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The Rio Tinto Limited (ASX: RIO) share price has taken a tumble on Thursday morning.

In early trade, the mining giant’s shares are down 3.5% to $95.67.

Why is the Rio Tinto share price sinking?

The good news for investors is that today’s decline has nothing to do with the company’s performance, the economy, or the price of iron ore.

The weakness in the Rio Tinto share price is actually good news for shareholders. Today’s decline has been driven by the mining giant’s shares trading ex-dividend this morning for its upcoming interim dividend.

This means that if you were on the company’s share register at the close of play on Wednesday, you’ll be in line to receive Rio Tinto’s second highest interim dividend in its history.

Unfortunately, buyers of its shares today and onwards will not be entitled to this dividend. As such, its shares have fallen to reflect this.

What is the Rio Tinto dividend?

At the end of last month, Rio Tinto released its half year results and revealed underlying EBITDA of $15.6 billion.

This allowed the company’s board to declare an interim dividend of 267 US cents per share. This equated to a fully franked $3.837 per share in local currency.

Eligible shareholders can now look forward to being paid this dividend in around six weeks on 22 September.

Based on the Rio Tinto share price at yesterday’s close of $99.18, this represents a yield of approximately 3.9% for investors. And there’s still a final dividend to come early next year!

And given that the Rio Tinto board decided to be conservative with this dividend, that final dividend could be even larger if commodity prices remain solid between now and then.

The post Why is the Rio Tinto share price sinking today? appeared first on The Motley Fool Australia.

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More reading

• Time is running out to secure the Rio Tinto dividend. Here’s what you need to do
• The iron ore price has slumped 10% in 5 days. Here’s how ASX 200 mining shares have responded.
• ‘The world is changing’: CEO reveals what will help drive Rio Tinto shares in 2023 and beyond 
• ‘We are in for the long haul’: Rio Tinto CEO defends future spending in the face of recession fears
• Which ASX 200 shares will prove to be dividend heavyweights this earnings season?

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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The AMP Ltd (ASX: AMP) share price is on watch after the bank released its earnings for the first half of 2022 this morning. The embattled financial services stock closed Wednesday’s session at $1.17.

AMP share price in focus on $1.1b capital return

• Underlying after tax profit of $117 million – down 24.5% on that of the prior corresponding period (pcp)
• Cash outflows of $1.9 billion for the half – an improvement on the pcp’s $3.6 billion outflow
• Strong capital position with a $1.5 billion surplus about target level
• It announced a $1.1 billion capital return
• As expected, the bank won’t be offering an interim dividend

AMP said its first half earnings reflect a focus on cost savings to offset margin compression.

AMP’s after-tax profits – when including the sale of the bank’s infrastructure debt platform – came to $481 million – up from $146 million.

It also announced a $1.1 billion capital return today. That will be made up of a $350 million on-market buyback, starting immediately.

It’s planning to return another $750 million in financial year 2023 through a combination of capital return, special dividend, or further buyback, subject to regulatory and shareholder approval.

AMP Bank’s residential mortgage book grew at 1.15 times system last half while its net interest margin (NIM) fell to 1.32%. The division reported $46 million of underlying profits – a 45.2% drop.

Finally, the company’s Australian Wealth Management division ended the period with $126.3 billion of assets under management (AUM), down from $142.3 billion at the end of financial year 2021. The drop was primarily due to negative market returns.

AMP Capital’s continuing operations were the only division to boast higher profits last half, bringing in $26 million – a 62.5% increase.

What else happened in the first half?

The major news from AMP last half was of the sale of its Collimate Capital businesses.

It agreed to sell the Collimate Capital real estate and domestic infrastructure business to Dexus Property Group (ASX: DXS) for $250 million cash upfront and up to $300 million in potential earn-outs on 27 April.

A quick aside; that potential $300 million payday was dropped to a maximum of $75 million when AMP lost control of the AMP Capital Wholesale Office Fud last month.  

The company announced the other half of Collimate Capital – its international equity business – will be picked up by digital infrastructure firm DigitalBridge for up to $699 million on 28 April.

The AMP share price rose 12.6% over the two days in which it announced the sales.

What did management say?

AMP CEO Alexis George commented on the company’s half year results, saying:

The first half of the year has seen a challenging economic backdrop. Despite the decline in investment markets, our business is well positioned with a robust balance sheet that will help us to drive forward through a period of continued economic uncertainty.

While our profit has declined … due to a more challenging environment, it is also a reflection of the deliberate actions we took to … continue delivering competitive offers to customers and set AMP up for longer-term success.

What’s next?

AMP said the current macroeconomic environment will likely bring more challenging business conditions.

Its banking division is targeting a NIM of between 1.35% and 1.4% in financial year 2022. Its NIM improved in the second quarter. It’s expected to continue growing in the second half due to higher interest rates.

It will also renew its focus on building AMP as a leading wealth management and banking business in Australia and New Zealand after the Collimate Capital businesses’ sales are completed in the current half.

AMP share price snapshot

The AMP share price outperformed in the six months ended 30 June.

It fell around 3% over the half year while the S&P/ASX 200 Index (ASX: XJO) dumped approximately 12%.

Looking longer-term, the stock has lifted 8% in the last 12 months while the index has slumped 8%.

However, the AMP share price is still trading 77% lower than it was five years ago.

The post AMP share price in focus amid falling profits and $1.1b capital return appeared first on The Motley Fool Australia.

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More reading

• Are AMP shareholders heading for a $1 billion pay day?
• Here are the top 10 ASX 200 shares today
• Up 13% in July, can the AMP share price maintain its momentum?
• Here’s the good news about bear markets
• The AMP share price has surged 9% so far this month. Can it keep going?

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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What an impressive year it has been for the AGL Energy Ltd (ASX: AGL) share price.

Since the beginning of 2022, the energy company’s shares have roared to life before settling around the mid-$8 mark.

Over the past eight months, the AGL share price is up almost 40%, outstripping the S&P/ASX 200 Energy (ASX: XEJ) sector.

For context, the benchmark index comprising 11 of the top 200 companies has risen 27% in 2022.

Even with the robust gains recently, let’s take a look at how much AGL has paid in dividends since 2017.

What is AGL’s dividend history?

Below, we take a look at the past five years’ worth of dividends that AGL has distributed to shareholders.

• September 2017 – 50 cents (final)

• March 2018 – 54 cents (interim)

• September 2018 – 63 cents (final)

• March 2019 – 55 cents (interim)

• September 2019 – 64 cents (final)

• March 2020 – 47 cents (interim)

• September 2020 – 51 cents (final)

• March 2021 – 41 cents (interim)

• September 2021 – 34 cents (final)

• March 2022 – 16 cents (interim).

Calculating the above AGL dividends since September 2017 gives us a total figure of $4.75 for every share owned.

Although the dividends represent more than 55% of the current share price, AGL shares were trading at around $24 five years ago. This is why the dividends are much higher towards the start of the period.

It is worth pointing out that AGL dividends were originally 80% franked but since 2021, they’ve been unfranked.

AGL share price snapshot

Despite tumbling over the long term, the AGL share price has gained around 13% in the past 12 months.

The company’s shares hit an all-time low of $5.10 on 16 November before bargain hunters swooped in. It’s up 68% since that time.

AGL is one of Australia’s oldest energy providers and is valued at $5.7 billion.

The company currently offers a healthy dividend yield of 5.83%.

The post Guess how much AGL has paid in dividends over the past 5 years? appeared first on The Motley Fool Australia.

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More reading

• AGL share price down amid Fortescue Future Industries hydrogen hub news
• Why was the AGL share price undercooked in July?
• ‘Massive untapped demand’: The $3 trillion opportunity ASX 200 energy shares could be missing
• Can the AGL dividend bounce back this earnings season?
• What’s been impacting the AGL share price this week?

Motley Fool contributor Aaron Teboneras 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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2022 has been an extremely volatile year for a number of ASX shares. Are the lower prices of businesses that are burning cash too attractive to ignore? Or are they too risky?

There are plenty of businesses that have seen big falls.

At the time of writing, before Thursday’s trading, these are some examples of the falls we’ve seen in 2022:

The RPMGlobal Holdings Ltd (ASX: RUL) share price has dropped 23%.

The Whispir Ltd (ASX: WSP) share price has declined 53%.

The Bigtincan Holdings Ltd (ASX: BTH) share price has fallen 31%.

Of course, every fall is different and each investor may have a different thought about why they sold (or bought) at a lower price.

However, some investors may be thinking it’s possible that some of these unloved names could have been oversold. Only time will tell for sure, but let’s take into account some thoughts from some expert investors on the situation.

Forager is a fund manager that has a reputation for often finding sold-off opportunities.

The Forager Australian Shares Fund (ASX: FOR) investment team recently gave some comments discussing the types of companies the fund is currently invested in:

On the current portfolio and RPMGlobal

Forager senior analyst Alex Shevelev said:

Some of these investments are in businesses that are currently loss-making. And you might be asking why a value biased fund manager is investing in companies that are loss-making. Well, we’ve actually had quite a bit of success in this space over the last 10 years of the existence of the fund.  Jumbo Interactive Ltd (ASX: JIN) a couple of years back was a great example [and] RPM is a good more recent example. These companies are frequently misunderstood, and it’s exactly because of that short-term lack of profitability that the companies can sometimes build up significant long-term value.

On Whispir

The Forager analysts pointed out to investors that the ASX shares they are interested in have proven business models. They have a proven product that “solve real customer needs and that already generate decent and growing amount of revenue.”

Forager senior analyst Gaston Amoros said this about one of the holdings:

Just to give you an example, Whispir already caters to some very large customers and if clearly addressing need to manage communications with customers and employees more efficiently and effectively.

What about Bigtincan?

Shevelev gave further comments on the types of ASX shares they’re looking at and another holding:

There’s also a lot of recurring revenue in these businesses. Now, customers tend to stay very sticky to these products. They’re often mission critical and they’re very difficult to rip out and replace with competitive products. So, a company like Bigtincan, for example, the sales enablement business, they have the vast majority of their customers from the prior year stay with them.

Foolish takeaway

So, it’d probably be wise to think individually about each business that has been sold off. But, ASX shares that have proven business models, have loyal customers, are making revenue and address a key need could be interesting to look at in this environment according to the investment thoughts of Forager.

The post Loss-making ASX shares: Big investment opportunity or extreme risk? appeared first on The Motley Fool Australia.

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More reading

• Why is the Whispir share price tumbling 10% on Monday?
• ‘Great long-term investment’: Expert names small-cap ASX share to buy for cheap

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 BIGTINCAN FPO, RPMGlobal Holdings, and Whispir Ltd. The Motley Fool Australia has positions in and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended RPMGlobal Holdings and Whispir Ltd. 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 Woodside Energy Group Ltd (ASX: WDS) share price has been volatile over the past 12 months. Amid the rollercoaster of the ASX share market in the last few months, was it a good move to acquire the BHP Group Ltd (ASX: BHP) oil and gas business?

For readers who don’t know, Woodside is the largest oil and gas company on the ASX. It became a lot larger after merging with the BHP petroleum division and issuing BHP shareholders with new Woodside shares.

The merger

When it announced the acquisition back in November 2021, Woodside boasted that the combined business would create a global top 10 independent energy company by production.

It said that the combination will lead to a business that has a high margin oil portfolio, long-life LNG assets, and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

Greater scale is one obvious benefit. But, Woodside has also estimated that there will be synergies of more than US$400 million per annum from optimising corporate processes and systems, leveraging combined capabilities, and improving capital efficiency on future growth projects and exploration.

How has the Woodside share price performed?

The merger was completed at the start of June 2022. Since then, the Woodside share price has risen by around 5%.

Over the same time period, the S&P/ASX 200 Index (ASX: XJO) share price has dropped more than 3%. In other words, Woodside shares have outperformed the ASX 200 by almost 10% since the merger happened. That’s quite a bit of outperformance over a relatively short period of time.

However, the merger wasn’t a surprise in June 2022. Investors have known about it since November 2021. Since the announcement of the merger, the Woodside share price has risen by 44%. That compares to a 5.5% drop for the ASX 200. Woodside shares have outperformed by around 50%.

However, it’s hard to say how much is down to Woodside’s merger with the BHP division and how much is down to the huge jump in energy prices after the Russian invasion of Ukraine.

But, don’t forget that Woodside will get a few hundred million dollars of synergies. It’s not just about the revenue boost.

Woodside CEO Meg O’Neill said:

The merger delivers a diverse portfolio of quality operating assets, plus a suite of growth opportunities across oil, gas and new energy that promises ongoing value for our shareholders.

We believe that completion of the merger will enable Woodside to play a more significant role in the energy transition that is imperative as we respond to climate change while ensuring reliable and affordable supplies of energy to a growing and aspirational global population.

Woodside dividend expectations

According to estimates on CMC Markets, Woodside is expected to pay a grossed-up dividend yield of 16.2% in FY22.

Woodside will reveal its full-year results for FY22 on 30 August.

The post Has the BHP Petroleum acquisition been positive for the Woodside share price? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 energy shares mixed amid bearish oil price outlook
• 2 little-to-no-debt ASX 200 shares to buy in a downturn: fundie
• Why is the Woodside share price having such a strong start to the week?
• 5 things to watch on the ASX 200 on Monday

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

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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.

The Nasdaq Composite Index (NASDAQ: .IXIC) is cranking on August 10, 2022, up 2.4% at 12:53 p.m. Today’s big gains come as earnings season continues and following the release of the latest inflation data from the U.S. Department of Labor this morning. According to the data, the Consumer Price Index, or CPI, rose 8.5% in July. For context, that’s still near the highest levels of the past four decades, but it’s trending very much in the right direction after June’s 9.1% set a 41-year high.

Today, investors are betting that slowing inflation is a good signal that a sharp recession is less likely. Energy and food prices are moderating, and many companies are still reporting upbeat quarterly results and expectations. Upstart (NASDAQ: UPST) and Affirm Holdings (NASDAQ: AFRM) are at the leading edge of that consumer risk, and their highly volatile stocks are up big today on the optimistic reading of the inflation data.

Today’s noteworthy postearnings gainers include The Trade Desk (NASDAQ: TTD), with shares up more than 36% at one point. Investors are also betting on better prospects for renewable and low-carbon energy companies. Shoals Technologies (NASDAQ: SHLS) and Plug Power (NASDAQ: PLUG) are two of those up big today.

When near-record inflation is a “good” thing

While the CPI is still very high, today’s interpretation of the data was generally positive. We have seen energy and food prices begin to come down, and some areas of the global supply chain crisis are improving, too. Semiconductor companies, in particular, are reporting that the cycle in that industry is turning from too much demand to too much supply in certain product categories. While that’s not a positive for shareholders in the short term, it’s positive for the broader economy that the supply shortfall that’s kept many products off the shelves and prices very high might be starting to ease.

Investors see this as very positive for Upstart, the AI-driven consumer lending platform, and for buy now, pay later specialist Affirm Holdings, with their shares up 16% and 13%, respectively, at this writing. Both companies live at the leading edge of consumer credit risk. By and large, the bulk of their lending products are unsecured consumer debt (though Upstart is diversifying into auto lending), which is the first kind of credit to see increased rates of default in weak economic periods. However, today’s gains could prove temporary, as both saw their stocks fall sharply earlier this week on earnings and economic speculation.

The Trade Desk’s second quarter was, by almost every measure, exceedingly strong. It reported 35% revenue growth, continued to retain more than 95% of its customers, and more than doubled its operating cash flows. If there’s one not-great number, it’s stock-based compensation, which almost tripled year over year and was the primary factor in The Trade Desk reporting a GAAP loss.

What happens next? Plenty of volatility as investors try to telegraph what happens in the near term. Investors in both companies should be prepared for that and acknowledge that their risks will be amplified if consumers continue to get squeezed. The companies’ long-term prospects, however, are tied to their ability to keep disrupting the traditional credit card and consumer lending industries.

The Trade Desk shakes off earnings woes for adtech

The Trade Desk’s results were a breath of fresh air for the adtech industry. In recent weeks, many of the companies that are deeply involved in the growing digital ad industry have reported somewhat mixed results. The mature giants like Facebook parent Meta Platforms (NASDAQ: META) have reported strong ad volume but falling ad rates, as marketers have cut ad spending.

Investors seem happy to trade a portion of equity to co-founder and CEO Jeff Green, however, as part of his compensation. Shares are up a massive 36% at this writing.

Cleantech stocks cleaning up today — can they keep it up?

The stocks of a number of clean energy companies are up big today. Shares of Shoals Technologies, which makes electrical wiring for utility-scale solar plants, are up 14% today, joining hydrogen companies Plug Power and Bloom Energy (NYSE: BE). The latter’s shares are up more than 15% after Bloom reported expectations-beating earnings and said it expects to be cash flow positive for the full year.

Plug Power reported on August 9. Unlike Bloom, its results came up short of expectations. However, analysts continued to have bullish outlooks, raising their price targets on the company, partly due to the expected tailwinds of the recently passed landmark federal climate legislation.

Looking beyond near-term price targets and potential tailwinds from the new climate law, investors should focus on the financials. Plug Power has a very long record of cash burn (it has never had a positive-cash-flow year in its multidecade history), while Shoals and Bloom have demonstrated positive cash flows in the past and are trending in positive directions.

Optimistic thinking is nice, but as investors, we mustn’t forget that long-term wealth comes from a healthy — growing — bottom line.

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

The post Nasdaq surges after inflation data: Why the top tech and growth stocks moved higher appeared first on The Motley Fool Australia.

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• The 1 reason Amazon shares may not be a buy right now
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jason Hall has positions in Bloom Energy Corp, The Trade Desk, and Upstart Holdings, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Affirm Holdings, Inc., Meta Platforms, Inc., The Trade Desk, and Upstart Holdings, Inc. The Motley Fool Australia has recommended Meta Platforms, Inc., The Trade Desk, and Upstart Holdings, Inc. 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 CSL Limited (ASX: CSL) share price has been on a decent run over the last couple of months.

Since the middle of June, the biotherapeutics company’s shares have risen a sizeable 14%.

This compares to a gain of approximately 6% for the benchmark ASX 200 index.

Why is the CSL share price on a roll?

Investors have been bidding the CSL share price higher due to the release of very positive industry data.

That data shows that plasma collection levels are now back to pre-COVID levels in the United States at long last.

This is a big positive for CSL as plasma is a key ingredient in many of its most lucrative therapies. When it was in short supply, the company was paying more than normal for donations, which was putting pressure on its margins. With supply now back to normal and collection prices reducing, CSL should soon start to see its margins improve again.

All in all, the general consensus is that CSL is now over the worst of its issues, and it is onwards and upwards from here. But will it be onwards and upwards for the CSL share price?

Where are its shares heading?

According to a note out of Goldman Sachs, its analysts believe CSL’s shares may be close to peaking for the time being.

This morning the broker has resumed coverage on the company with a neutral rating and $307.00 price target. This implies potential upside of just 5% from the current CSL share price of $292.35.

Goldman believes that the company’s shares are about fair value now based on historic earnings multiples. It explained:

Valuation of 34x NTM P/E has now recovered to the 5yr avg, and is back above the 10yr (29x). We believe risk-reward is once again well-balanced, and reinstate our rating at Neutral, with a 12-month TP of A$307.

The post Goldman Sachs gives its verdict on the CSL share price appeared first on The Motley Fool Australia.

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More reading

• CSL share price climbs as $16 billion Vifor acquisition becomes effective
• ‘Excited about the pipeline’: Why Wilson says the CSL share price is in the buy zone right now
• 3 ASX 200 shares to buy for a post-COVID resurgence: experts
• Up 8% in July, is there more upside in the CSL share price this earnings season?
• Why Citi just became even more bullish on the CSL share price

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 CSL Ltd. 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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In this high-tech age that we live in, those ASX shares perceived to represent “boring” businesses can be unfairly overlooked.

According to Switzer Financial Group director Paul Rickard, Aurizon Holdings Ltd (ASX: AZJ) is a prime example of a company with this perception in the market. 

“Boring is, I guess, any business involved in rail, haulage, logistics and coal,” he told Switzer TV Investing.

“But for many investors, they’ve gone to Aurizon for the income — because it’s been a high yielder.”

Share price heavily discounted after dividend announcement

On Monday, the market savaged Aurizon shares after the company revealed its full-year financials.

Investors were disturbed that a stock well-known for its yield was cutting its dividend by 24%. The Aurizon share price plummeted 6% that morning before recovering somewhat in the afternoon.

Rickard feels like that was an overreaction.

“It did cut its dividend, but that was, by and large, expected,” he said.

“It was actually a little bit better than analyst forecasts — but it was still a dividend cut.”

The sell-off, he added, has created “some value” for those dividend hunters willing to buy in for about a 5.6% yield next year.

“The market probably misunderstood what was coming.”

Taking advantage of the market’s misjudgment

Aurizon has two main businesses. One is owning and maintaining a network of train tracks in Queensland, the other is a haulage business that has many interests outside of that state. 

While much of its business relies on transporting coal, Rickard reckons Aurizon is shifting away from that to boost the stock’s ESG attractiveness.

“It’s actually divesting a part of what’s called East Coast Rail, which is its Hunter Valley thermal coal haulage business.”

The track business, which brings in about 55% of its revenue, can be considered an infrastructure play.

The Aurizon share price closed Wednesday at $3.89.

Aurizon isn’t a stock Rickard would actively chase, but Monday’s dip makes it appealing right at the moment.

“It’s an attractive yield… Markets have probably misjudged what they’re being told to create [buying] opportunities.”

It usually trades within a tight range, and is at the lower side of that spectrum.

“I think at $3.80 to $3.90 it’s reasonable for a dividend payer,” said Rickard.

“I wouldn’t go too much above $4, and I’m not expecting a huge [capital] gain. But I think you can quantify the risks.”

The post ‘Misunderstood’: Expert names dividend ASX share to buy now at price dip appeared first on The Motley Fool Australia.

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More reading

• Why Alliance, Aurizon, MVP, and Suncorp shares are dropping today
• Aurizon share price slips as dividend cut by 24%
• 5 things to watch on the ASX 200 on Monday
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Aurizon share price sinks despite ‘transformative’ acquisition win

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 Aurizon Holdings 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 Telstra Corporation Ltd (ASX: TLS) share price will be one to watch on Thursday.

That’s because this morning the telco giant has released its highly anticipated full year results.

Telstra share price on watch following strong result and dividend increase

• Revenue dropped 4.7% year over year to $22,045 million
• Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 8.4% to $7,256 million
• Net profit down 4.6% to $1,814 million
• Fully franked final dividend of 8.5 cents per share
• Outlook: FY 2023 underlying EBITDA of $7.8 billion to $8.0 billion

What happened in FY 2022?

For the 12 months ended 30 June, Telstra posted a 4.7% decline in revenue and an 8.4% increase in underlying EBITDA to $7.3 billion.

A key driver of Telstra’s earnings growth was its mobile business. It performed very strongly, reporting EBITDA growth of 21.2% or $700 million over the prior corresponding period. This reflects the addition of 155,000 net retail postpaid handheld services, 2.9% postpaid handheld average revenue per user (ARPU) growth, and 6.4% mobile services revenue growth.

In addition, 1 million Internet of Things (IoT) services were added, along with 218,000 wholesale services.

Telstra also advised that InfraCo Fixed income was $2.4 billion, with core access revenue up 3.1% including NBN recurring receipts up 3.3%. Amplitel was established as a standalone business with the sale of a non-controlling 49% interest delivering net cash proceeds after transaction costs of $2.8 billion. Amplitel revenue increased by 8.9%.

Things weren’t quite as positive in Fixed for Consumer and Small Business. Telstra notes that this continued to be impacted by the tail end of the NBN migration. However, there is confidence that segment EBITDA has bottomed.

Another positive was that Telstra has continued to cut costs. It revealed that underlying fixed costs were down $454 million and total operating expenses were down $906 million.

In light of this strong performance and its positive outlook, the Telstra board decided to make its first dividend increase in eight years. It lifted its final dividend by half a cent to 8.5 cents, bringing its full year dividend to 16.5 cents per share.

How does this compare to expectations?

The good news for the Telstra share price today is that this result appears to be ahead of expectations.

For example, according to a note out of Goldman Sachs, its analysts were expecting revenue of $21.6 billion and underlying EBITDA of $7.13 billion. Telstra has beaten on both.

And much like the rest of the market, the broker was not expecting a dividend increase in FY 2022. Goldman was forecasting a final dividend of 8 cents per share and a full year dividend of 16 cents per share.

Management commentary

Telstra’s CEO, Andy Penn, was very pleased with the company’s performance in FY 2022. He said:

Our mobiles result was outstanding, Consumer & Small Business Fixed grew sequentially in the second half, Enterprise returned to growth and we started to realise the benefits of setting up our infrastructure assets as standalone InfraCo businesses. We also continued to take cost out of the business, with underlying fixed costs down $454 million and total operating expenses down $906 million, or 5.8 percent.

Commenting on the company’s decision to increase its dividend for the first time in many years, Penn said:

This represents the first increase in the total Telstra dividend since 2015 and recognises the confidence of the Board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens EPS growth from FY21 – FY25, the strength of our balance sheet and the recognition by the Board of the importance of the dividend to shareholders

Outlook

Telstra has provided an update on its guidance for FY 2023. Pleasingly, it is in line with previously stated targets. It is as follows:

• Total Income of $23.0 billion to $25.0 billion
• Underlying EBITDA2 of $7.8 billion to $8.0 billion
• Capex4 of $3.5 billion to $3.7 billion
• Free cashflow after lease payments (FCFal) of $2.6 billion to $3.1 billion

The post Telstra share price on watch amid strong FY22 result and surprise dividend increase appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Here’s the Telstra dividend forecast through to 2024
• ‘Exciting’ ASX 200 dividend share expected to deliver material returns: expert
• ‘Wouldn’t have been on my radar previously’: Why WAM likes Telstra shares right now
• Looking to buy Telstra shares? Here’s what to watch when the telco giant reports this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation 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 Zip Co Ltd (ASX: ZIP) share price has run out of steam recently.

After rocketing higher in July, the buy now pay later (BNPL) provider’s shares have taken a tumble.

For example, since this time last week, the Zip share price has lost 13% of its value.

Where next for the Zip share price?

Unfortunately, one leading broker believes the Zip share price could be heading lower from here

According to a recent note out of Citi, its analysts have downgraded the company’s shares to a sell rating with a 70 cents price target.

Based on the current Zip share price of $1.23, this implies potential downside of 43% for investors over the next 12 months.

What did the broker say?

Although Citi believes that Zip’s plan to tighten its risk settings will reduce its bad debts, it expects this to come at the expense of growth.

In light of this, it feels that Zip may need to find further way to lower its costs to reduce its cash burn.

It explained:

While we expect net bad debts to decline as Zip tightens risk settings, we expect this to negatively impact TTV and have lowered our growth forecasts meaningfully and think Zip needs to make further cost cuts to reduce cash burn.

Given the risks to both transaction volumes and bad debts over the next 12 to 18 months in a tougher economic environment, we downgrade to Sell/High Risk.

The broker also criticised management’s very costly decision to pursue the acquisition of Sezzle Inc (ASX: SZL).

We also have some concerns on Zip’s decision making as the Sezzle acquisition process (which we had concerns on) resulted in Zip spending $60 million of capital. We continue to see value in Zip’s Australian business given its differentiated offering (albeit with higher credit risk), but see the US business as lacking scale.

The post Top broker warns that the Zip share price could sink 43% appeared first on The Motley Fool Australia.

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More reading

• Does this signify more bad news for ASX BNPL shares like Zip?
• Why is the Block share price tumbling 5% on Wednesday?
• Could Afterpay’s global ambitions threaten the future of Zip shares?
• These are the 10 most shorted ASX shares
• Did Zip really outgrow former ASX favourite Afterpay in the June quarter?

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 ZIPCOLTD FPO. 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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