diversification appeared first on The Motley Fool Australia.

More reading

• Both of these excellent ASX ETFs are on my buy list
• 2 cheap ASX 200 shares I’d buy for growth and dividends
• These are my top ASX 200 share picks for growth right now
• 3 ASX ETFs I’d buy to try to become a millionaire
• 5 oversold ASX shares to buy in April 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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 Alphabet, Apple, Corporate Travel Management, Meta Platforms, Microsoft, Nvidia, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Novo Nordisk and 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 Corporate Travel Management. The Motley Fool Australia has recommended Alphabet, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I love owning good investments in my portfolio. There are great ASX shares, but there are plenty of compelling businesses outside of the ASX too. My portfolio is quite focused on ASX shares because that’s where I spend my time researching.

But it’d be good for me to get more diversification without necessarily reducing my returns. That’s where exchange-traded funds (ETFs) come in. Good ETFs can provide diversification as well as solid returns.

The two ETFs I’m going to discuss below offer quality and exposure to different industries that largely aren’t available in Australia.

VanEck MSCI International Quality ETF (ASX: QUAL)

The QUAL ETF owns a portfolio of 300 global businesses that rank well on quality metrics.

Compared to the ASX, which is weighted to ASX bank shares and ASX mining shares, which largely make their profit in Australia (and New Zealand), this ASX ETF offers a much better spread of investments.

It does have the biggest weighting to IT (with a 33.8% allocation), which I think is a good thing because that’s usually where good returns can often be found due to the strong economics of software. Four other sectors have a weighting of more than 9%  – healthcare (18.2%), industrials (12.7%), communication services (10.2%) and consumer staples (9.3%).

Geographic diversification is also good. The portfolio includes several countries with a weighting of more than 1%, including the US (75.2%), Switzerland (5%), the UK (3.7%), Denmark (3.2%), Japan (3%), the Netherlands (3%), France (2%), and Canada (1.1%).

But, I don’t just want diversification for the sake of it if it were to reduce my returns materially. This ASX ETF only invests in businesses that score well on having a high return on equity (ROE), earnings stability, and low financial leverage.

In other words, it makes good profit for shareholders, the profit doesn’t usually experience sizeable declines, and the balance sheet is in good shape.

Past performance is not a guarantee of future performance, but the quality focus has led the QUAL ETF to deliver an average return per annum of 14.9% over the three years to April 2024.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

Morningstar analysts choose the MOAT ETF’s portfolio, which looks at US companies with strong and durable economic moats or competitive advantages.

Competitive advantages can come in many different forms, such as patents, brand power, network effects, cost advantages and switching costs. This ASX ETF is targeting businesses where the competitive advantage is expected to almost certainly endure for the next decade or two.

There’s quite a mixture of different businesses at the top of the holdings, including Alphabet, International Flavors & Fragrances, Teradyne and Rtx (which have a weighting of between 3.1% and 2.9%). The smallest position in the portfolio has a weighting of 1%.

The sector allocation within this ASX ETF can change as the investments shift, but at the moment, there are five industries with a double-digit weighting – healthcare (20.8%), industrials (17.9%), IT (15%), financials (14.3%) and consumer staples (11.6%). I like the mixture of businesses here.

Since its inception in June 2015, the MOAT ETF has delivered an average annual return of 15.6%.

I think both ASX ETFs can play a good part in my portfolio, and there’s a good chance I’ll own at least one of them by the end of 2024.

The post Both of these excellent ASX ETFs are on my buy list appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares I’d buy for instant diversification
• How much money should I put in one ASX ETF?
• 5 excellent ASX ETFs to buy next week
• Top ASX shares to buy for your superannuation fund in May 2024
• Does the VanEck Wide Moat ETF pay a decent ASX dividend?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended RTX and Teradyne. The Motley Fool Australia has recommended Alphabet and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Woodside Energy Group Ltd (ASX: WDS) share price has drifted around 10% lower this year to date, continuing its slide from last year and hitting 52-week lows earlier this month.

Meanwhile, the broader S&P/ASX 200 Energy Index (ASX: XEJ) is down just 1.8% so far this year.

But, as Warren Buffett says, “price is what you pay – value is what you get“.

So, is the Woodside share price attractively valued, or not?

What impacts Woodside’s valuation?

Woodside produces oil and gas. That means it does not have the luxury of setting its prices. Instead, it must accept the current market price for oil and gas. It is a “price taker”.

Brent crude oil currently trades at around US$83 per barrel, down from the highs above $90 per barrel seen early last month.

Oil prices have cooled since April on the prospect of even higher interest rates, “which could dampen growth and hit fuel demand in the world’s top oil consumer [the USA]”, per Trading Economics.

Analysts at Morgans, however, don’t see this as a headwind for the Woodside share price. The broker is bullish on the oil and gas giant’s stock and sees the decline in oil prices as “moderating”.

If oil prices do, in fact, remain stable, the broker sees the current Woodside share price “as a good time to add” and targets $36 per share for the energy player in the next 12 months.

Should this target price materialise, a $10,000 investment in Woodside shares today would be valued at around $12,700 – a 27% return, not including dividends.

Is the Woodside share price overvalued?

The company’s shares currently sell at a price-to-earnings (P/E) ratio of 21.6 times. That means, investors are paying $21.60 for every $1 of the company’s profits.

For this, Morgans expects the company to pay dividends of $1.25 per share in FY 2024 – a forward dividend yield of around 4.5% as I write.

Meanwhile, competitors Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG) trade at P/E multiples of around 12 times and 11 times respectively.

Okay, so we know investors are paying a higher price for Woodside shares than their peers relative to the earnings of the respective businesses.

Why would this be so? Does it mean Woodside is overvalued?

Morgans doesn’t think so. The broker says Woodside has “a healthy balance sheet and healthy dividend profile” as two factors in the value equation.

Its price target of $36 per share implies a P/E multiple of around 41 times Woodside’s last reported earnings per share of $0.87.

The broker ultimately believes the Woodside share price is undervalued. Time will tell.

The post Is the Woodside share price at a stretched valuation right now? appeared first on The Motley Fool Australia.

More reading

• ASX 200 energy shares slip as cracks appear in OPEC unity
• Guess which ASX energy shares are buys and could deliver huge 12-month returns
• 5 things to watch on the ASX 200 on Monday
• Here’s how the ASX 200 market sectors stacked up last week
• Morgans names the best ASX dividend shares to buy in May

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.

Looking for some exposure to the tech sector? Then read on!

That’s because two high-quality ASX 200 tech stocks have recently been tipped as buys by top brokers.

Here’s what they are saying about these rapidly growing companies:

Life360 Inc (ASX: 360)

This location technology company’s shares are trading within touching distance of a record high.

Investors have been scrambling to buy the Life360 app owner’s shares after its sales growth went into overdrive. This has been underpinned by the company’s enormous global monthly active users (MAU). They increased by 4.9 million during the first quarter to 66.4 million.

This growth impressed analysts at Bell Potter. In response, the broker retained its buy rating and boosted its price target to $17.75. This implies potential upside of 15% over the next 12 months. The broker commented:

We have increased the multiple we apply in the EV/Revenue valuation from 5.5x to 6.5x given the proposed US listing and potential re-rating of the stock given the higher multiples of comps like Reddit (NYSE: RDDT). There is, however, no change in the 9.3% WACC we apply in the DCF. The net result is a 9% increase in our PT to $17.75 which is >15% premium to the share price so we maintain our BUY recommendation. Key potential catalysts for the stock include another strong quarter of paying circle growth in Q2 (April was another good month), a potential upgrade to the 2024 guidance sometime in H2 and a US listing at some stage in the next 12 months.

Xero Ltd (ASX: XRO)

Another ASX 200 tech stock that is highly rated by brokers is Xero. It is a fast-growing cloud accounting platform provider.

Much like Life360, it has a very large user base. At the last count, the company had 3.95 million subscribers using its core accounting, payroll, workforce management, expenses, and projects solutions.

However, this is only a fraction of its addressable market, which gives Xero a multi-decade runway for growth. It is for this reason that Goldman Sachs currently has a conviction buy rating and $156.00 price target on its shares. It said:

Xero is a Global Cloud Accounting SaaS player, with existing focuses in ANZ, UK, North American and SE Asian markets. We see Xero as very well-placed to take advantage of the digitisation of SMBs globally, driven by compelling efficiency benefits and regulatory tailwinds, with >100mn SMBs worldwide representing a >NZ$100bn TAM. Given the company’s pivot to profitable growth and corresponding faster earnings ramp, we see an attractive entry point into a global growth story with Xero our preferred large-cap technology name in ANZ – we are Buy rated (on CL).

The post Brokers name 2 rapidly growing ASX 200 tech stocks to buy appeared first on The Motley Fool Australia.

More reading

• What are 3 of the safest ASX 200 tech shares in Australia right now?
• Leading brokers name 3 ASX shares to buy today
• Why Bellevue Gold, IPH, Life360, and Ramelius Resources shares are racing higher
• Why Cettire, De Grey Mining, Life360, and Neuren shares are falling today
• Why is the Life360 share price sinking 9% today?

Motley Fool contributor James Mickleboro has positions in Life360 and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Life360, and 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.

Over the last five years, Pilbara Minerals Ltd (ASX: PLS) shares have been among the best performers on the Australian share market.

During this time, the lithium miner’s shares have absolutely smashed the market with a stunning gain of 458%.

This means that if you had invested $10,000 into the company’s shares back then, your investment would be worth over $55,000 today.

This has been driven by the company’s emergence as one of the leading players in the lithium industry thanks to its 100% owned, world class Pilgangoora Lithium-Tantalum Project, which is located approximately 120 kilometres from Port Hedland in the Pilbara region of Western Australia.

But those returns have been and gone. What could happen if you were to invest $10,000 into Pilbara Minerals shares today?

Let’s see what analysts are forecasting for the lithium miner over the next 12 months.

$10,000 invested in Pilbara Minerals shares

The company’s shares are currently changing hands for $4.08. This means that with $10,000 (and 8 cents more) to invest, you could pick up 2,451 units.

Unfortunately, finding an analyst that is bullish on this miner is difficult right now due to the bleak outlook for lithium prices.

In fact, the most bullish broker out there appears to be Macquarie with its neutral rating and $4.20 price target.

If the Pilbara Minerals share price were to rise to that level, it would value those 2,451 units at $10,294.20.

That’s not exactly a compelling return and arguably doesn’t justify the risks involved in investing in the lithium industry.

But things could be much worse.

The bear predicting big declines

According to a recent note out of Goldman Sachs, its analysts have a sell rating and $2.80 price target on the company’s shares.

If Pilbara Minerals’ shares were to fall to that level, your investment would have a market value of $6,862.80. That’s over $3,000 less than you paid.

Goldman explains that it thinks the company’s shares are expensive based on its lithium price forecasts (which have been very accurate over the last 18 months). It said:

We see PLS’ net cash declining to ~A$0.8-0.9bn (though still a relatively strong position vs. some peers and defensive into a declining lithium price), where with the stock trading at ~1.2x NAV (peer average ~1.05x), or pricing ~US$1,300/t spodumene (including a nominal value of A$1.1bn for growth) vs. peers at ~US$1,210/t (lithium pure-plays ~US$1,110/t; GSe US$1,150/t LT real), we see PLS as relatively expensive on fundamentals.

Overall, based on the above, it may be best to sit tight and wait for a better entry point.

The post How much could a $10,000 investment in Pilbara Minerals shares be worth in 12 months? appeared first on The Motley Fool Australia.

More reading

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• Why these ASX mining shares have ‘got some huge advantages’: Chalmers
• These are the 10 most shorted ASX shares
• Forget Pilbara Minerals and buy this ASX 200 lithium stock instead
• Why Pilbara Minerals shares are a buy for this lithium short seller

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.

ANZ Group Holdings Ltd (ASX: ANZ) shares are a popular option for income investors.

Each year, the banking giant rewards its shareholders with two dividend payments.

The most recent was announced last week when the big four bank released its half year results.

As a reminder, ANZ reported cash earnings of $3,552 million for the six months. This represents a 1% decline compared to the second half of FY 2023.

Management advised that this reflects a difficult half for the Australia Retail business, which reported a 9% decline in cash earnings to $794 million. This offset a strong performance from its key Institutional business, which delivered a 12% jump in cash earnings to $1,522 million.

Fortunately for shareholders, this modest earnings decline didn’t stop the ANZ board from increasing its dividend. It lifted its 65% franked interim dividend by 2 cents per share year on year to 83 cents per share.

Unfortunately for non-shareholders, ANZ’s shares traded ex-dividend for this payout on Monday. This means that the rights to this dividend are now settled and so it is too late to receive this on pay day (1 July) if you were not on its share register at Friday’s close.

But don’t worry, because ANZ will be announcing its next dividend in six months when it releases its full year results.

But what will be the amount of that dividend? Let’s see what analysts are now predicting from the banking giant after running the rule over last week’s results.

ANZ dividend forecast

According to a note out of Goldman Sachs, its analysts have boosted their dividend forecasts in response to its results.

The broker is now expecting ANZ to pay total dividends of $1.66 per share in FY 2024. This is an increase from its previous forecast of $1.62 per share. Based on the latest ANZ share price of $28.21, this will mean a 5.9% partially franked dividend yield for investors.

In FY 2025, Goldman has also lifted its dividend forecast from $1.62 per share to $1.66 per share. This will mean another attractive partially franked 5.9% dividend yield for shareholders to look forward to receiving.

And if you’re a fan of consistency (and big yields), you will be pleased to know that Goldman expects a third year in a row of $1.66 per share partially franked dividends in FY 2026. This will mean yet another 5.9% dividend yield for investors.

Overall, the broker appears to believe that the big yields are here to stay, which is likely to be supportive of the ANZ share price during the forecast period.

The post Here’s the ANZ dividend forecast through to 2026 appeared first on The Motley Fool Australia.

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• Should you buy ANZ shares before they trade ex-dividend next week?
• It was huge week for ASX 200 bank shares. Here’s why

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.