Tag: Fool

If you’re looking for some tech sector exposure, then you may want to check out these two stocks in this article.

That’s because analysts at Bell Potter have just named them as ASX tech stocks to buy. Here’s what the broker is saying about them:

Hub24 Ltd (ASX: HUB)

The first ASX tech stock that Bell Potter is bullish on is Hub24. It is an investment platform provider with $84.4 billion of funds under administration (FUA).

Bell Potter has been impressed with the company’s growth in FY 2024 and believes it is well-positioned to continue this positive trend in the coming years. In light of this, it feels its shares are undervalued at current levels. It said:

We reiterate our Buy recommendation. HUB looks cheap relative to other high growth specialist platforms and the outlook for principal net flows should underpin incremental earnings growth. Our preference is predicated on a large exposure to superannuation assets. Delivering on complex integrations is another tick in our view.

Bell Potter has a buy rating and $53.20 price target on its shares. This implies potential upside of 14% for investors from current levels.

Integrated Research Limited (ASX: IRI)

Another ASX tech stock that could be a buy according to Bell Potter is experience management solutions provider Integrated Research.

It designs, develops, implements, and sells solutions that optimise business-critical systems. This provides insights, monitoring, and support to keep payment hubs, unified communications ecosystems, and contact centres running as they should.

Bell Potter was pleased with the company’s performance during the second half and notes that management now expects to hit the upper end of its guidance range for revenue and earnings. This has ultimately boosted the broker’s confidence in the tech stock’s outlook and underpinned an increase in its valuation. It said:

We have updated each valuation used in the determination of our price target for the forecast changes and also rolled forward the DCF by a year. We have also increased the multiples we apply in the PE ratio and EV/EBITDA valuations from 9.5x and 7.25x to 10.5x and 7.75x and also reduced the WACC we apply in the DCF from 10.2% to 9.7% due to the strong FY24 result and relatively positive outlook.

Bell Potter has put a buy rating and $1.05 price target on the company’s shares. Based on its current share price of 90 cents, this suggests that upside of 17% is possible over the next 12 months.

The post 2 ASX tech stocks to buy now: Broker appeared first on The Motley Fool Australia.

More reading

• Why EOS, Hub24, Integrated Research, and Kingsgate shares are pushing higher
• Up 80% in a year, why is this ASX 200 stock hitting a record high today?
• Why Hub24, Netwealth, Pantoro, and WA1 shares are falling today
• Shares vs. property: Which stocks and suburbs delivered the best growth in FY24?
• Buy this ASX tech stock with a $600b opportunity

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 Hub24. The Motley Fool Australia has recommended Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Pilbara Minerals Ltd (ASX: PLS) shares will be on watch next week.

That’s because the lithium giant is scheduled to release its highly anticipated quarterly update on 24 July.

Ahead of the release of the update, let’s take a look at what the market is expecting from the miner when it hands down its report card.

What should you expect?

According to a note out of Goldman Sachs, its analysts are expecting Pilbara Minerals to report stronger than expected spodumene production for the three months ended 30 June.

It is forecasting production of 194,000dmt, which is up 10.2% quarter on quarter and 19% on the prior corresponding period.

Whereas the consensus estimate is for a smaller increase in production to 184,000dmt for the fourth quarter.

What about sales?

Goldman is expecting Pilbara Minerals’ spodumene sales to also come in ahead of expectations. It is forecasting sales of 209,000dmt, compared to the consensus estimate of 190,000dmt.

However, the broker believes this will be achieved with a realised spodumene price of US$923 per tonne. This is short of the consensus estimate of US$961 per tonne. It is also down 71.7% from US$3,256 per tonne a year earlier.

Still profitable

Despite the collapse in lithium prices, Goldman expects Pilbara Minerals’ operations to remain profitable. The broker has pencilled in unit cash costs (including freight and royalties) of US$489 per tonne. This will be down from US$519 per tonne in the previous quarter.

At the end of the quarter, the broker expects this to leave Pilbara Minerals with a cash balance of US$1,299 million.

Should you buy Pilbara Minerals shares?

Despite its relatively positive view on the company’s operations, Goldman Sachs isn’t recommending Pilbara Minerals shares as a buy.

It currently has a sell rating and $2.60 price target on its shares. Based on its current share price of $3.00, this implies potential downside of approximately 14% for investors over the next 12 months.

It recently commented:

We see near-term FCF continuing to decline on lithium prices and increasing growth spend (c. -10% FCF yield in FY24E, and c.0% in FY25-27E). Overall, we see PLS spending ~A$0.85bn on P1400, taking total capex spend from FY24E to FY28E on current and P1400 expansions to ~A$3bn, ~A$0.9bn ahead of consensus which already prices further expansion. Furthermore, we see PLS’ net cash declining to ~A$0.8-0.9bn (though still a relatively strong position vs. some peers and defensive into a declining lithium price), where with the stock trading at ~1.2x NAV (peer average ~1.05x), or pricing ~US$1,300/t spodumene (including a nominal value of A$1.1bn for growth) vs. peers at ~US$1,210/t (lithium pure-plays ~US$1,110/t; GSe US$1,150/t LT real), we see PLS as relatively expensive on fundamentals.

The post Own Pilbara Minerals shares? Here’s what to expect from next week’s Q4 update appeared first on The Motley Fool Australia.

More reading

• 5 ways ASX shares investors define financial success
• Here’s the lithium price forecast through to 2027
• Are AGL or Pilbara Minerals shares a better buy?
• Top 10 most traded ASX shares and US stocks in June
• These are the 10 most shorted ASX 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 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.

Looking to boost your income portfolio with some good dividend yields? If you are, then check out the buy-rated ASX dividend shares listed below.

They have been named as buys and tipped to provide income investors with yields of X to Y. Here’s what you need to know about them:

Healthco Healthcare and Wellness REIT (ASX: HCW)

The first ASX dividend share that could be a buy is HealthCo Healthcare & Wellness REIT.

It is a real estate investment trust with a mandate to invest in hospitals, aged care, childcare, government, life sciences and research, and primary care and wellness property assets.

Bell Potter is a big fan and highlights its “significant scope for growth with an estimated $218 billion addressable market where an ageing and growing population should underpin long-term sector demand.”

In the near term, the broker is forecasting dividends per share of 8 cents in FY 2024 and then 8.3 cents in FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.15, this will mean dividend yields of 7% and 7.2%, respectively.

Bell Potter currently has a buy rating and $1.50 price target on its shares.

IPH Ltd (ASX: IPH)

Another ASX dividend share that could be a buy this week is IPH. It is an intellectual property solutions company with operations across the world.

Analysts at Goldman Sachs are tipping its shares as a buy. The broker believes IPH is “well-placed to deliver consistent and defensive earnings with modest overall organic growth.”

It expects this to underpin fully franked dividends per share of 34 cents in FY 2024 and then 37 cents in FY 2025. Based on the current IPH share price of $6.15, this represents yields of 5.5% and 6%, respectively.

Goldman currently has a buy rating and $8.70 price target on IPH’s shares.

Universal Store Holdings Ltd (ASX: UNI)

A third ASX dividend share that could be a great pick for income investors is Universal Store. It is a youth fashion retailer that operates the Universal Store, Thrills, and Perfect Stranger store brands.

Morgans thinks it would be a top option for investors. It likes the retailer due to its belief that its “growth opportunities are in place” and that “customers continue to respond well to the Universal Store banner.”

In respect to dividends, the broker is forecasting fully franked dividends per share of 26 cents in FY 2024 and then 29 cents in FY 2025. Based on its current share price of $5.19, this will mean yields of 5% and 5.6%, respectively.

The broker currently has an add rating and $6.50 price target on its shares.

The post Buy these ASX dividend shares with 5% to 7% yields appeared first on The Motley Fool Australia.

More reading

• Why brokers say these ASX income stocks are top buys
• Top high-yield ASX shares to buy in July 2024
• 3 high-yield ASX dividend shares to supercharge your passive income stream
• Very big dividend yields are expected from these ASX stocks
• Buy these ASX dividend shares for 5% to 7% yields

Motley Fool contributor James Mickleboro has positions in Universal Store. 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 recommended IPH. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Tuesday, the S&P/ASX 200 Index (ASX: XJO) ran out of steam and dropped into the red. The benchmark index fell 0.2% to 7,999.3 points.

Will the market be able to bounce back from this on Wednesday? Here are five things to watch:

ASX 200 expected to rebound

It looks set to be a better day for the Australian share market on Wednesday thanks to a positive session in the United States. According to the latest SPI futures, the ASX 200 is expected to open the day 52 points or 0.65% higher. On Wall Street, the Dow Jones was up 1.8%, the S&P 500 rose 0.65% and the Nasdaq climbed 0.2%. The Dow Jones had its best session in over a year.

Oil prices fall

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a difficult session after oil prices dropped overnight. According to Bloomberg, the WTI crude oil price is down 1.25% to US$80.88 a barrel and the Brent crude oil price is down 1.2% to US$83.84 a barrel. Chinese demand concerns put pressure on oil prices.

BHP Q4 update

BHP Group Ltd (ASX: BHP) shares will be on watch today when the mining giant releases its fourth quarter update. The market is expecting the Big Australian to report iron ore shipments of 74.9Mt for the three months with a realised iron ore price of US$101 per tonne. The consensus estimate for copper production is 470kt with a realised price of US$4.05 per tonne. And nickel production is expected to come in at 4.9Mt for the quarter.

Gold price surges to record high

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a great session after the gold price surged to a record high overnight. According to CNBC, the spot gold price is up 1.7% to US$2,470.7 an ounce. This has been driven by hopes that the US Federal Reserve will cut rates soon.

Buy Rio Tinto shares

The Rio Tinto Ltd (ASX: RIO) share price could be good value according to analysts at Goldman Sachs. In response to the mining giant’s quarterly update, the broker has retained its buy rating with a trimmed price target of $136.10. It said: “Compelling relative valuation: trading at c. ~0.8x NAV (A$144.0/sh) vs. peers (BHP ~0.9x NAV and FMG ~1.3x NAV) and c. ~5.5x NTM EBITDA at GSe base case, below the historical average of ~6-7x.”

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• No savings? I’d use the Warren Buffett method to earn lifelong passive income with ASX shares
• Why are BHP and other ASX 200 mining shares getting hammered on Tuesday?
• Why Champion Iron, Core Lithium, Encounter Resources, and Rio Tinto shares are dropping
• Rio Tinto shares fall on soft second quarter update

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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.

It’s fair to say that Fortescue Ltd (ASX: FMG) shares have had a fairly rough year in 2024 so far. Since the beginning of January, the Fortescue share price has lost a chunky 23.14% of its value, dropping from around $29.39 to the $22.59 we see today.

That doesn’t look great against the performance of the S&P/ASX 200 Index (ASX: XJO), which has risen by 4.87% over the same period.

But whilst this has no doubt been painful for Fortescue investors to endure, it has done wonders for the ASX 200 iron ore giant’s dividend yield.

Right now, Fortescue shares are trading on a whopping trailing dividend yield of 9.21%.

If we consider that Fortescue’s dividend payments usually come with full franking credits attached, this yield grosses up to an even more impressive 13.16% with the value of that full franking included.

So, is that all that needs to be said? Does Fortescue’s 9.21% dividend yield make this stock a screaming buy today? Let’s break it down.

Are Fortescue shares a screaming buy for that 9.2% dividend yield?

Well, to start off with, that massive dividend yield is no joke.

It comes from Fortescue’s two most recent dividend payments. The first was the miner’s final dividend of $1 per share, which we saw doled out in September last year. The second was the interim dividend of $1.08 per share, which was paid out in March.

As we mentioned above, both of these payments came fully franked. Together, they give Fortescue shares that 9.21% yield we see today.

However, just because Fortescue has coughed up that amount over the past 12 months doesn’t mean it will continue to do so going forward.

No company is ever under any kind of obligation to keep its dividends at the levels they were in the previous year. Indeed, as a miner, Fortescue’s dividends are even less reliable than those of most other ASX shares.

Any company’s ability to pay out dividends depends on its profitability from year to year. As Fortescue is completely reliant on the global price of iron ore for its own profits, its dividends are fundamentally unstable.

We can see this play out if we look back at the company’s past dividend payments. While the dividends that shareholders have enjoyed over the past 12 months are still substantial, Fortescue’s raw dividends have been volatile for years.

For example, over the 2021 calendar year, the company paid investors $3.58 in dividends per share. But just two years earlier, the annual total was a far less impressive $1.14.

Foolish takeaway

So long story short, it would be naive to buy Fortescue shares today with the expectation of receiving a 9%-plus yield going forward.

Saying that, I would still happily buy Fortescue today for its dividend income potential. This is one of the best-run iron ore miners on the ASX, with a very low-cost base for extracting and processing its ore.

When iron prices are low, the dividends may slow. But over the long term, I think investors can expect a lot of income from this company.

So, if maximising income was a primary goal of my investing strategy, I would happily buy Fortescue shares today as part of a diversified dividend portfolio.

The post Is the 9.2% dividend yield on Fortescue shares too tempting to pass up? appeared first on The Motley Fool Australia.

More reading

• Why are BHP and other ASX 200 mining shares getting hammered on Tuesday?
• It’s official, Aussies are getting richer! Here’s how
• Top 10 most traded ASX shares and US stocks in June
• I’d buy Fortescue shares today to generate $2,000 of monthly passive income
• Is it time to dive back into ASX lithium shares?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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 Australian Shares Index ETF (ASX: VAS) was the most traded exchange-traded fund (ETF) among investors using the SelfWealth trading platform last month.

The Vanguard Australian Shares Index ETF is an index-based ETF that tracks the performance of the S&P/ASX 300 Index (ASX: XKO).

This gives VAS investors exposure to major stocks like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia Ltd (ASX: CBA), CSL Ltd (ASX: CSL), and Wesfarmers Ltd (ASX: WES).

ETFs are an increasingly popular investment vehicle for Australian investors.

Value of ASX exchange-traded funds exceeds $200 billion

ASX ETFs now represent more than $200 billion in assets under management, according to ETF provider BetaShares’ half-year review.

Co-founder of Betashares, Ilan Israelstam, said: “The ETF industry continues to go from strength to strength, as investors increasingly adopt ETFs to build their portfolios.”

One of the benefits of exchange-traded funds is they provide instant diversification in a single trade. 

Let’s review the top 10 ETFs traded in June, according to SelfWealth.

Top 10 most traded ASX ETFs in June

Here are the top 10 most traded exchange-traded funds in June by volume (thus incorporating both buy and sell orders), according to Selfwealth Ltd (ASX: SWF).

We have also included the percentage of buy orders next to each exchange-traded fund.

Rank	Top ASX ETFs by trading volume	Percentage of buy orders
1	Vanguard Australian Shares Index ETF (ASX: VAS)	73.1%
2	Vanguard Msci Index International Shares ETF (ASX: VGS)	81.7%
3	Vanguard Diversified High Growth Index ETF (ASX: VDHG)	71.4%
4	Betashares Nasdaq 100 ETF (ASX: NDQ)	77.5%
5	iShares S&P 500 AUD ETF (ASX: IVV)	83%
6	BetaShares Australia 200 ETF (ASX: A200)	75.6%
7	Vanguard US Total Market Shares Index AUD ETF (ASX: VTS)	69.6%
8	BetaShares Diversified All Growth ETF (ASX: DHHF)	81.5%
9	BetaShares Geared Australian Equity ETF (ASX: GEAR)	57.8%
10	Global X Fang+ ETF (ASX: FANG)	70.4%

Which ETF attracted the most buyer interest?

The iShares S&P 500 AUD ETF attracted the most buy orders among the top 10 most traded ETFs in June.

The iShares S&P 500 ETF is an index-based ETF that tracks the performance of the 500 largest United States companies comprising the S&P 500 Index (SP: .INX).

It appears investors remain confident that US shares will continue to outperform the ASX 200.

In FY24, the S&P 500 rose by 22.7% while the S&P/ASX 200 Index (ASX: XJO) lifted 7.83% (or 12.1% with dividends included).

The IVV exchange-traded fund is among the 10 cheapest ETFs on the market.

We note that the ninth most traded ETF in June was the GEAR ETF.

GEAR delivered the best three-year returns among ASX ETFs, according to recently published data.

Check out the ASX global shares exchange-traded funds that delivered 50% to 70% returns last year.

The post Top 10 most traded ASX ETFs in June appeared first on The Motley Fool Australia.

More reading

• 5 ways ASX shares investors define financial success
• Own the Vanguard Australian Shares Index ETF (VAS)? Here’s how much you’ll get paid today
• Why I’d still call the FANG+ ETF a buy
• Buy and hold these ASX ETFs until 2030
• Should Aussies choose Vanguard Australian Shares Index ETF (VAS) or a term deposit for passive income?

Motley Fool contributor Bronwyn Allen has positions in BHP Group, CSL, Commonwealth Bank Of Australia, Vanguard Australian Shares Index ETF, Vanguard Diversified High Growth Index ETF, and Vanguard Us Total Market Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, CSL, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and Wesfarmers. The Motley Fool Australia has recommended CSL, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. 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 have been a hot topic among ASX investors following their successful initial public offering (IPO).

Since its listing, the stock has surged more than 20% into the green and now trades at $26.52 apiece. But the room is split on what to do with GYG shares from here.

With the buzz around this Mexican fast-food chain, it’s worth exploring why GYG shares might be a good addition to your portfolio—and one reason you might want to hold off. Here’s what the experts are saying.

Should you consider buying GYG shares?

GYG shares were all the rage in the first half of CY 2024. They were also a key contributor to the June returns of Firetrail Investments’ Absolute Return Fund.

In its monthly report, the firm said GYG was a “positive contributor” to its June return of 2.75%, bringing its second-quarter return to 7.3%.

The investment management boutique outlined four reasons for owning GYG shares.

1. Strong financials underneath GYG shares

Firetrail says Guzman y Gomez has shown impressive growth, with network sales compounding at nearly 30% annually over the past decade.

The company now operates 210 restaurants globally, with 70% as franchises and 30% as corporate stores.

This franchise model is highly profitable, with a typical GYG drive-thru turning over approximately $6 million annually and boasting a 22% profit margin. This is one reason it owns GYG shares.

These restaurant economics place GYG second only to McDonald’s in Australia, Firetrail says:

With an average build cost of $2 million, a new corporate GYG store generates an approximately 60% return on investment and pays itself off in just over 18 months.

We expect restaurant performance to continue to improve over time as ongoing same-store-sales growth drives operating leverage on a relatively fixed cost base

2. Significant growth potential

GYG currently has fewer than 200 stores in Australia but envisions the potential for over 1,000, with plans to open 30-40 new stores annually. Firetrail says this gives the company a 20-year growth runway in Australia alone.

It says this expansion is underpinned by the solid performance of existing stores, with ongoing same-store sales growth driving operating leverage.

As it stands, McDonald’s and Subway are the only two major quick service restaurant (QSR) companies with more than 1,000 stores (1,031 and 1,227 each, respectively).

3. Expansion opportunities abroad

It’s not just the Australian market that supports Firetrails’ investment thesis on GYG shares. The company has global ambitions, too.

GYG operates a small number of restaurants in Singapore and Japan and has begun expanding in the USA. Although it’s early days, “the prize is large,” it says and is confident in the brand’s international appeal.

We believe the investment thesis is underpinned by the Australian opportunity alone. However, management have global ambitions. The company has a small presence in Singapore and Japan today. Both markets could be materially larger over time.

Additionally, GYG has opened 4 restaurants in the USA and intends to open an additional 3-5 each year to prove out the brand appeal and unit economics.

4. Healthy franchisee network

A key strength of GYG is its profitable franchisee network, Firetrail says. Every GYG franchisee is currently profitable, with the median franchisee making a 50% return on investment.

This is “underpinned by a simple and transparent royalty model which ensures franchisees are treated fairly”.

The fund manager believes this trend drives a strong incentive to open new stores, ensuring a steady stream of royalty income for GYG.

“Unsurprisingly, the waitlist to become a franchisee is long”, it concluded.

One reason to potentially sell GYG shares

Despite the strong growth prospects, some analysts believe GYG shares are overvalued. Bell Potter recommends to sell the stock as it may be overvalued.

According to The Bull, Bell Potter analyst Christopher Watt says that investors may “want to consider trimming their positions to pocket some profits”.

He said GYG shares gave a “handsome windfall” on their first day on the ASX, closing the session at $30 after the initial public offering at $22.

Watt added:

We like the business, but believe the August 2024 reporting season will more than likely highlight a challenging year ahead for restaurants and discretionary retailers.

Time will tell which broker got it right.

Foolish takeout

GYG shares delivered gains for many investors in the first half of CY 2024. However, potential investors should be mindful of the current high valuation and the associated risks.

If GYG can continue to execute its growth strategy effectively, its shares could offer substantial returns in the long run. Always remember to conduct your own due diligence and that past performance is no indication of future results.

The post 4 reasons to buy GYG shares (and one reason to sell) appeared first on The Motley Fool Australia.

More reading

• Top broker slaps $33 price target on Guzman y Gomez (GYG) shares
• ASX 200 re-writes history. Which companies are leading the charge?
• Here’s what ASX brokers are saying about Guzman y Gomez shares right now
• 2 ASX shares I’d give a wide berth to in today’s stock market
• 5 reasons I’d throw Guzman y Gomez shares in the bin like a bad burrito

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

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• How is the stock market reacting to yesterday’s attack on Trump?
• ASX 200 shatters record. Why it could still be ‘relatively cheap’ to invest
• Why this ASX 200 real estate share is plunging 17% today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, PolyNovo, and Reliance Worldwide. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool Australia has recommended PolyNovo. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Many people share the dream of earning a lifelong passive income in a world of financial uncertainties. However, without any savings to start with, this goal may seem distant, if not impossible, to achieve. That’s where the wisdom of legendary investor Warren Buffett comes into play.

Known for his simple yet profoundly effective investment philosophy, Buffett’s approach can be adapted by anyone looking to make their way into the world of investments.

Warren Buffett, often referred to as the “Oracle of Omaha,” has built his fortune through making wise investments in undervalued companies with strong business models and potential for long-term growth.

Save, educate, and invest

For individuals starting from scratch, the first step towards employing the Buffett method is saving money. Buffett is known for his frugality. He still lives in the same house he bought in 1958 and enjoys McDonald’s breakfast. By leading a simple and frugal lifestyle, you can achieve two goals: better focus on important things in life and creating the initial capital to invest.

The second step, or what you can do in parallel, is education. In the early days, Buffett used to read the Moody’s Manual, a thick book introducing all listed shares, one company per page, from A to Z, twice.

He emphasises understanding the businesses you invest in. This means looking beyond share price fluctuations and focusing on the company’s fundamentals, such as its competitive advantages, management quality, financial health, and potential for growth.

What to consider in choosing ASX dividend shares

Patience is crucial when using the Warren Buffett method. Buffett is known for his long-term investment strategy, often holding onto his investments for decades. Dividend-paying stocks can be a great way to achieve this long-term investing goal.

Buffett’s investment vehicle, Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), collects billions of dollars in annual dividends from a handful of companies, including Bank of America Corp, Occidental Petroleum Corp, and Apple Inc.

In his 2022 shareholder letter, Buffett highlighted:

In August 1994 – yes, 1994 – Berkshire completed its seven-year purchase of the 400 million shares of Coca-Cola we now own. The total cost was $1.3 billion – then a very meaningful sum at Berkshire.
The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.

American Express is much the same story. Berkshire’s purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase.

ASX dividend shares

Once you have saved some money to invest, it is time to look for ASX dividend shares similar to Buffett’s. For this purpose, I looked for ASX companies with a solid dividend history, robust business fundamentals, and inexpensive valuations.

• Washinton H Soul Pattinson (ASX: SOL) has increased its dividends for more than a decade. Currently offering a fully franked dividend yield of 2.6%, it is one of the most loved ASX dividend shares.
• BHP Group Ltd (ASX: BHP) boasts a dividend yield of 5.5% after the recent weakness in its share price. While the near-term outlook is murky, the mining giant has a time-tested history of dividend payments.
• Steadfast Group Ltd (ASX: SDF) is a leader in the insurance broking industry, with a current dividend yield of 2.5%. Its earnings and dividends have demonstrated consistent growth year after year.
• Brickworks Limited (ASX: BKW) shares currently offer a fully-franked dividend yield of 2.3%. Based on management estimates, they are valued below the company’s net asset value (NAV).

While the first step can be daunting, let’s remember that Buffett made his first stock purchase—three shares of Cities Service preferred shares at $38 per share—when he was 11.

The post No savings? I’d use the Warren Buffett method to earn lifelong passive income with ASX shares appeared first on The Motley Fool Australia.

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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Kate Lee has positions in Brickworks and Occidental Petroleum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Bank of America, Berkshire Hathaway, Brickworks, Steadfast Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Occidental Petroleum. The Motley Fool Australia has positions in and has recommended Brickworks, Steadfast Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX shares investors say being debt-free and owning a home are their most important definitions of financial success, according to new research.

These are the findings of a survey conducted by online trading platform Stake in May.

Stake surveyed more than 2,000 Australian investors who held either ASX shares or overseas stocks.

The most popular definition of financial success was being debt-free, according to 86% of respondents.

It’s likely that being debt-free is even more appealing during today’s cost-of-living crisis!

Owning a home was the second most popular definition of financial success, with 85% of respondents agreeing that this was a key aspiration.

Debt-free home ownership is considered essential for a comfortable lifestyle in retirement in Australia.

But as we all know, getting into the property market can be difficult for many reasons.

One of them is that values continue to rise faster than most people can save a deposit. For example, in FY24, the median home price rose by $59,000, according to CoreLogic data.

On top of that, 13 interest rate rises between May 2022 and November 2023 have made it not only difficult to service a loan but also hard to get finance in the first place.

When assessing loan applications, banks typically add a 3% serviceability buffer. This means most customers today have to prove they can afford an interest rate of 8% or 9% to get a home loan.

What are the other definitions of financial success?

The third most popular definition of financial success, with 77% support among ASX shares investors, was being able to live in an area of their choosing.

This definition may reflect the compromises people are making in the property market as values continue to increase and buyers are forced to seek more affordable accommodation.

The fourth most desired milestone of financial success is having the capacity to support family members. Three-quarters of survey respondents said this represented financial success to them.

This reflects the rising role that the Bank of Mum and Dad is playing in Australia’s property market.

Finally, the fifth most common definition of success among ASX shares investors is having the flexibility to reduce working hours, or quit altogether, and live off one’s investments.

If you also aspire to this, check out this article by my colleague Sebastian: How much cash do you need to quit work and live off ASX dividend income?

You can also check out these 7 tips for successful ASX shares investing.

Which ASX shares are attractive to investors today?

The Stake survey explored the top investment themes exciting ASX shares investors today.

Gold was at the top of the list. This was not surprising given the year that ASX gold stocks had in FY24.

The top three ASX 200 mining shares for price growth last financial year were all gold stocks.

The survey also revealed the five most popular ASX shares bought by investors over the 12 months to May.

They included ASX lithium share Pilbara Minerals Ltd (ASX: PLS) and the Vanguard Australian Shares Index ETF (ASX: VAS).

On Tuesday, S&P/ASX All Ordinaries Index (ASX: XAO) shares are down 0.16%.

The post 5 ways ASX shares investors define financial success appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Vanguard Australian Shares Index ETF. 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.