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The Lake Resources (ASX: LKE) share price is outpacing the benchmark today. 

Shares in the embattled All Ordinaries Index (ASX: XAO) lithium stock closed on Friday trading for 4 cents. In morning trade on Monday, shares are changing hands for, well, 4 cents apiece, leaving them flat at time of writing.

That’s a good bit better than the 0.7% loss posted by the All Ords at this same time, however. 

Here’s what’s happening.

ASX lithium share finds support amid major cost cuts

The Lake Resources share price is holding its own after the company released a strategic operational update on its flagship Kachi lithium project, located in Argentina.

The ASX lithium miner reported that its Goldman Sachs-led partnering process for Kachi is continuing. Management said they have progressed from reviewing a broad range of potential partners to participating in detailed discussions with a select group of interested parties.

Investors are supporting the Lake Resources share price after the miner acknowledged that the partnership process, intended to maximise Kachi’s value, will take longer than initially expected in light of the current market conditions.

Commenting on the partnership process, Lake Resources CEO David Dickson said, “We continue to engage with interested parties as part of the strategic partnering process for Kachi.”

Dickson added:

We, along with industry analysts across the sector, see a structural deficit of battery-grade lithium in the next five years. Because of that, we are taking all necessary actions to secure our financial flexibility, ensuring we maximise value for our shareholders from the Goldman led strategic process.

The ASX lithium miner said that in order to support the value of its strategic partnering process to secure equity investment and offtake agreements, the non-binding conditional framework agreements entered into in late 2022 with WMC Energy and SK On Co are not being progressed.

The company also reported it is managing an ongoing process to potentially sell some of its non-core assets and lithium tenements.

Commenting on the asset sales that could help support the Lake Resources share price, Dickson noted:

These assets, while non-core to Lake’s strategy, are strategically located within the Lithium Triangle and offer exploration and development potential in close proximity to other known lithium resources.

In order to focus our efforts on making Kachi a success, we believe the timing is right for marketing the sale of these assets, which is part of our plan to optimise the Company’s financial runway.

This supports the work we have done over the past 18 months and the successful completion of the Definitive Feasibility Study showing that Kachi is a globally significant, tier-one project.

And on the cost-cutting front, the miner said it will reduce its global workforce by more than 50%.

As at 31 March, Lake Resources had a cash balance of $31 million.

Lake Resources share price snapshot

It’s been a tough year for the Lake Resources share price, down 87% over the past 12 months.

The post Down 87% in a year, Lake Resources share price resilient following severe cuts to survive appeared first on The Motley Fool Australia.

More reading

• These were the five best ASX bank shares to own in FY24
• Are Qantas or ANZ shares a better buy?
• Guess which ASX 200 share is pushing higher on $480m asset sale
• 2 high-yield ASX shares predicted to pay huge dividends in FY26
• Can Wesfarmers shares keep beating the ASX 200 index?

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 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.

The Australian share market was on form in FY 2024. During the 12 months, the S&P/ASX 200 Index (ASX: XJO) delivered a return of 7.8% before dividends.

A key driver of these gains was the banking sector, which delivered market-beating returns over the period. This was driven by investors piling into this side of the market in response to better than expected performances and an improving outlook.

But which ASX bank shares were the best to own in the last financial year? Let’s find out.

Bendigo and Adelaide Bank Ltd (ASX: BEN)

The Bendigo and Adelaide Bank share price was up 38% in FY 2024. This was despite a reasonably average performance from the regional bank during the 12 months. For example, in February, Bendigo and Adelaide Bank reported a 5% decline in cash earnings after tax to $268.2 million. However, the ASX bank share was arguably oversold a year ago and had a long way to bounce back as conditions in the banking sector improved

National Australia Bank Ltd (ASX: NAB)

The NAB share price wasn’t far behind with a gain of 37% during the year. Investors appear to have been buying the banking giant’s shares after rate hikes failed to cause a spike in bad debts. And while the bank’s financial performance wasn’t great on paper, it is performing in line with expectations during the current financial year. Together with its strong balance sheet, this allowed the ASX bank share to announce a new $1.5 billion share buyback.

Westpac Banking Corp (ASX: WBC)

The Westpac share price had a strong year and rose 27.6% over the period. Once again, Westpac posted a half-year result that was largely in line with expectations. And like NAB, the bank decided its balance sheet was strong enough to allow another $1 billion on-market share buyback. An added bonus for shareholders was the special dividend that was announced with its half-year results.

Commonwealth Bank of Australia (ASX: CBA)

The CBA share price was just behind with a gain of 27% during the financial year. Investors were bidding Australia’s largest bank to record highs as banking sector optimism reached fever pitch. Interestingly, this was despite almost every major broker declaring the bank’s shares as overvalued 12 months ago.

ANZ Group Holdings Ltd (ASX: ANZ)

The ANZ share price was the next best performer with a 19.1% gain over the period. It was a busy period for the ASX bank share and its shareholders. ANZ delivered a solid half year result in May, announced another $2 billion share buyback, and made major progress with its proposed takeover of the banking operations of Suncorp Group Ltd (ASX: SUN). In fact, at the close of the financial year, the transaction was all but complete.

The post These were the five best ASX bank shares to own in FY24 appeared first on The Motley Fool Australia.

More reading

• Are Qantas or ANZ shares a better buy?
• Retirement planning guide: 710,000 Aussies to retire over next 5 years
• Here’s when Westpac says the RBA will cut interest rates after last week’s inflation data
• Here are the top 10 ASX 200 shares today
• Want the latest Vanguard Australian Shares Index ETF dividend? Here’s what to do

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

ASX blue-chip shares can be very appealing investments when bought at a good price. Both Qantas Airways Limited (ASX: QAN) and ANZ Group Holdings Ltd (ASX: ANZ) offer intriguing potential.

There is merit to owning some of the biggest S&P/ASX 200 Index (ASX: XJO) shares if they deliver outperformance. If a blue chip can’t beat the wider ASX share market, then an investor may as well go with an index fund such as the Vanguard Australian Shares Index ETF (ASX: VAS).

Many investors are attracted to ASX bank shares because of their large dividend yields. But, I think there’s more to an investment than just passive income, though that can certainly contribute to total shareholder returns.

We can compare Qantas and ANZ shares in a few areas. Let’s explore.

How much competition?

The amount of competition in an industry can affect how much profit a business can make.

If it’s easy for a new entrant to come in and compete on price, then margins may be regularly challenged.

Over the last five years, banks have operated in a more competitive environment. Digital banking has enabled the smaller players to challenge the major ASX bank shares, such as ANZ and Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB). These days, you don’t need a national branch network to provide borrowers with a service.

To demonstrate how much competition there is, here are some of the listed lenders outside the big four: Macquarie Group Ltd (ASX: MQG), Bank of Queensland Ltd (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), AMP Ltd (ASX: AMP), Pepper Money Ltd (ASX: PPM), MyState Ltd (ASX: MYS) and currently Suncorp Group Ltd (ASX: SUN).

In the ANZ FY24 half-year result, the bank’s CEO Shayne Elliott said retail banking was “more competitive than ever”. Elliott added that the domestic environment was “expected to remain challenging across the remainder of the year”.

Qantas is well-known as Australia’s national airline. It does not have much competition, with Virgin and Regional Express Holdings Ltd (ASX: REX) being the only domestic competitors it needs to worry about. There are not that many competitors for international flights into and out of Australia, either, which I think is helpful for Qantas shares.

Less competition for Qantas means the airline can achieve satisfactory airfare prices.

Earnings direction

If a company grows earnings, then its share price is more likely to rise, in my opinion. I think it’s one of the most important factors of successful investing.

ANZ’s CEO said the Australian and New Zealand economies were “likely to remain subdued”, though the bank was well-positioned given its diversity of businesses, prudent management, and strong customer base.

The broker UBS thinks ANZ’s profit will fall from $7.4 billion in FY23 to $7 billion in FY24. However, its FY25 profit is expected to recover to $7.3 billion, though that would still represent a reduction from FY23’s profit figure. Time will tell if the acquisition of Suncorp Group Ltd‘s (ASX: SUN) banking operations can help improve its scale and margins.

The banking sector is seeing rising arrears, so that will be something to watch over the next year for ANZ shares.

Qantas is recovering from the impacts of COVID-19 and is now making large profits again, though airfares are not quite as high as they were recently. Broker UBS suggests Qantas’ net profit could drop from $1.7 billion in FY23 to $1.49 billion in FY24 and then decline to $1.44 billion in FY25.

However, Qantas did recently reaffirm how it aims to grow the underlying earnings before interest and tax (EBIT) of its loyalty division from a range of $500 million and $525 million in FY24 to between $800 million to $1 billion for 2030

So, it appears neither business is expected to generate profit in FY25.

What about valuation?

Based on UBS estimates, the Qantas share price is valued at 6x FY24’s estimated earnings and 6x FY25’s estimated earnings.

Looking at the forecasts from UBS for ANZ shares, the bank is valued at 12x FY24’s estimated earnings and under 12x FY25’s estimated earnings. The ANZ dividend could certainly help with shareholder returns, though Qantas is expected to start paying a dividend, too.

Qantas is clearly on a cheaper earnings multiple. If no major negatives come up for the airline, I think it could deliver a stronger return over the next two or three years.

I’d also choose the airline for the longer term because of the lower amount of competition, the improving fuel economy of planes, and the growing Qantas Loyalty business.

The post Are Qantas or ANZ shares a better buy? appeared first on The Motley Fool Australia.

More reading

• These were the five best ASX bank shares to own in FY24
• Why Delta Lithium, IAG, Mirvac, and Suncorp shares are climbing today
• ANZ shares higher on ‘significant’ $4.9b Suncorp Bank acquisition approval
• Which ASX shares to buy if interest rates rise (and which to avoid)
• Qantas share price drops 3% amid Qatar rumours

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

Lendlease Group (ASX: LLC) shares are starting the week positively.

In morning trade, the ASX 200 share is up 1.5% to $5.49.

Why is this ASX 200 share pushing higher today?

Investors have been buying Lendlease shares after it entered into an asset sale agreement with Omaha Beach Investment, an entity managed by Guggenheim Partners Investment Management.

According to the release, the agreement is for the sale of its US Military Housing business for A$480 million (US$320 million).

Management notes that the sale represents a significant premium to book value and includes the operating platform of the business along with the associated management rights for asset, property, development and construction management. Approximately 150 employees will transfer with the sale.

ASX 200 share points out that the transaction builds on the significant progress made as it executes on its strategy announced in May. This involves re-focusing on its Australian operations and international investment management capabilities, while recycling more than $4.5 billion of capital.

The company expects the transaction to result in FY 2025 operating profit after tax (OPAT) of $105 million to $120 million, with financial close and receipt of cash proceeds targeted by the end of the first half. Though, the transaction is subject to completion adjustments and conditions precedent. This includes third-party consents from particular service branches of the U.S. Department of Defense.

‘Significant progress’

The ASX 200 share’s CEO, Tony Lombardo, was happy with the news. He highlights the strong progress the company is making recycling capital. He commented:

With $1.9 billion of transactions already announced, including the sale of US Military Housing, we have made significant progress towards our target of recycling $2.8 billion of capital in the next 12 months. As this transaction demonstrates, we continue to take a disciplined approach to capital recycling, achieving premiums to book value, as we balance speed of execution with achieving value for our securityholders.

Implementation of our strategy is progressing well, with cost savings being realised across the regions as we today move to a simplified management structure. We are also working to complete the sales of our Life Sciences joint venture and our Communities projects. The announced exit from international Construction is well progressed, with the sale of our US East Coast operations anticipated to close in the coming months. Preparations have also commenced to sell our UK construction business within the next 18 months.

Life Sciences delays

One piece of news that could be holding back the ASX 200 share a touch is that completion of the sale of its Life Sciences interests into a new Asia Pacific Joint Venture is now expected to complete in the first half of FY 2025.

As a result, Lendlease now anticipates FY 2024 OPAT to be $260 million to 275 million. And FY 2024 Group gearing is now anticipated to be at the upper end of the 10% 20% target range, before the anticipated provision for impairments and charges.

This compares to previous guidance of “approximately $450m of OPAT” and group gearing “to be modestly above the midpoint of the 10-20% target range.”

The post Guess which ASX 200 share is pushing higher on $480m asset sale appeared first on The Motley Fool Australia.

More reading

• Insiders are buying these ASX shares after selloffs
• Insiders are buying these 6 ASX All Ords 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 passive income from ASX shares can be very rewarding. How easy is it to watch the cash hit your bank account every year – no effort at all! Some businesses are known for growing their dividend payouts, while others can offer large dividend yields.

When businesses are paying out a lot of their profit, they aren’t reinvesting significantly for long-term growth. So, don’t expect tons of capital growth from stocks with large dividend yields. However, dividend payments can be less volatile than share prices, which some investors may like.

The two high-yield ASX shares below are expected to grow their dividend payouts in FY25 and FY26. However, a tough retail environment could mean FY24 (which has just finished) results could see a dividend reset.

Shaver Shop Group Ltd (ASX: SSG)

This ASX retailer sells male and female grooming products and wants to be the market leader in ‘all things related to hair removal’. It has 123 stores across Australia and New Zealand and also sells products through its own websites and other online marketplaces.

It aims to offer customers a wide range of quality brands at competitive prices, supported by “excellent staff product knowledge”. The company’s scale enables it to negotiate exclusive products with suppliers. For example, it recently secured exclusive rights to distribute and sell Skull Shaver’s full range of products across Australia and New Zealand.

It also retails products across oral care, hair care, massage, air treatment and beauty categories.

Impressively, the high-yield ASX shares grew their dividend every year between FY17 and FY23, so the company has a strong commitment to rewarding shareholders.

According to the estimates on Market Screener, the business could pay a grossed-up dividend yield of 11.8% in FY25 and 12.2% in FY26.

Accent Group Ltd (ASX: AX1)

Accent is an ASX retail share that sells a wide variety of shoes. It acts as a distributor for a number of global shoe brands, including CAT, Dr Martens, Henleys, Herschel, Hoka, Kappa, Merrell, Skechers, Ugg and Vans.

The business also has several of its own brands, including Trybe, The Athlete’s Foot, Stylerunner, Platypus, Glue Store, and Nude Lucy.

Shoe retailing is not the most defensive industry in the world. Accent’s partnerships with global brands are not 100-year deals; they’re quite short-term. As such, Accent normally trades on a low price/earnings (P/E) ratio, but this can result in a big payout from the high-yield ASX share.

After FY24, the business could see profitability recover as cost growth slows, the store rollout continues, digital sales grow, and more brands are potentially added to its portfolio.

The estimate on Commsec suggests Accent could pay an annual dividend per share of 14 cents in FY25 and 16 cents per share in FY26, translating into forward grossed-up dividend yields of 10.3% and 11.8%, respectively.

The post 2 high-yield ASX shares predicted to pay huge dividends in FY26 appeared first on The Motley Fool Australia.

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

If you own shares of Wesfarmers Ltd (ASX: WES), congratulations!

Over the past year, the Wesfarmers share price has surged 32% to reach $65.18, outperforming the S&P/ASX 200 Index (ASX: XJO), which has grown 8% in the same period.

This remarkable performance can be attributed to the strength of Wesfarmers’ renowned retail brands, such as Bunnings, Kmart, and Officeworks. After all, who doesn’t enjoy visiting these stores on the weekends?

Beyond retail, Wesfarmers also maintains diverse business interests spanning chemicals, industrials, and healthcare providers.

Given its strong portfolio and recent performance, the question remains: Can Wesfarmers shares continue to deliver superior returns going forward?

What drives share price performance?

The share price of a company can be understood by looking at two key factors: earnings per share (EPS) and the price-to-earnings (PE) ratio.

EPS measures a company’s profit divided by the number of shares it has. The PE multiple shows how much investors are willing to pay for each dollar of earnings. By multiplying the EPS by the PE multiple, we get the share price.

For example, Wesfarmers’ FY25 EPS estimate of $2.48 and a PE multiple of 26 lead to its share price of $65.18, based on S&P Capital IQ. If the EPS rises to $3, the share price will increase to $78, assuming the PE multiple stays the same.

Thus, share prices change based on both the company’s earnings and investor sentiment.

Earnings growth expectations

Wesfarmers’ EPS estimates over the next three years appear to assume the company will soon resume a double-digit profit growth. Using S&P Capital IQ estimates, EPS estimates for Wesfarmers are:

• $2.25 in FY24, implying a 3.4% growth over the previous year
• $2.48 in FY25, implying a 10.3% growth over the previous year
• $2.76 in FY26, implying a 11% growth over the previous year

As we reviewed previously, Wesfarmers’ business results this year have been mixed. The company’s strong retail businesses continue to perform well, but hopes for its upcoming lithium mining venture have lost shine due to weak global commodity prices.

Looking ahead, the company remains confident about its retail business and, as my colleague Tristan highlighted, it expects lithium hydroxide production to commence in the first half of the 2025 calendar year.

PE multiples are high

Wesfarmers shares are currently trading at 26x FY25 earnings estimates. Historically, their PE multiples have ranged from 15x to 32x, making the current valuation relatively high.

Comparing Wesfarmers to its peers, based on earnings estimates provided by S&P Capital IQ:

• Woolworths Group Ltd (ASX: WOW) shares are valued at 23x FY25’s estimated earnings.
• Coles Group Ltd (ASX: COL) shares are valued at 20x FY25’s estimated earnings.

Given this context, it seems unlikely that Wesfarmers’ PE multiple will increase significantly from its current level.

Can Wesfarmers shares outperform the ASX 200?

Over the last 10 years, the ASX 200 Index generated a total return of 7.6%, including a dividend yield of 4.7%.

As discussed, Wesfarmers shares have the potential to outperform the index if the company achieves the expected 10% EPS growth while maintaining a 26x PE multiple. However, the success of this largely depends on the progress of its lithium projects and the direction of global commodity prices in particular.

Despite this uncertainty, Wesfarmers remains one of the top dividend payers on the ASX, currently offering a fully franked dividend yield of 3%. While it’s challenging to predict when lithium prices will rise, Wesfarmers shares can be a valuable addition for dividend-focused investors.

The post Can Wesfarmers shares keep beating the ASX 200 index? appeared first on The Motley Fool Australia.

More reading

• Top brokers name 3 ASX shares to buy next week
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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 positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX share market saw plenty of volatility over the last 12 months, and FY25 could be another very interesting year. One expert has revealed which ASX sectors he sees as opportunities.

Ausbil’s chief investment officer (CIO), Paul Xiradis, has been investing for around 45 years. Xiradis thinks the market underestimates the strength of the Australian economy and how strong business profits may be in FY25, according to an Australian Financial Review report.

The fund manager suggests earnings by ASX companies could increase by 5%, almost double what investment bank brokers are forecasting.

Which ASX sectors could perform in FY25?

Xiradis had this to say about how FY25 may pan out for the ASX share market:

Looking into FY25, there are a number of sectors which are going to grow far greater than the 5 per cent we forecast [for the market], like healthcare, technology, and we even expect the banks to do a little better than markets project.

We also see the drivers of decarbonisation still contributing, and we think AI will be with us for many years to come and so we see more upgrades coming through even though valuations have shifted up.

While Ausbil has less of an allocation to the ASX bank share sector than the benchmark, the fund manager thinks bank margins will do better than expected when the market realises interest rates may need to remain higher for longer.

Xiradis commented on the banks:

We just don’t think there’s going to be a downshift in earnings. So we expect the banks to deliver a better outcome than markets expect, not by much, perhaps a few per cent, but it could be greater if it all falls in their favour

Ausbil is optimistic about AI, data centres, ‘smart’ warehouses and logistics, so it has stakes in Nextdc Ltd (ASX: NXT) and Goodman Group (ASX: GMG).

Mining and energy

The fund manager is also optimistic about the business case for beneficiaries of decarbonisation, such as companies that could benefit from growing demand for copper. Xiradis suggested the market will need to lift its expectations of how high copper prices could go because of the lack of new supply.

Ausbil is ‘overweight’ on BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO) even though iron ore prices have fallen. BHP has compelling exposure to copper and metallurgical coal, while Rio Tinto has appealing aluminium assets, according to the fund manager.

Xiradis is bullish on AGL Energy Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG), suggesting the energy sector has “significant potential” due to higher energy prices, high government support and a strong demand outlook.

The post What this expert predicts will be the best-performing ASX sectors in FY25 appeared first on The Motley Fool Australia.

More reading

• Leaders and laggards of the ASX market sectors in FY24
• Buy Rio Tinto and these ASX dividend shares in July
• 3 fantastic ASX growth shares to buy in July
• Retirement planning guide: 710,000 Aussies to retire over next 5 years
• Here’s how the ASX 200 market sectors stacked up last week

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

Some ASX tech shares delivered huge returns in FY24, with triple-digit percentage gains. Given that the All Ordinaries (ASX: XAO) climbed by 8.3% during FY24, these All Ords tech stocks did remarkably well.

Some industries have advantages when it comes to growth, and tech may be the most advantaged of all. Many companies within the sector offer software that can achieve strong profit margins because of the software’s intangible nature. They also may be able to deliver strong revenue growth because software can be instantly replicated, whereas physical goods require manufacturing, shipping, and storage.  

Below are three of the best-performing ASX tech shares in FY24 within the All Ords. As always, remember that past performance is not a guarantee of future performance.

Gentrack Group Ltd (ASX: GTK)

Over the 12 months to 30 June 2024, Gentrack shares rose by 140%. It’s important to note Gentrack’s 2024 financial year finishes on 30 September 2024, there are still a few months to go.

Gentrack provides software to energy and water utility companies, as well as airports.

The company is benefiting from a return passenger volume to airports, with the airports spending on projects and improvements. Gentrack is also winning customers and seeing customers upgrade.

In the recent FY24 first-half result, Gentrack reported revenue growth of 21% to $102 million and also upgraded its guidance. For FY24, it previously expected revenue of at least $170 million, and now its guidance is around $200 million of revenue for the current financial year.

The company also upgraded its earnings before interest, tax, depreciation and amortisation (EBITDA) guidance range to between $23.5 million and $26.5 million, up from the previous range of between $20.5 million and $25.5 million.

DUG Technology Ltd (ASX: DUG)

In the 12 months to 30 June 2024, DUG Technology shares rose by 136%.

This company specialises in “analytical software development, big-data services and reliable, green, high-performance computing (HPC)”.

The market usually pays the most attention to a company’s most recent update. For the FY24 third quarter, the ASX tech share’s total revenue grew 39% year over year to US$17.6 million, and EBITDA rose 24% to US$4.6 million.

DUG Technology also reported US$14.6 million of new service projects were awarded in the three months to 31 March 2024, taking the total services order book at 31 March 2024 to US$43.1 million, an increase of 6% compared to 31 December 2023.

In addition, the company revealed plans to start a new business unit in the Middle East after unearthing a “great deal of opportunity” in Abu Dhabi.

Bravura Solutions Ltd (ASX: BVS)

The Bravura Solutions share price has soared 130% in the 12 months to 30 June 2024.

Bravura describes itself as a leading provider of software solutions for the wealth management, life insurance and funds administration industries.

The ASX tech share reported growth and a recovery in the FY24 first-half result, which showed revenue increased 7.4% to $127 million. EBITDA grew 11.5% to $7.9 million and cash EBITDA returned to profitability with $0.3 million of positive cash EBITDA generation. Adjusted net profit after tax (NPAT) rose $12.6 million to a loss of $1.7 million.

Bravura is forecasting that FY24 revenue to be around the same as FY23, while its transformation plan is now expected to deliver $40 million in gross cost-out savings.

The post 3 best ASX tech shares of FY24 appeared first on The Motley Fool Australia.

More reading

• Bell Potter names the best ASX tech stocks to buy in FY25
• 3 of the best growth-focused ASX shares to buy in June
• This fund returned 30% per annum for 3 years. Here are the ASX shares it’s buying now.

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 Bravura Solutions, Dug Technology, and Gentrack Group. The Motley Fool Australia has positions in and has recommended Gentrack Group. The Motley Fool Australia has recommended Dug Technology. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Adairs Ltd (ASX: ADH) share price has sunk 60% since June 2021 and is almost 30% lower since March 2024.

With such a massive fall over the past few years, could the ASX dividend stock be capable of providing solid passive income?

When a share price falls, it can increase the prospective dividend yield. For example, if a company had a share price of $10 and paid a dividend per share of 60 cents, it’d have a dividend yield of 6%. If the share price fell 50% to $5, and the dividend payment was still 60 cents per share, the dividend yield would become 12%.

However, it’s common for a dividend payment to be reduced during a period of heavy share price decline because the sinking valuation is a sign that profits are under pressure.

But, it’s still possible to find cyclical ASX dividend stocks that can deliver recovering profit and a resurgent dividend.

Adairs may be one of those cyclical businesses that could recover over the next couple of years.

Is recovery on the way?

The trading environment for discretionary ASX retail shares has been tough, with many households having less money to spend amid this inflationary environment. Expensive mortgages and soaring rent have certainly made things challenging for the retail sector.

The company’s latest earnings results did not indicate booming trading conditions. In February, Adairs said it continued to see “significantly lower” customer traffic than the same period last year. Consumers remained “value-orientated, with conversion declining notably when offers are reduced”.

In weeks 27 to 34 of FY24, group sales were down 9.6% year over year, with Adairs sales down 9.5%, Focus on Furniture sales down 14.1%, and Mocka sales up 4%.

However, there were some silver linings. Due to the material decline in sales that occurred in May 2023, Adairs management expects that the group’s comparative sales performance will improve across the second half of FY24. It’s also focused on managing the gross profit margin, which was up 200 basis points (2.00%) year over year.

Adairs expects trading to remain subdued, but initiatives could help profit recover, such as its product range, supply chain improvements, the Adairs-operated national distribution centre, cost of doing business (CODB) management and a store rollout.

The broker UBS suggests Adairs could generate net profit after tax (NPAT) of $36 million in FY24, $44 million in FY25 (up 22%) and $52 million in FY26 (up 18%).

Large dividends predicted

UBS has forecast that Adairs could pay an annual dividend per share of 18 cents in FY25, which would be a grossed-up dividend yield of 14%.

The broker has suggested Adairs could then pay an annual dividend per share of 21 cents per share in FY26 — a grossed-up dividend yield of 16%.

Dividends are not guaranteed, but if the company can reset its profitability, it could be a significant dividend payer in the coming years. However, it can’t be ruled out that tough trading conditions could continue throughout FY25.

The post 1 ASX dividend stock to buy that’s down 60% appeared first on The Motley Fool Australia.

More reading

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• My ASX share portfolio has two giant weeds in it. Should I pull them out?
• This ASX share is projected to pay a huge yield of 16% in 2026!

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

The Vanguard Australian Shares High Yield ETF (ASX: VHY) may be best known for its high level of passive income. But there’s more to consider about the ASX exchange-traded fund (ETF) than that.

ETFs pass on the dividends they receive to their shareholders, so the higher the dividend yield from an underlying holding, the stronger the yield collected by the EFT.

This is why the VHY ETF focuses on ASX stocks with a high dividend yield, investing in companies that have “higher forecast dividends relative to other ASX-listed companies.”

It achieves diversification by (regularly) restricting the proportion invested in any one industry to 40% of the total ETF and 10% in any one company. Australian real estate investment trusts (REITs) are excluded from the fund.

Which ASX shares are in the VHY ETF portfolio?

The largest positions in the portfolio are some of the biggest companies on the ASX.

At the end of May 2024, these were the biggest weightings in descending order:

• Commonwealth Bank of Australia (ASX: CBA)
• BHP Group Ltd (ASX: BHP)
• National Australia Bank Ltd (ASX: NAB)
• Wesfarmers Ltd (ASX: WES)
• Westpac Banking Corp (ASX: WBC)
• ANZ Group Holdings Ltd (ASX: ANZ)
• Woodside Energy Group Ltd (ASX: WDS)
• Macquarie Group Ltd (ASX: MQG)
• Rio Tinto Ltd (ASX: RIO)
• Telstra Group Ltd (ASX: TLS)

Looking at the overall portfolio’s balance, more than 60% of the sector allocation is to financial and mining shares, with weightings of 42.8% and 21.3%, respectively. ASX energy shares have a 10.4% position in the portfolio. These sectors typically have high dividend yields.  

Vanguard Australian Shares High Yield ETF dividend yield

This fund will undoubtedly produce a high level of passive dividend income each year. But how much?

Each ASX position in the portfolio influences the overall yield of the VHY ETF. Vanguard uses forecast dividend figures from Factset to tell investors the fund’s overall forecast yield.

According to the fund’s monthly update for May 2024, the Vanguard Australian Shares High Yield ETF has a forecast partially franked dividend yield of 4.9% and a forecast grossed-up dividend yield of 6.6%.  

Is this fund a good long-term buy?

For investors entirely focused on passive dividend income, I think it can be an effective option. Its annual management fee is only 0.25%.

However, I believe almost everyone should want to see earnings growth and capital growth from their invested businesses.

The sectors that the VHY ETF is invested in are typically slower-growing, compared to technology for example. To have a high dividend yield, businesses typically pay out a lot of their profit, so they do not retain much profit to reinvest for growth. This dynamic has resulted in the Vanguard Australian Shares High Yield ETF producing little capital growth.

In the last three years, the VHY ETF has returned an average of 8.8% per annum, but only 3% per annum of that was capital growth. In the past 10 years, it has returned an average of 6.9% per annum and the capital growth has been a paltry 0.6% per annum.

This ETF can provide good cash flow. However, it may be useful to invest in other ASX ETFs that focus on globally growing businesses, which can produce stronger overall returns due to their earnings and capital growth.

Examples of global ETFs include Vanguard MSCI Index International Shares ETF (ASX: VGS) and VanEck MSCI International Quality ETF (ASX: QUAL), which have track records of total long-term returns of more than 10% per annum. However, past performance is not a guarantee of future performance.

The post Is the Vanguard Australian Shares High Yield ETF (VHY) a good long-term buy? appeared first on The Motley Fool Australia.

More reading

• Want the latest Vanguard Australian Shares Index ETF dividend? Here’s what to do
• Buy these ASX ETFs in July for passive income
• 3 top ASX ETFs to buy in July
• Top ASX passive income shares to buy before June 30
• Buy these ASX ETFs for income in June

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 Macquarie Group and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group, Telstra Group, and Wesfarmers. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.