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Almost all of us would love the ability to quit work and rely on the passive income from ASX dividend shares to live. We might not want to stop working altogether. But merely having the option to work or not to work, safe in the knowledge that our dividends can cover all of our living expenses, is one that most Australians would relish.

But dreaming is the easy part. Plotting a viable pathway to financial independence is a little harder.

Hopefully, we can clear some of the fog from this path today with a look at how much cash you might need to quit work and live off of your dividend income for the rest of your days.

Well, there are quite a few variables we have to go through.

For one, we have to ask ourselves how much income we need to live off in order to give up our day jobs.

Some people might want to live lavish lifestyles after they stop working. These folks might want to travel the world and see the sights or host regular parties and gatherings for their friends and family.

Others might want to move to the country, buy a couple of chickens, plant a vegetable garden, and enjoy a simpler existence.

You’ll also need to consider other factors like whether you rent or, if you don’t, whether your mortgage is paid off.

Step one is working out how much money you will (not might) spend.

How much cash do you need to retire and live off ASX dividend income?

Step two involves assessing how much cash you have available to invest in a portfolio of income-producing ASX dividend shares.

Chances are you won’t want to (indeed, you shouldn’t) keep all of your net wealth tied up in shares, even if they are producing income for you. Keeping some of your wealth in cash for an emergency or rainy-day fund is important.

If you crash your car or have an expected medical bill in the depths of a stock market crash, you might be forced to sell your shares at the worst time possible. So make sure you take this into account as well.

But let’s get down to some numbers.

Here in Australia, our shares are well-known for their high dividend output. However, the level of cash you’ll need to invest will still vary from stock to stock. For instance, if you wish to bag $50,000 in annual dividend income from ANZ Group Ltd (ASX: ANZ) shares, you’ll need to invest approximately $825,000.

But to see that level of income from WiseTech Global Ltd (ASX: WTC) stock, you’ll have to invest more than $31 million.

Crunching the numbers on an early retirement

For simplicity’s sake, we’ll assume our would-be retiree buys a portfolio of generous ASX dividend payers that yields a collective 4%.

Some famous ASX dividend payers, like ANZ, Transurban Group (ASX: TCL) and Telstra Group Ltd (ASX: TLS), currently pay more than 4%. And some, like Woolworths Group Ltd (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA), pay less right now. But for an average, 4% arguably makes sense.

Harking back to our two lifestyles above, we’ll assume the person wanting to retire and maintain a lavish lifestyle would want $150,000 in annual income from their ASX dividend shares.

We’ll also assume that our more modestly inclined would-be retiree would be content with an annual salary of $75,000.

If one wishes to bag $150,000 in annual dividend income at a yield of 4%, they would need to aim for an ASX share portfolio worth $3.75 million.

For that $75,000 annual income, the figure one should aim for is $1.875 million.

Fortunately, dividends tend to rise over time, so we hopefully won’t have to worry about this annual income keeping up with inflation.

But this exercise just goes to show that building enough wealth to fund an early retirement is no easy feat, even if you are aiming for a modest early retirement. But with enough time and discipline, it is more than possible for most of us.

The post How much cash do you need to quit work and live off ASX dividend income? appeared first on The Motley Fool Australia.

More reading

• Are ASX 200 bank shares too expensive to buy right now?
• Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today
• Telstra share price lifts off alongside its mobile pricing plans
• 2 ASX shares to buy for a retirement portfolio in FY25
• Are Macquarie or CBA shares a better buy?

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group and WiseTech Global. The Motley Fool Australia has positions in and has recommended Telstra Group and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investors that have a high tolerance for risk, may want to check out the speculative ASX stock in this article.

That’s because one leading broker believes this risky investment could triple in value from current levels.

Which speculative ASX stock could triple in value?

The stock in question is Meteoric Resources NL (ASX: MEI).

At present, its shares are being anything but meteoric. In afternoon trade, they are down 16% to 13 cents.

This means that the rare earths developer’s shares are now down a sizeable 28% since the end of last week. This has been driven by the release of the scoping study results for the Caldeira ion-adsorption clay rare earth project in Brazil.

While this is disappointing, analysts at Bell Potter think it could have created a buying opportunity for investors that are willing to take the risk.

Commenting on the scoping study, the broker said:

MEI have released the results of its scoping study (SS) on the Caldeira ion-adsorption clay rare earth project in Minas Gerais. The SS outlined a post-tax NPV8% of US$699m with Capex of US$297m (excluding $104m contingency) and operating costs of US$7/kg TREO on a basket price of US$45/kg (US$20/kg at spot) less payability discounts of ~30% provides an achieved price of US$31 (spot US$14/kg). On this basis, The Caldeira project makes a ~50% operating margin at spot before accounting for royalties (4.75% Togni Family & 2% Government) and transport costs. We have updated our model to incorporate the new information and provided some first-pass commentary.

And while its capital costs are higher than Bell Potter was expecting, this hasn’t been enough to put off its analysts. In response to the update, it has retained its speculative buy rating on the ASX stock with a reduced price target of 40 cents (from 50 cents). This implies potential upside of 207% from current levels. The broker concludes:

The results confirm the Caldeira project is of superior quality, with the ability to operate through all stages of the pricing cycle. Critical path items for the business now shift towards the permitting phase, with three distinct licences needed and an EIA prior to production commencement. Our valuation is reduced to $0.40/sh (previously $0.50/sh) in this note on the inclusion of higher capital costs and associated equity financing, and adjustments to our pricing formulas. At current levels MEI remains an attractive business and we retain our Spec Buy recommendation.

The post Broker says this speculative ASX stock could rise over 200% appeared first on The Motley Fool Australia.

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• Why Bowen Coking Coal, Clinuvel, Meteoric Resources, and Pilbara Minerals shares are falling
• Meet the speculative ASX stock that could rise 200%

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 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 Vanguard US Total Market Shares Index ETF (ASX: VTS) gives Aussie investors exposure to more than 3,700 United States stocks, including the Magnificent Seven and many small caps and micro caps.

And that was handy exposure in a year when US shares outperformed ASX shares by about 3:1.

The S&P 500 Index rose by 22.7%, and the tech-heavy NASDAQ Composite Index lifted 28.61% in FY24.

Here at home, the S&P/ASX 200 Index (ASX: XJO) rose by 7.83%.

So, how profitable was it to own the Vanguard US Total Market Shares Index ETF in FY24?

How profitable was ASX VTS for Aussie investors in FY24?

The ASX VTS exchange-traded fund (ETF) began FY24 at $329.34 per unit.

The ASX ETF reached a 52-week high of $408 per unit on the final trading day of FY24.

It closed out the financial year at $406.76 per unit. That’s a 23.51% uplift.

With ETFs, we need to take into account the fees we pay for their management. The ASX VTS has a management expense ratio (MER) of 0.03%, making it one of the 10 cheapest ASX ETFs on the market.

Back to our returns for FY24.

Let’s say you put $10,000 into the ASX VTS on 1 July 2023 at a price of $329.34 per unit.

That would have given you 30 units in ASX VTS.

The 23.51% uplift in value means your holdings are now worth $12,322.60.

But wait, there’s more!

What about dividends?

First of all, ETFs call dividends ‘distributions’, so let’s get the language right first.

In FY24, the ASX VTS paid four distributions to Aussie investors:

• On 24 July 2023, it paid $1.2077
• On 20 October 2023, it paid $1.2609
• On 24 January 2024, it paid $1.5212
• On 24 April 2024, it paid $1.4079.

Altogether, ASX VTS owners received $5.3977 per unit in distributions during FY24.

If you held 30 units, then you received a total of $161.931.

If we add that to our capital earnings of $2,322.60, we get a total return of $2,484.53 for FY24.

In percentage terms, that’s a return of just under 24.85% on your original $10,000 buy on 1 July 2023.

More about the ASX VTS

The ASX VTS seeks to track the performance of the CRSP US Total Market Index (NASDAQ: CRSPTM1) before fees.

And yes, before you ask, that index does include the Magnificent Seven stocks we are all obsessed with! They are Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta Platforms, and Tesla shares.

Other appealing US stocks are also in the mix. They include Warren Buffett’s Berkshire Hathaway and diabetes and obesity GLP-1 drug maker Eli Lilly And Co.

The post Here’s how profitable owning the Vanguard US Total Market Shares Index ETF was in FY24 appeared first on The Motley Fool Australia.

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• 3 things about Vanguard US Total Market Shares Index ETF (VTS) every smart investor knows
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• Last chance to secure the latest Vanguard US Total Market Shares Index ETF dividend
• Own the Vanguard US Total Market Shares Index ETF (VTS)? Here’s your 12-month ASX outlook
• Why the Vanguard US Total Market Shares Index ETF (VTS) is a top long-term buy

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Bronwyn Allen has positions in Vanguard Us Total Market Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, 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.

If you want to some exposure to the gold sector, then read on!

That’s because analysts at Goldman Sachs have picked out a number of ASX gold stocks that it currently rates as buys. Here are four:

Bellevue Gold Ltd (ASX: BGL)

The broker is a fan of Bellevue Gold and sees it as an ASX gold stock to buy. It has a buy rating and $2.20 price target on its shares. This suggests that its shares could rise 13.5% from current levels. It commented: “We note the recently proposed paste plant may add upside to consensus capex expectations (GSe ~A$50mn), though this supports increased underground resource recovery, where the commenced study for expansion to ~1.5Mtpa/250kozpa is expected 1HFY25.”

De Grey Mining Limited (ASX: DEG)

This morning, Goldman has a retained its buy rating on this gold developer’s shares with a trimmed price target of $1.35. This implies potential upside of 16% for investors over the next 12 months. It was pleased with the company’s receipt funding update, noting that it is “expected to fully fund the development cost of the Hemi Gold Project.”

Evolution Mining Ltd (ASX: EVN)

Another ASX gold stock that Goldman is positive on is Evolution Mining. This morning, it has reiterated its buy rating and $4.15 price target on its shares. This suggests that upside of 12% is possible from current levels. Ahead of the release of its quarterly update, the broker said: “Following the production update in mid-June, we expect FY24 production to be in-line with implied guidance of ~723koz. With reduced uncertainty over the medium-term, particularly following Northparkes/Cowal site visits, our expectations for ~750koz/75kt of gold/copper production appear consistent with market expectations.”

Gold Road Resources Ltd (ASX: GOR)

A fourth ASX gold stock that could be a buy according to Goldman Sachs is Gold Road Resources. It has retained its buy rating with an improved price target of $2.10. This implies potential upside of 18% for investors. While Goldman suspects that Gold Road could underperform expectations due to wet weather, it remains very positive. It said: “We expect QoQ production to be largely flat in the Jun-24 quarter (below consensus) on recovery from rain impacts (recovery through April limiting production despite a return to target mining/milling rates from May and the Great Central Road reopened for consumables delivery). GOR expect a strong second half, where we see more medium-term opportunities from Yamarna (100% owned) and toll treating through the JV.”

The post Goldman Sachs says these ASX gold stocks are buys appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday
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• 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.

Investors who own the ASX 200 bank share National Australia Bank Ltd (ASX: NAB) have more than a few reasons to be smiling today.

For one, the NAB share price is having a solid Tuesday so far, currently up a happy 0.64% at $35.56 a share.

But NAB shares have also had one of their best years in quite a long time over the past 12 months. A year ago, this ASX bank was going for $25.64 a share. That means investors have enjoyed a near 39% gain since July 2023. The shares are also up a healthy 15.21% in 2024 to date.

Check all that out for yourself below:

If we add on the returns from NAB’s generous dividends, we’re looking at a 12-month gain well north of 40%. And that’s before we even factor in the full franking credits from NAB’s dividends.

Needless to say, NAB shareholders can’t ask for much better than this.

But even so, there’s another piece of good news for NAB shareholders to digest this July. That would be a massive insider buy for this bank stock.

NAB insiders buy up shares

According to an ASX filing from 3 July earlier this month, one of NAB’s directors has picked up a significant parcel of new shares.

The filing reveals that NAB board member and non-executive director Sarah Carolyn Kay picked up an additional 2,000 NAB shares on 3 July in an on-market trade. Kay spent $70,880 on this trade, implying that she paid an average share price of $35.44 for those 2,000 shares of stock.

This trade increases Kay’s total NAB shareholding to 6,182 shares. At today’s share pricing, that parcel would be worth just under $220,000.

Kay has been on NAB’s board since July 2023. In May, she purchased 1,500 NAB shares, paying $34.75 a share.

But Kay isn’t the only NAB insider that’s been buying up shares in 2024.

May was a busy month for these insiders. Another board member in non-executive director Alison Kitchen purchased 4,380 NAB shares back on 7 May for a total sum of $148,920. That implies a purchase price of $34. Kitchen is now the proud owner of 6,120 NAB shares in total.

Christine Fellowes, another non-executive director, also bought up some shares on 8 May. She purchased 1,457 shares, paying $49,931.39 for the privilege. That works out to be an average buy price of $34.27. Fellowes now holds 4,895 NAB shares in her name.

All of these directors would now be glad they bought, considering NAB shares are trading at a higher level today than all of these purchase prices.

Investors of all stripes usually like to see management and insider figures buy up shares of the companies they are well-paid to run. It aligns their financial interest closer to other shareholders. It also ‘puts the money where the mouths are’ by showing to investors that they have some skin in the game.

So no doubt NAB shareholders will welcome all of this news. But let’s see where the shares of this ASX 200 bank stock go from here.

The post This insider just bought a bucketload of NAB shares appeared first on The Motley Fool Australia.

More reading

• Are ASX 200 bank shares too expensive to buy right now?
• ASX 200 bank shares ‘don’t appear overly expensive’ compared to global peers: UBS
• Own NAB shares? Here’s how much you’re about to get paid in dividends
• Own NAB shares? You just got a 44% return in FY24
• What is the outlook for ASX 200 dividend shares in FY25?

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Let’s face it: 2024 has been all about the megacaps. Nvidia (NASDAQ: NVDA) is up 147% year to date; Meta Platforms is up 44%; Alphabet is up 33%.

Moreover, Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta Platforms now boast a combined market cap of $15.6 trillion. That’s roughly equivalent to the size of the Eurozone economy, which has an annual gross domestic product of $15.4 billion, according to the latest estimates from the World Bank.

So, let’s compare two of the best megacaps, Nvidia and Microsoft (NASDAQ: MSFT), to see which is better positioned to rule the second half of 2024 — and beyond.

Nvidia

No company has experienced a more remarkable growth in its market cap over the past two years than Nvidia. The semiconductor giant has added a staggering $2.7 trillion in value, catapulting it to the position of the most valuable company on Earth, if only briefly.

Its rise is almost entirely thanks to the surge in demand for artificial intelligence (AI) and the hardware behind it. Nvidia designs graphics processing units (GPUs). These powerful devices are often linked together by the thousands — even hundreds of thousands — within data centers to help train the latest and greatest AI models.

While there are other companies in the GPU design space, Nvidia enjoys several key competitive advantages. The trust and familiarity AI developers have with Nvidia’s GPUs and its software make it challenging for them to switch to another supplier. Moreover, Nvidia’s extensive experience in GPU design prior to the AI boom gives it a unique edge over its competitors.

Microsoft

Despite the attention garnered by Nvidia’s rapid ascent, it’s important not to overlook Microsoft’s impressive stock performance. The company once again holds the title of the most valuable company on Earth, a position it regained after briefly being overtaken by Nvidia. To maintain this lead, Microsoft is demonstrating its adaptability to the evolving tech landscape, particularly the AI revolution.

On that front, Microsoft has already begun integrating AI into its signature software applications. It now offers a generative AI assistant through its Microsoft Copilot add-on, which can analyze data, respond to queries, create images, and generate code.

What’s more, Microsoft diverse business segments provide a layer of protection, should the AI revolution falter. The company has a massive cloud services unit and a successful gaming division among various other business segments.

Which stock is a better buy in the second half of 2024?

Simply put, both Nvidia and Microsoft are outstanding companies. They generate billions in revenue, profits, and free cash flow. They’re also led by some of the top CEOs on the planet: Satya Nadella at Microsoft and Jensen Huang at Nvidia.

However, there are differences to evaluate.

For one, Nvidia’s valuation is approaching record highs. Its price-to-sales (P/S) ratio is now 39x — more than double its 10-year average of 15x.

Meanwhile, Microsoft’s P/S ratio is also historically high at 14x. However, that value is less than half of Nvidia’s on an absolute basis.

MSFT PS Ratio data by YCharts

In other words, both stocks are historically expensive, but Nvidia is far more costly in a head-to-head comparison.

At any rate, the rapid growth of the GPU market is what investors are counting on to bring Nvidia’s valuation down. And while those growth estimates are impressive (analysts expect Nvidia’s sales to rise 98% over last year), any signs of slowing growth could lead to a sharp sell-off in Nvidia shares.

In conclusion, I prefer Microsoft, given the stock’s more reasonable valuation at current levels. That said, long-term Nvidia investors shouldn’t bail on the stock now. Rather, they should remember that one of the keys to successful buy-and-hold investing is to let winners run. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Better megacap stock: Nvidia vs. Microsoft appeared first on The Motley Fool Australia.

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• Is Nvidia stock a buy now?
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• Is Nvidia stock going to $144?
• Nvidia’s stock is up 160% in 2024, but is it a bubble waiting to pop?
• Can Nvidia stock cross $1,000 again after the stock split?

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Jake Lerch has positions in Alphabet, Amazon, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, 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.

If you’re on the hunt for some big returns for your portfolio, then you may want to check out these ASX 200 shares in this article.

That’s because Bell Potter has named them as buys and is tipping them to deliver mouth-watering returns over the next 12 months. Here’s what the broker is saying about them:

Amotiv Ltd (ASX: AOV)

Bell Potter remains very positive on Amotiv, which was until recently known as GUD Holdings.

It is a consumer and industrial products company primarily focusing on automotive aftermarket parts and accessories. For automotive aftermarket products, its brands include Ryco, Wesfil, Goss, Brown and Watson. And for 4WD accessories, it operates under the APG brand.

Bell Potter likes this ASX 200 share due to its undemanding valuation and positive outlook. It explains:

We are Buy-rated on Amotiv and consider it to be fundamentally a good business and we note upside may exist from APG’s geographic expansion which is not in our earnings forecasts. The legacy auto business has been reasonably strong to date in an environment where there is increased risk around service trade down and deferral. The stock’s valuation is not demanding at 13x FY25 PE. Overall, our Buy rating for AOV is predicated on the relative resilience of the legacy auto business and improving momentum in new car sales, which should be favourable for APG’s earnings.

The broker currently has a buy rating and $12.80 price target on its shares. This implies potential upside of almost 27% for investors. The total return stretches to 30% including dividends.

Capricorn Metals Ltd (ASX: CMM)

Another ASX 200 share that could offer big returns is Capricorn Metals. It is a gold exploration and development company whose primary asset its 100%-owned Karlawinda Gold Project (KGP) in Western Australia.

Bell Potter has been very impressed with the quality of the KGP operation and management’s strong track record. It explains:

CMM’s management team has a track record of capital efficient project funding, development, commissioning and operation. In our view, FY25 and FY26 should benefit from higher revenue and EPS increases by 32% and 6% respectively. CMM is a sector leading gold producer with a strong balance sheet, a management team with an excellent track record of delivery and clear organic growth options to lift group production to 270kozpa.

The broker currently has a buy rating and $6.53 price target on its shares. This suggests that its shares could rise almost 30% from current levels.

The post Bell Potter says these ASX 200 shares can deliver ~30% returns appeared first on The Motley Fool Australia.

More reading

• 10 ASX shares to buy in FY25
• Here are the top 10 ASX 200 shares today
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• Morgans names more of the best ASX stocks to buy in June

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 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 Zip Co Ltd (ASX: ZIP) share price is at it again.

And by ‘it’, I mean notching new multi-year highs.

Shares in the All Ordinaries Index (ASX: XAO) buy now, pay later (BNPL) stock closed yesterday trading for $1.75. Currently, shares are changing hands for $1.76, up 0.7%.

As you can see on the chart below, this marks a new two-plus year high for the company.

In fact, you have to go all the way back to February 2022 to find the Zip share price trading at higher levels.

With another day in the green today, the Zip share price is now up 327% since this time last year. To put that in some perspective, that’s enough to turn a $5,000 investment into $21,350 in just 12 months!

What’s been driving the Zip share price higher?

While there’s still a long, long way to go for the Zip share price to potentially reset the $12.35 a share the BNPL stock was trading for on 19 February 2021, the company has clearly turned a corner over the past nine months.

Part of that comes amid a change in management and strategy, shifting away from an uncompromising growth strategy to one focused on returning the company to profitability. That strategy is proving successful to date, with Zip’s losses continuing to narrow amid rising revenues.

The company’s most recent quarterly results, Q3 FY 2024, came out on 16 April.

Highlights included a 14.6% year on year increase in total transaction volumes (TTV). TTV came in at $2.4 billion for the three months.

While the company’s Australian business hit some headwinds, its Americas business grew strongly, with TTV in the Americas up by 43.6% from Q3 FY 2023.

And with Apple Inc (NASDAQ: AAPL) announcing in June that it was pulling its United States BNPL service, Apple Pay Later, investors may be optimistic about Zip’s American growth prospects in the year ahead.

Then there are interest rates.

BNPL stocks have proven highly sensitive to a higher rate environment, as witnessed by the huge sell-down in the Zip share price when global rates first bottomed and then began to rise from their historic lows in 2022.

While Aussies may be waiting until 2025 for the first interest rate cut from the Reserve Bank of Australia, markets are increasingly pricing in at least one rate cut from the US Federal Reserve in 2024.

Any easing by the Fed and other global central banks should come as welcome news to many companies, particularly those in the BNPL space. And it could help the Zip share price continue to outperform.

The post Up 327% in a year, the Zip share price just smashed new multi-year highs! appeared first on The Motley Fool Australia.

More reading

• Zip shares FY24 recap: Up 256%, what’s next for FY25?
• 5 ASX All Ords shares that rose 250% to 700% in FY24
• Zip shares surge 10%, bringing gains to 55% in a month
• The three best ASX All Ords shares to buy and hold in FY 2024 unveiled
• Could Apple’s latest move boost Zip shares?

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

ASX 200 bank shares have enjoyed robust shareholder returns ranging from 30% to 45% over the past year.

Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) all notched respective gains following a strong show of earnings. Meanwhile, ANZ Group Holdings Ltd (ASX: ANZ) had a similar run.

Despite this, the big four banks may not have much room to grow into their currently elevated share prices, according to Macquarie analysts.

And the fact of the matter is the banking majors are all trading at or near six-month highs. So, is now a good time to buy ASX 200 bank shares? Here’s a closer look.

Macquarie weary on ASX 200 bank growth

Macquarie analysts caution that ASX 200 bank shares may struggle to grow into their elevated multiples over the next few years.

According to The Australian, Macquarie says visibility for the sector is low as pressures on earnings mount. According to the reporting, the firm said:

Looking forward, we do not see a clear path for underlying profitability to improve meaningfully from a top-down and divisional bottom-up perspective.

We note that banks’ current returns are broadly in the middle of their 10-year average ranges. As a result, we see limited scope for banks to grow into their elevated multiples

The broker notes that, despite each of the banks delivering double-digit total shareholder returns over the past year, their earnings have declined, while multiples have expanded “to a 15-30% relative premium [in price-to-earnings ratio (P/E)] versus five-year historical averages”.

Macquarie also observes that banks are currently experiencing one of the lowest bad debt periods on record, which may not support an earnings recovery in the medium term.

In H1 FY24, the banking majors booked a total of $1.21 billion in impairment charges, a 13% decrease from the prior corresponding period.

Despite this, bank share prices have continued to rise. But further growth from here could be a challenge, Macquarie says:

While multiple expansions often precede the earnings growth phase, this is an improbable outcome, in our view. Periods where the earnings subsequently lifted to support rallying share prices were generally characterised by normalising credit losses following an impairment cycle

Banks were strong in FY24

ASX 200 banks showed strong returns on the charts, and the fundamentals remained robust throughout the year.

Commonwealth Bank shares were up 27% in FY24 as the company reported half-yearly profits of $13.7 billion. According to my colleague James, growth softened towards the end of the year, with a 1% decline in earnings reported for its Q3 FY24 numbers.

Westpac shares gained 30% in FY24, driven by general market strength and positive operating results.

The bank’s half-year results in May showed a 16% decrease in net profit to $3.3 billion, yet investors welcomed the 7.1% increase in the interim dividend to 75 cents per share, alongside a fully franked special dividend of 15 cents per share.

Meanwhile, NAB shareholders must have been happy, as the bank delivered a massive return in FY24. According to my colleague Sebastian, NAB shares started the year at $26.37 each and closed at $36.23, a capital gain of 37.39%.

Including dividends, investors enjoyed a total yield of 6.33%, resulting in a 43.7% total gain.

Foolish takeaway

ASX 200 bank shares have delivered impressive returns in the past year, but analysts warn that their current valuations may be too high. Remember to conduct your own research and consider any long-term goals before making any investment decisions.

The post Are ASX 200 bank shares too expensive to buy right now? appeared first on The Motley Fool Australia.

More reading

• Did you buy Westpac shares in FY24? Here’s the recap
• Are Macquarie or CBA shares a better buy?
• Forget CBA and buy these ASX dividend stocks
• ASX 200 bank shares ‘don’t appear overly expensive’ compared to global peers: UBS
• Own NAB shares? Here’s how much you’re about to get paid in dividends

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 positions in and has recommended 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.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is back on form and charging higher. At the time of writing, the benchmark index is up 0.75% to 7,820.8 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are racing higher:

DroneShield Ltd (ASX: DRO)

The DroneShield share price is up a further 7% to a new record high of $2.15. This is despite there being no news out of the counter drone technology company on Tuesday. In fact, it has been almost three weeks since there was meaningful news out of the market darling. Nevertheless, investors appear to believe that DroneShield is perfectly positioned to continue its explosive growth thanks to industry tailwinds and some major contract wins. Its shares are now up over 450% since the start of the year.

GenusPlus Group Ltd (ASX: GNP)

The GenusPlus share price is up 5% to $2.04. Investors have been buying the national essential power and communications infrastructure provider’s shares after it announced a major program of maintenance and upgrade works for Western Power. Genus will provide distribution and transmission overhead maintenance services across Western Power’s network. The five-year agreement is expected to generate revenue of approximately $50 million in its first year.

Monadelphous Group Ltd (ASX: MND)

The Monadelphous share price is up 2% to $12.88. This morning, the engineering company announced that it has been awarded a major long-term maintenance and minor construction services contract. The contract is associated with Shell Australia’s Prelude Floating Liquefied Natural Gas (FLNG) facility. The seven year contract will commence in November when the company’s existing contract with Shell ends. Management believes that “renewing this significant contract demonstrates Monadelphous’ leadership position in the Australian energy maintenance market, both onshore and offshore.”

Telstra Group Ltd (ASX: TLS)

The Telstra Group share price is up almost 3% to $3.75. Investors have been buying the telco giant’s shares after it announced an increase to its mobile prices. The changes will see prices on most Telstra mobile plans increase by between $2 to $4 per month. Management notes that these changes aimed to balance cost of living pressures “with its need to continue to invest to manage technology evolution and continued strong customer demand on its mobile network.” Judging by its share price performance, the market appears to believe the company has got it just right with these increases.

The post Why DroneShield, GenusPlus, Monadelphous, and Telstra shares are roaring higher today appeared first on The Motley Fool Australia.

More reading

• Telstra share price lifts off alongside its mobile pricing plans
• 10 ASX shares to buy in FY25
• Forget CBA and buy these ASX dividend stocks
• What will it take for DroneShield shares to enter the ASX 200?
• Why Boss Energy, DroneShield, Jumbo, and Raiz shares are falling 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 DroneShield and GenusPlus Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.