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Market watchers would be forgiven for not knowing Qantas Airways Limited (ASX: QAN) is a dividend share.

It’s been a long time since the iconic ‘flying kangaroo’ paid out a portion of its earnings to investors.

So, why has the S&P/ASX 200 Index (ASX: XJO) staple been holding out on its dividends? Let’s take a look.

As of Wednesday’s close, the Qantas share price is $5.45. It has gained 5.8% year to date.

Meanwhile, the ASX 200 has slipped 4.33%.

When was Qantas’ last dividend?

The last time those invested in Qantas shares received a dividend from the company was way back in financial year 2019.

That year saw them banking a 12-cent interim dividend and a 13-cent final dividend, both fully franked.

It’s worth noting that Qantas ended financial year 2019 in the red. It recorded a 6.5% year-on-year fall in statutory profit after tax.

Readers might be able to guess what happened next. The COVID-19 pandemic took hold in Australia in March 2020, to the detriment of the travel sector.

As borders slammed shut and demand nose-dived, Qantas deferred the payment of its 13.5-cent interim dividend, promised in February 2020. However, come June 2020, the dividend had been revoked entirely.

On cancelling the dividend, Qantas stated:

This uncertainty has now crystallised into a significant detrimental impact on the group’s earnings and cash position.

Further, the fully franked nature of the interim dividend was based on franking credits expected from taxable profits in the second half, which will now not materialise.

Accordingly, the board has decided to revoke the interim dividend, avoiding the outflow of $201 million of cash and helping to maintain strong liquidity in the face of this unprecedented crisis.

Qantas also cancelled a planned off-market buyback, underwent a $1.9 billion capital raise to boost its bottom line, and stood down the majority of its staff in 2020.

Sadly, Qantas’ COVID-19 challenges didn’t end there.

In fact, the airline recorded a $1.28 billion underlying loss before tax for the 6 months ended 31 December 2021, mainly due to the pandemic.

Perhaps unsurprisingly, there’s been no sign of a dividend from the company since the onset of COVID-19.

But with restrictions easing and demand for travel returning, the future might be brighter for Qantas, its shares, and its dividends.

The post When did Qantas last pay a dividend? appeared first on The Motley Fool Australia.

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• Here are the 5 best performing ASX travel shares of 2022 so far
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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 Bruce Jackson.

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CSL Limited (ASX: CSL) shares have had a woeful couple of weeks, dragged down by the broader ASX market.

Despite navigating its way through challenging market conditions caused by COVID-19, the company posed a solid set of numbers from its half year results.

At Wednesday’s market close, CSL shares finished 1.28% lower to $265.89. For context, the S&P/ASX 200 Index (ASX: XJO) fell 0.78% to 7,261.20.

Below, we take a look at CSL’s most recent financial update and how brokers are viewing the global biotech’s shares.

How did CSL perform for the first half?

For the first half of FY22, CSL reported that COVID-19 tampered the performance of CSL Behring while boosting its Seqirus business.

In particular, revenue from CSL Behring stood the same when compared to the prior corresponding period. However, its Seqirus business delivered robust growth, achieving a 17% increase in revenue over H1 FY21.

The company stated that global demand for its therapies remain strong, particularly with significant growth in seasonal influenza vaccines. The latter is due to the COVID-19 pandemic driving high rates of people getting protected from the flu.

Despite the difference, both segments contributed to a 4% lift in revenue to US$6,041 million.

Nonetheless, group earnings before interest and tax (EBIT) fell 8% to US$2,215 million caused by a number of increased costs. This included research and development expenses as trials resumed post COVID-19 pause. Management is forecasting these costs to take up estimated FY22 revenue of between 10% to 11%.

Overall, the company to recorded a 2.8% drop in in net profit after tax (NPAT) to US$1,760 million.

What were the challenges?

While the results themselves were in line with expectations, CSL revealed that it also continues to face some challenges.

It stated that its core franchise, the immunoglobulin portfolio, has been impacted by industrywide constraints on collecting plasma in FY21.

Nonetheless, CSL responded by implementing multiple initiatives across its plasma collections network. This has given rise to significant improvement in plasma volumes collected.

It noted that plasma numbers were 18% higher than H1 FY21, but still slightly down on 2019 levels.

CSL opened 18 new facilities in the first half of FY22 to attract lapsed and new donors through its doors.

For the remainder of the financial year, the company plans to open another 35 centres, expanding its presence, mostly across the United States.

What do the brokers think?

After reporting its first half results, a number of brokers rated the company with varying price points.

The team at Morgans cut its price target for CSL shares by 2.1% to $327.60.

In addition, Macquarie had a similar outlook, raising its rating by 0.8% to $327.50.

Based on both brokers, this implies a potential upside of around 23% based on the current CSL share price.

However, on the other side of the scale, Morgan Stanley raised it price target by 7.9% to $302.00.

Furthermore, RBC Capital Markets slashed it view by 1% to $296.00 apiece.

The most recent broker note came from RBC Capital Markets earlier this month, slashing its view by 1% to $296.00. In contrast, this still implies an upside of about 11.3% from where CSL shares trade.

CSL share price review

Over the past 12 months, the CSL share price has seesawed following mixed investor sentiment across the market.

The company’s shares touched a 52-week high of $319.78 in November, before falling to a 52-week low of $240.10 in February.

Based on current valuations, CSL has a market capitalisation of roughly $128.08 billion.

The post Is the CSL share price a bargain heading into May? appeared first on The Motley Fool Australia.

More reading

• Here’s what the 5 biggest companies on the ASX 200 today were worth in 2000
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• Why Morgan Stanley says the CSL share price can hit $400 by 2025
• Why Bellevue Gold, CSL, Endeavour, and Serko shares are pushing higher today

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. owns 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 Bruce Jackson.

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The price of gold has fallen in recent memory despite the current turmoil impacting the global markets. In times of uncertainty and volatility, the yellow metal is traditionally seen as a safe haven.

During March 2022, the spot price of gold has spike above the psychological US$2,000 per ounce barrier before quickly retracing.

In that brief moment, gold hit a multi-year high of US$2,070.13, as investors reallocated their portfolio assets.

At the time of writing, the price of gold is fetching for US$1,890.57 per ounce. This means that the precious metal has lost 4.13% since the start of this year.

What’s weighing down the price of gold?

If history is anything to go by, gold should be gleaming to record highs today.

Changes in interest rates, inflation and demand for gold jewellery and bullion along with Russia’s invasion of Ukraine should be valid reasons. However, the price of gold has dropped almost 3% in the past month.

For example, China is a key market for gold purchases, particularly gold jewellery.

While the Asian giant is under tough COVID-19 restrictions, with shops remaining closed, this is expected to severely weaken demand.

And should the situation persist and disposable incomes of consumers are affected, then depressed demand may remain. Low demand in a key market such as China or India can drag down the price of gold.

In addition, with interest rates likely to lift, this can also drive investors away from the yellow metal.

There is a correlation as when interest rates are low, this reduces the opportunity cost of holding non-yielding bullion. On the other hand, when interest rates rise, investors begin to shift from gold to bonds.

Can gold break the psychological US$2,000 barrier?

The current environment is extremely fluid, given the number of macro factors that are occurring on the world stage.

Inflation, rate hikes, geopolitical tensions and the unpredictability of global markets is influencing the price of gold.

Although, it appears the market has already priced in potential interest rate rises, gold could surge yet again. This is because of the extremely high levels of inflation which could dent economic growth, leading to slower-than-expected rates hikes.

Looking at the two largest ASX gold mining companies, Newcrest Mining Ltd (ASX: NCM) and Northern Star Resources Ltd (ASX: NST), their shares have dipped 6.45%, and 15.85%, respectively in the past week.

For gold prices to break the US$2,000 barrier, an escalation in the Russian war or drawn-out rate hikes are needed.

The post Can the gold price surge above US$2,000 again this year? appeared first on The Motley Fool Australia.

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• Northern Star share price tumbles on guidance update
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources Limited. 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 Bruce Jackson.

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In February, the AGL Energy Ltd (ASX: AGL) board cut its interim dividend by 60% as the energy company released its first-half results. This prompted a short slump in the company’s shares at the time before the AGL share price rebounded and headed north again.

At Wednesday’s market close, AGL shares were trading at $8.30 apiece.

Below, we dive into the AGL dividend policy and its payout ratio.

A look at AGL’s dividend history

On 30 March, the company paid out an FY22 interim dividend of 16 cents — considerably lower than the 41 cents declared in the prior corresponding period.

Management noted the lower payout would enable AGL Australia and Accel Energy to manage capital for future growth, and maintain debt.

However, when measuring up against prior dividend payments, we need to go back to 2007 to see a lower dividend from AGL.

In addition, the last three AGL dividends paid to shareholders have been unfranked, in contrast to the previous eight years. This means those eligible for any recent dividends missed out on the tax credits.

The FY21 full-year dividend stood at 75 cents, which compares to the 98 cents recorded in the 2020 financial year.

And with FY22’s interim dividend at 16 cents, the final dividend is unlikely to match FY21’s full-year dividend.

More on AGL’s dividend payout ratio

In its H1 FY22 results, AGL delivered net cash from operating activities of $661 million, up 9% on H1 FY21. This increase was largely due to an uptick in working capital, which included a positive movement in green certificate assets and a large inflow from margin calls.

AGL said that this largely offset a reduction in earnings.

On the bottom line, underlying net profit after tax (NPAT) dropped to $194 million, down 41% from the prior comparable period.

The company had approximately $700 million in cash and undrawn debt facilities at the end of December.

The interim dividend was in line with AGL’s dividend policy to target a payout ratio of 75% of underlying profit after tax. The payout ratio is essentially the amount of a company’s earnings per share (EPS) that it pays out in dividends.

Following AGL’s upcoming demerger, the board proposes the respective dividend policies for each entity. They are as follows:

• AGL Australia: 60% to 75% of underlying NPAT
• Accel Energy: 80% to 100% of free cash flows after servicing net finance costs

AGL share price summary

In 2022, the AGL share price has continued to rise in value, gaining more than 35% for investors.

However, when factoring in the last 12 months, its shares are in the red, down almost 5%.

AGL has a trailing dividend yield of 6.02%, and a market capitalisation of roughly $5.58 billion.

The post How much is the AGL dividend payout ratio? appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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All eyes will be on the Coles Group Ltd (ASX: COL) share price on Thursday.

This follows the release of the supermarket giant’s third quarter update this morning.

Coles share price on watch amid solid sales growth

• Sales up 3.9% over the prior corresponding period to $9.3 billion
• Supermarkets sales up 4.2% to $8,226 million
• Liquor sales up 2.8% to $784 million
• Express sales down 2.1% to $285 million
• Flood event costs of $30 million and COVID costs of $65 million

What happened during the quarter?

For the 12 weeks ended 27 March, Coles reported a 3.9% increase in sales to $9.3 billion. This was driven by solid growth across its supermarkets and liquor businesses, which offset softer sales from the express business.

The release notes that supermarkets sales were elevated in the early part of January as the Omicron variant spread through the community. And while they were then impacted by the floods in New South Wales and Queensland, with supply chain challenges impacting availability and sales, it wasn’t enough to stop Coles’ supermarkets from reporting comparable store sales growth of 3.9%.

Coles also highlights that local shopping trends re-emerged with the contribution from neighbourhood stores greater, as compared to shopping centres and CBD stores, in the third quarter compared to the second quarter.

The Liquor business was also on form, reporting comparable store sales growth of 2.8% for the period. This was driven by growth across all states, despite the impact of the significant flood events and rising Omicron cases in the early part of the quarter limiting social gatherings and thus liquor consumption.

Finally, the Express segment reported a same store sales decline of 0.8%. Management notes that this was driven by COVID-19 isolations. And while traffic flows increased with workers returning to offices and children returning to school later in the quarter, this was then offset by the flood events and global fuel price increases.

How does this compare to expectations

Goldman Sachs was expecting Coles to report comparable sales growth of 3.5% for the supermarkets business and 2% for the liquor business.

Given that the company ultimately reported growth of 3.9% and 2.8%, respectively, this could bode well for the Coles share price today.

Management commentary

Coles CEO, Steven Cain, acknowledged cost of living pressures and revealed that the company will be doing its part to ease the burden. He said:

“Coles Group remains focused on our commitment to deliver trusted value for Australian families amid growing cost of living pressures driven by both local and global supply circumstances. In particular, we have the widest range of great value and sustainable own brand products in Australia.

I want to thank our team members and suppliers for their continued hard work during the quarter to provide the best offer possible despite the impact of widespread flooding and record COVID-19 numbers. I would also like to thank our customers, community partners and state and federal governments for their help and generosity in supporting Coles’ efforts to assist communities impacted by flooding during the quarter.”

Outlook

Positively for the Coles share price, the company revealed that it has started the fourth quarter strongly.

It highlights that it “recorded a solid trading period with no COVID-19 related restrictions on traditional family events such as Easter” and that “availability continues to improve as the supply chain recovers.”

Looking ahead, COVID costs are expected to moderate as public health requirements are eased, but supplier input cost inflation is expected to continue in the fourth quarter and into FY 2023. However, Coles doesn’t appear to be planning to pass these costs on and will “continue to focus on providing trusted value for customers to ease the burden from cost of living pressures.”

The post Coles share price in focus amid solid Q3 sales growth 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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With the market rotating away from hyper-growth technology and medical companies, ‘old school’ sectors are back in favour.

Whether it’s building houses, facilitating e-commerce or selling shoes, business activities that are considered more essential to consumers’ lives are flying high in the face of higher interest rates.

Let’s take a look at 3 examples that experts have rated as “buy” this week:

Who needs shoes? EVERYONE

Bell Potter Securities advisor Christopher Watt sees Accent Group Ltd (ASX: AX1) as nice value at the moment.

The share price has plunged more than 41% for the year so far.

“The stock looks attractive given recent levels of price weakness,” Watt told The Bull.

“Accent owns an impressive portfolio of footwear businesses, including The Athlete’s Foot, Platypus and Timberland.”

He added that Accent is really building “a positive point of difference” in Australian retail.

“The company has more than 500 stores and more than 20 online platforms. It pays fully franked dividends.”

Indeed the stock is handing out almost a 4% yield.

Almost no empty space left

Medallion Financial Group analyst Jean Claude Perrottet currently likes the look of Goodman Group (ASX: GMG).

“This industrial property group is a quality business, with about $68.2 billion in assets under management.”

He cited Goodman’s 98.4% occupancy rate as a testament to the quality of the company.

“Goodman delivered a strong 2022 first half result, with growth in key metrics,” said Perrottet.

“Operating profit of $786.2 million was up 28% on the prior corresponding period. The company has increased earnings per share guidance in fiscal year 2022.”

Goodman is a major beneficiary of the consumer shift to online shopping, leasing out massive warehouse space to retailers.

Morgan Stanley is also a fan, rating Goodman shares as a buy this week with a price target of $27.88.

That’s an 18% premium on Wednesday’s closing price of $23.63.

‘Dominant share’ of US market

Building materials provider James Hardie Industries plc (ASX: JHX) is also a current buy for Bell Potter’s Watt.

“This building products company has a dominant share of the US fibre cement market amid immense exposure to the attractive US housing market.”

The stock price has cooled off significantly in 2022, dropping almost 30% so far.

But in the face of persistent inflation and rising interest rates, Watt likes James Hardie’s ability to set its own prices.

“Strong pricing power enables the company to pass on increasing manufacturing costs, which protects profitability.”

Analysts at Firetrail agree with Watt, saying the exposure to a growing US market could prove fruitful.

“We estimate current North America margins of 29% could increase to 46% by FY27, materially higher than consensus FY27 margins of 34%,” they stated in a memo to clients last week.

“We believe the market is missing a material market share and margin-accretion opportunity which lies ahead of James Hardie as it shifts its product mix towards higher-margin products.”

The post Shoes, shopping, reno: 3 ASX shares experts are buying now 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 Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Commonwealth Bank of Australia (ASX: CBA) is planning to offer home loans with cheaper interest rates for houses that meet certain sustainability and energy-efficiency criteria.

CBA is the largest of the ‘big four’ ASX banks, featuring National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), and Westpac Banking Corp (ASX: WBC).

‘Green home offer’

The bank’s new initiative is called the ‘green home offer’. It offers a 1.99% variable interest rate with a 2.45% comparison rate. However, CBA’s conditions state that the product discount margin on this offer “may vary from time to time”.

CBA said it wants to reward new and existing customers who’re taking steps to reduce their footprint on the environment by investing in their homes, making them more energy efficient.

CBA’s executive general manager of home buying Dr Michael Baumann said:

We expect all residential homes to be built to these standards over the coming years as we move towards a net zero future and by introducing the new Green Home Offer we want to encourage customers to take steps now to protect the environment and their home. We know homes that are well built and energy efficient are good for the environment whilst significantly reducing living costs and improving the wellbeing of homeowners.

How do homes qualify?

There are two options. Either the home is a certified ‘Green Building Council of Australia (GBCA) Green Star Home’ or it meets a number of other criteria including that it’s electrified through the installation of a heat pump hot water system with no gas. It must also meet a minimum requirement for solar power generation, depending on the size of the house.

The GBCA and CBA are looking to raise awareness of this new standard of rating for larger homebuilders. It’s focused on being energy efficient. This includes being powered by renewables, being fully electric, and draught sealed. Homes also need to be well-ventilated with minimal toxins in carpets or paint and be resilient through being water efficient and ‘climate change ready’.

CBA said it wants to be able to provide customers with options that reduce their environmental footprint. It says it has a responsibility to do this because one in four home loans in Australia are with Commonwealth Bank. The bank also has a 10-year green loan for financing the installation of renewables in homes.

CBA share price snapshot

The CBA share price is around 2% higher since the start of 2022. However, it’s down around 5% since 21 April 2022.

In other news from the bank, yesterday CBA announced the transition of its chair. The bank’s non-executive director Paul O’Malley will take up the position in August.

The post Here’s how CBA plans to support greener homes with cheaper mortgages appeared first on The Motley Fool Australia.

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• Are CBA shares a buy? Here’s what analysts say

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

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S&P/ASX 200 Index (ASX: XJO) iron ore shares have seen some big swings up and down over the past 12 months.

This was predominantly driven by some wild moves in iron ore prices. The industrial metal reached US$233 per tonne in May last year before sliding all the way to US$87 per tonne by November.

On Tuesday, iron ore fell 9.7%, dragging ASX 200 iron ore shares down with it. Yesterday, prices rebounded by 2.4% to US$139 per tonne. As you’d expect, that helped boost the prices of the big ASX mining shares.

While the ASX 200 closed down 0.78% yesterday, BHP Group Ltd (ASX: BHP) shares finished the day up 0.8%; the Rio Tinto Ltd (ASX: RIO) share price closed up 0.2%; and Fortescue Metals Group Ltd (ASX: FMG) shares closed 1.7% higher.

With so much of these big companies’ fortunes riding on the price of iron ore, what’s the outlook for the remainder of the year?

Low-cost production equals strong profit margins

For an answer to the outlook for iron ore prices – and the profit margins of ASX 200 iron ore shares – we defer to Commonwealth Bank of Australia director of mining and energy commodities research, Vivek Dhar (courtesy of ABC News).

Commenting on the sharp fall in iron ore prices earlier this week, Dhar said, “Markets are worried that Beijing in particular may be exposed to more severe lockdowns, like what we’ve seen in Shanghai.”

As you’re likely aware, China remains intent on its zero-COVID policy. A policy that’s sent Shanghai – a city with more residents than all of Australia – into extended, crippling lockdowns. The virus is still spreading, and authorities’ lockdown measures could as well.

For that reason, Dhar believes demand for iron ore from China’s steel factories will be weak over the next several months. But he doesn’t expect iron ore prices to plummet back to the November 2021 lows this year.

ASX 200 iron ore shares to generate significant cash

Dhar expects iron ore to trade in the range of US$120 per tonne to US$160 per tonne this year, potentially falling to US$100 towards December. That’s well above the Aussie Government’s own forecast of US$55 per tonne.

And it should see ASX 200 iron ore shares remain well in the profit zone.

According to Dhar (quoted by ABC News):

When it comes to the profitability of Australia’s iron ore sector, it is still very, very strong. We sit very fortunately as the lowest cost producers of iron ore and, together with some Brazilian operations, I think that’s going to be very profitable.

The cash generation is going to be significant.

The post Cash generation among ASX 200 iron ore shares will ‘be significant’ in 2022: expert appeared first on The Motley Fool Australia.

More reading

• Here’s what the 5 biggest companies on the ASX 200 today were worth in 2000
• Why is the Fortescue share price outperforming today?
• 3 ASX 200 mining shares defying today’s sell-off to surge higher
• Own the Vanguard Australian Shares High Yield ETF? Here’s what you’re invested in
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

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 Bruce Jackson.

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There is no doubt 2022 has been a wild ride for investors dabbling in ASX shares.

January saw a deep plunge due to fears about persistent inflation and rising interest rates. Russian tanks rolled into Ukraine in February.

The S&P/ASX 200 Index (ASX: XJO) then made a massive 6.4% gain in March.

And this month, it consolidated those gains, only to fall off a cliff in the final week.

That’s sufficient volatility to turn your hair grey.

Yes, it is stressful seeing your portfolio turn into a sea of red, regain some of those losses, then lose them all again.

But a couple of fund managers reminded investors to stay focused on the long game.

“One-year returns for equity markets can be incredibly volatile. Regular calendar year falls of -10% to -30% are relatively frequent,” said Ophir Funds co-founders Steven Ng and Andrew Mitchell.

“However, as we go out to holding periods of five years, falls become MUCH less frequent. At 10 year periods, they have become practically non-existent and there are no periods of negative 20-year returns.”

‘Transferring money from the impatient to the patient’

Ng and Mitchell mentioned a famous Warren Buffet quote to demonstrate their point: 

“The share market is a device for transferring money from the impatient to the patient.”

The simple fact is that investors need to tolerate short-term price fluctuations as the entry fee for playing.

“Volatility and drawdowns are the price you pay for higher returns from shares over the long term,” their memo to clients read.

“You genuinely can’t have the sweet without the sour.”

What’s the payoff for putting up with “occasional -50% share market falls and more frequent -20% bear markets“?

Ng and Mitchell took the example of $100 invested in 1899 through cash, bonds, or shares.

Cash would have turned that into $8,650 today, while bonds would have done far better, with a current balance of $24,556.

“However, in another galaxy is equities, at $9,994,326!” the duo said.

“Hard to believe but true — more than 400 times the dollar return of bonds over the last 122 years. The shorter-term risk of shares has been handsomely rewarded over the long term.”

Ng and Mitchell were reminded of another quote, this time from Buffett’s right-hand man Charlie Munger:

“If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve.”

Setting expectations about timing and risk management

Mitchell and Ng said there’s nothing wrong with putting in risk management practices to reduce the bleeding during volatile times like 2022.

“But expectations must be realistic about what these practices can achieve – they are not a cure-all for avoiding declines in value when markets fall.”

They acknowledged that, for both professionals and amateurs, corrections are unpleasant.

“It is always painful whilst you are going through it, but ultimately it is a necessary ingredient for shares to outperform over the long term and for active managers, such as ourselves, to be able to stand the chance of beating the markets over time.”

And don’t forget, timing the market is a mug’s game.

“We’d all love to be able to time markets and miss these falls, but history (and the data!) suggests this is likely to be nigh on impossible,” read Ng and Mitchell’s memo.

“It is BECAUSE investors have to go through the painstaking drawdowns of the share market that they tend to be handsomely rewarded over the long term.”

The post ‘No risk, no reward’: Exit ASX shares if you can’t stomach volatility, says experts 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 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 Bruce Jackson.

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By now you likely know that the past few months have been hell for technology stocks.

The S&P/ASX All Technology Index (ASX: XTX) is more than 25% lower than where it started this year, and a whopping 30% down since November.

But some argue that tech businesses with sound financials and reliable earnings streams will inevitably recover those losses — and more.

This is why it was interesting to note 2 ASX tech shares nominated as buys by a pair of experts this week:

‘A significant advance’ for marketplace platform

Online real estate classifieds site Domain Holdings Australia Ltd (ASX: DHG) has suffered brutally, even more so than the All Tech index. 

Its shares are down more than 40% for the year. 

Yikes.

Fat Prophets chief Angus Geddes, however, thinks a positive catalyst is in the works.

“Domain’s pending acquisition of real estate campaign management platform Realbase will accelerate its agency solutions strategy and increase market penetration to about 50% of all Australian transactions.”

Geddes told The Bull the transaction makes sense “strategically and financially”, and gives Domain an opportunity to sell “higher value solutions”. 

“The deal is a significant advance in the evolution of the Domain marketplace strategy.”

According to CMC Markets, 7 out of 13 analysts rate Domain shares as a strong buy.

Revenue continues to climb

Software maker ​​Xero Limited (ASX: XRO) has also been hammered harder than the typical tech stock.

The Xero share price has lost more than 35% so far in 2022.

Medallion Financial Group analyst Jean Claude Perrottet reckons the sell-off has been overdone.

“Xero has generated strong growth since 2006 and now has more than 3 million subscribers,” he said.

“The company reported operating revenue of NZ$505.7 million in its first half result, an increase of 23% on the prior corresponding period.”

Burman Invest chief investment officer Julia Lee said last month that Xero shares would look “very interesting” once they dipped below the $100 mark.

Well, it closed Wednesday at $94.55.

“In our view, the share price offers value as it was recently trading well below its highs,” said Perrottet.

Xero shares are slightly more polarising among professional investors, with 6 out of 11 analysts surveyed on CMC Markets rating it as a strong buy while two warn that it’s a strong sell.

The post 2 ASX tech shares to buy for dirt cheap right now: experts appeared first on The Motley Fool Australia.

More reading

• 2 ASX 200 blue chip shares to buy in May: Analysts
• Top brokers name 3 ASX shares to buy next week
• Broker tips Xero share price to rise 30% due to ‘compelling global growth story’
• 2 top ASX growth shares leading brokers say ‘buy’
• 3 top ASX growth shares that experts say are buys

Motley Fool contributor Tony Yoo owns Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Xero. The Motley Fool Australia owns and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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