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The S&P/ASX 200 Index (ASX: XJO) stock APA Group (ASX: APA) has dropped today after revealing a painful $145 million writedown. APA is currently down 0.69% at $7.90, while the ASX 200 is up 0.13%.

APA is an energy infrastructure business that owns and operates a large network of gas pipelines around Australia. It also has energy generation assets including solar, wind and gas, plus electricity transmission assets.

Impairment of APA’s Sydney ethane pipeline

APA announced today that it expected to recognise a non-cash impairment of approximately $145 million, before tax, to the Moomba Sydney ethane pipeline (MSEP).

This impairment would result in a full write-down of the MSEP’s current book/balance sheet value. APA intends to include this accounting charge in its financial statements for the year ended 30 June 2024, being FY24. However, the result is still subject to finalisation upon completion of the auditor’s review process.

APA noted the impairment was “non-cash”, representing approximately 1% of its market capitalisation, and had no impact on its liquidity. It also affirmed there was no change to APA’s FY24 distribution guidance or its FY24 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance.

The ASX 200 stock expects to pay an FY24 annual distribution of 56 cents per security and generate underlying EBITDA of between $1.87 billion and $1.91 billion.

Why is the asset being impaired?

The MSEP is a ‘single user’ pipeline, which was used to transport ethane to plastics manufacturer Qenos Pty Ltd. This company recently entered into voluntary administration and has announced that it does not expect to restart its manufacturing facility.

APA noted that Qenos is the only likely customer with demand for ethane to be transported along the MSEP. The MSEP is the ASX 200 stock’s only asset that transports ethane and APA’s only long-distance single-user pipeline.

Could the pipeline be used for something else?

The energy infrastructure business said a range of potential alternative uses for the MSEP were being assessed, including the possible conversion of the asset to transport and store natural gas, to service the growing demand for capacity on APA’s east coast gas grid.

However, APA warned it would take some time to fully assess the potential alternative uses of the MSEP.

APA pointed out that accounting standards required an assessment of the asset’s carrying value to be finalised before completing the FY24 accounts. So, the company has taken a conservative approach and assumed the pipeline will not be utilised for the foreseeable future. Therefore, it expects to impair the asset’s full balance sheet value.

APA share price snapshot

Since the start of 2024, the APA share price has fallen 7.3%, and the ASX 200 has risen 1.5%.

The post ASX 200 stock slips on $145 million impairment appeared first on The Motley Fool Australia.

More reading

• Why APA Group, Chalice Mining, Guzman Y Gomez, and Monadelphous shares are falling
• 5 things to watch on the ASX 200 on Wednesday
• Shares vs. property: Which delivered the best growth in FY24?
• Here are the top 10 ASX 200 shares today
• What the RBA minutes imply for the ASX 200 and higher interest rates

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

The S&P/ASX 200 Index (ASX: XJO) is back on form and edging higher on Wednesday. At the time of writing, the benchmark index is up 0.2% to 7,731.9 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

APA Group (ASX: APA)

The APA Group share price is down 1% to $7.88. Investors have been selling this energy infrastructure company’s shares after it announced a non-cash impairment of approximately $145 million to the Moomba Sydney Ethane Pipeline (MSEP). The expected impairment would result in a full write down of the current book value of the MSEP. Management notes that the impairment is non-cash, represents approximately 1% of APA’s market capitalisation, and has no impact on liquidity. Furthermore, there is no change to its FY 2024 distribution or underlying EBITDA guidance.

Chalice Mining Ltd (ASX: CHN)

The Chalice Mining share price is down 11% to $1.34. This is quite a turnaround for the mineral exploration company’s shares. They were up as much as 8% this morning before sinking deep into the red. Investors were buying its shares after it announced a non-binding memorandum of understanding (MOU) with Mitsubishi Corporation. This MOU will see two parties work together with the intention of forming a potential strategic partnership to develop the 100%-owned Gonneville PGE-Nickel-Copper-Cobalt Project in Western Australia. However, given how MOUs are non-binding, investors don’t appear to see much value in the announcement at this stage.

Guzman Y Gomez Ltd (ASX: GYG)

The Guzman Y Gomez share price is down 1% to $25.25. Investors continue to sell down this quick service restaurant operator’s shares due to concerns over its sky-high valuation. Not even a bullish broker note out of Morgans has been enough to stop its shares from falling today. Morgans has initiated coverage on the company with an add rating and $30.00 price target.

Monadelphous Group Ltd (ASX: MND)

The Monadelphous share price is down 3% to $12.69. This appears to have been driven by a broker note out of Bell Potter this morning. According to the note, the broker has downgraded this mining services company’s shares to a hold rating (from buy) with a trimmed price target of $14.00 (from $15.40). Its analysts said: “We have adopted a conservative short-to-medium term outlook for EC division activity, reflecting a quietening major project development pipeline, with limited visibility on near-term contract awards.”

The post Why APA Group, Chalice Mining, Guzman Y Gomez, and Monadelphous shares are falling appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• ASX 200 stock slips on $145 million impairment
• Down 18% since listing, should you buy Guzman Y Gomez shares now?
• Guess which ASX mining stock is jumping 8% on deal with Mitsubishi
• Why Guzman Y Gomez, MacMahon, Strike Energy, and WiseTech shares are sinking

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

S&P/ASX 200 Index (ASX: XJO) retail shares got a late morning boost today, thanks to some thrifty Aussie shopping habits in May.

This follows the 11:30 a.m. AEST release of the Australian Bureau of Statistics’ (ABS) retail sales data for May.

In the minutes following the report’s release, the benchmark index gained 0.2%, with most ASX 200 retail shares joining the mini rally.

Here’s what we know.

Discounts driving sales growth

According to the ABS, Australian retail turnover rose 0.6% in May. That’s a marked improvement from the 0.1% increase in April and the 0.4% decline in March.

While that result is offering some tailwinds for ASX 200 retail shares today, investor reaction is likely muted as much of the growth was attributed to the big retailers’ sales events during the month.

“Retail turnover was boosted this month by watchful shoppers taking advantage of early end-of-financial year promotions and sales events,” Robert Ewing, ABS head of business statistics, said.

“Retail businesses continue to rely on discounting and sales events to stimulate discretionary spending, following restrained spending in recent months,” Ewing added.

And while it’s good to see growth figures for May, the bigger picture is less rosy.

“Despite the seasonally adjusted rise, underlying spending remains stagnant with retail turnover flat in trend terms. Compared to May 2023, trend is only up 1.5%,” Ewing said.

Digging into the market segments for ASX 200 retail shares, clothing, footwear, and personal accessory retailing had the largest rise (up 1.6%) after falling in March and April.

Household goods retailing increased by 1.1%, while sales at department stores decreased by 0.9%.

“Many retailers started end-of-financial year sales early, offering larger discounts than usual and noted that shoppers remain price-sensitive in response to persistent cost-of-living pressures,” Ewing added.

How are these ASX 200 retail shares tracking?

Drilling down to a few specific ASX 200 retail shares, the Wesfarmers Ltd (ASX: WES) share price jumped 0.3% on the ABS sales data, though it has since given back those gains, currently at $64.12 a share.

Wesfarmers subsidiaries include household names such as Bunnings Warehouse, Kmart Australia, Officeworks, and Priceline.

Shares in furniture and electrical goods retailer Harvey Norman Holdings Ltd (ASX: HVN) gained 0.4% following the ABS release and are currently at $4.22.

And ASX 200 home electronics retail share JB Hi-Fi Ltd (ASX: JBH) gained 0.7% following the sales data. At the time of writing, JB Hi-Fi is managing to hold onto those gains, currently at $61.22 a share.

The post How ASX 200 retail shares just got a boost from ‘watchful shoppers’ appeared first on The Motley Fool Australia.

More reading

• ASX passive income: How to make $1,000 per month
• What is the outlook for ASX 200 dividend shares in FY25?
• Can Wesfarmers shares keep beating the ASX 200 index?
• Which ASX shares to buy if interest rates rise (and which to avoid)
• 3 reasons to buy Wesfarmers shares like there’s no tomorrow

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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Harvey Norman and Wesfarmers. The Motley Fool Australia has recommended Jb Hi-Fi. 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 on course to end its losing streak. At the time of writing, the benchmark index is up 0.3% to 7,738.8 points.

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

Cettire Ltd (ASX: CTT)

The Cettire share price is up 11% to $1.35. This is despite there being no news out of the online luxury products retailer. However, it is worth noting that its shares have been on fire this week. Investors appears to have been buying stocks that were sold off in the last financial year. Nevertheless, Cettire’s shares remain down by over 55% since this time last year despite this week’s heroics. That weakness was driven by concerns over its business model and a sudden deterioration in its performance because of consumer spending headwinds.

Deterra Royalties Ltd (ASX: DRR)

The Deterra Royalties share price is up 1.5% to $4.08. This appears to have been driven by a broker note out of Goldman Sachs this morning. Its analysts have upgraded the mining royalties company to a buy rating with a $4.70 price target. This implies potential upside of 15% from current levels. The broker feels that a recent selloff has created a buying opportunity for investors.

G8 Education Ltd (ASX: GEM)

The G8 Education share price is up 3% to $1.22. This strong gain also appears to have been by a broker note this morning. According to a note out of Macquarie, its analysts have upgraded the childcare centre operator’s shares to an outperform rating with an improved price target of $1.35. Macquarie believes the company could be performing better than expected thanks to improving occupancy rates and lower wage increases.

Red Hill Minerals Ltd (ASX: RHI)

The Red Hill Minerals share price is up 11% to $7.34. This morning, this mining company announced a very large special dividend. Red Hill Minerals recently received $200 million from Mineral Resources Ltd (ASX: MIN) following the first shipment of ore from the Onslow Iron Project to China Baowu Steel Group. Its board has decided to return proceeds to shareholders through a special fully franked $1.50 per share dividend. Based on its current share price, this represents a 20% dividend yield. Its shares are scheduled to trade ex-dividend next week on 9 July. After which, the payment will be made to eligible shareholders later this month on 19 July.

The post Why Cettire, Deterra Royalties, G8 Education, and Red Hill shares are pushing higher appeared first on The Motley Fool Australia.

More reading

• This ASX stock just announced a special dividend with a 20% yield
• Goldman Sachs just upgraded this ASX 200 stock to a buy
• 5 potentially cheap ASX shares being bought by insiders
• Why Arcadium Lithium, Baby Bunting, Cettire, and Qualitas shares are racing higher
• Why Cettire, Collins Foods, Liontown, and Northern Star shares are dropping 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 and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Cettire. 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 dropped almost 4% over the past year, underperforming the S&P/ASX 200 Index (ASX: XJO) which rose by 6.8% during the same period.

This underperformance extends over the longer term as well. Over the last five years, BHP shares have gained 5.5%, whereas the ASX 200 has increased by 14.6%.

The primary reason for the share price decline is the drop in global commodity prices, particularly for BHP’s key metals: iron ore and copper.

Iron ore prices fell from US$144 per tonne in January 2024 to below US$100 per tonne in April 2024 due to ongoing weakness in China’s property and industrial sectors. While prices have recovered somewhat, the current price is around US$108 per tonne, down 25% from its peak.

Copper prices also took a breather after reaching near-record highs of US$10,890 per tonne in May 2024 and are now trading at US$9,483 per tonne.

BHP shares offer a fully-franked dividend yield of 5.44% at the current share price. Considering the tax benefits from franking credits, this translates to generating an additional $1,000 of monthly passive income (before tax) by investing less than $180,000 today.

Dividend history

While BHP’s current dividend yield is attractive, its value hinges on the consistency of its dividend payments. Let’s review BHP’s dividend payment history.

	Dividend per share (AUD)	Franking
FY13	$1.20	100%
FY14	$1.31	100%
FY15	$1.69	100%
FY16	$0.40	100%
FY17	$1.06	100%
FY18	$1.59	100%
FY19	$1.92	100%
FY20	$1.75	100%
FY21	$4.03	100%
FY22	$4.63	100%
FY23	$2.61	100%
TTM	$2.35	100%

Like any mining stock, BHP’s earnings are subject to commodity cycles, which can significantly impact its dividend payments. For instance, in FY16, the dividend per share dropped sharply from $1.69 to 40 cents and took three years to recover to its previous high.

However, long-term shareholders who held onto its shares through the ups and downs of mining cycles have generally seen their dividends grow over time.

All this time, BHP has offered 100% franking credits on its dividend payments, which is an added bonus for tax-conscious investors.

Valuations

No matter how high the dividend yield might be, it’s equally important to protect your invested capital. Watching the share price decline after purchasing is never a pleasant experience.

Let’s examine BHP’s current valuations using FY25 estimates from S&P Capital IQ. At present, BHP shares are valued at:

• A price-to-earnings (P/E) ratio of 10x, compared to its historical range of 7x to 20x.
• A price-to-book (P/B) ratio of 3x, compared to its historical range of 0.9x to 4x.

Note that the historical trading range excludes FY16 valuations, which appear to be outliers, with a P/E ratio as high as 53x and a P/B ratio of 8x.

Compared to BHP’s usual trading ranges, some may argue that the current P/B ratio suggests a potential downside. Economic uncertainties always loom, so it’s crucial to consider the risks involved.

But, all things considered, I can safely say that BHP’s valuation multiples are near or below their mid-points in terms of PER and PBR.

Foolish takeaway

For long-term dividend investors, I think BHP’s current share price offers a compelling opportunity. As a global leader in an essential industry with a consistent dividend history, BHP provides attractive dividend yields at reasonable valuation multiples.

The post I’d buy BHP shares to generate $1,000 of monthly passive income appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy today
• 5 things to watch on the ASX 200 on Wednesday
• What is the outlook for ASX 200 dividend shares in FY25?
• 3 cheap ASX passive income shares I’d buy to target $1,000 a month
• What went right and what went wrong for the BHP share price in FY 2024?

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

Guzman Y Gomez (ASX: GYG) shares are taking a tumble today.

Shares in the Mexican fast-food restaurant chain closed up 2.7% at $25.50 yesterday. In late morning trade on Wednesday, shares have given back those gains and more, currently changing hands for $24.70, down 3.1%.

For some context, the All Ordinaries Index (ASX: XAO) is up 0.3% at this same time.

As you can see on that chart above, Guzman Y Gomez shares have had a tough time of it since their debut on the ASX on 20 June.

Investors who were able to take part in the initial public offering (IPO) could have gotten in for $22.00 a share. For the rest of us, the fast-food stock opened on 20 June, trading at $30.00 per share. Shares hit an intraday high of $30.99 before ending the day back at $30.00.

That handed IPO investors a tidy 36% one-day gain.

Not bad.

Now, IPO investors are still in the green.

But with today’s losses factored in, the Guzman Y Gomez share price is down 17.7% from the opening price on its first day of trading on the ASX when most retail investors would have gotten a foot in.

Following that sizeable retrace, should you buy the Mexican fast-food stock now?

Are Guzman Y Gomez shares a buy?

The biggest concern you’re likely to hear about Guzman Y Gomez shares is their sky-high valuation.

Especially when compared to fast food rivals Collins Foods Ltd (ASX: CKF) and Domino’s Pizza Enterprises Ltd (ASX: DMP).

The key to the company’s success at current valuations is to deliver on its ambitious growth plans.

And it’s with this growth potential in mind that Morgans has placed an add rating on the stock with a $30.80 price target. That’s almost 25% above current levels.

According to Morgans’ analyst Billy Boulton (quoted by The Australian Financial Review), “To justify the current share price of GYG (or, indeed, to see upside to it), you have to believe that the long-term growth story is not just possible, but likely.”

Boulton added:

We believe investors buying into GYG at current prices will be well rewarded over time as the business realises its very significant long-term growth potential and its earnings benefit from strong operating leverage.

Guzman Y Gomez shares currently encompass 210 stores, with 185 in Australia. Morgans believes the company can eventually grow its Aussie footprint to 1,000 stores. If the broker has that right, early investors could indeed be amply rewarded.

The post Down 18% since listing, should you buy Guzman Y Gomez shares now? appeared first on The Motley Fool Australia.

More reading

• Why Guzman Y Gomez, MacMahon, Strike Energy, and WiseTech shares are sinking
• Is it ‘a long road from here’ for Guzman Y Gomez shares on the ASX?
• What percentage of GYG shares are owned by the company founders?
• Why are Guzman Y Gomez shares being shorted?
• Should I buy Guzman Y Gomez shares on the ASX?

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 Domino’s Pizza Enterprises. The Motley Fool Australia has recommended Collins Foods and Domino’s Pizza Enterprises. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Rio Tinto Ltd (ASX: RIO) has been busy investing funds into an ASX All Ords stock this week.

Based on the mining giant’s investment, it seems to see a lot of promise in this company’s project in Africa.

Which ASX All Ords stock?

This morning, Sovereign Metals Ltd (ASX: SVM) revealed that Rio Tinto has exercised all its share options to increase its shareholding in the company to 19.76%.

The miner exercised a total of 34,549,598 share options to acquire the same number of new fully paid ordinary shares at $0.535 per share. This results in proceeds of $18.5 million for the ASX All Ords stock.

What now?

Management believes Rio Tinto’s further investment represents another significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite.

It will use the proceeds from Rio Tinto’s additional strategic investment to continue advancing its tier one Kasiya Rutile-Graphite Project in Malawi.

This includes progressing the current optimisation study for Kasiya, which is focused on the development of a world-class mine that is capable of supplying critical minerals to the titanium pigment, titanium metal, and lithium-ion battery industries. After which, it will move to a definitive feasibility study.

Under the investment agreement between the parties, Rio Tinto continues to provide assistance and advice on technical and marketing aspects of Kasiya.

‘One of the most significant critical minerals projects globally’

The ASX All Ords stock’s chairman, Ben Stoikovich, was very pleased with the investment. He appears to see it as confirmation of the quality of the Kasiya project. Stoikovich said:

Rio Tinto’s further investment in Sovereign reaffirms Kasiya’s position as one of the most significant critical minerals projects globally. With Rio Tinto’s wealth of experience as one of the world’s largest and most accomplished global mining companies, Kasiya is well positioned to potentially become a market leader in low-CO2-footprint natural rutile and graphite.

Sovereign Metals’ managing director, Frank Eagar, adds:

In collaboration with Rio Tinto, we have made significant progress in advancing Kasiya over the course of this year, including the successful launch of the pilot phase mining in May. We are excited about Rio Tinto’s further investment in Sovereign, which represents another significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite.

Kasiya’s mineral resource estimate (MRE) is currently 1.8Bt at 1.0% rutile. This results in 17.9Mt tonnes of contained natural rutile and 24.4Mt of contained graphite. This makes it the largest in the world according to the company.

The post Guess which ASX All Ords stock just received another $18 million investment from Rio Tinto appeared first on The Motley Fool Australia.

More reading

• What is the outlook for ASX 200 dividend shares in FY25?
• Rio Tinto share price marching higher amid $426 million ‘industry-leading’ step
• What this expert predicts will be the best-performing ASX sectors in FY25
• Buy Rio Tinto and these ASX dividend shares in July
• Could this move unlock $40 billion for Rio Tinto shares?

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.

Receiving ASX passive income can be very rewarding because of how simple it is for the cash flow to hit the bank account every year. Depending on how much we invest and the dividend yield, investors can get an average of $100 per month, $1,000 per month or even more.

Most businesses try to make a profit every year and companies can decide how much of that profit to pay to shareholders each year as a dividend.

Some companies have been able to grow their earnings significantly over the years, leading to a substantial increase in the dividend payout.

Where I’d invest for ASX passive income

I believe investing should be done with a long-term mindset. It doesn’t necessarily matter what dividend yield a stock pays this year if there’s going to be a large cut next year. Ideally, I’d want to choose investments that seem like they can grow their earnings and increase the payouts in the coming years.

Some businesses have already built a record of steady ASX passive income growth and still have plenty of growth potential, in my opinion.

For example, Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has grown its annual dividend every year since 2000.

Collins Foods Ltd (ASX: CKF) has grown its annual dividend every year since 2014.

Universal Store Holdings Ltd (ASX: UNI) has grown its dividend each year since it started paying one in 2021.

Brickworks Limited (ASX: BKW) has grown its dividend every year since 2014.

Propel Funeral Partners Ltd (ASX: PFP) has increased its annual payout each year since 2021.

Wesfarmers Ltd (ASX: WES) has grown its annual dividend each year since 2021.

I believe each of these businesses is capable of growing their dividend every year for the next five years. Growing earnings can help deliver share price growth because investors are usually willing to pay more for a business that’s earning more.

I also regularly write about some higher-yield ASX dividend shares, though businesses with a higher dividend payout ratio are less likely to grow their payouts consistently.

How to make $1,000 of dividends per month

Australians have the benefit of receiving franking credits, which can boost the after-tax dividend yield for investors.

To receive an average of $1,000 per month of ASX passive income, we’re talking about $12,000 per year. That’s a lot of dividends, but it’s certainly possible for most people to build up to that amount, thanks to compounding.

If someone’s portfolio had a 5% dividend yield, it would need a portfolio value of $240,000. If it had a 4% dividend yield, it would require a portfolio value of $300,000.

How long could it take to reach that amount? If someone invested $1,000 per month and it returned an average of 10% (including re-investing dividends), it’d take around 11 years to reach approximately $240,000, and it’d take 15 years to reach $300,000.

The post ASX passive income: How to make $1,000 per month appeared first on The Motley Fool Australia.

More reading

• Bell Potter names the best ASX retail stocks to buy in FY25
• What is the outlook for ASX 200 dividend shares in FY25?
• Beginner investors: I suggest you start with these 2 ASX dividend powerhouses for decades of income
• Can Wesfarmers shares keep beating the ASX 200 index?
• Buy Rio Tinto and these ASX dividend shares in July

Motley Fool contributor Tristan Harrison has positions in Brickworks, Collins Foods, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Brickworks, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Collins Foods. 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 performed substantially better than the S&P/ASX 200 Index (ASX: XJO) in FY24. ANZ shares rose by 19% over the 12 months to 30 June 2024, compared to an index rise of around 8%.

Considering ASX bank shares make up a sizeable part of the ASX 200’s returns, it may be surprising to see that ANZ shares delivered outperformance of more than 10%.

ANZ’s financial calendar doesn’t finish in June, it runs to September. So, while the Australian tax year finished on 30 June 2024, there are still a few more months to go for ANZ’s 2024 financial year.

Investors often pay the most attention to the latest six-month result when it comes to valuing a business, so let’s remind ourselves what the bank reported less than two months ago.

Earnings recap

In May, ANZ reported its result for the six months to 31 March 2024 and advised that statutory net profit after tax (NPAT) fell 4% to $3.4 billion compared to the second half of FY23, while cash NPAT declined by 1% to $3.55 billion.

The ASX bank share revealed its total provision charge decreased by 38% to $70 million, with the individual provision charge declining by 69% to $38 million. Arrears are performing better than some investors may have expected in this high interest rate environment.

However, the net interest margin (NIM) fell slightly from 1.65% in the second half of FY23 to 1.63% for the first half of FY24, excluding the impact of ‘markets’ activities. Further declines in the NIM may not be helpful for ANZ shares.

The bank generated productivity cost savings during the period across technology services ($62 million), head office enablement ($59 million), customer service and distribution ($36 million), product management ($29 million), and banking services and transaction processing ($15 million).

The bank also announced that the total dividend per share was hiked by 2% to 83 cents, compared to the FY23 second-half payout.

Management commentary

The ANZ CEO Shayne Elliot had a number of positives to say about the bank’s performance in HY24:

This half’s strong performance is a direct consequence of peer-leading diversification as well as our disciplined focus on productivity and delivery.

Our preparations to integrate Suncorp Bank are well advanced. While the time taken to progress the necessary approvals has taken longer than anticipated, we have used that time productively and we are more confident than ever about the benefits that will follow.

Elliot said the bank’s flagship digital offering, ANZ Plus, had grown to almost 690,000 customers and approaching $14 billion in deposits at the end of April – and the ability to create joint accounts had been introduced. He added:

Net promoter scores are consistently higher than our peers, while attracting on average 35,000 customers every month, around half of which are new to the bank.

Acquisition approved

ANZ has attempted to buy the banking operations of Suncorp Group Ltd (ASX: SUN) for several years.

Federal Treasurer Jim Chalmers recently approved the deal. This stage was one of the main roadblocks to the acquisition’s progress.

A bigger ANZ, particularly with a larger presence in Queensland, could give it more scale benefits, deliver a better growth profile, and, if the integration goes according to plan, generate bigger overall profits and pay larger dividends.

ANZ share price snapshot

Since the start of 2024, the ANZ share price has lifted around 9%, compared to a 1% rise for the ASX 200.

The post ANZ shares smashed the ASX 200 return in FY24 appeared first on The Motley Fool Australia.

More reading

• What is the outlook for ASX 200 dividend shares in FY25?
• These were the five best ASX bank shares to own in FY24
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

A big pay day is coming soon for shareholders of one ASX stock.

That’s because this company has just announced a special dividend that will provide investors with a mouth-watering dividend yield.

Which ASX stock?

The ASX stock that is rewarding its shareholders is Red Hill Minerals Ltd (ASX: RHI).

It is an iron ore, gold, and base metals explorer based in the West Pilbara region of Western Australia.

While the company has a number of projects in its portfolio, the key one was the Onslow Iron Project. The company had a 40% stake in the project through the Red Hill Iron Ore joint venture.

It recently completed the sale of its interest in the joint venture to mining giant Mineral Resources Ltd (ASX: MIN) following last month’s delivery of the first shipment of ore from the Onslow Iron Project to China Baowu Steel Group.

This shipment triggered the second payment of $200 million to the ASX stock from Mineral Resources.

Red Hill’s executive chairman, Joshua Pitt, said:

Our Company worked closely within the RHIOJV over many years to advance this Project and found in MinRes an excellent team that is close to achieving the rare feat of completing a major project development, the Onslow Iron Project, on time and within budget. This second payment to the Company, followed by the royalty revenue stream generated from our royalty interest in the Project should benefit our shareholders while funding an effective gold and base metal exploration effort.

Special dividend

This morning, the ASX stock revealed that it has decided to return to shareholders funds raised from the Mineral Resources payment. It said:

[I] has resolved to pay a special dividend of $1.50 per ordinary share, fully franked at 25%. The dividend will be sourced from the second of two $200 million payments received from Mineral Resources Limited for the sale of the Company’s 40% interest in the Red Hill Iron Ore Joint Venture.

Based on its current share price of $7.13, this $1.50 per share pay out represents a whopping 21% dividend yield.

In order to receive this dividend, investors need to buy the ASX stock before it trades ex-dividend on 9 July. After which, payment will be made 10 days later on 19 July.

Pitt commented:

We congratulate Mineral Resources on achieving first ore on ship from the Onslow Iron Project. This milestone has resulted in the payment of the second $200 million and has triggered the commencement of our 0.75% royalty stream. It has enabled our Board to declare the Company’s sixth consecutive dividend and provides a great platform for the future.

The post This ASX stock just announced a special dividend with a 20% yield appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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.