Tag: Motley Fool

The Firefinch Ltd (ASX: FFX) share price is flying higher in morning trade, up 4.8% after posting earlier gains of 6.4%.

Firefinch shares closed on Friday at 95 cents and are currently trading for 99 cents.

Here’s why ASX investors are bidding up the Mali-focused gold miner and lithium developer’s shares.

What is the latest progress on the joint venture?

The Firefinch share price is marching higher after the company reported that the final conditions have been met regarding Jiangxi Ganfeng Lithium Co’s investment into its Goulamina Lithium Project.

After the transfer of the exploitation licence for the Goulamina to Lithium du Mali SA (LMSA) – a wholly-owned subsidiary of the joint venture (JV) company – Firefinch and Ganfeng now each hold a 50% interest in the JV company.

Firefinch said that all other conditions precedent had been satisfied. That includes a ‘letter of no objection’ from the Malian government.

The Firefinch share price could be getting a boost today from the report that under the JV agreement, Ganfeng will provide US$130 million of equity funding to the JV company. Ganfeng will also provide either US$40 million of Ganfeng direct debt or source US$64 million of third-party debt.

With the final conditions of the JV satisfied, Firefinch can now proceed with the demerger of Goulamina into Leo Lithium Limited. Firefinch expects to list Leo Lithium as a separate entity on the ASX later this year. Leo is the Firefinch group entity that holds its interest in the JV.

Firefinch managing director Michael Anderson commented on the progress:

This is a long-awaited and significant milestone. We have been working tirelessly to progress the joint venture and demerger process to deliver value for shareholders and are delighted to be on the brink of achieving the intended result.

Leo managing director Simon Hay added:

This is this a tremendous step along the path to listing Leo Lithium and developing Goulamina as one of the world’s largest lithium producers. The combined debt and equity funding package of at least US$170 million from Ganfeng means Leo can now accelerate work on the Goulamina Project.

Firefinch share price snapshot

The Firefinch share price has gained 52% over the past month and a whopping 350% since this time last year.

For some context, the All Ordinaries Index (ASX: XAO) is up 10% over the past 12 months.

The post Up 350% in a year, here’s why the Firefinch (ASX:FFX) share price is flying higher on Monday appeared first on The Motley Fool Australia.

More reading

• Why Allkem, Firefinch, JB Hi-Fi, and Piedmont Lithium are charging higher
• Here’s why the Firefinch (ASX:FFX) share price is blazing 8% higher today
• 5 ASX mining shares smashing 52-week highs today
• Could the Firefinch (ASX:FFX) share price have 130% upside? Broker weighs in
• Is this boosting the Firefinch (ASX:FFX) share price higher today?

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 Bruce Jackson.

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The Westpac Banking Corp (ASX: WBC) share price has been fairly volatile since the beginning of 2022, like most ASX shares. But, it has managed an increase of 10% from the start of the year.

It’s impossible to know what the Westpac share price is going to do in any given week, month, or even year. For example, no one could have genuinely seen that the COVID-19 pandemic was going to happen when it did.

How are things looking for the Westpac share price? 

The broker Citi is optimistic about the big four ASX bank. Westpac is Citi’s top choice compared to the other big four ASX banks of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Citi notes that Aussie banks have been doing better than other international banks since the start of the Russian invasion of Ukraine, though this outperformance may not continue. Australian banks may be doing well because of their strong balance sheets and the fact that Australia has a lot of commodity exposure.

Banks such as Westpac could benefit from rising interest rates.

The US Federal Reserve has commented that interest rates could increase by 50 basis points in one go to combat the very high level of inflation in the US. Federal Reserve officials have indicated that interest rates are likely to increase at each meeting between now and the end of 2022.

Australian interest rates are expected to rise too. According to reporting by the Sydney Morning Herald, ANZ expects the RBA to increase rates in the third quarter of 2022. There are other predictions, such as CBA’s, that the RBA could raise interest rates as early as June 2022.

Citi rates Westpac as a buy, with a price target of $27.

However, there are other brokers with much lower expectations.

For example, Morgan Stanley is ‘equal weight’ on Westpac, with a price target of just $22.40.

Recent profit performance

Last month, the bank released its update for the three months to 31 December 2021. It showed that the $1.82 billion quarterly profit was 80% higher than the quarterly average for the second half of FY21. The cash earnings of $1.58 billion were up 74%, though it was only an increase of 1% when excluding notable items.

Lending was up $5 billion, or 0.7%, over the quarter across institutional, mortgages and New Zealand.

The net interest margin was 1.91%, down 8 basis points due to competition and higher liquid assets.

Expenses were down 26% to $2.7 billion. Excluding notable items, expenses were down 7%.

There was an impairment charge of $118 million, mostly from increased ‘provision overlays’ reflecting continuing COVID-19 uncertainty.

Westpac said that asset quality metrics continued to improve and it had a “strong” common equity tier 1 (CET1) capital ratio of 12.2%.

The post What’s the outlook for the Westpac share price in April? appeared first on The Motley Fool Australia.

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• Here’s what $10,000 worth of Westpac (ASX:WBC) shares bought 10 years ago looks like today
• Analysts name 2 ASX dividend shares to buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has 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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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 exploded higher by 9% over just five recent trading days, pulling the index out of its brief stint in a bear market. The index remains in correction territory, but the rebound is a big reprieve. But we aren’t out of the woods yet.

No one knows if the market will retest its 2022 lows. What we do know is that volatility remains high, and the month of March has been chock-full of broad market gyrations with several big days to the upside and the downside.

Given all the uncertainty, it’s better to prepare for further downside now than be complacent and get caught off guard. Here are five questions you should ask yourself in case the stock market keeps crashing.

1. Why are you investing?

The stock market is but one playing field upon which several different games are simultaneously being played. Some folks are day trading and care nothing about fundamentals. Instead, their focus is on short-term price action and technical analysis. Others are trying to bet big on a moon shot. Some people are trying to beat the market over a multi-decade time horizon. And many folks are simply focused on capital preservation or passive income generation in retirement. There’s a big difference between a Wall Street hedge fund with billions of dollars under management and an 18-year-old kid with $500 in spare cash they made over the summer.

Once you begin to understand the different types of investors and their different motivations, it becomes easier to understand why stock prices can do crazy things. Put a different way, knee-jerk reactions and market volatility become less surprising.

Although it can be tempting to try to time the market, the best an investor can do is be roughly right, pick good companies, keep a level head, and let the power of patience and compounding returns do their work over time. These are tools that are free to use, yet many investors ignore them in favor of gambling.

2. What is your time horizon?

Your investment horizon is heavily influenced by age. But it can also depend on different financial obligations or upcoming expenses. Some investors are in the asset accumulation phase, while others are in the asset distribution phase.

Younger investors who still have their highest-earning years ahead of them and fewer financial obligations can afford to take risks and can use decades of portfolio growth to their advantage. Investors nearing retirement, or any period where spending may begin to outpace income, tend to be more focused on safeguarding their nest egg and protecting against downside risk. In this sense, an investor with a longer time horizon can afford to have a higher percentage of their assets in growth stocks while a retiree may be more interested in the income from stable dividend payers.

3. What is your risk tolerance?

Looking at a chart of stocks that beat the market over the last few decades is a simple enough exercise. But not all gains are created equal. In fact, some of the best stocks have been extremely volatile and required nerves of steel to hold during certain time periods. For example, Amazon (NASDAQ: AMZN) stock lost nearly 90% of its value in less than 18 months during the dot-com bubble burst in the early 2000s.

Between 23 October 2007 and 20 November 2008, Amazon again lost 65% of its value. And then between 4 September 2018 and Christmas Eve 2018, Amazon lost over a third of its value. However, even if you bought Amazon stock at its peak right before the dot-com bust on 3 January 2000 and suffered through those declines, you would be sitting on a 3,500% gain as of this writing. 

The lesson here is to understand your temperament and risk tolerance before buying a stock. Investors who bought Amazon and panic sold missed out on some major gains. But the decision is all too clear in hindsight and never easy in the moment.

4. How vulnerable are you to volatility?

Exposure to volatility combines your personal investment objectives, time horizon, and risk tolerance. For example, a young investor who hates risk but is investing for the next few decades may find themselves with a higher equities allocation than a risk-tolerant investor who has some major purchases coming up or is nearing retirement.

Understanding you and your family’s exposure to volatility is a good exercise that can help build a portfolio that is best for you. Often, being vulnerable to volatility means taking fewer risks and allocating a higher percentage of your savings toward cash and bonds instead of stocks, even though stocks tend to outperform cash and bonds over the long term.

5. What kind of investor do you want to be?

Most of us have our favorite investor role models. Some gravitate toward the characters in Michael Lewis’ The Big Short who correctly predicted the financial crisis and made money from it. Others appreciate Peter Lynch’s grassroots style or Warren Buffett’s patience and wry wisdom. Some folks want to be gunslingers and take bold bets. Others want to stick to what they know and invest in a way that helps them sleep well at night.

At The Motley Fool, we try to foster principles that will give you upside potential, encourage creativity, and provide you with an overall balanced approach. By doing your own research and keeping a diversified portfolio that blends long-term upside with proven winners, you can structure your investments in a way that suits your style.

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

The post 5 questions to ask yourself in case the stock market keeps crashing appeared first on The Motley Fool Australia.

More reading

• Why is the Rio Tinto (ASX:RIO) share price up today?
• This ASX battery metals share has been taking investors on a wild ride of supercharged gains and falls. Here’s why
• 3 timeless Warren Buffett lessons to apply right now
• The BHP dividend is being paid today. Here’s what you need to know
• Woolworths (ASX:WOW) share price higher on bullish broker note

Daniel Foelber has no position in any of the stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Amazon. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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The Rio Tinto Ltd (ASX: RIO) share price is in the green today amid the company striking a deal on a huge iron deposit.

The mining giant’s shares are currently swapping hands at $119.32, a 2.1% gain. In contrast, the  S&P/ASX 200 Index (ASX: XJO) is up 0.21% today.

The S&P/ASX 200 Resources Index (ASX: XJR) is also up 1.47% at the time of writing. Meantime, the BHP Group Ltd (ASX: BHP) share price is 1.91% higher so far today. The gains coincide with the iron ore price jumping 2.82% in a day, Trading Economics data reveals.

Let’s take a look at what is happening at Rio Tinto.

Deal struck

Rio Tinto has struck a deal with Guinea’s ruling junta on the massive Simandou iron ore deposit in the West African nation.

The agreement also includes the Aluminium Corp of China and SMB-Winning consortium, Reuters reported.

The project had recently been halted by Guinea’s military rulers who took control of the country in September. The iron ore deposit is said to hold more than 2 billion tonnes of high-grade ore.

Mines Minister Moussa Magassouba said on television, the companies “put aside many egos, many other interests to return to what is a win-win partnership for all parties”.

Rio Tinto owns a 45.05% stake in the southern half of the Simandou deposit, known as blocks three and four.

Commenting on the project, Rio Tinto Guinea country head Geraud Moussarie described the deal as “a historic step in the co-development of the Simandou project”, Reuters reported.

The agreement involves developing a 670 km railway from the Simandou site to a deepwater port at a cost of $15 billion.

Rio share price snapshot

The Rio Tinto share price is up 19% this year to date, gaining nearly 8% in the past 12 months.

In the past month, Rio Tinto shares have climbed by more than 4% and are up 8% over the past week alone.

For perspective, the S&P/ASX 200 Index (ASX: XJO) is up nearly 9% in the past 12 months.

Rio has a market capitalisation of about $44 billion based on its current share price.

The post Why is the Rio Tinto (ASX:RIO) share price up today? appeared first on The Motley Fool Australia.

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• How does Australia’s ban on alumina exports to Russia impact Rio Tinto (ASX:RIO)?
• Is it too late to jump on surging ASX 200 mining shares in 2022?

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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2022 has been a milestone year for the share price of battery metals focused ASX newbie Belararox Ltd (ASX: BRX).

The minerals explorer only recently listed on the index, floating on 28 January after offering its shares for 20 cents apiece under its initial public offering (IPO).

That means initial investors have likely had their socks blown off between then and now.

At the time of writing, the Belararox share price is $1.20 – 500% more than the company’s IPO offer price.

That’s despite the stock suffering a 14.48% tumble in Friday’s session and slipping another 2.82% today.

So, what’s the latest news from the battery metals explorer? Let’s take a look.

What’s been going on with this ASX battery metals share?

The Belararox share price has had a rollercoaster performance over the last few days.

The stock surged through the middle of last week, amping up its performance on Wednesday and Thursday, gaining approximately 18% on both days.

Then, on Friday, it suffered a downturn, tumbling around 14.5%.

So, what’s been driving the zinc, copper, gold, silver, nickel, and lead explorer’s stock over the last few sessions? It appears to be news of Belararox’s Belara Project.

The company announced it had mapped potentially significant new targets at the project on Wednesday.

The additional targets seemingly support the company’s expectation that the project is home to greater resources than previously noted.

The project was previously found to house copper, lead, zinc, silver, and gold.

A gradient array IP survey was responsible for finding the new targets.

They include the potential for extensions to the massive sulphide mineralisation at the project’s Belara and Native Bee mines. The survey also identified a new kilometre-long anomaly to the south of Native Bee.

The ASX-listed battery metals explorer’s managing director Arvind Misra said the newly identified strike extensions and targets will be tested by drilling. Misra continued:

The intention of our maiden drill campaign is to upgrade the existing resource at Belara. We feel there is immense inherent value within Belara that is not currently encapsulated by the historical resource, and we look forward to systemically exploring to reveal that potential. It appears our drill rigs will remain busy beyond the current program.

Belararox share price snapshot

The Belararox share price is back in the red today despite the broader market’s gains.

Right now, the ASX battery metals explorer’s stock is trading at $1.20, 2.8% lower than its previous close.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has gained 0.21% and the All Ordinaries Index (ASX: XAO) is up 0.17%.

The post This ASX battery metals share has been taking investors on a wild ride of supercharged gains and falls. Here’s why appeared first on The Motley Fool Australia.

More reading

• 3 timeless Warren Buffett lessons to apply right now
• The BHP dividend is being paid today. Here’s what you need to know
• Woolworths (ASX:WOW) share price higher on bullish broker note
• How big will the Fortescue (ASX:FMG) dividend be in 2022?
• Here’s why Macquarie just upgraded the Santos (ASX:STO) 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 Bruce Jackson.

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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.

Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has gotten a lot of attention as of late, and for good reason. Despite Buffett’s long-term outperformance, Berkshire Hathaway had been underperforming the S&P 500 and the Nasdaq Composite in recent years due to Berkshire’s lack of technology stocks that have been responsible for the bulk of the market’s gains.

But so far in 2022, Berkshire Hathaway stock is up 16%, while the S&P 500 is down for the year — largely thanks to the recent success of value stocks relative to growth stocks. What’s more, Berkshire Hathaway stock hit a new all-time high on Monday.

Short-term results aside, here are three Warren Buffett lessons that have proved invaluable over time and ring especially true today. 

1. Don’t follow the crowd

If there’s one thing we’ve learned over the last two years, it’s that following the crowd is a fantastic way to lose money.

After the COVID-19-induced stock market sell-off of spring 2020, meme stocks, unprofitable growth stocks, and pandemic-related stocks took center stage. Companies like Zoom Video Communications and Peloton Interactive produced monster gains, while the energy sector, financials, and real estate stocks got crushed. In 2021, the exact opposite was true, as many of these pandemic winners lost money while the energy sector was the best-performing sector in all of the S&P 500.

Fast-forward to 2022, and several top large-cap growth stocks have seen major drawdowns while value stocks and stable dividend payers have been the real winners. The lesson here is that jumping in and out of what is working or not working in a given time period is a bad idea. For years, Warren Buffett and his team were scrutinized for keeping a large cash position and not buying more stocks. But in the end, Buffett’s patience paid off, as Berkshire has had plenty of dry powder to pounce on opportunities, as evidenced by its recent acquisition of Alleghany. 

2. Invest in what you know

Buffett is a proponent of investing in what you know so that you have an advantage in the stock market. It’s a simple enough task, but it’s actually pretty hard to execute in practice.

Times change, and the economy is becoming more digitalized than ever before. Investors who may not understand technology-focused companies could follow Buffett’s footsteps and basically ignore the sector or invest in a relatively easy-to-understand business like Apple.

However, another option is to learn about a business and listen to the quarterly earnings calls. It requires more work but will also give you the tools you need to hold a company through tough times and let the investment thesis play out. And if the investment thesis begins to change or the company loses its edge over the competition, you’ll be better positioned to exit the position and avoid a falling knife.

3. Greed and fear

Typing it all together is Buffett’s famous quote to “be fearful when others are greedy, and greedy when others are fearful.” The advice applies perfectly to buying the dip in the U.S.-China trade war-induced sell-off at the end of 2018, the 2020 sell-off, and probably will apply well to the current sell-off we are in now. However, the advice to be fearful when others are greedy is also worth discussing.

Many growth companies saw their valuations pole-vault to astronomical levels that weren’t based on fundamentals or even the most optimistic forecasts. When that happens, Buffett’s advice is to be fearful, as it could be a sign of an unhealthy stock market.

Buffett has been a big believer in finding value where others aren’t looking. In many ways, the oil and gas industry was chock-full of high-yield dividend stocks and value stocks that investors were ignoring in favor of renewable energy and flashier names. Carbon neutrality is the future. But the world still runs on fossil fuels. Buffett’s ability to take criticism and invest in “ugly” stocks allowed him to make brilliant buys, such as the acquisition of some of Dominion Energy‘s energy infrastructure assets in July 2020, the gradual accumulation of Chevron stock, and other investments made through Berkshire Hathaway Energy, the conglomerate’s energy arm. 

Keep your cool when times are tough

When your screen is painted red and stocks keep falling with no end in sight, it’s easy to panic and make a decision you might later regret. By relying on timeless investing lessons, investors have a few tools they can pull out when times are tough. Instead of downplaying the emotional side of investing, it’s often better to accept the associated emotions and just try and make the best decision you can with what you know.

One of the most comforting facts to fall back on is the long-term performance of the U.S. stock market. That track record teaches us that every sell-off proved to be a great long-term buying opportunity. 

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

The post 3 timeless Warren Buffett lessons to apply right now appeared first on The Motley Fool Australia.

More reading

• This ASX battery metals share has been taking investors on a wild ride of supercharged gains and falls. Here’s why
• The BHP dividend is being paid today. Here’s what you need to know
• Woolworths (ASX:WOW) share price higher on bullish broker note
• How big will the Fortescue (ASX:FMG) dividend be in 2022?
• Here’s why Macquarie just upgraded the Santos (ASX:STO) share price

Daniel Foelber has the following options: long January 2024 $145 calls on Zoom Video Communications, long January 2024 $45 calls on Peloton Interactive, short January 2024 $150 calls on Zoom Video Communications, and short January 2024 $50 calls on Peloton Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Apple, Berkshire Hathaway (B shares), Peloton Interactive, and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Dominion Energy, Inc and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple, Berkshire Hathaway (B shares), and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

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

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The BHP Group Ltd (ASX: BHP) share price is edging higher amid the company’s eligible shareholders being rewarded today.

The mining company’s shares are currently up 1.24% to $50.39 apiece. This means its shares have surged almost 10% in the past week, and 13% in a month.

In context, the S&P/ASX 200 Index (ASX: XJO) is climbing higher during Monday’s morning trade. The benchmark index is up 0.2% to 7,421.3 points.

BHP pays out record interim dividend

BHP reported strong growth across key metrics in its results for the first half of the 2022 financial year.

In summary, profit from continuing operations rose 57% year-on-year to US$9,715 million. Higher sale prices across commodities, new record production at Western Australian Iron Ore (WAIO) and favourable exchange rate movements underpinned the result.

Management noted that despite the strong performance, this was partially offset by a number of factors. This includes planned maintenance across its assets, expected copper grade decline at Escondida, significant wet weather at Queensland Coal, and inflationary pressures.

Nonetheless, the board declared a record fully franked interim dividend of US$1.50 per share to be paid on 28 March (today). This represents a significant increase on the H1 FY21 dividend of US$1.01 and more than double the H1 FY20 dividend of US 65 cents.

When calculating against the current share price, BHP is trailing on a forecast fully franked dividend yield of 5.46%. In addition, the payout ratio is calculated to be 78% of the mining outfit’s profits, or US$7.6 billion.

It’s worth remembering that the company has paid relatively consistent dividends over the last 18 months, totalling US$22 billion.

BHP share price snapshot

Adding to its impressive gains, the BHP share price has surged around 11% in the last 12 months. When looking specifically at year to date, its shares are up 21%.

BHP has a price-to-earnings (P/E) ratio of 26.03 and commands a market capitalisation of roughly $251.95 billion.

The post The BHP dividend is being paid today. Here’s what you need to know appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
• How much is the next BHP dividend?
• BHP share price higher on broker upgrade
• ASX 200 (ASX:XJO) midday update: Premier’s record dividend, BHP upgraded

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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The Woolworths Group Ltd (ASX: WOW) share price is pushing higher on Monday morning.

At the time of writing, the retail giant’s shares are up almost 1% to $36.56.

Why is the Woolworths share price rising?

Investors have been bidding the Woolworths share price higher today following the release of a broker note out of Goldman Sachs.

According to the note, the broker has initiated coverage on the company’s shares with a buy rating and $40.50 price target.

Based on the current Woolworths share price, this implies potential upside of almost 11% for investors over the next 12 months.

Goldman is also forecasting a 93 cents per share fully franked dividend in FY 2022 and then 111.4 cents per share in FY 2023. Adding the former into the equation brings the total return on offer to approximately 13.5%.

What did the broker say?

Goldman is positive on the Woolworths share price due to three key reasons. These are its digital consumer strategy, alternative revenue streams, and its defensive qualities in an inflationary environment.

In respect to its digital strategy, Goldman commented: “We expect the transition to omni-channel sales to be a critical next step in competition, even after COVID. Per our proprietary “Digital Readiness Scorecard”, WOW is the most advanced in its digitalization efforts, as evidenced through its online penetration (~10% as of FY22) and 13.3m Everyday Rewards Members and significant ~12m digital traffic weekly, materially outperforming peers.”

As for alternative revenue streams, the broker believes media services could be a major source of revenue in the future.

It explained: “Media services, where retailers’ digital assets (including APP, website, email etc.) can act as ad platforms for its vendor brands, is one such potential, with early success seen in US peers (Walmart and Kroger). As long as the retailer can provide the brands with a target audience and high quality touch points with personalized media exposure and measured returns (with higher ROI than other mass media allocation), brands will likely shift spend onto the platform. As part of our DCF, we forecast that by 2030, WOW will be able to deliver A$1B revenue at ~30% EBIT margin for the Media business, which appears conservative compared to Walmart and Kroger delivering ~60% EBIT margin.”

Finally, Goldman is positive on the Woolworths share price due to the company’s defensive qualities in an inflationary environment.

It said: “WOW, being the largest grocer in Australia at ~35% market share as of FY21, has demonstrated historical success in managing through commodity inflation via a series of levers including price pass-through, mix improvement and cost efficiency initiatives. We expect that it will have strong pricing power and scale advantage to manage well through this cycle.”

The post Woolworths (ASX:WOW) share price higher on bullish broker note 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 Bruce Jackson.

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Fortescue Metals Group Limited (ASX: FMG) is a significant dividend payer. The 2022 dividend isn’t predicted to be as big as the 2021 dividend, but how big will it be?

Fortescue is one of the world’s biggest iron ore mining companies, alongside peers such as Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

FY21 saw the business pay out a $3.58 dividend per share, up 103% from $1.76, after generating US$10.3 billion of net profit after tax (NPAT), which was up 117% from the previous year.

At the current Fortescue share price, the FY21 annual dividend translates to a grossed-up dividend yield of 26.5%.

What do we know about Fortescue’s 2022 dividend so far?

Fortescue has a capital allocation framework and a stated intent to target the top end of its dividend policy to pay out 50% to 80% of full-year net profit after tax. In FY21 it had a dividend payout ratio of 80%, and in FY20 the dividend payout ratio was 77%.

In the FY22 half-year result, the interim dividend was cut by 41% to 86 cents per share. This represented a dividend payout ratio of 70%, which was a reduction from the 80% payout ratio in the first half of FY21.

While a reduction in the payout ratio was partly responsible for the dividend reduction, Fortescue also suffered a 32% drop in net profit after tax to $2.8 billion in the first six months of FY22.

In HY22, the amount of ore shipped and sold increased (by 3% and 2%, respectively), but the average revenue per dry metric tonne of iron ore fell 16% to US$95.58. The C1 cost (the ‘direct’ production costs of iron ore) increased by 20% to US$15.28 per wet metric tonne.

So, the market has already a significant cut. But what are analysts expecting with the dividend?

Dividend expectations

Commsec currently has an estimate of an annual dividend of $1.74 in FY22 from Fortescue. At the current Fortescue share price, that would translate into a grossed-up dividend yield of 12.9%.

There are some estimates out there that are both larger and smaller than Commsec’s. Morgans’ FY22 dividend estimate for the miner puts the grossed-up dividend yield at 14.25%.

However, the Credit Suisse annual dividend estimate puts the Fortescue grossed-up dividend yield at 11.5%.

While the estimates are quite varied, all of them seem to suggest that the FY22 annual dividend yield will be more than 10%.

Is the Fortescue share price a buy?

Brokers’ recommendations are mixed on the company at the moment.

Credit Suisse calls it a sell (‘underperform’), with a price target of just $14 because it seems expensive compared to other miners.

Ord Minnett rates it a hold with a price target of $21. It recognises the strong price that iron ore miners are seeing.

Morgans also rates the Fortescue share price as a hold, with a price target of $19.10.

The post How big will the Fortescue (ASX:FMG) dividend be in 2022? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison owns Fortescue Metals Group 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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The Santos Ltd (ASX: STO) share price is up 0.5% in early trade despite a retrace in oil prices overnight.

Santos shares closed on Friday at $7.94 and are currently trading for $7.98.

While that already represents a 20% gain year-to-date, on the back of soaring oil and gas prices, Macquarie just upgraded its Santos share price target well beyond the current level.

Why is Macquarie bullish on the ASX 200 energy giant?

It’s not rocketing oil prices that has Macquarie upping its target for the Santos share price. Rather it’s the significant oil discovery announced last week at the company’s Bedout Basin project in Western Australia.

Santos holds the project in a joint venture with Carnarvon Energy Ltd (ASX: CVN). Prior to last week’s new discovery, the Bedout Basin already held proven reserves of some 200 million barrels of liquids and 1.1 trillion cubic feet of gas, according to data from Carnarvon.

Commenting on the new discovery, Santos CEO, Kevin Gallagher said, “With the global oil and gas markets seeing increased volatility, low-CO2 oil and gas resources at Dorado and Pavo add significantly to Australia’s national energy security. It is also very encouraging for the next exploration well in the current campaign.”

Macquarie analysts say the discovery increases the value of the joint venture Dorado project.

As reported by The Australian, “Macquarie factors an increase of 2-5% in earning per share for Santos on increased near-term production.”

Macquarie has an outperform rating on the ASX 200 energy stock, increasing its target for the Santos share price from $7.89 to $10.50.

That’s 32% above the current level.

Santos share price snapshot

The Santos share price has been a clear beneficiary of soaring oil and gas prices.

Though Brent crude oil slipped 2.8% overnight to US$117 per barrel, it’s still up 50% from the US$78 per barrel it was worth on 1 January this year.

That’s helped propel the Santos share price 26% higher year-to-date with shares up 11% over the past month.

But comparison, the S&P/ASX 200 Index (ASX: XJO) is down 2% in the new year.

The post Here’s why Macquarie just upgraded the Santos (ASX:STO) share price appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Monday
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• Santos (ASX:STO) share price lower despite ‘significant oil discovery’
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 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 recommended Macquarie Group Limited. 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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