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

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

What happened

Many Tesla (NASDAQ: TSLA) watchers know the stock has been on a major roll recently. In just the last month, the shares are up nearly 30%. That trend continued Monday with the stock closing 3.1% higher.

So what

CEO Elon Musk noted on Twitter over the weekend that Tesla has now manufactured more than 3 million vehicles after its Shanghai plant passed the 1 million vehicle milestone. That fact has investors seeing through some of the noise related to Musk. 

Several things have contributed to the stock’s recent move higher. There is a little more clarity in the saga between Musk and Twitter. While investors still don’t know if Musk will be forced in court to follow through with his bid for the social media company, his recent sale of nearly $7 billion in Tesla shares related to the deal gave investors some information on how it might affect Tesla and his holdings. 

Additionally, Musk said last week that while the company’s Cybertruck still won’t be available until next year, the Tesla Semi Truck will be coming out this year, earlier than expected. A report from industry observer Torque News on Friday highlighted the economic advantage of the electric heavy truck over diesel-powered models. It showed a 200-mile journey using Tesla’s truck would have less than one-sixth the fuel cost.

Now what

Optimism has also been boosted by the passage of the Inflation Reduction Act. Tesla will once again benefit from tax incentives for buyers of its cheaper models, which haven’t been provided since it passed the 200,000-vehicle mark. And Tesla’s battery and energy segments will also likely benefit from investments from the legislation in the long run. 

The stock’s momentum has led to a month-long surge that has Tesla approaching the $1 trillion market cap it hasn’t seen since April. Investors are clearly excited once again at its prospects as it ramps up its two new plants in Texas and near Berlin, Germany, and prepares to offer its new trucks this year and next. 

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

The post Why Tesla stock was up again today appeared first on The Motley Fool Australia.

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More reading

• Investors should wait for these 2 signals before buying Tesla
• Why today’s jump in Tesla shares surprised investors
• Elon Musk just sold US$7 billion worth of Tesla shares. What’s going on?
• Why the Tesla share price sank today
• Tesla shareholders approved a 3-for-1 stock split — is the stock a buy?

Howard Smith 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 Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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

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The Seven West Media Ltd (ASX: SWM) share price is in focus following the release of the company’s financial year 2022 earnings and news of an on-market share buyback.

The Seven West share price closed Monday’s session at 52 cents.

Seven West share price on watch as profit lifts 60%

Highlights of Seven West’s full-year results include:

• Underlying net profit after tax (NPAT) of $200.8 million – a 60% increase on that of the prior corresponding period (pcp)
• Revenue of $1.54 billion – a 21% improvement
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) of $342.2 million – a 35% improvement and ahead of guidance
• Earnings per share (EPS) came to 12.7 cents – up from 8.2 cents

The company’s reach grew alongside key financial metrics over the year ended 25 June.

The company boasted a 39.1% share of the national television advertising market across financial year 2022.

Its metro TV revenue lifted 9%, while its regional TV revenue increased 6%. Additionally, West Australian Newspapers delivered its best result since financial year 2017 on the back of digital growth.

The company’s operating costs also rose 17% to $1.198 billion – within its previously guided range despite rising inflation.

It also announced an on-market buyback of up to 10% of its shares on issue. The buyback will be conducted on an opportunistic basis over the coming 12 months and funded from existing debt facilities. It was born from improvements in the company’s balance sheet over the past two years.

Seven West closed the financial year with a net debt level of $256.5 million – a 6.9% year-on-year increase.

What else happened in FY22?

The big news from the company last financial year was its acquisition of formerly ASX-listed Prime Media. The Seven West share price surged 14% when the acquisition was announced in November.

The Prime brand has since been retired and the company has today noted cost synergies will be at the top end of prior guidance.

Of course, the company was front of mind at the beginning of the financial year as Seven aired the 2022 Tokyo Olympic Games. The games were said to provide a launch pad for Seven’s 2022 financial year content line-up, including The Voice, SAS Australia, Dancing With The Stars: All Stars, The Voice Generations, the AFL Finals Series, Bathurst 1000, the Ashes Cricket Test Series, and the Beijing Winter Olympics.

What did management say?

Seven West managing director and CEO James Warburton commented on the company’s earnings, saying:

These results mark the strongest financial performance by our company in over a decade and reflect the successful completion of the group’s three-year strategy.

[They] represent the best Seven television EBITDA results in 11 years, the best EBITDA from West Australian Newspapers in five years, and our best group EBITDA result in six years.

What’s next?

Seven West has updated the market on its performance over the current quarter and its outlook for the rest of this financial year.

It noted trading conditions in the September quarter have been skewed by the impact of the Olympics. The company estimates its quarterly total TV advertising market is down around 2% excluding the Olympics and around 7% including the games. The December quarter, however, is expected to be positive year-on-year.

Seven West is targeting a 39% share in total TV revenue in financial year 2023. Seven Digital is forecast to grow its EBITDA this financial year. Meanwhile, its digital platform news revenue is expected to be consistent with financial year 2022.

The company’s operating costs for the current financial year are expected to come in at between $1.2 billion and $1.22 billion.

Seven West share price snapshot

The Seven West share price has had a rough trot on the ASX lately.

It has slipped 17% since the start of 2022. Though, it’s currently trading 8% higher than it was this time last year.

Meanwhile, the All Ordinaries Index (ASX: XAO) has dumped 8% year to date and 7% over the last 12 months.

The post Seven West Media share price in focus following best financial performance in a decade appeared first on The Motley Fool Australia.

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More reading

• Better ASX tech buy: Xero or Altium?
• Why Tesla stock was up again today
• Is the Beach Energy share price a buy following its post-reporting sell-off?
• BHP share price on watch amid record FY22 profits
• Why this broker sees plenty of upside for the ResMed share price

Motley Fool contributor Brooke Cooper 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.

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The Beach Energy Ltd (ASX: BPT) share price plummeted 11% on Monday following the release of the company’s financial year 2022 earnings. The stock closed yesterday’s session at $1.645.

Unfortunately, brokers shared in the market’s disappointment over the company’s results.

But do experts tip a post-sell-off upside for the stock? Let’s take a look.

Does the Beach Energy share price still offer upside?

The Beach Energy share price plummeted yesterday after the company revealed its full-year production had slumped 15% in financial year 2022.

The company produced 21.8 million barrels of oil equivalents in the 12 months to 30 June. Though, its underlying net profit after tax (NPAT) jumped 39% to $504 million, while its underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) lifted 17% to $1.1 billion.

Both UBS and JP Morgan labelled the results “soft”, The Australian reported.

UBS was said to have been disappointed by the company’s second-half earnings, noting its guidance points to slower growth.

The broker dropped its price target for Beach Energy shares by 5 cents to $2 but retained its ‘buy’ rating.

JP Morgan was also reportedly disheartened by the company’s EBITDA. The measure was dinted by higher operating costs which have been tipped to increase in financial year 2023. It was also disappointed by the company’s guidance.

JP Morgan reportedly also has a $2 price target and an ‘accumulate’ rating on Beach Energy shares.

That means the brokers, however saddened by the company’s earnings, are tipping a 21.6% upside on its current levels.

Finally, brokers Morgans and Credit Suisse were reportedly surprised by the company’s lesser-than-expected outlook. Credit Suisse analyst Saul Kavonic was quoted by The Australian, saying:

Another re-setting of Beach outlook to the downside, signalling Beach has continued to provide targets that are optimistic rather than conservative across the portfolio.

The analyst was reportedly referring to the production downgrade announced by the company in April 2021.

The post Is the Beach Energy share price a buy following its post-reporting sell-off? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why did the Woodside share price lag the ASX 200 on Monday?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• Why Beach, Bendigo and Adelaide Bank, Opthea, and Paradigm shares are sinking
• Beach Energy share price tumbles 9% as production slides

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper 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.

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The BHP Group Ltd (ASX: BHP) share price will be one to watch on Tuesday.

This follows the release of the mining giant’s full year results this morning.

BHP share price on watch following record profits

• Underlying EBITDA from continuing operations up 16% to a record US$40,634 million
• Underlying attributable profit up 26% to US$21,319 million
• Net operating cash flow up 13% to US$29,285 million and record free cash flow of US$24,300 million.
• Earnings per share up 25% to 421.2 US cents
• Final dividend of US$1.75 per share

What happened in FY 2022?

For the 12 eventful months ended 30 June, BHP delivered a 16% increase in underlying EBITDA from continuing operations to US$40,634 million. These results exclude its demerged petroleum assets.

This was driven almost entirely by BHP’s coal operations, which reported underlying EBITDA of US$9,504 million. This was up from just US$288 million a year earlier thanks to sky high prices.

Also performing positively were BHP’s copper operations, which delivered a modest increase in underlying EBITDA to US$8,565 million.

Combined, this offset an almost 18% decline in iron ore EBITDA to US$21,707 million due to softer prices for the steel making ingredient.

This ultimately led to BHP reporting record free cash flow of US$24,300 million, which allowed the mining giant to reward its shareholders handsomely with a big dividend.

The BHP board has decided to pay a fully franked final dividend of US$1.75 per share or US$8.9 billion. This includes an additional amount of US$0.60 per share (equivalent to US$3.0 billion) above the 50% minimum payout policy.

Total dividends for FY 2022 came to US$3.25 per share, the equivalent to a 77% payout ratio.

How does this compare to expectations?

Today’s result was a bit of a mixed bag, which makes it difficult to predict what will happen with the BHP share price today.

For example, analysts at Morgans were forecasting EBITDA of US$40,776 million, whereas Goldman Sachs was forecasting EBITDA of US$44,000 million. This means BHP has fallen a touch short of Morgans’ estimate and well short of Goldman’s estimate.

However, one thing the company did smash was the brokers’ dividend estimates. BHP’s US$3.25 per share dividend was higher than Morgans’ US$2.84 per share estimate and Goldman’s US$2.90 per share estimate.

Management commentary

BHP’s chief executive officer, Mike Henry, was rightfully pleased with the company’s performance. He said:

BHP delivered strong operational performance and disciplined cost control to realise record underlying earnings of US$40.6 billion and record free cash flow of US$24.3 billion. We have reduced debt and announced a final dividend of US$1.75 per share, bringing total cash dividends announced for the full year to a record US$3.25 per share.

BHP’s total economic contribution including payments to employees, suppliers, communities, governments and shareholders totalled US$78.1 billion. This includes US$17.3 billion paid to governments through taxes and royalties and US$19.6 billion paid to shareholders after the merger of our Petroleum business with Woodside.

These strong results were due to safe and reliable operations, project delivery and capital discipline, which allowed us to capture the value of strong commodity prices. BHP remains the lowest cost iron ore producer globally and we delivered record annual sales from Western Australia Iron Ore.

Outlook

Henry appears cautiously optimistic on the future. He explained:

BHP enters the 2023 financial year in great shape strategically, operationally and financially, and well prepared to manage an uncertain near-term environment. During the year, we unified BHP’s corporate structure, merged our Petroleum business with Woodside, completed the sales of our interests in the BMC and Cerrejón energy coal assets, and decided to retain and operate our New South Wales Energy Coal business until mine closure in 2030. We have improved our platform for growth through the Jansen potash project, iron ore and copper.

We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold. At the same time, we expect to see a slowdown in advanced economies as monetary policy tightens, as well as ongoing geopolitical uncertainty and inflationary pressures. The direct and indirect impacts of Europe’s energy crisis are a particular point of concern. Tight labour markets will remain a challenge for global and local supply chains. Waves of COVID-19 infection continue to occur in the communities where we operate, and we are planning accordingly.

Finally, BHP’s FY 2023 production guidance remains unchanged since its fourth quarter update.

The post BHP share price on watch amid record FY22 profits appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• 2 ASX 200 dividend shares analysts rate as buys
• Looking to buy BHP shares? Here’s what to watch when the mining giant reports this week
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• Down 20% in 6 months, what’s next for the BHP share price?

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The ResMed Inc (ASX: RMD) share price could be in the buy zone.

That’s the view of analysts at Goldman Sachs following the release of the sleep treatment company’s fourth quarter update.

What did the broker say about the ResMed share price?

Despite a decent rally in recent months, the broker still sees plenty of value in the ResMed share price.

According to the note, Goldman has retained its buy rating with an improved price target of $36.80.

Based on the current ResMed share price of $33.40, this implies potential upside of over 10% for investors over the next 12 months.

Goldman commented:

We continue to see a long-duration runway of HSD organic growth for RMD, and we believe that growth-adjusted valuation of 3.1x (sector 2.9x) is not demanding in the context of various near/long-dated tailwinds.

Why is Goldman bullish?

The broker has previously spoken about how it believes ResMed could be well-placed to benefit from a backlog of patients waiting to be diagnosed following the pandemic.

And while it sees some risk from these potential patients moving to alternative therapies, it feels the majority will wait and stick with the company’s products.

It explained:

There is a 12-18 month backlog of new patients waiting to be diagnosed. While there is a risk these prospective patients may switch to alternative therapies (e.g. dental sleep, neurostimulation), the degree of movement towards these substitutes has been relatively minor against the size of the CPAP market. Instead, we believe the backlog of new patients may add upside risk to our estimates if there is a material realisation of incremental devices/masks sales to new patients in FY23/24 (supply chain pressures permitting).

All in all, this could make the ResMed share price good value for investors that are looking for quality long term options.

The post Why this broker sees plenty of upside for the ResMed share price appeared first on The Motley Fool Australia.

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• Leading brokers name 3 ASX shares to buy today
• The ASX 200 company selling everything it makes due to its major competitor being out of the market: fundie
• 2 quality ASX shares Wilsons just bought
• Resmed share price dips despite profit and dividend boost
• Why Baby Bunting, PointsBet, ResMed, and Suncorp 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 ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Monday, the Westpac Banking Corp (ASX: WBC) share price opened the week with a day in the red.

The banking giant’s shares ended the session 1% lower at $22.43.

This followed the release of a third quarter update on its asset quality, capital position, and funding.

Are Westpac shares in the buy following the update?

While the market may not have responded too positively to the update, one leading broker was pleased with it.

According to a note out of Goldman Sachs, its analysts have responded by reiterating their conviction buy rating and lifting their price target slightly to $26.55.

Based on the current Westpac share price of $22.43, this suggests potential upside of 18% for investors over the next 12 months.

And if you include Goldman’s forecast for a fully franked dividend of $1.23 per share in FY 2022, this will mean a yield of 5.5% and a total potential return of over 23%.

What did the broker say?

Goldman Sachs has been connecting the dots from Westpac’s update and feels that it points to the bank’s earnings tracking ahead of expectations.

It commented:

While no earnings update was provided, the CET1 ratio, RWA and capital deduction disclosures did imply that the quarterly cash earnings performance may have been run-rating slightly better than what was implied by our previous 2H22E forecasts.

In light of this, the broker continues to see Westpac shares as the top option in the banking sector right now.

The broker concluded:

We continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) while we think its A$8 bn FY24 cost target will now be unachievable, we still forecast a 7% reduction in underlying expenses, iii) its recent market update highlighted that the business is still investing effectively in its franchise, and iv) our 12-mo TP implies a 23% TSR, and we note the stock is trading at a 20% discount to peers, versus the historic average discount of 2%.

The post Is the Westpac share price a buy following the bank’s latest update? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Westpac share price slips following release of Q3 update
• Westpac share price on watch following Q3 update
• 5 things to watch on the ASX 200 on Monday
• Up 12% in 30 days, is the Westpac share price still a buy?

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

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During reporting season in the midst of a year when there have been so many external distractions (like inflation, interest rate hikes and wars), it’s easy to get caught up in the here-and-now.

But regular The Motley Fool readers know it’s all about buying ASX shares to hold for the long run.

So with this in mind, here are two ASX shares that Ord Minnett senior investment advisor Tony Paterno named as buys this week:

‘Maintained a steady gross margin of about 20% since listing’

Insurance repairer Johns Lyng Group Ltd (ASX: JLG) is one company that will benefit from the effects of climate change.

“This building services company specialises in emergency construction,” Paterno told The Bull.

“In our view, increasing catastrophes in 2022 will assist earnings moving forward.”

Johns Lyng Group is also intruding into new functional and geographic areas, such as strata management and the US.

“The company is looking to expand into new markets, providing a runway for strong longer-term growth and underpinning double-digit earnings per share growth,” said Paterno.

“Johns Lyng Group has maintained a steady gross margin of about 20% since listing in 2017.”

The share price has incredibly lifted more than 50% since 22 June.

Only a couple of weeks ago, Wilson Asset Management senior equity analyst Sam Koch agreed with Paterno that Johns Lyng is a buy.

“The resiliency of Johns Lyng Group’s earnings growth is an attractive quality for shareholders in the current volatile macro-economic environment.”

‘Demand for high quality telecommunication assets’

The old retail investor staple Telstra Corporation Ltd (ASX: TLS) is Paterno’s other pick.

“The telecommunications giant has lifted its final dividend to 8.5 cents a share for fiscal year 2022.”

There is a big catalyst on the horizon, according to Paterno.

“Telstra may soon monetise its InfraCo fixed business once the legal separation is complete in October 2022,” he said.

“Recent transactions highlight that demand for high quality telecommunication assets, with long-term contracts and predictable cash flows, remain strong.”

The other bonus is that Paterno has noticed this infrastructure in this particular sector is very resilient in troubled economic times.

“Despite central banks raising interest rates globally, transaction multiples for telecommunication assets haven’t declined.”

Just last week, the team at Morgans also expressed their bullish views on Telstra shares.

“[The] telco has the strongest tailwinds in a decade with an increasingly rational market, pricing rises and the criticality of telco increasingly recognised,” read the analyst note.

“This combines with an incoming CEO who currently seems unlikely to drastically change the business and the potential for value uplift (potential bids) following the legal restructure.”

The post ‘Strong growth’: Expert names 2 ASX shares to buy for the long run appeared first on The Motley Fool Australia.

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More reading

• Own Telstra shares? How the telco is tackling inflation pressures
• ‘Strongest tailwinds in a decade’: Morgans tips Telstra shares as a buy
• Brokers name 3 ASX shares to buy today
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Is the Telstra share price a buy after the telco’s FY22 results?

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Johns Lyng Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Australians are locking away their wallets as they face steeply rising interest rates and higher costs of living from inflation.

In this sort of environment, there are sectors that will obviously suffer.

One is real estate. Higher loan costs mean lower demand, and lower property prices.

Another is discretionary retail. If consumers have to devote more of their pay packet to their loan repayments, they will start cutting out non-essential spending first. 

But in the share market, like in life, there are always exceptions to the rule.

Here’s a pair of ASX shares Marcus Today portfolio manager Thomas Wegner reckons are prime buys right now:

‘Optimistic and resilient outlook’

Although JB Hi-Fi Limited (ASX: JBH) released its annual report on Monday, its numbers were already known from a preliminary report in July.

Wegner told The Bull the market liked what it saw, with the JB Hi-Fi share price shooting up 5% that morning.

“Top and bottom lines came in ahead of most estimates.”

At the time, forward guidance wasn’t offered, but Wegner saw enough in the rear-view to have confidence about the electronics retailer. 

“The results still painted an optimistic and resilient outlook by the consumer,” he said. 

“Sales momentum was strong throughout the year, with total sales up 3.5% to $9.2 billion.”

The wider professional community is still somewhat unsure about a consumer discretionary stock like JB Hi-Fi. Out of 15 analysts surveyed on CMC Markets, six rate it as a buy, three as a hold, and six recommend selling.

The JB Hi-Fi share price has fallen about 6.6% since the start of the year. The stock does pay out a 5.9% dividend yield.

Real estate market might dip, but there are plenty of offsets

Australia’s property prices caught fire for a couple of years after an initial pause in activity when the COVID-19 pandemic first arrived.

But with interest rates rising this year, even hot real estate markets like Sydney and Melbourne have cooled.

This still doesn’t stop Wegner from recommending online classifieds site REA Group Limited (ASX: REA) as a buy though.

“This digital advertising business specialising in property posted revenue of $1.170 billion in fiscal year 2022, up 26% on the prior corresponding period,” he said.

“Net profit of $408 million was up 25%.”

The company did admit the Australian residential property market would slow down as rate hikes start to bite, but there are enough tailwinds to offset that impact.

“It believes demand will be supported by robust household balance sheets, low unemployment and increasing migration.”

Wegner isn’t the only analyst going against the fortunes of the real estate sector to back REA’s credentials.

The team at Morgans last week also recommended buying the stock after its financials were revealed.

“REA remains one of the highest quality franchises in our coverage,” said associate analyst Steven Sassine on the Morgans blog.

“And whilst FY23 may exhibit some volatility (e.g. macro impacts on listings volumes), we believe management has levers to potentially pull (e.g. yield) in such an environment.”

The post 2 surprisingly ‘robust’ ASX shares to buy in current climate: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo 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 recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The good news for income investors is there are a large number of dividend shares for them to choose from on the Australian share market.

Two such shares that Goldman Sachs rates as buys are listed below. Here’s what the broker is saying about them:

Charter Hall Social Infrastructure REIT (ASX: CQE)

The first ASX dividend share that Goldman Sachs is bullish on is this real estate investment trust.

The Charter Hall Social Infrastructure REIT invests in social infrastructure properties such as bus depots, police and justice services facilities, and childcare centres.

And while its recent results were a touch short of expectations, the broker saw enough to retain its conviction buy rating and bump its price target up to $4.35.

Goldman commented:

Although CQE’s result came in slightly below our expectations, we continue to believe the REIT is relatively well positioned given the sector’s positive fundamentals and CQE’s strong balance sheet, with headroom and liquidity to pursue investment opportunities, although rising interest costs will be a near term headwind in FY23. Furthermore, we remain attracted to its relatively resilient cash flows, underpinned by triple net leases to strong tenant covenants. CQE trades at an ~8% discount to NTA (versus a ~14% premium historically) and offers a potential 12m total return of ~20% at our revised TP of A$4.35, and we maintain our Buy rating (on CL).

As for dividends, the broker is forecasting dividends per share of 17.3 cents in FY 2023 and 18 cents in FY 2024. Based on the current Charter Hall Social Infrastructure REIT unit price of $3.76, this will mean yields of 4.6% and 4.8%, respectively.

GQG Partners Inc (ASX: GQG)

Another ASX dividend share that Goldman Sachs is bullish on is fund manager GQG.

The broker rates the company highly for a number of reasons. This includes its strong investment performance, low fees, and attractive valuation.

The broker explained:

Overall we reiterate Buy on GQG given: i) strong operating momentum in the business as evidenced by its investment performance, ii) GQG’s lowest quartile fee offering among global peers, and strong distribution coupled with a scalable business model, iii) GQG’s co-founders have the majority of their net wealth invested in GQG and its investment strategies, and iv) our revised 12m TP of A$1.92 offers c.27% [now 19%] TSR.

In respect to dividends, the broker is forecasting dividends per share of 8 cents in FY 2022 and 9 cents in FY 2023. Based on the current GQG share price of $1.68, this will mean yields of 4.8% and 5.4%, respectively.

The post Goldman Sachs names 2 ASX dividend shares to buy 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.

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Ask a fund manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part one of this edition, we’re joined by Grant Nichols, fund manager of the $2.4 billion Centuria Office REIT (ASX: COF), Australia’s largest listed pure-play office REIT. Today, Nichols explains how COF has kept its office space almost fully occupied during and after the COVID pandemic, and what’s keeping REIT investors awake at night.

The Motley Fool: COF reported some strong financials for FY22. Those included a statutory net profit of $115 million, up 50% year-on-year; occupancy levels increasing to 94.7%; and 98.2% average rent collection. How did the office REIT achieve that?

Grant Nichols: Leasing across the portfolio underpinned our results for FY22. We had a really good year of leasing; 41,000 square metres of net lettable area, which is about 13% of the portfolio NLA.

And that’s continued on what has been a very good leasing story across the portfolio for quite some time. Since the outbreak of COVID, we’ve leased in excess of 120,000 square metres of space. Which is about 40% of our portfolio’s net lettable area.

This is in contrast to some of the media stories we’re hearing about the concerns for ongoing tenant demand for office space. What we’re seeing across our portfolio is we’ve completed a lot of leasing; we’ve been able to track and retain a lot of our tenants and increase occupancy. So, it’s been a very good story.

The reason we’re able to do that is primarily due to the portfolio we’re providing.

We’re certainly seeing the flight to quality from tenants. Tenants are looking to get into better quality office space. And we have one of the youngest portfolios you can invest into, with the average age of our assets being around 16 years.

We feel we’re providing an accommodation solution that’s meeting the needs of the tenants, at the moment.

MF: On the topic of COVID, have you noticed a big bounce back in office space demand from the pandemic shutdown periods?

GN: We didn’t have any material deterioration in tenant demand through COVID.

There’s a lot of talk in the market about office occupancy. And that’s because there is now a more versatile work opportunity. People are working from home more than they were doing before COVID.

But tenant demand across our portfolio hasn’t materially changed.

What you need to think about is that if people are working from the office on Tuesday, Wednesday and Thursday, that doesn’t mean that office space, or your tenant footprint, contracts by 30% to 40%.

Because, ultimately, the whole point of having a centralised workplace is allowing all the staff to be in the same place at the same time, cooperating and communicating. And if you’re not providing that opportunity, it reduces the benefit of having that centralised workplace.

So, what we’re seeing across our portfolio is that tenant footprints aren’t materially changing. In fact, in some cases they’re increasing as tenants want to provide more breakout space for that kind of cooperation.

It’s just that the tenant occupancy within that accommodation may not be as used as it was pre-COVID. So instead of having 80% occupancy five days per week, it might be 80% occupancy for three days per week.

That’s where we’re seeing a change.

MF: Circling back to the strong FY22 results your ASX REIT posted. Despite those numbers, investors pushed down the COF share price by some 8% on the day of the results release. What do you think caused that?

GN: The biggest issue investors have at the moment is what the impact of rising interest rates will have on not only office but commercial property generally.

There are two items to that.

There’s the velocity of the interest rate change. I don’t know if we’ve ever been in a situation that’s seen interest rates increase at the rapid rate that we’re seeing at the moment.

Also, there’s still conjecture about where the neutral rate will moderate going forward.

I think most people are in agreement that the neutral interest rate will be lower than what it has been in the past. But there’s still conjecture in regards to what level that will be.

That’s where the concerns for investors lie across the [real estate investment trust] REIT market, that caution around interest rates.

Once there’s a greater consensus around where interest rates are going to moderate, I think that’s where you’ll see more confidence from investors looking at commercial property and commercial property REITs.

***

Tune in tomorrow for part two of our interview, where Centuria’s Grant Nichols looks at two tailwinds the office market could receive from rising inflation.

(You can find out more about the Centuria Office REIT (ASX: COF) here.)

The post This is the biggest issue for investors in ASX office REITs in 2022: fund manager appeared first on The Motley Fool Australia.

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

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